Exhibit 10.21

FOURTEENTH AMENDMENT TO REVOLVING CREDIT
AND SECURITY AGREEMENT
This FOURTEENTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this
“Amendment”) is entered into as of March 13, 2017 by and among VIRCO MFG.
CORPORATION, a Delaware corporation (“VMC”), VIRCO INC., a Delaware corporation
(“Virco”, and together with VMC, “Borrowers” and, each individually, a
“Borrower”), the financial institutions from time to time party to the Credit
Agreement (as defined below) as lenders (collectively, “Lenders”), and PNC BANK,
NATIONAL ASSOCIATION (“PNC”), as administrative agent for Lenders (PNC, in such
capacity, “Agent”), with respect to the following:
Borrowers, Lenders and Agent have previously entered into that certain Revolving
Credit and Security Agreement, dated as of December 22, 2011 (as amended,
restated or otherwise modified from time to time, the “Credit Agreement”).
Borrowers have requested that Agent and Lenders provide Borrower with an
Equipment Loan and make certain other amendments to the Credit Agreement. Agent
and Lenders are agreeable to the Borrowers’ requests but only on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Credit Agreement, the Loan Documents and this Amendment, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
A.Definitions Incorporated. Initially capitalized terms used but not otherwise
defined in this Amendment have the respective meanings set forth in the Credit
Agreement, as amended hereby.
B.Amendments to the Credit Agreement. The Credit Agreement is, as of the
Fourteenth Effective Date and subject to the satisfaction of the applicable
conditions precedent set forth in Section C of this Amendment, hereby amended as
set forth in Exhibit A, with all revisions to the Credit Agreement reflected in
Exhibit A in redlined format. The amendments to the Credit Agreement and
addition to the exhibits to the Credit Agreement are limited to the extent
specifically set forth above and no other terms, covenants or provisions of the
Credit Agreement, as applicable, are intended to be affected hereby.
C.Conditions Precedent. The obligations of Agent and Lenders hereunder, and this
Amendment, will be effective on the date (the “Fourteenth Amendment Effective
Date”) of satisfaction of each of the following conditions precedent, each in a
manner in form and substance acceptable to Agent:
1.Amendment. Borrowers shall have delivered to Agent an executed original of
this Amendment;
2.Equipment Note. Borrower shall have delivered to Agent an executed original of
the Equipment Note in form attached hereto as Exhibit B;
3.Amendment to Fee Letter. Borrower shall have delivered to Agent an executed
original of the First Amendment to the Fee Letter.
4.Flood Hazard Determinations. Agent shall have received flood hazard
determinations acceptable to Agent for all Real Property described in a
Mortgage;
5.Resolutions. Borrower shall have delivered to Agent executed corporate
resolutions from each Borrower authorizing the terms of the Amendment;
6.Representations and Warranties. The representations and warranties contained
herein and in the Credit Agreement shall be true and correct in all material
respects as of the date hereof as if made on the date hereof, except for such
representations and warranties limited by their terms to a specific date, in
which case each such representation and warranty shall be true and correct in
all material respects as of such specific date;
7.No Default. After giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing;

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8.Fee. Borrowers shall have delivered to Agent in immediately available funds an
amendment fee in the amount of $12,500;
9.Real Estate. At the expense of Borrowers, Borrowers will cooperate with Agent
by entering into one or more amendments to the real estate mortgages/deeds of
trust encumbering the real property in Arkansas to increase the principal amount
of the encumbrances to $52,500,000 and cause (a) such amendments to be recorded
in the real estate records within ninety days of the date hereof and (b) the
endorsement of the title policies to reflect the amendments; and
10.Other. All corporate and other proceedings, and all documents, instruments
and other legal matters in connection with the transactions contemplated hereby
shall be satisfactory in form and substance to Agent and its counsel.
D.Representations and Warranties. To induce Lenders and Agent to enter into this
Amendment, each Borrower represents and warrants to Lenders and Agent as of the
date hereof as follows:
1.Such Borrower has full power, authority and legal right to enter into this
Amendment and to perform all its respective Obligations hereunder. This
Amendment has been duly executed and delivered by such Borrower and the Credit
Agreement, as amended by this Amendment constitutes the legal, valid and binding
obligation of such Borrower enforceable in accordance with its terms, except as
such enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally. The execution,
delivery and performance of this Amendment (i) are within such Borrower’s
powers, have been duly authorized by all necessary company action, are not in
contravention of law or the terms of such Borrower’s by-laws, certificate of
incorporation, or other applicable documents relating to such Borrower’s
formation or to the conduct of such Borrower’s business or of any material
agreement or undertaking to which such Borrower is a party or by which such
Borrower is bound, (ii) will not conflict with or violate any law or regulation,
or any judgment, order, writ, injunction or decree of any court or Governmental
Body, (iii) will not require the Consent of any Governmental Body or any other
Person, except those Consents which will have been duly obtained, made or
compiled prior to date hereof and which are in full force and effect, and
(iv) will not conflict with, nor result in any breach in any of the provisions
of or constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any material agreement, charter document, instrument, by-law or other instrument
to which such Borrower is a party or by which it or its property is a party or
by which it may be bound.
2.After giving effect to this Amendment, the representations and warranties
contained in the Credit Agreement are true and correct in all material respects
except to the extent any such representation or warranty is expressly stated to
have been made as of a specific date, in which case each such representation and
warranty is true and correct in all material respects as of such specific date,
and no Default or Event of Default has occurred and is continuing.
E.Reaffirmation. Except as specifically modified by this Amendment, the Credit
Agreement and the other Loan Documents remain in full force and effect in
accordance with their respective terms and are hereby ratified, reaffirmed and
confirmed by Borrowers.
F.Events of Default. Any failure to comply with the terms of this Amendment will
constitute an Event of Default under the Credit Agreement.
G.Integration. This Amendment, together with the Credit Agreement and the Loan
Documents, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.
H.Severability. If any part of this Amendment is contrary to, prohibited by, or
deemed invalid under Applicable Laws, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.
I.Submission of Amendment. The submission of this Amendment to the parties or
their agents or attorneys for review or signature does not constitute a
commitment by Agent or Lenders to amend or otherwise modify any of the
provisions of the Credit Agreement and this Amendment shall have no binding
force or effect until the Fourteenth Amendment Effective Date.
J.Counterparts; Facsimile Signatures. This Amendment may be executed in any
number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto.
K.Governing Law. This Amendment is a Loan Document and is governed by the
Applicable Law

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pertaining in the State of New York, other than those conflict of law provisions
that would defer to the substantive laws of another jurisdiction. This governing
law election has been made by the parties in reliance on, among other things,
Section 5-1401 of the General Obligations Law of the State of New York, as
amended (as and to the extent applicable), and other Applicable Law.
L.Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of Borrowers, Lenders, Agent, and all future holders of the Obligations
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights or obligations under this Amendment without the
prior written consent of Agent.
M.Attorneys’ Fees; Costs. Borrowers agree to promptly pay, upon written demand,
all reasonable and documented attorneys’ fees and costs incurred in connection
with the negotiation, documentation and execution of this Amendment. If any
legal action or proceeding shall be commenced at any time by any party to this
Amendment in connection with its interpretation or enforcement, the prevailing
party or parties in such action or proceeding shall be entitled to reimbursement
of its reasonable attorneys’ fees and costs in connection therewith, in addition
to all other relief to which the prevailing party or parties may be entitled.
N.Jury Trial Waiver. To the extent not prohibited by applicable law, each party
to this Amendment hereby expressly waives any right to trial by jury of any
claim, demand, action, or cause of action 1. arising under this Amendment or any
other instrument, document, or agreement executed or delivered in connection
herewith, or 2. in any way connected with or related or incidental to the
dealings of the parties hereto or any of them with respect to this Amendment or
any other instrument, document, or agreement executed or delivered in connection
herewith, or the transactions related hereto or thereto in each case whether now
existing or hereafter arising, and whether sounding in contract or tort or
otherwise and each party hereto hereby consents that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury, and
that any party to this Amendment may file an original counterpart or a copy of
this Section with any court as written evidence of the consents of the parties
hereto to the waiver of their right to trial by jury. Without limiting the
applicability of any other provision of the Credit Agreement, the terms of
Article XII of the Credit Agreement, INCLUDING WITHOUT LIMITATION SECTION 12.3,
shall apply to this Amendment.
O.Total Agreement. This Amendment, the Credit Agreement, and the other Loan
Documents contain the entire understanding among Borrowers, Lenders and Agent
and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties, or guarantees
not herein contained and hereinafter made have no force and effect unless in
writing, signed by Borrowers’ and Agent’s respective officers. Neither this
Amendment nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled, or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Each Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Amendment and the
other Loan Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Amendment.
[Remainder of Page Intentionally Left Blank]Signature Page to Fourteenth
Amendment to Revolving Credit and Security Agreement [Virco]
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
the date first written above.
VIRCO MFG. CORPORATION,
a Delaware corporation, as a Borrower
By:    
Name:
Robert E. Dose

Title:
Vice President

VIRCO INC.,

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a Delaware corporation, as a Borrower
By:    
Name:
Robert E. Dose

Title:
Vice President

Signature Page to Fourteenth Amendment to Revolving Credit and Security
Agreement [Virco]
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By:    
Name:
Jeanette Vandenbergh

Title:      Senior Vice President

84751049
Exhibit A

53708450_1416
This CONFORMED COPY includes:

First Amendment to Revolving Credit and Security Agreement dated June 15, 2012;
Second Amendment to Revolving Credit and Security Agreement dated July 27, 2012;
Third Amendment to Revolving Credit and Security Agreement dated September 12,
2012;
Fourth Amendment to Revolving Credit and Security Agreement dated December 6,
2012;
Fifth Amendment to Revolving Credit and Security Agreement dated March 1, 2013;
Sixth Amendment to Revolving Credit and Security Agreement dated January 9,
2014;
Seventh Amendment to Revolving Credit and Security Agreement dated April 15,
2014;
Eighth Amendment to Revolving Credit and Security Agreement dated August 18,
2014; and
Ninth Amendment to Revolving Credit and Security Agreement dated March 31,
2015.2015;
Tenth Amendment to Revolving Credit and Security Agreement dated June 18, 2015;
Eleventh Amendment to Revolving Credit and Security Agreement dated December 1,
2015;
Twelfth Amendment to Revolving Credit and Security Agreement dated April 4,
2016;
Thirteenth Amendment to Revolving Credit and Security Agreement dated October
27, 2016; and
Fourteenth Amendment to Revolving Credit and Security Agreement dated March 13,
2017

REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
VIRCO MFG. CORPORATION,
a Delaware corporation
 
AND

VIRCO INC.,
a Delaware corporation
(AS BORROWERS)
THE OTHER BORROWERS FROM TIME TO TIME PARTY HERETO

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AND

THE GUARANTORS FROM TIME TO TIME PARTY HERETO

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December 22, 2011
TABLE OF CONTENTS
(continued)
Page
53708450_1416
ARTICLE I
DEFINITIONS    1

1.1
Accounting Terms    1

1.2
General Terms    1

1.3
Uniform Commercial Code Terms    2426

1.4
Certain Matters of Construction    2426

ARTICLE II
ADVANCES, PAYMENTS    2527

2.1
Revolving Advances    2527

2.2
Procedure for Revolving Advances Borrowing    26Advance Borrowings    28

2.2X
Equipment Loans    30

2.3
Disbursement of Advance Proceeds    2831

2.4
Maximum Advances    2931

2.5
Repayment of Advances    2931

2.6
Repayment of Excess Advances    2932

2.7
Statement of Account    2932

2.8
Letters of Credit    3032

2.9
Issuance of Letters of Credit    3032

2.10
Requirements For Issuance of Letters of Credit    3033

2.11
Disbursements, Reimbursement    3133

2.12
Repayment of Participation Advances    3234

2.13
Documentation    3235

2.14
Determination to Honor Drawing Request    3335

2.15
Nature of Participation and Reimbursement Obligations    3335

2.16
Indemnity    3437

2.17
Liability for Acts and Omissions    3437

2.18
Additional Payments    3538

2.19
Manner of Borrowing and Payment    3538

2.20
Mandatory Prepayments    3739

2.21
Use of Proceeds    3740

2.22
Defaulting Lender    3840

ARTICLE III
INTEREST AND FEES    3941

3.1
Interest    3941

3.2
Letter of Credit Fees    3941

3.3
[Intentionally Omitted.]    4042

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3.4
Fee Letter    4042

3.5
Computation of Interest and Fees    4042

3.6
Maximum Charges    4042

3.7
Increased Costs    4043

3.8
Basis for Determining Interest Rate Inadequate or Unfair    4143

3.9
Capital Adequacy    4244

3.10
Gross Up for Taxes    4244

3.11
Withholding Tax Exemption    4245

3.12
Replacement of Lenders    4345

ARTICLE IV
COLLATERAL: GENERAL TERMS    4446

4.1
Security Interest in the Collateral    4446

4.2
Perfection of Security Interest    4446

4.3
Disposition of Collateral    4547

4.4
Preservation of Collateral    4547

4.5
Ownership of Collateral    4548

4.6
Defense of Secured Parties’ Interests    4648

4.7
Books and Records    4649

4.8
Financial Disclosure    4749

4.9
Compliance with Laws    4749

4.10
Inspections and Appraisals    4749

4.11
Insurance    4749

4.12
Failure to Pay Insurance    4850

4.13
Payment of Taxes    4851

4.14
Payment of Leasehold Obligations    4951

4.15
Receivables    4951

4.16
Inventory    5153

4.17
Maintenance of Equipment    5153

4.18
Exculpation of Liability    5154

4.19
Environmental Matters    5254

4.20
Financing Statements    5456

4.21
Deposit and Investment Accounts    5456

4.22
New and Newly Registered Intellectual Property    5456

ARTICLE V
REPRESENTATIONS AND WARRANTIES    5557

5.1
Authority    5557

5.2
Formation and Qualification    5557

5.3
Survival of Representations and Warranties    5557

5.4
Tax Returns    5658

5.5
Financial Statements    5658

5.6
Entity Names    5658

5.7
O.S.H.A 57 and Environmental Compliance    58

5.8
Solvency; No Litigation, Violation, Indebtedness or Default    5759

5.9
Patents, Trademarks, Copyrights and Licenses    5860

5.10
Licenses and Permits    5860

5.11
Default of Indebtedness; No Default    5960

5.12
No Default    5961

5.13
No Burdensome Restrictions    5961

5.14
No Labor Disputes    5961

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5.15
Margin Regulations    5961

5.16
Investment Company Act    5961

5.17
Disclosure    5961

5.18
Swaps    6061

5.19
Conflicting Agreements    6062

5.20
Application of Certain Laws and Regulations    6062

5.21
Business and Property of Credit Parties    6062

5.22
Section 20 Subsidiaries    6062

5.23
Anti-Terrorism Laws    6062

5.24
Trading with the Enemy    6163

5.25
Ricoh Financing Statement    6163

5.26
Commercial Tort Claims    6163

ARTICLE VI
AFFIRMATIVE COVENANTS    6163

6.1
Payment of Fees    6163

6.2
Conduct of Business and Maintenance of Existence and Assets    6163

6.3
Violations    6263

6.4
Government Receivables    6264

6.5
Financial Covenants    6264

6.6
Execution of Supplemental Instruments    6365

6.7
Payment of Indebtedness    6365

6.8
Standards of Financial Statements    6465

6.9
Post-Closing Covenants    64[Reserved].    65

ARTICLE VII
NEGATIVE COVENANTS    6465

7.1
Merger, Consolidation, Acquisition and Sale of Assets    65

7.2
Creation of Liens    6566

7.3
Guarantees    6566

7.4
Investments    6566

7.5
[Intentionally Omitted.]    6667

7.6
Capital Expenditures    6667

7.7
Dividends    6667

7.8
Indebtedness    6768

7.9
Nature of Business    6768

7.10
Transactions with Affiliates    6768

7.11
[Intentionally Omitted.]    6869

7.12
Subsidiaries    6869

7.13
Fiscal Year and Accounting Changes    6869

7.14
Pledge of Credit    6869

7.15
Amendment of Articles of Incorporation, By-Laws    6869

7.16
Compliance with ERISA    6869

7.17
Prepayment of Funded Debt    6970

7.18
Anti-Terrorism Laws    6970

7.19
Membership/Partnership Interests    6970

7.20
Trading with the Enemy Act    6970

7.21
Clean Down    6970

7.22
Leases    6970

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ARTICLE VIII
CONDITIONS PRECEDENT    7071

8.1
Conditions to Initial Advances    7071

8.2
Conditions to Each Advance    7374

8.3
Conditions to Each Equipment Loan    75

ARTICLE IX
INFORMATION AS TO CREDIT PARTIES    7475

9.1
Disclosure of Material Matters    7475

9.2
Schedules    7475

9.3
Environmental Reports    7576

9.4
Litigation    7576

9.5
Material Occurrences    7576

9.6
Government Receivables    7677

9.7
Annual Financial Statements    7677

9.8
Quarterly Financial Statements    7677

9.9
Monthly Financial Statements    7677

9.10
Other Reports    7677

9.11
Additional Information    7677

9.12
Projected Operating Budget    7778

9.13
Variances From Operating Budget    7778

9.14
Notice of Suits, Adverse Events    7778

9.15
ERISA Notices and Requests    7778

9.16
Additional Documents    7879

ARTICLE X
EVENTS OF DEFAULT    7879

10.1
Nonpayment    7879

10.2
Breach of Representation    7879

10.3
Noncompliance    7879

10.4
Judicial Actions    7980

10.5
Judgments    7980

10.6
Bankruptcy    7980

10.7
Inability to Pay    7980

10.8
Affiliate Actions    7980

10.9
Lien Priority    7980

10.10
Cross Default    7980

10.11
Breach of Guaranty    80

10.12
Change of Control    8081

10.13
Invalidity    8081

10.14
Licenses    8081

10.15
Seizures    8081

10.16
Operations    8081

10.17
Pension Plans    8081

10.18
Section 6.5 Covenants    81

ARTICLE XI
LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT    8182

11.1
Rights and Remedies    8182

11.2
Agent’s Discretion    8283

11.3
Setoff    8283

11.4
Rights and Remedies not Exclusive    8283

11.5
Allocation of Payments After Event of Default    83

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ARTICLE XII
WAIVERS AND JUDICIAL PROCEEDINGS    8384

12.1
Waiver of Notice    8384

12.2
Delay    84

12.3
Jury Waiver; California Judicial Reference    84

ARTICLE XIII
EFFECTIVE DATE AND TERMINATION    8687

13.1
Term    8687

13.2
Termination    8687

ARTICLE XIV
REGARDING AGENT    87

14.1
Appointment    87

14.2
Nature of Duties    8788

14.3
Lack of Reliance on Agent and Resignation    8788

14.4
Certain Rights of Agent    8889

14.5
Reliance    8889

14.6
Notice of Default    8889

14.7
Indemnification    8889

14.8
Agent in its Individual Capacity    89

14.9
Delivery of Documents    8990

14.10
Borrowers’ Undertaking to Agent    8990

14.11
No Reliance on Agent’s Customer Identification Program    8990

14.12
Other Agreements    8990

ARTICLE XV
BORROWING AGENCY; GUARANTY    90

15.1
Borrowing Agency Provisions    90

15.2
Joint and Several Liability of Borrowers    9091

15.3
Guaranty    91

15.4
Waivers and Agreements    93

ARTICLE XVI
MISCELLANEOUS    96

16.1
Governing Law    96

16.2
Entire Understanding    9697

16.3
Successors and Assigns; Participations; New Lenders    9899

16.4
Application of Payments    100101

16.5
Indemnity    100101

16.6
Notice    101

16.7
Survival    102

16.8
Severability    102

16.9
Expenses    102

16.10
Injunctive Relief    102103

16.11
Consequential Damages    102103

16.12
Captions    103

16.13
Counterparts; Facsimile Signatures    103

16.14
Construction    103

16.15
Confidentiality; Sharing Information    103

16.16
Publicity    103104

16.17
Certifications From Banks and Participants; USA PATRIOT Act    104

vii
53708450_1416

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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.2(a)
Borrowing Base Certificate

Exhibit 1.2(b)
Compliance Certificate

Exhibit 2.1(a)
Revolving Credit Notes

Exhibit 2.2X
Equipment Loan Notes

Exhibit 8.1(k)
Financial Condition Certificate

Exhibit 16.3
Commitment Transfer Supplement

SCHEDULES
Schedule A
Notice Addresses

Schedule 1.2
Permitted Encumbrances

Schedule 4.5
Equipment and Inventory Locations

Schedule 4.15(h)
Deposit and Investment Accounts

Schedule 4.19
Real Property

Schedule 5.1
Consents

Schedule 5.2(a)
States of Qualification and Good Standing

Schedule 5.2(b)
Subsidiaries

Schedule 5.4
Federal Tax Identification Number

Schedule 5.6
Prior Names

Schedule 5.8(b)
Litigation

Schedule 5.8(d)
Plans

Schedule 5.9
Intellectual Property, Source Code Escrow Agreements

Schedule 5.10
Licenses and Permits

Schedule 5.14
Labor Disputes

Schedule 5.26
Commercial Tort Claims

Schedule 7.3
Guarantees

Schedule 7.4    Investments
Schedule 7.8     Indebtedness

100
53708450_1416

53708450_1416
REVOLVING CREDIT
AND
SECURITY AGREEMENT
This REVOLVING CREDIT AND SECURITY AGREEMENT dated as of December 22, 2011,
among VIRCO MFG. CORPORATION, a corporation organized under the laws of the
State of Delaware (“VMC”), VIRCO INC., a corporation organized under the laws of
the State of Delaware (“Virco” and, together with VMC and each Person that
becomes a party hereto pursuant to Section 7.12 as a borrower, each a
“Borrower”, and collectively “Borrowers”), the Persons from time to time party
hereto pursuant to Section 7.12 as a guarantor (each a “Guarantor”, and
collectively “Guarantors”), the financial institutions that are now or that
hereafter become a party hereto (collectively, “Lenders” and individually a
“Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent
for Lenders (PNC, in such capacity, “Agent”).

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IN CONSIDERATION of the mutual covenants and undertakings herein contained, the
parties hereto hereby agree as follows:
ARTICLE I

ARTICLE II

ARTICLE IIIDEFINITIONS
1.Accounting Terms
. As used in this Agreement, the other Loan Documents or any certificate, report
or other document made or delivered pursuant to this Agreement, accounting terms
not defined in Section 1.2 or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not defined, have the respective
meanings given to them under GAAP; provided, however, that whenever such
accounting terms are used for the purposes of determining compliance with
financial covenants in this Agreement, such accounting terms shall be defined in
accordance with GAAP as applied in preparation of the audited financial
statements of Borrowers for the fiscal year ended January 31, 2011. Any
reference herein to GAAP “as consistently applied” shall mean GAAP as
consistently applied after giving effect to any changes in GAAP, provided, that
any financial statements delivered pursuant to Sections 9.7, 9.8 or 9.9 that are
prepared after any such change in GAAP shall be accompanied by a reconciliation
between such financial statements after giving effect to such change in GAAP and
such financial statements without giving effect to such change GAAP.
Notwithstanding the foregoing, if at any time any change in GAAP would affect
the computation of any financial covenant or requirement set forth in any Loan
Document, and either Borrowing Agent, Agent, or Required Lenders so requests,
Agent and Borrowing Agent shall negotiate in good faith to amend such covenant
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of Agent) it being understood that a Default or
Event of Default under Section 6.5 shall not occur solely as a result of a
change in GAAP to the extent such Default or Event of Default would not have
occurred absent such change in GAAP; provided that, until so amended, (a) such
covenant or requirement will continue to be determined in accordance with GAAP
prior to such change, and (b) Borrowers shall provide to Agent financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
covenant or requirement made both before and after giving effect to such change
in GAAP.
2.General Terms
. For purposes of this Agreement the following terms have the following
meanings:
“Accountants” has the meaning set forth in Section 9.7.
“Advance Rates” means, collectively, the Receivables Advance Rate and the
Inventory Advance Rate.
“Advances” means and includes the Revolving Advances and, the Letters of Credit,
and the Equipment Loans.
“Affiliate” means, with respect to any Person (the “subject Person”), (a) any
Person that, directly or indirectly, is in control of, is controlled by, or is
under common control with the subject Person, or (b) any Person who is a
director, managing member, general partner, or officer (i) of the subject
Person, (ii) of any Subsidiary of the subject Person, or (iii) of any Person
described in clause (a) preceding. For purposes of this definition, “control” of
a Person means the power, direct or indirect, (y) to vote 10.0% or more of the
Equity Interests having ordinary voting power for the election of directors of
such Person or other Persons performing similar functions for any such Person or
(z) to direct or cause the direction of the management and policies of such
Person whether by ownership of Equity Interests, contract, or otherwise.
“Agent” has the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.
“Agreement” means this Revolving Credit Loan and Security Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

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“Alternate Base Rate” means, for any day, a rate per annum equal to the highest
of (a) the Base Rate in effect on such day, (b) the Federal Funds Open Rate in
effect on such day plus 1/2 of 1% and (c) the Eurodollar Rate for an Interest
period of one month plus 1%.
“Anti-Terrorism Laws” means any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the
Applicable Laws comprising or implementing the Bank Secrecy Act, and the
Applicable Laws administered by the United States Treasury Department’s Office
of Foreign Asset Control (as any of the foregoing Applicable Laws may from time
to time be amended, renewed, extended, or replaced).
“Applicable Law” means all laws (including Environmental Laws), rules and
regulations applicable to the Person, conduct, transaction, covenant, Loan
Document or contract in question, including all applicable common law and
equitable principles; all provisions of all applicable state, federal and
foreign constitutions, statutes, rules, regulations, treaties, directives and
orders of any Governmental Body, and all orders, judgments and decrees of all
courts and arbitrators.
“Applicable Margin” shall mean, as of any date of determination, the number of
percentage points set forth below opposite the level then in effect, it being
understood that the Applicable Margin for (i) LoansAdvances that are Domestic
Rate Loans shall be the percentage set forth under the column “Domestic Rate
Loans” and (ii) LoansAdvances that are Eurodollar Rate Loans shall be the
percentage set forth under the column “Eurodollar Rate Loans”:
Level
EBITDA

(measured fiscal year to date)
Domestic Rate Loans
Eurodollar Rate Loans
 
 
Revolving Advances
EquipmentLoans
Revolving Advances
EquipmentLoans
I
Less than or equal to ($4,700,000)
1.50
1.00
2.50
2.00
II
Greater than ($4,700,000), but less than or equal to ($2,800,000)
1.25
1.00
2.25
2.00
III
Greater than ($2,800,000), but less than or equal to $7,400,000
1.00
1.00
2.00
2.00
IV
Greater than $7,400,000, but less than or equal to $10,500,000
0.75
1.00
1.75
2.00
V
Greater than $10,500,000
0.50
1.00
1.50
2.00

Each Applicable Margin set forth above shall be adjusted, to the extent
applicable, five (5) Business Days after Parent shall have delivered Agent
copies of its annual or quarterly financial statements, together with a
Compliance Certificate, in each case, pursuant to Section 9.7 or 9.8 (containing
the calculation of the EBITDA for the applicable measurement period set forth
therein). Prior to the delivery of such financial statements and Compliance
Certificate with respect to the fiscal quarter ending on January 31, 2012, the
Applicable Margins shall be set at Level III. If VMC shall fail to deliver such
financial statements and Compliance Certificate within the time periods set
forth for such delivery in Section 9.7 or 9.8, as applicable, Agent may, if it
elects by notice to the Borrowing Agent (provided, that no notice shall be
required if an Event of Default has occurred under Section 10.6 or an event
described in Section 11.1(a)(iii) has occurred), adjust the Applicable Margins
to the highest (i.e., most expensive) Level over the then current Level until
five (5) Business Days following the delivery of such financial statements and
Compliance Certificate, following which the Applicable Margin shall thereafter
be determined in accordance with the information set forth in such Compliance
Certificate. In the event Agent disputes the calculations or results of any such
certificate, the Applicable Margin shall not be adjusted until such dispute is
resolved. If Agent reasonably determines that the EBITDA calculation contained
in any Compliance Certificate delivered pursuant to Section 9.7 or 9.8 hereof
was inaccurate at any time prior to the payment in full of all of other
Obligations and such inaccuracy, if corrected, would have led to the application

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of a higher Applicable Margin for any period than the Applicable Margin actually
applied for such period, then (x) VMC shall promptly deliver to Agent a correct
Compliance Certificate for such period, (y) the Applicable Margins shall be
determined as if the correct Applicable Margins (as set forth in the table
above) were applicable for such period, and (z) Borrowers shall promptly deliver
to Agent full payment in respect of the accrued additional interest as a result
of such increased Applicable Margin for such period.
“ATS Inventory” means Inventory that constitutes “assemble-to-ship” Inventory.
“Authority” has the meaning set forth in Section 4.19(d).
“Availability” means (a) the lesser of (i) the Maximum Revolving Advance Amount,
minus the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit,
or (ii) the Formula Amount, minus (b) the aggregate amount of all outstanding
Revolving Advances.
“Base Rate” means the base commercial lending rate of PNC as publicly announced
to be in effect from time to time, such rate to be adjusted automatically,
without notice, on the effective date of any change in such rate. This rate of
interest is determined from time to time by PNC as a means of pricing some loans
to its customers and is neither tied to any external rate of interest or index
nor does it necessarily reflect the lowest rate of interest actually charged by
PNC to any particular class or category of customers of PNC.
“Bank Products” shall mean any one or more of the following financial products
or accommodations extended to any Credit Party or its Subsidiaries by Agent or
any Lender or any of Agent’s or any Lender’s respective Affiliates: (a) credit
cards, (b) credit card processing services, (c) debit cards, (d) stored value
cards, (e) purchase cards (including so-called “procurement cards” or
“P-‑cards”), or (f) any cash management or related services including treasury,
depository, return items, overdraft, controlled disbursement, merchant store
value cards, e-payables services, electronic funds transfer, interstate
depository network, automatic clearing house transfer (including the Automated
Clearing House processing of electronic funds transfers through the direct
Federal Reserve Fedline system) and other cash management arrangements.
“Bank Products Obligations” shall mean all obligations, liabilities,
reimbursement obligations, fees, or expenses owing by any Credit Party or its
Subsidiaries to Agent or any Lender or any of Agent’s or any Lender’s respective
Affiliates in respect of Bank Products and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising.
“Blocked Accounts” has the meaning set forth in Section 4.15(h).
“Blocked Account Bank” has the meaning set forth in Section 4.15(h).
“Blocked Person” has the meaning set forth in Section 5.23(b).
“Borrower” or “Borrowers” has the meaning set forth in the preamble to this
Agreement and shall extend to all permitted successors and assigns of such
Persons.
“Borrowers on a Consolidated Basis” means the consolidation in accordance with
GAAP of the accounts or other items of Borrowers and their respective
Subsidiaries.
“Borrowers’ Account” has the meaning set forth in Section 2.7.
“Borrowing Agent” means VMC.
“Borrowing Base Certificate” means a certificate in substantially the form of
Exhibit 1.2(a) duly executed by the President, Vice President Finance or
Controller of Borrowing Agent and delivered to Agent, appropriately completed,
by which such officer shall certify to Agent the Formula Amount and calculation
thereof as of the date of such certificate.

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“Business Day” means any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for
business in East Brunswick, New Jersey, or Pasadena, California, and, if the
applicable Business Day relates to any Eurodollar Rate Loans, such day must also
be a day on which dealings are carried on in the London interbank market.
“Capital Expenditures” means expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto that have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations, which, in accordance
with GAAP, would be classified as capital expenditures, excluding, however, any
such expenditure (a) constituting leasehold improvement expenditures that are
actually paid for or reimbursed by unaffiliated third parties and (b) made to
restore, replace or rebuild property to the condition of such property
immediately prior to any damage, loss, destruction or condemnation of such
property, to the extent such expenditure is (i) not in excess of the amount of
insurance proceeds or condemnation awards received in cash by the Credit Parties
relating to any such damage, loss, destruction or condemnation and (ii) made
within one hundred and eighty (180) days of the date of receipt of such
insurance proceeds or condemnation awards.
“Capitalized Lease Obligation” means any Indebtedness of any Credit Party
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601, et seq.
“Change of Control” means an event or series of events by which:
(a)    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), other than members of the Virtue Family, 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 (such right,
an “option right”), whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of 20% or more of the equity
securities of VMC entitled to vote for members of the board of directors or
equivalent governing body of VMC on a fully-diluted basis (i.e., taking into
account all such securities that such person or group has the right to acquire
pursuant to any option right), provided that in no event may the Virtue Family
hold more than 45% in the aggregate of such equity securities of VMC; or
(b)    VMC fails to own directly or indirectly 100% of the issued and
outstanding Equity Interests of any of its Subsidiaries (other than pursuant to
any merger, transaction or other event expressly permitted by Section 7.1).
“Charges” means all taxes, charges, fees, imposts, levies or other assessments,
including all net income, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including the PBGC or any
other Governmental Body, environmental agency or superfund), upon the Collateral
or any Credit Party.
“Closing Date” means December 22, 2011.
“Code” means the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in effect.
“Collateral” means and includes all of each Credit Party’s right, title and
interest in and to, whether now owned or hereafter acquired and wherever
located:

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(a)    Receivables;
(b)    Equipment;
(c)    General Intangibles;
(d)    all Inventory;
(e)    all Investment Property;
(f)    all Real Property described in a Mortgage;
(g)    all Subsidiary Stock;
(h)    the Leasehold Interests described in a Mortgage;
(i)    (i) its respective goods and other property including all merchandise
returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of such Credit Party’s rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all
additional amounts due to such Credit Party from any Customer relating to the
Receivables; (iv) other property, including warranty claims, relating to any
goods securing the Obligations; (v) all of such Credit Party’s contract rights,
rights of payment that have been earned under a contract right, instruments
(including promissory notes), documents, chattel paper (including electronic
chattel paper), warehouse receipts, deposit accounts, letters of credit and
money; (vi) all commercial tort claims (whether now existing or hereafter
arising); (vii) if and when obtained by such Credit Party, all real and personal
property of third parties in which such Credit Party has been granted a lien or
security interest as security for the payment or enforcement of Receivables;
(viii) all letter of credit rights (whether or not the respective letter of
credit is evidenced by a writing); (ix) all supporting obligations; and (x) any
other goods, personal property or real property now owned or hereafter acquired
in which such Credit Party has expressly granted a security interest or may in
the future grant a security interest to Agent hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between Agent and
such Credit Party;
(j)    all of such Credit Party’s ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by such Credit Party or in which it has an interest), computer
programs, tapes, disks and documents relating to clauses (a), (b), (c), (d),
(e), (f), (g), (h) or (i) of this definition; and
(k)    all proceeds and products of clauses (a), (b), (c), (d), (e), (f), (g),
(h), (i) and (j) of this definition in whatever form, including: cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
Notwithstanding the foregoing, Collateral shall not include, and no Credit Party
shall be deemed to have granted a security interest in: (A) any rights or
interests in any license, contract or agreement to which such Credit Party is a
party to the extent, but only to the extent, that such a grant would, under the
terms of such license, contract or agreement, result in a breach of the terms
of, or constitute a default under, such license, lease, contract or agreement;
(B) property owned by such Credit Party that is subject to a purchase money Lien
or Capitalized Lease Obligation permitted under this Agreement if the lease,
license, contract, property right or agreement to which such Lien is granted
prohibits or requires the consent of any Person other than such Credit Party or
its Affiliates as a condition to the creation of any other Lien on such
property; (C) any voting stock of a Foreign Subsidiary in excess of 65% of all
outstanding voting stock of such Foreign Subsidiary; (D) any rights or property,
including any intent-to-use trademark applications to the extent that any valid
and enforceable law or regulation applicable to such rights or property
prohibits the creation of a security interest in such rights or property or
would otherwise result in a material loss of rights from the creation of such
security interest therein; or (E) any rights or interests in the Leasehold
Interest for the leased Real Property of

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the Credit Parties located at 2027 Harpers Way and Torrance, CA 90501, other
than in each case of the foregoing clauses (A) and (B), to the extent the terms
of any of the foregoing could be rendered ineffective pursuant to 9-406, 9-407
or 9-408 of the UCC or other Applicable Law; provided, that immediately upon the
ineffectiveness, lapse or termination of any such restriction, the Collateral
shall include, and each Credit Party shall be deemed to have granted a security
interest in, all such rights and interests or other assets, as the case may be,
as if such provision had never been in effect; and provided, further, that
notwithstanding any such restriction, Collateral shall, to the extent such
restriction does not by its terms apply thereto, include all rights incident or
appurtenant to any such rights or interests and the right to receive all
proceeds derived from or in connection with the sale, assignment or transfer of
such rights and interests (all of the foregoing to the extent excluded from
“Collateral” pursuant to this paragraph being referred to herein as “Excluded
Property”).
“Commitment Percentage” of any Lender means the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any
assignment by a Lender pursuant to Section 16.3(c) or 16.3(d).
“Commitment Transfer Supplement” means a document in the form of Exhibit 16.3,
properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation of
Lenders to make Advances under this Agreement.
“Compliance Certificate” means a compliance certificate in the form of that
attached hereto as Exhibit 1.2(b), appropriately completed and signed by the
Vice President Finance, Treasurer or Controller of Borrowing Agent.
“Consents” means all filings, licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third
parties, domestic or foreign, necessary to carry on the business of the Credit
Parties and their Subsidiaries or necessary (including to avoid a conflict or
breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the
other Loan Documents, including any Consents required under all applicable
federal, state or other Applicable Law.
“Consigned Inventory” means Inventory of any Borrower that is in the possession
of another Person on a consignment, sale or return, sale on approval, or other
basis that does not constitute a final sale and acceptance of such Inventory.
“Controlled Group” means, at any time, each Credit Party and each of its
Subsidiaries and all members of their respective controlled groups of
corporations and all trades or businesses (whether or not incorporated) under
common control with any Credit Party or any Subsidiary of a Credit Party and all
other entities which, together with any Credit Party or any Subsidiary of a
Credit Party, are treated as a single employer under Section 414 of the Code.
Any entity shall continue to be considered a member of a Controlled Group of a
Credit Party or a Subsidiary thereof with respect to liabilities arising after
the period in which the entity is considered a single employer with any Credit
Party or any such Subsidiary for which any Credit Party or any such Subsidiary
could be liable under the Code or ERISA.
“Credit Parties” shall mean Borrowers and the Guarantors, and “Credit Party”
shall mean any of them.
“Customer” means and includes the account debtor with respect to any Receivable
of a Person and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with such Person,
pursuant to which such Person is to deliver any personal property or perform any
services.
“Customs” has the meaning set forth in Section 2.10(b).
“Default” means an event, circumstance or condition that, with the giving of
notice or passage of time or both, would constitute an Event of Default.

