EXHIBIT 10.19

REVOLVING CREDIT

AND

SECURITY AGREEMENT

NATIONAL CITY BUSINESS CREDIT, INC.

(AS LENDER, AS ADMINISTRATIVE AGENT AND AS COLLATERAL AGENT)

and

NATIONAL CITY BANK

(AS ISSUER, AS LEAD ARRANGER AND AS SOLE BOOK RUNNER)

and

SUCH OTHER LENDERS WHICH ARE NOW OR HEREAFTER A PARTY HERETO

and

THE BORROWERS PARTY HERETO

(AS BORROWERS)

and

THE GUARANTORS PARTY HERETO

(AS GUARANTORS)

DECEMBER 29, 2005

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TABLE OF CONTENTS

 

I.

   DEFINITIONS    1

1.1

   Accounting Terms    1

1.2

   General Terms    1

1.3

   Uniform Commercial Code Terms    23

1.4

   Certain Matters of Construction    23

II.

   ADVANCES, PAYMENTS    23

2.1

   Revolving Advances    23

2.2

   Procedure for Borrowing Advances    24

2.3

   Disbursement of Advance Proceeds    26

2.4

   Maximum Advances    27

2.5

   Repayment of Advances    27

2.6

   Repayment of Excess Advances    27

2.7

   Statement of Account    28

2.8

   Letters of Credit    28

2.9

   Issuance of Letters of Credit    28

2.10

   Requirements For Issuance of Letters of Credit    29

2.11

   Additional Payments    31

2.12

   Manner of Borrowing and Payment    31

2.13

   Reserved    32

2.14

   Use of Proceeds    32

2.15

   Defaulting Lender    33

2.16

   Swing Loans    34

III.

   INTEREST AND FEES    35

3.1

   Interest    35

3.2

   Letter of Credit Fees    36

3.3

   Unused Facility Fee    37

3.4

   Reserved    37

3.5

   Computation of Interest and Fees    37

3.6

   Maximum Charges    38

3.7

   Increased Costs    38

3.8

   Basis For Determining Interest Rate Inadequate or Unfair    39

3.9

   Capital Adequacy    39

3.10

   Gross Up for Taxes    40

IV.

   COLLATERAL: GENERAL TERMS    41

4.1

   Security Interest in the Collateral    41

4.2

   Perfection of Security Interest    41

4.3

   Disposition of Collateral    41

4.4

   Preservation of Collateral    42

4.5

   Ownership of Collateral    42

4.6

   Defense of Agent’s and Lenders’ Interests    42

4.7

   Books and Records    43

4.8

   Financial Disclosure    43

4.9

   Compliance with Laws    44

4.10

   Inspection of Premises    44

4.11

   Insurance    44

4.12

   Failure to Pay Insurance    46

4.13

   Payment of Taxes    46

 

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4.14

   Payment of Leasehold Obligations    47

4.15

   Receivables    47

4.16

   Maintenance of Equipment    50

4.17

   Exculpation of Liability    50

4.18

   Environmental Matters    50

4.19

   Financing Statements    52

V.

   REPRESENTATIONS AND WARRANTIES    52

5.1

   Authority    52

5.2

   Formation and Qualification    53

5.3

   Survival of Representations and Warranties    53

5.4

   Tax Returns    53

5.5

   Financial Statements    53

5.6

   Corporate Name    54

5.7

   O.S.H.A. and Environmental Compliance    54

5.8

   Solvency; No Litigation, Violation, Indebtedness or Default    55

5.9

   Patents, Trademarks, Copyrights and Licenses    56

5.10

   Licenses and Permits    56

5.11

   Default of Indebtedness    57

5.12

   No Default    57

5.13

   No Burdensome Restrictions    57

5.14

   No Labor Disputes    57

5.15

   Margin Regulations    57

5.16

   Investment Company Act    57

5.17

   Disclosure    57

5.18

   Delivery of Tennenbaum Loan Documents and Senior Notes Documentation    58

5.19

   Hedging Contracts    58

5.20

   Conflicting Agreements    58

5.21

   Application of Certain Laws and Regulations    58

5.22

   Business and Property of the Loan Parties    58

5.23

   Section 20 Subsidiaries    58

5.24

   Anti-Terrorism Laws    59

5.25

   Non-Operating Subsidiaries    59

VI.

   AFFIRMATIVE COVENANTS    60

6.1

   Payment of Fees    60

6.2

   Conduct of Business and Maintenance of Existence and Assets    60

6.3

   Violations    60

6.4

   Government Receivables    60

6.5

   Fixed Charge Coverage Ratio    60

6.6

   Execution of Supplemental Instruments    61

6.7

   Payment of Indebtedness    61

6.8

   Standards of Financial Statements    61

6.9

   Anti-Terrorism Laws    61

VII.

   NEGATIVE COVENANTS    62

7.1

   Merger, Consolidation, Acquisition and Sale of Assets    62

7.2

   Creation of Liens    63

7.3

   Guarantees    63

7.4

   Investments    64

7.5

   Loans    64

7.6

   Capital Expenditures    65

7.7

   Dividends    65

 

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7.8

   Indebtedness    66

7.9

   Nature of Business    67

7.10

   Transactions with Affiliates    67

7.11

   Leases    67

7.12

   Subsidiaries    67

7.13

   Fiscal Year and Accounting Changes    68

7.14

   Pledge of Credit    68

7.15

   Amendment of Articles of Incorporation, By-Laws, Certificate of Limited
Partnership, Limited Partnership Agreement, Articles of Organization, Operating
Agreement, Etc.    68

7.16

   Compliance with ERISA    68

7.17

   Prepayment of Indebtedness    69

7.18

   Other Agreements    69

7.19

   Inactive Subsidiaries    69

VIII.

   CONDITIONS PRECEDENT    69

8.1

   Conditions to Initial Advances    69

8.2

   Conditions to Each Advance    73

IX.

   INFORMATION AS TO THE LOAN PARTIES    73

9.1

   Disclosure of Material Matters    73

9.2

   Schedules    73

9.3

   Litigation    74

9.4

   Material Occurrences    74

9.5

   Government Receivables    75

9.6

   Annual Financial Statements    75

9.7

   Quarterly Financial Statements    75

9.8

   Monthly Financial Statements    76

9.9

   Other Reports    76

9.10

   Additional Information    76

9.11

   Projected Operating Budget    76

9.12

   Notice of Suits, Adverse Events    77

9.13

   ERISA Notices and Requests    77

9.14

   Additional Documents    78

X.

   EVENTS OF DEFAULT    78

10.1

   Payment of Obligations    78

10.2

   Misrepresentations    78

10.3

   Failure to Furnish Information    78

10.4

   Liens Against Assets    78

10.5

   Breach of Covenants    78

10.6

   Judgment    79

10.7

   Insolvency and Related Proceedings of the Loan Parties    79

10.8

   Insolvency; Cessation of Operations    79

10.9

   Bankruptcy    79

10.10

   Material Adverse Effect    79

10.11

   Loss of Priority Lien    79

10.12

   Breach of Tennenbaum Loan Documents or Senior Notes Documentation    80

10.13

   Breach of Material Agreements    80

10.14

   Cross Default; Cross Acceleration    80

10.15

   Termination of Guaranty    80

10.16

   Change of Control    80

10.17

   Invalidity of Credit Agreement    80

 

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10.18

   Loss of Material Intellectual Property    80

10.19

   Destruction of Collateral    81

10.20

   Business Interruption    81

10.21

   ERISA Events    81

XI.

   LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT    81

11.1

   Rights and Remedies    81

11.2

   Agent’s Discretion    82

11.3

   Setoff    82

11.4

   Rights and Remedies not Exclusive    82

11.5

   Allocation of Payments After Event of Default    83

XII.

   WAIVERS AND JUDICIAL PROCEEDINGS    84

12.1

   Waiver of Notice    84

12.2

   Delay    84

12.3

   Jury Waiver    84

XIII.

   EFFECTIVE DATE AND TERMINATION    84

13.1

   Term    84

13.2

   Termination    85

XIV.

   REGARDING AGENT    85

14.1

   Appointment    85

14.2

   Nature of Duties    86

14.3

   Lack of Reliance on Agent and Resignation    86

14.4

   Certain Rights of Agent    87

14.5

   Reliance    87

14.6

   Notice of Default    87

14.7

   Indemnification    88

14.8

   Agent in its Individual Capacity    88

14.9

   Delivery of Documents    88

14.10

   Borrowers’ Undertaking to Agent    88

14.11

   No Reliance on Agent’s Customer Identification Program    88

XV.

   BORROWING AGENCY    89

15.1

   Borrowing Agency Provisions    89

15.2

   Waivers    90

XVI.

   MISCELLANEOUS    90

16.1

   Governing Law    90

16.2

   Entire Understanding    91

16.3

   Transfers and Assignments    93

16.4

   Application of Payments    96

16.5

   Indemnity    96

16.6

   Notice    97

16.7

   Survival    99

16.8

   Severability    99

16.9

   Expenses    99

16.10

   Injunctive Relief    99

16.11

   Consequential Damages    100

16.12

   Captions    100

16.13

   Counterparts; Telecopied Signatures    100

16.14

   Construction    100

16.15

   Confidentiality; Sharing Information    100

 

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16.16

   Tax Withholding Clause    101

16.17

   USA Patriot Act    102

16.18

   Publicity    102

16.19

   Current Indebtedness Amendment    102

 

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REVOLVING CREDIT AND SECURITY AGREEMENT

This Revolving Credit and Security Agreement (this “Agreement”), dated this 29th
day of December, 2005, by and among the Borrowers (as hereinafter defined), each
of the Guarantors (as hereinafter defined), the financial institutions which are
now or which hereafter become a party hereto (collectively, the “Lenders” and
individually, a “Lender”), National City Business Credit, Inc., an Ohio
corporation (“NCBC”), as administrative agent and collateral agent for the
Lenders and the Issuer (as hereinafter defined) (NCBC, in such capacity, the
“Agent”), Bank of America, N.A., as syndication agent for the Lenders (the
“Syndication Agent”), and National City Bank, a national banking association, as
the Issuer.

IN CONSIDERATION of the mutual covenants and undertakings herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers, the
Guarantors, the Lenders, the Agent, the Syndication Agent and the Issuer hereby
agree as follows:

I. DEFINITIONS.

1.1 Accounting Terms.

As used in this Agreement, the Notes, 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 shall have the
respective meanings given to them under GAAP. All financial computations to be
made under this Agreement shall, unless otherwise specifically provided herein,
be made in accordance with GAAP applied on a basis consistent in all material
respects with the financial statements delivered to the Agent and the Lenders on
or prior to the Closing Date.

1.2 General Terms.

For purposes of this Agreement the following terms shall have the following
meanings:

“Accountants” shall have the meaning set forth in Section 9.6.

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

“Advances” shall mean and include the Revolving Advances, Letters of Credit and
Swing Loans.

“Advance Rates” shall have the meaning set forth in Section 2.1(a) hereof.

“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person described in clause
(a) above. For purposes of this definition, control of a Person shall

 

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mean the power, direct or indirect, (x) to vote five percent (5%) or more of the
securities having ordinary voting power for the election of directors of such
Person, or (y) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

“Agent” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and assigns.

“Agent’s Letter” shall mean the Agent’s fee letter dated of even date herewith,
by and among the Borrowers and the Agent, together with all amendments,
supplements, modifications, substitutions and replacements thereto and thereof.

“Aggregate Consideration” shall mean with respect to any Permitted Acquisition
the sum of (a) the cash paid by any Loan Party, directly or indirectly, to the
seller in connection therewith, plus (b) Indebtedness incurred or assumed by any
Loan Party, whether in favor of the seller or otherwise and whether fixed or
contingent, in connection with such Permitted Acquisition, plus (c) any Guaranty
given or incurred (without duplication) by any Loan Party in connection
therewith, and plus (d) any other consideration given or obligation incurred by
any Loan Party in connection therewith.

“Agreement” shall have the meaning set forth in the preamble to this Agreement,
as amended, restated, modified or supplemented from time to time.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
higher of: (a) the rate of interest which is established from time to time by
National City Bank at its principal office in Cleveland, Ohio as its “prime
rate” or “base rate” in effect, such rate to be adjusted automatically, without
notice, as of the opening of business on the effective date of any change in
such rate (it being agreed that: (i) such rate is not necessarily the lowest
rate of interest then available from National City Bank on fluctuating rate
loans and (ii) such rate may be established by National City Bank by public
announcement or otherwise) and (b) the Federal Funds Effective Rate in effect on
such day plus one half of one percent (.50%).

“Anti-Terrorism Laws” shall mean any laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing laws may from time to time be amended, renewed, extended, or
replaced).

“Applicable Base Rate Margin” shall have the meaning set forth in Section 3.1(b)
hereof.

“Applicable Letter of Credit Fee Percentage” shall have the meaning set forth in
Section 3.2(a) hereof.

“Applicable Libor Rate Margin” shall have the meaning set forth in
Section 3.1(b) hereof.

“Applicable Margin” shall mean, as applicable: the Applicable Base Rate Margin
or the Applicable Libor Rate Margin.

 

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

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 16.3), and accepted by the Agent, in substantially the form
of Exhibit 16.3 or any other form approved by the Agent.

“Authority” shall have the meaning set forth in Section 4.18(d) hereof.

“BHI” shall mean Benchmark Holdings, Inc., a Delaware corporation and its
successors and assigns.

“Blocked Account Agreements” shall mean, collectively, each of the Blocked
Account Agreements in form and substance satisfactory to the Agent, entered into
by the Borrowers, as applicable, the Agent and the applicable Lockbox Bank at
which the applicable Collection Account is located, together with all
amendments, supplements, modifications, substitutions and replacements thereto
and thereof.

“Blocked Person” shall have the meaning assigned to such term in Section 5.24(b)
hereof.

“Borrower” shall mean Radnor, SUL, WTL and WHI and any other Person who may
hereafter become a party hereto as a borrower and “Borrowers” shall collectively
mean all such Persons.

“Borrowers’ Account” shall have the meaning set forth in Section 2.7 hereof.

“Borrowing Agent” shall mean Radnor.

“Borrowing Base Certificate” shall mean a certificate duly executed by an
officer of the Borrowing Agent appropriately completed and in substantially the
form of Exhibit A hereto.

“Business Day” shall mean 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 Cleveland, Ohio and, if the applicable Business Day relates to
any Libor Rate Loans, such day must also be a day on which dealings are carried
on in the London interbank market.

“Capital Expenditures” shall mean any expenditure made or liability incurred
which is, determined in accordance with GAAP, treated as a capital expenditure
and not as an expense item for the year in which it was made or incurred, as the
case may be.

“Cash Concentration Account” shall mean, with respect to the Borrowers, that
certain commercial deposit account at National City Bank, in the name of NCBC,
designated as “National City Business Credit, Inc. (as Agent for the benefit of
the Lenders and the Issuer) Radnor Cash Concentration Account”, which shall be:
(a) maintained by the Agent with National

 

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City Bank pursuant to a Deposit Account Agreement, without liability by the
Agent or National City Bank to pay interest thereon, (b) the funds within which
shall be the sole and exclusive property of the Agent for the pro rata benefit
of the Lenders and (c) from which account the Agent shall have the irrevocable
and exclusive right to withdraw funds until all of the Obligations are paid,
performed, satisfied and enforced in full and the commitments of the Lenders to
make Advances hereunder and all Letters of Credit have terminated.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.

“Change of Control” shall mean (a) the occurrence of any event (whether in one
or more transactions) which results in a transfer of control of (1) Radnor to a
Person who is not an Original Owner (provided, however, if such transfer of
control occurs solely as a result of the death of Michael T. Kennedy, such
transfer of control will not be deemed a Change of Control hereunder until
fifteen (15) days following the date of death of Michael T. Kennedy), or (2) any
other Loan Party to a Person other than a Loan Party or (b) any merger or
consolidation of or with any Loan Party in which a Loan Party is not the
surviving party or sale of all or substantially all of the property or assets of
any Loan Party. For purposes of this definition, “control” shall mean the power,
direct or indirect (x) to vote fifty percent (50%) or more of the securities
having ordinary voting power for the election of directors of any Loan Party or
(y) to direct or cause the direction of the management and policies of any Loan
Party by contract or otherwise.

“Charges” shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, 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, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other similar governmental authority, domestic or foreign
(including, without limitation, the Pension Benefit Guaranty Corporation or any
environmental agency or superfund), upon the Collateral, any Loan Party or any
Affiliates of any Loan Party.

“CIP Regulations” shall have the meaning assigned to such term in Section 14.11
hereof.

“Closing Date” shall mean December 29, 2005 or such other date as may be agreed
to by the parties hereto.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time and the regulations promulgated thereunder.

“Collateral” shall mean and include:

(a) all Receivables;

(b) all General Intangibles;

 

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(c) all Inventory;

(d) all Investment Property (excluding all capital stock or other equity
interest issued by any direct or indirect Subsidiary of Radnor);

(e) all of each Loan Party’s right, title and interest in and to (i) all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables; (ii) all of each Loan 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 any Loan Party from any Customer relating to
the Receivables; (iv) other property, including warranty claims, relating to any
goods securing this Agreement; (v) all of each Loan Party’s contract rights,
rights of payment which have been earned under a contract right, instruments
(including promissory notes), documents, chattel paper (including electronic
chattel paper), warehouse receipts, deposit accounts including, but not limited
to, the Blocked Accounts, letters of credit, and money; (vi) all commercial tort
claims (whether now existing or hereafter arising); and (vii) if and when
obtained by any Loan Party, all real and personal property of third parties in
which such Loan Party has been granted a lien or security interest as security
for the payment or enforcement of Receivables;

(f) all of each Loan Party’s ledger sheets, ledger cards, files, correspondence,
records, books of account, business papers, computer software (owned by any Loan
Party or in which it has an interest and in which the granting of a security
interest therein is not expressly prohibited), computer programs, tapes, disks
and documents relating to (a), (b), (c), (d) or (e) of this Paragraph; and

(g) all proceeds and products of (a), (b), (c), (d), (e) and (f) in whatever
form, including, but not limited to: 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.

“Collection Accounts” shall have the meaning set forth in Section 4.15(g)
hereof.

“Commitment Percentage” of any Lender shall mean 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 hereof.

“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on any Loan
Party’s business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of Radnor who: (i) was a member of such Board of Directors on
the date hereof; or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.

 

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“Contract Rate” shall mean, as of the date of determination, an interest rate
per annum equal to (a) the sum of the Alternate Base Rate plus the Applicable
Base Rate Margin with respect to Domestic Rate Loans and (b) the sum of the
Libor Rate plus the Applicable LIBOR Rate Margin with respect to Libor Rate
Loans.

“Controlled Group” shall mean all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with any Loan Party, are treated as a single employer under
Section 414 of the Code.

“Customer” shall mean and include the account debtor with respect to any
Receivable 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 any Loan Party,
pursuant to which such Loan Party is to deliver any Inventory or perform any
services.

“Default” shall mean an event which, with the giving of notice or passage of
time or both, would constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Section 3.1(b) hereof.

“Defaulting Lender” shall have the meaning set forth in Section 2.15(a) hereof.

“Deposit Account Agreement” shall have the meaning set forth in Section 4.15(g)
hereof.

“Dollar” and the sign “$” shall mean lawful money of the United States of
America.

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.

“Earnings Before Interest and Taxes” shall mean for any fiscal period the sum of
(i) net income (or loss) of Radnor and its Subsidiaries determined on a
consolidated basis for such period (excluding extraordinary gains and losses and
any non-cash charges or expenses other than a write-down of current assets),
(ii) plus all interest expense of Radnor and its Subsidiaries determined on a
consolidated basis for such period, and (iii) plus all charges against or minus
credits to income of Radnor and its Subsidiaries determined on a consolidated
basis for such period for federal, state and local taxes.

“EBITDA” shall mean for any fiscal period the sum of (i) Earnings Before
Interest and Taxes for such period, (ii) plus depreciation expenses of the
Radnor and its Subsidiaries on a consolidated basis for such period, and
(iii) plus amortization expenses of Radnor and its Subsidiaries on a
consolidated basis for such period.

“Eligible Assignee” shall mean any of the following Persons: (a) a Lender;
(b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person
(other than a natural person) approved by (i) the Agent, (ii) in the case of any
assignment of a commitment to make Advances hereunder, the Issuer, and
(iii) unless an Event of Default or Default has occurred and

 

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is continuing, the Borrowing Agent (each such approval not to be unreasonably
withheld or delayed); provided that, notwithstanding the foregoing, “Eligible
Assignee” shall not include any Loan Party or any of such Loan Party’s
Affiliates or Subsidiaries and; provided, further, that, notwithstanding the
foregoing, a Person shall only be an “Eligible Assignee” if (i) such Person
shall have complied with the requirements of Section 16.17, and (ii) the
assignment to or participation of such Person shall not constitute a “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code).

“Eligible Inventory” shall mean and include with respect to each Borrower,
Inventory, excluding work in process (unless otherwise deemed eligible by the
Agent), of each Borrower valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in the Agent’s opinion, obsolete,
slow moving or unmerchantable and which the Agent, in its sole and reasonable
discretion, shall not deem ineligible Inventory, based on such considerations as
the Agent may from time to time reasonably deem appropriate including, without
limitation, whether the Inventory is subject to a perfected, first priority
security interest in favor of the Agent and whether the Inventory conforms to
all standards imposed by any governmental agency, division or department thereof
which has regulatory authority over such goods or the use or sale thereof.

In addition, no Inventory of any Borrower shall be Eligible Inventory if it:

(a) is not owned by such Borrower free and clear of all Liens and rights of any
other Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure such
Borrower’s performance with respect to that Inventory), except the Liens in
favor of the Agent, on behalf of itself and the Lenders, and other Permitted
Encumbrances (subject to reserves established by the Agent in accordance with
the terms of this Agreement);

(b) (i) is not located on premises owned, leased or rented by such Borrower and
set forth in Schedule 4.5 (as such Schedule may be updated from time to time),
or (ii) is stored at a leased location, unless a reasonably satisfactory
landlord waiver has been delivered to the Agent, or reserves reasonably
satisfactory to the Agent have been established by the Agent with respect
thereto or (iii) is stored with a bailee, warehouseman, processor or similar
party unless a reasonably satisfactory warehouseman waiver, processing facility
waiver or a reasonably satisfactory, acknowledged bailee letter has been
received by the Agent or reserves reasonably satisfactory to the Agent have been
established by the Agent with respect thereto, or (iv) is located at a location
owned by a Borrower that is subject to a mortgage in favor of a lender other
than the Agent unless a reasonably satisfactory mortgagee waiver has been
delivered to the Agent, or reserves reasonably satisfactory to the Agent have
been established by the Agent with respect thereto; provided, however, that a
waiver or bailee letter shall not be required with respect to otherwise Eligible
Inventory in an amount not to exceed Three Hundred Thousand and 00/100 Dollars
($300,000.00) at any time located at the Lee Correctional Institute in South
Carolina;

(c) is in transit unless such otherwise Eligible Inventory is deemed eligible by
Agent or is in transit from (i) a domestic location owned by a Borrower or
(ii) a domestic location identified on Schedule 8.1(r) (as such Schedule may be
updated from time to time) to a

 

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domestic location owned by a Borrower or a location identified on Schedule
8.1(r) (as such Schedule may be updated from time to time);

(d) is covered by a negotiable document of title, unless such document has been
delivered to the Agent with all necessary endorsements, free and clear of all
Liens except those in favor of the Agent and the Lenders;

(e) is placed on consignment (or is being held pursuant to a consignment
agreement);

(f) is excess, obsolete, unsalable, shopworn, seconds, damaged or unfit for
sale;

(g) consists of goods which have been returned by the Customer, excluding goods
returned for reprocessing in the ordinary course of business;

(h) consists of display items or packing or shipping materials, manufacturing
supplies or replacement parts;

(i) is not of a type held for sale in the ordinary course of such Borrower’s
business;

(j) breaches any of the representations or warranties pertaining to Inventory of
such Borrower set forth in this Agreement or in any of the Other Documents;

(k) consists of any costs associated with “freight-in” charges;

(l) consists of any gross profit mark-up in connection with the sale and
distribution thereof to any division of any Borrower or to any Affiliate of such
Borrower;

(m) consists of Hazardous Substances or goods that can be transported or sold
only with licenses that are not readily available;

(n) is not covered by casualty insurance reasonably acceptable to the Lender, as
required by terms of this Agreement;

(o) was produced in violation of the Fair Labor Standards Act and subject to the
“hot goods” provision contained in Title 29 U.S.C. Section 215(a)(1); or

(p) is not otherwise satisfactory to the Agent as determined in good faith by
the Agent in the exercise of its discretion in a reasonable manner.

“Eligible Receivables” shall mean and include with respect to each Borrower,
each Receivable of such Borrower arising in the ordinary course of such
Borrower’s business and which the Agent, in its sole and reasonable credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as the Agent may from time to time deem appropriate. A Receivable shall not be
deemed eligible unless such Receivable is subject to the Agent’s first priority
perfected security interest and no other Lien (other than Permitted
Encumbrances), and is

 

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evidenced by an invoice or other documentary evidence satisfactory to the Agent.
In addition, no Receivable of a Borrower 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 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;

(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 which 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 continental United States of America
or Canada, unless the sale is on letter of credit, guaranty or acceptance terms,
in each case acceptable to the Agent in its sole reasonable discretion;

(g) the sale to the Customer is on a bill-and-hold (unless otherwise deemed
eligible by Agent), guaranteed sale, sale-and-return, sale on approval,
consignment or any other repurchase or return basis or is evidenced by chattel
paper;

(h) the Agent believes, in its sole reasonable judgment, 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 the 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.) or has otherwise complied with other applicable
laws and has complied with Section 6.4 hereof;

(j) the goods giving rise to such Receivable have not been shipped to the
Customer or the services giving rise to such Receivable have not been performed
by the applicable Borrower or the Receivable otherwise does not represent a
final sale;

 

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(k) the Receivables of the Customer exceed a credit limit determined by the
Agent, in its sole reasonable discretion, to the extent such Receivables exceed
such limit;

(l) the Receivable is subject to any offset (unless such Borrower has received a
letter from the Customer in form and substance satisfactory to the Agent
indicating that such Customer shall not exercise its right of offset),
deduction, defense, dispute, or counterclaim, or is owed by a Customer that is
also a creditor or supplier of a Borrower (but only to the extent of such
Borrower’s obligations to such customer from time to time) or the Receivable is
contingent in any respect or for any reason;

(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 for prompt payment, 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;

(o) such Receivable is not payable to a Borrower; or

(p) such Receivable is not otherwise satisfactory to the Agent as determined in
good faith by the Agent in the exercise of its discretion in a reasonable
manner.

