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EXECUTION VERSION

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AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of November 14, 2004

among

BLACK WARRIOR WIRELINE CORP.,

as Borrower,

THE OTHER CREDIT PARTIES FROM TIME TO TIME SIGNATORY HERETO,

as Credit Parties,

THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Lender

GECC CAPITAL MARKETS GROUP, INC.

as Lead Arranger

 

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TABLE OF CONTENTS

 

    Page       1. AMOUNT AND TERMS OF CREDIT 1   1.1 Credit Facilities. 1   1.2
Intentionally Omitted 3   1.3 Prepayments 3   1.4 Use of Proceeds 4   1.5
Interest and Applicable Margins 5   1.6 Eligible Accounts 6   1.7 Intentionally
Omitted 8   1.8 Cash Management Systems 8   1.9 Fees 8   1.10 Receipt of
Payments 9   1.11 Application and Allocation of Payments 9   1.12 Loan Account
and Accounting 10   1.13 Indemnity 10   1.14 Access 11   1.15 Taxes 11   1.16
Capital Adequacy; Increased Costs; Illegality 12   1.17 Single Loan 13 2.
CONDITIONS PRECEDENT 13   2.1 Conditions to the Initial Loans 13   2.2 Further
Conditions to Each Loan 14 3. REPRESENTATIONS AND WARRANTIES 15   3.1 Corporate
Existence; Compliance with Law 16   3.2 Executive Offices, Collateral Locations,
FEIN, Organizational Number 16   3.3 Corporate Power, Authorization, Enforceable
Obligations 16   3.4 Financial Statements and Projections 16   3.5 Material
Adverse Effect 17   3.6 Ownership of Property; Liens 17   3.7 Labor Matters 17  
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness 18
  3.9 Government Regulation 18   3.10 Margin Regulations 18   3.11 Taxes 19  
3.12 ERISA 19   3.13 No Litigation 20   3.14 Brokers 20   3.15 Intellectual
Property 20   3.16 Full Disclosure 20   3.17 Environmental Matters 21   3.18
Insurance 21   3.19 Deposit and Disbursement Accounts 21   3.20 Government
Contracts 22   3.21 Customer and Trade Relations 22   3.22 Agreements and Other
Documents 22   3.23 Solvency 22

 

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  3.24 Subordinated Debt 22 4. FINANCIAL STATEMENTS AND INFORMATION 23   4.1
Reports and Notices 23   4.2 Communication with Accountants 23 5. AFFIRMATIVE
COVENANTS 23   5.1 Maintenance of Existence and Conduct of Business 23   5.2
Payment of Charges 24   5.3 Books and Records 24   5.4 Insurance; Damage to or
Destruction of Collateral 24   5.5 Compliance with Laws 26   5.6 Supplemental
Disclosure 26   5.7 Intellectual Property 26   5.8 Environmental Matters 26  
5.9 Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases 27   5.10 Mortgages 27   5.11 Further Assurances 27   5.12
Certificates of Title 27   5.13 Subordinated Noteholder Consents 27 6. NEGATIVE
COVENANTS 28   6.1 Mergers, Subsidiaries, Etc. 28   6.2 Investments; Loans and
Advances 28   6.3 Indebtedness 28   6.4 Employee Loans and Affiliate
Transactions 29   6.5 Capital Structure and Business 29   6.6 Guaranteed
Indebtedness 29   6.7 Liens 29   6.8 Sale of Stock and Assets 30   6.9 ERISA 30
  6.10 Financial Covenants 30   6.11 Hazardous Materials 30   6.12
Sale-Leasebacks 30   6.13 Cancellation of Indebtedness 31   6.14 Restricted
Payments 31   6.15 Change of Corporate Name or Location; Change of Fiscal Year
31   6.16 No Impairment of Intercompany Transfers 31   6.17 No Speculative
Transactions 31   6.18 Leases; Real Estate Purchases 31   6.19 Changes Relating
to Subordinated Debt; Material Contracts 31 7. TERM 32   7.1 Termination 32  
7.2 Survival of Obligations Upon Termination of Financing Arrangements 32 8.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES 32   8.1 Events of Default 32   8.2
Remedies 34   8.3 Waivers by Credit Parties 34

 

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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT 35   9.1 Assignment and
Participations 35   9.2 Appointment of Agent 37   9.3 Agent’s Reliance, Etc. 37
  9.4 GE Capital and Affiliates 38   9.5 Lender Credit Decision 38   9.6
Indemnification 38   9.7 Successor Agent 38   9.8 Setoff and Sharing of Payments
39   9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert 39 10. SUCCESSORS AND ASSIGNS 41   10.1 Successors and Assigns 41 11.
MISCELLANEOUS 42   11.1 Complete Agreement; Modification of Agreement 42   11.2
Amendments and Waivers 42   11.3 Fees and Expenses 44   11.4 No Waiver 45   11.5
Remedies 45   11.6 Severability 45   11.7 Conflict of Terms 45   11.8
Confidentiality 45   11.9 GOVERNING LAW 46   11.10 Notices 46   11.11 Section
Titles 47   11.12 Counterparts 47   11.13 WAIVER OF JURY TRIAL 47   11.14 Press
Releases and Related Matters 47   11.15 Reinstatement 47   11.16 Advice of
Counsel 47   11.17 No Strict Construction 48

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INDEX OF APPENDICES

Annex A (Recitals) —   Definitions   Annex B (Section 1.8) —   Cash Management
System   Annex C (Section 2.1(a)) —   Closing Checklist   Annex D (Section
4.1(a)) —   Financial Statements and Projections – Reporting   Annex E(Section
4.1(b)) —   Collateral Reports   Annex F (Section 6.10) —   Financial Covenants
  Annex G (Section 9.9(a)) —   Lenders’ Wire Transfer Information   Annex H
(Section 11.10) —   Notice Addresses   Annex I (from Annex A -        
Commitments definition)     Commitments as of Closing Date   Annex J —  
Non-Consenting Subordinated Note Holders             Exhibit 1.1(a)(i) —   Form
of Notice of Revolving Credit Advance   Exhibit 1.1(a)(ii) —   Form of Revolving
Note   Exhibit 1.1(b)(i) —   Form of Term Note   Exhibit 1.5(e) —   Form of
Notice of Conversion/Continuation   Exhibit 4.1(b) —   Form of Borrowing Base
Certificate   Exhibit 9.1(a) —   Form of Assignment Agreement            
Schedule 1.1 —   Agent’s Representatives             Disclosure Schedule 1.4 —  
Sources and Uses; Funds Flow Memorandum   Disclosure Schedule 3.1 —   Type of
Entity; State of Organization   Disclosure Schedule 3.2 —   Executive Offices,
Collateral Locations, FEIN   Disclosure Schedule 3.4(A) —   Financial Statements
  Disclosure Schedule 3.4(B) —   Pro Forma   Disclosure Schedule 3.4(C) —  
Projections   Disclosure Schedule 3.6 —   Real Estate and Leases   Disclosure
Schedule 3.7 —   Labor Matters   Disclosure Schedule 3.8 —   Ventures,
Subsidiaries and Affiliates; Outstanding Stock   Disclosure Schedule 3.11 —  
Tax Matters   Disclosure Schedule 3.12 —   ERISA Plans   Disclosure Schedule
3.13 —   Litigation   Disclosure Schedule 3.15 —   Intellectual Property  
Disclosure Schedule 3.17 —   Hazardous Materials   Disclosure Schedule 3.18 —  
Insurance   Disclosure Schedule 3.19 —   Deposit and Disbursement Accounts  
Disclosure Schedule 3.20 —   Government Contracts   Disclosure Schedule 3.21 —  
Customer and Trade Relations   Disclosure Schedule 3.22 —   Material Agreements
  Disclosure Schedule 3.24 —   Subordinated Notes and Subordinated Note Holders
  Disclosure Schedule 5.1 —   Trade Names   Disclosure Schedule 6.3 —  
Indebtedness   Disclosure Schedule 6.4(a) —   Transactions with Affiliates  
Disclosure Schedule 6.7 —   Existing Liens  

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This AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of
November 14, 2004, among BLACK WARRIOR WIRELINE CORP., a Delaware corporation
(the “Borrower”); the other Credit Parties from time to time signatory hereto;
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual
capacity, “GE Capital”), for itself, as Lender, and as Agent for Lenders, and
the other Lenders signatory hereto from time to time.

RECITALS

WHEREAS, Borrower, Credit Parties, the Lenders and Agent are parties to that
certain Credit Agreement dated as of September 14, 2001, as amended by that
certain First Amendment to Credit Agreement, dated as of January 26, 2002, as
amended by that certain Second Amendment to Credit Agreement, dated as of June
10, 2002, as amended by that certain Third Amendment to Credit Agreement, dated
as of October 31, 2002, as amended by that certain Fourth Amendment to Credit
Agreement, dated as of February 14, 2003, as amended by that certain Fifth
Amendment to Credit Agreement, dated as of April 30, 2003, as amended by that
certain Sixth Amendment to Credit Agreement, dated as of January 15, 2004, as
amended by that certain Seventh Amendment to Credit Agreement, dated as of March
31, 2004 and as amended by that certain Eighth Amendment to Credit Agreement,
dated as of June 16, 2004 (as so amended, the “Original Credit Agreement”); and

WHEREAS, Borrower has requested that Lenders amend and restate the Original
Credit Agreement to decrease the revolving credit facility to $10,000,000, to
modify the term loan facility to contemplate that $4,262,185.82 of the current
outstanding amount of the original cap ex loan remain outstanding as a Term Loan
hereunder, with one subsequent draw of up to $3,737,814.18 to occur on the
Closing Date, as well as to modify the Original Credit Agreement in certain
other respects, and subject to the terms and conditions hereof, the Lenders and
Agent are willing to do so;

WHEREAS, Borrower has agreed to continue to secure all of its obligations under
the Loan Documents with a security interest and lien in favor of Agent, for the
benefit of Agent and Lenders, upon all of its existing and after-acquired
personal and real property; and

WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A and, for purposes of this Agreement and the other
Loan Documents, the rules of construction set forth in Annex A shall govern. All
Annexes, Disclosure Schedules, Exhibits and other attachments (collectively,
“Appendices”) hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree that the Original Credit Agreement is amended and restated
as follows:

1.      AMOUNT AND TERMS OF CREDIT

1.1     Credit Facilities.

(a)     Revolving Credit Facility.

 

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(i)     Subject to the terms and conditions hereof, each Revolving Lender agrees
to make available to Borrower from time to time until the Commitment Termination
Date its Pro Rata Share of advances (each, a “Revolving Credit Advance”). The
Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any
time exceed its separate Revolving Loan Commitment. The obligations of each
Revolving Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may borrow, repay and reborrow under this
Section 1.1(a); provided that the amount of any Revolving Credit Advance to be
made at any time shall not exceed Borrowing Availability at such time. Borrowing
Availability may be reduced by Reserves imposed by Agent in its reasonable
credit judgment. Each Revolving Credit Advance shall be made on notice by
Borrower to one of the representatives of Agent identified in Schedule 1.1 at
the address specified therein. Any such notice must be given no later than (1)
11:00 a.m. (New York time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on
the date which is 3 Business Days prior to the proposed Revolving Credit
Advance, in the case of a LIBOR Loan. Each such notice (a “Notice of Revolving
Credit Advance”) must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent. If Borrower desires to have the Revolving Credit Advances
bear interest by reference to a LIBOR Rate, Borrower must comply with Section
1.5(e).

(ii) Except as provided in Section 1.12, Borrower shall execute and deliver to
each Revolving Lender a note to evidence the Revolving Loan Commitment of that
Revolving Lender. Each note shall be in the principal amount of the Revolving
Loan Commitment of the applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a “Revolving Note” and,
collectively, the “Revolving Notes”). Each Revolving Note shall represent the
obligation of Borrower to pay the amount of the applicable Revolving Lender’s
Revolving Loan Commitment or, if less, such Revolving Lender’s Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Credit Advances to
Borrower together with interest thereon as prescribed in Section 1.5. The entire
unpaid balance of the aggregate Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.

(b)     Term Loan.

(i)     Subject to the terms and conditions hereof, each Term Lender agrees to
make a term loan (collectively, the “Term Loan”) on the Closing Date to Borrower
in the amount of the applicable Term Lender’s Term Loan Commitment. The
obligations of each Term Lender hereunder shall be several and not joint. Each
such Term Loan shall be evidenced by a promissory note substantially in the form
of Exhibit 1.1(b)(i) (each a “Term Note” and collectively the “Term Notes”),
and, except as provided in Section 1.12, Borrower shall execute and deliver a
Term Note to the applicable Term Lender. Each Term Note shall represent the
obligation of Borrower to pay the applicable Term Lender’s Term Loan Commitment,
together with interest thereon as prescribed in Section 1.5. Subject to the
terms and conditions hereof, $4,262,185.82 of the “Cap Ex Loans” extended under
the Original Credit Agreement shall continue outstanding hereunder as a portion
of the Term Loan, allocated pro rata to the Term Lenders based upon their Term
Loan Commitment.

         
(ii)     Borrower shall repay the Term Loan in thirty-five (35) consecutive
monthly installments, each in the amount of $133,333 on the first day of each
month, commencing on December 1, 2004 and continuing thereafter. The final
thirty-sixth installment shall be due and payable on November 14, 2007, and
shall be in the amount of $3,333,345 or, if different, the remaining principal
balance of the Term Loan.

         
(iii)     Notwithstanding Section 1.1(b)(ii), the aggregate outstanding
principal balance of the Term Loan shall be due and payable in full in
immediately available funds on the Commitment Termination Date, if not sooner
paid in full. No payment with respect to the Term Loan may be reborrowed.

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(iv)     Each payment of principal with respect to the Term Loan shall be paid
to Agent for the ratable benefit of each Term Lender making a Term Loan, ratably
in proportion to each such Term Lender’s respective Term Loan Commitment.

(c)     Intentionally Omitted.

(d)     Intentionally Omitted.

(e)     Reliance on Notices. Agent shall be entitled to rely upon, and shall be
fully protected in relying upon, any Notice of Revolving Credit Advance, Notice
of Conversion/Continuation or similar notice believed by Agent to be genuine.
Agent may assume that each Person executing and delivering any notice in
accordance herewith was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary.

1.2     Intentionally Omitted.

1.3     Prepayments.

(a)     Voluntary Prepayments; Termination of Commitments. Borrower may at any
time on at least 5 days’ prior written notice to Agent voluntarily prepay all or
part of the Term Loan; provided that any such prepayments shall be in a minimum
amount of $500,000 and integral multiples of $250,000 in excess of such amount.
In addition, Borrower may at any time on at least 10 days’ prior written notice
to Agent terminate the Revolving Loan Commitment; provided that upon such
termination, all Loans and other Obligations shall be immediately due and
payable in full. Any voluntary prepayment of the Term Loan and any termination
of the Revolving Loan Commitment must be accompanied by payment of the Fee
required by the GE Capital Fee Letter plus the payment of any LIBOR funding
breakage costs in accordance with Section 1.13(b). Upon any such termination of
the Revolving Loan Commitment, Borrower’s right to request Revolving Credit
Advances shall simultaneously be permanently terminated. Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of the Term
Loan made by or on behalf of Borrower shall be applied to prepay the scheduled
installments of Borrower’s Term Loan in inverse order of maturity.

(b)     Mandatory Prepayments.

 
(i)     If at any time the aggregate outstanding balances of the Revolving Loan
exceed the lesser of (A) the Maximum Revolver Amount and (B) the Borrowing Base,
Borrower shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess.

     
(ii)     If at any time the aggregate outstanding Term Loan exceeds 70% of the
Forced Liquidation Value of Eligible Term Equipment, Borrower shall immediately
repay the aggregate outstanding Term Loan to the extent required to eliminate
such excess.

     
(iii)     Immediately upon receipt by any Credit Party of proceeds of any asset
disposition (excluding proceeds of asset dispositions permitted by Section
6.8(a)) or any sale of Stock of any Subsidiary of any Credit Party, Borrower
shall prepay the Loans in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Credit
Party in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the extent
such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).

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(iv)     If Borrower issues Stock or any debt securities, no later than the
Business Day following the date of receipt of the proceeds thereof, Borrower
shall prepay the Loans in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. Any such prepayment shall be applied in
accordance with Section 1.3(c).
   