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“Default Rate” has the meaning set forth in Section 3.1.
“Defaulting Lender” has the meaning set forth in Section 2.22(a).
“Depository Accounts” has the meaning set forth in Section 4.15(h).
“Dilution Percent” means the percentage obtained by dividing (a) bad debt
write-downs or write-offs, discounts, returns, promotions, credits, credit memos
and other dilutive items with respect to all Receivables, by (b) gross sales.
“Dilution Reserve” means a reserve against the Formula Amount in an amount
equivalent to a 1.00% reduction in the Receivables Advance Rate for each
percentage point (or portion thereof) by which the Dilution Percent exceeds
5.00%.
“Documents” has the meaning set forth in Section 8.1(c).
“Dollar” and the sign “$” means lawful money of the United States of America.
“Domestic Rate Loan” means any Advance that bears interest based upon the
Alternate Base Rate.
“Drawing Date” has the meaning set forth in Section 2.11(b).
“Early Termination Date” has the meaning set forth in Section 13.1.
“Earnings Before Interest and Taxes” means for any period the sum of (a) net
income (or loss) of Borrowers on a Consolidated Basis for such period (excluding
extraordinary gains and losses), plus (b) all interest expense of Borrowers on a
Consolidated Basis for such period, plus (c) all charges against income of
Borrowers on a Consolidated Basis for such period for federal, state and local
taxes actually expensed for such period.
“EBITDA” means for any period, with respect to Borrowers on a Consolidated
Basis, the sum of (a) Earnings Before Interest and Taxes for such period, plus
(b) depreciation expenses for such period, plus (c) amortization expenses for
such period, plus (d) to the extent deducted in determining net income of the
Borrowers on a Consolidated Basis, non-cash compensation expense (including
deferred non-cash compensation expense), other non-cash expenses, or charges
arising from the sale or issuance of stock, the granting of stock options, and
the granting of stock appreciation rights and similar arrangements (including
any repricing, amendment, modification, substitution or change of any such
stock, stock option, stock appreciation rights or similar arrangements) or
non-cash interest and accretion charges related to pension plan adjustments.
“Eleventh Amendment” means the Eleventh Amendment to Revolving Credit and
Security Agreement dated as of December 1, 2015 among Borrowers, the Lenders
party thereto and Agent.
“Eleventh Amendment Date” means December 1, 2015.
“Eligible Assignee” shall mean (a) a commercial bank, or any Affiliate thereof,
organized under the laws of the United States, or any state thereof, which has
total assets in excess of $500,000,000 and (b) a commercial bank, or any
Affiliate thereof, organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of any such country and which (i) is acting through a
branch or agency located in the United States, and (ii) has total assets in
excess of $500,000,000, (c) any Lender or Affiliate (other than a natural
Person) of a Lender, (d) so long as no Default or Event of Default has occurred
and is continuing, any other Person (other than a natural Person) approved by
Borrower (which approval of Borrower shall not be unreasonably withheld,
conditioned or delayed), and (e) during the continuation of a Default or an
Event of Default, any other Person.
    “Eligible ATS Inventory” means ATS Inventory that otherwise qualifies as
Eligible Finished Goods Inventory except for the fact that such Inventory
constitutes “assemble-to-ship” Inventory.

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“Eligible Inventory” means Eligible ATS Inventory, Eligible Finished Goods
Inventory and Eligible Work In Process Inventory.
“Eligible Finished Goods Inventory” means and includes Inventory, excluding work
in process and ATS Inventory, with respect to each Borrower, valued at the lower
of cost or market value, determined on a first-in-first-out basis, that is not,
in Agent’s Permitted Discretion, obsolete, slow moving or unmerchantable and
that Agent, in its Permitted Discretion, does not deem to be ineligible
Inventory, based on such considerations as Agent may from time to time deem
appropriate in its Permitted Discretion, including whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and
no other Lien (other than a Permitted Encumbrance). In addition, Inventory shall
not be Eligible Finished Goods Inventory if it: (a) does not conform to all
applicable standards imposed by any Governmental Body that has regulatory
authority over such goods or the use or sale thereof; (b) is in transit (other
than in transit between locations of the Credit Parties, which locations are in
the United States); (c) is located outside the United States or at a location
that is not otherwise in compliance with this Agreement; (d) constitutes
Consigned Inventory; (e) is the subject of an Intellectual Property Claim that
Agent determines in its Permitted Discretion could have an adverse impact on the
ability to sell or otherwise dispose of or realize upon such Inventory or the
value thereof; (f) is subject to a License Agreement or other agreement that
limits, conditions or restricts any Borrower’s or Agent’s right to sell or
otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent
Agreement with the Licensor under such License Agreement; or (g) is situated at
a location not owned by a Borrower unless (i) the owner or occupier of such
location has executed a Lien Waiver Agreement or (ii) Agent, in its sole
discretion, establishes a Landlord Reserve in lieu of a Lien Waiver.
“Eligible Receivables” means and includes with respect to each Borrower, each
Receivable of such Borrower arising in the Ordinary Course of Business and that
Agent, in its Permitted Discretion, does not deem to be an ineligible
Receivable, based on such considerations as Agent may from time to time deem
appropriate. A Receivable shall not be deemed eligible unless such Receivable is
subject to Agent’s first priority perfected security interest and no other Lien
(other than Permitted Encumbrances), and is evidenced by an invoice or other
documentary evidence satisfactory to Agent. In addition, no Receivable shall be
an Eligible Receivable if:
(a)    it arises out of a sale made by any Borrower to an Affiliate of any
Borrower or to a Person controlled by an Affiliate of any Borrower;
(b)    it is due or unpaid more than (i) sixty (60) days after the original due
date or (ii) ninety (90) days after the original invoice date;
(c)    fifty percent (50%) or more of the Receivables from such Customer are not
deemed Eligible Receivables hereunder (such percentage may, in Agent’s Permitted
Discretion, be increased or decreased from time to time);
(d)    any covenant, representation or warranty contained in this Agreement with
respect to such Receivable has been breached;
(e)    the Customer shall: (i) apply for, suffer, or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property or call a meeting of
its creditors; (ii) admit in writing its inability, or be generally unable, to
pay its debts as they become due or cease operations of its present business;
(iii) make a general assignment for the benefit of creditors; (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect); (v) be adjudicated a bankrupt or insolvent; (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors;
(vii) acquiesce to, or fail to have dismissed, any petition that is filed
against it in any involuntary case under such bankruptcy laws; or (viii) take
any action for the purpose of effecting any of the foregoing;
(f)    the sale is to a Customer outside the United States of America or Canada,
unless the sale is (i) on letter of credit, guaranty or acceptance terms, in
each case acceptable to Agent in its Permitted Discretion or (ii) insured
pursuant to credit insurance acceptable to Agent in its sole discretion that is
issued by a credit insurer and pursuant to documentation (including an
assignment to Agent of such credit insurance and the proceeds thereof) that

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is, in each case, acceptable to Agent in its sole discretion, provided, that the
aggregate amount of Receivables included pursuant to this clause (f)(ii) shall
not exceed a sublimit to be established by Agent from time to time in its sole
discretion;
(g)    the sale to the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
(h)    Agent believes, in its Permitted Discretion, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer’s financial inability to pay;
(i)    the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727, et
seq. and 41 U.S.C. Sub-Section 15, et seq.), in the case of the United States of
America or any department, agency or instrumentality thereof, or, if requested
by Agent pursuant to Section 6.4, has otherwise complied with other applicable
statutes or ordinances, in the case of any state or any department, agency or
instrumentality thereof;
(j)    the goods giving rise to such Receivable have not been delivered to and
accepted by the Customer or the services giving rise to such Receivable have not
been performed by the applicable Borrower and accepted by the Customer or the
Receivable otherwise does not represent a final sale;
(k)    the Receivables of the Customer exceed fifteen percent (15%) of the
amount of all Receivables of the Borrowers;
(l)    the Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of a Borrower or the
Receivable is contingent in any respect or for any reason, but only to the
extent of such offset, deduction, defense, dispute, or counterclaim;
(m)    the applicable Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the Ordinary
Course of Business, but only to the extent of such discount, all of which
discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto;
(n)    any return, rejection or repossession of the merchandise has occurred or
the rendition of services has been disputed, but only to the extent of such
return, rejection, repossession, or dispute;
(o)    such Receivable is not payable to a Borrower; or
(p)    such Receivable is not otherwise satisfactory to Agent as determined by
Agent in its Permitted Discretion.
“Eligible Work In Process Inventory” means Inventory that otherwise qualifies as
Eligible Finished Goods Inventory except for the fact that such Inventory
constitutes “work in process” Inventory (excluding (i) Eligible ATS Inventory
and (ii) any such Inventory at or in transit to a third party processor for
finishing such Inventory (other than Valley Plating located in Conway, Arkansas
for same day or next day finishing), including to any third party for processor
for chrome plating or otherwise, provided that such Inventory may be included as
“Eligible Work In Process Inventory” upon return of such Inventory by such third
party to the Borrowers).
“Environmental Complaint” has the meaning set forth in Section 4.19(d).
“Environmental Laws” means all federal, state and local environmental, land use,
zoning, health, chemical use, safety and sanitation laws (including common
laws), statutes, ordinances and codes relating to human health and safety,
pollution or the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling, production
or disposal of Hazardous Substances and the rules, regulations,

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policies, guidelines, interpretations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect
thereto.
“Equipment” means and includes as to any Person, all of such Person’s goods
(other than Inventory) whether now owned or hereafter acquired and wherever
located including all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements and
substitutions therefor or accessions thereto.
“Equipment Loan Rate” shall mean (a) with respect to Equipment Loans that are
Domestic Rate Loans, an interest rate per annum equal to the sum of the
Applicable Margin for Equipment Loans plus the Alternate Base Rate and (b) with
respect to Equipment Loans that are LIBOR Rate Loans, the sum of the Applicable
Margin for Equipment Loans plus the LIBOR Rate.
“Equipment Loans” shall have the meaning set forth in Section 2.2X hereof.
“Equipment Notes” shall mean, collectively, the promissory notes referred to in
Section 2.2X hereof.
“Equity Interests” of any Person means any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests,
member interests, participation or other equivalents of or interest in
(regardless of how designated) equity of such Person, whether voting or
nonvoting, including common stock, preferred stock, convertible securities or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder.
“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto the interest rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing (i)
the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute
Bloomberg page that displays rates at which US dollar deposits are offered by
leading banks in the London interbank deposit market), or the rate which is
quoted by another source selected by Agent which has been approved by the
British Bankers’ Association as an authorized information vendor for the purpose
of displaying rates at which US dollar deposits are offered by leading banks in
the London interbank deposit market (an “Eurodollar Alternate Source”), at
approximately 11:00 a.m., London time two (2) Business Days prior to the first
day of such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Eurodollar
Alternate Source, a comparable replacement rate determined by the Agent at such
time (which determination shall be conclusive absent manifest error)) for an
amount comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate shall be adjusted with respect to
any Eurodollar Rate Loan that is outstanding on the effective date of any change
in the Reserve Percentage as of such effective date. Agent shall give prompt
notice to Borrowing Agent of the Eurodollar Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
“Eurodollar Rate Loan” means an Advance at any time that bears interest based on
the Eurodollar Rate.
“Event of Default” has the meaning set forth in Article X.
“Exchange Act” has the mean the Securities Exchange Act of 1934, as amended.
“Excluded Property” has the meaning set forth in the definition of “Collateral”.
“Executive Order No. 13224” means the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.

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“Extraordinary Receipts” means all Net Cash Proceeds received by Borrowers or
Guarantors not in the Ordinary Course of Business, including: (a) foreign,
United States, state or local tax refunds; (b) pension plan reversions; (c)
proceeds of business interruption insurance; (d) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action; (e) indemnity payments; (f) (i) 50% of the net proceeds for the issuance
of Equity Interests expressly permitted hereunder (other than issuances to a
Credit Party) and (ii) 100% of all other Equity Issuances; and (g) proceeds of
any issuance of Funded Debt (other than Funded Debt permitted pursuant to
Section 7.8); and (h) any purchase price adjustment received in connection with
any purchase agreement. .
“Federal Funds Effective Rate” for any day means the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100
of 1.00%) announced by the Federal Reserve Bank of New York (or any successor)
on such day as being the weighted average of the rates on overnight federal
funds transactions arranged by federal funds brokers on the previous trading
day, as computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the date of this Agreement; provided that, if such Federal Reserve
Bank (or its successor) does not announce such rate on any day, the “Federal
Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for
the last day on which such rate was announced.
“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (a “Federal Funds Alternate Source”) (or if such rate
for such day does not appear on the Bloomberg Screen BTMM (or any substitute
screen) or on any Federal Funds Alternate Source, or if there shall at any time,
for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Federal Funds Alternate Source, a comparable replacement rate
determined by the PNC at such time (which determination shall be conclusive
absent manifest error); provided however, that if such day is not a Business
Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate
changes, the rate of interest with respect to any advance to which the Federal
Funds Open Rate applies will change automatically without notice to the
Borrowers, effective on the date of any such change.
“Fee Letter” means that certain amended and restated fee letter dated as of
April 4, 2016 among Borrowers and PNC, as amended, restated, or otherwise
modified from time to time.
“Financial Condition Certificate” has the meaning set forth in Section 8.1(k).
“Fifth Amendment” means the Fifth Amendment to Revolving Credit and Security
Agreement dated as of March 1, 2013, among Borrowers, the Lenders party thereto
and Agent.
“Fifth Amendment Date” means March 1, 2013.
“First Amendment” shall mean the First Amendment to Revolving Credit and
Security Agreement dated as of June 15, 2012, among Borrowers, the Lenders party
thereto and Agent.
“First Amendment Date” shall mean June 15, 2012.
“Fixed Charge Coverage Ratio” means, for Borrowers on a Consolidated Basis, with
respect to any fiscal period, the ratio of:
(a)EBITDA, plus capitalized lease payments during such period, minus Unfinanced
Capital Expenditures made during such period, minus cash taxes paid during such
period; to
(b)the sum of all cash actually expended to make (i) interest payments on any
Advances hereunder (other than amortization of fees and other non-interest
expense hereunder), plus (ii) payments with respect to any other

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Funded Debt (other than principal payments in respect of Revolving Advances that
are not made in connection with a permanent reduction to the Maximum Revolving
Advance Amount), plus (iii) payments for all fees, commissions and charges set
forth herein and with respect to any Advances, plus (iv) capitalized lease
payments, plus (v) Restricted Payments.
“Foreign Subsidiary” of any Person, means any Subsidiary of such Person that is
not organized or incorporated in the United States or any State or territory
thereof.
“Formula Amount” has the meaning set forth in Section 2.1(a).
“Fourteenth Amendment” means the Fourteenth Amendment to Revolving Credit and
Security Agreement dated as of March [__], 2017 among Borrowers, the Lenders
party thereto and Agent.
“Fourteenth Amendment Date” means March [__], 2017.
“Fourth Amendment” shall mean the Fourth Amendment to Revolving Credit and
Security Agreement dated as of December 6, 2012, among Borrowers, the Lenders
party thereto and Agent.
“Fourth Amendment Date” shall mean December 6, 2012.
“Funded Debt” means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person’s
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capitalized Lease Obligations,
current maturities of long-term debt, revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and also including, in
the case of each Borrower, the Obligations and, without duplication,
Indebtedness consisting of guaranties of any of the foregoing Indebtedness of
other Persons.
“GAAP” means generally accepted accounting principles in the United States of
America.
“General Intangibles” means and includes, with respect to any Person, all of
such Person’s general intangibles, whether now owned or hereafter acquired,
including all payment intangibles, all choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, quality control
procedures, trademarks, trademark applications, service marks, trade secrets,
goodwill, copyrights, design rights, software, computer information, source
codes, codes, records and updates, registrations, licenses, franchises, customer
lists, tax refunds, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to such
Person to secure payment of any of the Receivables by a Customer (other than to
the extent covered by Receivables) all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
“Governmental Acts” means any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Body.
“Governmental Body” means any nation or government, any state or other political
subdivision thereof or any entity, authority, agency, division or department
exercising the legislative, judicial, regulatory or administrative functions of
or pertaining to a government.
“Gross-Up Payment” has the meaning set forth in Section 3.10.
“Guarantor” has the meaning set forth in the preamble to this Agreement and
shall extend to all permitted successors and assigns of such Persons.
“Guarantor Security Agreement” means any Security Agreement executed by any
Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and
substance satisfactory to the Agent.

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“Guaranty” means any guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders, in form and substance satisfactory to Agent, including the guaranty set
forth in Section 15.3.
“Hazardous Discharge” has the meaning set forth in Section 4.19(d).
“Hazardous Substance” means, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in or regulated under CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
“Hazardous Wastes” means all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws
now in force or hereafter enacted relating to hazardous waste disposal.
“Hedge Liabilities” has the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.
“Inchoate Obligations” means contingent indemnification or expense reimbursement
Obligations other than those related to claims, causes of action, or liabilities
that have been asserted or threatened or that otherwise can be reasonably
identified by the Agent or any Lender based on the then-known facts and
circumstances.
“Indebtedness” of a Person at a particular date means all obligations of such
Person that, in accordance with GAAP, would be classified upon a balance sheet
as liabilities (except (a) capital stock and surplus earned or otherwise and (b)
trade payables incurred in the Ordinary Course of Business and repayable in
accordance with customary trade practices no later than sixty (60) days after
the incurrence thereof) and in any event, without limitation by reason of
enumeration, shall include all indebtedness, debt and other similar monetary
obligations of such Person whether direct or guaranteed, and all premiums, if
any, due at the required prepayment dates of such indebtedness, and all
indebtedness secured by a Lien on assets owned by such Person, whether or not
such indebtedness actually has been created, assumed or incurred by such Person.
Any indebtedness of such Person resulting from the acquisition by such Person of
any assets subject to any Lien shall be deemed, for the purposes hereof, to be
the equivalent of the creation, assumption and incurring of the indebtedness
secured thereby, whether or not actually so created, assumed or incurred.
“Indemnitees” means, collectively, all Secured Parties and each of their
respective officers, directors, Affiliates, attorneys, employees and agents, and
“Indemnitee” means any of the foregoing Persons, individually.
“Ineligible Security” means any security that may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
“Intellectual Property” means property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask
work, trade secret or license or other right to use any of the foregoing.
“Intellectual Property Claim” means the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that
any Credit Party’s ownership, use, marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property or other property or asset violates
any ownership of or right to use any Intellectual Property of such Person.
“Interest Period” means the period provided for any Eurodollar Rate Loan
pursuant to Section 2.2(b).
“Interest Rate Hedge” means an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered
into by any Credit Party or its Subsidiaries in order to provide protection

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to, or minimize the impact upon, such Credit Party and/or its Subsidiaries of
increasing floating rates of interest applicable to Indebtedness.
“Inventory” means and includes, with respect to any Person, all of such Person’s
now owned or hereafter acquired goods, merchandise and other personal property,
wherever located, to be furnished under any consignment arrangement, contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description that are or
might be used or consumed in such Person’s business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
“Inventory Sublimit” means (a) during the period commencing on December 1 of
each fiscal year of VMC and ending on August 31 of such fiscal year,
$30,000,000, (b) during the period commencing on September 1 of each fiscal year
of VMC and ending on October 31 of such fiscal year, $20,000,000 and (c) during
the period commencing on November 1 of each fiscal year of VMC and ending on the
last day of DecemberNovember in such fiscal year, $12,500,000.
“Inventory Advance Rate” has the meaning set forth in Section 2.1(a)(y)(ii).
“Investment Property” means and includes, with respect to any Person, all of
such Person’s now owned or hereafter acquired investment property, securities
(whether certificated or uncertificated), securities entitlements, securities
accounts, commodities contracts and commodities accounts.
“Issuer” means any Person who issues a Letter of Credit and/or accepts a draft
pursuant to the terms hereof.
“Landlord Reserve” shall mean, as to each location at which a Borrower has
Inventory or books and records located and as to which a Lien Waiver Agreement
has not been received by Agent, a reserve in an amount equal to three months’
rent or expense, as applicable, for such location; provided, that for Borrowers’
leased location at 2027 Harpers Way, Torrance, California, in lieu of a Landlord
Waiver Agreement, Agent will implement an immediate three month rent reserve.
“Leasehold Interests” means all of each Credit Party’s right, title and interest
in and to the premises located at 2027 Harpers Way and Torrance, CA 90501 and
1655 Amity Road Conway, AR 72034
“Lender” and “Lenders” has the meaning ascribed to such term in the preamble to
this Agreement and shall include each Person that becomes a transferee,
successor or assign of any Lender.
“Lender-Provided Interest Rate Hedge” means an Interest Rate Hedge provided by
any Lender and with respect to which Agent confirms meets the following
requirements: such Interest Rate Hedge (a) is documented in a standard
International Swap Dealer Association Agreement; (b) provides for the method of
calculating the reimbursable amount of the provider’s credit exposure in a
reasonable and customary manner, and (c) is entered into for hedging (rather
than speculative) purposes. The liabilities of any Credit Party to the provider
of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be
“Obligations” hereunder, guaranteed obligations under each Guaranty and secured
obligations under each Guarantor Security Agreement (unless otherwise specified
in any such guaranty or Guarantor Security Agreement) and otherwise treated as
Obligations for purposes of each of the Loan Documents. The Liens securing the
Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the other Loan Documents.
“Letter of Credit Fees” has the meaning set forth in Section 3.2.
“Letter of Credit Borrowing” has the meaning set forth in Section 2.11(d).
“Letter of Credit Sublimit” means $3,000,000.
“Letters of Credit” has the meaning set forth in Section 2.8.

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“License Agreement” means any agreement between any Credit Party and a Licensor
pursuant to which such Credit Party is authorized to use any Intellectual
Property in connection with the manufacturing, marketing, sale or other
distribution of any Inventory of such Credit Party or otherwise in connection
with such Credit Party’s business operations (other than any off-the-shelf,
shrink wrap or other generally commercially available pre-packaged software
products or licenses).
“Licensor” means any Person from whom any Credit Party obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in
connection with such Credit Party’s manufacture, marketing, sale or other
distribution of any Inventory or otherwise in connection with such Credit
Party’s business operations.
“Licensor/Agent Agreement” means an agreement between Agent and a Licensor, in
form and content satisfactory to Agent in its Permitted Discretion, by which
Agent is given the right, vis-à-vis such Licensor, to enforce Agent’s Liens with
respect to and to complete manufacture of and dispose of any Credit Party’s
Inventory with the benefit of any Intellectual Property applicable thereto,
irrespective of such Credit Party’s default under any License Agreement with
such Licensor.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), Charge, claim or
encumbrance, or preference, priority or other security agreement or preferential
arrangement held or asserted in respect of any asset of any kind or nature
whatsoever including any conditional sale or other title retention agreement,
any lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction.
“Lien Waiver Agreement” means an agreement, in form and substance acceptable to
Agent, executed in favor of Agent in its Permitted Discretion by a Person who
owns or occupies premises at which any Collateral may be located from time to
time and by which such Person shall waive any Lien that such Person may ever
have with respect to any of the Collateral and shall authorize Agent from time
to time to enter upon the premises to inspect or remove the Collateral from such
premises or to use such premises to store or dispose of such Inventory.
“Limited Purpose Deposit Account” means the deposit account of VMC maintained
with Wells Fargo Bank, National Association on the Closing Date to the extent
such deposit account (a) is subject to Agent’s control on the Closing Date and
sole control after notice by Agent to such account bank and (b) on and after
November 15, 2012 (or such later date as Agent shall agree in its sole
discretion), does not contain amounts on deposit therein in excess of (i)
amounts solely used by VMC to make employee payroll and (ii) amounts not in
excess of $100,000 per calendar month solely used to pay charge backs and fees
in connection with merchant card services provided by Wells Fargo Bank, National
Association to Borrowers.
“Loan Documents” means the Revolving Credit Notes, the Fee Letter, any Guaranty,
any Guarantor Security Agreement, any Mortgage, any Pledge Agreement, any Patent
Security Agreement, any Trademark Security Agreement, any Lender-Provided
Interest Rate Hedge and any and all other agreements, instruments and documents,
including guaranties, pledges, powers of attorney, consents, interest or
currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Credit Party and/or delivered to
Agent or any Lender in respect of the transactions contemplated by this
Agreement.
“Material Adverse Effect” means a material adverse effect on: (a) the condition
(financial or otherwise), results of operations, assets, business, properties or
prospects of any Credit Party; (b) any Credit Party’s ability to duly and
punctually pay or perform the Obligations in accordance with the terms thereof;
(c) the value of the Collateral, or Agent’s Liens on the Collateral or the
priority of any such Lien; or (d) the practical realization of the benefits of
Agent’s and each Lender’s rights and remedies under this Agreement and the other
Loan Documents.
“Maximum Equipment Loan Amount” shall mean $2,500,000 less repayments of the
Equipment Loans.

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“Maximum Face Amount” means, with respect to any outstanding Letter of Credit,
the face amount of such Letter of Credit including all automatic increases
provided for in such Letter of Credit, whether or not any such automatic
increase has become effective.
“Maximum Revolving Advance Amount” means (a) during the period commencing on
March 1 of each fiscal year of VMC and ending on August 31 of such fiscal year,
$49,500,000, (b) during the period commencing on September 1 of each fiscal year
of VMC and ending on October 31 of such fiscal year, $40,000,000 and (c) during
the period commencing on November 1 of each fiscal year of VMC and ending on the
last day of February in such fiscal year, $30,000,000.
“Maximum Undrawn Amount” means with respect to any outstanding Letter of Credit,
the amount of such Letter of Credit that is or may become available to be drawn
(whether or not any of the circumstances permitting the beneficiary to so draw
exist at the time of determination), including all automatic increases provided
for in such Letter of Credit, whether or not any such automatic increase has
become effective.
“Modified Commitment Transfer Supplement” has the meaning set forth in Section
16.3(d).
“Mortgage” means the mortgage or deed of trust on the Real Property securing the
Obligations, together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
“Multiemployer Plan” means a “multiemployer plan” as defined in Sections 3(37)
and 4001(a)(3) of ERISA to which any Credit Party or any member of the
Controlled Group is required to contribute on behalf of its employees or with
respect to which any Credit Party or any member of the Controlled Group has or
could reasonably be expected to have liability, contingent or otherwise.
“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors at least two of whom are not under common control, as such a plan is
described in Section 4064 of ERISA, and to which any Credit Party or any member
of the Controlled Group contributes or has or could reasonably be expected to
have liability, contingent or otherwise.
“Net Cash Proceeds” means gross cash proceeds less (a) bona fide direct costs
incurred to non-Affiliates of any Credit Party in connection with obtaining such
proceeds, including (i) legal fees and fees of accountants and consultants, and
(ii) transfer or similar taxes actually payable by such Credit Party with
respect thereto and (b) the amounts necessary to discharge any Permitted
Encumbrances with respect thereto which have priority over Agent’s Liens.
“Net Invoice Cost” shall mean, with respect to Equipment, the net invoice cost
of such Equipment (excluding taxes, shipping, delivery, handling, installation,
overhead and other so called “soft” costs).
“Ninth Amendment” means the Ninth Amendment to Revolving Credit and Security
Agreement dated as of March 31, 2015 among Borrowers, the Lenders party thereto
and Agent.
“Ninth Amendment Date” means March 31, 2015.
“Notes” shall mean collectively, the Equipment Notes and the Revolving Credit
Notes.
“Obligations” means and includes (a) any and all Indebtedness, loans, advances,
debts, liabilities, obligations, covenants and duties owing by the Credit
Parties (or any of them) to Lenders or Agent or to any other direct or indirect
subsidiary or affiliate of Agent or any Lender of any kind or nature, present or
future (including any interest or other amounts accruing thereon after maturity,
or after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to any Credit Party, or
that would have accrued but for the commencement of such proceeding, in each
case, whether or not a claim for post-filing or post-petition interest or other
amounts is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement and the other Loan
Documents, together with all Bank Products Obligations and Hedge

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Liabilities, whether or not for the payment of money, whether arising by reason
of an extension of credit, opening of a letter of credit, loan, or guarantee,
under any interest or currency swap, future, option or other similar agreement
(including indebtedness, liabilities, and obligations of Credit Parties with
respect to any Lender-Provided Interest Rate Hedge), or in any other manner,
whether arising out of overdrafts or deposit or other accounts or electronic
funds transfers (whether through automated clearing houses or otherwise) or out
of Agent’s or any Lenders non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository transfer check or
other similar arrangements, whether direct or indirect (including those acquired
by assignment or participation), absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including amendments, extensions,
renewals or increases, and all costs and expenses of Agent and any Lender
incurred in the documentation, negotiation, modification, enforcement,
collection or otherwise in connection with any of the foregoing, including
reasonable attorneys’ fees and expenses and all obligations of any Credit Party
to Agent or Lenders to perform acts or refrain from taking any action, (b) all
obligations of any type described in the foregoing clause (a) arising in respect
of Lender-Provided Interest Rate Hedges and (c) all obligations of any type
described in the foregoing clause (a) arising in respect of cash management or
other services provided by PNC or any of its Affiliates.
“Ordinary Course of Business” means with respect to any Credit Party, the
ordinary course of such Credit Party’s business as conducted on the Closing
Date, including any reasonably related extensions thereof in the same line of
business conducted by such Credit Party on the Closing Date.
“Out-of-Formula Loans” has the meaning set forth in Section 16.2(b).
“Parent” of any Person means a corporation or other entity owning, directly or
indirectly greater than 50% of the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the directors of the Person,
or other Persons performing similar functions for any such Person.
“Participant” has the meaning set forth in Section 16.3(b).
“Participation Advance” has the meaning set forth in Section 2.11(d).
“Participation Commitment” means each Lender’s obligation to buy a participation
of the Letters of Credit issued hereunder.
“Patent Security Agreement” means the Patent Security Agreement, dated as of the
Closing Date, between Borrowers and Agent.
“Payee” shall have the meaning set forth in Section 3.10.
“Payment Office” means initially Two Tower Center Boulevard, East Brunswick, New
Jersey 08816; thereafter, such other office of Agent, if any, that it may
designate by notice to Borrowing Agent and to each Lender to be the Payment
Office.
“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.
“Peak Season” means the period from December 1 through August 31 of each fiscal
year of the Borrowers.
“Pension Benefit Plan” means any employee pension benefit plan (including a
Multiple Employer Plan or a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code or Section 302 of ERISA and either (a) is maintained or contributed to by
any Credit Party or any member of the Controlled Group for employees of any
Credit Party or any member of the Controlled Group; or (b) has at any time
within the preceding five years been maintained or contributed to by any Credit
Party or by any entity which was at such time a member of the Controlled Group.