“Environmental Complaint” shall have the meaning set forth in Section 4.18(d)
hereof.

“Environmental Laws” shall mean all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to 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, policies, guidelines, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.

“Equipment” shall mean and include as to each Loan Party all of such Loan
Party’s goods (other than Inventory) whether now owned or hereafter acquired and
wherever located including, without limitation, all equipment, machinery,
apparatus, vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder.

“Eurocurrency Reserve Percentage” means, for any Interest Period in respect of
any Libor Rate Loan, as of any date of determination, the aggregate of the then
stated maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves), expressed as a decimal, applicable to such Interest
Period (if more than one such percentage is applicable, the daily average of
such percentages for those days in such Interest Period during which any such
percentages shall be so applicable) by the Board of Governors of the Federal

 

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Reserve System, any successor thereto, or any other banking authority, domestic
or foreign, to which the Agent or any Lender may be subject in respect to
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Federal Reserve Board) or in respect of any other category
of liabilities including deposits by reference to which the interest rate on
Libor Rate Loans is determined or any category of extension of credit or other
assets that include the Libor Rate Loans. For purposes hereof, such reserve
requirements shall include, without limitation, those imposed under Regulation D
of the Federal Reserve Board and the Libor Rate Loans shall be deemed to
constitute Eurocurrency Liabilities subject to such reserve requirements without
benefit of credits for proration, exceptions or offsets which may be available
from time to time to the Agent under said Regulation D.

“Event of Default” shall mean the occurrence of any of the events set forth in
Article X hereof.

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

“Executive Order No. 13224” shall mean 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.

“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest one hundredth of one percent (1/100th of
1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day; provided, however, that: (a) if
the day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such a rate on such transactions on the
immediately preceding Business Day as so published on the next succeeding
Business Day and (b) if such rate is not so published for any Business Day, the
Federal Funds Rate for such Business Day shall be the average of quotations for
such day on such transactions received by the Agent from three federal funds
brokers of recognized standing selected by the Agent.

“Financial Covenant Triggering Event” shall mean (a) the occurrence of a Default
or Event of Default that is continuing, or (b) the Borrowers’ Undrawn
Availability is less than Eleven Million Two Hundred Fifty Thousand and 00/100
Dollars ($11,250,000.00) on any day, at which time the Borrowers shall comply
with the terms of Section 6.5.

“Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA minus Capital Expenditures that were not
specifically funded by Indebtedness (other than a Revolving Advance or Swing
Loan) of Radnor and its Subsidiaries determined on a consolidated basis with
respect to such period to (b) Fixed Charges.

“Fixed Charges” shall mean, with respect to any fiscal period, the sum of
(a) interest expense of Radnor and its Subsidiaries determined on a consolidated
basis with respect to such period (excluding non-cash (i) amortization of
deferred financing fees, (ii) liquidation preference charges and (iii) accretion
on equity or debt documents), plus (b) scheduled principal payments on
Indebtedness of Radnor and its Subsidiaries determined on

 

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a consolidated basis with respect to such period, plus (c) dividends and
distributions of Radnor and its Subsidiaries determined on a consolidated basis
with respect to such period as permitted by Section 7.7 hereof, plus (d) cash
taxes paid of Radnor and its Subsidiaries determined on a consolidated basis
with respect to such period.

“Formula Amount” shall have the meaning set forth in Section 2.1(a).

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

“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

“General Intangibles” shall mean and include as to each Loan Party all of such
Loan Party’s general intangibles, whether now owned or hereafter acquired
including, without limitation, all payment intangibles, choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes,
records and dates, registration, 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 Loan Party 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 Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.

“Guarantor” shall mean RCC, SDI, SEDI, SGL, SLL, WEDI, WGL, WLL and any other
Person who may hereafter guarantee payment or performance of the whole or any
part of the Obligations and “Guarantors” means collectively all such Persons.

“Guaranty” shall mean any guaranty of the obligations of the Borrowers executed
by a Guarantor in favor of the Agent for its benefit, the benefit of the Issuer
and for the ratable benefit of the Lenders, together with all amendments,
supplements, modifications, substitutions and replacements thereto and thereof.

“Hazardous Discharge” shall have the meaning set forth in Section 4.18(d)
hereof.

“Hazardous Substance” shall mean, 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 CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), the Toxic Substances Control Act, as amended
(TSCA) (15 U.S.C. Section 2601, et seq.), RCRA or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.

 

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“Hazardous Wastes” shall mean 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.

“Hedging Contracts” shall mean foreign exchange contracts, currency swap
agreements, futures contracts, commodities hedges, interest rate protection
agreements, interest rate future agreements, interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, option agreements
or any other similar hedging agreements or arrangements entered into by a Loan
Party in the ordinary course of business and not for speculative purposes.

“Hedging Obligations” shall mean all liabilities of a Loan Party under Hedging
Contracts.

“Incentive Pricing Effective Date” shall have the meaning set forth in
Section 3.1(b) hereof.

“Indebtedness” of a Person at a particular date shall mean all obligations of
such Person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock including redeemable stock issued to
SVEF and SVOF pursuant to the Purchase Agreement and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all Hedging Obligations, 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 shall have 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.

“Ineligible Security” shall mean any security which 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 Security Agreement” shall mean the Patent and Trademark
Security Agreement, dated of even date herewith, made by the Borrowers for the
benefit of the Agent, together with all amendments, supplements, modifications,
substitutions and replacements thereto and thereof.

“Interest Period” shall mean the period provided for any Libor Rate Loan
pursuant to Section 2.2(b) hereof.

“Inventory” shall mean and include as to each Loan Party all of such Loan
Party’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 which are or might be used or consumed in such Loan Party’s business
or used in selling or furnishing such goods, merchandise and other personal
property,

 

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and all documents of title or other documents representing them; provided,
however, spare parts, equipment and other fixed assets are not included in this
definition.

“Inventory Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y)(ii) hereof.

“Investment Property” shall mean and include as to each Loan Party, all of such
Loan Party’s now owned or hereafter acquired securities (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
contracts and commodities accounts.

“Issuer” means, with respect to any Letter of Credit, the issuer of such Letter
of Credit and shall be, with respect to any Letter of Credit hereunder, National
City Bank, or each other Lender that is requested by the Agent with the approval
of the Borrowing Agent, and agrees to act as an Issuer, and each of their
successors and assigns (and which may be replaced at the sole discretion of the
Agent).

“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.

“Letter of Credit Application” shall have the meaning set forth in
Section 2.9(a) hereof.

“Letter of Credit Fees” shall have the meaning set forth in Section 3.2 hereof.

“Letters of Credit” shall have the meaning set forth in Section 2.8 hereof.

“Libor Rate” means, for any Interest Period with respect to a Libor Rate Loan,
the quotient (rounded upwards, if necessary, to the nearest one sixteenth of one
percent (1/16th of 1%) of: (x) the per annum rate of interest, determined by the
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) as of approximately 12:00 noon (London time)
two (2) Business Days prior to the beginning of such Interest Period pertaining
to such Libor Rate Loan, as provided by Bloomberg’s or Reuters (or any other
similar company or service that provides rate quotations comparable to those
currently provided by such companies as the rate in the London interbank
market), as determined by the Agent from time to time for purposes of providing
quotations of interest rates applicable to deposits in Dollars or in the London
interbank market) as the rate in the London interbank market for deposits in
Dollars in immediately available funds with a maturity comparable to such
Interest Period divided by (y) a number equal to 1.00 minus the Eurocurrency
Reserve Percentage. In the event that such rate quotation is not available for
any reason, then the rate (for purposes of clause (x) hereof) shall be the rate,
determined by the Agent as of approximately 12:00 noon (London time) two
(2) Business Days prior to the beginning of such Interest Period pertaining to
such Libor Rate Loan, to be the average (rounded upwards, if necessary, to the
nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates at
which deposits in Dollars in immediately available funds in an amount comparable
to such Libor borrowing and with a maturity comparable to such Interest Period
are offered to the prime banks by leading banks in the London interbank market.
The Libor Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurocurrency Reserve Percentage.

 

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“Libor Rate Loan” shall mean an Advance at any time that bears interest based on
the Libor Rate.

“Lien” shall mean 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, without limitation, 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.

“Loan Party” or “Loan Parties” shall mean, singularly or collectively, as the
context may require, each Borrower and each Guarantor.

“Lockbox” shall mean a post office box rented by and in the name of the
Borrowing Agent (or any other Borrower acceptable to the Agent) as required by
this Agreement and as to which only the applicable Lockbox Bank and the Agent
have access pursuant to the requirements of this Agreement and which cannot be
closed by the applicable Lockbox Bank without the consent of the Agent pursuant
to the applicable Blocked Account Agreement.

“Lockbox Agreement” shall have the meaning set forth in Section 4.15(g) hereof.

“Lockbox Bank” shall mean National City Bank and, for such period as is
acceptable to the Agent, any other financial institution acceptable to the
Agent.

“Management Services Agreement” shall mean the Management Services Agreement,
dated as of January 1, 1997, by and among RMI, Radnor, WHI, RCC, SUL and SCL, as
amended by the Joinder, dated January 20, 1999.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, results of operations, business or prospects of the Loan
Parties taken as a whole, (b) the Loan Parties’ (taken as a whole) ability to
pay the Obligations in accordance with the terms thereof, (c) the value of the
Collateral taken as a whole, or the Agent’s Liens on the Collateral taken as a
whole or, subject to Permitted Encumbrances, the priority of any such Lien or
(d) the practical realization of the benefits of the Agent’s and each Lender’s
rights and remedies under this Agreement and the Other Documents.

“Maximum Revolving Advance Amount” shall mean Seventy Five Million and 00/100
Dollars ($75,000,000.00).

“Measurement Quarter” shall have the meaning set forth in Section 3.1(b) hereof.

“Monthly Advances” shall have the meaning set forth in Section 3.1(a) hereof.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Sections 3(37) and 4001(a)(3) of ERISA.

 

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“National City Bank” shall mean National City Bank, a national banking
association, and its successors and assigns.

“NCBC” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and assigns.

“Non-Consenting Lender” shall have the meaning set forth in Section 16.3(h)
hereof.

“Note” shall mean each Revolving Credit Note and the Swing Note and “Notes”
shall collectively mean all of the Revolving Credit Notes and the Swing Note.

“Obligations” shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties (absolute, contingent, matured or
unmatured) owing by the Loan Parties to the Lenders, the Issuer or the Agent or
to any other direct or indirect subsidiary or affiliate of the Agent, the Issuer
or any Lender of any kind or nature, present or future (including, without
limitation, any interest 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 Loan Party, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or the Other Documents, 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, or arising under any Hedging Contract or in
connection with any cash management or treasury administration services or
agreements, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of the Agent’s, the Issuer’s or any Lender’s 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, 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, whether
evidenced by any other agreement or instrument, including, but not limited to,
any and all of any Loan Party’s Indebtedness and/or liabilities under this
Agreement, the Other Documents or under any other agreement related thereto
between the Agent, the Issuer or the Lenders and any Loan Party and any
amendments, extensions, renewals or increases and all costs and expenses of the
Agent, the Issuer and any Lender incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of the
foregoing, including but not limited to, reasonable attorneys’ fees and expenses
and all obligations of any Loan Party to the Agent, the Issuer or the Lenders to
perform acts or refrain from taking any action.

“Original Owner” shall mean (i) each of Michael T. Kennedy, John P. McNiff and
R. Radcliffe Hastings, (ii) any Affiliate controlled by any of the Persons
described in clause (i), (iii) any trust created for the benefit of the Persons
described in clause (i) or the spouse and children or grandchildren (including
children or grandchildren by adoption) of such Persons, or (iv) any trust
created for the benefit of any trust described in clause (iii).

“Other Documents” shall mean the Revolving Credit Notes, the Swing Note, the
Questionnaire, the Letters of Credit, the Blocked Account Agreements, the
Waivers, any

 

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Guaranty, the Intellectual Property Security Agreement and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by any Loan Party and/or delivered to the
Agent, the Issuer or any Lender in respect of the transactions contemplated by
this Agreement.

“Parent” of any Person shall mean a corporation or other entity owning, directly
or indirectly at least fifty percent (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” shall mean have the meaning set forth in Section 16.3(d).

“Payment Office” shall mean initially 1965 East Sixth Street, 4th Floor,
Cleveland, Ohio 44114; thereafter, such other office of the Agent, if any, which
it may designate by notice to the Borrowing Agent and to each Lender to be the
Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

“Permitted Encumbrances” shall mean (a) Liens in favor of the Agent for the
benefit of the Agent and the Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Radnor and its Subsidiaries in accordance with GAAP; provided, that,
such Liens shall have no effect on the priority of the Liens in favor of the
Agent or the value of the assets in which the Agent has such a Lien and a stay
of enforcement of any such Lien shall be in effect; (c) deposits or pledges to
secure obligations under worker’s compensation, social security or similar laws,
or under unemployment insurance or general liability or product liability
insurance; (d) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations,
performance bonds, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of Radnor’s or such applicable Subsidiary’s
business; (e) mechanics, workers, materialmen’s, warehousemen’s, common
carriers, landlord’s or other like Liens arising in the ordinary course of
Radnor’s or such applicable Subsidiary’s business with respect to obligations
which are not due or which are being contested in good faith by Radnor or the
applicable Subsidiary; (f) Liens placed upon equipment and real estate assets
acquired to secure a portion of the purchase price thereof, provided that
(x) any such lien shall not encumber any other property of Radnor and its
Subsidiaries and (y) 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; (g) zoning restrictions, easements,
encroachments, rights of way, restrictions, leases, licenses, restrictive
covenants and other similar title exceptions or Liens affecting Real Property,
none of which materially impairs the use of such Real Property or the value
thereof, and none of which is violated in any material respect by existing or
supporting structures or land use; (h) attachment and judgment liens which do
not constitute an Event of Default under Section 10.6; (i) Liens disclosed on
Schedule 1.2 provided that the principal amount secured thereby is not hereafter
increased to an amount greater than the amount outstanding on the Closing Date,
and no additional assets become subject to such Liens except as otherwise
specifically identified on Schedule 1.2; (j) extensions, renewals and
refinancings of

 

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any of the Liens described in this definition of Permitted Encumbrances, subject
to the limitations set forth herein, provided that the aggregate amount of such
extended, renewed or refinanced Liens is not increased and such extended or
renewed Liens are on terms and conditions no more restrictive than the terms and
conditions of the Liens being extended, renewed or refinanced; and (k) other
Liens not described by any of the foregoing on assets (other than Collateral)
provided that such Liens secure Indebtedness in an aggregate principal amount at
any time outstanding not to exceed One Million and 00/100 Dollars
($1,000,000.00).

“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3)
of ERISA, maintained for employees of the Loan Parties or any member of the
Controlled Group or any such Plan to which any Loan Party or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

“Projections” shall have the meaning set forth in Section 5.5(a) hereof.

“Purchase Agreement” shall mean that certain Purchase Agreement, dated
October 27, 2005, by and among Radnor, SVEF and SVOF.

“Questionnaire” shall mean the Documentation Information Questionnaire and the
responses thereto provided by the Loan Parties and delivered to the Agent.

“Radnor” shall mean Radnor Holdings Corporation, a Delaware corporation and its
successors and assigns.

“RAMI” shall mean Radnor Asset Management, Inc., a Delaware corporation and its
successors and assigns.

“RCC” shall mean Radnor Chemical Corporation, a Delaware corporation and its
successors and assigns.

“RD2I” shall mean Radnor Delaware II, Inc., a Delaware corporation and its
successors and assigns.

“Real Property” shall mean all real property, both owned and leased, of the Loan
Parties.

“Receivables” shall mean and include, as to each Loan Party, all of such Loan
Party’s accounts, contract rights, instruments (including those evidencing
indebtedness owed to the Loan Parties by their 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 Loan Party arising out of or in connection with the
sale or lease of Inventory or the rendition of services (including, but not
limited to, tolling

 

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arrangements), 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 the Agent hereunder.

“Receivables Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.

“Register” shall have the meaning set forth in Section 16.3(c) hereof.

“Regulations” shall have the meaning set forth in Section 16.16 hereof.

“Releases” shall have the meaning set forth in Section 5.7(c)(i) hereof.

“Reportable Event” shall mean a reportable event described in Section 4043(b) of
ERISA or the regulations promulgated thereunder.

“Reporting Quarter” shall have the meaning set forth in Section 3.1(b) hereof.

“Required Lenders” shall mean the Lenders holding at least fifty one percent
(51%) of the Advances (excluding Swing Loans) and, if no Advances (excluding
Swing Loans) are outstanding, shall mean the Lenders holding fifty one percent
(51%) of the Commitment Percentages.

“Revolving Advances” shall mean Advances made other than Letters of Credit and
Swing Loans.

“Revolving Credit Note” or “Revolving Credit Notes” shall mean, singularly or
collectively, as the context may require, the promissory notes referred to in
Section 2.1(a) hereof, together with all amendments, restatements, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.

“RII” shall mean Radnor Investments, Inc., a Delaware corporation and its
successors and assigns.

“RIL” shall mean Radnor Investments, L.L.C., a Delaware limited liability
company and its successors and assigns.

“RI2I” shall mean Radnor Investments II, Inc., a Delaware corporation and its
successors and assigns.

“RI3I” shall mean Radnor Investments III, Inc., a Delaware corporation and its
successors and assigns.

“RMDI” shall mean Radnor Management Delaware, Inc., a Delaware corporation and
its successors and assigns.

“RMI” shall mean Radnor Management, Inc., a Delaware corporation and its
successors and assigns.

 

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“SCL” shall mean StyroChem Canada, Ltd., a Quebec corporation and its successors
and assigns.

“SDI” shall mean StyroChem Delaware, Inc., a Delaware corporation and its
successors and assigns.

“SEC” shall mean the United States Securities and Exchange Commission, or any
successor governmental entity charged with the supervision and oversight of the
federal securities laws.

“Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling NCBC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.

“SEDI” shall mean StyroChem Europe Delaware, Inc., a Delaware corporation and
its successors and assigns.

“Senior Notes” shall mean the Senior Notes in the aggregate principal amount of
One Hundred Thirty Five Million and 00/100 Dollars ($135,000,000.00), due 2010
and issued on March 11, 2003 pursuant to the Senior Notes Indenture.

“Senior Notes Documentation” shall mean collectively, the Senior Notes
Indenture, the Senior Notes and all related material agreements, documents and
instruments.

“Senior Notes Indenture” shall mean the Indenture dated as of March 11, 2003 by
and among Radnor, RCC, RD2I, RMDI, RMI, SDI, SUDI, SUL, SGL, SLL, WEDI, WGL,
WLL, WTL WHI and Wachovia Bank, National Association, as trustee, with respect
to the issuance by Radnor of the Senior Notes in the aggregate principal amount
of One Hundred Thirty Five Million and 00/100 Dollars ($135,000,000.00).

“Settlement Date” shall mean the Closing Date and thereafter Wednesday of each
week unless such day is not a Business Day in which case it shall be the next
succeeding Business Day.

“SGL” shall mean StyroChem GP, L.L.C., a Delaware limited liability company and
its successors and assigns.

“SLL” shall mean StyroChem LP, L.L.C., a Delaware limited liability company and
its successors and assigns.

“Subsidiary” shall mean a corporation or other entity of whose shares of stock
or other ownership interests having ordinary voting power (other than stock or
other ownership 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.

“SUL” shall mean StyroChem U.S., Ltd., a Texas limited partnership and its
successors and assigns.

 

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“Supermajority Lenders” shall mean Lenders holding at least sixty-six and 2/3
percent (66 2/3%) of the Advances (excluding Swing Loans) and, if no Advances
(excluding Swing Loans) are outstanding, shall mean Lenders holding sixty-six
and 2/3 percent (66 2/3%) of the Commitment Percentages.

“SVEF” shall mean Special Value Expansion Fund, LLC, a Delaware limited
liability company.

“SVOF” shall mean Special Value Opportunities Fund, LLC, a Delaware limited
liability company.

“Swing Loan Commitment” shall mean NCBC’s commitment to make Swing Loans to the
Borrowers pursuant to Section 2.16 hereof in an aggregate principal amount up to
Ten Million and 00/100 Dollars ($10,000,000.00).

“Swing Loan Request” shall mean a request for Swing Loans made in accordance
with Section 2.16 hereof.

“Swing Loans” shall mean collectively and “Swing Loan” shall mean separately all
Swing Loans or any Swing Loan made by NCBC to the Borrowers pursuant to 2.16
hereof.

“Swing Note” shall mean the promissory note referred to in Section 2.16 hereof,
together with all amendments, restatements, extensions, renewals, replacements,
refinancings or refundings thereof in whole or in part.

“Tennenbaum” shall mean Tennenbaum Capital Partners, LLC and its successors and
assigns.

“Tennenbaum Credit Agreement” shall mean the Credit Agreement dated as of
December 1, 2005 by and among Radnor, as the borrower, RCC, RMDI, RMI, SDI,
SEDI, SUL, SGL, SLL, WEDI, WGL, WLL, WTL, WHI and RD2I, all as guarantors, the
Tennenbaum Lenders, each as a lender, and Tennenbaum, as agent and collateral
agent, with respect to loans made by the Tennenbaum Lenders to Radnor in the
aggregate principal amount of Ninety-Five Million and 00/100 Dollars
($95,000,000.00), as amended from time to time.

“Tennenbaum Lenders” shall mean collectively, Special Value Expansion Fund, LLC,
a Delaware limited liability company and Special Value Opportunities Fund, LLC,
a Delaware limited liability company, and each of their respective successors
and assigns.

“Tennenbaum Loan Documents” shall mean collectively, the Tennenbaum Credit
Agreement and all related material agreements, documents and instruments.

“Term” shall have the meaning set forth in Section 13.1 hereof.

“Termination Event” shall mean (i) a Reportable Event with respect to any Plan
or Multiemployer Plan; (ii) the withdrawal of any Loan Party or any member of
the Controlled Group from a 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 Plan

 

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in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer
Plan; (v) any event or condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or
(vi) the partial or complete withdrawal within the meaning of Sections 4203 and
4205 of ERISA, of any Loan Party or any member of the Controlled Group from a
Multiemployer Plan.

“Toxic Substance” shall mean and include any material present on the Real
Property which has been shown to have significant adverse effect on human health
or which is subject to regulation under the Toxic Substances Control Act (TSCA),
15 U.S.C. Sections 2601 et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted relating to toxic
substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.

“UCP” shall have the meaning set forth in Section 2.9(b) hereof.

“Undrawn Availability” shall mean, at a particular date, an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount, minus the aggregate amount of outstanding Letters of Credit, minus
(b) the sum of (w) the outstanding amount of Revolving Advances plus (x) the
outstanding amounts of Swing Loans plus (y) all amounts due and owing to the
Borrowers’ trade creditors which are outstanding sixty (60) days or more beyond
the due date (without duplication with respect to any such amount deducted from
the Formula Amount), plus (z) fees and expenses for which the Borrowers are
liable but which have not been paid or charged to the Borrowers’ Account.

“Uniform Commercial Code” shall mean the Uniform Commercial Code or other
similar law of the Commonwealth of Pennsylvania as in effect on the date of this
Agreement and as amended from time to time.

“USA Patriot Act” shall mean 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.

“Waivers” shall mean, collectively, any and all Landlord’s Waivers,
Warehouseman’s Waivers, Creditor’s Waivers, Landlord’s Waiver and Agreements,
Mortgagee Waivers and Processing Facility Waivers, executed and delivered in
connection with this Agreement, in form and substance satisfactory to the Agent,
together with all amendments, supplements, modifications, substitutions and
replacements thereto and thereof.

“Website Posting” shall have the meaning set forth in Section 16.6 hereof.

“WEDI” shall mean WinCup Europe Delaware, Inc., a Delaware corporation and its
successors and assigns.

“Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.

 

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“WGL” shall mean WinCup GP, L.L.C., a Delaware limited liability company and its
successors and assigns.

“WHI” shall mean Wincup Holdings, Inc., a Delaware corporation and its
successors and assigns.

“WLL” shall mean WinCup LP, L.L.C., a Delaware limited liability company and its
successors and assigns.

“WRL” shall mean WinCup R.E. LLC, a Delaware limited liability company and its
successors and assigns.

“WTL” shall mean WinCup Texas, Ltd., a Texas limited partnership and its
successors and assigns.

1.3 Uniform Commercial Code Terms.

All terms used herein and defined in the Uniform Commercial Code as adopted in
the Commonwealth of Pennsylvania from time to time shall have the meaning given
therein unless otherwise defined herein. 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.

1.4 Certain Matters of Construction.

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. 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 the Agent is a party, including, without limitation, references to any of
the Other Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.

II. ADVANCES, PAYMENTS.

2.1 Revolving Advances.

(a) Subject to the terms and conditions set forth in this Agreement including,
without limitation, Section 2.1(b), each Lender, severally and not jointly, will
make Revolving Advances to the Borrowers in aggregate amounts outstanding at any
time equal to such Lender’s Commitment Percentage of the lesser of (x) the
Maximum Revolving Advance Amount less the aggregate amount of outstanding
Letters of Credit and Swing Loans or (y) an amount equal to the sum of:

(i) up to eighty-five percent (85%), subject to the provisions of Section 2.1(b)
hereof (“Receivables Advance Rate”), of Eligible Receivables, plus

 

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(ii) up to the lesser of (A) sixty percent (60%), subject to the provisions of
Section 2.1(b) hereof (“Inventory Advance Rate”) (the Receivables Advance Rate
and the Inventory Advance Rate shall be referred to collectively, as the
“Advance Rates”), of the value of Eligible Inventory (the Receivables Advance
Rate and the Inventory Advance Rate shall be referred to collectively, as the
“Advance Rates”), or (B) Forty Million and 00/100 Dollars ($40,000,000.00) in
the aggregate at any one time, minus

(iii) the aggregate amount of outstanding Letters of Credit, minus

(iv) the aggregate amount of outstanding Swing Loans, minus

(v) such reserves as the Agent may reasonably deem proper and necessary from
time to time.

The amount derived from the sum of Sections 2.1(a)(y)(i) and (ii) minus the sum
of Section 2.1(a)(y)(iii) through (v) 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
Note”) substantially in the form attached hereto as Exhibit 2.1(a).

(b) Discretionary Rights. Subject to Section 16.2(b)(vii), the Advance Rates may
be increased or decreased by the Agent at any time and from time to time in the
exercise of its reasonable discretion. Each Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or
increasing the reserves may limit or restrict Advances requested by the
Borrowing Agent.