(c) Application of Certain Mandatory Prepayments. Any prepayments made by
Borrower pursuant to Sections 1.3(b)(iii) or (b)(iv) above shall be applied as
follows: first, to Fees and reimbursable expenses of Agent then due and payable
pursuant to any of the Loan Documents; second, to interest then due and payable
on the Term Loan; third, to prepay the scheduled principal installments of the
Term Loan, in inverse order of maturity as to installments of principal, until
such Term Loan has been prepaid in full; fourth, to interest then due and
payable on Revolving Credit Advances; and fifth, to the principal balance of
Revolving Credit Advances until the same has been paid in full. The Revolving
Loan Commitment shall not be permanently reduced by the amount of any such
prepayments.

(d) Application of Prepayments from Insurance and Condemnation Proceeds.
Prepayments from insurance or condemnation proceeds in accordance with Section
5.4(c) shall be applied as follows: insurance proceeds from casualties or losses
to cash or Inventory shall be applied, first, to Revolving Credit Advances;
insurance or condemnation proceeds from casualties or losses to Equipment,
Fixtures and Real Estate shall be applied to scheduled installments of the Term
Loan in inverse order of maturity. The Revolving Loan Commitment shall not be
permanently reduced by the amount of any such prepayments.

(e)     No Implied Consent. Nothing in this Section 1.3 shall be construed to
constitute Agent’s or any Lender’s consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.

1.4     Use of Proceeds. Borrower shall utilize the proceeds of the Term Loan
solely to continue outstanding $4,262,185.82 of the “Cap Ex Loans” made under
the Original Credit Agreement and for the financing of Borrower’s ordinary
working capital, capital expenditure and general corporate needs. Borrower shall
utilize the proceeds of the Revolving Loan, solely for the financing of
Borrower’s ordinary working capital, capital expenditure and general corporate
needs. Disclosure Schedule (1.4) contains a description of Borrower’s sources
and uses of funds as of the Closing Date, including Loans to be made on that
date, and a funds flow memorandum detailing how funds from each source are to be
transferred to particular uses. Notwithstanding the foregoing, Borrower may use
up to $1,774,182.41 of the proceeds of the Loans on the Closing Date to repay
Subordinated Debt if the holders of such Subordinated Debt are not willing to
consent to an extension of the maturity date of their Subordinated Notes in
accordance with the terms hereof, so long as (i) GE Capital receives a
refinancing fee equal to 125 bps on the amount of any such notes so repaid and
(ii) such proceeds are sent by Agent by wire transfer on the Closing Date (A)
directly to the holders of such Subordinated Debt on the Closing Date or (B) to
an escrow account at Rosen, Cook, Sledge, Davis, Cade & Shattuck, P.A., counsel
for the Credit Parties, pursuant to an escrow agreement acceptable to Agent for
subsequent disbursement to such holders; provided that if any such Subordinated
Debt is not repaid on or prior to December 5, 2004, the Credit Parties shall
cause such counsel to return all such unused funds to Borrower no later than
5:00 p.m. New York time on such date and such funds shall be applied by Borrower
on such date to the principal repayment of the Revolving Loan to the extent
thereof. In no event may any such unused funds be applied by Borrower to the
principal installments of the Term Loan.

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1.5     Interest and Applicable Margins.

(a)     Borrower shall pay interest to Agent, for the ratable benefit of
Lenders, in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: (i)
with respect to the Revolving Credit Advances, the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based
on the aggregate Revolving Credit Advances outstanding from time to time and
(ii) with respect to the Term Loan, the Index Rate plus the Applicable Term Loan
Index Margin per annum or, at the election of Borrower, the applicable LIBOR
Rate plus the Applicable Term Loan LIBOR Margin per annum.

The Applicable Margins are as follows:

  Applicable Revolver Index Margin 1.75 %   Applicable Revolver LIBOR Margin
3.25 %   Applicable Term Loan Index Margin 2.50 %   Applicable Term Loan LIBOR
Margin 4.00 %        

(b)     If any payment on any Loan becomes due and payable on a day other than a
Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.

(c)     All computations of Fees calculated on a per annum basis and interest
shall be made by Agent on the basis of a 360-day year, in each case for the
actual number of days occurring in the period for which such interest and Fees
are payable. The Index Rate is a floating rate determined for each day. Each
determination by Agent of an interest rate and Fees hereunder shall be final,
binding and conclusive on Borrower, absent manifest error.

(d)     So long as an Event of Default has occurred and is continuing under
Section 8.1(a), (h) or (i), or so long as any other Default or Event of Default
has occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans shall be increased by two
percentage points (2%) per annum above the rates of interest or the rate of such
Fees otherwise applicable hereunder (“Default Rate”), and all outstanding
Obligations shall bear interest at the Default Rate applicable to such
Obligations. Interest at the Default Rate shall accrue from the initial date of
such Default or Event of Default until that Default or Event of Default is cured
or waived and shall be payable upon demand.

(e)     Subject to the conditions precedent set forth in Section 2.2, Borrower
shall have the option to (i) request that any Revolving Credit Advance be made
as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans
from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index
Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the LIBOR Period
applicable thereto, or (iv) continue all or any portion of any Loan as a LIBOR
Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral
multiples of $500,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (New York time) on the 3rd Business Day prior to (1) the date of
any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of
each LIBOR Period with respect to any LIBOR Loans to be continued as such, or
(3) the date on which Borrower wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower in such election. If no election
is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the
3rd Business Day prior to the end of the LIBOR Period with respect thereto (or
if a Default or an Event of Default has occurred and is continuing or if the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower must make such election by notice to Agent in
writing, by telecopy or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice
of Conversion/Continuation”) in the form of Exhibit 1.5(e).

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(f)     Notwithstanding anything to the contrary set forth in this Section 1.5,
if a court of competent jurisdiction determines in a final order that the rate
of interest payable hereunder exceeds the highest rate of interest permissible
under law (the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; provided, however, that if at any time thereafter the
rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
is equal to the total interest that would have been received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.

(g)     Notwithstanding anything to the contrary set forth in this Section 1.5
or elsewhere in this Agreement, Borrower shall not be permitted to borrow,
reborrow, continue or convert any Loans as or into LIBOR Loans without the prior
written consent of the Agent.

1.6     Eligible Accounts. All of the Accounts owned by Borrower and reflected
in the most recent Borrowing Base Certificate delivered by Borrower to Agent
shall be “Eligible Accounts” for purposes of this Agreement, except any Account
to which any of the exclusionary criteria set forth below applies. Agent shall
have the right to establish, modify or eliminate Reserves against Eligible
Accounts from time to time in its reasonable credit judgment. In addition, Agent
reserves the right, at any time and from time to time after the Closing Date, to
adjust any of the criteria set forth below, to establish new criteria and to
adjust advance rates with respect to Eligible Accounts, in its reasonable credit
judgment, subject to the approval of Supermajority Revolving Lenders in the case
of changes in advance rates which have the effect of making more credit
available. Eligible Accounts shall not include any Account of Borrower:

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(a)     that does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business;

(b)     (i)     upon which Borrower’s right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor’s
obligation to pay that invoice is subject to Borrower’s completion of further
performance under such contract or is subject to the equitable lien of a surety
bond issuer;

(c)     in the event that any defense, counterclaim, setoff or dispute is
asserted as to such Account;

(d)     that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;

(e)     with respect to which an invoice, reasonably acceptable to Agent in form
and substance, has not been sent to the applicable Account Debtor;

(f)     that (i) is not owned by Borrower or (ii) is subject to any right,
claim, security interest or other interest of any other Person, other than Liens
in favor of Agent, on behalf of itself and Lenders;

(g)     that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party;

(h)     that is the obligation of an Account Debtor that is the United States
government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower, if
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting assignment thereof;

(i)     that is the obligation of an Account Debtor located in a foreign country
other than Canada (excluding the province of Newfoundland, the Northwest
Territories and the Territory of Nunavit) unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, reasonably satisfactory to
Agent as to form, amount and issuer;

(j)     to the extent Borrower or any Subsidiary thereof is liable for goods
sold or services rendered by the applicable Account Debtor to Borrower or any
Subsidiary thereof but only to the extent of the potential offset;

(k)     that arises with respect to goods that are delivered on a bill-and-hold,
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;

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(l)     that is in default; provided, that, without limiting the generality of
the foregoing, an Account shall be deemed in default upon the occurrence of any
of the following:

         
(i)     the Account is not paid within the earlier of: 60 days following its due
date or 90 days following its original invoice date; provided that any Account
with respect to Chevron USA, Exxon USA, Unocal Gulf Region USA, Masters
Resources LLC and Encore Operating shall be in default if not paid within the
earlier of 120 days following its due date or 120 days following its original
invoice date;

         

   
(ii)     the Account Debtor obligated upon such Account suspends business, makes
a general assignment for the benefit of creditors or fails to pay its debts
generally as they come due; or

         

         
(iii)     a petition is filed by or against any Account Debtor obligated upon
such Account under any bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief or other law or laws
for the relief of debtors;

         

(m)     that is the obligation of an Account Debtor if 50% or more of the Dollar
amount of all Accounts owing by that Account Debtor are ineligible under the
other criteria set forth in this Section 1.6;

(n)     as to which Agent’s Lien thereon, on behalf of itself and Lenders, is
not a first priority perfected Lien;

(o)     as to which any of the representations or warranties in the Loan
Documents are untrue;

(p)     to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper;

(q)     to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment;

(r)     to the extent that such Account, together with all other Accounts owing
by such Account Debtor and its Affiliates as of any date of determination exceed
10% of all Eligible Accounts, except for such Account Debtor(s) approved in
advance by Agent, for which the limit shall be 15%;

(s)     that is payable in any currency other than Dollars; or

(t)     that is otherwise unacceptable to Agent in its reasonable credit
judgment.

1.7     Intentionally Omitted.

1.8     Cash Management Systems. On or prior to the Closing Date, Borrower will
establish and will maintain until the Termination Date, the cash management
systems described in Annex B (the “Cash Management Systems”).

1.9     Fees.

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(a)     Borrower shall pay to GE Capital, individually, the Fees specified in
the GE Capital Fee Letter, at the times specified for payment therein.

(b)     As additional compensation for the Revolving Lenders, Borrower shall pay
to Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a Fee for Borrower’s non-use of available funds in
an amount equal to one half of one percent (0.50%) per annum (calculated on the
basis of a 360 day year for actual days elapsed) multiplied by the difference
between (x) the Maximum Revolver Amount (as it may be reduced from time to time)
and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan outstanding during the period for which such Fee is
due.

(c)     Intentionally Omitted.

1.10     Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees, all payments shall be deemed received on the
Business Day immediately following the Business Day on which immediately
available funds therefor are received in the Collection Account prior to 2:00
p.m. New York time. Payments received after 2:00 p.m. New York time on any
Business Day or on a day that is not a Business Day shall be deemed to have been
received on the following Business Day.

1.11     Application and Allocation of Payments.

(a)     So long as no Default or Event of Default has occurred and is
continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall be applied, to the Revolving Loan; (ii)
payments matching specific scheduled payments then due shall be applied to those
scheduled payments; (iii) voluntary prepayments shall be applied as determined
by Borrower, subject to the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d). All
payments and prepayments applied to a particular Loan shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share.
As to any other payment, and as to all payments made when a Default or Event of
Default has occurred and is continuing or following the Commitment Termination
Date, Borrower hereby irrevocably waives the right to direct the application of
any and all payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
any and all such payments against the Obligations of Borrower as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or any
other books and records. In the absence of a specific determination by Agent
with respect thereto, payments shall be applied in the following order: (1) to
Fees and Agent’s expenses reimbursable hereunder; (2) to interest on the other
Loans, ratably in proportion to the interest accrued as to each Loan; (3) to
principal payments on the other Loans, ratably to the aggregate, combined
principal balance of the other Loans; and (4) to all other Obligations,
including expenses of Lenders to the extent reimbursable under Section 11.3.

(b)     Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if the amount of such charges would exceed Borrowing
Availability at such time. At Agent’s option and to the extent permitted by law,
any charges so made shall constitute part of the Revolving Loan hereunder.

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1.12     Loan Account and Accounting. Agent shall maintain a loan account (the
“Loan Account”) on its books to record: all Advances and the Term Loan, all
payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent’s customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent’s most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by Borrower; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect Borrower’s duty to pay
the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account. Unless Borrower notifies Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within 30
days after the date thereof, each and every such accounting shall (absent
manifest error) be deemed final, binding and conclusive on Borrower in all
respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.

1.13     Indemnity.

(a)     Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and hold harmless each of Agent, Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees,
attorneys, agents and representatives (each, an “Indemnified Person”), from and
against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted by any third party, any Credit Party
or any Subsidiary of any Credit Party against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and the
administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, “Indemnified Liabilities”); provided, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person’s gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction). NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN
DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR
ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

(b)     To induce Lenders to provide the LIBOR Rate option on the terms provided
herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last
day of any applicable LIBOR Period (whether that repayment is made pursuant to
any provision of this Agreement or any other Loan Document or occurs as a result
of acceleration, by operation of law or otherwise); (ii) Borrower shall default
in payment when due of the principal amount of or interest on any LIBOR Loan;
(iii) Borrower shall refuse to accept any borrowing of, or shall request a
termination of, any borrowing of, conversion into or continuation of, LIBOR
Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within 10 Business Days of receipt thereof, specifying the basis for such
objection in detail.

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1.14     Access. Each Credit Party that is a party hereto shall, during normal
business hours, from time to time upon one Business Day’s prior notice as
frequently as Agent determines to be appropriate: (a) provide Agent and any of
its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party’s books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party. If a Default or Event of Default has
occurred and is continuing or if access is necessary to preserve or protect the
Collateral as determined by Agent, each such Credit Party shall provide such
access to Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default has occurred and is continuing,
Borrower shall provide Agent and each Lender with access to their suppliers and
customers. Each Credit Party shall make available to Agent and its counsel, as
quickly as is possible under the circumstances, originals or copies of all books
and records that Agent may reasonably request. Each Credit Party shall deliver
any document or instrument necessary for Agent, as it may from time to time
reasonably request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by such Credit Party. Agent will give Lenders at least 5 days’ prior
written notice of regularly scheduled audits. Representatives of other Lenders
may accompany Agent’s representatives on regularly scheduled audits at no charge
to Borrower.

1.15     Taxes.

(a)     Any and all payments by Borrower hereunder (including any payments made
pursuant to Section 1.13) or under the Notes shall be made, in accordance with
this Section 1.15, free and clear of and without deduction for any and all
present or future Taxes. If Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder (including any sum payable
pursuant to Section 1.13) or under the Notes, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.15) Agent or Lenders, as applicable, receive an amount equal to
the sum they would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law. Within 30 days after the date of any payment of Taxes, Borrower shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Agent and Lenders shall not be obligated to return or refund
any amounts received pursuant to this Section.

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(b)     Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and, within 10 days of demand therefor, pay Agent and each Lender for
the full amount of Taxes (including any Taxes imposed by any jurisdiction on
amounts payable under this Section 1.15) paid by Agent or such Lender, as
appropriate, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.

(c)     Each Lender organized under the laws of a jurisdiction outside the
United States (a “Foreign Lender”) as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender’s entitlement to such exemption (a
“Certificate of Exemption”). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender.

1.16     Capital Adequacy; Increased Costs; Illegality.

(a)     If any Lender shall have determined that any law, treaty, governmental
(or quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender’s capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Agent) pay to Agent,
for the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.

(b)     If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall
from time to time, upon demand by such Lender (with a copy of such demand to
Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be conclusive and binding on Borrower for all purposes, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, the affected Lender shall, to the extent not inconsistent
with such Lender’s internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.16(b).

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(c)     Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender’s
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon, unless Borrower, within 5 Business Days
after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans.

(d)     Within 15 days after receipt by Borrower of written notice and demand
from any Lender (an “Affected Lender”) for payment of additional amounts or
increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), Borrower
may, at its option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Default or Event of Default has
occurred and is continuing, Borrower, with the consent of Agent, may obtain, at
Borrower’s expense, a replacement Lender (“Replacement Lender”) for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
Borrower obtains a Replacement Lender within 90 days following notice of their
intention to do so, the Affected Lender must sell and assign its Loans and
Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and
Fees with respect thereto through the date of such sale; provided, that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment. Notwithstanding the foregoing, Borrower shall
not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts within 15 days
following its receipt of Borrower’s notice of intention to replace such Affected
Lender. Furthermore, if Borrower gives a notice of intention to replace and does
not so replace such Affected Lender within 90 days thereafter, Borrower’s rights
under this Section 1.16(d) shall terminate and Borrower shall promptly pay all
increased costs or additional amounts demanded by such Affected Lender pursuant
to Sections 1.15(a), 1.16(a) and 1.16(b).