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“Pension Funding Rules” shall mean the rules of the Code and ERISA regarding
minimum required contributions (including any installment payment thereof) to
Pension Benefit Plans and set forth in Section 412, 430, 431 and 432 of the Code
and Sections 302, 303, 304 and 305 of ERISA.
“Permitted Discretion” shall mean a determination made in the exercise of
reasonable (from the perspective of a secured asset based lender) business
judgment.
“Permitted Encumbrances” means: (a) Liens in favor of Agent for the benefit of
Agent, Lenders and other Secured Parties under the Loan Documents; (b) Liens for
taxes, assessments, levies or other governmental charges not delinquent or being
Properly Contested; (c) deposits or pledges to secure obligations under worker’s
compensation, social security or similar laws, or under unemployment insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the Ordinary Course of
Business; (e) Liens arising by virtue of the rendition, entry or issuance
against any Credit Party or Subsidiary thereof, or any property of any Credit
Party or any Subsidiary thereof, of any judgment, writ, order, or decree for so
long as each such Lien (i) is in existence for less than 20 consecutive days
after it first arises or is being Properly Contested and (ii) is at all times
junior in priority to any Liens in favor of Agent; (f) mechanics’, workers’,
materialmen’s, carriers, laborers, landlords or suppliers, or other like Liens
arising by operation of law in the Ordinary Course of Business with respect to
obligations that are not delinquent or that are being Properly Contested; (g)
Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof or the interests of lessors under Capital Leases,
provided that (i) any such lien shall not encumber any other property of the
applicable Credit Party and (ii) the aggregate amount of Indebtedness secured by
such Liens incurred as a result of such purchases during any fiscal year shall
not exceed the amount provided for in Section 7.6; (h) the interests of lessors
under operating leases and non-exclusive licensors under license agreements that
do not materially interfere with or impair the use of the assets or rights of
the Credit Parties or their Subsidiaries subject to such leases or license
agreements, (i) with respect to any Real Property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof, (j) non-exclusive licenses of patents, trademarks,
copyrights, and other intellectual property rights in the Ordinary Course of
Business, (k) Liens securing Refinancing Indebtedness permitted hereunder that
are replacements of Permitted Encumbrances securing Indebtedness permitted
hereunder existing on the Closing Date, so long as such replacement Liens only
encumber those assets that secured the original Indebtedness, (l) rights of
setoff or, bankers’ liens and other Liens upon deposits of cash in favor of
banks or other depository institutions, solely to the extent incurred in
connection with the maintenance of such deposit accounts or the provision of
services described in the definition of Bank Products in each case in the
Ordinary Course of Business, (m) Liens granted in the Ordinary Course of
Business on the unearned portion of insurance premiums securing the financing of
insurance premiums to the extent the financing is expressly permitted hereby,
(n) Liens in favor of customs and revenue authorities arising as a matter of law
in the Ordinary Course of Business to secure payment of customs duties in
connection with the importation of goods, (o) Liens on assets of a Person (and
its Subsidiaries) existing at the time such Person (and its Subsidiaries) is
acquired by a Credit Party or any of its Subsidiaries (and not created in
anticipation or contemplation thereof) in a transaction expressly permitted
hereby, (p) customary assignments of insurance or condemnation proceeds provided
to landlords (or their mortgagees) pursuant to the terms of any lease; (q) Liens
and rights reserved in any lease for rent granted in the Ordinary Course of
Business with respect to rent that is not delinquent, (r) Liens disclosed on
Schedule 1.2; provided that such Liens shall secure only those obligations which
they secure on the Closing Date and shall not subsequently apply to any other
property or assets of any Credit Party, and (s) other Liens securing amounts not
exceeding $250,000 in the aggregate at any one time and which (i) are incidental
to the conduct of a Credit Party’s business or the ownership of its property and
assets, (ii) were not incurred in connection with the incurrence of Funded Debt
, (iii) do not constitute blanket liens on the assets of any Credit Party and
(iv) do not materially impair the use of such assets in the operation of any
Credit Party’s business;.
“Person” means any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization,
association, limited liability company, limited liability partnership,
institution, public benefit corporation, joint venture, entity or Governmental
Body (whether federal, state, county, city, municipal or otherwise, including
any instrumentality, division, agency, body or department thereof).
“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Benefit Plan but excluding any Multiemployer Plan),
maintained for employees of any Credit Party or any member

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of the Controlled Group or any such Plan to which any Credit Party or any member
of the Controlled Group is required to contribute on behalf of any of its
employees.
“Pledge Agreement” means any Pledge Agreement executed by any Credit Party in
favor of Agent.
“PNC” has the meaning set forth in the preamble to this Agreement and shall
extend to all of its successors and assigns.
“Pro Forma Balance Sheet” has the meaning set forth in Section 5.5(a).
“Pro Forma Financial Statements” has the meaning set forth in Section 5.5(b).
“Projections” has the meaning set forth in Section 5.5(b).
“Properly Contested” means, in the case of any Indebtedness or Lien, as
applicable, of any Person (including any taxes) that is not paid as and when due
or payable by reason of such Person’s bona fide dispute concerning its liability
to pay same or concerning the amount thereof: (a) such Indebtedness, or Lien, as
applicable, is being properly contested in good faith by appropriate proceedings
promptly instituted and diligently conducted; (b) such Person has established
appropriate reserves as shall be required in conformity with GAAP; (c) the
non-payment of such Indebtedness will not have a Material Adverse Effect and
will not result in the forfeiture of any assets of such Person; (d) no Lien is
imposed upon any of such Person’s assets with respect to such Indebtedness
unless such Lien is at all times junior and subordinate in priority to the Liens
in favor of Agent (except only with respect to property taxes that have priority
as a matter of applicable state law) and enforcement of such Lien is stayed
during the period prior to the final resolution or disposition of such dispute;
(e) if such Indebtedness or Lien, as applicable, results from, or is determined
by the entry, rendition or issuance against a Person or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order or
decree is stayed pending a timely appeal or other judicial review; and (f) if
such contest is abandoned, settled or determined adversely (in whole or in part)
to such Person, such Person forthwith pays such Indebtedness and all penalties,
interest and other amounts due in connection therewith.
“Purchasing CLO” has the meaning set forth in Section 16.3(d).
“Purchasing Lender” has the meaning set forth in Section 16.3(c).
“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901, et
seq., as same may be amended from time to time.
“Real Property” means all of each Credit Party’s right, title and interest in
and to the owned and leased premises identified on Schedule 4.19 or which is
hereafter owned or leased by any Credit Party.
“Receivables” means and includes, as to any Person, all of such Person’s
accounts, contract rights, instruments (including those evidencing indebtedness
owed to such Person by its Affiliates), documents, chattel paper (including
electronic chattel paper), General Intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing to
such Person arising out of or in connection with the sale or lease of Inventory
or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter
created, and whether or not specifically sold or assigned to Agent hereunder.
“Receivables Advance Rate” has the meaning set forth in Section 2.1(a)(y)(i).
“Refinancing Indebtedness” means refinancings, renewals, replacements, or
extensions of Funded Debt so long as: (a) such refinancings, renewals,
replacements or extensions do not result in an increase in the principal amount
(including the amount of unfunded commitments with respect thereto) of the
Funded Debt so refinanced, renewed, replaced or extended, other than by the
amount of premiums paid thereon and the fees and expenses incurred in connection
therewith and (b) such refinancings, renewals, replacements or extensions do not
result in a shortening of

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the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Funded Debt so refinanced, renewed, replaced or extended.
“Register” has the meaning set forth in Section 16.3(e).
“Regulations” shall have the meaning set forth in Section 3.11(a).
“Reimbursement Obligation” has the meaning set forth in Section 2.11(b).
“Release” has the meaning set forth in Section 5.7(c)(i).
“Reportable Event” means a reportable event described in Section 4043(c) of
ERISA or the regulations promulgated thereunder for which the thirty (30) day
notice period has not been waived.
“Required Lenders” means Lenders holding at least fifty one percent (51%) of the
Advances and, if no Advances are outstanding, means Lenders holding fifty one
percent (51%) of the Commitment Percentages; provided, however, that for
purposes of this definition only, a Defaulting Lender will be deemed not to be a
Lender and not to have either Advances outstanding or a Commitment Percentage.
“Reserve Percentage” means as of any day the maximum percentage in effect on
such day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) applicable to members
of the Federal Reserve system with respect to eurocurrency funding (currently
referred to as “Eurocurrency Liabilities”.
“Reserves” means reserves against the Formula Amount, including the Dilution
Reserve and the Landlord Reserve, established and adjusted by Agent from time to
time in its Permitted Discretion.
“Revolving Advances” means Advances made other than Letters of Credit and
Equipment Loans.
“Revolving Credit Notes” means, collectively, the promissory notes referred to
in Section 2.1(a).
“Revolving Interest Rate” means an interest rate per annum equal to (a) the sum
of the Alternate Base Rate, plus the Applicable Margin with respect to Domestic
Rate Loans or (b) the sum of the Eurodollar Rate, plus the Applicable Margin
with respect to Eurodollar Rate Loans.
“SEC” means the Securities and Exchange Commission or any successor thereto.
“Second Amendment” shall mean the Second Amendment to Revolving Credit and
Security Agreement dated as of July 27, 2012, among Borrowers, the Lenders party
thereto and Agent.
“Second Amendment Date” shall mean July 27, 2012.
“Section 20 Subsidiary” means the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
“Secured Parties” means, collectively, Agent, each Issuer, and Lenders.
“Securities Act” means the Securities Act of 1933, as amended.
“Settlement Date” means the Closing Date and thereafter Wednesday or Thursday of
each week or more frequently if Agent deems appropriate unless such day is not a
Business Day in which case it shall be the next succeeding Business Day.

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“Seventh Amendment” means the Seventh Amendment to Revolving Credit and Security
Agreement dated as of April 15, 2104 among Borrowers, the Lenders party thereto
and Agent.
“Seventh Amendment Date” means April 15, 2014.
“Sixth Amendment” means the Sixth Amendment to Revolving Credit and Security
Agreement dated as of January 9, 2104 among Borrowers, the Lenders party thereto
and Agent.
“Sixth Amendment Date” means January 9, 2014.
“Subsidiary” of any Person means a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such
power only by reason of the happening of a contingency) to elect a majority of
the directors of such corporation, or other Persons performing similar functions
for such entity, are owned, directly or indirectly, by such Person.
“Subsidiary Stock” means all of the issued and outstanding Equity Interests of
any Subsidiary owned by any Credit Party.
“Temporary Equipment Line” means a temporary line of credit terminating on July
31, 2015 of up to $1,000,000 in the aggregate outstanding to be used exclusively
by Borrowers to finance up to 80% of the invoice cost of new or used equipment,
net of tax, freight and installation charges.
“Tenth Amendment” means the Tenth Amendment to Revolving Credit and Security
Agreement dated as of June 18, 2015 among Borrowers, the Lenders party thereto
and Agent.
“Tenth Amendment Date” means June 18, 2015.
“Term” has the meaning set forth in Section 13.1.
“Termination Event” means (i) a Reportable Event with respect to any Pension
Benefit Plan; (ii) the withdrawal of any Credit Party or any member of the
Controlled Group from a Multiple Employer Plan during a plan year in which such
entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA;
(iii) the providing of notice of intent to terminate a Pension Benefit Plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the institution
by the PBGC of proceedings to terminate a Pension Benefit Plan; (v) any event or
condition which could reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Benefit Plan of any Credit Party or any member of the
Controlled Group; (vi) 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; or (vii) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of any Credit Party or any member of
the Controlled Group from a Multiemployer Plan.
“Third Amendment” shall mean the Third Amendment to Revolving Credit and
Security Agreement dated as of September 12, 2012, among Borrowers, the Lenders
party thereto and Agent.
“Third Amendment Date” shall mean September 12, 2012.
“Thirteenth Amendment” means the Thirteenth Amendment to Revolving Credit and
Security Agreement dated as of October 27, 2016 among Borrowers, the Lenders
party thereto and Agent.
“Thirteenth Amendment Date” means October 27, 2016.
“Toxic Substance” means and includes any material present on, at, under or from
the Real Property or the Leasehold Interests that has been shown to have
significant adverse effect on human health or that is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601, et seq., or
any other Applicable Law now in force

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or hereafter enacted relating to toxic substances. “Toxic Substance” includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
“Trademark Security Agreement” means the Trademark Security Agreement, dated as
of the Closing Date, between the Credit Parties and Agent.
“Trading with the Enemy Act” means the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any enabling legislation or executive order relating thereto.
“Transactions” has the meaning set forth in Section 5.5(a).
“Transferee” has the meaning set forth in Section 16.3(d).
“Twelfth Amendment” means the Twelfth Amendment to Revolving Credit and Security
Agreement dated as of April 4, 2016 among Borrowers, the Lenders party thereto
and Agent.
“Twelfth Amendment Date” means April 4, 2016.
“Undrawn Availability” at a particular date means Availability, minus the sum of
(a) all amounts due and owing to any Credit Party’s trade creditors that are
outstanding beyond normal trade terms, (b) fees and expenses for which the
Credit Parties are liable but which have not been paid or charged to Borrowers’
Account, and (c) all due but unpaid taxes of the Credit Parties.
“Unfinanced Capital Expenditures” shall mean all Capital Expenditures of
Borrowers on a Consolidated Basis, other than those made utilizing financing
provided by the applicable seller or third party lenders. For the avoidance of
doubt, Capital Expenditures made by Borrowers and their Subsidiaries utilizing
Revolving Advancesan Equipment Loan shall be deemed Unfinancedto be financed
Capital Expenditures.
“Uniform Commercial Code” has the meaning set forth in Section 1.3.
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
“Week” means the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.
“Withholding Certificate” has the meaning set forth in Section 3.11(a).
3.Uniform Commercial Code Terms
. All terms used herein and defined in the Uniform Commercial Code as adopted in
the State of New York from time to time (the “Uniform Commercial Code”) have the
respective meanings given therein unless otherwise defined herein. Without
limiting the foregoing, the terms “accessions”, “accounts”, “chattel paper”,
“commercial tort claims”, “commodities accounts”, “commodities contracts”,
“documents”, “deposit accounts”, “electronic chattel paper”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “payment intangibles”,
“proceeds”, “securities”, “securities accounts”, “securities entitlements”,
“supporting obligations” and “software”, as and when used in the description of
Collateral (and related underlying definitions) have the meanings given to such
terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the
definition of any category or type of collateral is expanded by any amendment,
modification or revision to the Uniform Commercial Code, such expanded
definition will apply automatically as of the date of such amendment,
modification or revision.
4.Certain Matters of Construction

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. The terms “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision. 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. Any pronoun used shall be deemed to cover all
genders. Wherever appropriate in the context, terms used herein in the singular
also include the plural and vice versa. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. Unless otherwise provided, all references to any instruments or
agreements to which Agent is a party, including references to any of the Loan
Documents, shall include any and all modifications or amendments thereto or
restatements thereof and any and all extensions or renewals thereof. All
references herein to the time of day means the time in New York, New York.
Whenever the words “including” or “include” shall be used, such words shall be
understood to mean “including, without limitation” or “include, without
limitation”. A Default or Event of Default shall be deemed to exist at all times
during the period commencing on the date that such Default or Event of Default
occurs to the date on which such Default or Event of Default is waived in
writing pursuant to this Agreement or, in the case of a Default only, is cured
within any period of cure expressly provided for in this Agreement; and an Event
of Default shall “continue” or be “continuing” until such Event of Default has
been waived in writing by the Required Lenders. Any Lien referred to in this
Agreement or any of the other Loan Documents as having been created in favor of
Agent, any agreement entered into by Agent pursuant to this Agreement or any of
the other Loan Documents, any payment made by or to or funds received by Agent
pursuant to or as contemplated by this Agreement or any of the other Loan
Documents, or any act taken or omitted to be taken by Agent, shall, unless
otherwise expressly provided, be created, entered into, made or received, or
taken or omitted, for the benefit or account of Agent and Lenders. Wherever the
phrase “to the best of the Credit Parties’ knowledge” or words of similar import
relating to the knowledge or the awareness of any Credit Party are used in this
Agreement or other Loan Documents, such phrase means and refer to (a) the actual
knowledge of a senior officer of any Credit Party or (b) the knowledge that a
senior officer would have obtained if he had engaged in good faith and diligent
performance of his duties, including the making of such reasonably specific
inquiries as may be necessary of the employees or agents of such Credit Party
and a good faith attempt to ascertain the existence or accuracy of the matter to
which such phrase relates. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a default if such action is taken or condition exists. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of a breach of a representation or warranty
hereunder.
ARTICLE IV

ARTICLE V

ARTICLE VIADVANCES, PAYMENTS
1.Revolving Advances
.
(a)Amount of Revolving Advances. Subject to the terms and conditions set forth
in this Agreement, including Section 2.1(b), each Lender, severally and not
jointly, will make Revolving Advances to Borrowers in aggregate amounts
outstanding at any time equal to such Lender’s Commitment Percentage of the
lesser of (x) the applicable Maximum Revolving Advance Amount at such time, less
the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y)
an amount equal to the sum of:
(i)up to 85%, subject to the provisions of Section 2.1(b) (“Receivables Advance
Rate”), of Eligible Receivables, plus
(ii)up to the lesser of (A) 60%, subject to the provisions of Section 2.1(b)
hereof, of the value of the Eligible Inventory (“Inventory Advance Rate” and
together with the Receivables Advance Rate, collectively, the “Advance Rates”),
(B) 85% of the appraised net orderly liquidation value of Eligible Inventory (as
evidenced by an Inventory appraisal satisfactory to Agent in its discretion,
reasonably exercised) or (C) the applicable Inventory Sublimit (provided, that
(A) the amount of Eligible ATS Inventory included in this clause (ii) shall not
exceed $7,000,0009,000,000 and (B) the amount of Eligible Work In Process
Inventory included in this clause (ii) shall not exceed $1,000,000), plus

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(iii)with respect to each fiscal year of the Borrowers, during the respective
period set forth below for such fiscal year, the amount applicable to such
period
Period
Amount
December
$8,000,000
January
$9,000,0008,000,000
February
$10,000,00011,000,000
March
$11,000,00014,000,000
April
$14,000,000
May
$14,000,000
June
$14,000,00011,000,000
July
$11,000,0008,000,000
August 1 through 1531
$8,000,000

plus (iv)     the Temporary Equipment Line, minus
(iv)(v)     the aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit, minus
(v)(vi)     Reserves.
The amount derived from the sum of (x) Sections 2.1(a)(y)(i), (ii), and (iii)
and (iv) minus (y) Section 2.1 (a)(y)(viv) and (viv) at any time and from time
to time shall be referred to as the ‘“Formula Amount’”. The Revolving Advances
shall be evidenced by one or more secured promissory notes (collectively, the
‘“Revolving Credit Notes’”) substantially in the form attached hereto as Exhibit
2.1(a).
(b)Discretionary Rights. The Advance Rates may be increased or decreased by
Agent at any time and from time to time in its Permitted Discretion, reasonably
exercised. Each Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing or imposing
Reserves may limit or restrict Advances requested by Borrowing Agent. The rights
of Agent under this subsection are subject to the provisions of Section 16.2(b).
2.Procedure for Revolving Advances Borrowing. Advance Borrowings
.
(a)Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00
a.m. on a Business Day of a Borrower’s request to incur, on that day, a
Revolving Advance hereunder (without requirement as to any minimum borrowing
amount in the case of Domestic Rate Loans and subject to the minimum borrowing
requirements of clause (b) below in the case of Eurodollar Rate Loans). Subject
to the satisfaction of the conditions set forth in Section 8.3 hereof, in the
event any Borrower desires an Equipment Loan, Borrowing Agent shall give Agent
at least three (3) Business Days prior written notice. Should any amount
required to be paid as interest hereunder, or as fees or other charges under
this Agreement or any other agreement with Agent or Lenders, or with respect to
any other Obligation, become due, same shall be deemed a request for a Revolving
Advance maintained as a Domestic Rate Loan as of the date such payment is due,
in the amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.
(b)Notwithstanding the provisions of subsection (a) above, in the event any
Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give
Agent written notice by no later than 10:00 a.m. on the day that is three (3)
Business Days prior to the date such Eurodollar Rate Loan is to be borrowed,
specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the type of borrowing and the amount on the date of such Advance
(other than Equipment Loans) to be borrowed, which amount shall be in an
aggregate principal amount that is not less than $1,000,000 and integral
multiples of $500,000 in excess thereof, and (iii) the duration of the first
Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be
for one, two or three months; provided, that if an Interest Period would end on
a day that is not a Business Day, it shall end on the next succeeding Business
Day unless such day falls in the next succeeding calendar month in which case
the Interest Period shall end

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on the next preceding Business Day. No Lender shall be required to make
available a Eurodollar Rate Loan to any Borrower during the continuance of a
Default or Event of Default. After giving effect to each requested Eurodollar
Rate Loan, including those that are converted from a Domestic Rate Loan under
Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar
Rate Loans, in the aggregate.
(c)Each Interest Period of a Eurodollar Rate Loan shall commence on the date
such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent
may elect as set forth in Section 2.2(b)(iii); provided that the exact length of
each Interest Period shall be determined in accordance with the practice of the
interbank market for offshore Dollar deposits and no Interest Period shall end
after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not later than 10:00 a.m. on the day that is three (3) Business Days
prior to the last day of the then current Interest Period applicable to such
Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest
Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have
elected to convert to a Domestic Rate Loan subject to Section 2.2(d).
(d)So long as no Event of Default has occurred and is continuing, Borrowing
Agent may, on the last Business Day of the then current Interest Period
applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with
respect to Domestic Rate Loans, convert any such loan into a loan of another
type in the same aggregate principal amount; provided that any conversion of a
Eurodollar Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such Eurodollar Rate Loan. Notwithstanding
the foregoing, if an Event of Default has occurred and is continuing, unless
Agent permits, at the direction of the Required Lenders, a continuation of
Eurodollar Rate Loans, any Eurodollar Rate Loans shall be converted into
Domestic Rate Loans on the last Business Day of the then current Interest Period
applicable to such Eurodollar Rate Loans. If Borrowing Agent desires to convert
a loan, Borrowing Agent shall give Agent written notice by no later than 10:00
a.m. (i) on the day that is three (3) Business Days’ prior to the date on which
such conversion is to occur with respect to a conversion from a Domestic Rate
Loan to a Eurodollar Rate Loan, or (ii) on the day that is one (1) Business Day
prior to the date on which such conversion is to occur with respect to a
conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in
each case, the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor.
(e)At its option and upon written notice given prior to 10:00 a.m. (New York
time) at least three (3) Business Days’ prior to the date of such prepayment,
any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in
part from time to time with accrued interest on the principal being prepaid to
the date of such repayment. Such Borrower shall specify the date of prepayment
of Advances that are Eurodollar Rate Loans and the amount of such prepayment. In
the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current Interest Period
with respect thereto, such Borrower shall indemnify Agent and Lenders therefor
in accordance with Section 2.2(f).
(f)Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses (other than any loss of anticipated
profits) or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in
the payment of the principal of or interest on any Eurodollar Rate Loan or
failure by any Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including any interest payable by Agent or Lenders to lenders of funds obtained
by it in order to make or maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive
absent manifest error.
(g)Notwithstanding any other provision hereof, if any Applicable Law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this
subsection (g), the term “Lender” shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall
forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate
Loans are then outstanding, promptly upon request from Agent, either pay all
such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans

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into loans of another type (regardless of whether a Default or Event of Default
has occurred and is continuing). If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon
Agent’s request, such amount or amounts as may be necessary to compensate
Lenders for any loss (other than any loss of anticipated profits) or expense
sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a
result of such payment or conversion, including any interest or other amounts
payable by Lenders to lenders of funds obtained by Lenders in order to make or
maintain such Eurodollar Rate Loan. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing
Agent shall be conclusive absent manifest error. Notwithstanding anything to the
contrary contained herein, neither Agent nor Lender is required to acquire
eurodollar deposits to fund or otherwise match fund any Eurodollar Rate Loans.
2.2X    Equipment Loans.
(i)     Immediately prior to the effectiveness of the Fourteenth Amendment, the
outstanding amount of Advances under the Temporary Equipment Line are in the
aggregate amount of $90,876.15. Upon the effectiveness of the Fourteenth
Amendment, all such outstanding Advances shall be converted to an Equipment Loan
(as defined below) and no further Advances shall be available to Borrowers under
the Temporary Equipment Line. As such, immediately upon the effectiveness of the
Fourteenth Amendment and the conversion of outstanding Advances under the
Temporary Equipment Line into an Equipment Loan, all outstanding Revolving
Advances under the Temporary Equipment Line shall be reduced to $0 and
thereafter Revolving Advances shall be available to Borrowers up to the Formula
Amount as set forth herein. For the avoidance of doubt, the Equipment Loan
existing on the Fourteenth Amendment Date shall accrue interest at the Equipment
Loan Rate and be payable monthly in accordance with Section 3.1.
(ii)    Subject to the terms and conditions of this Agreement, each Lender,
severally and not jointly, shall, from time to time, make Advances (each, an
“Equipment Loan” and collectively, the “Equipment Loans”) to one or more
Borrowers in an amount equal to such Lender’s Commitment Percentage of the
applicable Equipment Loan to finance Borrowers’ purchase of equipment for use in
Borrowers’ production line business in Arkansas and Torrance, California. All
such Equipment Loans shall be in such amounts as are requested by Borrowing
Agent, but in no event shall any Equipment Loan exceed eight five (85%) percent
for new equipment and eighty (80%) percent for used equipment of the Net Invoice
Cost of the equipment being purchased by Borrowers and the total amount of all
Equipment Loans advanced hereunder shall not exceed, in the aggregate, the
Maximum Equipment Loan Amount. Once repaid, Equipment Loans may not be
reborrowed.
(iii)    Equipment Loans shall be made available to Borrowers during the period
commencing on the Fourteenth Amendment Date and ending on September [__], 2017
(the “Borrowing Period”). At the end of the Borrowing Period, Agent shall
calculate the aggregate principal balance of all then outstanding Equipment
Loans, which amount shall amortize in equal and consecutive monthly installments
of principal, based on a three (3) year amortization schedule, the first of
which installments shall be due and payable on the first day of the next month
after the end of the Borrowing Period, and the remaining installments of which
shall be due and payable on the first day of each month thereafter (the amount
of each such monthly installment, the “Borrowing Period Monthly Installment”),
provided, however, that the aggregate principal balance of all Equipment Loans,
together with all accrued and unpaid interest thereon, and all unpaid fees,
costs and expenses payable hereunder in connection therewith, shall be due and
payable in full upon the expiration of the Term, subject to acceleration upon
the occurrence of an Event of Default under this Agreement or termination of
this Agreement. Equipment Loans shall be evidenced by one or more secured
promissory notes (collectively, the “Equipment Note”) in substantially the form
attached hereto as Exhibit 2.2X. The Equipment Loans may consist of Domestic
Rate Loans or LIBOR Rate Loans, or a combination thereof, as Borrowing Agent may
request and interest is payable as set forth in Section 3.1; and in the event
that Borrowers desire to obtain or extend any Equipment Loan (or any portion
thereof) as a LIBOR Rate Loan or to convert any Equipment Loan (or any portion
thereof) from a Domestic Rate Loan to a LIBOR Rate Loan, Borrowing Agent shall
comply with the notification requirements set forth in Section 2.2(a) and (b)
and the provision of Sections 2.2 shall apply.
3.Disbursement of Advance Proceeds

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. All Advances shall be disbursed from whichever office or other place Agent may
designate from time to time and, together with any and all other Obligations of
Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s
books. During the Term, Borrowers may use the Revolving Advances by borrowing,
prepaying and reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrowing Agent on
behalf of any Borrower or deemed to have been requested by any Borrower under
Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the
extent Lenders make such Revolving Advances, be made available to the applicable
Borrower on the day so requested by way of credit to such Borrower’s operating
account at PNC, or such other bank as Borrowing Agent may designate following
notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested by any Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
4.Maximum Advances
. The aggregate balance of Revolving Advances and Letters of Credit outstanding
at any time shall not cause Availability to be less than zero.
5.Repayment of Advances
.
(a)The Revolving Advances shall be due and payable in full on the last day of
the Term subject to earlier prepayment as herein provided. The Equipment Loans
shall be due and payable as provided in Section 2.2X hereof and in no event
later than payment in full on the last day of the Term, subject to mandatory
prepayments as herein provided. Each payment (including each prepayment) by any
Borrower on account of the principal of and interest on the Equipment Loans
shall be applied to the applicable Equipment Loan pro rata in the inverse order
of maturities thereof.
(b)Borrowers recognize that the amounts evidenced by checks, notes, drafts or
any other items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. In consideration of Agent’s agreement
to conditionally credit Borrower’s Account as of the next Business Day following
Agent’s receipt of those items of payment, Borrower agrees that, in computing
the charges under this Agreement, all items of payment shall be deemed applied
by Agent on account of the Obligations one (1) Business Day after (i) the
Business Day following the Agent’s receipt of such payments via wire transfer or
electronic depository check or (ii) in the case of payments received by Agent in
any other form, the Business Day such payment constitutes good funds in Agent’s
account. Agent is not, however, required to credit Borrower’s Account for the
amount of any item of payment which is unsatisfactory to Agent and Agent may
charge Borrower’s Account for the amount of any item of payment which is
returned to Agent unpaid.
(c)All payments of principal, interest and other amounts payable hereunder, or
under any of the Loan Documents shall be made to Agent at the Payment Office not
later than 1:00 P.M. (New York time) on the due date therefor in lawful money of
the United States of America in federal funds or other funds immediately
available to Agent. Agent has the right to effectuate payment on any and all
Obligations due and owing hereunder by charging Borrowers’ Account or by making
Advances as provided in Section 2.2.
(d)Borrowers shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement, without any deduction whatsoever,
including any deduction for any setoff or counterclaim.
(e)    Unpaid advances on the Temporary Equipment Line must be repaid beginning
July 31, 2015 and continuing on the first date of each month thereafter, in an
amount that will reduce the 80% advance rate against each item of equipment
financed through the Temporary Equipment Line by 2.77% per month.
6.Repayment of Excess Advances
. The aggregate balance of Advances outstanding at any time in excess of the
maximum amount of Advances permitted hereunder shall be immediately due and
payable without the necessity of any demand, at the Payment Office, whether or
not a Default or Event of Default has occurred, including, as a result of a
change in the applicable Maximum Revolving Advance Amount. or the Maximum
Equipment Loan Amount.
7.Statement of Account

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. Agent shall maintain, in accordance with its customary procedures, a loan
account (“Borrowers’ Account”) in the name of Borrowers in which shall be
recorded the date and amount of each Advance made by Agent and the date and
amount of each payment in respect thereof; provided, however, that the failure
by Agent to record the date and amount of any Advance shall not adversely affect
Agent or any Lender. Each month, Agent shall send to Borrowing Agent a statement
showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Agent and Borrowers during such
month. The monthly statements shall be deemed correct and binding upon Borrowers
in the absence of manifest error and shall constitute an account stated between
Lenders and Borrowers unless Agent receives a written statement of Borrowers’
specific exceptions thereto within thirty (30) days after such statement is
received by Borrowing Agent. The records of Agent with respect to the loan
account shall be conclusive evidence absent manifest error of the amounts of
Advances and other charges thereto and of payments applicable thereto.
8.Letters of Credit
. Subject to the terms and conditions hereof, Agent shall issue or cause the
issuance of standby Letters of Credit (“Letters of Credit”) for the account of
any Borrower; provided, however, that Agent will not be required to issue or
cause to be issued any Letters of Credit to the extent that the issuance thereof
would then cause Availability to be less than zero. The Maximum Undrawn Amount
of outstanding Letters of Credit shall not exceed in the aggregate at any time
the Letter of Credit Sublimit. All disbursements or payments related to Letters
of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at the Revolving Interest Rate for Domestic
Rate Loans; Letters of Credit that have not been drawn upon shall not bear
interest.
9.Issuance of Letters of Credit
.
(a)Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause
the issuance of a Letter of Credit by delivering to Agent at the Payment Office,
prior to 10:00 a.m. (New York time), at least five (5) Business Days’ prior (or
such lesser notice as Agent may agree) to the proposed date of issuance, Agent’s
form of Letter of Credit Application (the “Letter of Credit Application”)
completed to the reasonable satisfaction of Agent; and, such other certificates,
documents and other papers and information as Agent may reasonably request.
Borrowing Agent, on behalf of Borrowers, also has the right to give instructions
and make agreements with respect to any application, any applicable letter of
credit and security agreement, any applicable letter of credit reimbursement
agreement and/or any other applicable agreement, any letter of credit and the
disposition of documents, disposition of any unutilized funds, and to agree with
Agent upon any amendment, extension or renewal of any Letter of Credit.
(b)Each Letter of Credit shall, among other things, (i) provide for the payment
of sight drafts, other written demands for payment, or acceptances of usance
drafts when presented for honor thereunder in accordance with the terms thereof
and when accompanied by the documents described therein and (ii) have an expiry
date not later than twenty-four (24) months after such Letter of Credit’s date
of issuance and in no event later than the last day of the Term. Each standby
Letter of Credit shall be subject either to the Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce at the time a Letter of Credit is issued (the “UCP”) or the
International Standby Practices (ISP98 International Chamber of Commerce
Publication Number 590) (the “ISP98 Rules”)), and any subsequent revision
thereof at the time a standby Letter of Credit is issued, as determined by
Agent, and each trade Letter of Credit shall be subject to the UCP.
(c)Agent shall use its reasonable efforts to notify Lenders of the request by
Borrowing Agent for a Letter of Credit hereunder.
10.Requirements For Issuance of Letters of Credit
.
(a)Borrowing Agent shall authorize and direct any Issuer to name the applicable
Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If
Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize
and direct the Issuer to deliver to Agent all instruments, documents, and other
writings and property received by the Issuer pursuant to the Letter of Credit
and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit, the application
therefor or any acceptance therefor.

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(b)In connection with all Letters of Credit issued or caused to be issued by
Agent under this Agreement, each Borrower hereby appoints Agent, or its
designee, as its attorney, with full power and authority if and only if an Event
of Default has occurred and is continuing, (i) to sign and/or endorse such
Borrower’s name upon any warehouse or other receipts, letter of credit
applications and acceptances, (ii) to sign such Borrower’s name on bills of
lading; (iii) to clear Inventory through the United States of America Customs
Department (“Customs”) in the name of such Borrower or Agent or Agent’s
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower’s
name or Agent’s, or in the name of Agent’s designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys, officers, directors,
Affiliates, employees or agents will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for Agent’s or its
attorneys’, officers’, directors’, Affiliates’, employees’ or agents’ gross
negligence or willful misconduct as determined in a final, non-appealable order
by a court of competent jurisdiction. This power, being coupled with an
interest, is irrevocable as long as any Letters of Credit remain outstanding.
11.Disbursements, Reimbursement
.
(a)Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
Agent a participation in such Letter of Credit and each drawing thereunder in an
amount equal to such Lender’s Commitment Percentage of the Maximum Face Amount
of such Letter of Credit and the amount of such drawing, respectively.
(b)In the event of any request for a drawing under a Letter of Credit by the
beneficiary or transferee thereof, Agent will promptly notify Borrowing Agent.
Provided that Borrowing Agent has received such notice, Borrowers shall
reimburse (such obligation to reimburse Agent shall sometimes be referred to as
a “Reimbursement Obligation”) Agent prior to 12:00 Noon, New York time on each
date that an amount is paid by Agent under any Letter of Credit (each such date,
a “Drawing Date”) in an amount equal to the amount so paid by Agent. In the
event Borrowers fail to reimburse Agent for the full amount of any drawing under
any Letter of Credit by 12:00 Noon, New York time, on the Drawing Date, Agent
will promptly notify each Lender thereof, and Borrowers shall be deemed to have
requested that a Domestic Rate Loan be made by Lenders to be disbursed on the
Drawing Date under such Letter of Credit, to the extent that Availability would
be greater than zero after giving effect to such Revolving Advance and subject
to Section 8.2. Any notice given by Agent pursuant to this Section 2.11(b) may
be oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(c)Each Lender shall upon any notice pursuant to Section 2.11(b) make available
to Agent an amount in immediately available funds equal to its Commitment
Percentage of the amount of the drawing, whereupon the participating Lenders
shall (subject to Section 2.11(d)) each be deemed to have made a Domestic Rate
Loan to Borrowers in that amount. If any Lender so notified fails to make
available to Agent the amount of such Lender’s Commitment Percentage of such
amount by no later than 2:00 p.m., New York time on the Drawing Date, then
interest shall accrue on such Lender’s obligation to make such payment, from the
Drawing Date to the date on which such Lender makes such payment (i) at a rate
per annum equal to the Federal Funds Effective Rate during the first three days
following the Drawing Date and (ii) at a rate per annum equal to the Revolving
Interest Rate applicable to Domestic Rate Loans on and after the fourth day
following the Drawing Date. Agent will promptly give notice of the occurrence of
the Drawing Date, but failure of Agent to give any such notice on the Drawing
Date or in sufficient time to enable any Lender to effect such payment on such
date shall not relieve such Lender from its obligation under this Section
2.11(c), provided that such Lender shall not be obligated to pay interest as
provided in Sections 2.11(c)(i) and (ii) until and commencing from the date of
receipt of notice from Agent of a drawing.
(d)With respect to any unreimbursed drawing that is not converted into a
Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section
2.11(b), because of Borrowers’ failure to satisfy the conditions set forth in
Section 8.2 (other than any notice requirements) or for any other reason,
Borrowers shall be deemed to have incurred from Agent a borrowing (each a
“Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of
Credit Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at a rate per annum equal to the Revolving Interest Rate
applicable to Domestic Rate Loans. Each Lender’s payment to Agent pursuant to
Section 2.11(c) shall be deemed to be a payment in respect of its participation
in such

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Letter of Credit Borrowing and shall constitute a “Participation Advance” from
such Lender in satisfaction of its Participation Commitment under this Section
2.11.
(e)Each Lender’s Participation Commitment shall continue until the last to occur
of any of the following events: (x) Agent ceases to be obligated to issue or
cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued
or created hereunder remains outstanding and uncancelled and (z) all Persons
(other than Borrowers) have been fully reimbursed for all payments made under or
relating to Letters of Credit.
12.Repayment of Participation Advances
.
(a)Upon (and only upon) receipt by Agent for its account of immediately
available funds from Borrowers (i) in reimbursement of any payment made by Agent
under the Letter of Credit with respect to which any Lender has made a
Participation Advance to Agent, or (ii) in payment of interest on such a payment
made by Agent under such a Letter of Credit, Agent will pay to each Lender, in
the same funds as those received by Agent, the amount of such Lender’s
Commitment Percentage of such funds, except Agent shall retain the amount of the
Commitment Percentage of such funds of any Lender that did not make a
Participation Advance in respect of such payment by Agent.
(b)If Agent is required at any time to return to any Borrower, or to a trustee,
receiver, liquidator, custodian, or any official in any insolvency proceeding,
any portion of the payments made by Borrowers to Agent pursuant to Section
2.12(a) in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Lender shall, on demand of Agent, forthwith return
to Agent the amount of its Commitment Percentage of any amounts so returned by
Agent plus interest at the Federal Funds Effective Rate.
13.Documentation
. Each Borrower agrees to be bound by the terms of the Letter of Credit
Application and by Agent’s interpretations of any Letter of Credit issued on
behalf of such Borrower and by Agent’s written regulations and customary
practices relating to letters of credit, though Agent’s interpretations may be
different from such Borrower’s own. In the event of a conflict between the
Letter of Credit Application and this Agreement, this Agreement shall govern. It
is understood and agreed that, except in the case of gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), Agent shall not be liable for any error, negligence
and/or mistakes, whether of omission or commission, in following Borrowing
Agent’s or any Borrower’s instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
14.Determination to Honor Drawing Request
. In determining whether to honor any request for drawing under any Letter of
Credit by the beneficiary thereof, Agent shall be responsible only to determine
that the documents and certificates required to be delivered under such Letter
of Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit and that any other drawing condition
appearing on the face of such Letter of Credit has been satisfied in the manner
so set forth.
15.Nature of Participation and Reimbursement Obligations
. Each Lender’s obligation in accordance with this Agreement to make the
Revolving Advances or Participation Advances as a result of a drawing under a
Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a
draw under a Letter of Credit, shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Section
2.15 under all circumstances, including the following circumstances:
(i)any set-off, counterclaim, recoupment, defense or other right that such
Lender may have against Agent, any Borrower or any other Person for any reason
whatsoever;
(ii)the failure of any Borrower or any other Person to comply, in connection
with a Letter of Credit Borrowing, with the conditions set forth in this
Agreement for the making of a Revolving Advance, it being acknowledged that such
conditions are not required for the making of a Letter of Credit Borrowing and
the obligation of Lenders to make Participation Advances under Section 2.11;
(iii)any lack of validity or enforceability of any Letter of Credit;
(iv)any claim of breach of warranty that might be made by Borrower or any
Secured Party against the beneficiary of a Letter of Credit, or the existence of
any claim, set-off, recoupment, counterclaim, cross claim, defense or other
right that any Borrower or any Secured Party may have