2.2 Procedure for Borrowing Advances.

(a) The Borrowing Agent on behalf of any Borrower may notify the Agent prior to
12:00 p.m. (Cleveland, Ohio time) on a Business Day of a Borrower’s request to
incur, on that day, a Revolving Advance hereunder. Should any amount required to
be paid as interest hereunder, or as fees or other charges under this Agreement
or any Other Document, or with respect to any other Obligation, become due, same
shall be deemed a request for a Revolving Advance 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 Document, and such request shall be
irrevocable.

(b) Notwithstanding the provisions of (a) above, in the event any Borrower
desires to obtain a Libor Rate Loan, the Borrowing Agent shall notify the Agent
in writing no later than 10:00 a.m. (Cleveland, Ohio time) at least three
(3) Business Days’ prior to the date of such proposed borrowing, specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
amount of such Revolving Advance to be borrowed, which amount shall be in a
minimum amount of One Million and 00/100 Dollars ($1,000,000.00) and in integral
multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) thereafter,
and (iii) the duration of the first Interest Period therefor. Interest Periods
for Libor Rate Loans shall be for

 

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one (1), two (2), three (3) or six (6) months; provided, (A) 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 on the next preceding Business
Day and (B) the Borrowing Agent shall not select, convert to or renew any
Interest Period for any portion of the Revolving Advances that ends after the
last day of the Term. No Libor Rate Loan shall be made available to a Borrower
during the continuance of a Default or an Event of Default.

(c) Each Interest Period of a Libor Rate Loan shall commence on the date such
Libor Rate Loan is made and shall end on such date as the Borrowing Agent may
elect as set forth in subsection (b)(iii) above 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.

The Borrowing Agent shall elect the initial Interest Period applicable to a
Libor Rate Loan by its notice of borrowing given to the Agent pursuant to
Section 2.2(b) or by its notice of conversion given to the Agent pursuant to
Section 2.2(d), as the case may be. The Borrowing Agent shall elect the duration
of each succeeding Interest Period by giving irrevocable written notice to the
Agent of such duration not less than three (3) Business Days prior to the last
day of then current Interest Period applicable to such Libor Rate Loan. If the
Agent does not receive timely notice of the Interest Period elected by the
Borrowing Agent, the Borrowers shall be deemed to have elected to convert to a
Domestic Rate Loan subject to Section 2.2(d) hereinbelow.

(d) Any Borrower may, on the last Business Day of then current Interest Period
applicable to any outstanding Libor 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
Libor Rate Loan shall be made only on the last Business Day of then current
Interest Period applicable to such Libor Rate Loan. If a Borrower desires to
convert a loan, the Borrowing Agent shall give the Agent not less than three
(3) Business Days’ prior written notice to convert from a Domestic Rate Loan to
a Libor Rate Loan or one (1) Business Day’s prior written notice to convert from
a Libor Rate Loan to a Domestic Rate Loan, specifying 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; provided, however, a Borrower shall not be permitted to convert a
Domestic Rate Loan to a Libor Rate Loan or continue to select a Libor Rate Loan
during the continuance of a Default or an Event of Default. After giving effect
to each such conversion, there shall not be outstanding more than seven
(7) Libor Rate Loans, in the aggregate.

(e) At its option and upon three (3) Business Days’ prior written notice, any
Borrower may prepay the Libor Rate Loans in whole at any time or in part from
time to time, without premium or penalty, but with accrued interest on the
principal being prepaid to the date of such repayment. Such Borrower shall
specify the date of prepayment of Advances which are Libor Rate Loans and the
amount of such prepayment. In the event that any prepayment of a Libor Rate Loan
is required or permitted on a date other than the last Business Day of then
current Interest Period with respect thereto, such Borrower shall indemnify the
Agent and the Lenders therefor in accordance with Section 2.2(f) hereof.

 

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(f) Each Borrower shall indemnify the Agent and the Lenders and hold the Agent
and the Lenders harmless from and against any and all losses or expenses that
the Agent and the 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 Libor Rate Loan or failure by any Borrower to
complete a borrowing of, a prepayment of or conversion of or to a Libor Rate
Loan after notice thereof has been given, including, but not limited to, any
interest payable by the Agent or the Lenders to lenders of funds obtained by it
in order to make or maintain its Libor Rate Loans hereunder. A certificate as to
any additional amounts payable pursuant to the foregoing sentence submitted by
the Agent or any Lender to the Borrowing Agent shall be presumed correct 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 Libor Rate Loans) to make or maintain its Libor Rate Loans, the
obligation of the Lenders to make Libor Rate Loans hereunder shall forthwith be
cancelled and the Borrowers shall, if any affected Libor Rate Loans are then
outstanding, promptly upon request from the Agent, either pay all such affected
Libor Rate Loans or convert such affected Libor Rate Loans into loans of another
type. If any such payment or conversion of any Libor Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such Libor Rate
Loan, the Borrowers shall pay the Agent, upon the Agent’s request, such amount
or amounts as may be necessary to compensate the Lenders for any loss or expense
sustained or incurred by the Lenders in respect of such Libor Rate Loan as a
result of such payment or conversion, including (but not limited to) any
interest or other amounts payable by the Lenders to lenders of funds obtained by
the Lenders in order to make or maintain such Libor Rate Loan. A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted
by the Lenders to the Borrowing Agent shall be presumed correct absent manifest
error.

2.3 Disbursement of Advance Proceeds.

All Advances shall be disbursed from whichever office or other place the Agent
may designate from time to time and, together with any and all other Obligations
of the Borrowers to the Agent or the Lenders, shall be charged to the Borrowers’
Account on the Agent’s books. During the Term, the Borrowers may use the
Revolving Advances by borrowing, repaying and reborrowing, all in accordance
with the terms and conditions hereof. The proceeds of each Revolving Advance
requested by the Borrowers or deemed to have been requested by the Borrowers
under Section 2.2(a) hereof shall, with respect to requested Revolving Advances
to the extent the 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 National City Bank, or such other bank as the Borrowing
Agent may designate following notification to the 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 the Agent to be applied to the outstanding Obligations giving rise to such
deemed request.

 

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2.4 Maximum Advances.

Subject to Section 16.2(b), the aggregate balance of outstanding Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula Amount (without duplication with respect to
Letters of Credit and Swing Loans).

2.5 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.

(b) Each Borrower recognizes 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 the Agent on the date deposited to any Collection Account or
the Cash Concentration Account. For the purpose of calculating the aggregate
Revolving Advances outstanding and the resulting Undrawn Availability, all such
items of payment shall be credited to the Borrowers on the Business Day on which
the Agent has received notice of the deposit of the proceeds of such Collateral
into the Cash Concentration Account. For the purposes of calculating interest
and other charges on the Obligations, and in consideration of the Agent’s
agreement to conditionally credit the Borrowers’ Account as of the Business Day
on which the Agent receives those items of payment, each Borrower agrees that
all items of payment shall be deemed applied by the Agent on account of the
Obligations one (1) Business Day after the Business Day the Agent receives
notice of the deposit of the proceeds of such Collateral into the Cash
Concentration Account. The Agent is not, however, required to credit the
Borrowers’ Account for the amount of any item of payment which is unsatisfactory
to the Agent and the Agent may charge the Borrowers’ Account for the amount of
any item of payment which is returned to the Agent unpaid.

(c) All payments of principal, interest and other amounts payable hereunder, or
under any of the Other Documents shall be made to the Agent at the Payment
Office not later than 11:00 A.M. (Cleveland, Ohio time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to the Agent. The Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging the
Borrowers’ Account or by making Advances as provided in Section 2.2 hereof.

(d) The Borrowers shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement, without any deduction whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.

2.6 Repayment of Excess Advances.

The aggregate balance of outstanding Advances at any time in excess of the
maximum amount of such 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.

 

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2.7 Statement of Account.

The Agent shall maintain, in accordance with its customary procedures, a loan
account (“Borrowers’ Account”) in the name of the Borrowers in which shall be
recorded the date and amount of each Advance made by the Agent and the date and
amount of each payment in respect thereof; provided, however, the failure by the
Agent to record the date and amount of any Advance shall not adversely affect
the Agent or any Lender. Each calendar month, the Agent shall send to the
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between the
Agent and the Borrowers, during such month. The monthly statements shall be
deemed correct and binding upon the Borrowers in the absence of manifest error
and shall constitute an account stated between the Lenders and the Borrowers
unless the Agent receives a written statement of the Borrowers’ specific
exceptions thereto within thirty (30) days after such statement is received by
the Borrowing Agent. The records of the Agent with respect to the loan account
shall be presumed correct evidence absent manifest error of the amounts of
Advances and other charges thereto and of payments applicable thereto.

2.8 Letters of Credit.

Subject to the terms and conditions hereof, the Issuer shall (a) issue or cause
the issuance of Letters of Credit (“Letters of Credit”) on behalf of any
Borrower; provided, however, that the Issuer will not be required to issue or
cause to be issued any Letters of Credit to the extent that the face amount of
such Letters of Credit would then cause the sum of (i) the outstanding Revolving
Advances plus (ii) the outstanding amount of Letters of Credit plus (iii) the
outstanding Swing Loans to exceed the lesser of (x) the Maximum Revolving
Advance Amount or (y) the Formula Amount (without duplication with respect to
Letters of Credit and Swing Loans). The maximum amount of the amount of Letters
of Credit outstanding shall not exceed Ten Million and 00/100 Dollars
($10,000,000.00) in the aggregate at any time. All disbursements or payments
related to Letters of Credit shall be deemed to be Domestic Rate Loans (in
Dollars) consisting of Revolving Advances and shall bear interest at the
Alternate Base Rate; Letters of Credit that have not been drawn upon shall not
bear interest.

2.9 Issuance of Letters of Credit.

(a) The Borrowing Agent, on behalf of any Borrower, may request the Issuer to
issue or cause the issuance of a Letter of Credit by delivering to the Issuer at
the Payment Office, the Issuer’s form of Letter of Credit Application (the
“Letter of Credit Application”) completed to the satisfaction of the Issuer;
and, such other certificates, documents and other papers and information as the
Issuer may reasonably request no later than 12:00 noon (Cleveland, Ohio time) at
least three (3) Business Days’ prior to the date of such proposed issuance. The
Borrowing Agent, on behalf of the 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 the Issuer upon any amendment, extension or renewal of any
Letter of Credit.

 

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(b) Each Letter of Credit shall, among other things, (i) provide for the payment
of sight drafts or other forms of written demand 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 the earlier of one (1) year from the date of issuance
or the last day of the Term. Each trade Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revisions thereof adhered to by the Issuer (the “UCP”). Each standby Letter of
Credit shall be subject to the International Standby Practices 1998,
International Chamber of Commerce Publication 590 and any amendments or
revisions thereof adhered to by the Issuer (the “ISP”) or the UCP, as determined
by the Issuer. Each Letter of Credit shall be governed, to the extent not
inconsistent with the UCP or the ISP, as applicable, by the laws of the
Commonwealth of Pennsylvania (provided, however, upon the request of the
Borrowing Agent and the consent of the Issuer, a Letter of Credit may be
governed by the laws of a state other than Pennsylvania).

(c) The Agent shall notify the Lenders of the request by the Borrowing Agent for
a Letter of Credit hereunder within a reasonable time after receiving such
request.

(d) The Issuer shall have absolute discretion whether to accept any draft.
Without in any way limiting the Issuer’s absolute discretion whether to accept
any draft, the Borrowing Agent will not present for acceptance any draft, and
the Issuer will generally not accept any drafts (i) that arise out of
transactions involving the sale of goods by any Borrower not in the ordinary
course of its business, (ii) that involve a sale to an Affiliate of any
Borrower, (iii) that involve any purchase for which the Issuer has not received
all related documents, instruments and forms requested by the Issuer, or
(iv) that is not eligible for discounting with Federal Reserve Banks pursuant to
paragraph 7 of Section 13 of the Federal Reserve Act, as amended.

2.10 Requirements For Issuance of Letters of Credit.

(a) In connection with the issuance of any Letter of Credit, the Borrowers shall
indemnify, save and hold the Agent, each Lender and each Issuer harmless from
any loss, cost, expense or liability, including, without limitation, payments
made by the Agent, any Lender or any Issuer and expenses and reasonable
attorneys’ fees incurred by the Agent, any Lender or Issuer arising out of, or
in connection with, any Letter of Credit to be issued or created for any
Borrower. The Borrowers shall be bound by the Agent’s or any Issuer’s
regulations and good faith interpretations of any Letter of Credit issued or
created for the Borrowers’ Account, although this interpretation may be
different from its own; and, neither the Agent, nor any Lender, nor any Issuer
nor any of their correspondents shall be liable for any error, negligence, or
mistakes, whether of omission or commission, in following the Borrowing Agent’s
or any Borrower’s instructions or those contained in any Letter of Credit or of
any modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit, except for the Agent’s, any Lender’s, any Issuer’s or such
correspondents’ gross negligence or willful misconduct.

(b) The Borrowing Agent shall authorize and direct any Issuer to name the
applicable Borrower as the “Applicant” or “Account Party” of each Letter of
Credit. The

 

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Borrowing Agent shall authorize and direct the Issuer to deliver to the 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 the 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.

(c) In connection with all Letters of Credit issued by the Issuer under this
Agreement, each Borrower hereby appoints the Issuer, or its designee, as its
attorney, with full power and authority upon the occurrence and during the
continuance of an Event of Default or Default, (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 Issuer or Issuer’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 Issuer’s, or in the name of Issuer’s designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Issuer nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Issuer’s or its attorney’s willful misconduct or gross negligence.
This power, being coupled with an interest, is irrevocable as long as any
Letters of Credit remain outstanding.

(d) Each Lender shall to the extent of the percentage amount equal to the
product of such Lender’s Commitment Percentage times the aggregate amount of all
unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Advances exceeds or would exceed, with the making of such
disbursement, the lesser of the Maximum Revolving Advance Amount or the Formula
Amount (without duplication with respect to Letters of Credit and Swing Loans),
and such disbursement is not reimbursed by the Borrowers within two (2) Business
Days, the Agent shall promptly notify each Lender and upon the Agent’s demand
each Lender shall pay to the Agent such Lender’s proportionate share of such
unreimbursed disbursement together with such Lender’s proportionate share of the
Agent’s reasonable unreimbursed costs and expenses relating to such unreimbursed
disbursement. In the event the Issuer makes a disbursement in respect of a
Letter of Credit, each Lender shall pay to such Issuer, upon such Issuer’s
demand, such Lender’s proportionate share of such disbursement together with
such Lender’s proportionate share of such Issuer’s reasonable unreimbursed costs
and expenses relating to such disbursement. Upon receipt by the Agent of a
repayment from any Borrower of any amount disbursed by the Agent for which the
Agent had already been reimbursed by the Lenders, the Agent shall deliver to
each Lender that Lender’s pro rata share of such repayment. Each Lender’s
participation commitment shall continue until the last to occur of any of the
following events: (A) the Issuer ceases to be obligated to issue or cause to be
issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder
remains outstanding and uncancelled or (C) the Issuer has been fully reimbursed
for all payments made under or relating to Letters of Credit.

 

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2.11 Additional Payments.

Any sums reasonably expended by the Agent or any Lender due to any Borrower’s
failure to perform or comply with its obligations under this Agreement or any
Other Document including, without limitation, any Borrower’s obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to the
Borrowers’ Account as a Revolving Advance and added to the Obligations.

2.12 Manner of Borrowing and Payment.

(a) Each borrowing of Revolving Advances shall be advanced according to the
applicable Commitment Percentages of the Lenders.

(b) Each payment (including each prepayment) by the Borrowers 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 the Lenders.

(c) 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 NCBC with respect to Swing
Loans and to the Agent on behalf of the Lenders to the Payment Office with
respect to Revolving Advances, in each case on or prior to 1:00 P.M. (Cleveland,
Ohio time) in Dollars and in immediately available funds.

(d) (i) Notwithstanding anything to the contrary contained in Sections 2.12(a)
and 2.12(b) hereof, commencing with the first Business Day following the Closing
Date, each borrowing of Revolving Advances shall be advanced by the Agent and
each payment by any Borrower on account of Revolving Advances shall be applied
first to those Revolving Advances advanced by the Agent. On or before 1:00 P.M.
(Cleveland, Ohio time) on each Settlement Date commencing with the first
Settlement Date following the Closing Date, the Agent and the Lenders shall make
certain payments as follows: (I) if the aggregate amount of new Revolving
Advances made by the 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 the 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 (II) 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 the 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 applicable Contract
Rate on outstanding Advances (other than Swing Loans) which it has funded.

(iii) Promptly following each Settlement Date, the Agent shall submit to each
Lender a certificate with respect to payments received and Advances (other than
Swing Loans) made during the Week immediately preceding such Settlement Date.
Such certificate of the Agent shall be presumed correct in the absence of
manifest error.

 

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(e) If any Lender or Participant (a “benefited Lender”) shall at any time
receive any payment of all or part of its Advances (other than Swing Loans), 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 (other than Swing Loans), 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 (other than Swing Loans), 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 (other than Swing Loans) may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.

(f) Unless the Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances (other than
Swing Loans) available to the Agent, the Agent may (but shall not be obligated
to) assume that such Lender shall make such amount available to the Agent on the
next Settlement Date and, in reliance upon such assumption, make available to
the Borrowers a corresponding amount. The Agent will promptly notify the
Borrowers of its receipt of any such notice from a Lender. If such amount is
made available to the Agent on a date after such next Settlement Date, such
Lender shall pay to the Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Effective Rate (computed on the basis of a
year of 360 days) during such period as quoted by the 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 the Agent. A
certificate of the Agent submitted to any Lender with respect to any amounts
owing under this paragraph (e) shall be presumed correct, in the absence of
manifest error. If such amount is not in fact made available to the Agent by
such Lender within three (3) Business Days after such Settlement Date, the 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
the Borrowers; provided, however, that the Agent’s right to such recovery shall
not prejudice or otherwise adversely affect the Borrowers’ rights (if any)
against such Lender.

2.13 Reserved.

2.14 Use of Proceeds.

The Borrowers shall apply the proceeds of Advances (i) to repay existing
Indebtedness owed to PNC Bank, National Association, (ii) to pay fees and
expenses relating to the transaction contemplated by this Agreement, (iii) for
general corporate purposes and (iv) to provide for working capital needs.

 

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2.15 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
(other than a Swing Loan) or (y) notifies either the Agent or the Borrowing
Agent that it does not intend to make available its portion of any Advance
(other than a Swing Loan) (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 2.15 while such
Lender Default remains in effect.

(b) Advances (other than a Swing Loan) shall be incurred pro rata from the
Lenders (the “Non-Defaulting Lenders”) which 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 (other than a Swing Loan) 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 (other
than a Swing Loan) shall be applied to reduce the applicable Advances (other
than a Swing Loan) of each Lender pro rata based on the aggregate of the
outstanding Advances (other than a Swing Loan) of that type of all Lenders at
the time of such application; provided, that, such amount shall not be applied
to any Advances (other than a Swing Loan) of a Defaulting Lender at any time
when, and to the extent that, the aggregate amount of Advances (other than a
Swing Loan) of any Non-Defaulting Lender exceeds such Non-Defaulting Lender’s
Commitment Percentage of all Advances (other than a Swing Loan) then
outstanding. Notwithstanding any of the foregoing, each borrowing or payment or
pre-payment by the Borrowers of principal, interest, fees or other amounts from
the Borrowers with respect to Swing Loans shall be made by or to NCBC according
to Section 2.16.

(c) A Defaulting Lender shall not be entitled to give instructions to the Agent
or to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other 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.

(d) Other than as expressly set forth in this Section 2.15, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify the
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.15 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, the Agent or any
Lender 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
the Agent the breach which caused a Lender to become a Defaulting Lender, such
Defaulting

 

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Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.

2.16 Swing Loans.

(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, and in order to facilitate
advances and repayments between Settlement Dates, NCBC may, at its option,
cancelable at any time for any reason whatsoever, make swing loans (the “Swing
Loans”) (which shall be Domestic Rate Loans only) to the Borrowers at any time
or from time to time after the date hereof to, but not including, the last day
of the Term, in an aggregate principal amount up to but not in excess of Ten
Million and 00/100 Dollars ($10,000,000.00) (the “Swing Loan Commitment”),
provided that the aggregate principal amount of NCBC’s Swing Loans and the
Revolving Advances of all the Lenders shall not exceed the lesser of (x) the
Maximum Revolving Advance Amount less the aggregate amount of outstanding
Letters of Credit or (y) the Formula Amount (without duplication with respect to
Swing Loans). Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrowers may borrow, repay and reborrow
pursuant to this Section 2.16.

(b) Except as otherwise provided herein, the Borrowing Agent may from time to
time prior to the last day of the Term request NCBC to make Swing Loans by
delivery to NCBC not later than 10:00 a.m. (Cleveland, Ohio time) or such later
time as agreed to by NCBC on the proposed borrowing date of a duly completed
request therefor in writing or a request by telephone immediately confirmed in
writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being
understood that NCBC may rely on the authority of any individual making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify the
proposed borrowing date and the principal amount of such Swing Loan, which shall
be in integral multiples of Five Hundred Thousand and 00/100 Dollars
($500,000.00) and not less than One Million and 00/100 Dollars ($1,000,000.00).

(c) So long as NCBC elects to make Swing Loans, NCBC shall, after receipt by it
of a Swing Loan Request pursuant to Section 2.16(b), fund such Swing Loan to the
Borrowing Agent in U.S. Dollars and immediately available funds by way of credit
to the Borrowing Agent’s operating account at National City Bank or other place
that NCBC may designate from time to time prior to 2:00 p.m. (Cleveland, Ohio
time) on the borrowing date.

(d) The obligation of the Borrowers to repay the aggregate unpaid principal
amount of the Swing Loans made to the Borrowing Agent by NCBC, together with
interest thereon, shall be evidenced by a secured promissory note (the “Swing
Note”) substantially in the form of Exhibit 2.16(d) hereto, dated the Closing
Date payable to the order of NCBC in a face amount equal to the Swing Loan
Commitment.

(e) NCBC may, at its option, exercisable at any time for any reason whatsoever
but not less frequently than on each Settlement Date, request repayment of the
Swing Loans from the Lenders, and each Lender shall make a Revolving Advance in
an amount equal to such Lender’s Commitment Percentage of the aggregate
principal amount of the outstanding

 

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Swing Loans, plus, if NCBC so requests, accrued interest thereon, provided that
no Lender shall be obligated in any event to make Advances in excess of its
commitment to make Advances. Revolving Advances made pursuant to the preceding
sentence shall bear interest at the applicable Contract Rate for Domestic Rate
Loans and shall be deemed to have been properly requested in accordance with
Section 2.2 without regard to any of the requirements of that provision. NCBC
shall provide notice to the Lenders (which may be telephonic or written notice
by letter, facsimile or telex) that such Revolving Advances are to be made under
this Section 2.16(e) and of the apportionment among the Lenders, and the Lenders
shall be unconditionally obligated to fund such Revolving Advances (whether or
not (i) the conditions specified in Section 8.2 are then satisfied or (ii) a
Default or an Event of Default has occurred and is continuing unless, prior to
the time such Swing Loans were made, the Required Lenders shall have directed
the Agent not to make Advances to the Borrowers) by the time NCBC so requests,
which shall not be earlier than 3:00 p.m. (Cleveland, Ohio time) on the next
Business Day after the date the Lenders receive such notice from NCBC.

III. INTEREST AND FEES.

3.1 Interest.

(a) Interest on Advances shall be payable in arrears on the first (1st) day of
each calendar month with respect to Domestic Rate Loans and on the last day of
the Term and, with respect to Libor Rate Loans, at the end of each Interest
Period or, for Libor Rate Loans with an Interest Period in excess of three
(3) months, at the earlier of (a) each three (3) months on the anniversary date
of the commencement of such Libor Rate Loan or (b) the end of the Interest
Period. Interest charges shall be computed on the actual principal amount of
Advances outstanding during the calendar month (the “Monthly Advances”). On the
Closing Date through the day immediately preceding the first (1st) Incentive
Pricing Effective Date, (x) Domestic Rate Loans shall bear interest for each day
at a rate per annum equal to the Alternate Base Rate plus one quarter of one
percent (.25%), and (y) Libor Rate Loans shall bear interest for each applicable
Interest Period at a rate per annum equal to the Libor Rate plus two percent
(2.00%).

(b) Subject to the terms and conditions of this Agreement, during each fiscal
quarter of the Borrowers, in accordance with Section 9.8 hereof, the Borrowers
shall submit to the Agent quarterly financial statements (the fiscal quarter in
which such financial statements are required to be received by the Agent is the
“Reporting Quarter”) as of the last day of the fiscal quarter immediately
preceding such Reporting Quarter (with respect to any Reporting Quarter, the
fiscal quarter immediately preceding such Reporting Quarter is the “Measurement
Quarter”). Upon receipt of such quarterly financial statements by the Agent in
accordance with Section 9.8 as of the Measurement Quarter ending June 30, 2006
and as of the last day of each Measurement Quarter thereafter, the Fixed Charge
Coverage Ratio shall be calculated as provided for in Section 6.5 hereof and
from the first (1st) day of the first (1st) full calendar month following the
Agent’s receipt of such quarterly financial statements (the “Incentive Pricing
Effective Date”) until the next Incentive Pricing Effective Date, (x) Domestic
Rate Loans shall bear interest for each day at a rate per annum equal to the
Alternate Base Rate plus the Applicable Base Rate Margin determined by reference
to the Fixed Charge Coverage Ratio (the “Applicable Base Rate Margin”) set forth
below and (y) Libor Rate Loans shall bear interest during each applicable
Interest Period at a rate per annum equal to the Libor Rate plus the Applicable
Libor Rate

 

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Margin determined by reference to the Fixed Charge Coverage Ratio (the
“Applicable Libor Rate Margin”) set forth below:

 

Tier

  

Fixed Charge Coverage Ratio

  
Applicable Libor Rate
Margin    
Applicable Base Rate
Margin    
Applicable Letter of Credit
Fee Percentage  

I

   > 1.50 to 1.0    1.75 %   0.00 %   1.75 %

II

   <= 1.50 to 1.0 and > 1.25 to 1.0    2.00 %   0.25 %   2.00 %

III

   <= 1.25 to 1.0    2.25 %   0.50 %   2.25 %

(c) Subject to the terms and conditions of this Agreement, in the event that the
Borrowers fail to timely deliver the quarterly financial statements in
accordance with Section 9.8 hereof, the Applicable Margin and the Applicable
Letter of Credit Fee Percentage shall be the amount corresponding to Tier III
until the delivery of such financial statements.