1.17     Single Loan. All Loans to Borrower and all of the other Obligations of
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until the Termination
Date, by all of the Collateral.

CONDITIONS PRECEDENT

2.1     Conditions to the Initial Loans. No Lender shall be obligated to make
any Loan on the Closing Date, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been satisfied or provided for in
a manner satisfactory to Agent, or waived in writing by Agent and Lenders:

(a)     Credit Agreement; Loan Documents. This Agreement or counterparts hereof
shall have been duly executed by, and delivered to, Borrower, Agent and Lenders;
and Agent shall have received such documents, instruments, agreements and legal
opinions as Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents, including all those
listed in the Closing Checklist attached hereto as Annex C, each in form and
substance reasonably satisfactory to Agent.

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(b)     Intentionally Omitted.

(c)     Approvals. Agent shall have received (i) satisfactory evidence that the
Credit Parties have obtained all required consents and approvals of all Persons
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation
of the Related Transactions or (ii) an officer’s certificate in form and
substance reasonably satisfactory to Agent affirming that no such consents or
approvals are required.

(d)     Opening Availability. The Eligible Accounts supporting the initial
Revolving Credit Advance and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Agent, to provide
Borrower with Borrowing Availability, after giving effect to the initial
Revolving Credit Advance made to Borrower and the consummation of the Related
Transactions (on a pro forma basis, with trade payables being paid consistently
with Borrower’s historical practice, and expenses and liabilities being paid in
the ordinary course of business and without acceleration of sales) of at least
$6,000,000.

(e)     Payment of Fees. Borrower shall have paid the Fees required to be paid
on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.

(f)     Capital Structure: Other Indebtedness. The capital structure of each
Credit Party and the terms and conditions of all Indebtedness of each Credit
Party shall be acceptable to Agent in its sole discretion, including without
limitation, that the maturity of the Subordinated Notes shall be extended to no
earlier than 90 days after the Commitment Termination Date, with no payments of
interest or principal prior to such extended maturity date.

(g)     Due Diligence. Agent shall have completed its legal due diligence, with
results reasonably satisfactory to Agent.

2.2     Further Conditions to Each Advance. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan, if, as of the date thereof:

(a)     any representation or warranty by any Credit Party contained herein or
in any other Loan Document is untrue or incorrect as of such date, except to the
extent that such representation or warranty expressly relates to an earlier date
and except for changes therein expressly permitted or expressly contemplated by
this Agreement and Agent or Requisite Revolving Lenders, as the case may be,
have determined not to make such Advance, convert or continue any Loan as LIBOR
Loan as a result of the fact that such warranty or representation is untrue or
incorrect;

(b)     any event or circumstance having a Material Adverse Effect has occurred
since the date hereof as determined by the Requisite Revolving Lenders and Agent
or Requisite Revolving Lenders have determined not to make such Advance, convert
or continue any Loan as a LIBOR Loan as a result of the fact that such event or
circumstance has occurred;

(c)     any Default or Event of Default has occurred and is continuing or would
result after giving effect to any Advance, and Agent or Requisite Revolving
Lenders shall have determined not to make any Advance, convert or continue any
Loan as a LIBOR Loan as a result of that Default or Event of Default; or

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(d)     after giving effect to any Revolving Advance, the outstanding principal
amount of the aggregate Revolving Loan would exceed the lesser of the Borrowing
Base and the Maximum Revolver Amount.

The request and acceptance by Borrower of the proceeds of any Advance or the
conversion or continuation of any Loan into, or as, a LIBOR Loan shall be deemed
to constitute, as of the date thereof, (i) a representation and warranty by
Borrower that the conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of Agent’s Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.

2.3     Effect of Amendment and Restatement. Upon this Agreement becoming
effective pursuant to Section 2.1, from and after the Closing Date: (a) the
Revolving Credit Commitments shall be decreased in accordance with the terms
hereof, and the “Cap Ex Loans” outstanding under the Original Credit Agreement
shall be deemed to be a portion of the Term Loan and continue outstanding
hereunder; (b) all terms and conditions of the Original Credit Agreement and any
other “Loan Document” as defined therein, as amended by this Agreement and the
other Loan Documents being executed and delivered on the Closing Date, shall be
and remain in full force and effect, as so amended, and shall constitute the
legal, valid, binding and enforceable obligations of the Credit Parties party
thereto to Lenders and Agent; (c) the terms and conditions of the Original
Credit Agreement shall be amended as set forth herein and, as so amended, shall
be restated in their entirety, but only with respect to the rights, duties and
obligations among Borrower, Lenders and Agent accruing from and after the
Closing Date; (d) this Agreement shall not in any way release or impair the
rights, duties, Obligations or Liens created pursuant to the Original Credit
Agreement or any other Loan Document or affect the relative priorities thereof,
in each case to the extent in force and effect thereunder as of the Closing
Date, except as modified hereby or by documents, instruments and agreements
executed and delivered in connection herewith, and all of such rights, duties,
Obligations and Liens are assumed, ratified and affirmed by the Borrower; (e)
all indemnification obligations of the Credit Parties under the Original Credit
Agreement and any other Loan Documents shall survive the execution and delivery
of this Agreement and shall continue in full force and effect for the benefit of
Lenders, Agent, and any other Person indemnified under the Original Credit
Agreement or any other Loan Document at any time prior to the Closing Date; (e)
the Obligations incurred under the Original Credit Agreement shall, to the
extent outstanding on the Closing Date, continue outstanding under this
Agreement and shall not be deemed to be paid, released, discharged or otherwise
satisfied by the execution of this Agreement, and this Agreement shall not
constitute a refinancing, substitution or novation of such Obligations or any of
the other rights, duties and obligations of the parties hereunder; (f) the
execution, delivery and effectiveness of this Agreement shall not operate as a
waiver of any right, power or remedy of Lenders or Agent under the Original
Credit Agreement, nor constitute a waiver of any covenant, agreement or
obligation under the Original Credit Agreement, except to the extent that any
such covenant, agreement or obligation is no longer set forth herein or is
modified hereby; (g) any and all references in the Loan Documents to the
Original Credit Agreement shall, without further action of the parties, be
deemed a reference to the Original Credit Agreement, as amended and restated by
this Agreement, and as this Agreement shall be further amended or amended and
restated from time to time hereafter and (h) any and all references in any Loan
Document which is not being amended and restated on the date hereof to the
“Closing Date” shall, without further action of the parties, be deemed a
reference to the Original Closing Date.

3.     REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Loans, the Credit Parties executing this
Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each and
all of which shall survive the execution and delivery of this Agreement.

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3.1     Corporate Existence; Compliance with Law. Each Credit Party (a) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $50,000; (c) has the requisite power and authority and the legal right
to own, pledge, mortgage or otherwise encumber and operate its properties, to
lease the property it operates under lease and to conduct its business as now,
heretofore and proposed to be conducted; (d) subject to specific representations
regarding Environmental Laws, has all material licenses, permits, consents or
approvals from or by, and has made all material filings with, and has given all
material notices to, all Governmental Authorities having jurisdiction, to the
extent required for such ownership, operation and conduct; (e) is in compliance
with its charter and bylaws or partnership or operating agreement, as
applicable; and (f) subject to specific representations set forth herein
regarding ERISA, Environmental Laws, tax and other laws, is in compliance with
all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

3.2     Executive Offices, Collateral Locations, FEIN, Organizational Number. As
of the Closing Date, the current location of each Credit Party’s chief executive
office and the warehouses and premises at which any Collateral is located are
set forth in Disclosure Schedule (3.2), and, except as set forth in Disclosure
Schedule (3.2) none of such locations has changed within the 12 months preceding
the Closing Date. In addition, Disclosure Schedule (3.2) lists the federal
employer identification number and organizational number of each Credit Party.

3.3     Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party and the creation of all Liens provided for therein: (a) are within
such Person’s power; (b) have been duly authorized by all necessary corporate,
limited liability company or limited partnership action; (c) do not contravene
any provision of such Person’s charter, bylaws or partnership or operating
agreement as applicable; (d) do not violate any law or regulation, or any order
or decree of any court or Governmental Authority; (e) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f)
do not result in the creation or imposition of any Lien upon any of the property
of such Person other than those in favor of Agent, on behalf of itself and
Lenders, pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date. Each of the Loan Documents shall be
duly executed and delivered by each Credit Party that is a party thereto and
each such Loan Document shall constitute a legal, valid and binding obligation
of such Credit Party enforceable against it in accordance with its terms.

3.4     Financial Statements and Projections. Except for the Projections all
Financial Statements concerning Borrower that are referred to below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes, a statement of owners’
equity and normal year-end audit adjustments) and present fairly in all material
respects the financial position of the Persons covered thereby as at the dates
thereof and the results of their operations and cash flows for the periods then
ended.

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(a)     Financial Statements. The following Financial Statements attached hereto
as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:

(i)     The audited balance sheets at December 31, 2002 and 2003 and the related
statements of income and cash flows of Borrower for the Fiscal Years then ended,
certified by the Chief Financial Officer of Borrower.

(ii)     The unaudited balance sheet(s) at September 30, 2004 and the related
statement(s) of income and cash flows of Borrower for the two Fiscal Quarters
then ended.

(b)     Pro Forma. The Pro Forma delivered on the date hereof and attached
hereto as Disclosure Schedule (3.4(b)) was prepared by Borrower giving pro forma
effect to the Related Transactions, was based on the unaudited balance sheets of
Borrower dated June 30, 2004, and was prepared in accordance with GAAP, with
only such adjustments thereto as would be required in accordance with GAAP.

(c)     Projections. The Projections delivered on the date hereof and attached
hereto as Disclosure Schedule (3.4(c)) have been prepared by Borrower in light
of the past operations of its businesses and reflect projections for the three
year period beginning on January 1, 2005 on a month-by-month basis for Fiscal
Year 2005, and on an annual basis for Fiscal Years 2006 and 2007. The
Projections are based upon estimates and assumptions stated therein, all of
which Borrower believes to be reasonable and fair in light of current conditions
and current facts known to Borrower and, as of the Closing Date, reflect
Borrower’s good faith and reasonable estimates of the future financial
performance of Borrower and of the other information projected therein for the
period set forth therein.

3.5     Material Adverse Effect. Between December 31, 2003 and the Closing Date:
(a) no Credit Party has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward or
long-term commitments that are not reflected in the Pro Forma and that, alone or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect, (b) no contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit Party’s assets
and no law or regulation applicable to any Credit Party has been adopted that
has had or could reasonably be expected to have a Material Adverse Effect, and
(c) no Credit Party is in default and to the best of Borrower’s knowledge no
third party is in default under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Between December 31, 2003 and the Closing Date
no event has occurred, that alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.

3.6     Ownership of Property; Liens. As of the Closing Date, the real estate
(“Real Estate”) listed in Disclosure Schedule (3.6) constitutes all of the real
property owned, leased, subleased, or used by any Credit Party. Each Credit
Party owns good and marketable fee simple title to all of its owned Real Estate,
and valid and marketable leasehold interests in all of its leased Real Estate,
all as described on Disclosure Schedule (3.6), and copies of all such leases or
a summary of terms thereof reasonably satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party’s right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party’s Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.

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3.7     Labor Matters. As of the Closing Date (a) no strikes or other material
labor disputes against any Credit Party are pending or, to any Credit Party’s
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters; (c) all payments due
from any Credit Party for employee health and welfare insurance have been paid
or accrued as a liability on the books of such Credit Party; (d) except as set
forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound by
any collective bargaining agreement, management agreement, consulting agreement,
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement
(and true and complete copies of any agreements described on Disclosure Schedule
(3.7) have been delivered to Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party’s knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party’s knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.

3.8     Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is owned by
each of the Stockholders and in the amounts set forth in Disclosure Schedule
(3.8). Except as set forth in Disclosure Schedule (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)).

3.9     Government Regulation. No Credit Party is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrower, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.

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3.10     Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
“Margin Stock”). No Credit Party owns any Margin Stock, and none of the proceeds
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a “purpose credit” within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.

3.11     Taxes. All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all Charges have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). Proper and accurate amounts
have been withheld by each Credit Party from its respective employees for all
periods in full and complete compliance with all applicable federal, state,
local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party’s tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as described in Disclosure
Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party’s knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Material Adverse Effect.

3.12     ERISA.

(a)     Disclosure Schedule (3.12) lists (i) all ERISA Affiliates and (ii) all
Plans and separately identifies all Pension Plans, including Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest
IRS/DOL 5500-series form for each such Plan, have been delivered to Agent.
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC, including the timely filing
of all reports required under the IRC or ERISA, including the statement required
by 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
Neither any Credit Party nor ERISA Affiliate has engaged in a “prohibited
transaction,” as defined in Section 406 of ERISA and Section 4975 of the IRC, in
connection with any Plan, that would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the IRC.

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(b)     Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan
has any Unfunded Pension Liability; (ii) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan of any Credit Party or ERISA
Affiliate has been terminated, whether or not in a “standard termination” as
that term is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of
any Credit Party or any ERISA Affiliate (determined at any time within the last
five years) with Unfunded Pension Liabilities been transferred outside of the
“controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate (determined at such time); (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of any
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor’s Corporation or an equivalent rating by another
nationally recognized rating agency.

3.13     No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that
challenges any Credit Party’s right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could be reasonably be expected to have a Material
Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as of the
Closing Date there is no Litigation pending or, to any Credit Party’s knowledge,
threatened, that seeks damages in excess of $100,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.

3.14     Brokers. No broker or finder brought about the obtaining, making or
closing of the Loans or the Related Transactions, and no Credit Party or
Affiliate thereof has any obligation to any Person in respect of any finder’s or
brokerage fees in connection therewith.

3.15     Intellectual Property. As of the Closing Date, each Credit Party owns
or has rights to use all Intellectual Property necessary to continue to conduct
its business as now or heretofore conducted by it or proposed to be conducted by
it, and each Patent, Trademark, Copyright and License is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule
(3.15). Each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect. Except as set forth in Disclosure Schedule (3.15), no Credit
Party is aware of any infringement claim by any other Person with respect to any
Intellectual Property.

3.16     Full Disclosure. No information contained in this Agreement, any of the
other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.

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3.17     Environmental Matters.

(a)     Except as set forth in Disclosure Schedule (3.17), as of the Closing
Date: (i) the Real Estate is free of contamination from any Hazardous Material
except for such contamination that would not adversely impact the value or
marketability of such Real Estate and which would not result in Environmental
Liabilities, which could reasonably be expected to exceed $100,000; (ii) no
Credit Party has caused or suffered to occur any Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate; (iii) the
Credit Parties are and have been in compliance with all Environmental Laws,
except for such noncompliance that would not result in Environmental Liabilities
which could reasonably be expected to exceed $100,000; (iv) the Credit Parties
have obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure to
so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities that could reasonably be expected to exceed $100,000,
and all such Environmental Permits are valid, uncontested and in good standing;
(v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $100,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $25,000 or injunctive
relief against, or that alleges criminal misconduct by, any Credit Party; (vii)
no notice has been received by any Credit Party identifying it as a “potentially
responsible party” or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a “potentially responsible party” under CERCLA or analogous state statutes;
and (viii) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.

(b)     Each Credit Party hereby acknowledges and agrees that Agent (i) is not
now, and has not ever been, in control of any of the Real Estate or any Credit
Party’s affairs, and (ii) does not have the capacity through the provisions of
the Loan Documents or otherwise to influence any Credit Party’s conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.

3.18     Insurance. Disclosure Schedule (3.18) lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.

3.19     Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists all
banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number therefor.

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3.20     Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party’s Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any
similar state or local law.

3.21     Customer and Trade Relations. Except as set forth in Disclosure
Schedule (3.21), as of the Closing Date, there exists no actual or, to the
knowledge of any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in the business relationship of any
Credit Party with any customer or group of customers whose purchases during the
preceding 12 months caused them to be ranked among the ten largest customers of
such Credit Party; or the business relationship of any Credit Party with any
supplier material to its operations.