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at any time against a beneficiary, any successor beneficiary or any transferee
of any Letter of Credit or the proceeds thereof (or any Persons for whom any
such transferee may be acting), any Secured Party or any other Person, whether
in connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between any Borrower
or any Subsidiaries of such Borrower and the beneficiary for which any Letter of
Credit was procured);
(v)the lack of power or authority of any signer of (or any defect in or forgery
of any signature or endorsement on) or the form of or lack of validity,
sufficiency, accuracy, enforceability or genuineness of any draft, demand,
instrument, certificate or other document presented under or in connection with
any Letter of Credit, or any fraud or alleged fraud in connection with any
Letter of Credit, or the transport of any property or provisions of services
relating to a Letter of Credit, in each case even if Agent or any of Agent’s
Affiliates has been notified thereof;
(vi)payment by Agent under any Letter of Credit against presentation of a
demand, draft or certificate or other document that does not comply with the
terms of such Letter of Credit;
(vii)the solvency of, or any acts or omissions by, any beneficiary of any Letter
of Credit, or any other Person having a role in any transaction or obligation
relating to a Letter of Credit, or the existence, nature, quality, quantity,
condition, value or other characteristic of any property or services relating to
a Letter of Credit;
(viii)any failure by Agent or any of Agent’s Affiliates to issue any Letter of
Credit in the form requested by Borrowing Agent, unless Agent has received
written notice from Borrowing Agent of such failure within three (3) Business
Days after Agent has furnished Borrowing Agent a copy of such Letter of Credit
and such error is material and no drawing has been made thereon prior to receipt
of such notice;
(ix)any Material Adverse Effect on any Credit Party;
(x)any breach of this Agreement or any other Loan Document by any party thereto;
(xi)the occurrence or continuance of an insolvency proceeding with respect to
any Credit Party;
(xii)the fact that a Default or Event of Default has occurred and is continuing;
(xiii)the fact that the Term has expired or this Agreement or the Obligations
hereunder have been terminated; and
(xiv)any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.
16.Indemnity
. In addition to amounts payable as provided in Section 16.5, each Borrower
hereby agrees to protect, indemnify, pay and save harmless Agent and any of
Agent’s Affiliates that have issued a Letter of Credit and all other Indemnitees
from and against any and all claims, demands, liabilities, damages, taxes,
penalties, interest, judgments, losses, costs, charges and expenses (including
reasonable fees, expenses and disbursements of counsel and allocated costs of
internal counsel) that Agent or any of Agent’s Affiliates and all other
Indemnitees may incur or be subject to as a consequence, direct or indirect, of
the issuance of any Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of Agent or such Indemnitee as determined by a
final and non-appealable judgment of a court of competent jurisdiction or (b)
the wrongful dishonor by Agent or any of Agent’s Affiliates or such Indemnitee
of a proper demand for payment made under any Letter of Credit, except if such
dishonor resulted from any Governmental Act.
17.Liability for Acts and Omissions
. As between Borrowers and Agent and Secured Party, each Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the respective foregoing, Agent shall not be responsible for: (a)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if Agent has been notified thereof); (b) the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(c) the failure of the beneficiary of any such Letter of Credit, or any other
party to which such Letter of Credit may be transferred, to comply fully with
any conditions required in order to draw upon such Letter of Credit or any other
claim of any

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Borrower against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among any Borrower and any beneficiary of
any Letter of Credit or any such transferee; (d) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, facsimile, telegraph, telex or otherwise, whether or not they be in
cipher; (e) errors in interpretation of technical terms; (f) any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (g) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (h) any consequences arising from
causes beyond the control of Agent, including any Governmental Acts, and none of
the above shall affect or impair, or prevent the vesting of, any of Agent’s, its
attorneys’, officers’, directors’, Affiliates’, employees’ or agents’ rights or
powers hereunder. Notwithstanding the foregoing, nothing in the preceding
sentence shall relieve Agent from liability for Agent’s gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment) in connection with actions or omissions described
in such clauses (a) through (h) of the preceding sentence. In no event shall
Agent or Agent’s Affiliates be liable to any Borrower for any indirect,
consequential, incidental, punitive, exemplary or special damages or expenses
(including attorneys’ fees), or for any damages resulting from any change in the
value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of its
Affiliates (i) may rely on any oral or other communication reasonably believed
by Agent or such Affiliate to have been authorized or given by or on behalf of
the applicant for a Letter of Credit, (ii) may honor any presentation if the
documents presented appear on their face substantially to comply with the terms
and conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was
pursuant to a court order, to settle or compromise any claim of wrongful
dishonor, or otherwise, and shall be entitled to reimbursement to the same
extent as if such presentation had initially been honored, together with any
interest paid by Agent or its Affiliates; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon
receipt of such statement (even if such statement indicates that a draft or
other document is being delivered separately), and shall not be liable for any
failure of any such draft or other document to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may pay any paying or negotiating bank
claiming that it rightfully honored under the laws or practices of the place
where such bank is located; and (vi) may settle or adjust any claim or demand
made on Agent or its Affiliate in any way related to any order issued at the
applicant’s request to an air carrier, a letter of guarantee or of indemnity
issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such
Order, notwithstanding that any drafts or other documents presented in
connection with such Letter of Credit fail to conform in any way with such
Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions
set forth above, any action taken or omitted by Agent under or in connection
with the Letters of Credit issued by it or any documents and certificates
delivered thereunder, if taken or omitted without gross negligence (as
determined by a court of competent jurisdiction in a final non-appealable
judgment), shall not put Agent under any resulting liability to any Borrower or
any Lender.
18.Additional Payments
. Any sums expended by any Secured Party due to any Borrower’s failure to
perform or comply with its obligations under this Agreement or any other Loan
Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12,
4.13, 4.14 and 6.1, may be charged to Borrowers’ Account as a Revolving Advance
and added to the Obligations.
19.Manner of Borrowing and Payment
.
(a)Each borrowing of Revolving Advances shall be advanced according to the
applicable Commitment Percentages of Lenders.
(b)Each payment (including each prepayment) by any Borrower on account of the
principal of and interest on the Revolving Advances, shall be applied to the
Revolving Advances pro rata according to the applicable Commitment Percentages
of Lenders. Except as expressly provided herein, all payments (including
prepayments) to be made by any Borrower on account of principal, interest and
fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of Secured Parties to the Payment Office, in each case on or prior to
1:00 P.M., New York time, in Dollars and in immediately available funds.

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(i)Notwithstanding anything to the contrary contained in Sections 2.19(a) and
(b) hereof, commencing with the first Business Day following the Closing Date,
each borrowing of Revolving Advances shall be advanced by Agent and each payment
by any Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent. On or before 1:00 P.M., New York time, on
each Settlement Date commencing with the first Settlement Date following the
Closing Date, Agent and Lenders shall make certain payments as follows: (1) if
the aggregate amount of new Revolving Advances made by Agent during the
preceding Week (if any) exceeds the aggregate amount of repayments applied to
outstanding Revolving Advances during such preceding Week, then each Lender
shall provide Agent with funds in an amount equal to its applicable Commitment
Percentage of the difference between (w) such Revolving Advances and (x) such
repayments and (2) if the aggregate amount of repayments applied to outstanding
Revolving Advances during such Week exceeds the aggregate amount of new
Revolving Advances made during such Week, then Agent shall provide each Lender
with funds in an amount equal to its applicable Commitment Percentage of the
difference between (y) such repayments and (z) such Revolving Advances.
(ii)Each Lender shall be entitled to earn interest at the Revolving Interest
Rate or the Equipment Loan Rate, as applicable, on outstanding Advances that it
has funded.
(iii)Promptly following each Settlement Date, Agent shall submit to each Lender
a certificate with respect to payments received and Advances made during the
Week immediately preceding such Settlement Date. Such certificate of Agent shall
be conclusive in the absence of manifest error.
(c)If any Lender or Participant (a “benefited Lender”) shall at any time receive
any payment of all or part of its Advances, or interest thereon, or receive any
Collateral in respect thereof (whether voluntarily or involuntarily or by
set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender’s Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(d)Unless Agent has been notified by telephone, confirmed in writing, by any
Lender that such Lender will not make the amount that would constitute its
applicable Commitment Percentage of the Advances available to Agent, Agent may
(but shall not be obligated to) assume that such Lender shall make such amount
available to Agent on the next Settlement Date and, in reliance upon such
assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is not
in fact made available to Agent by such Lender within three (3) Business Days
after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers’ rights (if any) against such Lender.
20.Mandatory Prepayments
.
(a)Subject to Section 4.3, when any Credit Party sells or otherwise disposes of
any Collateral other than Inventory in the Ordinary Course of Business,
Borrowers shall repay the Advances in an

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amount equal to the net proceeds of such sale (i.e., gross proceeds less the
reasonable costs of such sales or other dispositions), such repayments to be
made promptly but in no event more than one (1) Business Day following receipt
of such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent. The foregoing shall not be deemed to be implied consent to
any such sale otherwise prohibited by the terms and conditions hereof. Such
repayments shall be applied to the Revolving Advances in such order as Agent may
determine, subject to Borrowers’ ability to reborrow Revolving Advances in
accordance with the terms.
(b)When any Credit Party receives any Extraordinary Receipts, Borrowers shall
repay the Advances in an amount equal to such Extraordinary Receipts, such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt thereof, and until the date of repayment, all such amounts
shall be held in trust for Agent. Such repayments will be applied to the
Revolving Advances in such order as Agent may determine, subject to Borrowers’
ability to reborrow Revolving Advances in accordance with the terms hereof.
21.Use of Proceeds
.
(a)Borrowers shall apply the proceeds of Advances to (i) repay in full existing
indebtedness owed to Wells Fargo Bank, National Association, (ii) pay fees and
expenses relating to this transaction, and (iii) provide for its working capital
and other general corporate needs and reimburse drawings under Letters of
Credit.
(b)Without limiting the generality of Section 2.21(a), neither any Borrower, any
other Credit Party, nor any other Person which may in the future become a Credit
Party, intends to use nor shall they use any portion of the proceeds of the
Advances, directly or indirectly, for any purpose in violation of the Trading
with the Enemy Act.
22.Defaulting Lender
.
(a)Notwithstanding anything to the contrary contained herein, in the event any
Lender (x) has refused (which refusal constitutes a breach by such Lender of its
obligations under this Agreement) to make available its portion of any Advance
or (y) notifies either Agent or Borrowing Agent that it does not intend to make
available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting
Lender”) as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
2.22 while such Lender Default remains in effect.
(b)Advances shall be incurred pro rata from Lenders (the “Non-Defaulting
Lenders”) that are not Defaulting Lenders based on their respective Commitment
Percentages, and no Commitment Percentage of any Lender or any pro rata share of
any Advances required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of principal of any
type of Advances shall be applied to reduce the applicable Advances of each
Lender (other than any Defaulting Lender) pro rata based on the aggregate of the
outstanding Advances of that type of all Lenders at the time of such
application; provided, that, Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its sole discretion, re-lend to a Borrower the amount of such
payments received or retained by it for the account of such Defaulting Lender.
(c)A Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the other Loan Documents. All amendments, waivers and other
modifications of this Agreement and the other Loan Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding or a Commitment Percentage.
(d)Other than as expressly set forth in this Section 2.22, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this Section
2.22 shall be deemed to release any Defaulting Lender from its obligations under
this Agreement and the other Loan Documents, shall alter such obligations, shall
operate as a waiver of any default by such Defaulting

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Lender hereunder, or shall prejudice any rights that any Borrower or any Secured
Party may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e)In the event a Defaulting Lender retroactively cures to the satisfaction of
Agent the breach that caused a Lender to become a Defaulting Lender, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as
a Lender under this Agreement.
ARTICLE VII

ARTICLE VIII

ARTICLE IXINTEREST AND FEES
1.Interest
. Interest on Advances shall be payable in arrears on the first day of each
month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate
Loans, at the end of each Interest Period or, for Eurodollar Rate Loans with an
Interest Period in excess of three months, at the earlier of (a) each three
months from the commencement of such Eurodollar Rate Loan or (b) the end of the
Interest Period. Interest charges shall be computed on the actual principal
amount of Advances (excluding any Equipment Loan) outstanding during the month
at a rate per annum equal to the applicable Revolving Interest Rate. Interest
charges shall be computed on the actual principal amount of Equipment Loans
outstanding during the month at a rate per annum equal to the Equipment Loan
Rate. Whenever, subsequent to the date of this Agreement, the Alternate Base
Rate is increased or decreased, the Revolving Interest Rate and Equipment Loan
Rate for Domestic Rate Loans shall be similarly changed without notice or demand
of any kind by an amount equal to the amount of such change in the Alternate
Base Rate during the time such change or changes remain in effect. The
Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without
notice or demand of any kind on the effective date of any change in the Reserve
Percentage as of such effective date. Upon and after the occurrence of an Event
of Default, and during the continuation thereof, at the option of Agent or at
the direction of Required Lenders, upon notice to the Borrowing Agent (provided
that no notice shall be required if an Event of Default has occurred under
Section 10.6 or any event described in Section 11.1(a)(iii) has occurred), the
Obligations shall bear interest at the rate applicable thereto plus two percent
(2.0%) per annum or, if no rate is otherwise applicable thereto, two percent
(2.0%) per annum (as applicable, the “Default Rate”).
2.Letter of Credit Fees
.
(a)Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees
for each Letter of Credit for the period from and excluding the date of issuance
of same to and including the date of expiration or termination, equal to the
average daily face amount of each outstanding Letter of Credit multiplied by a
per annum rate equal to the Applicable Margin for Eurodollar Rate Loans, such
fees to be calculated on the basis of a 360-day year for the actual number of
days elapsed and to be payable quarterly in arrears on the first day of each
quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee
of one quarter of one percent (0.25%) per annum, multiplied by the Maximum
Undrawn Amount of each Letter of Credit, together with any and all
administrative, issuance, amendment, payment and negotiation charges with
respect to Letters of Credit and all fees and expenses as agreed upon by the
Issuer and Borrowing Agent in connection with any Letter of Credit, including in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder and shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing
fees, the “Letter of Credit Fees”). All such charges shall be deemed earned in
full on the date when the same are due and payable hereunder and shall not be
subject to rebate or pro-ration upon the termination of this Agreement for any
reason. Any such charge in effect at the time of a particular transaction shall
be the charge for that transaction, notwithstanding any subsequent change in the
Issuer’s prevailing charges for that type of transaction. All Letter of Credit
Fees payable hereunder shall be deemed earned in full on the date when the same
are due and payable hereunder and shall not be subject to rebate or pro-ration
upon the termination of this Agreement for any reason. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, at the
election of Agent or Required Lenders, upon notice to the Borrowing Agent
(provided that no notice shall be required if an Event of Default has occurred
under Section 10.6 or any event described in Section 11.1(a)(iii) has occurred),
the Letter of Credit Fees described in Section 3.2(a)(i) shall be increased by
an additional two percent (2%) per annum.

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(b)Upon the occurrence and during the continuance of an Event of Default, upon
demand (provided that no demand shall be required if an Event of Default has
occurred under Section 10.6 or any event described in Section 11.1(a)(iii) has
occurred), Borrowers will cause cash to be deposited and maintained in an
account with Agent, as cash collateral, in an amount equal to one hundred and
five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of
Credit, and each Borrower hereby irrevocably authorizes Agent, in its
discretion, on such Borrower’s behalf and in such Borrower’s name, to open such
an account and to make and maintain deposits therein, or in an account opened by
such Borrower, in the amounts required to be made by such Borrower, out of the
proceeds of Receivables or other Collateral or out of any other funds of such
Borrower coming into any Secured Party’s possession at any time. Agent will
invest such cash collateral (less applicable Reserves) in such short-term
money-market items as to which Agent and such Borrower mutually agree and the
net return on such investments shall be credited to such account and constitute
additional cash collateral. No Borrower may withdraw amounts credited to any
such account without written consent of Agent, to be given or withheld in its
sole discretion, except upon the occurrence of all of the following: (x) payment
and performance in full of all Obligations, (y) expiration of all Letters of
Credit and (z) termination of this Agreement.
3.[Intentionally Omitted.]
4.Fee Letter
. Borrowers shall pay the amounts required to be paid in the Fee Letter in the
manner and at the times required by the Fee Letter.
5.Computation of Interest and Fees
. Subject to Section 3.6, interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days elapsed. If any
payment to be made hereunder becomes due and payable on a day other than a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the applicable Revolving
Interest Rate or Equipment Loan Rate, as applicable, during such extension. All
fees payable under this Agreement and the other Loan Documents will be deemed
earned in full on the date when same is due and payable and will not be subject
to rebate or proration upon termination of this Agreement for any reason.
6.Maximum Charges
. In no event whatsoever shall interest and other charges charged hereunder
exceed the highest rate permissible under Applicable Law. In the event interest
and other charges as computed hereunder would otherwise exceed the highest rate
permitted under law, such excess amount shall be first applied to any unpaid
principal balance owed by Borrowers, and if the then remaining excess amount is
greater than the previously unpaid principal balance, Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
7.Increased Costs
. In the event that any Applicable Law, treaty or regulation enacted after the
Closing Date, or any change therein or in the interpretation or application of
any Applicable Law, treaty or regulation (including, without limitation, the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and all rules
and regulations promulgated thereunder) after the Closing Date, or compliance by
any Lender (for purposes of this Section 3.7, the term “Lender” shall include
Agent or any Lender and any corporation or bank controlling Agent or any Lender)
and the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans as of the Closing Date with any request or
directive enacted after the Closing Date (whether or not having the force of
law) from any central bank or other financial, monetary or other authority,
shall:
(a)subject Agent or any Lender to any tax of any kind whatsoever with respect to
this Agreement or any other Loan Document or change the basis of taxation of
payments to Agent or any Lender of principal, fees, interest or any other amount
payable hereunder or under any other Loan Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by the jurisdiction
in which it maintains its principal office);
(b)impose, modify or hold applicable any reserve, special deposit, assessment or
similar requirement against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended

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by, any office of Agent or any Lender, including pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or
(c)impose on Agent or any Lender or the London interbank Eurodollar market any
other condition with respect to this Agreement or any other Loan Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender (on an after-tax
basis) for such additional cost or such reduction, as the case may be; provided
that the foregoing shall not apply to increased costs that are reflected in the
Eurodollar Rate, as the case may be. Agent or such Lender shall certify the
amount of such additional cost or reduced amount to Borrowing Agent, and such
certification shall be conclusive absent manifest error.
8.Basis for Determining Interest Rate Inadequate or Unfair
. In the event that Agent or any Lender has determined that:
(a)reasonable means do not exist for ascertaining the Eurodollar Rate for any
Interest Period; or
(b)Dollar deposits in the relevant amount and for the relevant maturity are not
available in the London interbank Eurodollar market, with respect to an
outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan that was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then
current Interest Period for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders will have no obligation to make an affected
type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
9.Capital Adequacy
.
(a)In the event that Agent or any Lender has determined that any Applicable Law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or any Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent’s
and each Lender’s policies with respect to capital adequacy) by an amount deemed
by Agent or any Lender to be material, then, from time to time, Borrowers shall
pay upon demand to Agent or such Lender such additional amount or amounts as
will compensate Agent or such Lender (on an after-tax basis) for such reduction.
In determining such amount or amounts, Agent or such Lender may use

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any reasonable averaging or attribution methods. The protection of this Section
3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the Applicable Law,
regulation or condition.
(b)A certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section
3.9(a) when delivered to Borrowing Agent shall be conclusive absent manifest
error.
10.Gross Up for Taxes
. If any Borrower shall be required by Applicable Law to withhold or deduct any
taxes from or in respect of any sum payable under this Agreement or any of the
other Loan Documents to Agent, or any Secured Party, assignee of any Secured
Party, or Participant (each, individually, a “Payee” and collectively, the
“Payees”), (a) the sum payable to such Payee or Payees, as the case may be,
shall be increased as may be necessary so that, after making all required
withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions
been made (the “Gross-Up Payment”), (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall
be obligated to make any portion of the Gross-Up Payment that is attributable to
any withholding or deductions that would not have been paid or claimed had the
applicable Payee or Payees properly claimed a complete exemption with respect
thereto pursuant to Section 3.11.
11.Withholding Tax Exemption
.
(a)Each Payee that is not incorporated under the Laws of the United States of
America or a state thereof (and, upon the written request of Agent, each other
Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly
completed appropriate valid Withholding Certificates (as defined under
§1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its
status (i.e., U.S. or foreign Person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term “Withholding Certificate”
means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related
statements and certifications as required under §1.1441-1(e)(2) and/or (3) of
the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations;
or any other certificates under the Code or Regulations that certify or
establish the status of a payee or beneficial owner as a U.S. or foreign Person.
(b)Each Payee required to deliver to Borrowing Agent and Agent a valid
Withholding Certificate pursuant to Section 3.11(a) shall deliver such valid
Withholding Certificate as follows: (A) each Payee that is a party hereto on the
Closing Date shall deliver such valid Withholding Certificate at least five (5)
Business Days prior to the first date on which any interest or fees are payable
by any Borrower hereunder for the account of such Payee; (B) each Payee shall
deliver such valid Withholding Certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless Agent in
its sole discretion shall permit such Payee to deliver such Withholding
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by Agent). Each Payee that so delivers a
valid Withholding Certificate further undertakes to deliver to Borrowing Agent
and Agent two (2) additional copies of such Withholding Certificate (or a
successor form) on or before the date that such Withholding Certificate expires
or becomes obsolete or after the occurrence of any event requiring a change in
the most recent Withholding Certificate so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by
Borrowing Agent or Agent.
(c)Notwithstanding the submission of a Withholding Certificate claiming a
reduced rate of or exemption from U.S. withholding tax required under Section
3.11(b), Agent shall be entitled to withhold United States federal income taxes
at the full 30% withholding rate if in its reasonable judgment it is required to
do so under the due diligence requirements imposed upon a withholding agent
under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under
§1.1461-1(e) of the Regulations against any claims and demands of any Payee for
the amount of any tax it deducts and withholds in accordance with regulations
under §1441 of the Code.
12.Replacement of Lenders
. If any Lender (an “Affected Lender”) (a) makes demand upon any Credit Party
for (or if any Credit Party is otherwise required to pay) amounts pursuant to
Section 3.7 or 3.9, (b) is unable to make or maintain Eurodollar Rate Loans as

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a result of a condition described in Section 2.2(g), or (c) is a Defaulting
Lender, Borrowing Agent may, within thirty (30) days of receipt of such demand,
notice (or the occurrence of such other event causing any Credit Party to be
required to pay such compensation or causing Section 2.2(g) to be applicable),
or Lender Default, as the case may be, by notice (a “Replacement Notice”) in
writing to Agent and such Affected Lender (i) request the Affected Lender to
cooperate with Borrowers in obtaining a replacement Lender satisfactory to Agent
and Borrowers (a “Replacement Lender”); (ii) request the non-Affected Lenders to
acquire and assume all of the Affected Lender’s Revolving Advances and
Commitment Percentage as provided herein, but none of such Lenders shall be
under an obligation to do so; or (iii) designate a Replacement Lender approved
by Agent, such approval not to be unreasonably withheld or delayed. If any
satisfactory Replacement Lender is obtained, and/or if any one or more of the
non-Affected Lenders agrees to acquire and assume all of the Affected Lender’s
Revolving Advances and Commitment Percentage, then such Affected Lender shall
assign, in accordance with Section 16.3, all of its Advances and Commitment
Percentage and other rights and obligations under this Agreement and the other
Loan Documents to such Replacement Lender or non-Affected Lenders, as the case
may be, in exchange for payment of the principal amount so assigned and all
interest and fees accrued on the amount so assigned, plus all other Obligations
then due and payable to the Affected Lender; provided, however, that (A) such
assignment shall be without recourse, representation or warranty and shall be on
terms and conditions reasonably satisfactory to such Affected Lender and such
Replacement Lender and/or non-Affected Lenders, as the case may be, and (B)
prior to any such assignment, Borrowers shall have paid to such Affected Lender
all amounts properly demanded and unreimbursed under Section 3.7 and 3.9. Upon
the effective date of such assignment, Borrowers shall issue replacement
Revolving Credit Notes and/or Equipment Notes to such Replacement Lender and/or
non-Affected Lenders, as the case may be, and such institution(s) shall become a
“Lender” for all purposes under this Agreement and the other Documents.
ARTICLE X

ARTICLE XI

ARTICLE XIICOLLATERAL: GENERAL TERMS
1.Security Interest in the Collateral
. To secure the prompt payment and performance to Agent and each Secured Party
of the Obligations, each Credit Party hereby assigns, pledges and grants to
Agent for its benefit and for the ratable benefit of each Secured Party a
continuing security interest in and to and Lien on all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located. Each Credit Party shall mark its books and records as may be necessary
or appropriate to evidence, protect and perfect Agent’s security interest and
shall cause its financial statements to reflect such security interest. Each
Credit Party shall promptly provide Agent with written notice of all commercial
tort claims as provided in Section 4.2(b), such notice to contain the case title
together with the applicable court and a brief description of the claim(s). Upon
delivery of each such notice, such Credit Party shall be deemed to hereby grant
to Agent a security interest and lien in and to such commercial tort claims and
all proceeds thereof.
2.Perfection of Security Interest
.
(a)Each Credit Party shall take all action that may be necessary or desirable,
or that Agent may reasonably request, so as at all times to maintain the
validity, perfection, enforceability and priority of Agent’s security interest
in and Lien on the Collateral or to enable Agent to protect, exercise or enforce
its rights hereunder and in the Collateral, including: (i) promptly discharging
all Liens other than Permitted Encumbrances; (ii) using commercially reasonable
efforts to obtain Lien Waiver Agreements; (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping
or marking, in such manner as Agent may specify, all chattel paper, instruments,
letters of credit and advices thereof and documents evidencing or forming a part
of the Collateral, except, so long as no Default or Event of Default has
occurred and is continuing, for such chattel paper, instruments, letters of
credit and related documents having an aggregate value for all such items of
less than $250,000; (iv) entering into warehousing, lockbox and other custodial
arrangements pursuant to this Agreement in form and substance reasonably
satisfactory to Agent; and (v) executing and delivering financing statements,
control agreements (to the extent required hereunder), instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
reasonably satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent’s security interest and Lien
under the Uniform Commercial Code or other Applicable

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Law. By its signature hereto, each Credit Party hereby authorizes Agent to file
against such Credit Party, one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent (which statements may have a description of collateral
that is broader than that set forth herein, including a description of “all
assets” or words of similar import). All reasonable and documented out of pocket
charges, expenses and fees Agent may incur in doing any of the foregoing, and
any local taxes relating thereto, shall be charged to Borrowers’ Account as a
Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at
Agent’s option, shall be paid to Agent for its benefit and for the ratable
benefit of Secured Parties immediately upon demand.
(b)The Credit Parties shall (i) promptly notify Agent in writing upon acquiring
or otherwise obtaining any Collateral after the date hereof consisting of (x)
deposit accounts required to be subject to Agent’s control pursuant to Section
4.21, and (y) investment property, letter-of-credit rights, tangible chattel
paper or electronic chattel paper (as such terms are defined from time to time
in the UCC) and, upon the request of Agent in the case of the foregoing clauses
(x) and (y), promptly execute such other documents, and do such other acts or
things deemed appropriate by Agent to deliver to Agent control with respect to
such Collateral, provided that such action shall only be required with respect
to Collateral of the type described in clause (y) having an aggregate value in
excess of $25,000 for all such Collateral; (ii) promptly notify Agent in writing
upon acquiring or otherwise obtaining any Collateral after the date hereof
consisting of documents or instruments and, upon the request of Agent, promptly
execute such other documents, and do such other acts or things deemed
appropriate by Agent to deliver to Agent possession of such documents which are
negotiable and instruments having an aggregate value in excess of $25,000, and,
with respect to nonnegotiable documents, to have such nonnegotiable documents
issued in the name of Agent; (iii) with respect to Collateral in the possession
of a third party, other than certificated securities and goods covered by a
document, obtain an acknowledgment from the third party that it is holding the
Collateral for the benefit of Agent; (iv) promptly notify Agent in writing upon
incurring or otherwise obtaining a commercial tort claim after the date hereof
asserted against any third party, of the details thereof in the form of an
amendment to Schedule 5.26 hereto, and do such other acts or things deemed
appropriate by Agent to give Agent a security interest in such commercial tort
claim; (v) not change its state of incorporation or organization or type of
organization; (vi) not change its legal name without providing Agent with at
least 30 days’ prior written notice (or such longer period as Agent shall agree
in its sole discretion); and (vii) reimburse Agent for all expenses, including
reasonable attorney’s fees and charges (including time charges of attorneys who
are employees of Agent), incurred by Agent in seeking to collect or enforce any
rights in respect of such Collateral.
3.Disposition of Collateral
. Each Credit Party will safeguard and protect all Collateral for Agent’s
general account and make no disposition thereof whether by sale, lease or
otherwise except (a) the sale of Inventory in the Ordinary Course of Business
and (b) the disposition or transfer of obsolete and worn-out Equipment in the
Ordinary Course of Business during any fiscal year having an aggregate fair
market value of not more than $200,000 and only to the extent that the proceeds
of which are remitted to Agent to be applied pursuant to Section 2.20.
4.Preservation of Collateral
. Following the occurrence and during the continuance of a Default or Event of
Default, in addition to the rights and remedies set forth in Section 11.1,
Agent: (a) may at any time take such steps as Agent deems necessary to protect
Agent’s interest in and to preserve the Collateral, including the hiring of such
security guards or the placing of other security protection measures as Agent
may deem appropriate; (b) may employ and maintain at any of any Credit Party’s
premises a custodian who shall have full authority to do all acts necessary to
protect Agent’s interests in the Collateral; (c) may lease warehouse facilities
to which Agent may move all or part of the Collateral; (d) may use any Credit
Party’s owned or leased lifts, hoists, trucks and other facilities or equipment
for handling or removing the Collateral; and (e) shall have, and is hereby
granted, a right of ingress and egress to the places where the Collateral is
located, and may proceed over and through any of Credit Party’s owned or leased
property. Each Credit Party shall cooperate fully with all of Agent’s efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent’s reasonable and documented out of pocket
expenses of preserving the Collateral, including any expenses relating to the
bonding of a custodian, shall be charged to Borrowers’ Account as a Revolving
Advance maintained as a Domestic Rate Loan and added to the Obligations.
5.Ownership of Collateral
.

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(a)With respect to the Collateral, at the time the Collateral becomes subject to
Agent’s security interest: (i) each Credit Party shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in each and every item of the its respective
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (ii) each Loan
Document executed by each Credit Party or delivered to Agent or any Secured
Party in connection with this Agreement shall be true and correct in all
material respects; (iii) all signatures and endorsements of each Credit Party
that appear on such documents and agreements shall be genuine and each Credit
Party shall have full capacity to execute same; and (iv) each Credit Party’s
Equipment (other than vehicles and Equipment out for repair) and Inventory
(other than sample Inventory and other immaterial items of Collateral held by
employees of the Credit Parties for marketing and sales purposes) shall be
located in the United States as set forth on Schedule 4.5 or in transit to or
between such locations or to a customer; provided that the Credit Parties may
amend Schedule 4.5 by delivery of such amended schedule to the Agent at the time
of acquisition of any new location in the United States.
(b)(i) There is no location at which any Credit Party has any Inventory (except
for Inventory in transit and sample Inventory and other immaterial items of
Collateral held by employees of the Credit Parties for marketing and sales
purposes) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5
contains a correct and complete list, as of the Closing Date, of the legal names
and addresses of each warehouse at which Inventory of any Credit Party is
stored; none of the receipts received by any Credit Party from any warehouse
states that the goods covered thereby are to be delivered to bearer or to the
order of a named Person or to a named Person and such named Person’s assigns;
(iii) Schedule 4.5 sets forth a correct and complete list as of the Closing Date
of (A) each place of business of each Credit Party and (B) the chief executive
office of each Credit Party; and (iv) Schedule 4.5 sets forth a correct and
complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by each Credit Party, together
with the names and addresses of any landlords.
6.Defense of Secured Parties’ Interests
. Until (a) payment and performance in full of all of the Obligations (other
than Inchoate Obligations) and (b) termination of this Agreement, Agent’s
interests in the Collateral shall continue in full force and effect. During such
period no Credit Party shall, without Agent’s prior written consent, pledge,
sell (except to the extent permitted in Section 4.3), assign, transfer, create
or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered
in any way except for Permitted Encumbrances, any part of the Collateral. Each
Credit Party shall defend Agent’s interests in the Collateral against any and
all Persons whatsoever. At any time following demand by Agent for payment of all
Obligations in accordance with this Agreement, Agent shall have the right to
take possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including: labels, stationery, documents, instruments
and advertising materials. If Agent exercises this right to take possession of
the Collateral, the Credit Parties shall, upon demand, assemble it in the best
manner possible and make it available to Agent at a place reasonably convenient
to Agent. In addition, with respect to all Collateral, Secured Parties shall be
entitled to all of the rights and remedies set forth herein and further provided
by the Uniform Commercial Code or other Applicable Law. Each Credit Party shall
and, after the occurrence and during the continuance of a Default or Event of
Default, Agent may, at its option, instruct all suppliers, carriers, forwarders,
warehousers or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver same to Agent
and/or subject to Agent’s order and if they shall come into any Credit Party’s
possession, they, and each of them, shall be held by such Credit Party in trust
as Agent’s trustee, and such Credit Party will immediately deliver them to Agent
in their original form together with any necessary endorsement.
7.Books and Records
. Each Credit Party shall (a) keep proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to its business and affairs; (b) set up on its books accruals
with respect to all taxes, assessments, charges, levies and claims; and (c) on a
reasonably current basis set up on its books, from its earnings, allowances
against doubtful Receivables, advances and investments and all other proper
accruals (including by reason of enumeration, accruals for premiums, if any, due
on required payments and accruals for depreciation, obsolescence, or
amortization of properties), which should be set aside from such earnings in
connection with its business. All determinations pursuant to this subsection
shall be made in accordance with, or as required by, GAAP consistently applied
in the opinion of such independent public accountant as shall then be regularly
engaged by the Credit Parties.