(d) Whenever, subsequent to the date of this Agreement, the Alternate Base Rate
is increased or decreased, the Contract 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 Libor Rate shall be adjusted with respect to Libor
Rate Loans without notice or demand of any kind on the effective date of any
change in the Eurocurrency Reserve Percentage as of such effective date. Upon
and after the occurrence of an Event of Default, and during the continuation
thereof, the Obligations shall bear interest at the applicable Contract Rate
plus two percent (2.00%) per annum (the “Default Rate”).

3.2 Letter of Credit Fees.

(a) The Borrowers shall pay (x) to the Agent, for the ratable benefit of the
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 (i) until the first (1st) Incentive Pricing Effective Date, two
percent (2.00%) per annum and (ii) on and after the first (1st) Incentive
Pricing Effective Date, the applicable percentage per annum determined by
reference to the Fixed Charge Coverage Ratio as set forth in Section 3.1(b)
hereof (the “Applicable Letter of Credit Fee Percentage”), such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of each calendar month and
on the last day of the Term and (y) to the Issuer, for its own account, 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
one-quarter of one percent (0.25%) per annum, such fees to be calculated on the
basis of a three hundred sixty (360) day year for the actual number of days
elapsed and to be payable monthly in arrears on the first (1st) day of each
calendar month and on the last day of the Term and (z) to the Issuer, for its
own account, any and all fees and expenses as agreed upon by the Issuer and the
Borrowing Agent in connection with any Letter of Credit, including, without
limitation, in connection with the opening, amendment or renewal of any such
Letter of Credit and any acceptances created thereunder and shall reimburse the
Agent for any and all fees and expenses, if any, paid by the Agent to the Issuer
(all of the foregoing fees, the

 

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“Letter of Credit Fees”). 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 proration upon the termination of this Agreement for any
reason. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the Letter of Credit Fees otherwise applicable pursuant to
this Section 3.2 shall be increased by two percent (2.0%) per annum.

(b) Immediately upon the request of the Agent after the occurrence and during
the continuance of a Default or an Event of Default, the Borrowers will cause
cash to be deposited and maintained in an account with the Agent, as cash
collateral, in an amount equal to one hundred five percent (105%) of the
outstanding amount of Letters of Credit, and each Borrower hereby irrevocably
authorizes the 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 Lender’s possession at
any time. The Agent will invest such cash collateral (less applicable reserves)
in such short-term money-market items as to which the Agent and such Borrower
mutually agree and the net return on such investments shall be credited to such
account and constitute additional cash collateral. So long as such Default or
Event of Default is continuing, no Borrower may withdraw amounts credited to any
such account except upon payment and performance in full of all Obligations and
termination of this Agreement.

3.3 Unused Facility Fee.

If, for any calendar month during the Term, the average daily unpaid balance of
the Advances for each day of such calendar month does not equal the Maximum
Revolving Advance Amount (for purposes of this computation, NCBC’s Swing Loans
shall be deemed to be borrowed amounts under its commitment to make Revolving
Advances), then the Borrowers shall pay to the Agent for the ratable benefit of
the Lenders a fee at a rate per annum equal to one-quarter of one percent
(0.25%) multiplied by the amount by which the Maximum Revolving Advance Amount
exceeds such average daily unpaid balance, such fees shall be payable to the
Agent in arrears on the first (1st) day of each calendar month after the date
hereof until the termination hereof and on the earlier of (i) such termination
date or (ii) the last day of the Term.

3.4 Reserved.

3.5 Computation of Interest and Fees.

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 Contract Rate during such extension.

 

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3.6 Maximum Charges.

In no event whatsoever shall interest and other charges charged hereunder exceed
the highest rate permissible under 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 the Borrowers, and if then remaining excess amount is greater than the
previously unpaid principal balance, the Lenders shall promptly refund such
excess amount to the Borrowers and the provisions hereof shall be deemed amended
to provide for such permissible rate.

3.7 Increased Costs.

In the event that, (a) the introduction after the date of this Agreement of any
law, treaty, rule or regulation, or any change therein after the date of this
Agreement, (b) any change after the date of this Agreement in the interpretation
or administration of any law, treaty, rule or regulation by any central bank or
other governmental authority or (c) the compliance by the Agent, any Lender or
the Issuer with any guideline, request or directive from any central bank or
other governmental authority (whether or not having the force of Law) after the
date of this Agreement (for purposes of this Section 3.7, the term “Lender”
shall include the Agent or any Lender and any corporation or bank controlling
the Agent or any Lender) and the office or branch where the Agent or any Lender
(as so defined) makes or maintains any Libor Rate Loans shall:

(a) subject the Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Other Document or change the basis of taxation
of payments to the Agent or any Lender of principal, fees, interest or any other
amount payable hereunder or under any Other Documents (except for changes in the
rate of tax on the overall net income of the 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 by, any office of the Agent
or any Lender, including (without limitation) pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or

(c) impose on the Agent or any Lender or the London interbank offered rate
market any other condition with respect to this Agreement or any Other Document;

and the result of any of the foregoing is to increase the cost to the Agent or
any Lender of making, renewing or maintaining its Advances hereunder by an
amount that the 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 the Agent or such Lender deems to be
material, then, in any case the Borrowers shall promptly pay the Agent or such
Lender, upon its demand, such additional amount as will compensate the Agent or
such Lender for such additional cost or such reduction, as the case may be,
provided that the foregoing shall not apply to increased costs which are
reflected in the Libor Rate. The Agent or such

 

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Lender shall certify the amount of such additional cost or reduced amount to the
Borrowers, and such certification shall be presumed correct absent manifest
error.

3.8 Basis For Determining Interest Rate Inadequate or Unfair.

In the event that the Agent or any Lender shall have determined that:

(a) reasonable means do not exist for ascertaining the Libor Rate applicable
pursuant to Section 2.2 hereof for any Interest Period; or

(b) Dollar deposits in the relevant amount and for the relevant maturity are not
available in the London interbank Libor market, with respect to an outstanding
Libor Rate Loan, a proposed Libor Rate Loan, or a proposed conversion of a
Domestic Rate Loan into a Libor Rate Loan,

then the Agent shall give the Borrowing Agent prompt written, telephonic or
telegraphic notice of such determination. If such notice is given, (i) any such
requested Libor Rate Loan shall be made as a Domestic Rate Loan, unless the
Borrowing Agent shall notify the Agent no later than 10:00 a.m. (Cleveland, Ohio
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 Libor Rate Loan, (ii) any Domestic Rate Loan or Libor Rate Loan which was to
have been converted to an affected type of Libor Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if the Borrowing Agent shall notify
the Agent, no later than 10:00 a.m. (Cleveland, Ohio time) two (2) Business Days
prior to the proposed conversion, shall be maintained as an unaffected type of
Libor Rate Loan, and (iii) any outstanding affected Libor Rate Loans shall be
converted into a Domestic Rate Loan, or, if the Borrowing Agent shall notify the
Agent, no later than 10:00 a.m. (Cleveland, Ohio time) two (2) Business Days
prior to the last Business Day of then current Interest Period applicable to
such affected Libor Rate Loan, shall be converted into an unaffected type of
Libor Rate Loan, on the last Business Day of then current Interest Period for
such affected Libor Rate Loans. Until such notice has been withdrawn, the
Lenders shall have no obligation to make an affected type of Libor Rate Loan or
maintain outstanding affected Libor Rate Loans and no Borrower shall have the
right to convert a Domestic Rate Loan or an unaffected type of Libor Rate Loan
into an affected type of Libor Rate Loan.

3.9 Capital Adequacy.

(a) In the event that the Agent or any Lender shall have determined that,
(a) the introduction after the date of this Agreement of any law, treaty, rule
or regulation, or any change therein after the date of this Agreement, (b) any
change after the date of this Agreement in the interpretation or administration
of any law, treaty, rule or regulation by any central bank or other governmental
authority or (c) the compliance by the Agent, any Lender or the Issuer with any
guideline, request or directive from any central bank or other governmental
authority (whether or not having the force of Law) after the date of this
Agreement (for purposes of this Section 3.9, the term “Lender” shall include the
Agent or any Lender and any corporation or bank controlling the Agent or any
Lender) and the office or branch where the Agent or any Lender (as so defined)
makes or maintains any Libor Rate Loans, has or would have the effect of

 

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reducing the rate of return on the Agent or any Lender’s capital as a
consequence of its obligations hereunder to a level below that which the Agent
or such Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Agent’s and each Lender’s policies with respect
to capital adequacy) by an amount deemed by the Agent or any Lender to be
material, then, from time to time, the Borrowers shall pay upon demand to the
Agent or such Lender such additional amount or amounts as will compensate the
Agent or such Lender for such reduction. In determining such amount or amounts,
the Agent or such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.9 shall be available to the 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 the Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate the Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to the Borrowers shall be
presumed correct absent manifest error.

3.10 Gross Up for Taxes.

(a) 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 Documents, (a) the sum payable to Agent or such Lender shall be
increased as may be necessary so that, after making all required withholding or
deductions, Agent or such Lender (as the case may be) receives an amount equal
to the sum it would have received had no such withholding or deductions been
made, (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.

(b) Each of the Borrowers, on a joint and several basis, shall indemnify the
Agent and each Lender against, and reimburse the Agent and each Lender on demand
for, any withholding or similar taxes and reasonable legal fees, that the Agent
or such Lender may incur at any time arising out of or in connection with any
failure of any Borrower to make any payment of such taxes when due.

(c) The Borrowers shall furnish to the Agent, upon the request of any Lender
(through the Agent), together with sufficient certified copies for distribution
to each Lender requesting the same (identifying the Lenders that so requested),
original official tax receipts in respect of each payment of taxes required
under this Section 3.10 or other available documentation reasonably satisfactory
to the Agent evidencing such payment of taxes, within thirty (30) days after the
date such payment is made, and the Borrowers shall promptly furnish to the Agent
at its request or at the request of any Lender (through the Agent) any other
available information, documents and receipts that the Agent or such Lender may
reasonably require to establish to its satisfaction that full and timely payment
has been made of all taxes required to be paid under this Section 3.10.

 

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IV. COLLATERAL: GENERAL TERMS.

4.1 Security Interest in the Collateral.

To secure the prompt payment and performance to the Agent, the Issuer and each
Lender of the Obligations, each Loan Party hereby assigns, pledges and grants to
the Agent for its benefit and for the ratable benefit of each Lender and the
Issuer a continuing security interest in and to all of its Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Each Loan Party shall promptly provide the Agent with written notice of all
commercial tort claims, 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 Loan Party shall be deemed to hereby grant to the Agent a
security interest and lien in and to such commercial tort claims and all
proceeds thereof.

4.2 Perfection of Security Interest.

Each Loan Party shall take all action that may be necessary or desirable, or
that the Agent may request, so as at all times to maintain the validity,
perfection, enforceability and priority of the Agent’s security interest in the
Collateral or to enable the Agent to protect, exercise or enforce its rights
hereunder and in the Collateral, including, but not limited to, (i) immediately
discharging all Liens on the Collateral other than Permitted Encumbrances,
(ii) using commercially reasonable efforts to obtain applicable Waivers, as the
Agent may reasonably request, (iii) delivering to the Agent, endorsed or
accompanied by such instruments of assignment as the Agent may specify, and
stamping or marking, in such manner as the Agent may specify, any and all
chattel paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (iv) entering into warehousing,
lockbox and other custodial arrangements satisfactory to the Agent as and to the
extent required hereunder, and (v) executing and delivering control agreements,
instruments of pledge, notices and assignments, in each case in form and
substance satisfactory to the Agent, relating to the creation, validity,
perfection, maintenance or continuation of the Agent’s security interest in
Collateral under the Uniform Commercial Code or other applicable law. The Agent
is hereby authorized to file financing statements in accordance with the Uniform
Commercial Code from time to time. By its signature hereto, each Loan Party
hereby authorizes the Agent to file against such Loan Party, one or more
financing, continuation, or amendment statements pursuant to the Uniform
Commercial Code to perfect Liens in the Collateral securing Obligations arising
hereunder in form and substance satisfactory to the Agent. All charges, expenses
and fees the Agent may incur in doing any of the foregoing, and any local taxes
relating thereto, shall be charged to the Borrowers’ Account as a Revolving
Advance of a Domestic Rate Loan and added to the Obligations (notice thereof
shall be provided to the Borrowing Agent thereafter), or, at the Agent’s option,
shall be paid to the Agent for the benefit of the Issuer and the ratable benefit
of the Lenders immediately upon demand.

4.3 Disposition of Collateral.

Each Loan Party will safeguard and protect all Collateral for the Agent’s
general account and make no disposition thereof whether by sale, lease or
otherwise except as may be otherwise permitted under this Agreement.

 

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4.4 Preservation of Collateral.

Following the occurrence and during the continuation of an Event of Default in
addition to the rights and remedies set forth in Section 11.1 hereof, the Agent:
(a) may at any time take such steps as the Agent deems necessary to protect the
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 the
Agent may deem appropriate; (b) may employ and maintain at any of any Loan
Party’s premises a custodian who shall have full authority to do all acts
necessary to protect the Agent’s interests in the Collateral; (c) may lease
warehouse facilities to which the Agent may move all or part of the Collateral;
(d) may use any Loan 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 any Loan
Party’s owned or leased property. Each Loan Party shall cooperate fully with all
of the Agent’s efforts to preserve the Collateral as permitted in the foregoing
sentence and will take such actions to preserve the Collateral as the Agent may
direct. All of the Agent’s expenses of preserving the Collateral in accordance
with the foregoing, including any expenses relating to the bonding of a
custodian, shall be charged to the Borrowers’ Account as a Revolving Advance of
a Domestic Rate Loan and added to the Obligations.

4.5 Ownership of Collateral.

With respect to the Collateral, at the time the Collateral becomes subject to
the Agent’s security interest: (a) each Loan 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 its respective Collateral
to the Agent; and, except for Permitted Encumbrances, the Collateral shall be
free and clear of all Liens and encumbrances whatsoever; (b) each document and
agreement executed by each Loan Party or delivered to the Agent or any Lender in
connection with this Agreement shall be true and correct in all material
respects; (c) all signatures and endorsements of each Loan Party that appear on
such documents and agreements shall be genuine and each Loan Party shall have
full capacity to execute same; and (d) each Loan Party’s Inventory shall be
located as set forth on Schedule 4.5 (as such Schedule may be updated from time
to time) and shall not be removed from such location(s) without the prior
written consent of the Agent except with respect to the sale of Inventory in the
ordinary course of business and with respect to Inventory in transit from one
location identified on Schedule 4.5 (as such Schedule may be updated from time
to time) to another location identified on Schedule 4.5.

4.6 Defense of Agent’s and Lenders’ Interests.

Until (a) payment and performance in full of all of the Obligations and
(b) termination of this Agreement, the Agent’s interests in the Collateral shall
continue in full force and effect. During such period no Loan Party shall,
without the Agent’s prior written consent, pledge, sell (except Inventory in the
ordinary course of business), 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, and except for sales, assignments, and transfers
expressly permitted elsewhere herein, any part of the Collateral. Each Loan
Party shall defend the Agent’s interests in the Collateral against any and all
Persons whatsoever. At any time after an Event of Default

 

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has occurred and is continuing and after demand by the Agent for payment of all
Obligations, the Agent shall have the right to take possession of the indicia of
the Collateral and the Collateral in whatever physical form contained, including
without limitation: labels, stationery, documents, instruments and advertising
materials. If the Agent exercises such right to take possession of the
Collateral, the Loan Parties shall, upon demand, assemble it in the best manner
possible and make it available to the Agent at a place reasonably convenient to
the Agent. In addition, with respect to all Collateral, the Agent, the Issuer
and the Lenders 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. After the occurrence and during the continuance of an Event of Default,
each Loan Party shall, and the Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehousers or others receiving or holding cash, checks,
Inventory, documents or instruments in which the Agent holds a security interest
to deliver same to the Agent and/or subject to the Agent’s order and if they
shall come into any Loan Party’s possession, they, and each of them, shall be
held by such Loan Party in trust as the Agent’s trustee, and such Loan Party
will immediately deliver them to the Agent in their original form together with
any necessary endorsement.

4.7 Books and Records.

Each Loan 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 without limitation 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 all material respects 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 Loan Parties.

4.8 Financial Disclosure.

Each Loan Party hereby irrevocably authorizes and directs all accountants and
auditors employed by such Loan Party at any time during the Term and promptly
after the request of the Agent (with prior written notice to the Borrowing Agent
so long as no Event of Default has occurred and is continuing) to exhibit and
deliver to the Agent and each Lender copies of any Loan Party’s financial
statements (if any exist at or prior to the date of such request), trial
balances or other accounting records of any sort in the accountant’s or
auditor’s possession, and to disclose to the Agent and each Lender any
information such accountants may have concerning such Loan Party’s financial
status and business operations. Each Loan Party hereby authorizes all federal,
state and municipal authorities to furnish to the Agent and each Lender copies
of reports or examinations relating to such Loan Party, whether made by such
Loan Party or otherwise; however, the Agent and each Lender will attempt to
obtain such information or materials directly from such Loan Party prior to
obtaining such information or materials from such accountants or such
authorities.

 

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4.9 Compliance with Laws.

Each Loan Party shall comply with all laws, acts, rules, regulations and orders
of any Governmental Body with jurisdiction over it or its respective Collateral
or any part thereof or to the operation of such Loan Party’s business the
non-compliance with which could reasonably be expected to have a Material
Adverse Effect. Each Loan Party may, however, contest or dispute any acts,
rules, regulations, orders and directions of those bodies or officials in any
reasonable manner, provided that any related Lien is inchoate or stayed and
sufficient reserves are established to the reasonable satisfaction of the Agent
to protect the Agent’s Lien on or security interest in the Collateral. The
Collateral at all times shall be maintained in accordance with the material
requirements of all insurance carriers which provide insurance with respect to
the Collateral so that such insurance shall remain in full force and effect.

4.10 Inspection of Premises.

At all reasonable times (after providing reasonable advance notice to the Loan
Parties) as the Agent deems necessary, the Agent shall have full access to and
the right to audit, check, inspect and make abstracts and copies from each Loan
Party’s books, records, audits, correspondence and all other papers relating to
the Collateral and the operation of each Loan Party’s business. The Agent and
its agents may enter upon any of each Loan Party’s premises at any time during
business hours and at any other reasonable time (after providing reasonable
advance notice to the Loan Parties), and from time to time as the Agent deems
necessary, for the purpose of inspecting and appraising the Collateral and any
and all records pertaining thereto and the operation of such Loan Party’s
business. Notwithstanding anything herein to the contrary, (i) prior to the
occurrence of a Default or Event of Default that is continuing, the Agent shall
conduct such audits, inspections, field examinations and appraisals no more
frequently than once per fiscal quarter, and (ii) after the occurrence of a
Default or Event of Default that is continuing, the Agent may conduct such
audits, inspections, field examinations and appraisals at any time and from time
to time and the Agent shall not be required to provide advance notice to the
Loan Parties with respect thereto.

4.11 Insurance.

Each Loan Party shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Loan Party’s own cost and expense in
amounts and with carriers acceptable to the Agent, each Loan Party shall
(a) keep all its insurable properties and properties in which each Loan 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 Loan Party’s including, without limitation, business
interruption insurance; (b) maintain insurance in such amounts as is customary
in the case of companies engaged in businesses similar to such Loan 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 Loan 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

 

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insurance as may be required under the laws of any state or jurisdiction in
which such Loan Party is engaged in business; (e) furnish the Agent with
(i) evidence of the maintenance of all such insurance by the renewal thereof no
later than the expiration date thereof, and (ii) appropriate loss payable
endorsements in form and substance satisfactory to the Agent, naming the Agent
as a co-insured and loss payee as its interests may appear but only with respect
to all insurance coverage covering damage, loss or destruction of Collateral,
and providing (A) that all proceeds thereunder covering a loss of or damage to
Collateral shall be payable to the 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 thirty (30) days’ prior written
notice is given to the Agent. The Loan Parties shall provide copies of all such
insurance policies (including the appropriate lender loss payee and additional
insured endorsements) within thirty (30) days after the Agent’s request,
however, only certificates of such insurance shall be required at Closing. In
the event of any loss under any insurance covering Collateral, the carriers
named in such insurance policies covering Collateral hereby are directed by the
Agent and the applicable Loan Party to make payment for such loss to the Agent
and not to such Loan Party and the Agent jointly. If any insurance losses with
respect to Collateral are paid by check, draft or other instrument payable to
any Loan Party and the Agent jointly, the Agent may endorse such Loan Party’s
name thereon and do such other things as the Agent may deem advisable to reduce
the same to cash. The Agent is hereby authorized to negotiate and compromise
claims under insurance coverage with respect to Collateral. All loss recoveries
with respect to Collateral received by the Agent upon any such insurance may be
applied to the Obligations, in such order as the Agent in its sole discretion
shall determine. Any surplus with respect to Collateral shall be paid by the
Agent to the Loan Parties or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by the Loan Parties to the Agent, on demand.
Any loss recoveries not relating to items of Collateral shall be payable
directly to the Loan Parties and, if received by the Agent, the Agent shall
promptly deliver same to the Loan Parties. Anything hereinabove to the contrary
notwithstanding, and subject to the fulfillment of the conditions set forth
below, (i) the Agent shall remit to the Loan Parties insurance proceeds with
respect to Collateral received by the Agent during any calendar year under
insurance policies procured and maintained by the Loan Parties which insure the
Loan Parties’ insurable Collateral to the extent such insurance proceeds do not
exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in the
aggregate during such calendar year or One Hundred Thousand and 00/100 Dollars
($100,000.00) per occurrence and (ii) all proceeds of business interruption
insurance, and all proceeds of insurance with respect to larceny, embezzlement
or other criminal misappropriation, regardless of amount, shall be payable
directly and promptly to the applicable Loan Party. In the event the amount of
insurance proceeds with respect to Collateral received by the Agent for any
occurrence exceeds One Hundred Thousand and 00/100 Dollars ($100,000.00), then
the Agent shall not be obligated to remit the insurance proceeds to the Loan
Parties unless the Loan Parties shall provide the Agent with evidence reasonably
satisfactory to the Agent that the insurance proceeds will be used by the Loan
Parties to repair, replace or restore the insured Collateral which was the
subject of the insurable loss. In the event the Loan Parties have previously
received (or, after giving effect to any proposed remittance by the Agent to the
Loan Parties would receive) insurance proceeds with respect to Collateral which
equal or exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in
the aggregate during any calendar year, then the Agent may, in its sole
discretion, either remit the insurance proceeds to the Loan Parties upon the
Loan Parties

 

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providing the Agent with evidence reasonably satisfactory to the Agent that the
insurance proceeds will be used by the Loan Parties to repair, replace, restore
or reuse the insured Collateral which was the subject of the insurable loss, or
apply the proceeds to the Obligations, as aforesaid. The agreement of the Agent
to remit insurance proceeds in the manner above provided shall be subject in
each instance to satisfaction of each of the following conditions: (x) No Event
of Default or Default shall then have occurred and be continuing, and (y) the
Loan Parties shall use the insurance proceeds with respect to Collateral to
repair, replace, restore or reuse the insured Collateral which was the subject
of the insurable loss and for no other purpose.

4.12 Failure to Pay Insurance.

If any Loan Party fails to obtain insurance as hereinabove provided, or to keep
the same in force, the Agent, if the Agent so elects, may obtain such insurance
and pay the premium therefor on behalf of such Loan Party, and charge the
Borrowers’ Account therefor as a Revolving Advance of a Domestic Rate Loan and
such expenses so paid shall be part of the Obligations.

4.13 Payment of Taxes.

Each Loan Party will pay, when due, all taxes, assessments and other Charges
lawfully levied or assessed upon such Loan Party or any of the Collateral
including, without limitation, real and personal property taxes, assessments and
charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes, except (i) those taxes, assessments or charges
that are not material and (ii) those taxes, assessments or Charges to the extent
that any Loan Party has contested or disputed those taxes, assessments or
Charges in good faith, by expeditious protest, administrative or judicial appeal
or similar proceeding provided, with respect to items (i) and (ii) referenced
above in this Section 4.13, that any related tax Lien is stayed and sufficient
reserves are established to the reasonable satisfaction of the Agent to protect
the Agent’s security interest in or Lien on the Collateral. If any tax by any
governmental authority is or may be imposed on or as a result of any transaction
between any Loan Party and the Agent, the Issuer or any Lender which the Agent,
the Issuer or any Lender 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 which, in the Agent’s opinion, may
possibly create a valid Lien on the Collateral, the Agent may without notice to
the Loan Parties pay the taxes, assessments or other Charges and each Loan Party
hereby indemnifies and holds the Agent, the Issuer and each Lender harmless in
respect thereof. The Agent will not pay any taxes, assessments or Charges to the
extent that any Loan Party has contested or disputed those taxes, assessments or
Charges in good faith, by expeditious protest, administrative or judicial appeal
or similar proceeding provided that any related tax lien is stayed and
sufficient reserves are established to the reasonable satisfaction of the Agent
to protect the Agent’s security interest in or Lien on the Collateral. The
amount of any payment by the Agent under this Section 4.13 shall be charged to
the Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and added
to the Obligations and, until the Loan Parties shall furnish the Agent with an
indemnity therefor (or supply the Agent with evidence satisfactory to the Agent
that due provision for the payment thereof has been made), the Agent may hold
without interest any balance standing to the Loan Parties’ credit and the Agent
shall retain its security interest in any and all Collateral held by the Agent.

 

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4.14 Payment of Leasehold Obligations.

Each Loan 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, at the Agent’s
reasonable request will provide evidence of having done so.

4.15 Receivables.

(a) Nature of Receivables. Each of the Receivables shall be 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 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 Loan Party, or work, labor or services theretofore
rendered by a Loan Party as of the date each Receivable is created. Same shall
be due and owing without dispute, setoff or counterclaim except as may be stated
on the accounts receivable schedules delivered by the Loan Parties to the Agent.

(b) Solvency of Customers. Each Customer, to the applicable Loan Party’s
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Loan Party who are not solvent such
Loan Party has set up on its books and in its financial records bad debt
reserves adequate to cover the uncollectible portion.

(c) Locations of Loan Parties. Each Loan Party’s chief executive office is
located at the addresses set forth on Schedule 4.15(c) hereto. Until written
notice is given to the Agent by the Borrowing Agent of any other office at which
any Loan Party keeps its records pertaining to Receivables, all such records
shall be kept at such executive office.

(d) Notification of Assignment of Receivables. At any time following the
occurrence and during the continuance of an Event of Default, the Agent shall
have the right to send notice of the assignment of, and the Agent’s security
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. After the occurrence and
during the continuance of such Event of Default and the providing of such
notice, the Agent shall have the sole right to collect the Receivables, take
possession of the Collateral, or both. The Agent’s actual collection expenses,
including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to the Borrowers’ Account and added to the
Obligations.