3.22     Agreements and Other Documents. As of the Closing Date, each Credit
Party has provided to Agent or its counsel, on behalf of Lenders, accurate and
complete copies (or summaries) of all of the following agreements or documents
to which it is subject and each of which is listed in Disclosure Schedule
(3.22): supply agreements and purchase agreements not terminable by such Credit
Party within 60 days following written notice issued by such Credit Party and
involving transactions in excess of $1,000,000 per annum; leases of Equipment
having a remaining term of one year or longer and requiring aggregate rental and
other payments in excess of $500,000 per annum; licenses and permits held by the
Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; instruments and documents evidencing any Indebtedness
or Guaranteed Indebtedness of such Credit Party and any Lien granted by such
Credit Party with respect thereto; and instruments and agreements evidencing the
issuance of any equity securities, warrants, rights or options to purchase
equity securities of such Credit Party.

3.23     Solvency. Both before and after giving effect to (a) the Loans to be
made or incurred on the Closing Date or such other date as Loans requested
hereunder are made or incurred; (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower; (c) the consummation of the
other Related Transactions; and (d) the payment and accrual of all transaction
costs in connection with the foregoing, each Credit Party is and will be
Solvent.

3.24     Subordinated Debt. As of the Closing Date, Borrower has provided to
Agent or its counsel, on behalf of Lenders, accurate and complete copies of all
Subordinated Notes (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith), each of which is listed in Disclosure Schedule (3.24).
Disclosure Schedule (3.24) also sets forth a true and correct list of all
Subordinated Note Holders. Borrower had the corporate power and authority to
incur the Indebtedness evidenced by the Subordinated Notes and to enter into the
amendment to the Subordinated Notes contemplated as a condition to the closing
of this Credit Agreement. The Subordination Agreement is enforceable against the
holders of the Subordinated Notes by Agent and Lenders. All Obligations
constitute senior Indebtedness entitled to the benefits of the subordination
provisions contained in the Subordination Agreement. Borrower acknowledges that
Agent and each Lender are entering into this Agreement and are extending the
Commitments in reliance upon the subordination provisions contained in the
Subordination Agreement and this Section 3.23.

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3.25     OFAC. No Credit Party (i) is a person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (ii) engages in any dealings or transactions prohibited by
Section 2 of such executive order, or is otherwise associated with any such
person in any manner violative of Section 2, or (iii) is a person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

3.26     Patriot Act. Each Credit Party is in compliance, in all material
respects, with the (i) the Trading with the Enemy Act, as amended, and each of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation
or executive order relating thereto, and (ii) the Uniting And Strengthening
America By Providing Appropriate Tools Required To Intercept And Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will
be used, directly or indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.      FINANCIAL STATEMENTS AND INFORMATION

4.1     Reports and Notices.

(a)     Each Credit Party executing this Agreement hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
or to Agent and Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and in the manner
set forth in Annex D.

(b)     Each Credit Party executing this Agreement hereby agrees that, from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
or to Agent and Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
Persons and in the manner set forth in Annex E.

4.2     Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including Grant Thornton LLP, and
authorizes and, at Agent’s request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of any Credit Party.

5.      AFFIRMATIVE COVENANTS

Each Credit Party executing this Credit Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:

5.1     Maintenance of Existence and Conduct of Business. Each Credit Party
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in
good repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).

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5.2     Payment of Charges.

(a)     Subject to Section 5.2(b), each Credit Party shall pay and discharge or
cause to be paid and discharged promptly all Charges payable by it, including
(i) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed) and all Charges with respect to tax, social security
and unemployment withholding with respect to its employees, (ii) lawful claims
for labor, materials, supplies and services or otherwise, and (iii) all storage
or rental charges payable to warehousemen or bailees, in each case, before any
thereof shall become past due.

(b)     Each Credit Party may in good faith contest, by appropriate proceedings,
the validity or amount of any Charges, Taxes or claims described in Section
5.2(a); provided, that (i) adequate reserves with respect to such contest are
maintained on the books of such Credit Party, in accordance with GAAP; (ii) no
Lien shall be imposed to secure payment of such Charges (other than payments to
warehousemen and/or bailees) that is superior to any of the Liens securing the
Obligations and such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges;
(iii) none of the Collateral becomes subject to forfeiture or loss as a result
of such contest; (iv) such Credit Party shall promptly pay or discharge such
contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met; and (v) Agent has not advised
Borrower in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.

5.3     Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).

5.4     Insurance; Damage to or Destruction of Collateral.

(a)     The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) as in effect on
the date hereof or otherwise in form and amounts and with insurers reasonably
acceptable to Agent. Such policies of insurance (or the loss payable and
additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party’s failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys’ fees, court costs and other charges related thereto, shall
be payable on demand by Borrower to Agent and shall be additional Obligations
hereunder secured by the Collateral.

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(b)     Agent reserves the right at any time upon any change in any Credit
Party’s risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent’s opinion,
adequately protect both Agent’s and Lender’s interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If reasonably requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.

(c)     Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all “All Risk” and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $500,000, as such Credit Party’s true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such “All Risk” policies of insurance, endorsing the name of such Credit Party
on any check or other item of payment for the proceeds of such “All Risk”
policies of insurance and for making all determinations and decisions with
respect to such “All Risk” policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d); or permit or require the applicable Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $500,000 in the aggregate,
Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property; provided that if such Credit Party shall not have
completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d). All insurance proceeds that are to be made available to Borrower to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing Base in an amount equal to the amount of such proceeds so applied.
All insurance proceeds made available to any Credit Party that is not a Borrower
to replace, repair, restore or rebuild Collateral shall be deposited in a cash
collateral account. Thereafter, such funds shall be made available to such
Credit Party provide funds to replace, repair, restore or rebuild the Collateral
as follows: (i) Borrower shall request a Revolving Credit Advance or a release
from the cash collateral account be made to such Credit Party in the amount
requested to be released; (ii) so long as the conditions set forth in Section
2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance or
Agent shall release funds from the cash collateral account; and (iii) in the
case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d).

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(d)     The Credit Parties shall, at their sole cost and expense, maintain (i)
key-man life insurance policies in the amount of $1.0 million and $1.0 million
on the lives of William Jenkins and Danny Thornton respectively, all in form and
with insurers reasonably acceptable to Agent and (ii) assignments of such
key-man life insurance policies to Agent, all in form acceptable to Agent.

5.5     Compliance with Laws. Each Credit Party shall comply with all federal,
state, local and foreign laws and regulations applicable to it, including those
relating to ERISA and labor matters and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.6     Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.

5.7     Intellectual Property. Each Credit Party will conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect.

5.8     Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in Environmental Liabilities in excess of $25,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $25,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent’s written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrower’s expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance reasonably acceptable to
Agent, and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrower shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.

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5.9     Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases. Each Credit Party shall obtain a landlord’s agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property, mortgagee of owned property or bailee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. After the Closing Date,
no real property or warehouse space shall be leased by any Credit Party and no
Inventory shall be shipped to a processor or converter under arrangements
established after the Closing Date without the prior written consent of Agent
or, unless and until a reasonably satisfactory landlord agreement or bailee
letter, as appropriate, shall first have been obtained with respect to such
location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located.

5.10     Mortgages. At the request of Agent, each Credit Party executing this
Agreement agrees that it shall and shall cause each other Credit Party to, at
such Credit Party’s expense and upon request of Agent, to provide to Agent a
mortgage or deed of trust granting Agent a first priority Lien on such Real
Estate, together with environmental audits, mortgage title insurance commitment
and policy, real property survey, local counsel opinion(s), and, if required by
Agent, supplemental casualty insurance and flood insurance, and such other
documents, instruments or agreements reasonably requested by Agent, in each
case, in form and substance reasonably satisfactory to Agent. To the extent
otherwise permitted hereunder, if any Credit Party proposes to acquire a fee
ownership interest in Real Estate after Agent has requested that the Credit
Parties deliver a mortgage or deed of trust pursuant to the foregoing sentence,
it shall notify Agent, and if the Agent requests, provide to Agent a mortgage or
deed of trust granting Agent a first priority Lien on such Real Estate, together
with environmental audits, mortgage title insurance commitment, real property
survey, local counsel opinion(s), and, if required by Agent, supplemental
casualty insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.

5.11     Further Assurances. Each Credit Party executing this Agreement agrees
that it shall and shall cause each other Credit Party to, at such Credit Party’s
expense and upon request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Agent to carry out more effectively the provisions and purposes of this
Agreement or any other Loan Document.

5.12     Certificates of Title. As of the Closing Date, Borrower shall have
delivered to the Agent applications for new certificates of title for all
Equipment of Borrower that can be titled evidencing the Lien granted to Agent
under the Loan Documents in such Equipment, and as of one Business Day
immediately following the Closing Date, Borrower shall have caused all existing
certificates of title for all Equipment of Borrower that can be titled to be
delivered to Agent, with any Liens noted thereon released by the holder of such
Lien. If Borrower acquires any Equipment after the Closing Date that can be
titled, Borrower shall cause a certificate of title to be issued for such
Equipment, with the Lien of the Agent noted thereon, and shall cause such
certificate to be delivered to the Agent or its designee directly.

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5.13     Post Closing Covenant.

(a)     No later than December 31, 2004, the Credit Parties shall, at their sole
cost and expense, (i) establish an additional key-man life insurance policy in
the amount of $1.0 million on the life of William Jenkins, in form and with an
insurer reasonably acceptable to Agent and (ii) deliver to Agent an assignment
of such key-man life insurance policy to Agent, all in form acceptable to Agent.

(b)     No later than 120 days after the Closing Date, the Credit Parties shall,
at their sole cost and expense, (i) establish key-man life insurance policies in
the amount of $1.0 million on the life of Ron Whitter, in form and with insurers
reasonably acceptable to Agent and (ii) deliver to Agent assignments of such
key-man life insurance policies to Agent, all in form acceptable to Agent.

(c)     No later than November 30, 2004, the Credit Parties shall, at their sole
cost and expense, deliver or cause to be delivered to Agent a good standing
certificate as of a recent date for Borrower, issued by the Secretary of State
of the State of Mississippi.

(d)     No later than November 30, 2004, the Credit Parties shall, at their sole
cost and expense, provide to Agent written evidence confirming that the key-man
life insurance policies of Borrower in the amount of $1.0 million and $1.0
million on the lives of William Jenkins and Danny Thornton, respectively, which
are in existence on the Closing Date, are in full force and effect and that the
premiums therefor have been paid current.

6.      NEGATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to
all Credit Parties that from and after the date hereof until the Termination
Date:

6.1     Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person.

6.2     Investments; Loans and Advances. Except as otherwise expressly permitted
by this Section 6, no Credit Party shall make or permit to exist any investment
in, or make, accrue or permit to exist loans or advances of money to, any
Person, through the direct or indirect lending of money, holding of securities
or otherwise, except that: (a) Borrower may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to Borrower
pursuant to negotiated agreements with respect to settlement of such Account
Debtor’s Accounts in the ordinary course of business, so long as the aggregate
amount of such Accounts so settled by Borrower does not exceed $250,000; and (b)
other investments not exceeding $1,000,000 in the aggregate at any time
outstanding.

6.3     Indebtedness.

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(a)     No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured by purchase
money security interests and Capital Leases permitted in Section 6.7(c), (ii)
the Loans and the other Obligations, (iii) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv) existing Indebtedness
described in Disclosure Schedule (6.3) and refinancings thereof or amendments or
modifications thereto that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any
Credit Party, Agent or any Lender, as determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified, (v) Permitted Insurance
Premium Indebtedness in an aggregate amount not to exceed $2,400,000 at any one
time outstanding and (vi) Indebtedness specifically permitted under Section
6.17;

(b)     No Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness, other than (i) the Obligations;
(ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Sections
6.8(b) or (c); and (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any
refinancing thereof in accordance with Section 6.3(a)(iv).

6.4     Employee Loans and Affiliate Transactions.

(a)     No Credit Party shall enter into or be a party to any transaction with
any other Credit Party or any Affiliate thereof except in the ordinary course of
and pursuant to the reasonable requirements of such Credit Party’s business and
upon fair and reasonable terms that are no less favorable to such Credit Party
than would be obtained in a comparable arm’s length transaction with a Person
not an Affiliate of such Credit Party. All such transactions existing as of the
date hereof are described in Disclosure Schedule (6.4(a)).

(b)     No Credit Party shall enter into any lending or borrowing transaction
with any employees of any Credit Party, except loans to its respective employees
in the ordinary course of business consistent with past practices for travel and
entertainment expenses, relocation costs and similar purposes up to a maximum of
$50,000 to any employee and up to a maximum of $250,000 in the aggregate at any
one time outstanding.

6.5     Capital Structure and Business. No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations that could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance or sale of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock, except for payments to holders of
Subordinated Debt permitted by Section 1.4 options granted under existing or
future employee incentive stock option plans; or (c) amend its charter or bylaws
in a manner that would adversely affect Agent or Lenders or such Credit Party’s
duty or ability to repay the Obligations. No Credit Party shall engage in any
business other than the businesses currently engaged in by it.

6.6     Guaranteed Indebtedness. No Credit Party shall create, incur, assume or
permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, and (b) for Guaranteed Indebtedness incurred for the benefit of any other
Credit Party if the primary obligation is expressly permitted by this Agreement.

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6.7     Liens. No Credit Party shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing the Indebtedness described on Disclosure
Schedule (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $1,000,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within 20
days following such purchase and does not exceed 100% of the purchase price of
the subject assets). In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional collateral for
the Obligations, except operating leases, Capital Leases or Licenses which
prohibit Liens upon the assets that are subject thereto.

6.8     Sale of Stock and Assets. No Credit Party shall sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
the Stock of any of its Subsidiaries (whether in a public or a private offering
or otherwise) or any of its Accounts, other than (a) the sale of Inventory in
the ordinary course of business, and (b) the sale, transfer, conveyance or other
disposition by a Credit Party of Equipment or Fixtures that are obsolete or no
longer used or useful in such Credit Party’s business and having an appraised
value not exceeding $100,000 in any single transaction or $250,000 in the
aggregate in any Fiscal Year; and (c) other Equipment and Fixtures having a
value not exceeding $100,000 in any single transaction or $250,000 in the
aggregate in any Fiscal Year. With respect to any disposition of assets or other
properties permitted pursuant to clauses (b) and (c) above, subject to
Section 1.3(b), Agent agrees on reasonable prior written notice to release its
Lien on such assets or other properties in order to permit the applicable Credit
Party to effect such disposition and shall execute and deliver to Borrower, at
Borrower’s expense, appropriate UCC termination statements and other releases as
reasonably requested by Borrower.

6.9     ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.

6.10     Financial Covenants. Borrower shall not breach or fail to comply with
any of the Financial Covenants.

6.11     Hazardous Materials. No Credit Party shall cause or permit a Release of
any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.

6.12     Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets.

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6.13     Cancellation of Indebtedness. No Credit Party shall cancel any claim or
debt owing to it, except for reasonable consideration negotiated on an arm’s
length basis and in the ordinary course of its business consistent with past
practices.

6.14     Restricted Payments. No Credit Party shall make any Restricted Payment,
except (a) dividends and distributions by Subsidiaries of Borrower paid to
Borrower and (b) employee loans permitted under Section 6.4(b).

6.15     Change of Corporate Name or Location; Change of Fiscal Year

No Credit Party shall (a) change its name as it appears in official filings in
the state of its incorporation or other organization, (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, (c) change the type of entity that it is, (d)
change its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least 30 days prior written notice to
Agent and after Agent’s written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has
been completed or taken, and provided that any such new location shall be in the
continental United States. Without limiting the foregoing, no Credit Party shall
change its name, identity or corporate structure in any manner that might make
any financing or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of the Code or any other then
applicable provision of the Code except upon prior written notice to Agent and
Lenders and after Agent’s written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has
been completed or taken. No Credit Party shall change its Fiscal Year.

6.16     No Impairment of Intercompany Transfers. No Credit Party shall directly
or indirectly enter into or become bound by any agreement, instrument, indenture
or other obligation (other than this Agreement and the other Loan Documents)
that could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to the payment of dividends or distributions or the
making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.