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8.Financial Disclosure
. Each Credit Party hereby irrevocably authorizes and directs all accountants
and auditors employed by such Credit Party at any time during the Term to
exhibit and deliver to Agent and each Lender copies of any of such Credit
Party’s financial statements, trial balances or other accounting records of any
sort in the accountant’s or auditor’s possession, and to disclose to Agent and
each Lender any information such accountants may have concerning such Credit
Party’s financial status and business operations. Each Credit Party hereby
authorizes all Governmental Bodies to furnish to Agent and each Lender copies of
reports or examinations relating to such Credit Party, whether made by such
Credit Party or otherwise; however, Agent and each Lender will attempt to obtain
such information or materials directly from such Credit Party prior to obtaining
such information or materials from such accountants or Governmental Bodies.
9.Compliance with Laws
. Each Credit Party shall comply with all Applicable Laws with respect to the
Collateral or any part thereof or to the operation of such Credit Party’s
business the non-compliance with which could reasonably be expected to have a
Material Adverse Effect. The assets of the Credit Parties at all times shall be
maintained in accordance with the requirements of all insurance carriers that
provide insurance with respect to the assets of the Credit Parties so that such
insurance shall remain in full force and effect.
10.Inspections and Appraisals
. Agent and each Lender shall have access to and the right to audit, check,
inspect and, subject to applicable confidentiality restrictions, make abstracts
and copies from each Credit Party’s books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of each Credit
Party’s business. Agent and its agents may enter upon any premises of any Credit
Party at any time during business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of such Credit Party’s business.
Agent shall have the right to obtain appraisals of the Collateral through one or
more appraisers acceptable to Agent at any time and from time to time and the
Credit Parties agree to reimburse Agent for all charges, costs and expenses of
Agent in connection therewith. In addition to the foregoing, Agent shall have
the right to conduct a desktop or full appraisal, annually, provided that upon
the occurrence and continuance of an Event of Default, Agent may conduct such
additional desktop and full appraisals as it determines.
11.Insurance
. The assets and properties of each Credit Party at all times shall be
maintained in accordance with the requirements of all insurance carriers that
provide insurance with respect to the assets and properties of such Credit Party
so that such insurance shall remain in full force and effect. Each Credit Party
shall bear the full risk of any loss of any nature whatsoever with respect to
the Collateral. At each Credit Party’s own cost and expense in amounts and with
carriers acceptable to Agent, each Credit Party shall (a) keep all its insurable
properties and properties in which such Credit Party has an interest insured
against the hazards of fire, flood, sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to such Credit
Party’s including business interruption insurance; (b) maintain a bond in such
amounts as is customary in the case of companies engaged in businesses similar
to such Credit Party insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such
Credit Party either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Credit Party is engaged in business; (e) furnish Agent with (i)
copies of all policies and evidence of the maintenance of such policies by the
renewal thereof as soon as practicable before any expiration date therefor and
in any event not less than ten (10) days’ prior to such expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (b) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least ten
(10) days’ prior written notice is given to Agent for any cancellation,
amendment or termination of such policy resulting from nonpayment of premiums
and at least thirty (30) days’ prior written notice is given to Agent for any
other reason for cancellation, amendment or termination of such policy. In the
event of any

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loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable Credit Party to make payment for such loss to Agent and not to such
Credit Party and Agent jointly. If any insurance losses are paid by check, draft
or other instrument payable to any Credit Party and Agent jointly, Agent may
endorse such Credit Party’s name thereon and do such other things as Agent may
deem advisable to reduce the same to cash. Agent is hereby authorized to adjust
and compromise claims under insurance coverage referred to in clauses (a) and
(b) above. All loss recoveries received by Agent upon any such insurance may be
applied to the Obligations, in such order as Agent in its sole discretion shall
determine. Any surplus shall be paid by Agent to the Credit Parties or applied
as may be otherwise required by law. Any deficiency thereon shall be paid by the
Credit Parties to Agent, on demand.
12.Failure to Pay Insurance
.
(a)If any Credit Party fails to obtain insurance as hereinabove provided, or to
keep the same in force, Agent, if Agent so elects, may obtain such insurance and
pay the premium therefor on behalf of such Credit Party, and charge Borrowers’
Account therefor as a Revolving Advance of a Domestic Rate Loan and such
expenses so paid shall be part of the Obligations; provided that Agent shall use
commercially reasonable efforts to notify Borrowing Agent of the foregoing.
(b)Unless the Credit Parties provide Agent with evidence of the insurance
coverage required by this Agreement, Agent may purchase insurance at the expense
of the Credit Parties to protect Agent’s and the Lenders’ interests in the
Collateral. This insurance may, but need not, protect the Credit Parties’
interests. The coverage that Agent purchases may not pay any claim that is made
against the Credit Parties in connection with the Collateral. The Credit Parties
may later cancel any insurance purchased by Agent, but only after providing
Agent with evidence that the Credit Parties have obtained insurance as required
by this Agreement. If Agent purchases insurance for the Collateral, the Credit
Parties will be responsible for the costs of that insurance, including interest
and any other charges that may be imposed with the placement of the insurance,
until the effective date of the cancellation or expiration of the insurance. The
costs of the insurance may be added to the amount of the Obligations. The costs
of the insurance may be more than the cost of the insurance the Credit Parties
may be able to obtain.
(c)The premiums and other costs of any insurance obtained by Agent pursuant to
this Section 4.12 may be charged to Borrowers’ Account as a Revolving Advance
maintained as a Domestic Rate Loan and added to the Obligations.
13.Payment of Taxes
. Each Credit Party will pay, when due, to the extent lawfully levied or
assessed upon such Credit Party or any of the Collateral, all real and personal
property taxes, assessments and Charges, all franchise and federal taxes,
assessments and Charges, all state and local taxes, assessments and Charges in
excess of $250,000 in the aggregate, and all employment, social security
benefits, withholding, and sales taxes, in each case, other than those being
Properly Contested. If any tax by any Governmental Body is or may be imposed on
or as a result of any transaction between any Credit Party and any Secured Party
that any Secured Party may be required to withhold or pay or if any taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made that, in any Secured Party’s opinion, may
possibly create a valid Lien on the Collateral, Agent may without notice to the
Credit Parties pay the taxes, assessments or other Charges and each Credit Party
hereby indemnifies and holds each Indemnitee harmless in respect thereof. Agent
will not pay any taxes, assessments or Charges to the extent that any applicable
Credit Party has Properly Contested those taxes, assessments or Charges. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and
added to the Obligations and, until the Credit Parties shall furnish Agent with
an indemnity therefor (or supply Agent with evidence satisfactory to Agent that
due provision for the payment thereof has been made), Agent may hold without
interest any balance standing to Borrowers’ credit and Agent shall retain its
security interest in and Lien on any and all Collateral held by Agent.
14.Payment of Leasehold Obligations
. Each Credit Party shall at all times pay, when and as due, its rental
obligations under all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such leases and keep
them in full force and effect and, at Agent’s request will provide evidence of
having done so.
15.Receivables

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.
(a)Nature of Receivables. Each Credit Party represents and warrants that each of
the Receivables (without representing that any such Receivable is an Eligible
Receivable except to the extent otherwise expressly so represented pursuant to
the Loan Documents) shall be, (i) as of the date of creation thereof, a bona
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided that immaterial or unintentional invoice errors shall not be
deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of a Credit Party, or work, labor or
services theretofore rendered by a Credit Party and (ii) due and owing in
accordance with the applicable Credit Party’s standard terms of sale without
known dispute, setoff or counterclaim, except as may be stated on the most
recently delivered Borrowing Base Certificate; provided that if any such
dispute, setoff or counterclaim arises between delivery of Borrowing Base
Certificates in an aggregate amount greater than $500,000, the Credit Parties
shall have disclosed the same to Agent in writing.
(b)Solvency of Customers. Each Customer, to the best of each Credit Party’s
knowledge based on such Credit Party’s use and review of customary credit checks
and other similar inspections with respect to such Customer, as of the date each
Receivable is created, is not subject to any insolvency proceeding and is and
will be able to pay all Receivables on which the Customer is obligated in full
when due or with respect to such Customers of any Credit Party who are not so
able such Credit Party has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c)Location of Credit Parties. Each Credit Party’s chief executive office is
located at 2027 Harpers Way, Torrance, California. Until written notice is given
to Agent by Borrowing Agent of any other office at which any Credit Party keeps
its records pertaining to Receivables (including collection thereof), all such
records shall be kept at such executive office; provided that duplicate copies
thereof may be kept at other locations of the Credit Parties and their
Subsidiaries.
(d)Collection of Receivables. Until any Credit Party’s authority to do so is
terminated by Agent (which notice Agent may give at any time following the
occurrence and during the continuance of a Default or Event of Default ), each
Credit Party will, at such Credit Party’s sole cost and expense, but on Agent’s
behalf and for Agent’s account, collect as Agent’s property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections with any Credit Party’s funds or use the same except to pay
Obligations. Each Credit Party shall deposit in the Blocked Account or, upon
request by Agent, deliver to Agent, in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e)Notification of Assignment of Receivables. After the occurrence and during
the continuance of a Default or Event of Default, Agent shall have the right to
send notice of the assignment of, and Agent’s security interest in and Lien on,
the Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right, if it has made such election, to collect the Receivables, take possession
of the Collateral, or both. Agent’s actual collection expenses, including
stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the charges of any collection personnel used for collection, may be
charged to Borrowers’ Account and added to the Obligations.
(f)Power of Agent to Act on Credit Parties’ Behalf. Agent shall have the right
to receive, endorse, assign and/or deliver in the name of Agent or any Credit
Party any and all checks, drafts and other instruments for the payment of money
relating to the Receivables, and each Credit Party hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each Credit
Party hereby constitutes Agent or Agent’s designee as such Credit Party’s
attorney with power (i) to endorse such Credit Party’s name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign such Credit Party’s name on any invoice or bill of
lading relating to any of the Receivables, drafts against Customers, assignments
and verifications of Receivables; (iii) to send verifications of Receivables to
any Customer; (iv) to sign such Credit Party’s name on all financing statements
or any other documents or instruments deemed necessary or appropriate by Agent
to preserve, protect, or perfect Agent’s interest in the Collateral and to file
same; (v) to demand payment of the Receivables; (vi) to enforce payment of the
Receivables by legal proceedings or otherwise; (vii) to exercise all of such
Credit Party’s rights and remedies with respect to the collection of the
Receivables and any other Collateral; (viii) to settle, adjust, compromise,
extend or renew the Receivables; (ix) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) to prepare, file and sign such
Credit Party’s name on a proof of claim in bankruptcy or similar document

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against any Customer; (xi) to prepare, file and sign such Credit Party’s name on
any notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Receivables; and (xii) to do all other acts and things
necessary to carry out this Agreement; provided, however, that Agent shall only
exercise the rights described in clauses (vi) through (ix), inclusive upon the
occurrence and during the continuance of a Default or Event of Default. All acts
of said attorney or designee are hereby ratified and approved, and said attorney
or designee shall not be liable for any acts of omission or commission nor for
any error of judgment or mistake of fact or of law, unless done maliciously or
with gross (not mere) negligence (as determined by a court of competent
jurisdiction in a final non-appealable judgment); this power being coupled with
an interest is irrevocable while any of the Obligations (other than Inchoate
Obligations) remain unpaid. Agent shall have the right at any time following the
occurrence and during the continuance of an Event of Default or Default, to
change the address for delivery of mail addressed to any Credit Party to such
address as Agent may designate and to receive, open and dispose of all mail
addressed to any Credit Party.
(g)No Liability. No Secured Party shall, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Receivables or
any instrument received in payment thereof, or for any damage resulting
therefrom. Following the occurrence and during the continuance of an Event of
Default or Default Agent may, without notice or consent from any Credit Party,
sue upon or otherwise collect, extend the time of payment of, compromise or
settle for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept following the
occurrence and during the continuance of an Event of Default or Default the
return of the goods represented by any of the Receivables, without notice to or
consent by any Credit Party, all without discharging or in any way affecting any
Credit Party’s liability hereunder.
(h)Establishment of a Lockbox Account, Dominion Account. All proceeds of
Collateral and all Extraordinary Receipts shall be deposited by Borrowers into
either (i) a lockbox account, dominion account or such other “blocked account”
(“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked
Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may
be selected by Borrowing Agent and be acceptable to Agent or (ii) depository
accounts (“Depository Accounts”) established at Agent for the deposit of such
proceeds. Each applicable Borrower, Agent and each Blocked Account Bank shall
enter into a deposit account control agreement in form and substance
satisfactory to Agent directing such Blocked Account Bank to transfer such funds
so deposited to Agent, either to any account maintained by Agent at said Blocked
Account Bank or by wire transfer to appropriate account(s) of Agent. All funds
deposited in such Blocked Accounts shall immediately become the property of
Agent and Borrowing Agent shall obtain the agreement by such Blocked Account
Bank to waive any offset rights against the funds so deposited. No Secured Party
assumes any responsibility for such blocked account arrangement, including any
claim of accord and satisfaction or release with respect to deposits accepted by
any Blocked Account Bank thereunder. All deposit accounts and investment
accounts of each Credit Party and its Subsidiaries are set forth on Schedule
4.15(h).
(i)Adjustments. No Credit Party will, without Agent’s consent, compromise or
adjust any Receivables (or extend the time for payment thereof) or accept any
returns of merchandise or grant any additional discounts, allowances or credits
thereon except for compromises, adjustments, returns, discounts, credits and
allowances in the Ordinary Course of Business.
16.Inventory
. All Inventory held for sale or lease by any Credit Party has been and will be
manufactured and maintained in all material respects in compliance with all
requirements of each Governmental Body that has regulatory authority over such
Inventory or the use or sale thereof. To the extent Inventory held for sale or
lease has been produced by any Credit Party, it has been and will be produced by
such Credit Party in accordance with the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders thereunder.
17.Maintenance of Equipment
. The Equipment shall be maintained in good operating condition and repair
(reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved. The Credit Parties shall use or
operate the Equipment in compliance in all material respects with Applicable
Law. Each Credit Party shall have the right to sell Equipment to the extent
expressly set forth in Section 4.3.

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18.Exculpation of Liability
. Nothing herein contained shall be construed to constitute Agent or any Lender
as any Credit Party’s agent for any purpose whatsoever, nor shall Agent or any
Lender be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof. No Secured Party, whether by anything herein or
in any assignment or otherwise, assumes any of any Credit Party’s obligations
under any contract or agreement assigned to Agent or such Lender, and no Secured
Party shall be responsible in any way for the performance by any Credit Party of
any of the terms and conditions thereof.
19.Environmental Matters
.
(a)The Credit Parties shall ensure that the Real Property and all operations and
businesses conducted thereon remains in compliance with all Environmental Laws
except as could not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect, and they shall not place or permit to be placed
any Hazardous Substances on any Real Property except as permitted by Applicable
Law or appropriate Governmental Bodies except as could not individually or in
the aggregate reasonably be expected to have a Material Adverse Effect.
(b)The Credit Parties shall establish and maintain a system to assure and
monitor continued compliance in a reasonable manner with all applicable
Environmental Laws, which system shall include periodic reviews of such
compliance.
(c)The Credit Parties shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
The Credit Parties shall use their best efforts to obtain certificates of
disposal, such as hazardous waste manifest receipts, from all treatment,
transport, storage or disposal facilities or operators employed by the Credit
Parties in connection with the transport or disposal of any Hazardous Waste
generated at the Real Property, except, in each case, as could not individually
or in the aggregate reasonably be expected to have a Material Adverse Effect.
(d)In the event any Credit Party obtains, gives or receives notice of any
material Release or threat of material Release of a reportable quantity of any
Hazardous Substances on, at, under or from the Real Property or any other
property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any written notice of violation, request for information
or notification that it is potentially responsible for investigation or cleanup
of environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Credit
Party’s interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any Governmental Body
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the “Authority”), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Credit Party is aware giving rise
to the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the Real
Property and the Collateral and is not intended to create nor shall it create
any obligation upon Agent or any Lender with respect thereto.
(e)Borrowing Agent shall promptly forward to Agent copies of any written request
for information, notification of potential liability, demand letter relating to
any Credit Party’s potential material liability under Environmental Laws,
including potential responsibility with respect to the investigation or cleanup
of Hazardous Substances at any other site owned, operated or used by any Credit
Party to dispose of Hazardous Substances and shall continue to forward copies of
material correspondence between any Credit Party and the Authority regarding
such claims to Agent until the claim is settled. Borrowing Agent shall promptly
forward to Agent copies of all documents and reports concerning a Hazardous
Discharge that any Credit Party is required to file under any Environmental
Laws, except as to such Hazardous Discharges as could not reasonably be expected
to have a Material Adverse Effect. Such information is to be provided solely to
allow Agent to protect Agent’s security interest in and Lien on the Real
Property and the Collateral.

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(f)The Credit Parties shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action under Environmental Laws
in order to safeguard the health of any Person and to avoid subjecting the
Collateral or Real Property to any Lien. If any Credit Party shall fail to
respond promptly to any material Hazardous Discharge or Environmental Complaint
or any Credit Party shall fail to comply with any of the requirements of any
Environmental Laws in all material respects, Agent on behalf of Lenders may, but
without the obligation to do so, for the sole purpose of protecting Agent’s
interest in the Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Secured Parties (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by the Credit Parties, and until paid shall be added to and
become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between any Secured Party and any Credit
Party.
(g)Promptly upon the written request of Agent from time to time, the Credit
Parties shall provide Agent, at the Credit Parties’ expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with the investigation,
abatement, cleanup, removal and monitoring of any Hazardous Substances found on,
under, at, from or within the owned Real Property. Any report or investigation
of such Hazardous Discharge proposed and acceptable to an appropriate Authority
that is charged to oversee the clean-up of such Hazardous Discharge shall be
acceptable to Agent. If such estimates, individually or in the aggregate, exceed
$25,000, Agent shall have the right to require the Credit Parties to post a
bond, letter of credit or other security reasonably satisfactory to Agent to
secure payment of these costs and expenses.
(h)The Credit Parties shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney’s fees, suffered or incurred by
Agent or Lenders under or on account of any Environmental Laws, including the
assertion of any Lien thereunder, with respect to any Hazardous Discharge, the
presence of any Hazardous Substances affecting the Real Property, whether or not
the same originates or emerges from the Real Property or any contiguous real
estate, including any loss of value of the Real Property as a result of the
foregoing except to the extent such loss, liability, damage and expense is
attributable to any Hazardous Discharge resulting from actions on the part of
any Secured Party. The Credit Parties’ obligations under this Section 4.19 shall
arise upon the discovery of the presence of any Hazardous Substances at the Real
Property, whether or not any Governmental Body has taken or threatened any
action in connection with the presence of any Hazardous Substances. The Credit
Parties’ obligation and the indemnifications hereunder shall survive the
termination of this Agreement.
(i)For purposes of Sections 4.19 and 5.7, all references to Real Property shall
be deemed to include all of each Credit Party’s right, title and interest in and
to its currently owned and leased premises.
20.Financing Statements
. Except as respects the financing statements filed by Agent and the financing
statements described on Schedule 1.2, no financing statement covering any of the
Collateral or any proceeds thereof is on file in any public office.
21.Deposit and Investment Accounts
. Borrowers agree not to maintain any deposit or investment accounts other than
accounts held at or through Agent, except that Borrowers may maintain the
accounts set forth on Schedule 4.15(h) (as so updated from time to time) that
are (a) deposit accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrowers’ employees
(including any “rabbi trust” account used in connection with such purposes) and
identified to Agent by Borrowers as such, or (b) subject to a control agreement
in favor of Agent from the holder of such account, giving Agent a first-priority
security interest in such account, in form and substance satisfactory to Agent;
provided, that, notwithstanding the foregoing, all deposit accounts of the
Credit Parties (other than (x) deposit accounts of the type described in the
foregoing clause (a), (y) the Limited Purpose Deposit Account to the extent such
deposit account is in compliance with the requirements set forth in the
definition thereof and (z) deposit accounts at

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Comerica Bank that comply with the foregoing clause (b)) shall be maintained at
PNC no later than November 15, 2012 (or such later date as Agent shall agree in
its sole discretion). On each Business Day that amounts received in the Limited
Purpose Deposit Account (other amounts of the type described in clause (b) of
the definition thereof deposited therein by VMC) since the last date of transfer
required by this sentence (or the Closing Date, in the case of the first such
transfer) are equal to or in excess of $250,000 in the aggregate, the Borrowers
shall transfer on such Business Day all such amounts to the collection account
of VMC maintained at PNC.
22.New and Newly Registered Intellectual Property
. If any Credit Party (a) obtains ownership of any patent registered with the
United States Patent and Trademark Office, trademark registered with the United
States Patent and Trademark Office, or copyright registered with the United
States Copyright Office, or (b) submits a registered application for any patent
or any trademark, then such Credit Party shall, concurrently with the delivery
of the Compliance Certificate for the relevant period, provide written notice
thereof to Agent and shall execute such intellectual property security
agreements and other documents and take such other actions (including recording
or allowing Agent to record such intellectual property security agreements with
the United States Copyright Office or the United States Patent and Trademark
Office, as applicable) as Agent shall request in its Permitted Discretion to
perfect and maintain a first priority perfected security interest in favor of
Agent. No Credit Party shall register any copyrights or mask works in the United
States Copyright Office, unless such Credit Party shall: (i) not less than five
(5) Business Days prior to making the relevant filings, provide Agent written
notice of such Credit Party’s filing of an application to register such
copyrights or mask works together with a copy of the application to be filed
with the United States Copyright Office (excluding exhibits thereto); (ii)
execute an intellectual property security agreement and such other documents and
take such other actions as Agent may request in its Discretion to perfect and
maintain a first priority perfected security interest in favor of Agent in the
copyrights or mask works intended to be registered with the United States
Copyright Office; and (iii) record or allow Agent to record such intellectual
property security agreement with the United States Copyright Office. Each Credit
Party shall promptly provide to Agent evidence of the recording of the
intellectual property security agreement necessary for Agent to perfect and
maintain a first priority perfected security interest in such property.
ARTICLE XIII

ARTICLE XIV

ARTICLE XVREPRESENTATIONS AND WARRANTIES
Each Credit Party represents and warrants to Secured Parties as follows:
1.Authority
. Each Credit Party has full power, authority and legal right to enter into this
Agreement and the other Loan Documents and to perform all its respective
Obligations hereunder and thereunder. This Agreement and the other Loan
Documents have been duly executed and delivered by each Credit Party, and this
Agreement and the other Loan Documents constitute the legal, valid and binding
obligation of such Credit Party enforceable in accordance with their terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights generally.
The execution, delivery and performance of this Agreement and of the other Loan
Documents (a) are within such Credit Party’s corporate powers, have been duly
authorized by all necessary corporate action, are not in contravention of law or
the terms of such Credit Party’s by-laws, certificate of incorporation or other
applicable documents relating to such Credit Party’s formation or to the conduct
of such Credit Party’s business or of any material agreement or undertaking to
which such Credit Party is a party or by which such Credit Party is bound, (b)
will not conflict with or violate any law or regulation, or any judgment, order
or decree of any Governmental Body, (c) will not require the Consent of any
Governmental Body or any other Person, except those Consents set forth on
Schedule 5.1, all of which will have been duly obtained, made or compiled with
prior to the Closing Date and that are in full force and effect, (d) will not
conflict with, nor result in any breach in any of the provisions of or
constitute a default under any material agreement, charter document, instrument,
by-law, operating agreement or other material instrument to which such Credit
Party is a party or by which it or its property is a party or by which it may be
bound, and (e) will not result in the creation of any Lien (except Permitted
Encumbrances) upon any asset of such Credit Party under the provisions of any
agreement, charter document, instrument, by-law, operating agreement or other
instrument to which such Credit Party is a party or by which it or its property
is a party or by which it may be bound.
2.Formation and Qualification

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.
(a)Each Credit Party is duly incorporated and in good standing under the laws of
its state of incorporation, as listed on Schedule 5.2(a) and is qualified to do
business and is in good standing as of the Closing Date in the states listed on
Schedule 5.2(a), which constitute all states in which qualification and good
standing are necessary for such Credit Party to conduct its business and own its
property where the failure to be so qualified could reasonably be expected to
have a Material Adverse Effect on such Credit Party. Each Credit Party has
delivered to Agent true and complete copies of its certificate of incorporation
and by-laws and will notify Agent of any amendment or changes thereto not less
than 30 days prior to each such amendment.
(b)The only Subsidiaries of each Credit Party are listed on Schedule 5.2(b).
3.Survival of Representations and Warranties
. All representations and warranties of such Credit Party contained in this
Agreement and the other Loan Documents shall be true, correct, and complete, in
all material respects (except that any such representation or warranty already
qualified or modified by materiality in the text thereof shall be true, correct
and complete in all respects), and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
4.Tax Returns
. Each Credit Party’s federal tax identification number, as of the Closing Date,
is set forth on Schedule 5.4. Each Credit Party has filed all material federal,
state and local tax returns and other reports each is required by law to file
and has paid all taxes, assessments, fees and other governmental charges that
are due and payable. Federal, state and local income tax returns of each Credit
Party have been examined and reported upon by the appropriate taxing authority
or closed by applicable statute and satisfied for all fiscal years prior to and
including the fiscal year ending January 31, 2004. The provision for taxes on
the books of each Credit Party is adequate for all years not closed by
applicable statutes, and for its current fiscal year, and no Credit Party has
any knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.
5.Financial Statements
.
(a)The pro forma balance sheet of Borrowers on a Consolidated Basis (the “Pro
Forma Balance Sheet”) furnished to Agent on the Closing Date reflects the
consummation of the transactions contemplated by and under this Agreement
(collectively, the “Transactions”) and fairly reflects the financial condition
of Borrowers on a Consolidated Basis as of the Closing Date after giving effect
to the Transactions, and has been prepared in accordance with GAAP, consistently
applied. The Pro Forma Balance Sheet has been certified by the Vice President
Finance of Borrowing Agent as fairly presenting, in all material respects, the
financial condition of the Borrowers as of the date thereof. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP, except
as may be disclosed in such financial statements and except for the absence of
footnotes and customary year-end adjustments..
(b)The twelve-month cash flow projections of Borrowers on a Consolidated Basis
and their projected balance sheets as of the Closing Date, copies of which are
annexed to the Financial Condition Certificate (the “Projections”) were prepared
by the Vice President Finance of VMC, in good faith based upon assumptions
believed by the Borrowers to be reasonable at the time made (it being understood
that such projections are subject to uncertainties and contingencies and that no
assurance can be given that any particular projections will be realized). The
cash flow Projections together with the Pro Forma Balance Sheet, are referred to
as the “Pro Forma Financial Statements”.
and
(c)The consolidated and consolidating (if applicable) balance sheets of
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of November 30, 2011, and the
related statements of income, changes in stockholder’s equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified

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public accountants, copies of which have been delivered to Agent, have been
prepared in accordance with GAAP, as in effect from time to time (except as
expressly noted therein and except for changes in application in which such
accountants concur and present fairly the financial position of Borrowers and
their Subsidiaries at such date and the results of their operations for such
period). Since January 31, 2011 there has been no change in the condition,
financial or otherwise, of Borrowers or their Subsidiaries as shown on the
consolidated balance sheet as of such date which individually or in the
aggregate could reasonably be expected to have a Materially Adverse Effect.
6.Entity Names
. No Credit Party has changed its corporate name or used a trade name in the
past five years and does not sell Inventory under any other name, nor has any
Credit Party been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person during the
preceding five (5) years, in each case except as set forth on Schedule 5.6.
7.O.S.H.A. and Environmental Compliance
.
(a)Each Credit Party has duly complied with, and its facilities, business,
assets, property, leaseholds, Real Property and Equipment are in compliance in
all material respects with, the provisions of the Federal Occupational Safety
and Health Act, the Environmental Protection Act, RCRA and all other
Environmental Laws; there have been no outstanding citations, notices or orders
of non-compliance issued to any Credit Party or relating to its business,
assets, property, leaseholds or Equipment under any such laws, rules or
regulations other than, in each case, such non-compliance as count not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b)Each Credit Party has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable Environmental Laws
other than those the failure of which to obtain could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.
(c)There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under
or within any Real Property or any premises leased by any Credit Party that
could individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
8.Solvency; No Litigation, Violation, Indebtedness or Default
.
(a)The Credit Parties, taken as a whole, are solvent, able to pay their debts as
they mature, have capital sufficient to carry on their businesses and all
businesses in which they are about to engage, and (i) as of the Closing Date,
the fair present saleable value of their assets, taken as a whole, calculated on
a going concern basis, is in excess of the amount of its liabilities and (ii)
subsequent to the Closing Date, the fair saleable value of their assets
(calculated on a going concern basis), taken as a whole, will be in excess of
the amount of its liabilities.
(b)Except as disclosed in Schedule 5.8(b), no Credit Party has (i) any pending
or threatened (in writing to any Credit Party) litigation, arbitration, actions
or proceedings that could reasonably be expected to have a Material Adverse
Effect, and (ii) any indebtedness for borrowed money other than the Obligations
and Funded Debt set forth on Schedule 7.8 hereof.
(c)No Credit Party is in violation of any applicable statute, law, rule,
regulation or ordinance in any respect that could reasonably be expected to have
a Material Adverse Effect, nor is any Credit Party in violation of any order of
any court, Governmental Body or arbitration board or tribunal.
(d)No Credit Party or member of the Controlled Group maintains or contributes,
or has any obligation to contribute to, or liability under, any Pension Benefit
Plan, any Multiemployer Plan or any Multiple Employer Plan other than (x) on the
Closing Date, those listed on Schedule 5.8(d) hereto and (y) thereafter, as
permitted under this Agreement. Further, (i) each Credit Party and each member
of the Controlled Group has met all applicable minimum funding requirements
under the Pension Funding Rules in respect of each Pension Benefit Plan and no
waiver of the Pension Funding Rules has been applied for or obtained in the past
five years; (ii) each Pension Benefit Plan which is intended to be a qualified
plan under Section 401(a) of the Code as currently in effect has been determined
by the Internal Revenue Service to be qualified under Section 401(a) of the Code
and the trust related thereto is exempt from federal income tax under Section
501(a) of the Code; (iii) no Credit Party or member of the Controlled Group

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has incurred any liability to the PBGC other than for the payment of premiums,
and there are no premium payments which have become due which are unpaid; (iv)
no Pension Benefit Plan has been terminated by the plan administrator thereof
nor by the PBGC for which there is any unsatisfied material liability, and there
is no occurrence which would reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Pension Benefit
Plan; (v) except as would not reasonably be expected to have a Material Adverse
Effect, the present value of the aggregate benefit liabilities under each
Pension Benefit Plan sponsored, maintained or contributed to by any Credit Party
or any member of the Controlled Group (determined as of the end of the most
recent plan year on the basis of the actuarial assumptions specified for funding
purposes in the most recent actuarial valuation for such Pension Benefit Plan),
did not exceed the aggregate current fair market value of the assets of such
Pension Benefit Plan; (vi) except as would not reasonably be expected to have a
Material Adverse Effect, no Credit Party or member of the Controlled Group has
breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan; (vii) except as would not reasonably expected to
have a Material Adverse Effect, no Credit Party or member of the Controlled
Group has nor any fiduciary of, nor any trustee to, any Plan, has engaged in a
“prohibited transaction” described in Section 406 of the ERISA or Section 4975
of the Code; (viii) no Termination Event has occurred and no Credit Party or
member of the Controlled Group has taken any action which would reasonably be
expected to constitute or result in a Termination Event; (ix) each Credit Party
and each member of the Controlled Group have made all material contributions due
and payable with respect to each Plan; (x) no Credit Party or member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur any unsatisfied liability under the Multiemployer Pension
Plan Amendments Act of 1980 and there exists no fact which would reasonably be
expected to result in any such liability; and (xi) no Credit Party or any member
of the Controlled Group has received notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA.
9.Patents, Trademarks, Copyrights and Licenses
. All patents and patent applications registered with the United States Patent
and Trademark Office, trademarks and trademark applications registered with the
United States Patent and Trademark Office, copyrights and copyright applications
registered with the United States Copyright Office are set forth on Schedule
5.9, are valid and have been duly registered or filed with all appropriate
Governmental Bodies and constitute all of the intellectual property rights that
are necessary for the operation of the business of the Credit Parties, to the
knowledge of the Credit Parties, there is no objection to or pending challenge
to the validity of any such patent, trademark, or copyright, and no Credit Party
is aware of any grounds for any such challenge, except as set forth in Schedule
5.9. Each patent, patent application, patent license, trademark, trademark
application, trademark license, service mark, service mark application, service
mark license, design rights, copyright, copyright application and copyright
license that is necessary to the conduct of the business of the Credit Parties
and their Subsidiaries and owned or held by any Credit Party and all trade
secrets used by any Credit Party consist of original material or property
developed by such Credit Party, was lawfully acquired by such Credit Party from
the proper and lawful owner thereof or is otherwise lawfully licensed or used by
the Credit Parties. With respect to all software used by any Credit Party (other
than commercially available off-the-shelf software), such Credit Party is in
possession of all source and object codes related to each piece of software or
is the beneficiary of a source code escrow agreement, each such source code
escrow agreement being listed on Schedule 5.9.
10.Licenses and Permits
. Except as set forth in Schedule 5.10, each Credit Party (a) is in compliance
with and (b) has procured and is now in possession of, all licenses or permits
required by any applicable federal, state, provincial or local law, rule or
regulation for the operation of its business in each jurisdiction wherein it is
now conducting or proposes to conduct business and where the failure to procure
such licenses or permits could reasonably be expected to have a Material Adverse
Effect.
11.Default of Indebtedness; No Default
. Upon the contemporaneous repayment in full and termination of VMC’s Wells
Fargo Credit Facility, no Credit Party is in default in the payment of the
principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
that, in each case, with or without the lapse of time or the giving of notice,
or both, constitutes or could constitute an Event of Default hereunder.
12.No Default

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. No Credit Party is in default in the payment or performance of any of its
material contractual obligations and no default thereunder has occurred, in each
case that with or without the lapse of time or the giving of notice, or both,
constitutes or could constitute an Event of Default hereunder.
13.No Burdensome Restrictions
. No Credit Party is party to any contract or agreement the performance of which
could reasonably be expected to have a Material Adverse Effect. Each Credit
Party has heretofore delivered or made available to Agent true and complete
copies of all material contracts to which it is a party or to which it or any of
its properties is subject. No Credit Party has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
that is not a Permitted Encumbrance.
14.No Labor Disputes
. No Credit Party is involved in any material labor dispute; there are no
material strikes or walkouts or union organization of any Credit Party’s
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14.
15.Margin Regulations
. No Credit Party is engaged, nor will it engage, principally or as one of its
important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any Advance will be used for “purchasing” or “carrying”
“margin stock” as defined in Regulation U of such Board of Governors.
16.Investment Company Act
. No Credit Party is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
17.Disclosure
. No representation or warranty made by any Credit Party in this Agreement or in
any other Loan Document or in any financial statement, report, certificate or
any other document furnished in connection herewith or therewith contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading as of the time
it was made or deemed made or delivered; provided that any Credit Party’s
representation and warranty as to any forecast, projection or other statement
regarding future performance, future financial results or other future
development is limited to the fact that such forecast, projection or statement
was prepared in good faith on the basis of information and assumptions that such
Credit Party believed to be reasonable as of the date such material was prepared
(it being understood that the projections are subject to uncertainties and
contingencies, many of which are beyond such Credit Party’s control, and that no
assurance can be given that the projections will be realized). There is no fact
known to any Credit Party or which reasonably should be known to such Credit
Party that such Credit Party has not disclosed to Agent in writing with respect
to the transactions contemplated by this Agreement that could reasonably be
expected to have a Material Adverse Effect.
18.Swaps
. No Credit Party is a party to, nor will it be a party to, any swap agreement
whereby such Credit Party has agreed or will agree to swap interest rates or
currencies unless same provides that damages upon termination following an event
of default thereunder are payable on an unlimited “two-way basis” without regard
to fault on the part of either party.
19.Conflicting Agreements
. No provision of any mortgage, indenture, contract, agreement, judgment, decree
or order binding on any Credit Party or affecting the Collateral conflicts with,
or requires any Consent that has not already been obtained to, or would in any
way prevent the execution, delivery or performance of, the terms of this
Agreement or the other Loan Documents.
20.Application of Certain Laws and Regulations

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. No Credit Party is subject to any law, statute, rule or regulation that
regulates the incurrence of any Indebtedness that is not applicable to
businesses generally, including laws, statutes, rules or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
21.Business and Property of Credit Parties
. Upon and after the Closing Date, the Credit Parties do not propose to engage
in any business other than as set forth in Section 7.9 the business of
manufacturing to supplying equipment and furniture to schools and activities
necessary to conduct the foregoing. On the Closing Date, each Credit Party will
own all the property and possess all of the rights and Consents necessary for
the conduct of the business of such Credit Party.
22.Section 20 Subsidiaries
. No Credit Party intends to use and shall not use any portion of the proceeds
of the Advances, directly or indirectly, to purchase during the underwriting
period, or for 30 days thereafter, Ineligible Securities being underwritten by a
Section 20 Subsidiary.
23.Anti-Terrorism Laws
.
(a)General. No Credit Party (nor to the knowledge of any Credit Party, any
Affiliate of any Credit Party) is in violation of any Anti-Terrorism Law or
engages in or conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
(b)Executive Order No. 13224. Neither any Credit Party (nor to the knowledge of
any Credit Party, any Affiliate of any Credit Party) nor its respective agents
acting or benefiting in any capacity in connection with the Advances or other
transactions hereunder, is any of the following (each a “Blocked Person”):
(i)a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
(ii)a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;
(iii)a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv)a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order No. 13224;
(v)a Person or entity that is named as a “specially designated national” on the
most current list published by the U.S. Treasury Department Office of Foreign
Asset Control at its official website or any replacement website or other
replacement official publication of such list, or
(vi)a Person or entity who is affiliated or associated with a Person or entity
listed above.
Neither any Credit Party nor to the knowledge of any Credit Party, any of its
agents acting in any capacity in connection with the Advances or other
transactions hereunder (1) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (2) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.
24.Trading with the Enemy
. No Credit Party has engaged, nor does it intend to engage, in any business or
activity prohibited by the Trading with the Enemy Act.
25.Ricoh Financing Statement
. The Liens evidenced by UCC-1 Financing Statement No. 2009 3342604 filed with
the Delaware Secretary of State on October 16, 2009 naming Ricoh Americas
Corporation (“Ricoh”), as secured party, and VMC, as debtor, only encumber
office Equipment leased by VMC from Ricoh, In addition, one or more Borrowers
(a) leases three mail system machines from MailFinance (one machine is in
Torrance and two in Arkansas) and (b) rents from time to time equipment such as
forklifts, boom lifts, or vehicles on short term rental arrangements (less than
one year).