(e) Power of Agent to Act on Loan Parties’ Behalf. The Agent shall have the
right, at any time after the occurrence and during the continuance of an Event
of Default, to receive, endorse, assign and/or deliver in the name of the Agent
or any Loan Party any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and each Loan Party hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed.
Each Loan Party hereby constitutes the Agent or the Agent’s designee as such
Loan Party’s attorney with power at any time after the occurrence and during the

 

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continuance of an Event of Default (i) to endorse such Loan Party’s name upon
any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral; (ii) to sign such Loan 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 demand payment of the Receivables; (v) to
enforce payment of the Receivables by legal proceedings or otherwise; (vi) to
exercise all of the Loan Parties’ rights and remedies with respect to the
collection of the Receivables and any other Collateral; (vii) to settle, adjust,
compromise, extend or renew the Receivables; (viii) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (ix) to
prepare, file and sign such Loan Party’s name on a proof of claim in bankruptcy
or similar document against any Customer; (x) to prepare, file and sign such
Loan Party’s name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables; and (xi) to do all other
acts and things necessary to carry out this Agreement. 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 with gross (not mere)
negligence or willful misconduct; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. The Agent shall have the
right at any time following the occurrence and during the continuance of an
Event of Default, to change the address for delivery of mail addressed to any
Loan Party to such address as the Agent may designate and to receive, open and
dispose of all mail addressed to any Loan Party.

(f) No Liability. Neither the Agent, the Issuer nor any Lender 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 unless such liability arises from the Agent’s,
the Issuer’s or any Lender’s willful misconduct or gross negligence as finally
determined by a court of competent jurisdiction. Following the occurrence and
during the continuance of an Event of Default, the Agent may, without notice or
consent from any Loan 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. The Agent is authorized and empowered to
accept following the occurrence and during the continuance of an Event of
Default the return of the goods represented by any of the Receivables, without
notice to or consent by any Loan Party, all without discharging or in any way
affecting any Loan Party’s liability hereunder.

(g) Establishment of Lockboxes, Collection Account. The Borrowers have
established and shall maintain one or more Lockboxes with National City Bank and
with each other Lockbox Bank in the name of the Borrowing Agent or such other
Borrowers as are acceptable to the Agent, in its sole discretion. The Borrowers
have established and will maintain a deposit account (each a “Collection
Account”) with each Lockbox Bank in the name of the Borrowing Agent or such
other Borrowers, as are acceptable to the Agent, in its sole discretion. In the
case of National City Bank, the Cash Concentration Account maintained at
National City Bank shall function as the Collection Account maintained at
National City Bank for all purposes of this Section 4.15(g). Each Lockbox Bank
and the Borrowing Agent (or other applicable Borrower) have entered into
agreements establishing the Lockboxes maintained by such

 

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Lockbox Bank (each a “Lockbox Agreement”) and agreements with respect to the
Collection Account maintained at such Lockbox Bank (each a “Deposit Account
Agreement”), each such Lockbox Agreement and Deposit Account Agreement to be in
form and substance satisfactory to the Agent. The Borrowing Agent (or other
applicable Borrower) and the Agent shall have entered into a Blocked Account
Agreement with each Lockbox Bank relating to rights of the Agent with respect to
the Lockboxes and the Collection Accounts maintained at such Lockbox Bank. Each
of the Borrowers shall notify all of its Customers to forward all collections of
every kind due such Borrower to a Lockbox (such notices to be in such form and
substance as the Agent may reasonably require to from time to time).

Schedule 4.15(g) hereto lists the following information with respect to each
Borrower: (i) all present Lockboxes, all Collection Accounts and the Cash
Concentration Account, (ii) the name and address of each Lockbox, (iii) the
account number of each Collection Account and the Cash Concentration Account ,
(iv) a contact Person at each Lockbox Bank, and (v) a list describing all
Lockbox Agreements, Deposit Account Agreements and Blocked Account Agreements,
and all other agreements establishing each Lockbox and Collection Account.

(h) Processing Collections; Cash Concentration Account. In accordance with the
terms of the applicable Blocked Account Agreement, each Lockbox Bank shall be
instructed to deposit on a daily basis all collections from Customers of the
Borrowers sent to the Lockbox maintained by such Lockbox Bank directly into the
applicable Collection Account in the identical form in which such collections
were made (except for any necessary endorsements) whether by cash or check. In
accordance with the terms of the applicable Blocked Account Agreement, such
Lockbox Bank shall be instructed to deposit on a daily basis all funds from
collections deposited into such Collection Account to the Cash Concentration
Account. The Cash Concentration Account shall not be subject to any deduction,
set off, banker’s lien or any other right in favor of any Person. All funds
deposited into the Cash Concentration Account shall be the exclusive property of
the Agent on behalf of the Lenders and shall be subject to the sole and
exclusive control of the Agent and only to such signing authority designated
from time to time by the Agent. The Borrowers shall not have control over or any
interest in such funds.

Any collections of Receivables received directly by any Borrower shall be deemed
held by such Borrower in trust and as fiduciary for the Lenders. Each of the
Borrowers agrees not to commingle any such collections with any of such
Borrower’s other funds or property, but to hold such funds separate and apart in
trust and as fiduciary for the Lenders until deposit is made into the applicable
Collection Account or the Cash Concentration Account. Each of the Borrowers
hereby agrees to deposit immediately such directly received collections into any
Collection Account maintain by or on behalf of such Borrower or directly into
the Cash Concentration Account.

(i) Adjustments. No Loan Party will, without the 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 those compromises, adjustments, returns, discounts, credits
and allowances as have been heretofore (A) customary in the business or industry
of such Loan Party, and (B) done in the ordinary course of such Loan Party’s
business.

 

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4.16 Maintenance of Equipment.

The Equipment shall be maintained in good operating condition and repair in
substantial accordance with industry standards (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. No Loan Party shall use or operate the Equipment in violation of any
law, statute, ordinance, code, rule or regulation except to the extent that such
violation would not have a Material Adverse Effect.

4.17 Exculpation of Liability.

Nothing herein contained shall be construed to constitute the Agent, the Issuer
or any Lender as any Loan Party’s agent for any purpose whatsoever, nor shall
the Agent, the Issuer 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 except to the extent
such shortage, discrepancy, damage, loss or destruction resulted directly from
the gross (not mere) negligence or willful misconduct of the Agent or Lenders.
Neither the Agent, the Issuer nor any Lender, whether by anything herein or in
any assignment or otherwise, assume any of any Loan Party’s obligations under
any contract or agreement assigned to the Agent, the Issuer or such Lender, and
neither the Agent, the Issuer nor any Lender shall be responsible in any way for
the performance by any Loan Party of any of the terms and conditions thereof.

4.18 Environmental Matters.

(a) The Loan Parties shall ensure that the Real Property remains in compliance
in all material respects with all Environmental Laws, and they shall not place
or permit to be placed any Hazardous Substances on any Real Property except as
not prohibited by applicable law or appropriate governmental authorities.

(b) The Loan Parties shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic review of such compliance.

(c) The Loan 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 Loan 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 Loan
Parties in connection with the transport or disposal of any Hazardous Waste
generated at the Real Property.

(d) In the event any Loan Party obtains, gives or receives notice of any Release
or threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any 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

 

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complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Loan Party’s interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any state agency
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”), in each case
dealing with matters which would reasonably be expected to have a Material
Adverse Effect, then the Borrowing Agent shall, within five (5) Business Days,
give written notice of same to the Agent detailing facts and circumstances of
which any Loan Party is aware giving rise to the Hazardous Discharge or
Environmental Complaint. Such information is to be provided to allow the Agent
to protect its security interest in the Real Property and the Collateral and is
not intended to create nor shall it create any obligation upon the Agent or any
Lender with respect thereto.

(e) The Loan Parties shall promptly forward to the Agent copies of any request
for information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned or operated by any Loan Party and
used to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Loan Party and the Authority regarding such claims to
the Agent until the claim is settled. The Loan Parties shall promptly forward to
the Agent copies of all documents and reports concerning a Hazardous Discharge
at the Real Property that any Loan Party is required to file under any
Environmental Laws. Such information is to be provided solely to allow the Agent
to protect the Agent’s security interest in the Real Property and the
Collateral.

(f) The Loan Parties shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Loan Party shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint, the Agent, on behalf of the Lenders, may,
but without the obligation to do so, for the sole purpose of protecting the
Agent’s interest in 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 the Agent (or such third parties as directed by the Agent) deems
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 the Agent, the Issuer and the Lenders
(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 Loan 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 the Agent, the Issuer
any Lender and any Loan Party.

(g) Promptly upon the written request of the Agent from time to time, the Loan
Parties shall provide the Agent, at the Loan Parties’ expense, with an
environmental assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of the
Agent, to assess with a reasonable degree of certainty the existence of a
Hazardous Discharge and the potential costs in connection with abatement,

 

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cleanup and removal of any Hazardous Substances found on or at the Real
Property; provided, however, so long as no Default or Event of Default has
occurred and is continuing, the Agent may not request such environmental
assessment or environmental audit report more frequently than once per calendar
year; and provided further that the Agent shall not request any such
environmental assessment or environmental audit report without having reasonable
suspicion of the existence of a Hazardous Discharge. 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 the Agent.

(h) The Loan Parties shall defend and indemnify the Agent, the Issuer and the
Lenders and hold the Agent, the Issuer, the 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 the Agent, the Issuer or the Lenders
under or on account of any Environmental Laws, including, without limitation,
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, except to the extent such loss, liability, damage and expense is
attributable to any Hazardous Discharge resulting from actions on the part of
the Agent, the Issuer or any Lender. The Loan Parties’ obligations under this
Section 4.18 shall arise upon the discovery of the presence of any Hazardous
Substances at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection with the
presence of any Hazardous Substances. The Loan Parties’ obligation and the
indemnifications hereunder shall survive the termination of this Agreement.

4.19 Financing Statements.

Except as respects (i) the financing statements filed by the Agent, (ii) the
financing statements described on Schedule 1.2, and (iii) those financing
statements permitted to be filed hereunder, no financing statement covering any
of the Collateral or any proceeds thereof is on file in any public office.

V. REPRESENTATIONS AND WARRANTIES.

Each Loan Party represents and warrants as follows:

5.1 Authority.

Each Loan Party has the full power, authority and legal right to enter into this
Agreement and the Other Documents to which it is a party and to perform all of
its respective Obligations hereunder and thereunder, as the case may be. This
Agreement and the Other Documents to which each Loan Party is a party constitute
the legal, valid and binding obligations of such Loan Party, enforceable in
accordance with their terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally. The execution, delivery and performance
of this Agreement and of the Other Documents by each Loan Party a party hereto
or thereto (a) are within such Loan Party’s corporate, limited partnership or
limited liability company powers, as

 

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the case may be, have been duly authorized, are not in contravention of law or
the terms of such Loan Party’s by-laws, operating agreement, articles of
incorporation, certificate of limited partnership, articles of organization,
limited partnership agreement or other applicable documents relating to such
Loan Party’s formation or organization, as the case may be, or to the conduct of
such Loan Party’s business or of any material agreement or undertaking to which
such Loan Party is a party or by which such Loan Party is bound, and (b) 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 Loan Party under the provisions of
any agreement, charter document, instrument, by-law, or other instrument to
which such Loan Party is a party or by which it or its property may be bound.

5.2 Formation and Qualification.

(a) Each Loan Party is duly incorporated or organized, as the case may be, and
in good standing under the laws of the jurisdictions listed on Schedule 5.2(a)
and is qualified to do business and is in good standing in the jurisdictions
listed on Schedule 5.2(a) which constitute all jurisdictions in which
qualification and good standing are necessary for such Loan Party to conduct its
business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Each Loan Party has
delivered to the Agent true and complete copies of its articles of incorporation
and by-laws, certificate of limited partnership and limited partnership
agreement, articles of organization and operating agreement or other
organizational documents, as the case may be, and will promptly notify the Agent
of any amendment or changes thereto.

(b) The only Subsidiaries of each Loan Party are listed on Schedule 5.2(b).

5.3 Survival of Representations and Warranties.

All representations and warranties of each Loan Party contained in this
Agreement and the Other Documents, as the case may be, shall be true at the time
of such Loan Party’s execution of this Agreement and the Other Documents, as the
case may be, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto.

5.4 Tax Returns.

Each Loan Party’s federal tax identification number is set forth on Schedule
5.4. Each Loan Party has filed all federal, state and local tax returns and
other reports such Loan Party is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are due and payable. The
provision for taxes on the books of each Loan Party is adequate for all years
not closed by applicable statutes, and for its current fiscal year, and no Loan
Party has any knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books in accordance with GAAP.

5.5 Financial Statements.

(a) The twelve-month income statement, balance sheet and statement of cash flow
projections of Radnor and its Subsidiaries on a consolidated and consolidating
basis, copies

 

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of which are annexed hereto as Exhibit 5.5(a) (the “Projections”) were prepared
by the Chief Financial Officer of Radnor, are based on underlying assumptions
and estimates which provide a reasonable basis for the projections contained
therein and reflect Radnor’s judgment based on present circumstances of the most
likely set of conditions and course of action for the projected period.

(b) The consolidated and consolidating balance sheets of Radnor and its
Subsidiaries as of December 31, 2004, 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 public accountants, copies of which have
been delivered to the Lender, have been prepared in accordance with GAAP,
consistently applied and present fairly in all material respects the financial
condition of Radnor and its Subsidiaries at such date and the results of their
operations for such period. Since December 31, 2004, except as otherwise
disclosed in the interim financial statements for monthly and quarterly periods
during 2005 previously delivered to the Agent, there has been no change in the
financial condition of Radnor and its Subsidiaries as shown on the consolidated
balance sheet as of such date and no change in the aggregate value of Equipment
and Real Property owned by Radnor and its Subsidiaries, except changes in the
ordinary course of business, none of which individually or in the aggregate has
had, or reasonably could be believed to cause in the future, a Material Adverse
Effect.

5.6 Corporate Name.

Except as set forth on Schedule 5.6, no Loan Party has been known by any other
corporate name in the past five (5) years and does not sell Inventory under any
other name, nor has any Loan Party been the surviving entity of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years.

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

Except as set forth on Schedule 5.7

(a) each Loan Party has duly complied with, and (i) its facilities, business,
assets, property, and Equipment, and (ii) to its knowledge, its leaseholds 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 applicable Environmental Laws except to the extent such non-compliance
would not reasonably be expected to have a Material Adverse Effect; there are no
outstanding citations, notices or orders of non-compliance issued to any Loan
Party or relating to its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations except to the extent such
non-compliance would not reasonably be expected to have a Material Adverse
Effect.

(b) Each Loan Party has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable Environmental Laws.

(c) (i) There are no releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under
or within any Real Property in violation of applicable Environmental Laws except
to the extent such violation would not

 

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reasonably be expected to have a Material Adverse Effect; (ii) there are no
underground storage tanks or polychlorinated biphenyls on the Real Property in
violation of applicable Environmental Laws; (iii) to the knowledge of any Loan
Party, the Real Property has not ever been used as a treatment, storage or
disposal facility of Hazardous Waste and (iv) no Hazardous Substances are
present on the Real Property in violation of Environmental Laws except to the
extent such violation would not reasonably be expected to have a Material
Adverse Effect.

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

(a) After giving effect to the transactions contemplated by this Agreement, the
Loan Parties will be solvent, able to pay their debts as they mature, have
capital sufficient to carry on their business 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, calculated on a going concern basis, is in excess of the
amount of their liabilities and (ii) subsequent to the Closing Date, the fair
saleable value of their assets (calculated on a going concern basis) will be in
excess of the amount of their liabilities.

(b) Except as disclosed in Schedule 5.8(b), no Loan Party has (i) any pending or
threatened litigation, arbitration, actions or proceedings which could
reasonably be expected to have a Material Adverse Effect, and (ii) any
liabilities or Indebtedness for borrowed money other than the Obligations.

(c) No Loan Party is in violation of any applicable statute, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is any Loan Party in violation of any order of any court,
governmental authority or arbitration board or tribunal which would reasonably
be expected to have a Material Adverse Effect.

(d) No Loan Party nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(d) hereto.
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
“accumulated funding deficiency,” as defined in Section 302(a) (2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Loan Party and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each 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 Loan
Party nor any member of the Controlled Group 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 Plan has been terminated by the
plan administrator thereof nor by the PBGC, and there is no occurrence which
would cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Plan, (v) at this time, the current value of the assets of each
Plan exceeds the present value of the accrued benefits and other liabilities of
such Plan and no Loan Party nor any member of the Controlled Group knows of any
facts or circumstances which would materially change the value of such assets
and accrued benefits and other liabilities and could reasonably be expected to
have a Material Adverse Effect, (vi) no Loan Party nor any member of the
Controlled Group has breached any of the responsibilities,

 

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obligations or duties imposed on it by ERISA with respect to any Plan, (vii) no
Loan Party nor any member of a Controlled Group has incurred any liability for
any excise tax arising under Section 4972 or 4980B of the Code, and no fact
exists which could give rise to any such liability, (viii) no Loan Party nor any
member of the Controlled Group nor any fiduciary of, nor any trustee to, any
Plan, has engaged in a “prohibited transaction” described in Section 406 of
ERISA or Section 4975 of the Code nor taken any action which would constitute or
result in a Termination Event with respect to any such Plan which is subject to
ERISA, (ix) each Loan Party and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period contained in 29 CFR Section 2615.3 has not been waived, (xi) no
Loan Party nor any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of any Loan Party and any
member of the Controlled Group, and (xii) no Loan Party nor any member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.

5.9 Patents, Trademarks, Copyrights and Licenses.

All patents, patent applications, trademarks, trademark applications, service
marks, service mark applications, copyrights, copyright applications,
tradenames, assumed names and material licenses owned or utilized by any Loan
Party are set forth on Schedule 5.9, are valid and have been duly registered or
filed with all appropriate governmental authorities and constitute all of the
patents, trademarks, service marks, copyrights, tradenames, assumed names and
material licenses which are necessary for the operation of its business; there
is no objection to or pending challenge to the validity of any such patent,
trademark, copyright, tradename or material license and no Loan Party is aware
of any grounds for any challenge which would reasonably be expected to have a
Material Adverse Effect, except as set forth in Schedule 5.9 hereto. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service mark, service mark application, service mark license,
copyright, copyright application and copyright license owned or held by any Loan
Party consists of original material or property developed by such Loan Party or
was lawfully acquired by such Loan Party from the proper and lawful owner
thereof. Each of such items has been maintained so as to preserve the value
thereof from the date of creation or acquisition thereof, except to the extent
that the failure to so maintain such items would not reasonably be expected to
have a Material Adverse Effect.

5.10 Licenses and Permits.

Except as set forth in Schedule 5.10, each Loan Party (a) is in compliance with
and (b) has procured and is now in possession of, all material licenses or
permits required by any applicable federal, state or local law 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 comply with or procure
such licenses or permits would reasonably be expected to have a Material Adverse
Effect.

 

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5.11 Default of Indebtedness.

No Loan Party is in default in the payment of the principal of or interest on
any Indebtedness that individually, or in the aggregate, is in excess of Five
Million and 00/100 Dollars ($5,000,000.00) 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 which with or
without the lapse of time or the giving of notice, or both, constitutes or would
constitute an event of default thereunder.

5.12 No Default.

No Loan Party is in default in the payment or performance of any of its
contractual obligations which would reasonably be expected to have a Material
Adverse Effect.

5.13 No Burdensome Restrictions.

No Loan Party is party to any contract or agreement, the performance of which
could reasonably be expected to have a Material Adverse Effect. No Loan 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 which is not a Permitted Encumbrance.

5.14 No Labor Disputes.

No Loan Party is involved in any labor dispute; there are no strikes or walkouts
or union organization of any of the Loan 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 hereto.

5.15 Margin Regulations.

No Borrower 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.

5.16 Investment Company Act.

No Borrower 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.

5.17 Disclosure.

No representation or warranty made by any Loan Party in this Agreement or in any
financial statement, report, certificate or any other document furnished in
connection herewith contains any untrue statement of material fact or omits to
state any material fact necessary to make the statements herein or therein not
misleading. There is no fact known to any

 

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Loan Party or which reasonably should be known to such Loan Party which such
Loan Party has not disclosed to the Agent in writing with respect to the
transactions contemplated by this Agreement which could reasonably be expected
to have a Material Adverse Effect.

5.18 Delivery of Tennenbaum Loan Documents and Senior Notes Documentation.

Agent has received complete copies of the Tennenbaum Loan Documents, the Senior
Notes Documentation and all amendments and waivers with respect thereto. None of
such documents and agreements have been amended or supplemented, nor have any of
the provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to the Agent.

5.19 Hedging Contracts.

No Loan Party is a party to, nor will it be a party to, any Hedging Contract
unless same provides that damages upon termination following an event of default
thereunder are payable on a “two-way basis” without regard to fault on the part
of either party.

5.20 Conflicting Agreements.

No provision of any mortgage, indenture, contract, agreement, judgment, decree
or order binding on any Loan Party or affecting the Collateral conflicts with,
or requires any Consent which has not already been obtained and where a failure
to obtain such Consent would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.

5.21 Application of Certain Laws and Regulations.

No Loan Party nor any Affiliate of any Loan Party is subject to any statute,
rule or regulation which regulates the incurrence of any Indebtedness, including
without limitation, statutes or regulations relative to common or interstate
carriers or to the sale of electricity, gas, steam, water, telephone, telegraph
or other public utility services.

5.22 Business and Property of the Loan Parties.

Upon and after the Closing Date, the Loan Parties do not propose to engage in
any business other than as set forth on Schedule 5.21 hereto and activities
necessary to conduct the foregoing. On the Closing Date, each Loan Party will
own or lease all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Loan Party.

5.23 Section 20 Subsidiaries.

The Borrowers do not intend 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 thirty (30) days thereafter, Ineligible Securities being
underwritten by a Section 20 Subsidiary.

 

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5.24 Anti-Terrorism Laws.

(a) No Loan Party nor any Affiliate of any Loan Party, is in violation in any
material respect 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) No Loan Party, nor any Affiliate of any Loan Party or their 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 with which any Lender or the Issuer is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order No. 13224;

(v) a Person 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 who is affiliated or associated with a Person listed above.

No Loan Party or, to the knowledge of any Loan Party, any of its agents acting
or benefiting in any capacity in connection with the Advances or other
transactions hereunder, (i) 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 (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.

5.25 Non-Operating Subsidiaries.

Each of RAMI, RII, RI2I, RD2I, RI3I, RIL and BHI are non-operating entities with
no material assets. WRL is a special purpose entity which owns certain real
property and is expressly prohibited from guaranteeing Indebtedness.

 

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VI. AFFIRMATIVE COVENANTS.

Each Borrower shall, and if applicable, each Loan Party shall, until payment in
full of the Obligations and termination of this Agreement:

6.1 Payment of Fees.

Pay to the Agent on demand all usual and customary fees and expenses which the
Agent incurs in connection with (a) the forwarding of Advance proceeds and
(b) the establishment and maintenance of any Collection Accounts as provided for
in Section 4.15(g). The Agent may, without making demand, charge the Borrowers’
Account for all such fees and expenses.

6.2 Conduct of Business and Maintenance of Existence and Assets.

Conduct continuously and operate actively 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 in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, 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 in all material respects 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 where the failure to do so would reasonably be
expected to have a Material Adverse Effect.

6.3 Violations.

Promptly notify the 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 Loan Party or the Collateral which could reasonably be
expected to have a Material Adverse Effect.

6.4 Government Receivables.

To the extent any Borrower desires such Receivables to constitute Eligible
Receivables, take all steps necessary to protect the Agent’s interest in the
Collateral under the Federal Assignment of Claims Act or other applicable state
or local statutes or ordinances and deliver to the Agent appropriately endorsed,
any instrument or chattel paper connected with any Receivable arising out of
contracts between any Borrower and the United States, any state or any
department, agency or instrumentality of any of them.

6.5 Fixed Charge Coverage Ratio.

Maintain a Fixed Charge Coverage Ratio (for Radnor and its Subsidiaries on a
consolidated basis) of not less than 1.10 to 1.00 (i) as of the last day of the
fiscal quarter ending March 31, 2006 for the fiscal quarter then ending, (ii) as
of the last day of the fiscal quarter ending June 30, 2006 for the period equal
to the two (2) consecutive fiscal quarters then ending, (iii) as of the last day
of the fiscal quarter ending September 30, 2006 for the period equal to the
three (3) consecutive fiscal quarters then ending, (iv) as of the last day of
the fiscal quarter

 

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ending December 31, 2006 for the period equal to the four (4) consecutive fiscal
quarters then ending, and (v) as of the last day of each fiscal quarter
thereafter for the period equal to the four (4) consecutive fiscal quarters then
ending; provided, however, unless a Financial Covenant Triggering Event occurs
during the fiscal quarter immediately following the most recently ended fiscal
quarter, the requirement to maintain the Fixed Charge Coverage Ratio pursuant to
this Section 6.5 shall not be applicable. Accordingly, if a Financial Covenant
Triggering Event occurs during the fiscal quarter immediately following the most
recently ended fiscal quarter, the requirement to maintain the Fixed Charge
Coverage Ratio with respect to such most recently ended fiscal quarter shall be
applicable and such Fixed Charge Coverage Ratio shall be calculated based upon
the compliance certificate previously delivered or required to be delivered
pursuant to Article IX hereof with respect to such most recently ended fiscal
quarter and, in such case, if the Fixed Charge Coverage Ratio was not maintained
as set forth in this Section 6.5 with respect to such most recently ended fiscal
quarter, the Loan Parties shall have breached this Section 6.5 on the later of
(i) the date on which the Financial Covenant Triggering Event occurred or
(ii) the date on which the compliance certificate was required to be delivered
pursuant to Article IX hereof.

6.6 Execution of Supplemental Instruments.

Execute and deliver to the 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 the Agent
may reasonably request, in order for the full intent of this Agreement to be
carried into effect.

6.7 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 contested in good faith by appropriate proceedings and each Loan
Party shall have provided for such reserves with respect thereto, as the Agent
may reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of the Lenders and the Issuer.

6.8 Standards of Financial Statements.

Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11
and 9.12 as to which GAAP is applicable to be complete and correct in all
material respects (subject, in the case of interim financial statements, to
notes and normal year-end audit adjustments) 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).

6.9 Anti-Terrorism Laws.

The Loan Parties and their respective Affiliates and agents shall not
(i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including the

 

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making or receiving of any contribution of funds, goods or services to or for
the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order No. 13224; or (iii) 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 Loan Parties shall deliver to the Lenders and/or the Issuer any
certification or other evidence requested from time to time by any Lender or the
Issuer in its sole reasonable discretion, confirming the Loan Parties’
compliance with this Section 6.9.