6.17     No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.

6.18     Real Estate Purchases. No Credit Party shall purchase a fee simple
ownership interest in Real Estate with an aggregate purchase price in excess of
$250,000.

6.19     Changes Relating to Subordinated Debt; Material Contracts. No Credit
Party shall change or amend the terms of any Subordinated Debt (or any indenture
or agreement in connection therewith) if the effect of such amendment is to: (a)
increase the interest rate on such Subordinated Debt; (b) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of default other than
to delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the Credit Party thereunder or confer additional
material rights on the holder of such Subordinated Debt in a manner adverse to
any Credit Party, Agent or any Lender.

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7.      TERM

7.1     Termination. The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.

7.2     Survival of Obligations Upon Termination of Financing Arrangements

Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated, or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided, that the provisions of Section
11, the payment obligations under Sections 1.15 and 1.16, and the indemnities
contained in the Loan Documents shall survive the Termination Date.

8.      EVENTS OF DEFAULT; RIGHTS AND REMEDIES

8.1     Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an “Event of
Default” hereunder:

(a)     Borrower (i) fails to make any payment of principal of, or interest on,
or Fees owing in respect of, the Loans or any of the other Obligations when due
and payable, or (ii) fails to pay or reimburse Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within 10 days following
Agent’s demand for such reimbursement or payment of expenses.

(b)     Any Credit Party fails or neglects to perform, keep or observe any of
the provisions of Sections 1.4, 1.8, 5.4(a), 5.12, 5.13 or 6, or any of the
provisions set forth in Annexes B or F, respectively.

(c)     Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes D or E,
respectively, and the same shall remain unremedied for (i) 3 days or more with
respect to any report, certificate or other information required to be delivered
weekly and (i) 5 days or more with respect to all other reports, certificates
and information.

(d)     Any Credit Party fails or neglects to perform, keep or observe any other
provision of this Agreement or of any of the other Loan Documents (other than
any provision embodied in or covered by any other clause of this Section 8.1)
and the same shall remain unremedied for 20 days or more.

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(e)     A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $250,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $250,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.

(f)     Any information contained in any Borrowing Base Certificate is untrue or
incorrect in any respect in any Borrowing Base Certificate), or any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect as of the date when made or
deemed made.

(g)     Assets of any Credit Party are attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of any
Credit Party and such condition continues for 30 days or more.

(h)     A case or proceeding is commenced against any Credit Party seeking a
decree or order in respect of such Credit Party (i) under the Bankruptcy Code,
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party’s assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Credit Party, and such case or proceeding
shall remain undismissed or unstayed for 60 days or more or a decree or order
granting the relief sought in such case or proceeding shall be entered by a
court of competent jurisdiction.

(i)     Any Credit Party (i) files a petition seeking relief under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consents to or fails to contest in a timely and
appropriate manner the institution of proceedings thereunder or the filing of
any such petition or the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for such Credit Party or for any substantial part of any such Credit Party’s
assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any
action in furtherance of any of the foregoing; or (v) admits in writing its
inability to, or is generally unable to, pay its debts as such debts become due.

(j)     A final judgment or judgments for the payment of money in excess of
$250,000 in the aggregate at any time are outstanding against one or more of the
Credit Parties and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.

(k)     Any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Credit Party
shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.

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(l)     Any Change of Control occurs.

(m)     Any Material Adverse Effect occurs.

(n)     William Jenkins ceases to serve as, or to perform the duties and
functions of the office of, the chief executive officer of Borrower, unless he
dies or becomes incapacitated or unless otherwise agreed to by the Agent.

   
(o)     The Subordinated Debt owing to any of the Subordinated Note Holders
listed on Annex J is unpaid by Borrower at any time after December 5, 2004,
unless on or prior to such date, such Subordinated Note Holder shall have
consented to the transaction contemplated by this Agreement in a form permitted
by the Escrow Agreement of even date herewith to which Borrower and GE Capital
are parties.
     

8.2     Remedies.

(a)     If any Default or Event of Default has occurred and is continuing, Agent
may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan Commitment with respect to additional
Revolving Advances, whereupon any additional Revolving Advances shall be made or
incurred in Agent’s sole discretion (or in the sole discretion of the Requisite
Revolving Lenders, if such suspension occurred at their direction) so long as
such Default or Event of Default is continuing. If any Default or Event of
Default has occurred and is continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly provided
herein, increase the rate of interest applicable to the Loans to the Default
Rate.

(b)     If any Event of Default has occurred and is continuing, Agent may (and
at the written request of the Requisite Lenders shall), without notice: (i)
terminate the Revolving Loan Commitment with respect to further Advances; (ii)
declare all or any portion of the Obligations, including all or any portion of
any Loan to be forthwith due and payable, all without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower and each other Credit Party; or (iii) exercise any rights and remedies
provided to Agent under the Loan Documents or at law or equity, including all
remedies provided under the Code; provided, that upon the occurrence of an Event
of Default specified in Sections 8.1(h) or (i), the Revolving Loan Commitment
shall be immediately terminated and all of the Obligations, including the
aggregate Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.

8.3     Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives (including for purposes
of Section 12): (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent’s taking possession or control of, or to Agent’s replevy, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.

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9.      ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

9.1     Assignment and Participations.

(a)     Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at any time or
times, the Loan Documents, Loans and any Commitment or any portion thereof or
interest therein, including any Lender’s rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall: (i) require the
consent of Agent (which consent shall not be unreasonably withheld or delayed
with respect to a Qualified Assignee) and the execution of an assignment
agreement (an “Assignment Agreement”) substantially in the form attached hereto
as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory
to, and acknowledged by, Agent; (ii) be conditioned on such assignee Lender
representing to the assigning Lender and Agent that it is purchasing the
applicable Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iii) after giving
effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $5,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $5,000,000
(unless it assigns its entire Commitments); (iv) include a payment to Agent of
an assignment fee of $3,500; and (v) so long as no Event of Default has occurred
and is continuing, require the consent of Borrower, which shall not be
unreasonably withheld or delayed; provided that no such consent shall be
required for an assignment to a Qualified Assignee. In the case of an assignment
by a Lender under this Section 9.1, the assignee shall have, to the extent of
such assignment, the same rights, benefits and obligations as all other Lenders
hereunder. The assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitments or assigned portion thereof from and after the
date of such assignment. Borrower hereby acknowledges and agrees that any
assignment shall give rise to a direct obligation of Borrower to the assignee
and that the assignee shall be considered to be a “Lender”. In all instances,
each Lender’s liability to make Loans hereunder shall be several and not joint
and shall be limited to such Lender’s Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or otherwise transfers all
or any part of the Obligations, Agent or any such Lender shall so notify
Borrower and Borrower shall, upon the request of Agent or such Lender, execute
new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the
foregoing provisions of this Section 9.1(a), any Lender may at any time pledge
the Obligations held by it and such Lender’s rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender’s rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor; provided, that no such pledge to a
Federal Reserve Bank shall release such Lender from such Lender’s obligations
hereunder or under any other Loan Document.

(b)     Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrower to the participant and the participant shall be
considered to be a “Lender”. Except as set forth in the preceding sentence, no
Credit Party shall have any obligation or duty to any participant. Neither Agent
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.

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(c)     Except as expressly provided in this Section 9.1, no Lender shall, as
between Borrower and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.

(d)     Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrower shall only be certified by
Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(c).

(e)     Any Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.

(f)     Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”), may grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing by the Granting Lender to Agent and Borrower, the
option to provide to Borrower all or any part of any Loans that such Granting
Lender would otherwise be obligated to make to Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan; and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender
to the same extent, and as if such Loan were made by such Granting Lender. No
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Lender). Any
SPC may (i) with notice to, but without the prior written consent of, Borrower
and Agent and without paying any processing fee therefor assign all or a portion
of its interests in any Loans to the Granting Lender or to any financial
institutions (consented to by Borrower and Agent) providing liquidity and/or
credit support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC. This Section 9.1(g) may not be amended without the prior written consent of
each Granting Lender, all or any of whose Loans are being funded by an SPC at
the time of such amendment. For the avoidance of doubt, the Granting Lender
shall for all purposes, including without limitation, the approval of any
amendment or waiver of any provision of any Loan Document or the obligation to
pay any amount otherwise payable by the Granting Lender under the Loan
Documents, continue to be the Lender of record hereunder.

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9.2     Appointment of Agent. GE Capital is hereby appointed to act on behalf of
all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Except as expressly set forth in this Agreement and the other Loan
Documents, Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to any Credit Party or any of
their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent
nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.

If Agent shall request instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Loan Document, then Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders or all affected Lenders, as the case may be, and Agent shall
not incur liability to any Person by reason of so refraining. Agent shall be
fully justified in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of Agent, be
contrary to law or the terms of this Agreement or any other Loan Document, (b)
if such action would, in the opinion of Agent, expose Agent to Environmental
Liabilities or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable.

9.3     Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

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9.4     GE Capital and Affiliates. With respect to its Commitments hereunder,
GE Capital shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity. GE Capital
and its Affiliates may lend money to, invest in, and generally engage in any
kind of business with, any Credit Party, any of their Affiliates and any Person
who may do business with or own securities of any Credit Party or any such
Affiliate, all as if GE Capital were not Agent and without any duty to account
therefor to Lenders. GE Capital and its Affiliates may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.

9.5     Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

9.6     Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Credit Parties and without limiting the obligations of Borrower
hereunder), ratably according to their respective Pro Rata Shares, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent’s gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.

9.7     Successor Agent. Agent may resign at any time by giving not less than 30
days’ prior written notice thereof to Lenders and Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
resigning Agent’s giving notice of resignation, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a
Lender is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent has
been appointed pursuant to the foregoing, within 30 days after the date such
notice of resignation was given by the resigning Agent, such resignation shall
become effective and the Requisite Lenders shall thereafter perform all the
duties of Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower, such
approval not to be unreasonably withheld or delayed; provided that such approval
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent’s resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent’s
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.

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9.8     Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of any Credit Party (regardless of whether such balances are then due to such
Credit Party) and any other properties or assets at any time held or owing by
that Lender or that holder to or for the credit or for the account of any Credit
Party against and on account of any of the Obligations that are not paid when
due. Any Lender exercising a right of setoff or otherwise receiving any payment
on account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.13, 1.15 or 1.16). Each Credit Party agrees,
to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers’ lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.

9.9     Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.

(a)     Advances; Payments.

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(i)      Each Revolving Lender shall make the amount of such Lender’s Pro Rata
Share of such Revolving Credit Advance available to Agent in same day funds by
wire transfer to Agent’s account as set forth in Annex G not later than 3:00
p.m. (New York time) on the requested funding date, in the case of an Index Rate
Loan, and not later than 11:00 a.m. (New York time) on the requested funding
date, in the case of a LIBOR Loan. After receipt of such wire transfers (or, in
the Agent’s sole discretion, before receipt of such wire transfers), subject to
the terms hereof, Agent shall make the requested Revolving Credit Advance to the
Borrower designated by Borrower in the Notice of Revolving Credit Advance. All
payments by each Revolving Lender shall be made without setoff, counterclaim or
deduction of any kind.

(ii)      On the 2nd Business Day of each calendar week or more frequently at
Agent’s election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone, or telecopy of the amount of such Lender’s Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all payments or
Advances required to be made by it and has purchased all participations required
to be purchased by it under this Agreement and the other Loan Documents as of
such Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata
Share of principal, interest and Fees paid by Borrower since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. To the
extent that any Lender (a “Non-Funding Lender”) has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender’s Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender’s account (as specified
by such Lender in Annex G or the applicable Assignment Agreement) not later than
2:00 p.m. (New York time) on the next Business Day following each Settlement
Date.

(b)     Availability of Lender’s Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.

(c)     Return of Payments.

(i)      If Agent pays an amount to a Lender under this Agreement in the belief
or expectation that a related payment has been or will be received by Agent from
Borrower and such related payment is not received by Agent, then Agent will be
entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind.

(ii)      If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Loan Document, Agent will not
be required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

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(d)     Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder on the date
specified therefor shall not relieve any other Lender (each such other Revolving
Lender, an “Other Lender”) of its obligations to make such Advance or purchase
such participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a “Lender” or a “Revolving Lender” (or be included in the
calculation of “Requisite Lenders”, “Requisite Revolving Lenders” or
“Supermajority Revolving Lenders” hereunder) for any voting or consent rights
under or with respect to any Loan Document. At Borrower’s request, Agent or a
Person reasonably acceptable to Agent shall have the right with Agent’s consent
and in Agent’s sole discretion (but shall have no obligation) to purchase from
any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at
Agent’s request, sell and assign to Agent or such Person, all of the Commitments
of that Non-Funding Lender for an amount equal to the principal balance of all
Loans held by such Non-Funding Lender and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.

(e)     Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, that Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes D and E hereto and
agree that Agent shall have no duty to provide the same to Lenders.

(f)     Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders.

10.      SUCCESSORS AND ASSIGNS

10.1     Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party, Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party), except
as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express
written consent of Agent and Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.

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11.      MISCELLANEOUS

11.1     Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter or fee letter
(other than the GE Capital Fee Letter) or confidentiality agreement, if any,
between any Credit Party and Agent or any Lender or any of their respective
Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.

11.2     Amendments and Waivers.

(a)     Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable. Except as set forth in clauses (b) and (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.

(b)     No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that increases the percentage advance
rates set forth in the definition of the Borrowing Base, or that makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
set forth in Section 1.6, shall be effective unless the same shall be in writing
and signed by Agent, Supermajority Revolving Lenders and Borrower. No amendment,
modification, termination or waiver of or consent with respect to any provision
of this Agreement that waives compliance with the conditions precedent set forth
in Section 2.2 to the making of any Loan shall be effective unless the same
shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default or any Event of Default shall
be effective for purposes of the conditions precedent to the making of Loans set
forth in Section 2.2 and Section 2.3 unless the same shall be in writing and
signed by Agent, Requisite Revolving Lenders and Borrower.

(c)     No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender’s Commitment (which action shall be
deemed to directly affect all Lenders; (ii) reduce the principal of, rate of
interest on or Fees payable with respect to any Loan of any affected Lender;
(iii) extend any scheduled payment date (other than payment dates of mandatory
prepayments under Section 1.3(b)(ii)-(iv)) or final maturity date of the
principal amount of any Loan of any affected Lender; (iv) waive, forgive, defer,
extend or postpone any payment of interest or Fees as to any affected Lender;
(v) release any Guaranty or, except as otherwise permitted herein or in the
other Loan Documents, release, or permit any Credit Party to sell or otherwise
dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate
(which action shall be deemed to directly affect all Lenders); (vi) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Loans that shall be required for Lenders or any of them to take any action
hereunder; and (vii) amend or waive this Section 11.2 or the definitions of the
terms “Requisite Lenders”, “Requisite Revolving Lenders” or “Supermajority
Revolving Lenders” insofar as such definitions affect the substance of this
Section 11.2. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of Agent under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent, in addition
to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Credit Party in any case shall entitle such Credit Party or any other Credit
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.

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(d)     If, in connection with any proposed amendment, modification, waiver or
termination (a “Proposed Change”):

(i)      requiring the consent of all affected Lenders, the consent of Requisite
Lenders is obtained, but the consent of other Lenders whose consent is required
is not obtained (any such Lender whose consent is not obtained as described in
this clause (i) and in clauses (ii), (iii) and (iv) below being referred to as a
“Non-Consenting Lender”),

(ii)      requiring the consent of Supermajority Revolving Lenders, the consent
of Requisite Revolving Lenders is obtained, but the consent of Supermajority
Revolving Lenders is not obtained,

(iii)      requiring the consent of Requisite Revolving Lenders, the consent of
Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving Lenders is not
obtained, or

(iv)      requiring the consent of Requisite Lenders, the consent of Lenders
holding 51% or more of the aggregate Commitments is obtained, but the consent of
Requisite Lenders is not obtained,

then, so long as Agent is not a Non-Consenting Lender, at Borrower’s request,
Agent or a Person reasonably acceptable to Agent shall have the right, with
Agent’s consent and in Agent’s sole discretion (but with no obligation by Agent)
to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders
agree that they shall, upon Agent’s request, sell and assign to Agent or such
Person, all of the Commitments of such Non-Consenting Lenders for an amount
equal to the principal balance of all Loans held by the Non-Consenting Lenders
and all accrued interest and Fees with respect thereto through the date of sale,
such purchase and sale to be consummated pursuant to an executed Assignment
Agreement.