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26.Commercial Tort Claims
. No Credit Party holds any commercial tort claim it has asserted in excess of
$250,000, except as set forth on Schedule 5.26.
ARTICLE XVI

ARTICLE XVII

ARTICLE XVIIIAFFIRMATIVE COVENANTS
Each Credit Party shall, until indefeasible payment in full in cash (or other
immediately available funds) of the Obligations (other than Inchoate
Obligations) and termination of this Agreement:
1.Payment of Fees
. With respect to Borrowers, pay to Agent, without duplication: (a) all fees and
other amounts required to be paid pursuant to this Agreement and the other Loan
Documents, as and when the same become due; and (b) ON DEMAND all usual and
customary fees and expenses that Agent incurs in connection with (i) the
forwarding of Advance proceeds and (ii) the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).
Agent may, without making demand, charge Borrowers’ Account for all such fees
and expenses.
2.Conduct of Business and Maintenance of Existence and Assets
. (a) Conduct its business according to good business practices and maintain all
of its properties useful or necessary in its business in good working order and
condition (reasonable wear and tear excepted and except as may be disposed of or
sold in accordance with the terms of this Agreement), including all licenses,
patents, copyrights, design rights, trade names, trade secrets and trademarks
and take all actions necessary to enforce and protect the validity of any
intellectual property right or other right included in the Collateral; (b) keep
in full force and effect its existence and comply with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof except where failure to do so could not
reasonably be expected to have a Material Adverse Effect.
3.Violations
. Promptly notify Agent in writing of any violation of any law, statute,
regulation or ordinance of any Governmental Body, or of any agency thereof,
applicable to any Credit Party that could reasonably be expected to have a
Material Adverse Effect.
4.Government Receivables
. Take all steps necessary to protect Agent’s interest in the Collateral under
the Federal Assignment of Claims Act, the Uniform Commercial Code and all other
applicable state or local statutes or ordinances, and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with, any
Receivable arising out of contracts between any Credit Party and the United
States, any state or any department, agency or instrumentality of any of them;
provided, that such actions shall only be required under such applicable state
or local statutes or ordinances (i) at Agent’s request and (ii) with respect to
a Receivable in excess of $500,000.
5.Financial Covenants
.
(a)[Reserved].
(b)Fixed Charge Coverage Ratio. Cause to be maintained a Fixed Charge Coverage
Ratio of not less than 1.10 to 1.00 for the consecutive four fiscal quarter
period of the Borrowers ending January 31, 2017.
(c)Minimum EBITDA. Cause to be maintained, for the applicable consecutive fiscal
month period ending as of the applicable fiscal month end set forth below,
EBITDA as of such fiscal month end of not less than the amount set forth
opposite the respective fiscal month period below:

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Fiscal Month Period and Fiscal Month End
EBITDA
Eleven consecutive fiscal months ending
December 31, 2016
Not Measured
Twelve consecutive fiscal months ending
January 31, 2017
$7,304,000
Fiscal month ending February 29, 201628, 2017
Not Measured
Two consecutive fiscal months ending
March 31, 20162017
Not Measured
Three consecutive fiscal months ending
April 30, 20162017
$(3,626,0004,600,000)
Four consecutive fiscal months ending
May 31, 20162017
Not Measured
Five consecutive fiscal months ending
June 30, 20162017
Not Measured
Six consecutive fiscal months ending
July 31, 20162017
$5,256,0002,775,000
Seven consecutive fiscal months ending
August 31, 20162017
Not Measured
Eight consecutive fiscal months ending
September 30, 20162017
Not Measured
Nine consecutive fiscal months ending
October 31, 20162017
$10,904,000
Ten consecutive fiscal months ending
November 30, 20162017
Not Measured
Eleven consecutive fiscal months ending
December 31, 20162017
Not Measured
Twelve consecutive fiscal months ending
January 31, 2018
$7,400,000
Twelve consecutive fiscal months ending
January 31, 2017
$7,304,000

(d)Setting of Financial Covenants. The financial covenants in this Section 6.5
shall be set on thirty days prior to the first day of the first quarter of the
fiscal year, based on a forecast provided by Borrowers that is acceptable to
Agent.
6.Execution of Supplemental Instruments
. Execute and deliver to Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Agent may reasonably
request, in order that the full intent of this Agreement may be carried into
effect.
7.Payment of Indebtedness
. Pay, discharge or otherwise satisfy at or before maturity (subject, where
applicable, to specified grace periods and, in the case of the trade payables,
to normal payment practices) all its obligations and liabilities of whatever
nature, except when the failure to do so could not reasonably be expected to
have a Material Adverse Effect or when the amount or validity thereof is
currently being Properly Contested, subject at all times to any applicable
subordination arrangement in favor of any Secured Party.
8.Standards of Financial Statements
. Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10,
9.11, 9.12, 9.13 and 9.14 as to which GAAP is applicable to fairly present in
all material respects the financial condition and results of operations of the
Borrowers and their Subsidiaries (subject, in the case of interim financial
statements, to normal year-end audit adjustments and the absence of footnotes)
and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).

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9.Post-Closing Covenants. [Reserved].
(a)    On or before the sixtieth (60th) day following the Closing Date (or such
later date as Agent shall agree in its sole discretion):
(i)    cause Patent No. D471729 (App. No. 29147210 for "Four Legged Chair"),
Trademark Reg. No. 0,740,021 (MARTEST), and Trademark Reg. No. 4,040,857
(PLANSCAPE) the chain of title records in the Patent and Trademark Office to
properly reflect VMC as the registered owner of all such Intellectual Property;
and
(ii)    deliver to Agent, in form and substance satisfactory to Agent, a Phase
II environmental assessment in respect of the Real Property of Borrowers located
at 1265 Bruce Street, Conway, AR 72034.
(b)    On or before the ninetieth (90th) day following the Closing Date (or such
later date as Agent shall agree in its sole discretion) deliver to Agent a
credit card processor agreement in form and substance acceptable to Agent for
(i) credit card receivables processed by Discover and (ii) credit card
receivables processed by American Express.
(c)    No later than thirty (30) days after Agent’s written request therefor (or
such later date as Agent shall agree in its sole discretion), deliver each of
the following items, in form and substance satisfactory to Agent and Lenders,
with respect to the Real Property of Borrowers located at 1265 Bruce Street,
Conway, AR 72034:

(i)    an executed Mortgage in respect of such Real Property;
(ii)    a survey for such Real Property; and
(iii)    a fully paid mortgagee title insurance policy, in standard ALTA form,
issued by a title insurance company reasonably satisfactory to Agent, in an
amount equal to not less than the fair market value of such Real Property,
insuring such Mortgage to create a valid Lien on such Real Property with no
exceptions that Agent shall not have approved in writing and no survey
exceptions.
ARTICLE XIX

ARTICLE XX

ARTICLE XXINEGATIVE COVENANTS
No Credit Party shall, until indefeasible payment in full in cash (or other
immediately available funds) of the Obligations (other than Inchoate
Obligations) and termination of this Agreement:
1.Merger, Consolidation, Acquisition and Sale of Assets
.
(a)Enter into any merger, consolidation or other reorganization with or into any
other Person or acquire all or a substantial portion of the assets or Equity
Interests of any Person or permit any other Person to consolidate with or merge
with it, except for (i) any merger, consolidation or reorganization between the
Credit Parties, provided that any Borrower must be the surviving entity of any
such merger, consolidation or reorganization to which it is a party or (ii) any
merger, consolidation or reorganization between a Credit Party and Subsidiaries
of such Credit Party that are not Credit Parties so long as such Credit Party is
the surviving entity of any such merger.
(b)Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except (i) sales, leases, transfers and dispositions permitted by
Section 4.3 and (ii) any other sales, leases, transfers or dispositions
expressly permitted by this Agreement.
2.Creation of Liens
. Create or suffer to exist any Lien or transfer upon or against any of its
property or assets now owned or hereafter acquired, except Permitted
Encumbrances provided that nothing herein constitutes an admission by any
Secured Party

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that a Permitted Encumbrance has priority over any Lien in favor of Agent or any
other Secured Party, and Agent and the other Secured Parties reserve their
rights to assert such priority as against any Permitted Encumbrance.
3.Guarantees
. Become liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Secured Parties)
except (a) as disclosed on Schedule 7.3, (b) guarantees made in the Ordinary
Course of Business in respect of (i) performance bonds (other than performance
bonds in respect of sales of school furniture), surety or appeal bonds, notary
public bonds and bonds in support of Borrowers’ prior self-insurance program up
to an aggregate amount of $250,000 and (ii) unsecured bid bonds and unsecured
performance bonds in respect of sales of school furniture, (c) the endorsement
of checks in the Ordinary Course of Business and (d) guarantees in respect of
Indebtedness otherwise permitted hereunder.
4.Investments
. Purchase or acquire obligations or Equity Interests of, or any other interest
in, any Person, or make any investments, advances, loans or extensions of credit
to any Person, including any Parent, Subsidiary or Affiliate (each, an
“Investment”) except with respect to:
(a)the following cash equivalents (i) obligations issued or guaranteed by the
United States of America or any agency thereof, (ii) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (iii) certificates of time deposit and
bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(x) such bank has a combined capital and surplus of at least $500,000,000, or
(y) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (iv) bonds and other fixed income
instruments (including tax-exempt bonds) rated investment grade from companies
or public entities, and mutual funds that invest substantially all of their
assets in such bonds and other fixed income instruments, either owned directly
by a Credit Party or managed on a Credit Party’s behalf by any nationally
recognized investment advisor who or which has assets under management in excess
of $500,000,000, (v) repurchase agreements or similar arrangements with banks
which have capital and surplus of not less than $500,000,000, (vi) U.S. money
market funds that invest solely in obligations issued or guaranteed by the
United States of America or an agency thereof and (vii) mutual funds or money
market funds that invest substantially all of their assets in instruments
described in the subsections above;
(b)advances to officers, directors and employees of the Credit Parties in an
aggregate amount not to exceed $25,000 at any time outstanding, for travel,
entertainment, relocation and other purposes in the Ordinary Course of Business
and consistent with past practice;
(c)Investments of Borrowers in any Guarantor and Investments of any Subsidiary
in any Credit Party;
(d)Investments received in satisfaction of judgments or pursuant to any plan or
reorganization or similar arrangement upon the bankruptcy or insolvency of trade
creditors or account debtors;
(e)guarantees permitted by Section 7.3;
(f)Investments existing as of the date hereof and set forth on Schedule 7.4 and
any replacements, renewals or extensions of any such Investments; provided that
the amount of any such Investment is not increased at the time of such
replacement, renewal or extension of such Investment except by an amount equal
to a reasonable premium or other reasonable amount paid in respect of the
underlying obligations and fees and expenses reasonably incurred in connection
with such replacement, renewal or extension;
(g)Investments in respect of prepaid expenses, negotiable instruments held for
collection or lease, utility, workers’ compensation, in each case in the
Ordinary Course of Business;
(h)Investments pursuant to employee wage and benefit plans for the benefit of
the Credit Parties’ employees (including any “rabbi trust” account used in
connection with such purposes); and
(i)additional Investments not exceeding $50,000 in the aggregate outstanding at
any time.
5.[Intentionally Omitted.]
6.Capital Expenditures
. Contract for, purchase or make any expenditure or commitments for Capital
Expenditures in the 20152016 fiscal year, or any fiscal year thereafter, in an
aggregate amount for all Borrowers in excess of $5,000,000.7,400,000. The

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limitation on the amount of Capital Expenditures which may be made in any fiscal
year pursuant to the terms contained in this Section shall apply to Capital
Expenditures financed with Equipment Loans.
7.Dividends
. Declare, pay or make any dividend or distribution on any shares of the common
stock or preferred stock of any Credit Party (other than dividends or
distributions payable in its stock, or split-ups or reclassifications of its
stock, including, in respect of VMC’s Rights Plan) or apply any of its funds,
property or assets to the purchase, redemption or other retirement of any common
or preferred stock, or of any options to purchase or acquire any such shares of
common or preferred stock of any Credit Party (collectively, “Restricted
Payments”), except that:
(a)each Subsidiary may make Restricted Payments to any Credit Party that owns an
Equity Interest in such Subsidiary;
(b)each Credit Party and Subsidiary may purchase, redeem or otherwise acquire
Equity Interests issued by it solely with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other common
Equity Interests;
(c)each Borrower and Subsidiary may purchase (i) Equity Interests in any Credit
Party or options with respect to Equity Interests in any Credit Party held by
directors, employees or management of any Borrower or any of its Subsidiaries
(or their estates or authorized representatives) in connection with the death,
disability or termination of employment of any such directors, employees or
management and (ii) Equity Interests in any Credit Party for the purpose of
holding such Equity Interest for future issuance under an employee stock plan;
and
(d)Borrowers may make Restricted Payments to any Person that owns an Equity
Interest in any Borrower on the condition that (i) such Restricted Payments
shall not exceed $1,300,000 in the aggregate during any fiscal year; (ii)
Borrowers must have a Fixed Charge Coverage Ratio of not less than 1.10:1.00 for
the trailing twelve month period ending on the fiscal quarter immediately
preceding the date of any such Restricted Payment, (iii) no Default or Event of
Default shall have occurred or be continuing, and (iv) no Default or Event of
Default shall result from any such Restricted Payment.
8.Indebtedness
. Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade
debt) except in respect of::
(a)the Obligations;
(b)Indebtedness in respect of Capital Expenditures permitted under Section 7.6;
(c)without duplication, guarantees of any Credit Party or Subsidiary in respect
of Indebtedness of the Borrowers expressly permitted hereunder;
(d)intercompany Indebtedness between the Credit Parties;
(e)Indebtedness of any Credit Party or Subsidiary thereof incurred in the
Ordinary Course of Business in respect of bank guarantees, letters of credit or
similar instruments to support local regulatory requirements;
(f)Indebtedness disclosed on Schedule 7.8 and any permitted Refinancing
Indebtedness in respect thereof;
(g)additional unsecured Indebtedness in an aggregate principal amount not to
exceed $500,000 at any time outstanding;
(h)Indebtedness in respect of Capitalized Lease Obligations not in excess of
$150,000 in the aggregate at any time outstanding, solely to the extent arising
due to changes imposed subsequent to the Closing Date by GAAP requiring leases
characterized as operating leases as of the Closing Date (or any renewal or
replacement thereof) to be recharacterized as a Capital Lease Obligation; in the
aggregate at any time outstanding;
(i)Guarantees permitted under Section 7.3; and
(j)other Indebtedness incurred in the Ordinary Course of Business or arising as
result of operations of the Credit Parties in the Ordinary Course of Business,
in each case not constituting Funded Debt and not otherwise prohibited under
this Agreement or any other Loan Document.
9.Nature of Business
. Substantially change the nature of the business in which it is presently
engaged or any business substantially related or incidental thereto or any
reasonable extension thereof, as determined in good faith by the Credit Parties.
10.Transactions with Affiliates

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. Directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise enter into any transaction or
deal with, any Affiliate, except transactions on an arm’s-length basis on terms
and conditions no less favorable than terms and conditions that would have been
obtainable from a Person other than an Affiliate, except:
(a)any contract, agreement or business arrangement between Credit Parties; and
(b)reasonable and customary director, officer and employee compensation
(including bonuses) and other benefits (including retirement, health, stock
option and other benefit plans, any issuances of securities or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment agreements, stock options and stock ownership plans) and
reasonable and customary indemnification and reimbursement arrangements with
respect to such Persons, in each case incurred in the Ordinary Course of
Business and consistent in all material respects with past practice.
11.[Intentionally Omitted.]
12.Subsidiaries
.
(a)Form or acquire any Subsidiary unless (i) such Subsidiary is not a Foreign
Subsidiary and such Subsidiary expressly joins in this Agreement as a borrower
or becomes a Guarantor of the Obligations and grants a security interest in its
assets (subject to the same exceptions and limitations as the security interest
granted by the Credit Parties hereunder) and becomes jointly and severally
liable for the obligations of Borrowers hereunder, under the Revolving Credit
Notes and under any other agreement between any Borrower and Agent or Lenders,
in each case pursuant to a joinder agreement acceptable to Agent, and (ii) Agent
shall have received all documents, including legal opinions, it may reasonably
require to establish compliance with each of the foregoing conditions.
(b)Enter into any partnership, joint venture or similar arrangement.
13.Fiscal Year and Accounting Changes
. Change, without the prior written consent of Agent to be given or withheld in
its sole discretion, its fiscal year end from January 31 or make any change (a)
in accounting treatment and reporting practices except as required by GAAP or
the Securities Act or (b) in tax reporting treatment except as required by law.
14.Pledge of Credit
. Now or hereafter pledge any Secured Party’s credit on any purchases or for any
purpose whatsoever or use any portion of any Advance in or for any business
other than such Credit Party’s business as conducted on the date of this
Agreement.
15.Amendment of Articles of Incorporation, By-Laws
. Amend, modify or waive any term or material provision of its Certificate of
Incorporation or By-Laws in a manner adverse to Agent or any other Secured Party
in any material respect (including, without limitation of those amendments which
may be adverse to the Secured Parties, any such amendment that changes the
manner in which members of the board of directors are elected, vacancies on such
board are filled, the number of members that may constitute such board (or any
provision pursuant to which the number of members may be increased or decreased)
or the manner in which any class of shares is entitled to vote or the manner in
which the weight of such vote is calculated, including, in all cases any
amendment to Article IX of the Certificate of Incorporation of VMC, shall, in
each case, be materially adverse to Agent and the Lenders).
16.Compliance with ERISA
. (a)(i) Maintain, or permit any member of the Controlled Group to maintain, or
(ii) become obligated to contribute to, or permit any member of the Controlled
Group to become obligated to contribute to, any Pension Benefit Plan, other than
those Pension Benefit Plans disclosed on Schedule 5.8(d) or those Pension
Benefit Plans for which the Agent has provided its prior written consent; (b)
engage, or permit any member of the Controlled Group to engage, in any
non-exempt “prohibited transaction”, as that term is defined in section 406 of
ERISA and Section 4975 of the Code that could reasonably expected to have a
Material Adverse Effect, (c) fail to satisfy, or permit any member of the
Controlled Group to fail to satisfy, the minimum funding standards of the
Pension Funding Rules, (d) except as could not reasonably be expected to have a
Material Adverse Effect terminate, or permit any member of the Controlled

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Group to terminate, any Pension Benefit Plan where such event could result in
any liability of any Credit Party or any member of the Controlled Group or the
imposition of a lien on the property of any Credit Party or any member of the
Controlled Group pursuant to Section 430(k) of the Code or Section 4068 of
ERISA, (e) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan that could reasonably be expected
to have a Material Adverse Effect; (f) fail promptly to notify Agent of the
occurrence of any Termination Event that could reasonably be expected to have a
Material Adverse Effect, (g) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the requirements of ERISA or the Code
or other Applicable Laws in respect of any Plan, that could reasonably be
expected to have a Material Adverse Effect or (h) postpone or delay, or allow
any member of the Controlled Group to postpone or delay, any funding requirement
under the Pension Funding Rules with respect of any Pension Benefit Plan.
17.Prepayment of Funded Debt
. At any time, directly or indirectly, prepay any Funded Debt (other than the
Obligations), or repurchase, redeem, retire or otherwise acquire any Funded Debt
of any Credit Party, in an amount not in excess of $150,000 in the aggregate in
any fiscal year of the Borrowers.
18.Anti-Terrorism Laws
. No Credit Party shall, until satisfaction in full of the Obligations and
termination of this Agreement, nor shall it permit agent to:
(a)Conduct any business or engage in any transaction or dealing with any Blocked
Person, including the making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person.
(b)Deal in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order No. 13224.
(c)Engage in or conspire to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or
any other Anti-Terrorism Law. The Credit Parties shall deliver to Lenders any
certification or other evidence requested from time to time by any Lender in its
sole discretion, confirming the Credit Parties’ compliance with this Section
7.18.
19.Membership/Partnership Interests
. Treat or permit any of its Subsidiaries to (a) treat its limited liability
company membership interests or partnership interests, as the case may be, as
securities as contemplated by the definition of “security” in Section 8-102(15)
and by Section 8-103 of Article 8 of Uniform Commercial Code or (b) certificate
its limited liability company membership interests or partnership interests, as
the case may be, unless, in each case, such certificates are contemporaneously
with such treatment delivered to Agent together with an endorsement in blank.
20.Trading with the Enemy Act
. Engage in any business or activity in violation of the Trading with the Enemy
Act.
21.Clean Down
. Commencing in calendar year 2015, during the period between October 1st and
December 31st of each year, permit Revolving Advances in the aggregate to exceed
$6,000,000 at any time for a period of 30 consecutive days during such period.
22.Leases
. Enter as lessee into any lease arrangement for real or personal property
(unless capitalized and permitted under Section 7.6) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed
$10,000,000 in any one fiscal year in the aggregate for all Borrowers.
ARTICLE XXII

ARTICLE XXIII

ARTICLE XXIVCONDITIONS PRECEDENT
1.Conditions to Initial Advances

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. The agreement of Lenders to make the initial Advances requested to be made on
the Closing Date , and of Agent to issue or cause to be issued any Letter(s) of
Credit to be issued on the Closing Date, if any, is subject to the satisfaction,
or waiver by Agent, immediately prior to or concurrently with the making of such
Advances, of the following conditions precedent:
(a)Loan Documents. Agent shall have received (i) the Revolving Credit Notes duly
executed and delivered by an authorized officer of each Borrower, and (ii) each
other Loan Document to be delivered on the Closing Date executed and delivered
by each of the parties thereto;
(b)Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related
agreement or under law or reasonably requested by Agent to be filed, registered
or recorded is in form appropriate for filing, registration and recordation, as
applicable, in order to create, in favor of Agent, a perfected, first priority
security interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(c)Corporate Proceedings of Borrowers. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board
of Directors of each Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Revolving Credit Notes, each Mortgage, and
any related agreements, (collectively the “Documents”) and (ii) the granting by
each Borrower of the security interests in and liens upon the Collateral in each
case certified by the Secretary or an Assistant Secretary of each Borrower as of
the Closing Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(d)Incumbency Certificates of Borrowers. Agent shall have received a certificate
of the Secretary or an Assistant Secretary of each Borrower, dated the Closing
Date, as to the incumbency and signature of the officers of each Borrower
executing this Agreement, the other Loan Documents, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e)Corporate Proceedings of Guarantors. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board
of Directors of each Guarantor authorizing the execution, delivery and
performance of the Guaranty and each other Loan Document to which it is a party
certified by the Secretary or an Assistant Secretary of each Guarantor as of the
Closing Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(f)Incumbency Certificates of Guarantors. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Guarantor, dated
the Closing Date, as to the incumbency and signature of the officers of each
Guarantor executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(g)Certificates. Agent shall have received a copy of the Articles or Certificate
of Incorporation of each Borrower and each Guarantor, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of Incorporation together with copies of the By-Laws of each
Borrower and each Guarantor and all agreements of each Borrower’s and each
Guarantor’s shareholders certified as accurate and complete by the Secretary of
each Borrower and such Guarantor;
(h)Good Standing Certificates. Agent shall have received good standing
certificates for each Borrower and each Guarantor dated not more than 30 days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each Borrower’s and each Guarantor’s jurisdiction of incorporation
and each jurisdiction where the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect;
(i)Legal Opinion. Agent shall have received the executed legal opinion of
Gibson, Dunn & Crutcher LLP in form and substance reasonably satisfactory to
Agent, which shall cover such matters incident to the transactions contemplated
by this Agreement, the other Loan Documents, and related agreements as Agent may
reasonably require and each Credit Party hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;
(j)No Litigation. (i) No litigation, investigation or proceeding before or by
any arbitrator or Governmental Body shall be continuing or threatened in writing
against any Borrower or any Guarantor or against the

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officers or directors of any Borrower or any Guarantor (A) in connection with
this Agreement, the other Loan Documents or any of the transactions contemplated
thereby and that, in the reasonable opinion of Agent, is deemed material or (B)
that could, in the reasonable opinion of Agent, have a Material Adverse Effect;
and (ii) no injunction, writ, restraining order or other order of any nature
materially adverse to any Borrower or any Guarantor or the conduct of its
business or inconsistent with the due consummation of the Transactions shall
have been issued by any Governmental Body;
(k)Financial Condition Certificates. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(k) (the “Financial
Condition Certificate”).
(l)Collateral Examination. Agent shall have completed Collateral examinations
and received appraisals, the results of which shall be in form and substance
satisfactory to Agent in its Permitted Discretion, of the Receivables,
Inventory, General Intangibles, Real Property, Leasehold Interest and Equipment
of each Borrower and all books and records in connection therewith;
(m)Fees. Agent shall have received all fees payable to Agent and Lenders on or
prior to the Closing Date hereunder, including pursuant to Article III hereof;
(n)Pro Forma Financial Statements. Agent shall have received a copy of the
Projections and Pro Forma Financial Statements, which shall demonstrate the
ability of Borrowers to service their Indebtedness and perform all their
Obligations hereunder and otherwise which must be satisfactory in all respects
to Agent;
(o)Insurance. Agent shall have received in form and substance satisfactory to
Agent, certified copies of Borrowers’ casualty insurance policies, together with
loss payable endorsements on Agent’s standard form of loss payee endorsement
naming Agent as loss payee, and certified copies of Borrowers’ liability
insurance policies, together with endorsements naming Agent as a co-insured and
lender loss payee, as may be required by Agent, and if any Real Property is
located in an area designated as a flood hazard area by any Governmental Body,
the Borrowers will provide the Agent, at the Borrowers’ expense, a policy of
flood insurance in an amount equal to the lesser of (i) the value of the
applicable Real Property to be insured and (ii) the maximum amount available
under the federal flood insurance program;
(p)Title Insurance. Agent shall have received fully paid mortgagee title
insurance policies (or binding commitments to issue title insurance policies,
marked to Agent’s satisfaction to evidence the form of such policies to be
delivered with respect to the Mortgage delivered on the Closing Date), in
standard ALTA form, issued by a title insurance company reasonably satisfactory
to Agent, each in an amount equal to not less than the fair market value of the
Real Property subject to a Mortgage on the Closing Date, insuring such Mortgage
to create a valid Lien on the applicable Real Property with no exceptions that
Agent shall not have approved in writing and no survey exceptions;
(q)Environmental Reports. Agent shall have received all environmental studies
and reports prepared by independent environmental engineering firms with respect
to all Real Property owned or leased by any Credit Party, including, Phase I
environmental assessments and satisfactory flood certifications;
(r)Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances
made pursuant to this Agreement;
(s)Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;
(t)Consents. Agent shall have received any and all Consents necessary to permit
the effectuation of the transactions contemplated by this Agreement and the
other Loan Documents; and, Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(u)No Adverse Material Change. (i) since January 31, 2011, there shall not have
occurred any event, condition or state of facts that could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to Agent or Lenders shall have been proven to be inaccurate
or misleading in any material respect;
(v)Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises
leased by the Credit Parties at which Inventory and books and records are
located;
(w)Mortgages. Agent shall have received in form and substance satisfactory to
Lenders (i) an executed Mortgage in respect of the Credit Parties’ Real Property
located at 1701 Sturgis Road, Conway, Arkansas and (ii) title policies and (ii)
surveys, for such Real Property;

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(x)Contract Review. Agent shall have reviewed (i) all material contracts of the
Credit Parties including leases, union contracts, labor contracts, vendor supply
contracts, license agreements and distributorship agreements and (ii) all
agreements with trade vendors including terms of sales provided to the Credit
Parties and any remaining past due amounts owed to vendors, and such contracts
and agreements, shall be satisfactory in all respects to Agent;
(y)Closing Certificate. Agent shall have received a closing certificate signed
by the Vice President Finance of each Credit Party dated as of the date hereof,
stating that (i) all representations and warranties set forth in this Agreement
and the other Loan Documents are true and correct in all respects on the Closing
Date (ii) the Credit Parties are on such date in compliance with all the terms
and provisions set forth in this Agreement and the other Loan Documents and
(iii) on such date (after giving effect to the repayment and termination of
VMC’s Wells Fargo Credit Facility) no Default or Event of Default has occurred
or is continuing;
(z)Borrowing Base. Agent shall have received a Borrowing Base Certificate from
Borrowers that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Borrowers on the Closing Date;
(aa)Undrawn Availability. After giving effect to the initial Advances hereunder,
Borrowers shall have Undrawn Availability (after payment of all fees and
transaction expenses in connection with the Loan Documents, and subtraction of
all trade payables aged beyond 60 days past due) of at least $5,500,000; and
(ab)Compliance with Laws. Agent shall be reasonably satisfied that each Credit
Party is in compliance with all pertinent federal, state, local or territorial
regulations, including those with respect to the Federal Occupational Safety and
Health Act, the Environmental Protection Act, ERISA and the Trading with the
Enemy Act.
(ac)Repayment of Indebtedness. Agent shall have received a copy of a payoff
letter and lien releases in respect of the Indebtedness of Borrowers outstanding
under the Second Amended and Restated Credit Agreement, dated as of March 12,
2008, between VMC and Wells Fargo, National Association (as in effect on the
date hereof, “VMC’s Wells Fargo Credit Facility”), and all Indebtedness and
commitments to lend thereunder shall be paid in full and terminated, as
applicable, on the Closing Date substantially contemporaneously with the initial
Advances made hereunder.
(ad)Corporate. Agent shall be reasonably satisfied with the legal and capital
structure of the Credit Parties and their respective Subsidiaries.
(ae)Other. All (i) corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel, and (ii) documents,
instruments and agreements required to be delivered by or on behalf of Borrowers
and Guarantors pursuant to the “closing checklist” provided by Agent in
connection with this Agreement shall be delivered in form and substance
satisfactory to Agent and its counsel.
2.Conditions to Each Advance
. The agreement of Lenders to make any Advance requested to be made on any date
(including the initial Advance), and of Agent to issue or cause to be issued any
Letter of Credit requested to be issued on any date (including the Closing
Date), is subject to the satisfaction of the following conditions precedent as
of the date such Advance is made:
(a)Representations and Warranties. Each of the representations and warranties
made by any Credit Party in or pursuant to this Agreement, the other Loan
Documents and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement, the other Loan Documents or any related agreement shall be true
and correct in all material respects (except that any such representation or
warranty that is already qualified or modified by materiality shall be true and
correct in all respects) on and as of such date as if made on and as of such
date, except for those representations and warranties that relate solely to an
earlier date, in which case such representation or warranty shall be true and
correct in all material respects as of such date;
(b)No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date;
(c)No Material Adverse Effect. No Material Adverse Effect shall have occurred on
or prior to such date, or would result after giving effect to the Advances
requested to be made on such date;
Provided, however, that, notwithstanding Sections 8.2(a), (b) and (c), Agent, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall

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not be deemed a waiver of any such Event of Default or Default and shall not
obligate any Secured Party to make any future Advances; and
(d)Maximum Advances. In the case of any type of Advance requested to be made,
after giving effect thereto, the aggregate amount of such type of Advance shall
not exceed the maximum amount of such type of Advance permitted under this
Agreement.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
3.Conditions to Each Equipment Loan
. The agreement of Lenders to make any Equipment Loan is subject to satisfaction
of the following conditions precedent: (a) receipt by Agent of (i) a copy of the
invoice relating to the equipment being purchased, (ii) evidence that such
equipment has been shipped to the applicable Borrower, (iii) evidence that the
requested Equipment Loan does not exceed (x) eighty-five percent (85%) of the
Net Invoice Cost of such new equipment purchased by such Borrower or (y) eighty
percent (80%) of the Net Invoice Cost of such used equipment purchased by such
Borrower, and (iv) such other documentation and evidence that Agent may request;
and (b) after giving effect thereto, the aggregate outstanding principal amount
of Equipment Loans shall not exceed the Maximum Equipment Loan Amount.
ARTICLE XXV

ARTICLE XXVI

ARTICLE XXVIIINFORMATION AS TO CREDIT PARTIES
Until indefeasible payment in full in cash (or other immediately available
funds) of the Obligations (other than Inchoate Obligations) and termination of
this Agreement, each Credit Party shall, or (except with respect to Section
9.11) shall cause Borrowing Agent on its behalf to:
1.Disclosure of Material Matters
. Immediately upon learning thereof, report to Agent all matters materially
adversely affecting the value, enforceability or collectibilitycollectability of
any portion of the Collateral in excess of $100,000 in the aggregate (other than
Inventory held by employees of the Credit Parties for marketing and sales
purposes not in excess of $10,000 in the aggregate), including any Credit
Party’s reclamation or repossession of, or the return to any Credit Party of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
2.Schedules
. During the Peak Season, deliver to Agent on or before the fifteenth (15th) day
of each month (or as frequently as Agent shall require during the existence of a
Default) a Borrowing Base Certificate in form and substance satisfactory to
Agent (which shall be calculated as of the last day of the prior month and which
shall not be binding upon Agent or restrictive of Agent’s rights under this
Agreement) and on or before the Wednesday of each week (or as frequently as
Agent shall require during the existence of a Default) as and for the prior week
(a) accounts receivable roll forwards and ageings inclusive of reconciliations
to the general ledger, (b) accounts payable schedules inclusive of
reconciliations to the general ledger, and (c) Inventory reports. At all times
other than during the Peak Season, deliver to Agent on or before the fifteenth
(15th) day of each month (or as frequently as Agent shall require during the
existence of a Default) as and for the prior month (a) accounts receivable
ageings inclusive of reconciliations to the general ledger, (b) accounts payable
schedules inclusive of reconciliations to the general ledger, (c) Inventory
reports, (d) current ‘do not mail’ planscape accounts receivable detail and (e)
a Borrowing Base Certificate in form and substance satisfactory to Agent (which
shall be calculated as of the last day of the prior month and which shall not be
binding upon Agent or restrictive of Agent’s rights under this Agreement).
Borrowers shall also deliver to Agent on or before Wednesday of each week (or as
frequently as Agent shall require during the existence of a Default) as and for
the prior week, a report of the sales and collections activity for such week. In
addition, each Borrower will deliver to Agent at such intervals as Agent may
require: (i) confirmatory assignment schedules, (ii) copies of Customer’s
invoices, (iii) evidence of shipment or delivery, and (iv) such further
schedules, documents and/or information regarding the Collateral as Agent may
require including trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it considers advisable and may do whatever it deems reasonably necessary to
protect its interests hereunder. The items to be provided under this Section 9.2
are to be in form satisfactory

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to Agent and executed by Borrowing Agent and delivered to Agent from time to
time solely for Agent’s convenience in maintaining records of the Collateral,
and any Borrower’s failure to deliver any of such items to Agent shall not
affect, terminate, modify or otherwise limit Agent’s Lien with respect to the
Collateral.
3.Environmental Reports
. Furnish Agent, concurrently with the delivery of the financial statements
referred to in Sections 9.7 and 9.8, with a Compliance Certificate stating (to
the best of his knowledge) that each Credit Party is in compliance in all
material respects with all federal, state and local Environmental Laws. To the
extent any Credit Party is not in compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action such Credit Party will implement in order to achieve full
compliance.
4.Litigation
. Promptly notify Agent in writing of any claim, litigation, suit or
administrative proceeding affecting any Credit Party, whether or not the claim
is covered by insurance, and of any litigation, suit or administrative
proceeding, which in any such case adversely affects the Collateral or that
could reasonably be expected to have a Material Adverse Effect.
5.Material Occurrences
. Promptly notify Agent in writing upon the occurrence of (a) any Event of
Default or Default; (b) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied (after
giving effect to any reconciliation required to accompany such financial
statements pursuant to Section 1.1), the financial condition or operating
results of any Borrower as of the date of such statements; (c) any accumulated
retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Credit Party to a tax imposed by Section 4971 of the Code; (d) each
and every default by any Credit Party that might result in the acceleration of
the maturity of any Funded Debt, including the names and addresses of the
holders of such Funded Debt with respect to which there is a default existing or
with respect to which the maturity has been or could be accelerated, and the
amount of such Funded Debt; and (e) any other development in the business or
affairs of any Credit Party that could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action the
Credit Parties propose to take with respect thereto.
6.Government Receivables
. Upon request of Agent, provide Agent with a listing of all Receivables that
arise out of contracts between any Credit Party and the United States, any
state, or any department, agency or instrumentality of any of them, in such
reasonable detail as Agent may require.
7.Annual Financial Statements
. Furnish Agent and Lenders within ninety (90) days after the end of each fiscal
year of VMC, financial statements of Borrowers and their Subsidiaries on a
consolidating (if applicable) and consolidated basis including statements of
income and stockholders’ equity and cash flow from the beginning of the current
fiscal year to the end of such fiscal year and the balance sheet as at the end
of such fiscal year, all prepared in accordance with GAAP consistently applied,
and in reasonable detail and reported upon without a “going concern” or like
qualification by an independent certified public accounting firm selected by
Borrowers and satisfactory to Agent (the “Accountants”). The report of the
Accountants shall be prepared in accordance with generally accepted accounting
standards. In addition, the reports shall be accompanied by a Compliance
Certificate.
8.Quarterly Financial Statements
. Furnish Agent and Lenders within forty five (45) days after the end of (i)
each fiscal quarter (other than the fourth fiscal quarter), an unaudited balance
sheet of Borrowers and their Subsidiaries on a consolidating (if applicable) and
consolidated basis and unaudited statements of income and stockholders’ equity
and cash flow of Borrowers and their Subsidiaries on a consolidating (if
applicable) and consolidated basis reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and fairly representing the
financial condition of the Borrowers in all material respects, subject to normal
and recurring year end adjustments and to the absence of footnotes and (ii) the
fourth fiscal quarter a summary of the last three month’s profits and losses,
and cash flow. The reports shall be accompanied by a Compliance Certificate.