VII. NEGATIVE COVENANTS.

No Loan Party shall until satisfaction in full of the Obligations and
termination of this Agreement:

7.1 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 stock
of any Person or permit any other Person to consolidate with or merge with it;
provided however, that (i) any Borrower may merge or consolidate into another
Borrower; (ii) any Loan Party that is not a Borrower may merge or consolidate
into another Loan Party that is not a Borrower; (iii) any Loan Party that is not
a Borrower may merge or consolidate into a Borrower so long as the Borrower
survives such consolidation or merger; and (iv) a Loan Party may merge or
consolidate into a Subsidiary that is not a Loan Party so long as the Loan Party
survives such consolidation or merger; and provided further that (i) any Loan
Party may purchase or acquire all or a substantial portion of the assets or
stock of any Person or a business or division of another Person (a “Permitted
Acquisition”), and (ii) any Loan Party may merge or consolidate with or into any
Person if all of the following requirements are met in connection with such
Permitted Acquisition, merger or consolidation:

1) in the case of a Loan Party acquiring the ownership interests in such Person,
such Person shall become a Borrower or a Guarantor for the Obligations as
determined by the Agent;

2) in the case of a merger or consolidation involving a Borrower, such Borrower
shall be the continuing and surviving entity;

3) in the case of a stock or other ownership purchase, the Person acquired by
such Loan Party shall, to the extent such Person becomes a Borrower or
Guarantor, grant Liens in its assets to the Agent for the benefit of the Lenders
covering the same type of assets as the Collateral, and in the case of a
Permitted Acquisition or a merger or consolidation in which a Loan Party is the
continuing or surviving entity, such Loan Party shall cause the Lien of the
Agent to be a first priority, perfected security interest, provided, however,
none of such assets which become Collateral as a result of a Permitted
Acquisition or a merger or consolidation in which a Borrower is the continuing
or surviving entity shall be included in the Formula Amount

 

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in accordance with the terms of this Agreement until such time as Agent makes
such determination in its sole discretion;

4) the board of directors or other equivalent governing body of such Person
shall have approved such Permitted Acquisition, merger or consolidation;

5) the business acquired, or the business conducted by the Person whose
ownership interests are being acquired or the business subject to the merger or
consolidation, as applicable, shall be substantially the same as, or reasonably
related to, one or more line or lines of business conducted by the Loan Parties
as described in Section 5.21;

6) no Default or Event of Default shall exist immediately prior to and after
giving effect to such Permitted Acquisition, merger or consolidation; and

7) immediately prior to and after giving effect to such Permitted Acquisition
(including the payment of any prospective portion of the purchase price or
earn-outs), merger or consolidation, the Borrowers’ Undrawn Availability (i) on
the date of the Permitted Acquisition and (ii) on average for the most recently
ended thirty (30) consecutive days as of the date of the Permitted Acquisition
shall be greater than or equal to Twenty Million and 00/100 Dollars
($20,000,000.00); provided, however, the Aggregate Consideration paid by any
such Loan Party for all such Permitted Acquisitions, mergers or consolidations
shall not exceed Five Million and 00/100 Dollars ($5,000,000.00) in the
aggregate.

(b) Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except: (1) transactions involving the sale, lease or transfer of
Inventory in the ordinary course of business, (2) any sale, transfer or lease of
assets (not consisting of Collateral) (i) in the ordinary course of business
which are no longer necessary or required in the conduct of such Loan Party’s
business or (ii) which are obsolete, of immaterial value or no longer utilized
in the business of such Loan Party and (3) the sale of capital stock or other
equity interests of any foreign Subsidiary of a Loan Party.

7.2 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.

7.3 Guarantees.

Become liable upon the obligations of any Person by assumption, endorsement or
guaranty thereof or otherwise (other than to the Lenders or the Issuer) except
(a) as disclosed on Schedule 7.3, (b) the endorsement of checks in the ordinary
course of business, (c) guarantees made by a Loan Party with respect to the
obligations of another Loan Party, (d) the guarantee of Indebtedness of
StyroChem Finland Oy not to exceed Seven Million Five Hundred Thousand and
00/100 Dollars ($7,500,000.00) and (e) unsecured guarantees made by a Loan Party
in the ordinary course of such Loan Party’s business up to an aggregate amount
for all Loan Parties of Five Million and 00/100 Dollars ($5,000,000.00).

 

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7.4 Investments.

Purchase or acquire obligations or stock of, or any other interest in, any
Person, except (a) investments existing on the Closing Date and set forth on
Schedule 7.4, (b) obligations issued or guaranteed by the United States of
America or any agency thereof, (c) commercial paper with maturities of not more
than one hundred eighty (180) days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (d) certificates of time deposit and bankers’
acceptances having maturities of not more than one hundred eighty (180) days and
repurchase agreements backed by United States government securities of a
commercial bank if (i) such bank has a combined capital and surplus of at least
Five Hundred Million and 00/100 Dollars ($500,000,000.00), or (ii) 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, (e) U.S. money market funds (i) rated AAA by
Standard & Poors, Inc. or with an equivalent rating from Moody’s Investors
Service, Inc., or (ii) that invest solely in obligations issued or guaranteed by
the United States of America or an agency thereof, (f) investments by a Loan
Party in a Loan Party, (g) investments (whether in cash or in kind) in
(i) corporations, general or limited partnerships, limited liability companies,
joint ventures and similar Persons (excluding natural Persons) that are not
Subsidiaries, and (ii) Subsidiaries that are not Borrowers or Guarantors,
provided, however, that (A) immediately prior to and after giving effect to such
investment, the Borrowers’ Undrawn Availability shall be greater than or equal
to Twenty Million and 00/100 Dollars ($20,000,000.00) (y) on the date of such
investment and (z) on average for the most recently ended thirty
(30) consecutive day period preceding the date of the investment; and (B) the
aggregate amount of such investments when combined with the aggregate amount of
all (y) loans and advances permitted in Section 7.5(e) below and (z) dividends
and distributions permitted in Section 7.7 below shall not exceed Five Million
and 00/100 Dollars ($5,000,000.00) in the aggregate at any time and (h) any
investments received in compromise or resolution of (A) obligations of trade
creditors, franchisees or customers that are accounts receivable of a Loan
Party, including pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of any trade creditor, franchisee or customer
or (B) litigation, arbitration or other disputes with Persons who are not
Affiliates.

7.5 Loans.

Make advances, loans or extensions of credit to any Person (other than another
Loan Party), including, without limitation, any Parent, Subsidiary or Affiliate
except with respect to (a) the existing advances, loans and extensions of credit
set forth on Schedule 7.5 attached hereto and made a part hereof, (b) the
extension of commercial trade credit in connection with the sale of Inventory in
the ordinary course of its business, (c) loans to employees in the ordinary
course of business not to exceed the aggregate amount of Two Hundred Thousand
and 00/100 Dollars ($200,000.00) at any time outstanding, (d) loans and advances
in accordance with past practices to (i) RMI to reimburse RMI for the Expenses
(as defined in the Management Services Agreement) and other miscellaneous and
necessary operating expenses incurred by RMI in connection with its performance
of its obligations under the Management Services Agreement (as such agreement
exists on the Closing Date, a complete copy of which has been provided to the
Agent) and (ii) RMDI to reimburse RMDI for expenses incurred by RMDI in
connection with its performance of management services for the Loan Parties and
other miscellaneous and necessary operating expenses in connection therewith,
and (e) loans and advances in or to (i)

 

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corporations, general or limited partnerships, limited liability companies,
joint ventures and similar Persons (excluding natural Persons) that are not
Subsidiaries, and (ii) Subsidiaries that are not Borrowers or Guarantors,
provided, however, that (A) immediately prior to and after giving effect to such
loans and advances, the Borrowers’ Undrawn Availability shall be greater than or
equal to Twenty Million and 00/100 Dollars ($20,000,000.00) (y) on the date of
such loan or advance and (z) on average for the most recently ended thirty
(30) consecutive day period preceding the date of the loan or advance; and
(B) the aggregate amount of all such loans and advances when combined with the
aggregate amount of all (y) investments permitted pursuant to Section 7.4(g)
above and (z) dividends and distributions permitted pursuant to Section 7.7
below shall not exceed Five Million and 00/100 Dollars ($5,000,000.00) in the
aggregate at any time.

7.6 Capital Expenditures.

Make or incur any Capital Expenditure or commitments for Capital Expenditures
(including capitalized leases) in calendar year 2006 or in any calendar year
thereafter in an aggregate amount for Radnor and its Subsidiaries on a
consolidated basis with respect to each such year in excess of Twenty Five
Million and 00/100 Dollars ($25,000,000.00).

7.7 Dividends.

Declare, pay or make any dividend or distribution on any shares of the common
stock or preferred stock or other equity interest, as the case may be, of any
Loan Party (other than dividends or distributions payable in stock or other
equity interest, as the case may be, or split-ups, or reclassifications of its
stock or cash or other dividends paid by any Subsidiary of Radnor to (i) Radnor
or (ii) any Subsidiary of Radnor that is a Loan Party), or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or preferred stock or other equity interest, as the case may be, or of
any options to purchase or acquire any such shares of common or preferred stock
or other equity interest, as the case may be, of any Loan Party except that
Radnor may make dividends or distributions to its shareholders or redeem or
repurchase stock of its shareholders in an aggregate annual amount which shall
not exceed fifty percent (50%) of the net income of Radnor, as determined in
accordance with GAAP, for the immediately preceding fiscal year, so long as in
each case (a) a notice of termination with regard to this Agreement shall not be
outstanding, (b) no Event of Default or Default shall exist immediately prior to
or after giving effect to such dividend or distribution or redemption or
repurchase, (c) immediately prior to and after giving effect to such dividend or
distribution, the Borrowers’ Undrawn Availability shall be greater than or equal
to Twenty Million and 00/100 Dollars ($20,000,000.00) (y) on the date such
dividend or distribution is declared, paid or made and (z) on average for the
most recently ended thirty (30) consecutive days preceding the date of such
dividend or distribution, and (d) the aggregate amount of all such dividends or
distributions permitted above when combined with the aggregate amount of all
(y) investments permitted pursuant to Section 7.4(g) above and (z) loans and
advances permitted pursuant to Section 7.5(e) above shall not exceed Five
Million and 00/100 Dollars ($5,000,000.00) in the aggregate at any time.

In addition, the Loan Parties shall not permit their Subsidiaries (other than
SCL and StyroChem Finland Oy) to enter into or otherwise be bound by any
agreement prohibiting or restricting the payment of dividends to a Loan Party.

 

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7.8 Indebtedness.

Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade
debt) except in respect of:

(a) Indebtedness existing on the Closing Date and set forth on Schedule 7.8
(including any extensions, renewals or refinancings thereof), provided that
there is no material change in the material terms thereof and the principal
amount of such Indebtedness shall not be increased to an amount greater than the
amount outstanding on the Closing Date without the prior written consent of the
Required Lenders;

(b) Indebtedness to the Lenders and the Issuer under or pursuant to this
Agreement or the Other Documents;

(c) Indebtedness incurred for Capital Expenditures permitted under Section 7.6
hereof;

(d) Indebtedness as permitted under Section 7.3 hereof; and

(e) Indebtedness of any Loan Party to any other Loan Party to the extent the
loan pursuant to which such Indebtedness is created is permitted under
Section 7.5 hereof;

(f) Indebtedness arising from Hedging Contracts entered into in the ordinary
course of business consisting of bona fide hedging transactions;

(g) unsecured Indebtedness not otherwise covered by any of the foregoing in an
amount not to exceed Ten Million and 00/100 Dollars ($10,000,000.00) in the
aggregate outstanding at any one time; and

(h) Indebtedness of a Loan Party which refinances the Indebtedness permitted
under clauses (c) through (g) above, provided, that, each of the following
conditions is satisfied as determined by the Agent in good faith:

(A) All such refinanced Indebtedness shall be subject to all conditions,
covenants, restrictions and limitations set forth in this Section 7.8 applicable
to the Indebtedness being refinanced;

(B) such Indebtedness shall be on terms and conditions consistent in all
material respects to the terms and conditions of the Indebtedness being
refinanced;

(C) The Agent shall have received not less than five (5) days prior written
notice of the intention of such Loan Party to incur such Indebtedness, which
notice shall set forth in reasonable detail satisfactory to Agent the amount of
such Indebtedness, the person or persons to whom such Indebtedness will be owed,
the interest rate, the schedule of repayments and maturity date with respect
thereto and such other information as the Agent may reasonably request with
respect thereto;

 

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(D) The Agent shall have received true, correct and complete copies of all
material agreements, documents and instruments evidencing or otherwise related
to such Indebtedness;

(E) all of the net proceeds of the loans or other accommodations giving rise to
such Indebtedness (net of reasonable expenses and amounts required to repay the
Indebtedness being refinanced) shall be paid to the Agent for application to the
Obligations; and

(F) as of the date of incurring such Indebtedness and after giving effect
thereto, no Event of Default or Default shall exist or have occurred and be
continuing.

7.9 Nature of Business.

Substantially change the nature of the business in which it is currently
engaged, nor, except as specifically permitted hereby purchase or invest,
directly or indirectly, in any assets or property other than in the ordinary
course of business or other than those which are useful in, necessary for and
are to be used in its business, as presently conducted.

7.10 Transactions with Affiliates.

Directly or indirectly, purchase, acquire or lease any property from, or sell,
transfer or lease any property to, or otherwise deal with, any Affiliate, except
transactions in the ordinary course of business, on an arm’s length basis on
terms no less favorable than terms which would have been obtainable from a
Person other than an Affiliate; provided, however, so long as no Default or
Event of Default shall exist immediately prior to or after giving effect to such
payments, this Section 7.10 shall not prohibit any payments or advances to RMI
or RMDI as permitted by Section 7.5(d), or any other loans, investments or
dividends that are permitted under Sections 7.4, 7.5 or 7.7 hereof.

7.11 Leases.

Enter as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed
Eleven Million and 00/100 Dollars ($11,000,000.00) in any one fiscal year in the
aggregate for Radnor and its Subsidiaries.

7.12 Subsidiaries.

(a) Form any domestic Subsidiary unless, (i) (y) such Subsidiary expressly
becomes a Borrower and becomes jointly and severally liable for the obligations
of the Borrowers hereunder, under the Notes and under any Other Document, or
(z) such Subsidiary becomes a Guarantor for the Obligations and, among other
things, executes a Guaranty in form and substance reasonably satisfactory to the
Agent, (ii) Agent shall have received all documents, including organizational
documents and legal opinions it may reasonably require in connection therewith
and (iii) such Subsidiary grants first (1st) priority perfected Liens in its
assets to the Agent for the benefit of the Issuer and the Lenders, provided,
however, to the extent such Subsidiary becomes a Borrower, none of such assets
which become Collateral shall be included

 

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in the Formula Amount in accordance with the terms of this Agreement until such
time as the Agent makes such determination in is sole reasonable discretion; or

(b) Subject to Section 7.4 hereof, enter into any partnership, joint venture or
similar agreement.

7.13 Fiscal Year and Accounting Changes.

Change its fiscal year from the last Friday in December in any calendar year or
make any material change (i) in accounting treatment and reporting practices
except as required by GAAP or (ii) in tax reporting treatment except as required
or permitted by law.

7.14 Pledge of Credit.

Subject to Section 7.4 hereof, now or hereafter pledge the Agent’s or any
Lender’s credit on any purchase or for any purpose whatsoever or use any portion
of any Advance in or for any business other than such Borrower’s business as
conducted on the date of this Agreement.

7.15 Amendment of Articles of Incorporation, By-Laws, Certificate of Limited
Partnership, Limited Partnership Agreement, Articles of Organization, Operating
Agreement, Etc.

Amend, modify or waive any material term or material provision of its Articles
of Incorporation, By-Laws, Certificate of Limited Partnership, Limited
Partnership Agreement, Certificate of Formation, Operating Agreement or other
organizational documents which amendment, modification or waiver would
reasonably be considered material and adverse to the Agent or the Lenders,
unless required by law.

7.16 Compliance with ERISA.

(i) (x) Maintain, or permit any member of the Controlled Group to maintain, or
(y) become obligated to contribute, or permit any member of the Controlled Group
to become obligated to contribute, to any Plan, other than those Plans disclosed
on Schedule 5.8(d), (ii) 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, (iii) incur, or permit any
member of the Controlled Group to incur, any “accumulated funding deficiency”,
as that term is defined in Section 302 of ERISA or Section 412 of the Code,
(iv) terminate, or permit any member of the Controlled Group to terminate, any
Plan where such event could result in any liability of any Loan Party or any
member of the Controlled Group or the imposition of a lien on the property of
any Loan Party or any member of the Controlled Group pursuant to Section 4068 of
ERISA, (v) assume, or permit any member of the Controlled Group to assume, any
obligation to contribute to any Multiemployer Plan not disclosed on Schedule
5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify
the Agent of the occurrence of any Termination Event, (viii) 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, (ix) fail
to meet, or permit any member of the Controlled Group to fail to meet, all
minimum funding requirements under ERISA or the Code or postpone or delay or
allow

 

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any member of the Controlled Group to postpone or delay any funding requirement
with respect of any Plan.

7.17 Prepayment of Indebtedness.

At any time, directly or indirectly, prepay any Indebtedness (other than to the
Lenders or the Issuer or another Loan Party) or repurchase, redeem, retire or
otherwise acquire any Indebtedness of any Loan Party except in connection with a
refinancing of such Indebtedness permitted under this Agreement.

7.18 Other Agreements.

Enter into any amendment, waiver or modification of the Tennenbaum Loan
Documents or the Senior Notes Documentation that could reasonably be expected to
materially and adversely affect the Agent, the Lenders or the Issuer.

7.19 Inactive Subsidiaries.

Permit any of RAMI, RII, RI2I, RD2I, RI3I, RIL and BHI to become operating
entities or hold material assets.

VIII. CONDITIONS PRECEDENT.

8.1 Conditions to Initial Advances.

The agreement of the Lenders and the Issuer, as the case may be, to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by the Lenders and the Issuer, immediately prior to or
concurrently with the making of such Advances, of the following conditions
precedent:

(a) Notes. The Agent shall have received the Notes duly executed and delivered
by an authorized officer of each Borrower;

(b) Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by this
Agreement, any related agreement or under law or reasonably requested by the
Agent to be filed, registered or recorded in order to create, in favor of the
Agent, a perfected 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 the
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 Loan Parties. The Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to the Agent,
of the board of directors, partners, managers or members, as the case may be, of
each Loan Party authorizing (i) the execution, delivery and performance of this
Agreement, the Notes, and any related agreements to which such Loan Party is a
party, and (ii) the granting by each Loan Party of the

 

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security interests in and Liens upon the Collateral in each case certified by
the Secretary of each Loan Party (or the General Partner of each Loan Party that
is a limited partnership) 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 Loan Parties. The Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Loan Party or the
General Partner of each Loan Party that is a limited partnership, dated the
Closing Date, as to the incumbency and signature of the officers of each Loan
Party or such General Partner of such Loan Party executing this Agreement, any
certificate or other documents to be delivered by it pursuant hereto, together
with evidence of the incumbency of such Secretary;

(e) Certificates. The Agent shall have received a copy of the Articles or
Certificate of Incorporation, Certificate of Limited Partnership or Certificate
of Formation, as the case may be, of each Loan Party, together with all
amendments thereto, certified by the Secretary of State or other appropriate
official of such entity’s jurisdiction of incorporation or formation, as the
case may be, together with copies of the By-Laws, Partnership Agreement or
Operating Agreement, as the case may be, of each Loan Party, all agreements of
each Loan Party’s shareholders, partners or members, as the case may be,
certified as accurate and complete by the Secretary of each Loan Party or the
General Partner of each Loan Party that is a limited partnership, as the case
may be.

(f) Good Standing and Tax Lien Certificates. The Lender shall have received
copies of good standing and tax lien certificates, or similar certifications, as
applicable, for each Loan Party dated not more than sixty (60) days prior to the
Closing Date, issued by the Secretary of State, Department of Revenue or other
appropriate official of each such entity’s jurisdiction of incorporation or
formation, as the case may be, and each jurisdiction where the conduct of each
entity’s business activities or the ownership of each such entity’s properties
necessitates qualification;

(g) Legal Opinion. The Agent shall have received the executed legal opinion of
Duane Morris LLP and local counsel opinions, if applicable, in form and
substance satisfactory to the Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes, and related
agreements as the Agent may reasonably require and each Loan Party hereby
authorizes and directs such counsel to deliver such opinion to the Agent, the
Lenders and the Issuer;

(h) No Litigation. (i) No litigation, investigation or proceeding before or by
any arbitrator or Governmental Body shall be continuing or threatened against
any Loan Party or against the officers, directors or managers of any Loan Party,
(A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of the Agent, is
deemed material or (B) which could, in the reasonable opinion of the Agent, have
a Material Adverse Effect; and (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to any Loan Party or the conduct of
its business or inconsistent with the due consummation of the transactions
contemplated by this Agreement shall have been issued by any Governmental Body;

 

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(i) Financial Condition Certificate. The Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(i);

(j) Collateral Examination; Trade References. The Agent shall have (i) completed
a Collateral examination, the results of which shall be satisfactory in form and
substance to the Lenders and the Issuer, (ii) reviewed all books and records in
connection with the Collateral, and (iii) reviewed various trade references with
respect to the Loan Parties, in form and substance satisfactory to the Agent;

(k) Fees. The Agent shall have received all fees payable to the Agent, the
Lenders and the Issuer on or prior to the Closing Date pursuant to Article III
hereof;

(l) Projections. The Agent shall have received a copy of the Projections which
shall be satisfactory in all respects to the Lenders and the Issuer;

(m) Tennenbaum Loan Documents. Agent shall have received final executed copies
of the Tennenbaum Loan Documents as in effect on the Closing Date.

(n) Insurance. The Agent shall have received in form and substance satisfactory
to the Agent, certificates of insurance for the Loan Parties’ casualty insurance
policies, together with loss payable endorsements on the Agent’s standard form
of loss payee endorsement naming the Agent as lender loss payee with respect to
the Collateral, and certificates of insurance for the Loan Parties’ liability
insurance policies, together with endorsements naming the Agent as an additional
insured;

(o) Payment Instructions. The Agent shall have received written instructions
from the Borrowers directing the application of proceeds of the initial Advances
made pursuant to this Agreement;

(p) Collection Accounts. The Agent shall have received the duly executed
(i) Blocked Account Agreements, (ii) Lockbox Agreements, (iii) Deposit Account
Agreements or other agreements establishing the Collection Accounts with
financial institutions acceptable to the Agent for the collection or servicing
of the Receivables and proceeds of the Collateral and evidence satisfactory to
the Agent that the Borrowers have directed all Customers to remit payments to
the Collection Accounts;

(q) Consents. The Agent shall have received any and all Consents necessary to
permit the effectuation of the transactions contemplated by this Agreement and
the Other Documents; and, such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as the Agent and its counsel
shall deem necessary;

(r) No Adverse Material Change. (i) since December 31, 2004, there shall not
have occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to the Agent shall have been proven to be inaccurate or
misleading in any material respect;

(s) Leasehold and Similar Agreements. The Agent shall have received the
landlord, mortgagee, warehouseman, consignment, processing or similar agreements
satisfactory

 

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to the Agent with respect to all premises leased by the Loan Parties and at
which Inventory is located as set forth on Schedule 8.1(r);

(t) Contract Review. The Agent shall have reviewed all material contracts of the
Loan Parties and all other leases, union contracts, labor contracts, vendor
supply contracts, license agreements, loan documents and distributorship
agreements requested by the Agent and such contracts and agreements shall be
satisfactory in all respects to the Agent.

(u) Guarantees and Other Documents. The Agent shall have received the executed
(i) Guarantees and (ii) Other Documents, all in form and substance satisfactory
to the Agent;

(v) Existing Indebtedness. The Agent shall have received (i) a payoff letter, in
form and substance satisfactory to the Agent, pursuant to which any existing
Indebtedness that is to be paid by initial Advances hereunder will be paid in
full, and (ii) evidence satisfactory to the Agent that all necessary termination
statements, satisfaction documents and any other applicable releases in
connection with any existing Indebtedness and all other Liens with respect to
the Loan Parties that are not Permitted Encumbrances have been filed or
arrangements satisfactory to the Agent have been made for such filing;

(w) Closing Certificate. The Agent shall have received a closing certificate
signed by the Chief Financial Officer of each Loan Party, dated as of the date
hereof, stating that (i) all representations and warranties set forth in this
Agreement and the Other Documents to which such Loan Party is a party are true
and correct in all material respects on and as of such date, (ii) the Loan
Parties are on such date in compliance with all the terms and provisions set
forth in this Agreement and the Other Documents, as the case may be, and
(iii) on such date no Default or Event of Default has occurred or is continuing;

(x) Borrowing Base. The Agent shall have received evidence from the Borrowers
that the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support the Advances in the amount requested
by the Borrowers on the Closing Date;

(y) Undrawn Availability. After giving effect to the initial Advances hereunder
and all closing costs, fees and expenses, the Borrowers shall have Undrawn
Availability of at least Twenty Million and 00/100 Dollars ($20,000,000.00); and

(z) Intellectual Property Security Agreement. The Agent shall have received in
form and substance satisfactory to the Agent (i) an executed Intellectual
Property Security Agreement, and (ii) all notices and powers of attorney with
respect thereto;

(aa) Senior Notes Documentation. Agent shall have received final executed copies
of the Senior Notes Documentation as in effect on the Closing Date.

(bb) Other. All corporate and other proceedings, and all documents, instruments
and other legal matters in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Agent and its
counsel.

 

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8.2 Conditions to Each Advance.

The agreement of the Lenders and the Issuer to make any Advance requested to be
made on any date (including, without limitation, the initial Advance), 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 Loan Party in or pursuant to this Agreement and any related
agreements to which it is a party, as the case may be, 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 or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and 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; provided, however that, the 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 not be deemed
a waiver of any such Event of Default or Default.

(c) Maximum Advances. Subject to the terms of Section 16.2(b), in the case of
any Advances requested to be made, after giving effect thereto, the aggregate
Advances shall not exceed the maximum amount of Advances permitted under
Section 2.1 hereof.

Each request for an Advance by the Borrowing Agent hereunder shall constitute a
representation and warranty by each Loan Party as of the date of such Advance
that the conditions contained in this subsection shall have been satisfied.

IX. INFORMATION AS TO THE LOAN PARTIES.

Each Borrower shall, on behalf of itself and the other Loan Parties, until
satisfaction in full of the Obligations and the termination of this Agreement:

9.1 Disclosure of Material Matters.

Immediately upon learning thereof, report to the Agent all matters materially
affecting the value, enforceability or collectibility of any portion of the
Collateral including, without limitation, any Loan Party’s reclamation or
repossession of, or the return to any Loan Party of, a material amount of goods
or material claims or material disputes asserted by any Customer or other
obligor.