(e)     Upon payment in full in cash and performance of all of the Obligations
(other than indemnification Obligations), termination of the Commitments and a
release of all claims against Agent and Lenders, and so long as no suits,
actions, proceedings or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrower termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.

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11.3     Fees and Expenses. Borrower shall reimburse (i) Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants and auditors) and (ii) Agent (and, with respect
to clauses (c) and (d) below, all Lenders) for all fees, costs and expenses,
including the reasonable fees, costs and expenses of counsel or other advisors
(including environmental and management consultants and appraisers), incurred in
connection with the negotiation and preparation of the Loan Documents and
incurred in connection with:

(a)     the forwarding to Borrower or any other Person on behalf of Borrower by
Agent of the proceeds of any Loan (including a wire transfer fee of $25 per wire
transfer);

(b)     any amendment, modification or waiver of, consent with respect to, or
termination of, any of the Loan Documents or Related Transactions Documents or
advice in connection with the syndication and administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;

(c)     any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, Borrower or any other Person and whether as a
party, witness or otherwise) in any way relating to the Collateral, any of the
Loan Documents or any other agreement to be executed or delivered in connection
herewith or therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against any or all of the Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents; including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency of one or
more Events of Default; provided that in the case of reimbursement of counsel
for Lenders other than Agent, such reimbursement shall be limited to one counsel
for all such Lenders; provided, further, that no Person shall be entitled to
reimbursement under this clause (c) in respect of any litigation, contest,
dispute, suit, proceeding or action to the extent any of the foregoing results
from such Person’s gross negligence or willful misconduct;

(d)     any attempt to enforce any remedies of Agent against any or all of the
Credit Parties or any other Person that may be obligated to Agent or any Lender
by virtue of any of the Loan Documents, including any such attempt to enforce
any such remedies in the course of any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that in the case
of reimbursement of counsel for Lenders other than Agent, such reimbursement
shall be limited to one counsel for all such Lenders;

(e)     any workout or restructuring of the Loans during the pendency of one or
more Events of Default; and

(f)     efforts to (i) monitor the Loans or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;

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including, as to each of clauses (a) through (f) above, all reasonable
attorneys’ and other professional and service providers’ fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.

11.4     No Waiver. Agent’s or any Lender’s failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrower specifying
such suspension or waiver.

11.5     Remedies. Agent’s and Lenders’ rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies that Agent
or any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.

11.6     Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.

11.7     Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.

11.8     Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of 2 years following receipt
thereof, except that Agent and any Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent’s or
such Lender’s counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.

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11.9     GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

11.10     Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered: (a) upon the earlier of actual receipt and 3 Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10); (c) 1 Business
Day after deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in Annex H or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Agent) designated in Annex H to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.

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11.11     Section Titles. The Section titles and Table of Contents contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.

11.12     Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.

11.13     WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

11.14     Press Releases and Related Matters. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue any
press releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least 2 Business Days’ prior notice to
GE Capital and without the prior written consent of GE Capital unless (and only
to the extent that) such Credit Party or Affiliate is required to do so under
law and then, in any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public disclosure. Each
Credit Party consents to the publication by Agent or any Lender of a tombstone
or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.

11.15     Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Borrower
for liquidation or reorganization, should Borrower become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee be appointed for all or any significant part of Borrower’s assets, and
shall continue to be effective or to be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

11.16     Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 11.9 and 11.13, with its counsel.

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11.17     No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.18     Reaffirmation of Security Documents.  In connection with this
amendment and restatement of the Original Credit Agreement, each Credit Party
reaffirms and ratifies acknowledges and reaffirms that (a) all liens and
security interests granted to the Agent under the Security Agreement remain in
full force and effect and shall continue to secure the Obligations (as modified
by this Agreement) and (b) the validity, perfection or priority of the security
interests will not be impaired by amendment and restatement of the Original
Credit Agreement or the execution and delivery of this Agreement. Each Credit
Party hereby acknowledges and affirms that all references to the Original Credit
Agreement contained in the Security Documents are deemed to be references to
this Agreement, and that all capitalized terms defined by reference to the
Original Credit Agreement, shall have the meanings assigned to such terms in
this Agreement. The defined term “Obligations” shall be deemed to include
without limitation the Revolving Credit Commitments, the Term Loan Commitments
and the Loans under this Agreement.

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

BLACK WARRIOR WIRELINE CORP., as Borrower

 

By: /S/ William L. Jenkins          
Name:William L. Jenkins
Title:      Chief Executive Officer

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender

By: /S/ Samantha Farber             
       Samantha Farber
       Duly Authorized Signatory

 

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ANNEX A (Recitals)
to
CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings, and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:

“Acceptable Appraiser” shall mean Superior Auctioneers & Marketing, Inc. (unless
Agent has notified Borrower in writing that Superior Auctioneers & Marketing,
Inc. shall no longer constitute an acceptable appraiser to Agent) and each other
appraisal firm approved by the Agent in its sole discretion.

“Account Debtor” means any Person who may become obligated to any Credit Party
under, with respect to, or on account of, an Account, Chattel Paper or General
Intangibles (including a payment intangible).

“Accounting Changes” has the meaning ascribed thereto in Annex F.

“Accounts” means all “accounts,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, or Instruments),
(including any such obligations that may be characterized as an account or
contract right under the Code), (b) all of each Credit Party’s rights in, to and
under all purchase orders or receipts for goods or services, (c) all of each
Credit Party’s rights to any goods represented by any of the foregoing
(including unpaid sellers’ rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health care insurance receivables and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.

“Advance” means any Revolving Credit Advance.

“Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, 5% or more of the Stock having ordinary voting power in the
election of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person’s officers, directors, joint venturers and partners and (d) in the case
of Borrower, the immediate family members, spouses and lineal descendants of
individuals who are Affiliates of Borrower. For the purposes of this definition,
“control” of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise; provided,
however, that the term “Affiliate” shall specifically exclude Agent and each
Lender.

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“Agent” means GE Capital in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.7.

“Agreement” means the Credit Agreement by and among Borrower, the other Credit
Parties party thereto, GE Capital, as Agent and Lender and the other Lenders
from time to time party thereto, as the same may be amended, supplemented,
restated or otherwise modified from time to time.

“Appendices” has the meaning ascribed to it in the recitals to the Agreement.

“Applicable Margins” means collectively the Applicable Unused Line Fee Margin,
the Applicable Revolver Index Margin, the Applicable Term Loan Index Margin, the
Applicable Revolver LIBOR Margin and the Applicable Term Loan LIBOR Margin.

“Applicable Revolver Index Margin” means the per annum interest rate margin from
time to time in effect and payable in addition to the Index Rate applicable to
the Revolving Loan, as determined by reference to Section 1.5(a).

“Applicable Revolver LIBOR Margin” means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Revolving Loan, as determined by reference to Section 1.5(a).

“Applicable Term Loan Index Margin” means the per annum interest rate from time
to time in effect and payable in addition to the Index Rate applicable to the
Term Loan, as determined by reference to Section 1.5(a).

“Applicable Term Loan LIBOR Margin” means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Term Loan, as determined by reference to Section 1.5(a).

“Applicable Unused Line Fee Margin” means the per annum fee, from time to time
in effect, payable in respect of Borrower’s non-use of committed funds pursuant
to Section 1.9(b), which fee is determined by reference to Section 1.5(a).

“Assignment Agreement” has the meaning ascribed to it in Section 9.1(a).

“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. §§101 et seq.

“Blocked Accounts” has the meaning ascribed to it in Annex B.

“Borrower” has the respective meaning ascribed thereto in the preamble to the
Agreement.

“Borrowing Availability” means as of any date of determination the lesser of (i)
the Maximum Revolver Amount and (ii) the Borrowing Base, in each case, less the
aggregate Revolving Loan then outstanding.

“Borrowing Base” means, as of any date of determination by Agent, from time to
time, an amount equal to 85% of the book value of Eligible Accounts, less any
Reserves established by Agent at such time.

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“Borrowing Base Certificate” means a certificate to be executed and delivered
from time to time by Borrower in the form attached to the Agreement as Exhibit
4.1(b).

“Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of New York and in
reference to LIBOR Loans shall mean any such day that is also a LIBOR Business
Day.

“Capital Expenditures” means, with respect to any Person, all expenditures (by
the expenditure of cash or the incurrence of Indebtedness) by such Person during
any measuring period for any fixed assets or improvements or for replacements,
substitutions or additions thereto that have a useful life of more than one year
and that are required to be capitalized under GAAP.

“Capital Lease” means, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee that, in accordance
with GAAP, would be required to be classified and accounted for as a capital
lease on a balance sheet of such Person.

“Capital Lease Obligation” means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

“Cash Management Systems” has the meaning ascribed to it in Section 1.8.

“Change of Control” means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934,) shall have
acquired, after the Closing Date, beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934,) of 20% or more of the issued and outstanding
shares of capital Stock of Borrower having the right to vote for the election of
directors of Borrower under ordinary circumstances; (b) during any period of
twelve consecutive calendar months, individuals who at the beginning of such
period constituted the board of directors of Borrower (together with any new
directors whose election by the board of directors of Borrower or whose
nomination for election by the Stockholders of Borrower was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office; or (c)
Borrower ceases to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of any of its Subsidiaries.

“Charges” means all federal, state, county, city, municipal, local, foreign or
other governmental taxes (including taxes owed to the PBGC at the time due and
payable), levies, assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll,
income or gross receipts of any Credit Party, (d) any Credit Party’s ownership
or use of any properties or other assets, or (e) any other aspect of any Credit
Party’s business.

“Chattel Paper” means any “chattel paper,” as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any
Credit Party.

“Closing Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in
connection with the Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached hereto as Annex B.

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“Closing Date” means November 14, 2004.

“Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

“Collateral” means the property covered by the Security Agreement and the other
Collateral Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations.

“Collateral Documents” means the Security Agreement, the Patent Security
Agreement, the Trademark Security Agreement, the Copyright Security Agreement
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.

“Collateral Reports” means the reports with respect to the Collateral referred
to in Annex D.

“Collection Account” means that certain account of Agent, account number
502-328-54 in the name of Agent at Bankers Trust Company in New York, New York
ABA No. 021 001 033, or such other account as may be specified in writing by
Agent as the “Collection Account.”.

“Commitment Termination Date” means the earliest of (a) November 14, 2007, (b)
the date of termination of Lenders’ obligations to make Advances or permit
existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the
date of indefeasible prepayment in full by Borrower of the Loans, and the
permanent reduction of all Commitments to zero dollars ($0).

“Commitments” means (a) as to any Lender, the aggregate of such Lender’s
Revolving Loan Commitment and Term Loan Commitment as set forth on Annex I to
the Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate of all Lenders’ Revolving Loan
Commitments and Term Loan Commitments, which aggregate commitment shall be
Eighteen Million Dollars ($18,000,000) on the Closing Date, as to each of
clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement.

“Compliance Certificate” has the meaning ascribed to it in Annex C.

“Concentration Accounts” has the meaning ascribed to it in Annex B.

“Contracts” means all “contracts,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.

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“Control Letter” means a letter agreement between Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name
of any Credit Party, (ii) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other
financial assets held in a securities account in the name of any Credit Party,
(iii) a futures commission merchant or clearing house, as applicable, with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant disclaims any security interest in the applicable financial
assets, acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.

“Copyright License” means any and all rights now owned or hereafter acquired by
any Credit Party under any written agreement granting any right to use any
Copyright or Copyright registration.

“Copyright Security Agreements” means the Copyright Security Agreements made in
favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.

“Copyrights” means all of the following now owned or hereafter adopted or
acquired by any Credit Party: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

“Credit Parties” means Borrower and each of its Subsidiaries.

“Default” means any event that, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.

“Default Rate” has the meaning ascribed to it in Section 1.5(d).

“Deposit Accounts” means all “deposit accounts” as such term is defined in the
Code, now or hereafter held in the name of any Credit Party.

“Disbursement Accounts” has the meaning ascribed to it in Annex B.

“Disclosure Schedules” means the Schedules prepared by Borrower and denominated
as Disclosure Schedules (1.4) through (6.7) in the Index to the Agreement.

“Documents” means all “documents,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located.

“Dollars” or “$” means lawful currency of the United States of America.

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“EBITDA” means, with respect to any Person for any fiscal period, without
duplication, an amount equal to (a) consolidated net income of such Person for
such period determined in accordance with GAAP, minus (b) the sum of (i) income
tax benefits, (ii) interest income, (iii) gain from extraordinary items for such
period, (iv) any aggregate net gain (but not any aggregate net loss) during such
period arising from the sale, exchange or other disposition of capital assets by
such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), and (v) any other non-cash gains that have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) the amount of non-cash charges (including
depreciation and amortization) for such period, (v) amortized debt discount for
such period, and (vi) the amount of any deduction to consolidated net income as
the result of any grant to any members of the management of such Person of any
Stock, in each case to the extent included in the calculation of consolidated
net income of such Person for such period in accordance with GAAP, but without
duplication. For purposes of this definition, the following items shall be
excluded in determining consolidated net income of a Person: (1) the income (or
deficit) of any other Person accrued prior to the date it became a Subsidiary
of, or was merged or consolidated into, such Person or any of such Person’s
Subsidiaries; (2) the income (or deficit) of any other Person (other than a
Subsidiary) in which such Person has an ownership interest, except to the extent
any such income has actually been received by such Person in the form of cash
dividends or distributions; (3) the undistributed earnings of any Subsidiary of
such Person to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any contractual obligation or requirement of law applicable to such
Subsidiary; (4) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued during
such period; (5) any write-up of any asset; (6) any net gain from the collection
of the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (9) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.

“Eligible Accounts” has the meaning ascribed to it in Section 1.6.

“Eligible Term Equipment” means all Equipment of Borrower and Inventory of
Borrower consisting of tools and parts for Equipment existing on the Closing
Date and subject to the appraisal performed on July 23, 2004 by Superior Asset
Appraisals, Inc. on behalf of the Agent.

“Environmental Laws” means all applicable federal, state, local and foreign
laws, statutes, ordinances, codes, rules, standards and regulations, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§
9601 et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization
Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42
U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et
seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. §§ 300(f) et seq.), and any and all regulations promulgated thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.

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“Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs,
investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.

“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

“Equipment” means all “equipment,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located and, in any
event, including all such Credit Party’s machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.

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

“ERISA Affiliate” means, with respect to any Credit Party, any trade or business
(whether or not incorporated) that, together with such Credit Party, are treated
as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of
the IRC.

“ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate,
(a) any event described in Section 4043(c) of ERISA with respect to a Title IV
Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the loss of a Qualified Plan’s qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.

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“ESOP” means a Plan that is intended to satisfy the requirements of Section
4975(e)(7) of the IRC.

“Event of Default” has the meaning ascribed to it in Section 8.1.

“Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et
seq.

“Federal Funds Rate” means, for any day, a floating rate equal to the weighted
average of the rates on overnight Federal funds transactions among members of
the Federal Reserve System, as determined by Agent in its sole discretion, which
determination shall be final, binding and conclusive (absent manifest error).

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

“Fees” means any and all fees payable to Agent or any Lender pursuant to the
Agreement or any of the other Loan Documents.

“Financial Covenants” means the financial covenants set forth in Annex H.

“Financial Statements” means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex C.

“Fiscal Month” means any of the monthly accounting periods of Borrower.

“Fiscal Quarter” means any of the quarterly accounting periods of Borrower,
ending on March 31, June 30, September 30 and December 31 of each year.

“Fiscal Year” means any of the annual accounting periods of Borrower ending on
December 31 of each year.

“Fixed Charges” means, with respect to any Person for any fiscal period, (a) the
aggregate of all Interest Expense paid in cash during such period, plus (b)
scheduled payments of principal with respect to Indebtedness (other than
Permitted Insurance Premium Indebtedness to the extent that such payments are
characterized as operating expenses of the Borrower and payments made to holders
of Subordinated Debt to the extent permitted under Section 1.4) during such
period, plus (c) Capital Expenditures paid in cash during such period, plus (d)
income taxes paid in cash during such period.

“Fixed Charge Coverage Ratio” means, with respect to any Person for any fiscal
period, the ratio of EBITDA to Fixed Charges.

“Fixtures” means all “fixtures” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party.