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9.Monthly Financial Statements
. Furnish Agent and Lenders within thirty (30) days after the end of each month,
an unaudited balance sheet of Borrowers and their Subsidiaries on a
consolidating (if applicable) and consolidated basis and unaudited statements of
income and stockholders’ equity and cash flow of Borrowers and their
Subsidiaries on a consolidating (if applicable) and consolidated basis
reflecting results of operations from the beginning of the fiscal year to the
end of such month and for such month, prepared on a basis consistent with prior
practices and fairly representing the financial condition of the Borrowers in
all material respects, subject to normal and recurring year end adjustments and
to the absence of footnotes. The reports shall be accompanied by a Compliance
Certificate.
10.Other Reports
. Furnish Agent as soon as available, but in any event within ten (10) days
after the issuance thereof, (a) with copies of such financial statements,
reports and returns as each Borrower shall send to its stockholders, (b) with
copies of each annual report, proxy or financial statement or other report or
communication sent to the shareholders of Borrowers, and copies of all annual,
regular, periodic and special reports and registration statements which
Borrowers may file or be required to file with the SEC under Section 13 or 15(d)
of the Exchange Act, and not otherwise required to be delivered to Lenders
pursuant to other provisions of this Section, and (c) with copies of any other
report or other document that was filed by Borrower or any of its Subsidiaries
with any Governmental Authority;
11.Additional Information
. Furnish Agent with such additional information as Agent shall reasonably
request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Revolving Credit Notes have
been complied with by the Credit Parties including, without the necessity of any
request by Agent, (a) copies of all environmental audits and reviews, (b) at
least thirty (30) days prior thereto, notice of any Credit Party’s opening of
any new office or place of business or any Credit Party’s closing of any
existing office or place of business (other than home offices of individual
marketing and sales employees and regional sales managers of the Credit
Parties), and (c) promptly upon any Credit Party’s learning thereof, notice of
any labor dispute to which any Credit Party may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which any Credit Party is a party or by which any
Credit Party is bound.
12.Projected Operating Budget
. Commencing with fiscal year 2012, furnish Agent and Lenders, (a) no later than
thirty (30) days prior to the beginning of each Borrower’s fiscal years a draft
of, and (b) no later than thirty (30) days after the beginning of each such
fiscal years a final board of directors approved, month by month projected
operating budget and cash flow of Borrowers and their Subsidiaries on a
consolidating (if applicable) and consolidated basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections, in the case of the
foregoing clause (b), to be accompanied by a certificate signed by the President
or Vice President Finance of each Borrower to the effect that such projections
have been prepared on the basis of sound financial planning practice consistent
with past budgets and financial statements and that such officer has no reason
to question the reasonableness of any material assumptions on which such
projections were prepared.
13.Variances From Operating Budget
. Furnish Agent, concurrently with the delivery of the financial statements
referred to in Section 9.7 and each quarterly report, a written report
summarizing all material variances from budgets submitted by Borrowers pursuant
to Section 9.12 and a discussion and analysis by management with respect to such
variances.
14.Notice of Suits, Adverse Events
. Furnish Agent with prompt written notice of: (a) any lapse or other
termination of any Consent issued to any Credit Party by any Governmental Body
or any other Person that is material to the operation of any Credit Party’s
business; (b) any refusal by any Governmental Body or any other Person to renew
or extend any such Consent; and (c) copies of any periodic or special reports
filed by any Credit Party with any Governmental Body or Person, if such reports
indicate any material change in the business, operations, affairs or condition
of any Credit Party, or if copies thereof are requested by Lender; and (d)
copies of any material notices and other communications from any Governmental
Body or Person that specifically relate to any Credit Party.

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15.ERISA Notices and Requests
. Furnish Agent with prompt written notice in the event that (a) any Credit
Party or any member of the Controlled Group knows or has reason to know that a
Termination Event has occurred, together with a written statement describing
such Termination Event and the action, if any, which any Credit Party or any
member of the Controlled Group has taken, is taking, or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, Department of Labor or PBGC with respect thereto, (b) any
Credit Party or any member of the Controlled Group knows or has reason to know
that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) that could reasonably be expected to have a Material Adverse Effect
has occurred together with a written statement describing such transaction and
the action which such Credit Party or such member of the Controlled Group (as
applicable) has taken, is taking or proposes to take with respect thereto, (c) a
funding waiver request has been filed with respect to any Pension Benefit Plan
together with all communications received by any Credit Party or any member of
the Controlled Group with respect to such request, (d) any increase in the
benefits of any frozen Pension Benefit Plan as set forth in Schedule 5.8(d), (e)
any Credit Party or any member of the Controlled Group shall receive from the
PBGC a notice of intention to terminate a Pension Benefit Plan or to have a
trustee appointed to administer a Pension Benefit Plan, together with copies of
each such notice, (f) any Credit Party or any member of the Controlled Group
shall receive any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of a Pension Benefit Plan under Section
401(a) of the Code, together with copies of each such letter; (g) any Credit
Party or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability with respect to a Multiemployer Plan,
together with copies of each such notice; (h) any Credit Party or any member of
the Controlled Group shall fail to make a required installment or any other
required payment under the Pension Funding Rules on or before the due date for
such installment or payment; (i) any Credit Party or any member of the
Controlled Group knows that (i) a Multiemployer Plan has been terminated, (ii)
the administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan. The
Credit Parties shall promptly deliver to Agent all information required to be
reported to the PBGC under Section 4010 of ERISA and such other documents or
governmental reports or filings related to any Pension Benefit Plan as Agent
shall reasonably request. Promptly following an request therefor, the Credit
Parties shall deliver to the Agent copies of any documents or notices described
in Sections 101(j), (k) or (l) of ERISA that any Credit Party or any member of
the Controlled Group may request with respect to any Pension Benefit Plan or
Multiemployer Plan, as applicable; provided, that, if any Credit Party or any
member of the Controlled Group has not requested such documents or notices from
the administrator or sponsor of the applicable Pension Benefit Plan or
Multiemployer Plan, then the applicable Credit Party or the applicable member of
the Controlled Group shall, upon request by Agent, promptly make a request for
such documents or notices from such administrator or sponsor and shall provide
copies of such documents and notices to Agent promptly after receipt thereof.
16.Additional Documents
. Execute and deliver to Agent, upon request, such documents and agreements as
Agent may, from time to time, reasonably request to carry out the purposes,
terms or conditions of this Agreement.
ARTICLE XXVIII

ARTICLE XXIX

ARTICLE XXXEVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute an
“Event of Default”:
1.Nonpayment
. Failure by any Borrower to pay any principal or interest on the Obligations
when due, whether due at maturity or by reason of acceleration pursuant to the
terms of this Agreement or by notice of intention to prepay, or by required
prepayment or failure to pay any other liabilities or make any other payment,
fee or charge provided for herein or in any other Loan Document when due;
2.Breach of Representation
. Any representation or warranty made or deemed made by any Credit Party in this
Agreement, any other Loan Document or in any related agreement, certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been incorrect in any material respect
or when taken together

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with all such other information delivered under the Loan Documents, misleading
in any material respect (except, in each case, that any such representation or
warranty that is already qualified or modified by materiality shall be true and
correct in all respects) on the date when made or deemed to have been made;
3.Noncompliance
. Except as otherwise provided in Section 10.1, failure or neglect of any Credit
Party to perform, keep or observe any term, provision, condition or covenant:
(a)contained in Sections 4.3, 4.5, 4.6, 4.7, 4.11, 4.21, 6.5, 6.6, 6.7, Sections
7.1 through 7.22 or Sections 9.7, 9.8, 9.9, 9.12 and 9.13;
(b)contained in Sections 9.1 through 9.15 (other than Sections 9.7, 9.8, 9.9,
9.12 and 9.13), which remains unremedied for a period of five (5) Business Days;
(c)contained in any other provisions of this Agreement or any of the other Loan
Documents, which remains unremedied for a period of thirty (30) days after the
earlier of (x) knowledge of such failure by any Credit Party, or (y) written
notice of such failure to Borrowing Agent by Agent or any Lender;
4.Judicial Actions
. Issuance of a notice of Lien, levy, assessment, injunction or attachment
against any Credit Party’s Inventory, Receivables or other property having an
aggregate value in excess of $250,000 that is not stayed or lifted within thirty
(30) days;
5.Judgments
. Any judgment or judgments are rendered against any Credit Party for an
aggregate amount in excess of $250,000 and (a) enforcement proceedings shall
have been commenced by a creditor upon such judgment, (b) there shall be any
period of thirty (30) consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, shall not be in
effect, or (c) any such judgment results in the creation of a Lien upon any of
the Collateral (other than a Permitted Encumbrance);
6.Bankruptcy
. Any Credit Party shall: (a) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a substantial part of its property;
(b) make a general assignment for the benefit of creditors; (c) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect); (d) be adjudicated a bankrupt or insolvent; (e) file a petition
seeking to take advantage of any other law providing for the relief of debtors;
(f) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws; or
(g) take any action for the purpose of effecting any of the foregoing;
7.Inability to Pay
. Any Credit Party shall admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present business;
8.Affiliate Actions
. Any Affiliate of any Credit Party (a) violates any Anti-Terrorism Law or
engages in or conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law, (b) shall, or its respective
agents acting or benefiting in any capacity in connection with the Advances or
other transactions hereunder, shall be a Blocked Person, (c) (i) conducts any
business or engages in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, (ii) deals in, or otherwise engages
in, any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order No. 13224, or (iii) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law.
9.Lien Priority

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. Any Lien created hereunder or provided for hereby or under any related
agreement for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest;
10.Cross Default
. A default of the obligations of any Credit Party shall occur under (i) any
agreement to which it is a party in respect of Funded Debt in excess of $200,000
in the aggregate for all such Persons, or (ii) any other agreement to which it
is a party that materially adversely affects its condition, affairs or prospects
(financial or otherwise), in each case which default is not cured within any
applicable grace period;
11.Breach of Guaranty
. Termination or breach of any Guaranty or Guarantor Security Agreement or
similar agreement executed and delivered to Agent in connection with the
Obligations of any Borrower, or if any Guarantor attempts to terminate,
challenges (in writing) the validity of, or its liability under, any such
Guaranty or Guaranty Security Agreement or similar agreement;
12.Change of Control
. Any Change of Control shall occur;
13.Invalidity
. Any material provision of this Agreement or any other Loan Document shall, for
any reason, cease to be valid and binding on any Credit Party, or any Credit
Party shall so claim in writing to Agent or any Lender;
14.Licenses
. (a) Any Governmental Body shall (i) revoke, terminate, suspend or adversely
modify any license, permit, patent trademark or trade name of any Credit Party,
or (ii) commence proceedings to suspend, revoke, terminate or adversely modify
any such license, permit, trademark, trade name or patent and such proceedings
shall not be dismissed or discharged within sixty (60) days, or (iii) schedule
or conduct a hearing on the renewal of any license, permit, trademark, trade
name or patent necessary for the continuation of any Credit Party’s business and
the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, trade name or patent; or (b) any agreement that is
necessary or material to the operation of any Credit Party’s business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement could, in each case of this
Section 10.15, reasonably be expected to have a Material Adverse Effect;
15.Seizures
. Any portion of the Collateral shall be seized or taken by a Governmental Body,
or Credit Party or the title and rights of any Credit Party that is the owner of
any material portion of the Collateral shall have become the subject matter of
claim, litigation, suit or other proceeding that might, in the opinion of Agent,
upon final determination, result in impairment or loss of the security provided
by this Agreement or the other Loan Documents;
16.Operations
. The operations of any Credit Party’s manufacturing facility are interrupted at
any time for more than (a) five (5) consecutive days during the Peak Season or
(b) fifteen (15) consecutive days at any other time, in each case unless such
Credit Party shall (i) be entitled to receive for such period of interruption,
proceeds of business interruption insurance sufficient to assure that its per
diem cash needs during such period is at least equal to its average per diem
cash needs for the consecutive six month period immediately preceding the
initial date of interruption and (ii) receive such proceeds in the amount
described in clause (a) preceding not later than thirty (30) days following the
initial date of any such interruption; provided, however, that notwithstanding
the provisions of clauses (i) and (ii) of this section, an Event of Default
shall be deemed to have occurred if such Credit Party shall be receiving the
proceeds of business interruption insurance for a period of thirty (30)
consecutive days; or
17.Pension Plans
. Any failure by any Credit Party to comply with the requirements of Sections
7.16 or 9.15 hereof, determined without regard to any materiality limitation or
threshold set forth therein, shall occur or exist with respect to any Pension
Benefit

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Plan and, as a result of such event or condition, together with all other such
events or conditions, any Credit Party or any member of the Controlled Group
shall incur, or in the opinion of Agent be reasonably likely to incur, a
liability to a Pension Benefit Plan or the PBGC (or both) which, in the
reasonable judgment of Agent, would be reasonably likely to result in aggregate
liability to the Credit Parties (or any of them) of $250,000 or more; or
18.Section 6.5 Covenants
. Any covenant in Section 6.5 becomes inapplicable due to the failure of such
covenant to apply by its terms in a future period, and the Borrowers and Agent
fail to come to an agreement acceptable to Agent in its sole discretion to amend
the covenant to apply to future periods.
ARTICLE XXXI

ARTICLE XXXII

ARTICLE XXXIIILENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT
1.Rights and Remedies
.
(a)Upon the occurrence of (i) an Event of Default pursuant to Section 10.6 all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any
of the other Events of Default and at any time thereafter (such Event of Default
not having previously been waived), at the option of Required Lenders all
Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to
make Advances and (iii) a filing of a petition against any Credit Party in any
involuntary case under any state or federal bankruptcy laws, all Obligations
shall be immediately due and payable and the obligation of Lenders to make
Advances hereunder and the obligation of Agent to issue or cause the issuance of
any Letter of Credit will be terminated other than as may be agreed to by Agent
and Lenders and approved by an appropriate order of the bankruptcy court or
other governmental Body having jurisdiction over such Credit Party in connection
therewith in form and substance satisfactory to Agent and Lenders in their sole
discretion. Upon the occurrence of any Event of Default, Agent shall have the
right to exercise any and all rights and remedies provided for herein, under the
other Loan Documents, under the Uniform Commercial Code and at law or equity
generally, including the right to foreclose the security interests granted
herein and to realize upon any Collateral by any available judicial procedure
and/or to take possession of and sell any or all of the Collateral with or
without judicial process. Agent may enter any of any Credit Party’s premises or
other premises without legal process and without incurring liability to any
Credit Party therefor, and Agent may thereupon, or at any time thereafter, in
its discretion without notice or demand, take the Collateral and remove the same
to such place as Agent may deem advisable and Agent may require the Credit
Parties to make the Collateral available to Agent at a convenient place. With or
without having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral that is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give the Credit Parties reasonable notification of such sale or sales, it being
agreed that in all events written notice mailed to Borrowing Agent at least ten
(10) days prior to such sale or sales is reasonable notification. At any public
sale Agent or any Secured Party may bid for and become the purchaser, and Agent,
any Secured Party or any other purchaser at any such sale thereafter shall hold
the Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and all such claims, rights and equities are
hereby expressly waived and released by each Credit Party. In connection with
the exercise of the foregoing remedies, including the sale of Inventory, Agent
is granted a perpetual non-revocable, royalty free, nonexclusive license and
Agent is granted permission to use all of each Credit Party’s (a) trademarks,
trade styles, trade names, patents, patent applications, copyrights, service
marks, licenses, franchises and other proprietary rights that are used or useful
in connection with Inventory for the purpose of marketing, advertising for sale
and selling or otherwise disposing of such Inventory and (b) Equipment for the
purpose of completing the manufacture of unfinished goods. The cash proceeds
realized from the sale of any Collateral shall be applied to the Obligations in
the order set forth in Section 11.5. Non-cash proceeds will only be applied to
the

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Obligations as they are converted into cash. If any deficiency shall arise, the
Credit Parties shall remain liable to Secured Party therefor.
(b)To the extent that Applicable Law imposes duties on Agent to exercise
remedies in a commercially reasonable manner, each Credit Party acknowledges and
agrees that it is not commercially unreasonable for Agent (i) to fail to incur
expenses reasonably deemed significant by Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (iv) to exercise collection remedies against
Customers and other Persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Credit Party, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure Agent against risks
of loss, collection or disposition of Collateral or to provide to Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Agent in the
collection or disposition of any of the Collateral. Each Credit Party
acknowledges that the purpose of this Section 11.1(b) is to provide
non-exhaustive indications of what actions or omissions by Agent would not be
commercially unreasonable in Agent’s exercise of remedies against the Collateral
and that other actions or omissions by Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 11.1(b).
Without limitation upon the foregoing, nothing contained in this Section 11.1(b)
shall be construed to grant any rights to any Credit Party or to impose any
duties on Agent that would not have been granted or imposed by this Agreement or
by Applicable Law in the absence of this Section 11.1(b).
2.Agent’s Discretion
. Agent shall have the right in its sole discretion to determine which rights,
Liens, security interests or remedies Agent may at any time pursue, relinquish,
subordinate, or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Secured Party rights
hereunder.
3.Setoff
. Subject to Section 14.12, in addition to any other rights that Agent or any
other Secured Party may have under Applicable Law, upon the occurrence of an
Event of Default hereunder, Agent and such Secured Party shall have a right,
immediately and without notice of any kind, to apply any Credit Party’s property
held by Agent and such Secured Party to reduce the Obligations.
4.Rights and Remedies not Exclusive
. The enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any rights or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative.
5.Allocation of Payments After Event of Default
. Notwithstanding any other provisions of this Agreement to the contrary, after
the occurrence and during the continuance of an Event of Default, all amounts
collected or received by Agent on account of the Obligations or any other
amounts outstanding under any of the Loan Documents or in respect of the
Collateral may, at Agent’s discretion, be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of Agent in connection with enforcing its
rights and the rights of Secured Parties under this Agreement and the other Loan
Documents and any protective advances made by Agent with respect to the
Collateral under or pursuant to the terms of this Agreement;

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SECOND, to payment of any fees owed to Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of each of Lenders to the extent owing to
such Lender pursuant to the terms of this Agreement;
FOURTH, to the payment of all of the Obligations consisting of accrued fees and
interest;
FIFTH, to the payment of the outstanding principal amount of the Obligations
(including the payment or cash collateralization of any outstanding Letters of
Credit);
SIXTH, to all other Obligations and other obligations that have become due and
payable under the Loan Documents or otherwise and not repaid pursuant to clauses
“FIRST” through “FIFTH” above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of Lenders shall receive (so long as it is not a
Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any
amounts available for distribution pursuant to clause “FIFTH” above are
attributable to the issued but undrawn amount of outstanding Letters of Credit,
such amounts shall be held by Agent in a cash collateral account and applied (A)
first, to reimburse the Issuer from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FIFTH” and
“SIXTH” above in the manner provided in this Section 11.5.
ARTICLE XXXIV

ARTICLE XXXV

ARTICLE XXXVIWAIVERS AND JUDICIAL PROCEEDINGS
1.Waiver of Notice
. Each Credit Party hereby waives notice of non-payment of any of the
Receivables, demand, notice of acceleration, notice of intent to accelerate,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.
2.Delay
. No delay or omission on Agent’s or any Secured Party’s part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.
3.Jury Waiver; California Judicial Reference
.
(a)EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES TO THE MAXIMUM EXTENT
NOT PROHIBITED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR THERETO OR ANY
OF THEM WITH RESPECT TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR THEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE

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AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT OR SUCH OTHER LOAN DOCUMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(b)IN THE EVENT THAT ANY SUCH ACTION IS COMMENCED OR MAINTAINED IN ANY COURT IN
THE STATE OF CALIFORNIA, AND THE WAIVER OF JURY TRIAL SET FORTH IN SECTION ABOVE
IS NOT ENFORCEABLE, AND EACH PARTY TO SUCH ACTION DOES NOT SUBSEQUENTLY WAIVE IN
AN EFFECTIVE MANNER UNDER CALIFORNIA LAW ITS RIGHT TO A TRIAL BY JURY, THE
PARTIES HERETO HEREBY ELECT TO PROCEED AS FOLLOWS:
(i)WITH THE EXCEPTION OF THE ITEMS SPECIFIED IN CLAUSE (II) BELOW, ANY
CONTROVERSY, DISPUTE OR CLAIM (EACH, A “CONTROVERSY”) BETWEEN THE PARTIES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL BE
RESOLVED BY A REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS
638, ET SEQ. OF THE CALIFORNIA CODE OF CIVIL PROCEDURE (“CCP”), OR THEIR
SUCCESSOR SECTIONS, WHICH SHALL CONSTITUTE THE EXCLUSIVE REMEDY FOR THE
RESOLUTION OF ANY CONTROVERSY, INCLUDING WHETHER THE CONTROVERSY IS SUBJECT TO
THE REFERENCE PROCEEDING. EXCEPT AS OTHERWISE PROVIDED ABOVE, VENUE FOR THE
REFERENCE PROCEEDING WILL BE IN ANY COURT IN WHICH VENUE IS APPROPRIATE UNDER
APPLICABLE LAW (THE “COURT”).
(ii)THE MATTERS THAT SHALL NOT BE SUBJECT TO A REFERENCE ARE THE FOLLOWING: (A)
NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY;
(B) EXERCISE OF SELF HELP REMEDIES (INCLUDING SET-OFF); (C) APPOINTMENT OF A
RECEIVER; AND (D) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING WRITS
OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY
INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE
OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) AND (B) OR TO
SEEK OR OPPOSE FROM A COURT OF COMPETENT JURISDICTION ANY OF THE ITEMS DESCRIBED
IN CLAUSES (C) AND (D). THE EXERCISE OF, OR OPPOSITION TO, ANY OF THOSE ITEMS
DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PURSUANT TO THIS AGREEMENT.
(iii)THE REFEREE SHALL BE A RETIRED JUDGE OR JUSTICE SELECTED BY MUTUAL WRITTEN
AGREEMENT OF THE PARTIES. IF THE PARTIES DO NOT AGREE WITHIN TEN (10) DAYS OF A
WRITTEN REQUEST TO DO SO BY ANY PARTY, THEN, UPON REQUEST OF ANY PARTY, THE
REFEREE SHALL BE SELECTED BY THE PRESIDING JUDGE OF THE COURT (OR HIS OR HER
REPRESENTATIVE). A REQUEST FOR APPOINTMENT OF A REFEREE MAY BE HEARD ON AN EX
PARTE OR EXPEDITED BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM WOULD
RESULT IF EX PARTE RELIEF IS NOT GRANTED.
(iv)EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE
THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND
PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER
QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL
PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL
BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT THAT WHEN ANY PARTY SO REQUESTS, A
COURT REPORTER WILL BE USED AT ANY HEARING CONDUCTED BEFORE THE REFEREE, AND THE
REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING
SUCH A REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR THE COURT REPORTER.
SUBJECT TO THE REFEREE’S POWER TO

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AWARD COSTS TO THE PREVAILING PARTY, THE CREDIT PARTIES WILL PAY THE COST OF THE
REFEREE AND ALL COURT REPORTERS.
(v)THE REFEREE SHALL BE REQUIRED TO DETERMINE ALL ISSUES IN ACCORDANCE WITH
EXISTING APPLICABLE CASE LAW AND STATUTORY LAW. THE RULES OF EVIDENCE APPLICABLE
TO PROCEEDINGS AT LAW IN THE COURT WILL BE APPLICABLE TO THE REFERENCE
PROCEEDING. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL
RELIEF, ENTER EQUITABLE ORDERS THAT WILL BE BINDING ON THE PARTIES AND RULE ON
ANY MOTION THAT WOULD BE AUTHORIZED IN A COURT PROCEEDING. THE REFEREE SHALL
ISSUE A DECISION AT THE CLOSE OF THE REFERENCE PROCEEDING WHICH DISPOSES OF ALL
CLAIMS OF THE PARTIES THAT ARE THE SUBJECT OF THE REFERENCE. PURSUANT TO CCP
SECTION 644, SUCH DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT OR AN
ORDER IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT AND ANY
SUCH DECISION WILL BE FINAL, BINDING AND CONCLUSIVE. THE PARTIES RESERVE THE
RIGHT TO APPEAL FROM THE FINAL JUDGMENT OR ORDER OR FROM ANY APPEALABLE DECISION
OR ORDER ENTERED BY THE REFEREE. THE PARTIES RESERVE THE RIGHT TO FINDINGS OF
FACT, CONCLUSIONS OF LAWS, A WRITTEN STATEMENT OF DECISION, AND THE RIGHT TO
MOVE FOR A NEW TRIAL OR A DIFFERENT JUDGMENT, WHICH NEW TRIAL, IF GRANTED, IS
ALSO TO BE A REFERENCE PROCEEDING UNDER THIS PROVISION.
(vi)NEITHER THE INCLUSION OF THIS SECTION 12.3, NOR ANY REFERENCE TO CALIFORNIA
LAW CONTAINED HEREIN SHALL BE DEEMED TO AFFECT OR LIMIT IN ANY WAY THE PARTIES’
CHOICE OF NEW YORK LAW.
ARTICLE XXXVII

ARTICLE XXXVIII

ARTICLE XXXIXEFFECTIVE DATE AND TERMINATION
1.Term
. This Agreement, which shall inure to the benefit of and shall be binding upon
the respective successors and permitted assigns of each Credit Party, Agent and
each Secured Party, shall become effective on the date hereof and shall continue
in full force and effect until December 22, 2019 (the “Term”) unless sooner
terminated as herein provided. Borrowers may terminate this Agreement at any
time upon not less than sixty (60) days’ nor more than ninety (90) days’ prior
written notice upon payment in full of the Obligations (other than Inchoate
Obligations). In the event this Agreement is terminated prior to the last day of
the Term (the date of such prepayment hereinafter referred to as the “Early
Termination Date”), Borrowers shall pay to Agent for the benefit of Lenders an
early termination fee as set forth in the Fee Letter.
2.Termination
. The termination of the Agreement shall not affect any Borrower’s, Agent’s or
any other Secured Party’s rights, or any of the Obligations having their
inception prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into,
rights or interests created or Obligations (other than Inchoate Obligations)
have been fully and indefeasibly paid, disposed of, concluded or liquidated. The
security interests, Liens and rights granted to Agent and Secured Party
hereunder and the financing statements filed hereunder shall continue in full
force and effect, notwithstanding the termination of this Agreement or the fact
that Borrowers’ Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations (other than Inchoate Obligations) of each
Borrower have been indefeasibly paid and performed in full after the termination
of this Agreement or each Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, each Borrower waives any rights that it may have under the Uniform
Commercial Code to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such termination
statements to each Borrower, or to file them with any filing office, unless and
until this Agreement has been terminated in accordance with its terms and all
Obligations (other than Inchoate Obligations) have been indefeasibly paid in
full in immediately available funds. All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof until
all Obligations (other than Inchoate Obligations) are indefeasibly paid and
performed in full. In the event of the payoff or refinancing of all outstanding
Obligations contemporaneously with the termination of all Commitments hereunder,
Agent shall confirm

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the payoff of the Obligations on the date so paid and the termination of the
Commitments on the date so terminated in a customary payoff letter satisfactory
to Agent in its reasonable discretion
ARTICLE XL

ARTICLE XLI

ARTICLE XLIIREGARDING AGENT
1.Appointment
. Each Lender hereby designates PNC to act as Agent for such Lender under this
Agreement and the other Loan Documents. Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in the Fee Letter),
charges and collections (without giving effect to any collection days) received
pursuant to this Agreement, for the ratable benefit of Secured Parties. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including
collection of the Revolving Credit Notes) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action that exposes Agent to liability or that is contrary
to this Agreement or the other Loan Documents or Applicable Law unless Agent is
furnished with an indemnification reasonably satisfactory to Agent with respect
thereto.
2.Nature of Duties
. Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Loan Documents. Neither Agent nor any of
its officers, directors, employees or agents shall be (i) liable for any action
taken or omitted by them as such hereunder or in connection herewith, unless
caused by their gross (not mere) negligence or willful misconduct (as determined
by a court of competent jurisdiction in a final non-appealable judgment), or
(ii) responsible in any manner for any recitals, statements, representations or
warranties made by any Credit Party or any officer thereof contained in this
Agreement, or in any of the other Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any of the other Loan Documents
or for the value, validity, effectiveness, genuineness, due execution,
enforceability or sufficiency of this Agreement, or any of the other Loan
Documents or for any failure of any Credit Party to perform its obligations
hereunder. Agent shall not be under any obligation to any Secured Party to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any of the other
Loan Documents, or to inspect the properties, books or records of any Credit
Party. The duties of Agent as respects the Advances to Borrowers shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Secured Party; and nothing
in this Agreement, expressed or implied, is intended to or shall be so construed
as to impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.
3.Lack of Reliance on Agent and Resignation
. Independently and without reliance upon Agent or any other Secured Party, each
Secured Party has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Credit Party in
connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of each Credit Party. Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit or other information with respect thereto, whether
coming into its possession before making of the Advances or at any time or times
thereafter except as shall be provided by the Credit Parties pursuant to the
terms hereof. Agent shall not be responsible to any Secured Party for any
recitals, statements, information, representations or warranties herein or in
any agreement, document, certificate or a statement delivered in connection with
or for the execution, effectiveness, genuineness, validity, enforceability,
collectibilitycollectability or sufficiency of this Agreement or any other Loan
Document, or of the financial condition of any Credit Party, or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or the other Loan Documents or
the financial condition of any Credit Party, or the existence of any Event of
Default or any Default.

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Agent may resign on sixty (60) days’ written notice to each of Lenders and
Borrowing Agent and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers: provided that
no consent or approval of Borrowers will be required hereunder if a Default or
Event of Default has occurred and is continuing at the time of such designation.
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term “Agent” means such successor agent effective upon its
appointment, and the former Agent’s rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent’s resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
4.Certain Rights of Agent
. If Agent shall request instructions from Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Loan Document, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent has received instructions from the Required
Lenders; and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, Secured Parties shall not have any
right of action whatsoever against Agent as a result of its acting or refraining
from acting hereunder in accordance with the instructions of the Required
Lenders.
5.Reliance
. Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate, telex, teletype
or telecopier message, cablegram, order or other document or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the other Loan Documents and its duties
hereunder, upon advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable care.
6.Notice of Default
. Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder or under the other Loan Documents, unless
Agent has received notice from a Lender or Borrowing Agent referring to this
Agreement or the other Loan Documents, describing such Default or Event of
Default and stating that such notice is a “notice of default”. In the event that
Agent receives such a notice, Agent shall give notice thereof to Secured
Parties. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided, that,
unless and until Agent has received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of Secured Parties.
7.Indemnification
. To the extent Agent is not reimbursed and indemnified by Borrowers, each
Lender will reimburse and indemnify Agent in proportion to its respective
portion of the Advances (or, if no Advances are outstanding, according to its
Commitment Percentage), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any other Loan Document;
provided that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).
8.Agent in its Individual Capacity
. With respect to the obligation of Agent to lend under this Agreement, the
Advances made by it shall have the same rights and powers hereunder as any other
Lender and as if it were not performing the duties as Agent specified herein;
and the term “Lender” or any similar term shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity as a Lender. Agent
may engage in business with any Credit Party as if it were not performing the

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duties specified herein, and may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or otherwise without
having to account for the same to Secured Parties.
9.Delivery of Documents
. To the extent Agent receives financial statements required under Sections 9.7,
9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower
pursuant to the terms of this Agreement that any Borrower is not obligated to
deliver to each Lender, Agent will promptly furnish such documents and
information to Secured Parties.
10.Borrowers’ Undertaking to Agent
. Without prejudice to their respective obligations to Secured Parties under the
other provisions of this Agreement, each Borrower hereby undertakes with Agent
to pay to Agent from time to time on demand all amounts from time to time due
and payable by it for the account of Secured Parties or any of them pursuant to
this Agreement to the extent not already paid. Any payment made pursuant to any
such demand shall pro tanto satisfy the relevant Borrower’s obligations to make
payments for the account of Secured Parties or the relevant one or more of them
pursuant to this Agreement.
11.No Reliance on Agent’s Customer Identification Program
. Each Lender acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on Agent to carry out such
Lender’s, Affiliate’s, participant’s or assignee’s customer identification
program, or other obligations required or imposed under or pursuant to the USA
PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or
any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with any Credit Party, its
Affiliates or its agents, this Agreement, the other Loan Documents or the
transactions hereunder or contemplated hereby: (a) any identity verification
procedures; (b) any record-keeping; (c) comparisons with government lists; (d)
customer notices; or (e) other procedures required under the CIP Regulations or
such other laws.
12.Other Agreements
. Each of the Lenders agrees that it shall not, without the express consent of
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations, any amounts owing by such
Lender to any Credit Party or any deposit accounts of any Credit Party now or
hereafter maintained with such Lender. Anything in this Agreement to the
contrary notwithstanding, each of Lenders further agrees that it shall not,
unless specifically requested to do so by Agent, take any action to protect or
enforce its rights arising out of this Agreement or the other Loan Documents, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the other Loan Documents shall be taken in concert and
at the direction or with the consent of Agent or Required Lenders.
ARTICLE XLIII

ARTICLE XLIV

ARTICLE XLVBORROWING AGENCY; GUARANTY
1.Borrowing Agency Provisions
.
(a)Each Borrower hereby irrevocably designates Borrowing Agent to be its
attorney and agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.
(b)The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. Neither Agent nor any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing

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arrangements of Borrowers as provided herein, reliance by Agent or any Lender on
any request or instruction from Borrowing Agent or any other action taken by
Agent or any Lender with respect to this Section 15.1 except due to willful
misconduct or gross (not mere) negligence by the indemnified party (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment).
(c)All Obligations shall be joint and several, and each Borrower shall make
payment upon the maturity of the Obligations by acceleration or otherwise, and
such obligation and liability on the part of each Borrower shall in no way be
affected by any extensions, renewals and forbearance granted to Agent or any
Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Borrower, the release by Agent or any
Lender of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Agent or any Lender to the
other Borrowers or any Collateral for such Borrower’s Obligations or the lack
thereof. Each Borrower waives all suretyship defenses.
2.Joint and Several Liability of Borrowers
. Each Borrower hereby agrees as follows.
(a)Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by Agent and the Lenders under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.
(b)Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including any Obligations arising under this Section
15.2), it being the intention of each Borrower and the parties hereto that all
the Obligations shall be the joint and several obligations of each Borrower
without preferences or distinction among them.
(c)If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.
(d)The Obligations of each Borrower under the provisions of this Section 15.2
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each Borrower to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
3.Guaranty
.
(a)Guaranty. Each Guarantor hereby absolutely and unconditionally guarantees, as
a guaranty of payment and performance and not merely as a guaranty of
collection, prompt payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all times thereafter,
of any and all of the Obligations, whether for principal, interest, premiums,
fees, indemnities, damages, costs, expenses or otherwise, of Borrowers and the
other Credit Parties to the Secured Parties, arising hereunder or under any
other Loan Document (including all renewals, extensions, amendments,
refinancings and other modifications thereof and all costs, attorneys’ fees and
expenses incurred by the Secured Parties in connection with the collection or
enforcement thereof). Agent’s books and records showing the amount of the
Obligations shall be admissible in evidence in any action or proceeding, and
shall be binding upon each Guarantor, and conclusive for the purpose of
establishing the amount of the Obligations. This Guaranty shall not be affected
by the genuineness, validity, regularity or enforceability of the Obligations or
any instrument or agreement evidencing any Obligations, or by the existence,
validity, enforceability, perfection, non-perfection or extent of any collateral
therefor, or by any fact or circumstance relating to the Obligations which might
otherwise constitute a defense to the obligations of any Guarantor under this
Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now
have or hereafter acquire in any way relating to any or all of the foregoing.
(b)Limitation of Guaranty. Any term or provision of this Section 15.3 or any
other provision in this Agreement or any other Loan Document to the contrary
notwithstanding, the maximum aggregate amount for which any Guarantor shall be
liable hereunder shall not exceed the maximum amount for which such Guarantor
shall