9.2 Schedules.

Deliver to the Agent on or before the fifteenth (15th) day following the fiscal
month end as and for the prior fiscal month (a) accounts receivable agings of
the Borrowers (reconciled to the general ledger and Borrowing Base Certificate),
(b) accounts payable schedules of the Borrowers (reconciled to the general
ledger), (c) Inventory reports of the Borrowers (which shall include a lower of
cost or market calculation) and (d) a Borrowing Base Certificate (which shall be
calculated as of the last day of the prior fiscal month and which shall

 

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not be binding upon the Agent or restrictive of the Agent’s rights under this
Agreement). In addition, each Borrower shall deliver to the Agent on or before
the first (1st) day of each Week as and for the prior Week an interim Borrowing
Base Certificate (which shall be calculated as of the last day of the prior Week
and which shall not be binding upon the Agent or restrictive of the Agent’s
rights under this Agreement) reflecting all activity (sales, collections,
credits, etc.) impacting the accounts of the Borrowers for all Business Days of
the immediately preceding Week. The amount derived as being excluded from
Eligible Receivables used on such interim Borrowing Base Certificate shall be
the amount that is calculated and updated monthly pursuant to this Section 9.2
and which is satisfactory to the Agent. The amount of Eligible Inventory to be
included on such interim Borrowing Base Certificate shall be calculated and
updated monthly pursuant to this Section 9.2 and which is satisfactory to the
Agent. In addition, each Borrower will deliver to the Agent at such intervals as
the Agent may reasonably 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 the Agent may require including, without limitation, trial
balances and test verifications. The Agent shall have the right to confirm and
verify all Receivables by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to protect its
interests hereunder. The items to be provided under this Section are to be in
form satisfactory to the Agent and executed by each applicable Borrower and
delivered to the Agent from time to time solely for the Agent’s convenience in
maintaining records of the Collateral, and any Borrower’s failure to deliver any
of such items to the Agent shall not affect, terminate, modify or otherwise
limit the Agent’s Lien with respect to the Collateral.

9.3 Litigation.

Promptly notify the Agent in writing of any litigation, suit or administrative
proceeding affecting any Loan Party, whether or not the claim is covered by
insurance, and of any suit or administrative proceeding, which in any such case
could reasonably be expected to have a Material Adverse Effect.

9.4 Material Occurrences.

Promptly notify the Agent in writing upon the occurrence of (a) any Event of
Default or Default; (b) any event of default under the Tennenbaum Loan Documents
or the Senior Notes Documentation; (c) any event, development or circumstance
whereby any financial statements or other reports furnished to the Agent fail in
any material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of Radnor and its
Subsidiaries on a consolidated basis as of the date of such statements; (d) any
accumulated retirement plan funding deficiency which, if such deficiency
continued for two (2) plan years and was not corrected as provided in
Section 4971 of the Code, could subject any Loan Party to a tax imposed by
Section 4971 of the Code; (e) each and every default by any Loan Party which
would reasonably be expected to result in the acceleration of the maturity of
any Indebtedness which individually, or in the aggregate, is in excess of Five
Million and 00/100 Dollars ($5,000,000.00), including the names and addresses of
the holders of such Indebtedness 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 Indebtedness; and (f) any other development in the
business or affairs of any Loan Party which could reasonably be expected to have
a Material

 

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Adverse Effect; in each case, to the extent permitted by applicable law,
describing the nature thereof and the action the Loan Parties propose to take
with respect thereto.

9.5 Government Receivables.

Notify the Agent immediately if any of its Receivables arise out of contracts
between any Borrower and the United States, any state, or any department, agency
or instrumentality of any of them.

9.6 Annual Financial Statements.

Furnish the Lender within three (3) days after the submission to the SEC in
accordance with all applicable SEC rules and regulations, but in any event no
later than one hundred twenty (120) days after the end of each fiscal year of
Radnor, annual financial statements of Radnor and its Subsidiaries on a
consolidated and consolidating basis including, but not limited to, 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 applied on a
basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm
selected by Radnor and satisfactory to the Agent (the “Accountants”). In
addition, the reports shall be accompanied by a certificate of Radnor signed by
Radnor’s Chief Financial Officer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Radnor with respect to such event, and such certificate shall
have appended thereto calculations which set forth compliance with the
requirements or restrictions imposed by Sections 6.5, 7.1, 7.3, 7.4, 7.5, 7.6,
7.7 and 7.11 hereof.

9.7 Quarterly Financial Statements.

Furnish the Lender within three (3) days after the submission to the SEC in
accordance with all applicable SEC rules and regulations, but in any event no
later than sixty (60) days after the end of each fiscal quarter of Radnor, an
unaudited balance sheet of Radnor and its Subsidiaries on a consolidated and
consolidating basis and unaudited statements of income and cash flow of Radnor
and its Subsidiaries on a consolidated and consolidating 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 complete and correct in all material respects, subject to normal
and recurring year end adjustments that individually and in the aggregate are
not material to the business of Radnor and its Subsidiaries. The reports shall
be accompanied by a certificate of Radnor signed either by Radnor’s Chief
Financial Officer, Chief Executive Officer or Treasurer which shall state that,
based on an examination sufficient to permit him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Radnor with respect to such event, and
such certificate shall have appended thereto calculations which set forth
compliance with the requirements or restrictions imposed by Sections 6.5, 7.1,
7.3, 7.4, 7.5, 7.6, 7.7 and 7.11 hereof.

 

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9.8 Monthly Financial Statements.

Furnish the Agent within thirty (30) days after the end of each calendar month,
an unaudited balance sheet of Radnor and its Subsidiaries on a consolidated and
consolidating basis and unaudited statements of income and cash flow of Radnor
and its Subsidiaries on a consolidated and consolidating 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 complete and correct in all material respects, subject to normal and
recurring year end adjustments that individually and in the aggregate are not
material to the business of Radnor and its Subsidiaries. The reports shall be
accompanied by a certificate of either Radnor’s Chief Financial Officer, Chief
Executive Officer or Treasurer which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Radnor with respect to such event.

9.9 Other Reports.

Furnish the Agent as soon as available, but in any event within fifteen
(15) days after the filing thereof, with copies of such financial statements,
proxy statements, registration statements, reports and returns as each Loan
Party is or may be required to file with the United States Securities Exchange
Commission or any State Securities Commission.

9.10 Additional Information.

Furnish the Agent with such additional information as the Agent shall reasonably
request in order to enable the Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Notes have been complied
with by the Loan Parties including, without limitation and without the necessity
of any request by the Agent, (a) copies of all environmental audits and reviews,
(b) at least thirty (30) days prior thereto, notice of any Loan Party’s opening
of any new place of business or any Loan Party’s closing of any existing place
of business, and (c) promptly upon any Loan Party’s learning thereof, notice of
any material labor dispute to which any Loan 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 Loan Party is a party or by which
any Loan Party is bound.

9.11 Projected Operating Budget.

Furnish the Agent, no later than fifteen (15) days prior to the beginning of
each fiscal year of Radnor, commencing with fiscal year 2007 and each fiscal
year thereafter during the Term, a month by month projected operating budget and
cash flow of Radnor and its Subsidiaries on a consolidated and consolidating
basis for such fiscal year (including a consolidated income statement for each
fiscal month and a consolidated balance sheet as at the end of each fiscal
month), such projections to be accompanied by a certificate signed by the Chief
Financial Officer of Radnor to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past
budgets and financial statements

 

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and that such officer has no reasonable basis to question the reasonableness of
any material assumptions on which such projections were prepared.

9.12 Notice of Suits, Adverse Events.

Furnish the Agent with prompt notice of (i) any lapse or other termination of
any Consent issued to any Loan Party by any Governmental Body or any other
Person that is material to the operation of any Loan Party’s business, (ii) any
refusal by any Governmental Body or any other Person to renew or extend any such
Consent; (iii) copies of any periodic or special reports filed by any Loan Party
with any Governmental Body or Person, if such reports indicate any material
change in the business, operations, affairs or condition of any Loan Party, or
if copies thereof are requested by the Lender and/or the Issuer, and (iv) copies
of any material notices and other material communications from any Governmental
Body which specifically relate to any Loan Party.

9.13 ERISA Notices and Requests.

Furnish the Agent with immediate written notice in the event that (i) any Loan
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 such Loan 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, (ii) any Loan
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) has occurred together with a written statement describing such transaction
and the action which such Loan Party or any member of the Controlled Group has
taken, is taking or proposes to take with respect thereto, (iii) a funding
waiver request has been filed with respect to any Plan together with all
communications received by any Loan Party or any member of the Controlled Group
with respect to such request, (iv) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions
to any Plan to which any Loan Party or any member of the Controlled Group was
not previously contributing shall occur, (v) any Loan Party or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (vi) any Loan Party or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any
Loan Party or any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with copies of each
such notice; (viii) any Loan Party or any member of the Controlled Group shall
fail to make a required installment or any other required payment under
Section 412 of the Code on or before the due date for such installment or
payment; (ix) any Loan Party or any member of the Controlled Group knows that
(a) a Multiemployer Plan has been terminated, (b) the administrator or plan
sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or
(c) the PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan.

 

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9.14 Additional Documents.

Execute and deliver to the Agent, upon request, such documents and agreements as
the Agent may, from time to time, reasonably request to carry out the purposes,
terms or conditions of this Agreement.

X. EVENTS OF DEFAULT.

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

10.1 Payment of Obligations.

Failure by any Borrower to pay any principal or interest on the Obligations when
due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement, or by required prepayment or failure to pay any other
liabilities or make any other payment, fee or charge provided for herein when
due or in any Other Document;

10.2 Misrepresentations.

Any representation or warranty made by any Loan Party in this Agreement or any
related agreement or in any certificate, document or financial or other
statement furnished at any time in connection herewith or therewith, as the case
may be, shall prove to have been misleading in any material respect on the date
when made or deemed to have been made;

10.3 Failure to Furnish Information.

Failure by any Loan Party to (i) furnish financial information required to be
provided hereunder when due, (ii) furnish financial information requested by the
Agent within ten (10) days after such information is requested, or (iii) permit
the inspection of its books or records;

10.4 Liens Against Assets.

Issuance of a notice of Lien (other than Permitted Encumbrances), levy,
assessment, injunction or attachment against a material portion of any Loan
Party’s property which is not stayed or lifted within thirty (30) days;

10.5 Breach of Covenants.

(i) Except as otherwise provided for in Sections 10.1 and 10.3, failure or
neglect of any Loan Party to perform, keep or observe any term, provision,
condition, covenant herein contained (other than those in Sections 4.6, 4.7,
4.14, 4.16, 4.18 or 6.3 hereof), or contained in any other agreement or
arrangement, now or hereafter entered into between any Loan Party and the Agent,
any Lender or the Issuer relating to the Obligations; or (ii) failure or neglect
of any Loan Party to perform, keep or observe any term, provision, condition,
covenant herein contained in Sections 4.6, 4.7, 4.14, 4.16, 4.18 or 6.3 hereof
and such failure shall continue for thirty (30) days from the occurrence of such
failure or neglect;

 

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10.6 Judgment.

Any judgment is rendered or judgment lien is filed against any Loan Party for an
amount in excess of Five Hundred Thousand and 00/100 Dollars ($500,000.00) or
any judgment or judgments are rendered or judgment liens filed against the Loan
Parties taken as a whole for an aggregate amount in excess of One Million and
00/100 Dollars ($1,000,000.00) which within thirty (30) days of such rendering
or filing is not either appealed, satisfied, stayed or discharged of record;

10.7 Insolvency and Related Proceedings of the Loan Parties.

Any Loan Party shall (i) 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,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) 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
(vii) take any action for the purpose of effecting any of the foregoing;

10.8 Insolvency; Cessation of Operations.

Any Loan 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;

10.9 Bankruptcy.

Any Subsidiary of any Loan Party shall (i) 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, (ii) make a general assignment for the benefit of creditors,
(iii) admit in writing its inability, or be generally unable to pay its debts as
they become due or cease operations of its present business, (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, within thirty (30) days, any
petition 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;

10.10 Material Adverse Effect.

Any change in any Loan Party’s condition or affairs (financial or otherwise)
which in the Agent’s reasonable opinion has a Material Adverse Effect;

10.11 Loss of Priority Lien.

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
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10.12 Breach of Tennenbaum Loan Documents or Senior Notes Documentation.

An event of default has occurred under the (i) Tennenbaum Loan Documents or
(ii) the Senior Notes Documentation which default shall not have been cured or
waived within any applicable cure period.

10.13 Breach of Material Agreements.

A default of the obligations of any Loan Party under any other material
agreement to which it is a party shall occur which materially and adversely
affects its condition, affairs or prospects (financial or otherwise) which
default is not cured within any applicable cure period;

10.14 Cross Default; Cross Acceleration.

Any Loan Party shall (a) default in any payment of principal of or interest on
any Indebtedness that individually, or in the aggregate, is in excess of Five
Million and 00/100 Dollars ($5,000,000.00) beyond any period of grace with
respect to such payment or (b) default in the observance of any other covenant,
term or condition contained in any agreement or instrument pursuant to which
such Indebtedness that individually, or in the aggregate, is in excess of Five
Million and 00/100 Dollars ($5,000,000.00) is created, secured or evidenced, if
the effect of such default is to cause the acceleration of any such Indebtedness
(whether or not such right shall have been waived);

10.15 Termination of Guaranty.

Termination or breach of any Guaranty or similar agreement executed and
delivered to the Agent in connection with the Obligations of any Loan Party, or
if any Guarantor attempts to terminate, challenges the validity of, or its
liability under, any such Guaranty or similar agreement;

10.16 Change of Control.

Any Change of Control shall occur;

10.17 Invalidity of Credit Agreement.

Any material provision of this Agreement shall, for any reason, cease to be
valid and binding on any Loan Party, or any Loan Party shall so claim in writing
to the Agent;

10.18 Loss of Material Intellectual Property.

(i) any Governmental Body shall (A) revoke, terminate, suspend or adversely
modify any license, permit, patent, trademark or tradename of any Loan Party
material to the continuation of any Loan Party’s business, or (B) commence
proceedings to suspend, revoke, terminate or adversely modify any such license,
permit, trademark, tradename or patent and such proceedings shall not be
dismissed or discharged within sixty (60) days, or (C) schedule or conduct a
hearing on the renewal of any license, permit, trademark, tradename or patent
necessary for the continuation of any Loan Party’s business and the staff of
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Body issues a report recommending the termination, revocation, suspension or
material, adverse modification of such license, permit, trademark, tradename or
patent; (ii) any agreement which is necessary or material to the operation of
any Loan Party’s business shall be revoked or terminated and not replaced by a
substitute acceptable to the Agent within thirty (30) days after the date of
such revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse Effect;

10.19 Destruction of Collateral.

Any portion of the Collateral shall be seized or taken by a Governmental Body,
or any Loan Party or the title and rights of any Loan Party shall have become
the subject matter of litigation which might, in the reasonable opinion of the
Agent, upon final determination, result in material impairment or loss of the
security provided by this Agreement or the Other Documents;

10.20 Business Interruption.

The operations of any Loan Party’s manufacturing facility are interrupted at any
time for more than fourteen (14) consecutive days, which interruption would
reasonably be expected to have a Material Adverse Effect; or

10.21 ERISA Events.

An event or condition specified in Sections 7.16 or 9.13 hereof shall occur or
exist with respect to any Plan and, as a result of such event or condition,
together with all other such events or conditions, any Loan Party or any member
of the Controlled Group shall incur, or in the opinion of the Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of the Agent, would have a Material Adverse Effect.

XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

11.1 Rights and Remedies.

Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 or 10.8,
all Obligations shall be immediately due and payable and this Agreement and the
obligation of the Lenders and the Issuer to make Advances shall be deemed
terminated; and, (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured), at the option of
Required Lenders, all Obligations shall be immediately due and payable and the
Lenders and the Issuer shall have the right to terminate this Agreement and to
terminate the obligation of the Lenders and the Issuer to make Advances and
(iii) a filing of a petition against any Loan Party in any involuntary case
under any state or federal bankruptcy laws, the obligation of the Lenders and
the Issuer to make Advances hereunder shall be terminated other than as may be
required by an appropriate order of the bankruptcy court having jurisdiction
over any Loan Party. Upon the occurrence of any Event of Default, the Agent
shall have the right to exercise any and all other rights and remedies provided
for herein, under the Uniform Commercial Code and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take, to the extent permitted by applicable law, possession
of and sell any or all of the Collateral with or without judicial process. The
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Loan Party’s premises or other premises without legal process and without
incurring liability to any Loan Party therefor, and the 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 the Agent may deem advisable and
the Agent may require the Loan Parties to make the Collateral available to the
Agent at a convenient place. With or without having the Collateral at the time
or place of sale, the 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 the Agent may elect. Except as to that part of the Collateral which
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Agent shall give the Loan Parties
reasonable notification of such sale or sales, it being agreed that in all
events written notice delivered to the Loan Parties at least five (5) days prior
to such sale or sales is reasonable notification. At any public sale the Agent,
any Lender or the Issuer may bid for and become the purchaser, and the Agent,
any Lender, the Issuer 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 such right and equity are hereby
expressly waived and released by each Loan Party. In connection with the
exercise of the foregoing remedies, the Agent is granted permission to use all
of each Loan Party’s trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied as
set forth in Section 11.5 hereof. If any deficiency shall arise, the Loan
Parties shall remain liable to the Agent, the Lenders and the Issuer therefor.

11.2 Agent’s Discretion.

The Agent shall have the right in its sole discretion to determine which rights,
Liens, security interests or remedies the 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 the
Agent’s, the Lenders’ or the Issuer’s rights hereunder.

11.3 Setoff.

In addition to any other rights which the Agent, any Lender or the Issuer may
have under applicable law, upon the occurrence of an Event of Default hereunder,
the Agent, such Lender and the Issuer, including any branch, Subsidiary or
Affiliate of the Agent, such Lender or the Issuer, shall have a right to apply
any Loan Party’s property held by the Agent, such Lender, the Issuer, such
branch, Subsidiary or Affiliate to reduce the Obligations.

11.4 Rights and Remedies not Exclusive.

The enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right 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.

 

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11.5 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 the Agent on account of the Obligations or any other
amounts outstanding under any of the Other Documents or in respect of the
Collateral shall be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ fees) of the Agent in
connection with enforcing the rights of the Lenders and the Issuer under this
Agreement and the Other Documents and any protective advances made by the Agent
with respect to the Collateral under or pursuant to the terms of this Agreement;

SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ fees) of each of the
Lenders and the Issuer in connection with enforcing its rights under this
Agreement and the Other Documents;

FOURTH, to the payment of all of the Obligations consisting of accrued fees and
interest arising under or pursuant to this Agreement or the Other Documents;

FIFTH, to the payment of the outstanding principal amount of the Obligations
constituting Advances (including the payment or cash collateralization of the
outstanding amount of Letters of Credit);

SIXTH, to all other Obligations which shall have become due and payable by the
Loan Parties under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “FIFTH” above;

SEVENTH, to the payment of the surplus, if any, to the Borrowers unless any
other Person shall 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 the Lenders and the Issuer shall receive (so
long as it is not a Defaulting Lender) an amount equal to its pro rata share
(based on the proportion that then outstanding Advances held by such Lender or
the Issuer bears to the aggregate then outstanding Advances) of amounts
available to be applied pursuant to clauses “THIRD”, “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
the 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.

 

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XII. WAIVERS AND JUDICIAL PROCEEDINGS.

12.1 Waiver of Notice.

Each Loan Party hereby waives notice of non-payment of any of the Receivables,
demand, 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.

12.2 Delay.

No delay or omission on the Agent’s, any Lender’s or the Issuer’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.

12.3 Jury Waiver.

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT 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 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 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.

XIII. EFFECTIVE DATE AND TERMINATION.

13.1 Term.

This Agreement, which shall inure to the benefit of and shall be binding upon
the respective successors and permitted assigns of each Loan Party, the Agent,
each Lender, and the Issuer, shall become effective on the date hereof and shall
continue in full force and effect until June 15, 2009 (the “Term”) unless sooner
terminated as herein provided. The Loan Parties may terminate this Agreement at
any time upon thirty (30) days’ prior written notice upon payment in full of the
Obligations.

 

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13.2 Termination.

The termination of this Agreement shall not affect any Loan Party’s, the
Agent’s, any Lender’s or the Issuer’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 have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to the Agent, the Lenders and the Issuer hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that the
Borrowers’ Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of each Loan Party have been paid or
performed in full after the termination of this Agreement or each Loan Party has
furnished the Agent, the Lenders and the Issuer with an indemnification
satisfactory to the Agent, the Lenders and the Issuer with respect thereto.
Accordingly, each Loan Party waives any rights which it may have under the
Uniform Commercial Code to demand the filing of termination statements with
respect to the Collateral, and the Agent shall not be required to send such
termination statements to each Loan Party, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid in full in immediately available funds.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until all Obligations are paid or
performed in full. Without limitation, all indemnification obligations contained
herein shall survive the termination hereof and payment in full of the
Obligations.

XIV. REGARDING AGENT.

14.1 Appointment.

Each Lender and the Issuer hereby designates NCBC to act as the Agent for such
Lender and the Issuer under this Agreement and the Other Documents. Each Lender
and the Issuer hereby irrevocably authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and the Other Documents and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto and the Agent
shall hold all Collateral, payments of principal and interest, fees, charges and
collections (without giving effect to any collection days) received pursuant to
this Agreement, for the ratable benefit of the Lenders and the Issuer. The 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
without limitation, collection of the Notes) the 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 the Agent shall not be
required to take any action which exposes the Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless the
Agent is furnished with an indemnification reasonably satisfactory to the Agent
with respect thereto.

 

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14.2 Nature of Duties.

The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and the Other Documents. Neither the 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, or
(ii) responsible in any manner for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement, or in any of the Other Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any of the Other Documents,
as the case may be, or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other
Documents or for any failure of any Loan Party to perform its obligations
hereunder. The Agent shall not be under any obligation to any Lender or the
Issuer 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 Documents, or to inspect the properties, books or records of any Loan
Party. The duties of the Agent as respects the Advances to the Borrowers shall
be mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement a fiduciary relationship in respect of any Lender or the
Issuer; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations in respect of
this Agreement except as expressly set forth herein. The parties hereto
acknowledge and agree that no Person shall have, solely by reason of its
designation as a syndication agent, any power, duty, responsibility or liability
whatsoever under this Agreement or any of the Other Documents.

14.3 Lack of Reliance on Agent and Resignation.

Independently and without reliance upon the Agent, any other Lender or the
Issuer, each Lender and the Issuer has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of each
Loan 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 Loan Party. The Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender or the Issuer 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 any
Loan Party pursuant to the terms hereof. The Agent shall not be responsible to
any Lender or the Issuer 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, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Loan
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, the
Note, the Other Documents or the financial condition of any Loan Party, or the
existence of any Event of Default or any Default.

 

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The Agent may resign on sixty (60) days’ written notice to each of the Lenders,
the Issuer and the Borrowing Agent and upon such resignation, the Required
Lenders will promptly designate a successor of the Agent reasonably satisfactory
to the Loan Parties.

Any such successor of the Agent shall succeed to the rights, powers and duties
of the Agent, and the term “Agent” shall mean such successor agent effective
upon its appointment, and the former the Agent’s rights, powers and duties as
the Agent shall be terminated, without any other or further act or deed on the
part of such former the Agent. After the Agent’s resignation as the 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 the Agent under this Agreement.

14.4 Certain Rights of Agent.

If the Agent shall request instructions from the Lenders and the Issuer with
respect to any act or action (including failure to act) in connection with this
Agreement or any Other Document, the Agent shall be entitled to refrain from
such act or taking such action unless and until the Agent shall have received
instructions from the Required Lenders; and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, the
Lenders and the Issuer shall not have any right of action whatsoever against the
Agent as a result of its acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders.

14.5 Reliance.

The 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 Documents and its duties hereunder,
upon advice of counsel selected by it. The 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 the Agent with reasonable care.

14.6 Notice of Default.

The 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 Documents, unless
the Agent has received notice from a Lender, the Issuer or a Loan Party
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a “notice of default”. In the
event that the Agent receives such a notice, the Agent shall give notice thereof
to the Lenders and the Issuer. The 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 the Agent shall have received such
directions, the 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 the Lenders and the
Issuer.

 

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14.7 Indemnification.

To the extent the Agent is not reimbursed and indemnified by the Loan Parties,
each Lender will reimburse and indemnify the Agent and the Issuer 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 which may be
imposed on, incurred by or asserted against the Agent or the Issuer in
performing its duties hereunder, or in any way relating to or arising out of
this Agreement or any Other Document; provided that, the Lenders shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent’s gross (not mere) negligence or willful misconduct.

14.8 Agent in its Individual Capacity.

With respect to the obligation of the 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 the Agent specified
herein; and the term “Lender” or any similar term shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity as a
Lender. The Agent may engage in business with any Loan Party as if it were not
performing the duties specified herein, and may accept fees and other
consideration from any Loan Party for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.

14.9 Delivery of Documents.

To the extent the Agent receives financial statements required under Sections
9.7, 9.9, 9.10 and 9.12 and a Borrowing Base Certificate pursuant to the terms
of this Agreement, the Agent will promptly furnish such documents and
information to the Lenders and the Issuer.

14.10 Borrowers’ Undertaking to Agent.

Without prejudice to their respective obligations to the Lenders and/or the
Issuer under the other provisions of this Agreement, each Borrower hereby
undertakes with the Agent to pay to the Agent from time to time on demand all
amounts from time to time due and payable by it for the account of the Agent,
the Lenders or the Issuer 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 the Lenders and the Issuer or the relevant one or more of them
pursuant to this Agreement.

14.11 No Reliance on Agent’s Customer Identification Program.

Each of the Lenders and the Issuer acknowledges and agrees that neither such
Lender nor the Issuer, nor any of their Affiliates, participants or assignees,
may rely on the Agent to carry out such Lender’s, Issuer’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

 

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programs involving any of the following items relating to or in connection with
any of the Loan Parties, their Affiliates or their agents, this Agreement, the
Other Documents or the transactions hereunder or contemplated hereby: (1) any
identity verification procedures, (2) any record keeping, (3) comparisons with
government lists, (4) customer notices or (5) other procedures required under
the CIP Regulations or such other laws.