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“Forced Liquidation Value” means, with respect to any Equipment, the “forced
liquidation value” of such Equipment as determined by the most recent appraisal
performed by or at the request of the Agent, by an Acceptable Appraiser.

“Funded Debt” means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person’s
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.

“GAAP” means generally accepted accounting principles in the United States of
America consistently applied, as such term is further defined in Annex H to the
Agreement.

“GE Capital” means General Electric Capital Corporation, a Delaware corporation.

“GE Capital Fee Letter” means that certain letter, dated as of the Closing Date,
between GE Capital and Borrower with respect to certain Fees to be paid from
time to time by Borrower to GE Capital.

“General Intangibles” means all “general intangibles,” as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, including all
right, title and interest that such Credit Party may now or hereafter have in or
under any Contract, all payment intangibles, customer lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.

“Goods” means all “goods” as defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, including embedded software to
the extent included in “goods” as defined in the Code, manufactured homes,
standing timber that is cut and removed for sale and unborn young of animals.

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“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

“Guaranteed Indebtedness” means as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease,
dividend, or other obligation (“primary obligation”) of any other Person (the
“primary obligor”) in any manner, including any obligation or arrangement of
such Person to (a) purchase or repurchase any such primary obligation, (b)
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or (e)
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
incurred and (y) the maximum amount for which such Person may be liable pursuant
to the terms of the instrument embodying such Guaranteed Indebtedness, or, if
not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.

“Guaranties” means, collectively, each guaranty executed by any Guarantor in
favor of Agent and Lenders in respect of the Obligations.

“Guarantors” means each Subsidiary of Borrower, and each other Person, if any,
that executes a guaranty or other similar agreement in favor of Agent, for
itself and the ratable benefit of Lenders, in connection with the transactions
contemplated by the Agreement and the other Loan Documents.

“Hazardous Material” means any substance, material or waste that is regulated
by, or forms the basis of liability now or hereafter under, any Environmental
Laws, including any material or substance that is (a) defined as a “solid
waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s),
or any radioactive substance.

“Indebtedness” means, with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred 6 months or more, but excluding
obligations to trade creditors incurred in the ordinary course of business that
are unsecured and not overdue by more than 6 months unless being contested in
good faith, (b) all reimbursement and other obligations with respect to letters
of credit, bankers’ acceptances and surety bonds, whether or not matured, (c)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.

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“Indemnified Liabilities” has the meaning ascribed to it in Section 1.13.

“Indemnified Person” has the meaning ascribed to in Section 1.13.

“Index Rate” means, for any day, a floating rate equal to the higher of (i) the
rate publicly quoted from time to time by The Wall Street Journal as the “base
rate on corporate loans posted by at least 75% of the nation’s 30 largest banks”
(or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
“Selected Interest Rates” as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.

“Index Rate Loan” means a Loan or portion thereof bearing interest by reference
to the Index Rate.

“Instruments” means all “instruments,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and, in any
event, including all certificated securities, all certificates of deposit, and
all promissory notes and other evidences of indebtedness, other than instruments
that constitute, or are a part of a group of writings that constitute, Chattel
Paper.

“Intellectual Property” means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.

“Intercompany Notes” has the meaning ascribed to it in Section 6.3.

"Interest Expense" means, with respect to any Person for any fiscal period,
interest expense of such Person paid in cash determined in accordance with GAAP
for the relevant period ended on such date, including, interest expense with
respect to any Funded Debt of such Person but excluding interest expense with
respect to any Permitted Insurance Premium Indebtedness of such Person.

“Interest Payment Date” means (a) as to any Index Rate Loan, the first Business
Day of each month to occur while such Loan is outstanding, and (b) as to any
LIBOR Loan, the last day of the applicable LIBOR Period; provided that, in
addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an “Interest Payment Date”
with respect to any interest that has then accrued under the Agreement.

“Inventory” means all “inventory,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and in any
event including inventory, merchandise, goods and other personal property that
are held by or on behalf of any Credit Party for sale or lease or are furnished
or are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party’s business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.

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“Investment Property” means all “investment property” as such term is defined in
the Code now owned or hereafter acquired by any Credit Party, wherever located,
including (i) all securities, whether certificated or uncertificated, including
stocks, bonds, interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (ii) all securities
entitlements of any Credit Party, including the rights of any Credit Party to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Credit Party; (iv) all commodity contracts of any
Credit Party; and (v) all commodity accounts held by any Credit Party.

“IRC” means the Internal Revenue Code of 1986 and all regulations promulgated
thereunder.

“IRS” means the Internal Revenue Service.

“Lenders” means GE Capital, the other Lenders named on the signature pages of
the Agreement, and, if any such Lender shall decide to assign all or any portion
of the Obligations, such term shall include any assignee of such Lender.

“Letter-of-Credit Rights” means “letter-of-credit rights” as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.

“LIBOR Business Day” means a Business Day on which banks in the City of London
are generally open for interbank or foreign exchange transactions.

“LIBOR Loan” means a Loan or any portion thereof bearing interest by reference
to the LIBOR Rate.

“LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on
a LIBOR Business Day selected by Borrower pursuant to the Agreement and ending
one, two or three months thereafter, as selected by Borrower’s irrevocable
notice to Agent as set forth in Section 1.5(e); provided, that the foregoing
provision relating to LIBOR Periods is subject to the following:

         (a)      if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry such
LIBOR Period into another calendar month in which event such LIBOR Period shall
end on the immediately preceding LIBOR Business Day;

             (b)      any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end 2 LIBOR Business Days prior to such date;

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         (c)      any LIBOR Period that begins on the last LIBOR Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Period) shall end on the last
LIBOR Business Day of a calendar month;

             (d)      Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and

             (e)      Borrower shall select LIBOR Periods so that there shall be
no more than 3 separate LIBOR Loans in existence at any one time.    

“LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent
equal to:

             (a)      the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by

             (b)      a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) that
are required to be maintained by a member bank of the Federal Reserve System.  
 

If such interest rates shall cease to be available from Telerate News Service,
the LIBOR Rate shall be determined from such financial reporting service or
other information as shall be mutually acceptable to Agent and Borrower.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Credit Party.

“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable
law of any jurisdiction).

“Litigation” has the meaning ascribed to it in Section 3.13.

“Loan Account” has the meaning ascribed to it in Section 1.12.

“Loan Documents” means the Agreement, the Notes, the Collateral Documents, and
all other agreements, instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of, Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

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“Loans” means the Revolving Loan and the Term Loan.

“Lock Boxes” has the meaning ascribed to it in Annex B.

“Margin Stock” has the meaning ascribed to in Section 3.10.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of any Credit
Party, (b) any Credit Party’s ability to pay any of the Loans or any of the
other Obligations in accordance with the terms of this Agreement or any other
Loan Document, (c) the Collateral or Agent’s Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent’s or any
Lender’s rights and remedies under the Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, it shall also constitute a
Material Adverse Effect if at any time the “Average Rig Count” for the United
States (excluding Canada and International rigs) published from time to time by
Baker Hughes, Inc. falls below 675 for 12 consecutive weeks.

“Maximum Revolver Amount” means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making,
is obligated to make or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.

“Multi-Shot Division” means the portion of Borrower’s business related to
land-based directional drilling, onshore and offshore downhole surveying,
measurement while drilling, steering tools, motor rentals to oil and gas
operators that was sold by Borrower to Multi-Shot, LLC, a Texas limited
liability company, in August, 2004.

“Non-Funding Lender” has the meaning ascribed to it in Section 9.9(a)(ii).

“Notes” means, collectively, the Revolving Notes and the Term Notes.

“Notice of Conversion/Continuation” has the meaning ascribed to it in Section
1.5(e).

“Notice of Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).

“Obligations” means all loans, advances, debts, liabilities and obligations for
the performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any Credit Party to Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under the Agreement or any of the other Loan
Documents. This term includes all principal, interest (including all interest
that accrues after the commencement of any case or proceeding by or against any
Credit Party in bankruptcy, whether or not allowed in such case or proceeding),
Fees, Charges, expenses, attorneys’ fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents.

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“Original Closing Date” means September 14, 2001.

“Original Credit Agreement” has the meaning assigned to such term in the
recitals of this Agreement.

“Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right with respect to any invention on
which a Patent is in existence.

“Patent Security Agreements” means the Patent Security Agreements made in favor
of Agent, on behalf of itself and Lenders, by each applicable Credit Party.

“Patents” means all of the following in which any Credit Party now holds or
hereafter acquires any interest: (a) all letters patent of the United States or
of any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State, or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means a Plan described in Section 3(2) of ERISA.

“Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable or which
are being contested in accordance with Section 5.2(b); (b) pledges or deposits
of money securing statutory obligations under workmen’s compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers’, mechanics’
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers’,
warehousemen’s, suppliers’ or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $50,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly permitted
under clauses (b) and (c) of Section 6.7 of the Agreement.

“Permitted Insurance Premium Indebtedness” shall mean Indebtedness of the
Borrower incurred to finance insurance premiums of the Borrower in the ordinary
course of business.

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

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“Plan” means, at any time, an “employee benefit plan”, as defined in Section
3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to or has maintained, contributed to or
had an obligation to contribute to at any time within the past 7 years on behalf
of participants who are or were employed by any Credit Party or ERISA Affiliate.

“Proceeds” means “proceeds,” as such term is defined in the Code, including (a)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to any Credit Party from time to time with respect to any of the Collateral, (b)
any and all payments (in any form whatsoever) made or due and payable to any
Credit Party from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or (ii)
for past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Credit Party against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.

“Pro Forma” means the unaudited consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as of June 30, 2004 after giving pro forma effect
to the Related Transactions.

“Projections” means Borrower’s forecasted consolidated and consolidating: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, all prepared on a division-by-division basis, if
applicable, and otherwise consistent with the historical Financial Statements of
Borrower, together with appropriate supporting details and a statement of
underlying assumptions.

“Pro Rata Share” means with respect to all matters relating to any Lender, (a)
with respect to the Revolving Loan, the percentage obtained by dividing (i) the
Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan
Commitments of all Lenders, (b) with respect to the Term Loan(s), the percentage
obtained by dividing (i) the Term Loan Commitment of that Lender by (ii) the
aggregate Term Loan Commitments of all Lenders, as any such percentages may be
adjusted by assignments permitted pursuant to Section 9.1, (c) with respect to
all Loans, the percentage obtained by dividing (i) the aggregate Commitments of
that Lender by (ii) the aggregate Commitments of all Lenders, and (d) with
respect to all Loans on and after the Commitment Termination Date, the
percentage obtained by dividing (i) the aggregate outstanding principal balance
of the Loans held by that Lender, by (ii) the outstanding principal balance of
the Loans held by all Lenders.

“Qualified Plan” means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any commercial bank, savings and
loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.

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“Ratable Share” has the meaning ascribed to it in Section 1.1(b).

“Real Estate” has the meaning ascribed to it in Section 3.6.

“Related Transactions” means the initial Revolving Credit Advance and the Term
Loan on the Closing Date, extension of the maturity date of the Subordinated
Notes to a date no earlier than 90 days after the Commitment Termination Date,
the payment of all fees, costs and expenses associated with all of the foregoing
and the execution and delivery of all of the Related Transactions Documents.

“Related Transactions Documents” means the Loan Documents, the Subordination
Agreement, Subordinated Notes and all other agreements or instruments executed
in connection with the Related Transactions.

“Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.

“Requisite Lenders” means Lenders having (a) more than 66 2/3% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, more
than 66 2/3% of the aggregate outstanding amount of all Loans.

“Requisite Revolving Lenders” means Lenders having (a) more than 66 2/3% of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 66 2/3% of the aggregate outstanding
amount of the Revolving Loan.

“Reserves” means (a) reserves established pursuant to Section 5.4(c), and (b)
such other reserves against Eligible Accounts or Borrowing Availability that
Agent may, in its reasonable credit judgment, establish from time to time.
Without limiting the generality of the foregoing, Reserves established to ensure
the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a
reasonable exercise of Agent’s credit judgment.

“Restricted Payment” means, with respect to any Credit Party (a) the declaration
or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of Stock;
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of such Credit Party’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly; (c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt; (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter
outstanding; (e) any payment of a claim for the rescission of the purchase or
sale of, or for material damages arising from the purchase or sale of, any
shares of such Credit Party’s Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of
funds or other property to any Stockholder of such Credit Party other than
payment of compensation in the ordinary course of business to Stockholders who
are employees of such Person and (g) any payment of management fees (or other
fees of a similar nature) by such Credit Party to any Stockholder of such Credit
Party or its Affiliates.

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“Retiree Welfare Plan” means, at any time, a Welfare Plan that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant’s termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.

“Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i).

“Revolving Lenders” means, as of any date of determination, Lenders having a
Revolving Loan Commitment.

“Revolving Loan” means, at any time, the aggregate amount of Revolving Credit
Advances outstanding to Borrower.

“Revolving Loan Commitment” means (a) as to any Lender, the aggregate commitment
of such Lender to make Revolving Credit Advances as set forth on Annex I to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving
Credit Advances, which aggregate commitment shall be Ten Million ($10,000,000)
on the Closing Date, as such amount may be adjusted, if at all, from time to
time in accordance with the Agreement.

“Revolving Note” has the meaning ascribed to it in Section 1.1(a)(ii).

“Security Agreement” means the Security Agreement dated as of the Original
Closing Date entered into by and among Agent, on behalf of itself and Lenders,
and each Credit Party that is a signatory thereto.

“Software” means all “software” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

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“St. James” means, collectively, St. James Capital Corp., a Delaware
corporation, SJMB, LP, a Texas Limited Partnership, and SJMB, LLC, a Texas
Limited Liability Company.

“Stock” means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other “equity security” (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934).

“Stockholder” means, with respect to any Person, each holder of Stock of such
Person.

“Subordinated Debt” means the Indebtedness of Borrower evidenced by the
Subordinated Notes and any other Indebtedness of any Credit Party subordinated
to the Obligations in a manner and form satisfactory to Agent and Lenders in
their sole discretion, as to right and time of payment and as to any other
rights and remedies thereunder.

“Subordinated Note Holders” shall mean each of the Persons listed on Disclosure
Schedule 3.24.

“Subordinated Notes” means those certain promissory notes issued by Borrower and
described on Disclosure Schedule 3.24.

“Subordination Agreement” shall mean the Subordination Agreement, dated as of
the Original Closing Date, by and among the Subordinated Note Holders, the
Agent, the Lenders and Borrower.

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or may exercise the powers of a general partner. Unless the context otherwise
requires, each reference to a Subsidiary shall be a reference to a Subsidiary of
a Borrower.

“Supermajority Revolving Lenders” means Lenders having (a) 80% or more of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan.

“Supporting Obligations” means all “supporting obligations” as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.

“Taxes” means taxes, levies, imposts, deductions, Charges or withholdings, and
all liabilities with respect thereto, excluding taxes imposed on or measured by
the net income of Agent or a Lender by the jurisdictions under the laws of which
Agent and Lenders are organized or conduct business or any political subdivision
thereof.

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“Termination Date” means the date on which (a) the Loans have been indefeasibly
repaid in full, (b) all other Obligations under the Agreement and the other Loan
Documents have been completely discharged, and (c) Borrower shall have no
further right to borrow any monies under the Agreement.

“Term Lenders” means those Lenders having Term Loan Commitments.

“Term Loan” has the meaning assigned to it in Section 1.1(b)(i).

“Term Loan Commitment” means (a) as to any Lender with a Term Loan Commitment,
the commitment of such Lender to make its Pro Rata Share of the Term Loan as set
forth on Annex I to the Agreement or in the most recent Assignment Agreement
executed by such Lender, and (b) as to all Lenders with a Term Loan Commitment,
the aggregate commitment of all Lenders to make the Term Loan, which aggregate
commitment shall be Eight Million ($8,000,000) on the Closing Date. After
advancing the Term Loan, each reference to a Lender’s Term Loan Commitment shall
refer to that Lender’s Pro Rata Share of the outstanding Term Loan.

“Term Note” has the meaning assigned to it in Section 1.1(b)(i).

“Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is
covered by Title IV of ERISA, and that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.

“Trademark Security Agreements” means the Trademark Security Agreements made in
favor of Agent, on behalf of Lenders, by each applicable Credit Party.

“Trademark License” means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right to use any Trademark.

“Trademarks” means all of the following now owned or hereafter existing or
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.