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be liable without rendering this Guaranty or any other Loan Document, as it
relates to such Guarantor, subject to avoidance under Applicable Law relating to
fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of the
Bankruptcy Code or any comparable provisions of Applicable Law (collectively,
“Fraudulent Transfer Laws”). Any analysis of the provisions of this Guaranty for
purposes of Fraudulent Transfer Laws shall take into account the right of
contribution established in clause (c) of Section 15.3 and, for purposes of such
analysis, give effect to any discharge of intercompany debt as a result of any
payment made under any Guaranty made pursuant to this Section.
(c)Right of Contribution. To the extent that any Guarantor shall be required
hereunder to pay any portion of any guaranteed Obligation exceeding the greater
of (i) the amount of the value actually received by such Guarantor and its
Subsidiaries from the Advances and the other Obligations and (ii) the amount
such Guarantor would otherwise have paid if such Guarantor had paid the
aggregate amount of the guaranteed Obligations (excluding the amount the amount
paid by Borrowers) in the same proportion as such Guarantor’s net worth on the
date enforcement is sought hereunder bears to the aggregate net worth of all the
Guarantors on such date, then such Guarantor shall be reimbursed by such other
Guarantors for the amount of such excess, pro rata, based on the respective net
worth of such Guarantors on such date.
(d)Rights of Secured Parties. Each Guarantor consents and agrees that the
Secured Parties may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing effectiveness
hereof: (i) amend, extend, renew, compromise, discharge, accelerate or otherwise
change the time for payment or the terms of the Obligations or any part thereof;
(ii) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any security for the payment of this Guaranty or any
Obligations; (iii) apply such security and direct the order or manner of sale
thereof as Agent and the Lenders in their sole discretion may determine; and
(iv) release or substitute one or more of any endorsers or other guarantors of
any of the Obligations. Without limiting the generality of the foregoing, each
Guarantor consents to the taking of, or failure to take, any action which might
in any manner or to any extent vary the risks of any Guarantor under this
Guaranty or which, but for this provision, might operate as a discharge of such
Guarantor.
(e)Obligations Independent. The obligations of each Guarantor hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Obligations and the obligations of any other guarantor, and a separate action
may be brought against any Guarantor to enforce this Guaranty whether or not
Borrowers or any other Credit Party or any other person or entity is joined as a
party.
(f)Subrogation. No Guarantor shall exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Obligations and any
amounts payable under this Guaranty have been indefeasibly paid and performed in
full and all of the commitments of the Lenders hereunder have been terminated.
If any amounts are paid to any Guarantor in violation of the foregoing
limitation, then such amounts shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Secured Parties to reduce the
amount of the Obligations, whether matured or unmatured.
(g)Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Obligations now or hereafter existing and shall remain in full
force and effect until all Obligations and any other amounts payable under this
Guaranty are indefeasibly paid in full in cash and all of the commitments of the
Lenders hereunder have been terminated. Notwithstanding the foregoing, this
Guaranty shall continue in full force and effect or be revived, as the case may
be, if any payment by or on behalf of Borrowers or any Guarantor or any other
Credit Party is made, or any of the Secured Parties exercises its right of
setoff, in respect of the Obligations and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by any of the Secured Parties in their discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any insolvency proceeding or otherwise, all as if such payment
had not been made or such setoff had not occurred and whether or not the Secured
Parties are in possession of or have released this Guaranty and regardless of
any prior revocation, rescission, termination or reduction. The obligations of
each Guarantor under this paragraph shall survive termination of this Guaranty.
(h)Stay of Acceleration. If acceleration of the time for payment of any of the
Obligations is stayed, in connection with any case commenced by or against any
Credit Party under any insolvency proceeding, or otherwise, all such amounts
shall nonetheless be payable by such Credit Party immediately upon demand by the
Secured Parties.
(i)Condition of Borrowers. Each Guarantor acknowledges and agrees that it has
the sole responsibility for, and has adequate means of, obtaining from Borrowers
and the other Credit Parties and any other

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guarantor such information concerning the financial condition, business and
operations of Borrowers and any such other guarantor as such Guarantor requires,
and that none of the Secured Parties has any duty, and such Guarantor is not
relying on the Secured Parties at any time, to disclose to such Guarantor any
information relating to the business, operations or financial condition of
Borrowers or any other Credit Party or any other guarantor (each Guarantor
waiving any duty on the part of the Secured Parties to disclose such information
and any defense relating to the failure to provide the same).
4.Waivers and Agreements
.
(a)Except as otherwise expressly provided in this Agreement, each Credit Party
hereby waives notice of acceptance of its joint and several liability, notice of
any Advances or Letters of Credit issued under or pursuant to this Agreement,
notice of the occurrence of any Default, Event of Default, or of any demand for
any payment under this Agreement, notice of any action at any time taken or
omitted by Agent or Lenders under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement). Each Credit Party hereby waives all rights that it may have now or
in the future under any statute, at common law, in equity or otherwise, to
compel Agent or Lenders to marshal assets or to proceed against any other Credit
Party, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Credit Party.
Each Credit Party waives all defenses available to a surety, guarantor or
accommodation co-obligor other than payment in full of all Obligations. Each
Credit Party hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Credit
Party in the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by Agent
or Lenders in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or the addition, substitution or release, in
whole or in part, of any Credit Party. Without limiting the generality of the
foregoing, each Credit Party assents to any other action or delay in acting or
failure to act on the part of Agent or any Lender with respect to the failure by
any Credit Party to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 15.4 afford
grounds for terminating, discharging or relieving any Credit Party, in whole or
in part, from any of its Obligations under this Section 15.4, it being the
intention of each Credit Party that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of each Credit Party under this Section 15.4
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Credit Party under this Section 15.4
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any Credit Party or Agent or any Lender.
(b)Each Credit Party represents and warrants to Agent and Lenders that such
Credit Party is currently informed of the financial condition of the other
Credit Parties and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Credit Party further represents and warrants to Agent and Lenders that such
Credit Party has read and understands the terms and conditions of this Agreement
and the other Loan Documents. Each Credit Party hereby covenants that such
Credit Party will continue to keep informed of the other Borrowers’ financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
(c)Each Credit Party waives, to the maximum extent permitted by law, all rights
and defenses that such Credit Party may have because the Obligations are or
become secured by Real Property. This means, among other things: (i) Agent and
Lenders may collect from such Credit Party without first foreclosing on any Real
Property or personal property Collateral pledged by any other Credit Party and
(ii) if Agent or any Lender forecloses on any Real Property pledged by any
Credit Party: (A) the amount of the Obligations may be reduced only by the price
for which such Collateral is sold at the foreclosure sale, even if such
Collateral is worth more than the sale price; and (B) Agent and Lenders may
collect from such Credit Party even if Agent or Lenders, by foreclosing on any
such Real

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Property, has destroyed any right such Credit Party may have to collect from the
other Credit Parties. This is an unconditional and irrevocable waiver of any
rights and defenses such Credit Party may have because the Obligations are
secured by Real Property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the
California Code of Civil Procedure or any comparable statutes.
(d)Each Credit Party understands and acknowledges that if the Secured Parties
foreclose judicially or nonjudicially against any Real Property security for the
Obligations, that foreclosure could impair or destroy any ability that such
Credit Party may have to seek reimbursement, contribution, or indemnification
from any other Credit Party or others based on any right such Credit Party may
have of subrogation, reimbursement, contribution, or indemnification for any
amounts paid by such Credit Party under this Agreement. Each Credit Party
further understands and acknowledges that in the absence of this paragraph, such
potential impairment or destruction of such Credit Party’s rights, if any, may
entitle such Credit Party to assert a defense to this Agreement based on Section
580d of the California Code of Civil Procedure as interpreted in Union Bank v.
Gradsky, 265 Cal. App. 2d 40 (1968). By executing this Agreement, each Credit
Party freely, irrevocably, and unconditionally: (i) waives and relinquishes that
defense and agrees that such Credit Party will be fully liable under this
Agreement even though the Secured Parties may foreclose, either by judicial
foreclosure or by exercise of power of sale, any deed of trust securing the
Obligations; (ii) agrees that such Credit Party will not assert that defense in
any action or proceeding which the Secured Parties may commence to enforce this
Agreement; (iii) acknowledges and agrees that the rights and defenses waived by
such Credit Party in this Agreement include any right or defense that such
Credit Party may have or be entitled to assert based upon or arising out of any
one or more of Sections 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure or Section 2848 of the California Civil Code; and (iv) acknowledges
and agrees that the Secured Parties are relying on this waiver in creating the
Obligations, and that this waiver is a material part of the consideration which
the Secured Parties are receiving for creating the Obligations.
(e)Each Credit Party waives any right or defense it may have at law or equity,
including California Code of Civil Procedure Section 580a, to a fair market
value hearing or action to determine a deficiency judgment after a foreclosure.
As provided in Section 16.1 hereof, this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. The foregoing
provisions are included solely out of an abundance of caution and shall not be
construed to mean that any of the above referenced provisions of California law
are in any way applicable to this Agreement or the Obligations.
(f)Agent and Lenders may, in their discretion, pursue such rights and remedies
as they deem appropriate, including realization upon Collateral by judicial
foreclosure or non‑judicial sale or enforcement, without affecting any rights
and remedies under this Agreement. If, in taking any action in connection with
the exercise of any rights or remedies, Agent or any Lender shall forfeit any
other rights or remedies, including the right to enter a deficiency judgment
against any Credit Party or other Person, whether because of any Applicable Laws
pertaining to “election of remedies” or otherwise, each Credit Party consents to
such action and waives any claim based upon it, even if the action may result in
loss of any rights of subrogation that any Credit Party might otherwise have
had, whether under Section 580(d) of the California Code of Civil Procedure, any
comparable statute, or otherwise. Any election of remedies that results in
denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Credit Party shall not impair any other Credit Party’s
obligation to pay the full amount of the Obligations. Each Credit Party waives
all rights and defenses arising out of an election of remedies, such as
non-judicial foreclosure with respect to any security for the Obligations, even
though that election of remedies destroys such Credit Party’s rights of
subrogation against any other Person. Agent may bid all or a portion of the
Obligations at any foreclosure or trustee’s sale or at any private sale, and the
amount of such bid need not be paid by Agent but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Agent or
any other Person is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral, and the difference between such bid
amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations, notwithstanding that any present or future
law or court decision may have the effect of reducing the amount of any
deficiency claim to which Agent or any Lender might otherwise be entitled but
for such bidding at any such sale.
(g)The provisions of this Section 15.4 are made for the benefit of Agent,
Lenders and their respective successors and assigns, and may be enforced by it
or them from time to time against any Credit Party as often as occasion therefor
may arise and without requirement on the part of Agent, any Lender, any of their
respective successors or assigns first to marshal any of its or their claims or
to exercise any of its or their rights against any Credit Party or to exhaust
any remedies available to it or them against any Credit Party or to resort to
any other source or

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means of obtaining payment of any of the Obligations hereunder or to elect any
other remedy. The provisions of this Section 15.4 shall remain in effect until
all of the Obligations shall have been paid in full in accordance with the terms
of this Agreement. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Credit Party, or otherwise, the provisions of this Section
15.4 will forthwith be reinstated in effect, as though such payment had not been
made.
(h)Until the Obligations (other than Inchoate Obligations) have been paid in
full in cash or cash collateralized in accordance with the terms hereof and all
of the commitments of the Lenders hereunder have been terminated, each Credit
Party hereby agrees that it will not enforce any of its rights of contribution
or subrogation against any other Credit Party with respect to any liability
incurred by it hereunder or under any of the other Loan Documents, any payments
made by it to Agent or any Lender with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations (other
than Inchoate Obligations) have been paid in full in cash. Any claim which any
Credit Party may have against any other Credit Party with respect to any
payments to Agent or any Lender hereunder or under any other Loan Documents are
hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations (other than
Inchoate Obligations) and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Credit Party, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Credit Party therefor.
(i)Each Credit Party hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness or other obligations owing by any Credit Party
to any other Credit Party is hereby subordinated to the prior payment in full in
cash of the Obligations (other than Inchoate Obligations) in accordance with the
terms of this Agreement. Each Credit Party hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Credit Party will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Credit Party owing to such Credit Party until the
Obligations (other than Inchoate Obligations) shall have been paid in full in
cash. If, notwithstanding the foregoing sentence, any Credit Party shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Credit Party as
trustee for Agent, and such Credit Party shall deliver any such amounts to Agent
for application to the Obligations in accordance with the terms of this
Agreement.
(j)Each Credit Party expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution of any other claim that such
Credit Party may now or hereafter have against the other Credit Parties or other
Person directly or contingently liable for the Obligations hereunder, or against
or with respect to the other Credit Parties’ property (including any property
that is Collateral for the Obligations), arising from the existence or
performance of this Agreement, until termination of this Agreement and repayment
in full of the Obligations.
ARTICLE XLVI

ARTICLE XLVII

ARTICLE XLVIIIMISCELLANEOUS
1.Governing Law
. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York applied to contracts to be performed wholly within the
State of New York. Any judicial proceeding brought against any Credit Party with
respect to any of the Obligations, this Agreement, the other Loan Documents or
any related agreement may be brought in any court of competent jurisdiction in
the City of New York, Borough of Manhattan, State of New York, United States of
America, and, by execution and delivery of this Agreement, each Credit Party
accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Each Credit Party hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
registered mail (return receipt requested) directed to the Borrowing Agent at
its address set forth in Schedule A and service so made shall be deemed
completed five (5) days after the same has been so deposited in the mails of the
United States of America, or, at Agent’s option, by service upon Borrowing
Agent, which each Credit Party irrevocably appoints as such Credit Party’s agent
for the purpose of accepting service within the State of New York.

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Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Agent or any Secured Party to bring
proceedings against any Credit Party in the courts of any other jurisdiction.
Each Credit Party waives any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. Each Credit Party
waives the right to remove any judicial proceeding brought against such Credit
Party in any state court to any federal court. Any judicial proceeding by any
Credit Party against any Secured Party or any other Indemnitee involving,
directly or indirectly, any matter or claim in any way arising out of, related
to or connected with this Agreement or any related agreement, shall be brought
only in a federal or state court located in the City of New York, Borough of
Manhattan, State of New York, United States of America; provided, that the
Credit Parties may bring counterclaims in any other court in which the original
claim was brought by Agent or any Secured Party.
2.Entire Understanding
.
(a)This Agreement and the documents executed concurrently herewith contain the
entire understanding between the Credit Parties, Agent and each Secured Party
and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless
in writing, signed by each Credit Party’s, Agent’s and each Lender’s respective
officers. Neither this Agreement nor any portion or provisions hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Each Credit Party
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and other Loan Documents and is not relying upon
oral representations or statements inconsistent with the terms and provisions of
this Agreement.
(b)The Required Lenders, Agent with the consent in writing of the Required
Lenders, and the Credit Parties may, subject to the provisions of this Section
16.2(b), from time to time enter into written supplemental agreements to this
Agreement or the other Loan Documents executed by the Credit Parties, for the
purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of Lenders, Agent or the Credit Parties
thereunder or the conditions, provisions or terms thereof or waiving any Event
of Default thereunder, but only to the extent specified in such written
agreements; provided, however, that no such supplemental agreement shall,
without the consent of all Lenders:
(i)increase the Commitment Percentage, the maximum dollar commitment of any
Lender or the Maximum Revolving Advance Amount or the Maximum Equipment Loan
Amount (or any component thereof).
(ii)extend the maturity of any Revolving Credit NotesNote or the due date for
any amount payable hereunder, or decrease the rate of interest or reduce any fee
payable by Borrowers to Lenders pursuant to this Agreement.
(iii)alter the definition of the term Required Lenders or alter, amend or modify
this Section 16.2(b).
(iv)release any Collateral during any calendar year (other than in accordance
with the provisions of this Agreement) having an aggregate value in excess of
$250,000.
(v)change the rights and duties of Agent.
(vi)permit any Revolving Advance to be made if after giving effect thereto the
total of Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (30) consecutive Business Days or exceed one hundred
and ten percent (110%) of the Formula Amount.
(vii)increase the Advance Rates above the Advance Rates in effect on the Closing
Date.
(viii)release any Guarantor.
Any such supplemental agreement shall apply equally to each Secured Party and
shall be binding upon the Credit Parties, Secured Parties and all future holders
of the Obligations. In the case of any waiver, the Credit Parties and Secured
Parties shall be restored to their former positions and rights, and any Event of
Default waived shall be deemed to be cured and not continuing, but no waiver of
a specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default that was waived), or impair any right consequent thereon.

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In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within five (5) days of delivery of such request, such Lender shall be deemed to
have consented to the matter that was the subject of the request. In the event
that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such consent is denied, then PNC may, at its option, require such Lender to
assign its interest in the Advances to PNC or to another Lender or to any other
Person designated by Agent (the “Designated Lender”), for a price equal to (i)
the then outstanding principal amount thereof plus (ii) accrued and unpaid
interest and fees due such Lender, which interest and fees shall be paid when
collected from Borrowers. In the event PNC elects to require any Lender to
assign its interest to PNC or to the Designated Lender, PNC will so notify such
Lender in writing within forty five (45) days following such Lender’s denial,
and such Lender will assign its interest to PNC or the Designated Lender no
later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.
Notwithstanding (a) the existence of a Default or Event of Default, (b) that any
of the other applicable conditions precedent set forth in Section 8.2 have not
been satisfied or (c) any other provision of this Agreement, Agent may at its
discretion and without the consent of Required Lenders, voluntarily permit the
sum of the outstanding Revolving Advances and the Maximum Undrawn Amount at any
time to exceed ten percent (10%) of the Formula Amount for up to sixty (60)
consecutive Business Days (the “Out-of-Formula Loans”); provided, that, such
outstanding Advances do not exceed the Maximum Revolving Advance Amount. If
Agent is willing in its sole and absolute discretion to make such Out-of-Formula
Loans, such Out-of-Formula Loans shall be payable on demand and shall bear
interest at the Default Rate for Revolving Advances ; provided that, if Lenders
do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby
to have changed the limits of Section 2.1(a). For purposes of this paragraph,
the discretion granted to Agent hereunder shall not preclude involuntary
overadvances that may result from time to time due to the fact that the Formula
Amount was unintentionally exceeded for any reason, including Collateral
previously deemed to be either “Eligible Receivables” or “Eligible Inventory”,
as applicable, becomes ineligible, collections of Receivables applied to reduce
outstanding Revolving Advances are thereafter returned for insufficient funds or
overadvances are made to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Formula
Amount by more than ten percent (10%), Agent shall use its efforts to have
Borrowers decrease such excess in as expeditious a manner as is practicable
under the circumstances and not inconsistent with the reason for such excess.
Revolving Advances made after Agent has determined the existence of involuntary
overadvances shall be deemed to be involuntary overadvances and shall be
decreased in accordance with the preceding sentence.
In addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 16.2, Agent is hereby authorized by Borrowers
and Lenders, from time to time in Agent’s sole discretion, (A) after the
occurrence and during the continuation of a Default or Event of Default, or (B)
at any time that any of the other applicable conditions precedent set forth in
Section 8.2 have not been satisfied, to make Revolving Advances to Borrowers on
behalf of Lenders that Agent, in its reasonable business judgment, deems
necessary or desirable (a) to preserve or protect the Collateral, or any portion
thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment
of the Advances and other Obligations, or (c) to pay any other amount chargeable
to Borrowers pursuant to the terms of this Agreement; provided, that at any time
after giving effect to any such Revolving Advances the outstanding Revolving
Advances do not exceed one hundred and ten percent (110%) of the Formula Amount.
3.Successors and Assigns; Participations; New Lenders
.
(a)This Agreement shall be binding upon and inure to the benefit of the Credit
Parties, Agent, each Secured Party, all future holders of the Obligations and
their respective successors and assigns, except that no Credit Party may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b)Each Credit Party acknowledges that in the regular course of commercial
banking business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a “Participant”). Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder
thereof; provided that

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Borrowers shall not be required to pay to any Participant more than the amount
that it would have been required to pay to Lender that granted an interest in
its Advances or other Obligations payable hereunder to such Participant had such
Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder; and provided, further, that in no event shall Borrowers be
required to pay any such amount arising from the same circumstances and with
respect to the same Advances or other Obligations payable hereunder to both such
Lender and such Participant. Each Borrower hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Participant as security for the Participant’s
interest in the Advances.
(c)Any Lender, with the consent of Agent (which shall not be unreasonably
withheld or delayed), may sell, assign or transfer all or any part of its rights
and obligations under or relating to Revolving Advances under this Agreement and
the other Loan Documents to one or more Eligible Assignees and one or more
Eligible Assignees may commit to make Advances hereunder (each a “Purchasing
Lender”), in minimum amounts of not less than $5,000,000 (or its entire
interest, if less), pursuant to a Commitment Transfer Supplement, executed by a
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage as
set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement and the other Loan Documents. Each Borrower hereby consents
to the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the other Loan Documents. Borrowers shall execute and deliver
such further documents and do such further acts and things in order to
effectuate the foregoing.
(d)Any Lender, with the consent of Agent (which shall not be unreasonably
withheld or delayed), may directly or indirectly sell, assign or transfer all or
any portion of its rights and obligations under or relating to Revolving
Advances under this Agreement and the other Loan Documents to an entity, whether
a corporation, partnership, trust, limited liability company or other entity
that (i) is engaged in making, purchasing, holding or otherwise investing in
bank loans and similar extensions of credit in the ordinary course of its
business and (ii) is administered, serviced or managed by the assigning Lender
or an Affiliate of such Lender (a “Purchasing CLO” and together with each
Participant and Purchasing Lender, each a “Transferee” and collectively the
“Transferees”), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned (“Modified Commitment
Transfer Supplement”), executed by any intermediate purchaser, the Purchasing
CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for
recording. Upon such execution and delivery, from and after the transfer
effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose. Such Modified
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing
CLO. Borrowers shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.
(e)Agent shall maintain at its address a copy of each Commitment Transfer
Supplement and Modified Commitment Transfer Supplement delivered to it and a
register (the “Register”) for the recordation of the names and addresses of each
Lender and the outstanding principal, accrued and unpaid interest and other fees
due hereunder. The entries in the Register shall be conclusive, in the absence
of manifest error, and each Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The Register shall be available for
inspection by Borrowing Agent or any Lender at any reasonable time and from time
to time upon reasonable prior notice. Agent shall receive a fee in the

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amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing
CLO upon the effective date of each transfer or assignment (other than to an
intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.
(f)Each Credit Party authorizes each Lender to disclose to any Transferee and
any prospective Transferee any and all financial information in such Lender’s
possession concerning such Credit Party that has been delivered to such Lender
by or on behalf of such Credit Party pursuant to this Agreement or in connection
with such Lender’s credit evaluation of such Credit Party.
4.Application of Payments
. Agent shall have the continuing and exclusive right to apply or reverse and
re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations. To the extent that any Credit Party makes a payment or Agent or
any Secured Party receives any payment or proceeds of the Collateral for any
Credit Party’s benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Secured Party.
5.Indemnity
. Each Credit Party shall indemnify each Indemnitee from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including
fees and disbursements of counsel) that may be imposed on, incurred by, or
asserted against any Indemnitee in any claim, litigation, proceeding or
investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the other Loan Documents, whether or not any Indemnitee is a party
thereto, except to the extent that any of the foregoing arises out of the gross
(not mere) negligence or willful misconduct of the party being indemnified (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment). Without limiting the generality of the foregoing, this indemnity
shall extend to any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) asserted against
or incurred by any Indemnitees by any Person under any Environmental Laws or
similar laws by reason of any Credit Party’s or any other Person’s failure to
comply with laws applicable to solid or hazardous waste materials, including
Hazardous Substances and Hazardous Waste, or other Toxic Substances.
Additionally, if any taxes (excluding taxes imposed upon or measured solely by
the net income of Agent and Lenders, but including any intangibles taxes, stamp
tax, recording tax or franchise tax) shall be payable by any Secured Party or
the Credit Parties on account of the execution or delivery of this Agreement, or
the execution, delivery, issuance or recording of any of the Loan Documents, or
the creation or repayment of any of the Obligations hereunder, by reason of any
Applicable Law now or hereafter in effect, the Credit Parties will pay (or will
promptly reimburse Secured Parties for payment of) all such taxes, including
interest and penalties thereon, and will indemnify and hold the indemnitees
described above in this Section 16.5 harmless from and against all liability in
connection therewith.
6.Notice
. Any notice or request hereunder may be given to Borrowing Agent or any Credit
Party or to Agent or any Lender at their respective addresses set forth in
Schedule A or at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section 16.6. Any notice,
request, demand, direction or other communication (for purposes of this Section
16.6 only, a “Notice”) to be given to or made upon any party hereto under any
provision of this Loan Agreement shall be given or made by telephone or in
writing (which includes by means of electronic transmission (i.e., “e-mail”
or.pdf) or facsimile transmission or by setting forth such Notice on a site on
the World Wide Web (a “Website Posting”) if Notice of such Website Posting
(including the information necessary to access such site) has previously been
delivered to the applicable parties hereto by another means set forth in this
Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Schedule A or in accordance with any
subsequent unrevoked Notice from any such party that is given in accordance with
this Section 16.6. Any Notice shall be effective:
(a)In the case of hand-delivery, when delivered;
(b)If given by mail, four days after such Notice is deposited with the United
States Postal Service, with first-class postage prepaid, return receipt
requested;

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(c)In the case of a telephonic Notice, when a party is contacted by telephone,
if delivery of such telephonic Notice is confirmed no later than the next
Business Day by hand delivery, a facsimile or electronic transmission, a Website
Posting or an overnight courier delivery of a confirmatory Notice (received at
or before noon on such next Business Day);
(d)In the case of a facsimile transmission, when sent to the applicable party’s
facsimile machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;
(e)In the case of electronic transmission, when actually received;
(f)In the case of a Website Posting, upon delivery of a Notice of such posting
(including the information necessary to access such site) by another means set
forth in this Section 16.6; and
(g)If given by any other means (including by overnight courier), when actually
received.
Any Lender giving a Notice to Borrowing Agent or any Credit Party shall
concurrently send a copy thereof to Agent, and Agent shall promptly notify the
other Lenders of its receipt of such Notice.
7.Survival
. The obligations of the Credit Parties under Sections 2.2(f), 3.7, 3.8, 3.9,
4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall
survive termination of this Agreement and the other Loan Documents and payment
in full of the Obligations.
8.Severability
. If any part of this Agreement is contrary to, prohibited by, or deemed invalid
under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.
9.Expenses
. All reasonable and documented out-of-pocket costs and expenses, including
reasonable attorneys’ fees (including the allocated costs of in-house counsel,
one primary counsel to Agent and, if necessary, one local counsel in any
relevant jurisdiction) and disbursements incurred by Agent on its behalf or on
behalf of Secured Parties, including all costs and expenses incurred (and
including in or in connection with or anticipation of an insolvency proceeding,
reorganization, or any similar proceeding): (a) in all efforts made to enforce
payment of any Obligation or effect collection of any Collateral, or (b) in
connection with the entering into, modification, amendment, administration and
enforcement of this Agreement and the other Loan Documents or any consents or
waivers hereunder or thereunder and all related agreements, documents and
instruments, or (c) in instituting, maintaining, preserving, enforcing and
foreclosing on Agent’s security interest in or Lien on any of the Collateral, or
maintaining, preserving or enforcing any of Agent’s or any Lender’s rights
hereunder and under the other Loan Documents and under all related agreements,
documents and instruments, whether through judicial proceedings or otherwise, or
(d) in defending or prosecuting any actions or proceedings arising out of or
relating to Agent’s or any Lender’s transactions with any Credit Party, or (e)
in connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement and under the other Loan Documents
and all related agreements, documents and instruments, may be charged to
Borrowers’ Account and shall be part of the Obligations, or (f) in connection
with any inspections or appraisal conducted pursuant to Section 4.10, provided
that absent the occurrence and continuation of an Event of Default, only four
collateral appraisals (other than desk top appraisals) during any 12 month
period following the Closing Date shall be at the expense of the Borrowers.
10.Injunctive Relief
. Each Credit Party recognizes that, in the event such Credit Party fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, or threatens to fail to perform, observe or discharge such
obligations or liabilities, any remedy at law may prove to be inadequate relief
to Secured Parties; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
11.Consequential Damages
. Neither Agent nor any Lender, nor any agent or attorney for any of them, shall
be liable to any Credit Party (or any Affiliate of any such Person) for
indirect, punitive, exemplary or consequential damages arising from any breach
of

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contract, tort or other wrong relating to the establishment, administration or
collection of the Obligations or as a result of any transaction contemplated
under this Agreement or any other Loan Document.
12.Captions
. The captions at various places in this Agreement are intended for convenience
only and do not constitute and shall not be interpreted as part of this
Agreement.
13.Counterparts; Facsimile Signatures
. This Agreement may be executed in any number of and by different parties
hereto on separate counterparts, all of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same
agreement. Any signature delivered by a party by facsimile or other similar form
of electronic transmission shall be deemed to be an original signature hereto.
14.Construction
. The parties acknowledge that each party and its counsel have reviewed this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
15.Confidentiality; Sharing Information
.
Agent, each Lender and each Transferee shall hold all non-public information
obtained by Agent, such Lender or such Transferee pursuant to the requirements
of this Agreement in accordance with Agent’s, such Lender’s and such
Transferee’s customary procedures for handling confidential information of this
nature; provided, however, that Agent, each Lender and each Transferee may
disclose such confidential information (a) to its examiners, Affiliates, outside
auditors, counsel and other professional advisors, (b) to Agent, any Lender or
to any prospective Transferees, (c) as required or requested by any Governmental
Body or representative thereof or pursuant to legal process, and (d) in
connection with the enforcement of its rights under this Agreement and the other
Loan Documents; provided, further that (i) unless specifically prohibited by
Applicable Law or court order, Agent, each Lender and each Transferee shall use
its reasonable best efforts prior to disclosure thereof, to notify the
applicable Credit Party of the applicable request for disclosure of such
non-public information (A) by a Governmental Body or representative thereof
(other than any such request in connection with an examination of the financial
condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant
to legal process and (ii) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Credit Party other than
those documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated.
Each Credit Party acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such Credit
Party or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Credit Party hereby authorizes each Lender to share any
information delivered to such Lender by such Credit Party and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such Subsidiary or Affiliate of such Lender,
it being understood that any such Subsidiary or Affiliate of any Lender
receiving such information shall be bound by the provisions of this Section
16.15 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of this Agreement.
16.Publicity
. Each Credit Party and each Lender hereby authorizes Agent to make appropriate
announcements of the financial arrangement entered into among the Credit
Parties, Agent and Lenders, including announcements that are commonly known as
tombstones, in such publications and to such selected parties as Agent shall in
its sole and absolute discretion deem appropriate. No Lender may make any such
announcement without the prior written consent of Agent, such consent to be
given or withheld in Agent’s sole and absolute discretion.
17.Certifications From Banks and Participants; USA PATRIOT Act

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. Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and is not
excepted from the certification requirement contained in Section 313 of the USA
PATRIOT Act and the applicable regulations because it is both (a) an affiliate
of a depository institution or foreign bank that maintains a physical presence
in the United States or foreign country, and (b) subject to supervision by a
banking authority regulating such affiliated depository institution or foreign
bank) shall deliver to Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (i) within 10 days after the Closing Date, and (ii) as
such other times as are required under the USA PATRIOT Act.
[Signature Pages Follow; Remainder of Page Intentionally Left Blank]
53708450_1415
53708450_16
Each of the parties has signed this Agreement as of the day and year first above
written.
BORROWERS:
VIRCO MFG. CORPORATION,
a Delaware corporation

By:_____/s/Robert E. Dose_______
Name:     Robert E. Dose
Title:
Vice President Finance,

Treasurer and Secretary

VIRCO INC.,
a Delaware corporation

By:_____/s/Robert E. Dose_______
Name:     Robert E. Dose
Title:    Vice President Finance,
Treasurer and Secretary

PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent

By:_____/s/Jeanette Vandenbergh___
Name:    Jeanette Vandenbergh
Title:    Vice President

Commitment Percentage (Revolving Advances): 100%
Commitment Percentage (Equipment Loans): 100%

53708450_1416

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Schedule A
Notice Address

Notice Address for Agent:

PNC Bank, National Association
Two North Lake Avenue, Suite 440
Pasadena, California 91101
Attention:    Relationship Manager (Virco Mfg. Corporation)
Telephone:    (626) 432-7546
Facsimile:    (626) 432-4589

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

PNC Bank, National Association
PNC Agency Services
PNC Firstside Center
500 First Avenue, 4th Floor
Pittsburgh, Pennsylvania 15219
Attention:
Lisa Pierce

Telephone:
(412) 762-6442

Facsimile:
(412) 762-8672

with an additional copy to:

McGuireWoods LLP
1800 Century Park East, 8th Floor
Los Angeles, California 90067
Attention:    Gary Samson, Esq.
Telephone:    (310) 315-8248        
Facsimile:    (310) 956-3148
Email:        gsamson@mcguirewoods.com

Notice Address for Credit Parties:

Virco Mfg. Corporation
2027 Harpers Way
Torrance, California 90501
Attention:    Robert E. Dose
VP Finance
Facsimile:    (310)533-1906
Attention:    Robert E. Dose

Virco Inc.
2027 Harpers Way
Torrance, California 90501
Attention:    Robert E. Dose
VP Finance
Facsimile:    (310)533-1906
Attention:    Robert E. Dose
Document comparison by Workshare 9 on Friday, June 02, 2017 10:17:02 AM

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Input:
Document 1 ID
interwovenSite://DMSPROXY/Active/53708450/14
Description
#53708450v14<Active> - VIRCO: Conformed Copy of Credit Agreement
Document 2 ID
interwovenSite://DMSPROXY/Active/53708450/16
Description
#53708450v16<Active> - VIRCO: Conformed Copy of Credit Agreement
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Exhibit B

84785966

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EQUIPMENT NOTE

$2,500,000                                            March 13, 2017

This EQUIPMENT NOTE (this “Note”) is executed and delivered under and pursuant
to the terms of that certain Revolving Credit and Security Agreement, dated as
of December 22, 2011 (as such agreement may be amended, restated, or otherwise
modified from time to time, the “Credit Agreement”), among VIRCO MFG.
CORPORATION, a corporation organized under the laws of the State of Delaware
(“VMC”), VIRCO INC., a corporation organized under the laws of the State of
Delaware (“Virco” and, together with VMC and each Person that becomes a party
hereto pursuant to Section 7.12 as a borrower, each a “Borrower”, and
collectively “Borrowers”), the Persons from time to time party hereto pursuant
to Section 7.12 as a guarantor, the financial institutions that are now or that
hereafter become a party hereto (collectively, “Lenders” and individually a
“Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent
for Lenders (PNC, in such capacity, “Agent”). Initially capitalized terms used
but not defined herein have the respective meanings set forth in the Credit
Agreement.
FOR VALUE RECEIVED, Borrowers hereby promise to pay to the order of PNC Bank,
national association, at the office of Agent specified in the Credit Agreement
or at such other place as Agent may from time to time designate, in accordance
with the Credit Agreement, to Borrowing Agent in writing:
(i)    the principal sum of $2,500,000, or such other amount thereof as may be
from time to time advanced under the Equipment Loans and pursuant to the terms
of the Credit Agreement (the “Principal Amount”), subject to acceleration upon
the occurrence of an Event of Default or earlier termination of the Credit
Agreement pursuant to the terms thereof; and

(ii)    interest on the Principal Amount of this Note from time to time
outstanding until such Principal Amount is paid in full at the applicable
Equipment Loan Rate in accordance with the provisions of the Credit Agreement.
In no event, however, shall interest exceed the maximum interest rate permitted
by Applicable Law. During the existence of an Event of Default, at the option of
Agent or the Required Lenders, interest shall be payable at the Default Rate.

This Note is an Equipment Note under and as defined in the Credit Agreement and
is secured by the Liens granted pursuant to the Credit Agreement and the other
Loan Documents, is entitled to the benefits of the Credit Agreement and the
other Loan Documents, and is subject to all of the agreements, terms, and
conditions therein contained.
This Note is subject to mandatory prepayment and may be voluntarily prepaid, in
whole or in part, on the terms and conditions set forth in the Credit Agreement.
If an Event of Default under Section 10.6 of the Credit Agreement occurs, this
Note shall immediately become due and payable, without notice on demand,
together with reasonable attorneys’ fees if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof and if any other
Event of Default occurs, this Note may, as provided in the Credit Agreement, be
declared to be immediately due and payable, without notice on demand, in each
case together with expenses and costs as provided in the Credit Agreement.
This Note shall be governed by and construed in accordance with the laws of the
State of New York applied to contracts to be performed wholly within the State
of New York. This governing law election has been made in reliance of the
Applicable Law. Borrowers hereby irrevocably consent to the non-exclusive
jurisdiction of any state or federal court located in the County of New York,
State of New York in any and

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

all actions and proceedings whether arising hereunder, under the Credit
Agreement, any Other Document or undertaking. Borrowers waive any objection to
improper venue and forum non-conveniens to proceedings in any such court and all
rights to transfer for any reason. Without limiting the applicability of any
other provision of this Note, the terms of Section 12.3 of the Credit Agreement
shall apply to this Note, mutatis mutandis.
Borrowers expressly waive any presentment, demand, protest, notice of protest,
notice of intent to accelerate, notice of acceleration, or any other notice of
any kind except as expressly provided in the Credit Agreement.
IN WITNESS WHEREOF, each Borrower has duly executed this Note as of the date
first written above.

[Signature pages follow]

BORROWERS:
VIRCO MFG. CORPORATION,
a Delaware corporation

By:_____/s/Robert E. Dose_______
Name:     Robert E. Dose
Title:
Vice President Finance,

Treasurer and Secretary

VIRCO INC.,
a Delaware corporation

By:_____/s/Robert E. Dose_______
Name:     Robert E. Dose
Title:    Vice President Finance,
Treasurer and Secretary