XV. BORROWING AGENCY.

15.1 Borrowing Agency Provisions.

(a) Each Borrower hereby irrevocably designates the 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 the
Borrowers, and hereby authorizes the Agent to pay over or credit all loan
proceeds hereunder in accordance with the request of the 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 the Borrowers and at their request. Neither the Agent, any
Lender nor the Issuer shall incur liability to the Borrowers as a result
thereof. To induce the Agent, the Lenders and the Issuer to do so and in
consideration thereof, each Borrower hereby indemnifies the Agent, each Lender
and the Issuer and holds the Agent, each Lender and the Issuer harmless from and
against any and all liabilities, expenses, losses, damages and claims of damage
or injury asserted against the Agent, any Lender or the Issuer by any Person
arising from or incurred by reason of the handling of the financing arrangements
of the Borrowers as provided herein, reliance by the Agent, any Lender or the
Issuer on any request or instruction from the Borrowing Agent or any other
action taken by the Agent, any Lender or the Issuer with respect to this
Section 15.1 except due to willful misconduct or gross (not mere) negligence by
the indemnified party.

(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 the Agent, any
Lender or the Issuer to any Borrower, failure of the Agent, any Lender or the
Issuer to give any Borrower notice of borrowing or any other notice, any failure
of the Agent, any Lender or the Issuer to pursue or preserve its rights against
any Borrower, the release by the Agent, any Lender or the Issuer 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 the Agent, any Lender or the Issuer to the
other Borrowers or any Collateral for such Borrower’s Obligations or the lack
thereof. Each Borrower waives all suretyship defenses. Without limiting the
generality of the foregoing, each of the Borrowers hereby acknowledges and
agrees that any and all actions, inactions or omissions by any one or more, or
all, of the Borrowers in connection with, related to or otherwise affecting this
Agreement or any of the Other Documents are the obligations of, and inure to and
are binding upon, each and all of the Borrowers, jointly and severally.

 

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15.2 Waivers.

Each Borrower expressly waives (i) any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which
such Borrower may now or hereafter have against the other Borrowers or other
Person directly or contingently liable for the Obligations hereunder, or against
or with respect to the other Borrowers’ property (including, without limitation,
any property which 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 and (ii) any defense it may otherwise
have to the payment and performance of the Obligations based on any contention
that its liability hereunder and under the Other Documents is limited and not
joint and several. Each Borrower acknowledges and agrees that the foregoing
waivers serve as a material inducement to the agreement of the Lenders and the
Issuer to make the Advances, and that the Lenders and the Issuer are relying on
each specific waiver and all such waivers in entering into this Agreement. The
undertakings of each Borrower hereunder secure the Obligations of itself and the
other Borrowers.

XVI. MISCELLANEOUS.

16.1 Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania. Any judicial proceeding brought by or against
any Loan Party with respect to any of the Obligations, this Agreement or any
related agreement may be brought in any court of competent jurisdiction in the
Commonwealth of Pennsylvania, United States of America, and, by execution and
delivery of this Agreement, each Loan 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 Loan 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
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent’s, any Lender’s and or the Issuer’s option, by service
upon the Borrowing Agent which each Loan Party irrevocably appoints as such Loan
Party’s agent for the purpose of accepting service within the Commonwealth of
Pennsylvania. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of the Agent, any Lender or the
Issuer to bring proceedings against any Loan Party in the courts of any other
jurisdiction. Each Loan 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. Any judicial
proceeding by any Loan Party against the Agent, any Lender or the Issuer
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 County of Allegheny,
Commonwealth of Pennsylvania.

 

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16.2 Entire Understanding.

(a) This Agreement and the documents executed concurrently herewith contain the
entire understanding among each Loan Party, the Agent, each Lender and the
Issuer and supersedes 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 Loan Party’s, the Agent’s, each
Lender’s and the Issuer’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 Loan Party acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.

(b) The Required Lenders, the Agent with the consent in writing of the Required
Lenders, and the Loan 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 Documents executed by the Loan Parties, for the
purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of the Lenders, the Issuer, the Agent or the
Loan 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, the consent of the Issuer must be
obtained with respect to any amendment, waiver or consent with respect to
Sections 2.8, 2.9, 2.10 or any other provisions, the amendment or waivers of
which would adversely affect the Issuer and, provided, further, that no such
supplemental agreement shall, (A) without the consent of all Lenders:

(i) increase the Commitment Percentage or maximum dollar commitment of any
Lender or increase the Maximum Revolving Advance Amount;

(ii) extend the maturity of any Note or the due date for any amount payable
hereunder, or decrease the rate of interest or reduce, limit or forgive any
principal amount or fee payable by the Borrowers to the Lenders and/or the
Issuer 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
One Million and 00/100 Dollars ($1,000,000.00);

(v) change the rights and duties of the Agent;

(vi) permit any Revolving Advance to be made if after giving effect thereto the
sum of the Revolving Advances outstanding, the amount of Letters of Credit
outstanding and the amount of Swing Loans outstanding hereunder would exceed
(x) the Maximum Revolving Advance Amount or (y) the Formula Amount for more than
thirty (30)

 

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consecutive Business Days (or more than sixty (60) days in the aggregate in any
fiscal year) or exceed one hundred five percent (105%) of the Formula Amount at
any time;

(vii) increase the Advance Rates above the Advance Rates in effect on the
Closing Date;

(viii) release any Loan Party from the Obligations under this Agreement, the
applicable Guaranty, if any, or any Other Document; or

(ix) alter, amend or modify Section 11.5 hereof;

or (B) without the consent of the Supermajority Lenders, alter, amend or modify
Sections 6.5 or 7.6 hereof.

Any such supplemental agreement shall apply equally to each Lender and the
Issuer and shall be binding upon the Loan Parties, the Lenders, the Issuer, the
Agent and all future holders of the Obligations. In the case of any waiver, the
Loan Parties, the Agent, the Lenders and the Issuer 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 which was waived), or impair any
right consequent thereon.

Notwithstanding (a) the existence of a Default or an Event of Default, (b) that
any of the other applicable conditions precedent set forth in Section 8.2 hereof
have not been satisfied or (c) any other provision of this Agreement, the Agent
may at its discretion and without the consent of the Required Lenders,
voluntarily permit the outstanding Revolving Advances, amount of Swing Loans
outstanding and the amount of Letters of Credit outstanding at any time to
exceed one hundred five percent (105%) of the Formula Amount for up to thirty
(30) consecutive Business Days (or sixty (60) days in the aggregate in any
fiscal year) provided that (i) such outstanding Advances do not exceed the
Maximum Revolving Advance Amount and (ii) the Required Lenders shall not have
directed the Agent in writing to cease making further Advances. For purposes of
the preceding sentence, the discretion granted to the 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, but not limited to, Collateral previously deemed to be either
“Eligible Receivables” or “Eligible Inventory”, as applicable, becomes
ineligible or 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 the Agent involuntarily
permits the outstanding Revolving Advances to exceed the Formula Amount by more
than five (5%), the Agent shall use its efforts to have the 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 and
Swing Loans made after the 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, the Agent is hereby authorized by the Loan
Parties, the

 

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Lenders and the Issuer, from time to time in the Agent’s sole discretion,
(a) after the occurrence and during the continuation of a Default or an Event of
Default, or (b) at any time that any of the other applicable conditions
precedent set forth in Section 8.2 hereof have not been satisfied, to make
Revolving Advances to the Borrowers on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (i) to preserve
or protect the Collateral, or any portion thereof, (ii) to enhance the
likelihood of, or maximize the amount of, repayment of the Advances and other
Obligations, or (iii) to pay any other amount chargeable to the 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, the
amount of Swing Loans outstanding and the amount of Letters of Credit
outstanding do not exceed (1) one hundred five percent (105%) of the Formula
Amount or (2) the Maximum Revolving Advance Amount.

16.3 Transfers and Assignments.

(a) Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Loan Parties may not
assign or otherwise transfer any of their rights or obligations hereunder
without the prior written consent of each Lender. No Lender may assign or
otherwise transfer any of its rights or obligations hereunder except: (i) to an
Eligible Assignee in accordance with the provisions of Section 16.3(b), (ii) by
way of participation in accordance with the provisions of Section 16.3(d) or
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 16.3(e) (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in Section 16.3(d) and, to the extent
expressly contemplated hereby, the Affiliates of each of the Agent, the Lenders
and the respective directors, officers, employees, agents and advisors of such
Affiliates of each of the Agent, the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

(b) Transfer of Commitments. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its commitment to make Advances
hereunder and the Advances at the time owing to such Lender); provided that
(i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s commitment to make Advances hereunder and the Advances at the
time owing to such Lender or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the commitment to make Advances hereunder (which for this
purpose includes Advances outstanding thereunder) or, if the applicable
commitment to make Advances hereunder is not then in effect, the principal
outstanding balance of the Advances of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Agent or, if “Trade Date” is specified in
the Assignment and Assumption, as of the Trade Date) shall not be less than Five
Million and 00/100 Dollars ($5,000,000.00), in the case of any assignment in
respect of Revolving Advances, unless the Agent otherwise consents (such consent
not to be unreasonably withheld, delayed or conditioned); (ii) each partial
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of all the assigning Lender’s rights and obligations under this Agreement with
respect to the Advances or the commitment to make Advances hereunder assigned,
except that this clause (ii) shall not prohibit any Lender from assigning all or
a portion of its rights and obligations in Revolving Advances on a non-pro rata
basis; (iii) any assignment of a commitment to make Advances hereunder must be
approved by the Agent and the Issuer unless the Person that is the proposed
assignee is itself a Lender with a commitment to make Advances hereunder
(whether or not the proposed assignee would otherwise qualify as an Eligible
Assignee); and (iv) the parties to each assignment shall execute and deliver to
the Agent an Assignment and Assumption, together with a processing and
recordation fee of Three Thousand Five Hundred and 00/100 Dollars ($3,500.00),
and the Eligible Assignee, if it shall not be a Lender, shall deliver to the
Agent an Administrative Questionnaire. Subject to acceptance and recording
thereof by the Agent pursuant to Section 16.3(c), from and after the effective
date specified in each Assignment and Assumption, the Eligible Assignee
thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Section 16.5 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 16.3(d).

(c) Maintenance of Register. The Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at its office in Cleveland, Ohio, a copy
of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the commitments to
make Advances hereunder of, and principal amounts of the Advances owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The
entries in the Register shall be conclusive, and the Loan Parties, the Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowing Agent and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrowing Agent or the Agent, sell participations to any Person
(other than a natural person or any Loan Party or any of the Loan Party’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its commitment to make Advances hereunder and/or the Advances owing
to it); provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Loan
Parties, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
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Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in Section 16.2(b)(i) through (ix) that affects
such Participant. The Loan Parties agree that each Participant shall be entitled
to the benefits of Sections 2.2(f), 2.2(g), 2.5(d), 3.7, 3.8, 3.9, 16.5 and
16.16 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 16.3(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.3 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.12(d)
as though it were a Lender.

A Participant shall not be entitled to receive any greater payment under
Section 16.5 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrowers’ prior written
consent. A Participant that is not incorporated under the Laws of the United
States of America or a state thereof shall not be entitled to the benefits of
Section 11.3 unless the Loan Parties are notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Loan
Parties, to comply with Section 16.16 as though it were a Lender.

(e) Pledge of Interests. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

(f) Revolving Credit Notes. The Borrowers shall execute and deliver: (i) to the
Agent, the transferor and the transferee, any consent or release (of all or a
portion of the obligations of the transferor) to be delivered in connection with
each Assignment and Assumption, (ii) if a Lender’s entire interest in its
commitments to make Advances hereunder and in all of its Advances have been
transferred to the transferee, appropriate replacement notes against return of
the Revolving Credit Notes (each marked “replaced”) held by the transferor and
(iii) if only a portion of a Lender’s interest in its commitments to make
advances hereunder and Advances has been transferred, replacement notes to each
of the transferor and the transferee against return of the original such
Revolving Credit Notes of the transferor (each marked “replaced”) held by the
transferor; provided, that, simultaneously with the Borrowers’ delivery of new
Revolving Credit Notes pursuant to this Section 16.3(f), the transferor Lender
will deliver to the Borrowing Agent any note being replaced in whole or in part,
and each such note delivered by the transferor Lender shall be conspicuously
marked “replaced” when so delivered.

(g) Replacement of Certain Lenders. If any Lender is a Defaulting Lender
hereunder, then, the Borrowing Agent may, at its sole expense and effort, upon
notice to such Lender and the Agent, require such Lender to assign and delegate,
without recourse (in accordance with the restrictions contained in
Section 16.3(b)), all of its interests, rights and obligations under this
Agreement to an Eligible Assignee that shall assume such obligations; provided
that: (i) the Borrowing Agent shall have received the prior written consent of
the Agent, which consent shall not be unreasonably withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Advances, accrued interest thereon,

 

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accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Borrowers (in the case of all other amounts). None of the Lenders shall be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowing Agent to require such assignment and delegation cease to apply.

(h) Replacement of Non-consenting Lenders. If, in connection with any proposed
amendment, waiver or consent hereunder pursuant to Section 16.2(b) hereof:
requiring the consent of all Lenders, the consent of Required Lenders is
obtained but the consent of all Lenders whose consent is required is not
obtained (any Lender withholding consent as described herein being referred to
as a “Non-Consenting Lender”), then, so long as the Agent is not a
Non-Consenting Lender, the Agent may, at the sole expense of the Loan Parties,
upon notice to such Non-Consenting Lender and the Borrowing Agent, require such
Non-Consenting Lender to assign and delegate, without recourse (in accordance
with the restrictions contained in Section 16.3(b)), all of its interests,
rights and obligations under this Agreement to an Eligible Assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that such Lender shall have received payment
of an amount equal to the outstanding principal of its Advances, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrowers (in the case of all other amounts).

16.4 Application of Payments.

The 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 Loan Party makes a payment or the Agent,
any Lender or the Issuer receives any payment or proceeds of the Collateral for
any Loan 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 the Agent, such
Lender or the Issuer.

16.5 Indemnity.

Each Loan Party shall indemnify the Agent, each Lender, the Issuer and each of
their respective officers, directors, Affiliates, employees and agents 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, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against the Agent,
any Lender or the Issuer in any litigation, proceeding or investigation
instituted or conducted by any governmental agency 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
Documents, whether or not the Agent, any Lender or the Issuer is a party
thereto, except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of the party being indemnified.

 

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16.6 Notice.

Any notice or request hereunder may be given to the Borrowing Agent or any Loan
Party or to the Agent, any Lender or the Issuer at their respective addresses
set forth below or at such other address as may hereafter be specified in a
notice designated as a notice of change of address under this Section. 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 Agreement shall be given or made by telephone or in
writing (which includes by means of electronic transmission (i.e., “e-mail”) 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 Section 16.6 hereof 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 (4) days after such Notice is deposited with the
United States Postal Service, with first-class postage prepaid, return receipt
requested;

(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.

(h) Any Lender or the Issuer giving a Notice to the Borrowing Agent or any Loan
Party shall concurrently send a copy thereof to the Agent, and the Agent shall
promptly notify the other Lenders ad the Issuer of its receipt of such Notice.

 

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(A)    If to Agent or NCBC at:   

National City Business Credit, Inc.

One South Broad Street, 14th Floor

Philadelphia, Pennsylvania 19107

Attention: Kenneth Frank

Telephone: (267) 256-4121

Telecopier: (267) 256-4001

Email: kenneth.frank@nationalcity.com

   With a copy to:   

National City Business Credit, Inc.

1965 East 6th Street

4th Floor

Locator 01-3049

Cleveland, Ohio 44114

Attention: Michael Fine

Telephone: 216-222-2847

Telecopier: 216-222-9555

Email: michael.fine@nationalcity.com

   And a copy to:   

Thorp Reed & Armstrong, LLP

One Oxford Centre

301 Grant Street, 14th Floor

Pittsburgh, Pennsylvania 15219-1425

Attention: Jeffrey J. Conn, Esquire

Telephone: (412) 394-2324

Telecopier: (412) 394-2555

Email: jconn@thorpreed.com

(B)    If to the Issuer at:   

National City Bank

1965 East 6th Street

4th Floor Locator 01-3049

Cleveland, Ohio 44114

Attention: M. Kate George

Telephone: 216-222-2951

Telecopier: 216-222-9555

Email: mary.george@nationalcity.com

(C)    If to a Lender other than the Agent, as specified on the signature pages
hereof. (D)    If to Borrowing Agent or any Borrower, at:   

Radnor Holdings Corporation

Radnor Financial Center

150 Radnor Chester Road, Suite 300

Radnor, Pennsylvania 19087-5292

Attention: R. Radcliffe Hastings

Telephone: 610-341-9600

 

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Telecopier: 610-995-2697

Email: radhastings@radnorholdings.com

   With a copy to:   

Duane Morris, LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Thomas G. Spencer, Esquire

Telephone: 215-979-1218

Telecopier: 215-979-1020

Email: tgspencer@duanemorris.com

16.7 Survival.

The obligations of the Loan Parties under Sections 2.2(f), 3.7, 3.8, 3.9,
4.18(h), 14.7 and 16.5 shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.

16.8 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.

16.9 Expenses.

All costs and expenses including, without limitation, reasonable attorneys’ fees
(including the allocated costs of in house counsel) and disbursements incurred
by the Agent on its behalf or on behalf of the Lenders and/or the Issuer (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 or any consents or
waivers hereunder and all related agreements, documents and instruments, or
(c) in instituting, maintaining, preserving, enforcing and foreclosing on the
Agent’s security interest in or Lien on any of the Collateral, whether through
judicial proceedings or otherwise, or (d) in defending or prosecuting any
actions or proceedings arising out of or relating to the Agent’s, any Lender’s
or the Issuer’s transactions with any Loan Party, or (e) in connection with any
advice given to the Agent, any Lender or the Issuer with respect to its rights
and obligations under this Agreement and all related agreements, may be charged
to the Borrowers’ Account and shall be part of the Obligations (the Agent shall
promptly thereafter provide notice thereof to the Borrowing Agent).

16.10 Injunctive Relief.

Each Loan Party recognizes that, in the event any Loan Party fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement,
any remedy at law may prove to be inadequate relief to the Lenders and/or the
Issuer; therefore, the Agent, if the

 

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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.

16.11 Consequential Damages.

Neither the Agent, nor any Lender nor the Issuer, nor any agent or attorney for
any of them, shall be liable to any Loan Party for any special, incidental,
consequential or punitive damages arising from any breach of contract, tort or
other wrong relating to the establishment, administration or collection of the
Obligations.

16.12 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.

16.13 Counterparts; Telecopied 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 transmission shall be deemed to
be an original signature hereto.

16.14 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.

16.15 Confidentiality; Sharing Information.

(a) The Agent, each Lender, the Issuer, each Eligible Assignee a party to an
Assignment and Assumption and each Participant shall hold all non-public
information obtained by the Agent, such Lender, the Issuer, such Eligible
Assignee a party to an Assignment and Assumption or such Participant pursuant to
the requirements of this Agreement in accordance with the Agent’s, such
Lender’s, the Issuer’s, such Eligible Assignee a party to an Assignment and
Assumption’s and such Participant’s customary procedures for handling
confidential information of this nature; provided, however, the Agent, each
Lender, the Issuer, each Eligible Assignee a party to an Assignment and
Assumption and each Participant may disclose such confidential information
(a) to its examiners, affiliates, outside auditors, counsel and other
professional advisors, (b) to the Agent, any Lender, the Issuer or to any
prospective each Eligible Assignees a party to an Assignment and Assumption and
Participants, and (c) as required or requested by any Governmental Body or
representative thereof or pursuant to legal process; provided, further that
(i) unless specifically prohibited by applicable law or court order, the Agent,
each Lender, the Issuer and each Eligible Assignee a party to an Assignment and
Assumption and each Participant shall use its best efforts prior to disclosure
thereof, to notify the applicable Loan 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

 

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with an examination of the financial condition of a Lender, the Issuer, a each
Eligible Assignee a party to an Assignment and Assumption or a Participant by
such Governmental Body) or (B) pursuant to legal process and (ii) in no event
shall the Agent, any Lender, the Issuer, any Eligible Assignee a party to an
Assignment and Assumption or any Participant be obligated to return any
materials furnished by any Loan Party other than those documents and instruments
in possession of the Agent, any Lender or the Issuer in order to perfect its
Lien on the Collateral once the Obligations have been paid in full and this
Agreement has been terminated.

(b) Each Loan Party acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such Loan
Party or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender, the Issuer or by one or more Subsidiaries or
Affiliates of such Lender or the Issuer and if any such Loan Party requested
such services, each Loan Party hereby authorizes each Lender and the Issuer to
share any information delivered to such Lender or the Issuer by such Loan Party
and its Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Lender or the Issuer to enter into this Agreement, to any such
Subsidiary or Affiliate of such Lender or the Issuer, it being understood that
any such Subsidiary or Affiliate of any Lender or the Issuer receiving such
information shall be bound by the provisions of Section 16.15 as if it were a
Lender or the Issuer, as the case may be, hereunder. Such authorization shall
survive the repayment of the other Obligations and the termination of the
Agreement.

16.16 Tax Withholding Clause.

Each Lender, the Issuer or assignee or participant of a Lender or the Issuer
that is not incorporated under the Laws of the United States of America or a
state thereof (and, upon the written request of the Agent, each other Lender,
the Issuer or assignee or participant of a Lender or the Issuer) agrees that it
will deliver to each of the Borrowing Agent and the Agent two (2) duly completed
appropriate valid Withholding Certificates certifying its status (as a 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 Internal Revenue 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 Section 1.1441-1(e)(2) and/or
(3) of the Income Tax Regulations (the “Regulations”); a statement described in
Section 1.871-14(c)(2)(v) of the Regulations; or any other certificates under
the Internal Revenue Code or Regulations that certify or establish the status of
a payee or beneficial owner as a U.S. or foreign person. Each Lender or the
Issuer, assignee or participant required to deliver to the Borrowing Agent and
the Agent a Withholding Certificate pursuant to the preceding sentence shall
deliver such valid Withholding Certificate as follows: (A) each Lender or the
Issuer which 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 the Borrowers hereunder for the
account of such Lender or the Issuer; (B) each assignee or participant shall
deliver such valid Withholding Certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless the Agent
in its sole discretion shall permit such assignee or participant to deliver such
valid Withholding Certificate less than five (5) Business Days before such date
in which case it shall be due on the date specified by the Agent). Each Lender,
the Issuer, assignee or participant which so delivers a valid Withholding
Certificate further undertakes to deliver to each of the Borrowing Agent and

 

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the 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 the
Borrowing Agent or the Agent. Notwithstanding the submission of a Withholding
Certificate claiming a reduced rate of or exemption from U.S. withholding tax,
the Agent shall be entitled to withhold United States federal income taxes at
the full thirty percent (30%) withholding rate if in its reasonable judgment it
is required to do so. Further, the Agent is indemnified under § 1.1461-1(e) of
the Regulations against any claims and demands of any Lender or assignee or
participant of a Lender for the amount of any tax it deducts and withholds in
accordance with regulations under § 1441 of the Code.

16.17 USA Patriot Act.

Each Lender, the Issuer or assignee or participant of a Lender or the Issuer
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 (i) an affiliate of a depository institution or foreign bank that
maintains a physical presence in the United states or foreign country, and
(ii) subject to supervision by a banking authority regulating such affiliated
depository institution or foreign bank) shall deliver to the Agent the
certification, or, if applicable, recertification, certifying that such Lender
or the Issuer is not a “shell” and certifying to other matters as required by
Section 313 of the USA Patriot Act and the applicable regulations: (1) within
ten (10) days after the Closing Date, and (2) as such other times as are
required under the USA Patriot Act.

16.18 Publicity.

Each Loan Party, each Lender and the Issuer hereby authorizes the Agent to make
appropriate announcements of the financial arrangement entered into among the
Loan Parties, the Agent, the Lenders and the Issuer, including, without
limitation, announcements which are commonly known as tombstones, in such
publications and to such selected parties as the Agent shall in its sole and
absolute discretion deem appropriate.

16.19 Current Indebtedness Amendment.

In the event that the Accountants determine that the Obligations should be
classified as current Indebtedness (EITF 95-22), the Required Lenders and the
Agent hereby agree to amend this Agreement on mutually agreeable terms to cause
the Obligations not to be classified as current Indebtedness as set forth above.

[INTENTIONALLY LEFT BLANK]

 

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Each of the parties has signed this Agreement as of the day and year first above
written.

 

BORROWERS:

Radnor Holdings Corporation

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

Executive Vice President

StyroChem U.S., Ltd.

By:

 

StyroChem GP, L.L.C.

Its:

 

General Partner

 

By:

 

Radnor Chemical Corporation

 

Its:

 

Sole Member

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

Executive Vice President

WinCup Holdings, Inc.

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

Executive Vice President

WinCup Texas, Ltd.

By:

 

WinCup GP, L.L.C

Its:

 

General Partner

 

By:

 

WinCup Holdings, Inc.

 

Its:

 

Sole Member

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

Executive Vice President

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

GUARANTORS: Radnor Chemical Corporation By:   /s/ R. Radcliffe Hastings  

R. Radcliffe Hastings

Executive Vice President

StyroChem Delaware, Inc. By:   /s/ R. Radcliffe Hastings  

R. Radcliffe Hastings

Executive Vice President

StyroChem GP, L.L.C. By:   Radnor Chemical Corporation Its:   Sole Member By:  
/s/ R. Radcliffe Hastings  

R. Radcliffe Hastings

Executive Vice President

StyroChem LP, L.L.C. By:   Radnor Chemical Corporation Its:   Sole Member By:  
/s/ R. Radcliffe Hastings  

R. Radcliffe Hastings

Executive Vice President

WinCup GP, L.L.C. By:   WinCup Holdings, Inc. Its:   Sole Member By:   /s/ R.
Radcliffe Hastings  

R. Radcliffe Hastings

Executive Vice President

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

WinCup LP, L.L.C.

By:

 

WinCup Holdings, Inc.

Its:

 

Sole Member

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

 

Executive Vice President

WinCup Europe Delaware, Inc.

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

 

Executive Vice President

StyroChem Europe Delaware, Inc.

By:

 

/s/ R. Radcliffe Hastings

 

R. Radcliffe Hastings

 

Executive Vice President

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AGENT, LENDERS AND ISSUER:

National City Business Credit, Inc., as Lender and as Agent

By:

 

/s/ Kenneth W. Frank

 

Kenneth W. Frank, Director

Commitment Percentage: 73.333333333%

Bank of America, N.A., as Lender and as Syndication Agent

By:

 

/s/ Richard Levenson

Name: Richard Levenson

Title: S.V.P.

Commitment Percentage: 26.666666667%

National City Bank, a national banking association, as Issuer

By:

 

/s/ Paul Hogan

 

Paul Hogan, Managing Director