“Unfunded Pension Liability” means, at any time, the aggregate amount, if any,
of the sum of (a) the amount by which the present value of all accrued benefits
under each Title IV Plan exceeds the fair market value of all assets of such
Title IV Plan allocable to such benefits in accordance with Title IV of ERISA,
all determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, and (b) for a period of 5 years following a transaction which might
reasonably be expected to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by any Credit Party or any ERISA
Affiliate as a result of such transaction.

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“Welfare Plan” means a Plan described in Section 3(i) of ERISA.

Rules of construction with respect to accounting terms used in the Agreement or
the other Loan Documents shall be as set forth in Annex H. All other undefined
terms contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are
used or defined therein; in the event that any term is defined differently in
different Articles or Divisions of the Code, the definition contained in Article
or Division 9 shall control. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause refer to
such Section, subsection or clause as contained in the Agreement. The words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.

Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation”; the word “or”
is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.

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ANNEX B (Section 1.8)
to
CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

Borrower shall, and shall cause its Subsidiaries to, establish and maintain the
Cash Management Systems described below:

(a)      On or before the Closing Date and until the Termination Date, Borrower
shall (i) establish lock boxes (“Lock Boxes”) or at Agent’s discretion, blocked
accounts (“Blocked Accounts”) at one or more of the banks set forth in
Disclosure Schedule (3.19), and shall request in writing and otherwise take such
reasonable steps to ensure that all Account Debtors forward payment directly to
such Lock Boxes, and (ii) deposit and cause its Subsidiaries to deposit or cause
to be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all cash, checks, drafts or other similar
items of payment relating to or constituting payments made in respect of any and
all Collateral (whether or not otherwise delivered to a Lock Box) into one or
more Blocked Accounts in Borrower’s name or any such Subsidiary’s name and at a
bank identified in Disclosure Schedule (3.19) (each, a “Relationship Bank”). On
or before the Closing Date, Borrower shall have established a concentration
account in its name (the “Concentration Account”) at the bank that shall be
designated as the Concentration Account bank in Disclosure Schedule (3.19) (the
“Concentration Account Bank”) which bank shall be reasonably satisfactory to
Agent.

(b)      Borrower may maintain, in its name, an account (each a “Disbursement
Account” and collectively, the “Disbursement Accounts”) at a bank reasonably
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances made to Borrower pursuant to Section 1.1 for use by
Borrower solely in accordance with the provisions of Section 1.4.

(c)      On or before the Closing Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit of
itself and Lenders, and Borrower, in form and substance reasonably acceptable to
Agent, which shall become operative on or prior to the Closing Date. Each such
blocked account agreement shall provide, among other things, that (i) all items
of payment deposited in such account and proceeds thereof deposited in the
Concentration Account are held by such bank as agent or bailee-in-possession for
Agent, on behalf of itself and Lenders, (ii) the bank executing such agreement
has no rights of setoff or recoupment or any other claim against such account,
as the case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Closing Date (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees to
forward immediately all amounts in each Blocked Account to the Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the Concentration Account and (B) with respect to the Concentration
Account Bank, such bank agrees to immediately forward all amounts received in
the Concentration Account to the Collection Account through daily sweeps from
the Concentration Account into the Collection Account. Borrower shall not cause
or permit any of its Subsidiaries to, accumulate or maintain cash in
Disbursement Accounts or payroll accounts as of any date of determination in
excess of checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.

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(d)      So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace the Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, Borrower or its Subsidiaries, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance reasonably satisfactory to Agent. Borrower shall close any of its
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days following notice from Agent
that the creditworthiness of any bank holding an account is no longer acceptable
in Agent’s reasonable judgment, or as promptly as practicable and in any event
within 60 days following notice from Agent that the operating performance, funds
transfer or availability procedures or performance with respect to accounts or
Lock Boxes of the bank holding such accounts or Agent’s liability under any
tri-party blocked account agreement with such bank is no longer acceptable in
Agent’s reasonable judgment.

(e)      The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each of its
Subsidiaries shall have granted a Lien to Agent, on behalf of itself and
Lenders, pursuant to the Security Agreement.

(f)      All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.

(g)      Borrower shall and shall cause its Affiliates, officers, employees,
agents, directors or other Persons acting for or in concert with Borrower (each
a “Related Person”) to (i) hold in trust for Agent, for the benefit of itself
and Lenders, all checks, cash and other items of payment received by Borrower or
any such Related Person, and (ii) within 1 Business Day after receipt by
Borrower or any such Related Person of any checks, cash or other items of
payment, deposit the same into a Blocked Account of Borrower. Borrower and each
Related Person thereof acknowledges and agrees that all cash, checks or other
items of payment constituting proceeds of Collateral are part of the Collateral.
All proceeds of the sale or other disposition of any Collateral, shall be
deposited directly into the applicable Blocked Accounts.

(h)      Notwithstanding the foregoing, the Borrower may maintain a certificate
of deposit with AmSouth Bank in Account No. 9003134551, without such account
being subject to the foregoing provisions, provided that such account is used
solely for credit card retainers and the aggregate funds in such account do not
exceed $50,000 at any time.

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ANNEX C (Section 2.1(a))
to
CREDIT AGREEMENT

CLOSING CHECKLIST

In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):

A.      Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.

B.      Revolving Notes and Term Notes. Duly executed originals of the Revolving
Notes and Term Notes for each applicable Lender, dated the Closing Date.

C.      Reaffirmations. Duly executed originals of a Reaffirmation of the
Security Agreement and Subsidiary Guaranty, dated the Closing Date, executed by
each Loan Party party to either the Security Agreement or the Subsidiary
Guaranty.

D.      Insurance. Satisfactory evidence that the insurance policies required by
Section 5.4 are in full force and effect, together with appropriate evidence
showing loss payable and/or additional insured clauses or endorsements, as
requested by Agent, in favor of Agent, on behalf of Lenders, and assignments of
all key-man life insurance policies executed by Borrower in form and substance
satisfactory to Agent.

E.      Security Interests and Code Filings.

         (a)      Evidence satisfactory to Agent that Agent (for the benefit of
itself and Lenders) has a valid and perfected first priority security interest
in the Collateral subject to Permitted Encumbrances, including (i) such
documents duly executed or authorized (with respect to financing statements) by
each Credit Party (including financing statements under the Code and other
applicable documents under the laws of any jurisdiction with respect to the
perfection of Liens) as Agent may request in order to perfect its security
interests in the Collateral, and (ii) copies of Code search reports listing all
effective financing statements that name any Credit Party as debtor, together
with copies of such financing statements, none of which shall cover the
Collateral, except for Permitted Encumbrances.

         (b)      Evidence satisfactory to Agent, including copies, of all UCC
and other financing statements filed in favor of any Credit Party with respect
to each location, if any, at which Inventory may be consigned.

         (c)      Control Letters from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of Borrower, and (iii) all futures commission agents and clearing
houses with respect to all commodities contracts and commodities accounts held
by Borrower.

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F.      Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts of Borrower as of a date not
more than 7 days prior to the Closing Date.

G.      Letter of Direction. Duly executed originals of a letter of direction
from Borrower addressed to Agent, on behalf of itself and Lenders, with respect
to the disbursement on the Closing Date of the proceeds of the Term Loan.

H.      Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex B to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex B, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex B.

I.      Charter and Good Standing. For each Credit Party, such Person’s (a)
charter and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.

J.      Bylaws and Resolutions. For each Credit Party, (a) such Person’s bylaws,
together with all amendments thereto and (b) resolutions of such Person’s Board
of Directors approving and authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each certified as of the Closing Date by
such Person’s corporate secretary or an assistant secretary as being in full
force and effect without any modification or amendment.

K.      Incumbency Certificates. For each Credit Party, signature and incumbency
certificates of the officers of each such Person executing any of the Loan
Documents, certified as of the Closing Date by such Person’s corporate secretary
or an assistant secretary as being true, accurate, correct and complete.

L.      Opinions of Counsel. Duly executed originals of opinions of Rosen, Cook,
Sledge, Davis, Cade & Shattuck, P.A., counsel for the Credit Parties, together
with any local counsel opinions reasonably requested by Agent, each in form and
substance reasonably satisfactory to Agent and its counsel, dated the Closing
Date, and each accompanied by a letter addressed to such counsel from the Credit
Parties, authorizing and directing such counsel to address its opinion to Agent,
on behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.

M.      Accountants’ Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2.

N.      Appointment of Agent for Service. An appointment of CT Corporation as
each Credit Party’s agent for service of process.

O.      Fee Letter. Duly executed originals of the GE Capital Fee Letter.

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P.      Officer’s Certificate. Agent shall have received duly executed originals
of a certificate of the Chief Executive Officer and Chief Financial Officer of
Borrower, dated the Closing Date, stating that, since December 31, 2003 (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no material
adverse change in the industry in which Borrower operates; (c) no Litigation has
been commenced which, if successful, would have a Material Adverse Effect or
could challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; (d) there have been no Restricted Payments made by any
Credit Party; and (e) there has been no material increase in liabilities,
liquidated or contingent, and no material decrease in assets of Borrower or any
of its Subsidiaries.

Q.      Waivers. Agent, on behalf of Lenders, shall have received landlord
waivers and consents, bailee letters and mortgagee agreements in form and
substance reasonably satisfactory to Agent, in each case as required pursuant to
Section 5.9.

R.      Reaffirmations of Subordination Agreements. Agent and Lenders shall have
received Reaffirmations of the Subordination Agreements, duly executed by all
parties to the Subordination Agreements and in form and substance satisfactory
to Agent, in its sole discretion; together with certified copies of amendments
to the Subordinated Notes extending the maturity date of the Subordinated Notes
to no earlier than 90 days after the Commitment Termination Date and consenting
to the Borrower incurring the Indebtedness and granting the Liens contemplated
under the Loan Documents, such amendments to be in form and substance
satisfactory to Agent in its sole discretion executed by all holders of the
Subordinated Notes.

S.      Audited Financials; Financial Condition. Agent shall have received a
copy of Borrower’s Form 10-Q/A filed with the Securities and Exchange Commission
for the Fiscal Quarter ending June 30, 2004, the Financial Statements,
Projections and other materials set forth in Section 3.4, all certified by
Borrower’s Chief Financial Officer, in each case in form and substance
reasonably satisfactory to Agent, and Agent shall be satisfied, in its sole
discretion, with all of the foregoing. Agent shall have further received a
certificate of the Chief Executive Officer and/or the Chief Financial Officer of
Borrower, based on such Pro Forma and Projections, to the effect that (a)
Borrower will be Solvent upon the consummation of the transactions contemplated
herein; (b) the Pro Forma fairly presents the financial condition of Borrower as
of the date thereof after giving effect to the transactions contemplated by the
Loan Documents; (c) the Projections are based upon estimates and assumptions
stated therein, all of which Borrower believes to be reasonable and fair in
light of current conditions and current facts known to Borrower and, as of the
Closing Date, reflect Borrower’s good faith and reasonable estimates of its
future financial performance and of the other information projected therein for
the period set forth therein; and (d) containing such other statements with
respect to the solvency of Borrower and matters related thereto as Agent shall
request.

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T.      Mortgages and Amendments Thereto. If requested by Agent, Mortgages
covering all of the Real Estate owned by the Credit Parties, including without
limitation amendment to all Mortgages granted to the Agent prior to the Closing
Date pursuant to the Original Credit Agreement, reflecting the restructuring of
the Commitments under this Agreement, to the extent necessary or desirable,
together with: (a) endorsements to title insurance policies issued to the Agent
prior to the Closing Date, in satisfactory in form and substance to Agent, in
its sole discretion; (b) evidence that counterparts of the Mortgages and
amendments thereto have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on each parcel of such Real
Estate in favor of Agent for the benefit of itself and Lenders (or in favor of
such other trustee as may be required or desired under local law) securing the
Commitments and Obligations; and (c) an opinion of counsel in each state in
which any such Real Estate is located in form and substance and from counsel
reasonably satisfactory to Agent.

U.      Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.

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ANNEX D (Section 4.1(a))
to
CREDIT AGREEMENT

FINANCIAL STATEMENTS AND PROJECTIONS – REPORTING

Borrower shall deliver or cause to be delivered to Agent or to Agent and
Lenders, as indicated, the following:

(a)      Monthly Financials. To Agent and Lenders, within 30 days after the end
of each Fiscal Month, financial information regarding Borrower and its
Subsidiaries, certified by the Chief Financial Officer of Borrower, consisting
of consolidated and consolidating (i) unaudited balance sheets as of the close
of such Fiscal Month and the related statements of income and cash flows for
that portion of the Fiscal Year ending as of the close of such Fiscal Month;
(ii) unaudited statements of income and cash flows for such Fiscal Month,
setting forth in comparative form the figures for the corresponding period in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments, and without footnotes or disclosures required by GAAP); and (iii) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month. Such financial information shall be accompanied by (A) a
statement in reasonable detail (each, a “Compliance Certificate”) showing the
calculations used in determining compliance with each Financial Covenant that is
tested on a monthly basis, and (B) the certification of the Chief Financial
Officer of Borrower that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrower and its Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.

(b)      Operating Plan. To Agent and Lenders, as soon as available, but not
later than 30 days after the end of each Fiscal Year, an annual operating plan
for Borrower, on a consolidated and consolidating basis, approved by the Board
of Directors of Borrower, for the following Fiscal Year, which (i) includes a
statement of all of the material assumptions on which such plan is based, (ii)
includes monthly balance sheets, income statements and statements of cash flows
for the following year and (iii) integrates sales, gross profits, operating
expenses, operating profit, cash flow projections and Borrowing Availability
projections, all prepared on the same basis and in similar detail as that on
which operating results are reported (and in the case of cash flow projections,
representing management’s good faith estimates of future financial performance
based on historical performance), and including plans for personnel, Capital
Expenditures and facilities.

(d)      Annual Audited Financials. To Agent and Lenders, within 105 days after
the end of each Fiscal Year, audited Financial Statements for Borrower and its
Subsidiaries on a consolidated and (unaudited) consolidating basis, consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP and certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the Financial Covenants, (ii) a report from such accounting firm to the
effect that, in connection with their audit examination, nothing has come to
their attention to cause them to believe that a Default or Event of Default has
occurred (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed to
Agent, on behalf of itself and Lenders, in substantially the form of Disclosure
Schedule 4.1(a) signed by such accounting firm, (iv) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters, and (v) the certification of the
Chief Executive Officer or Chief Financial Officer of Borrower that all such
Financial Statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated and consolidating basis, as at the end of such
Fiscal Year and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.

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(e)      Management Letters. To Agent and Lenders, within 5 Business Days after
receipt thereof by any Credit Party, copies of all management letters, exception
reports or similar letters or reports received by such Credit Party from its
independent certified public accountants.

(f)      Default Notices. To Agent and Lenders, as soon as practicable, and in
any event within 5 Business Days after an executive officer of Borrower has
actual knowledge of the existence of any Default, Event of Default or other
event that has had a Material Adverse Effect, telephonic or telecopied notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.

(g)      SEC Filings and Press Releases. To Agent and Lenders, promptly upon
their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.

(h)      Subordinated Debt and Equity Notices. To Agent, as soon as practicable,
copies of all material written notices given or received by any Credit Party
with respect to any Subordinated Debt or Stock of such Person, and, within 2
Business Days after any Credit Party obtains knowledge of any matured or
unmatured event of default with respect to any Subordinated Debt, notice of such
event of default.

(i)      Supplemental Schedules. To Agent, supplemental disclosures, if any,
required by Section 5.6.

(j)      Litigation. To Agent in writing, promptly upon learning thereof, notice
of any Litigation commenced or threatened against any Credit Party that (i)
seeks damages in excess of $100,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities or (vi) involves any product recall.

(k)      Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.

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(l)      Lease Default Notices. To Agent, within 2 Business Days after receipt
thereof, copies of (i) any and all default notices received under or with
respect to any leased location or public warehouse where Collateral is located,
and (ii) such other notices or documents as Agent may reasonably request.

(m)      Lease Amendments. To Agent, within 2 Business Days after receipt
thereof, copies of all material amendments to real estate leases.

(n)      Other Documents. To Agent and Lenders, such other financial and other
information respecting any Credit Party’s business or financial condition as
Agent or any Lender shall from time to time reasonably request.

(o)      Weekly Accounts Payable Reports. To Agent and Lenders, as soon as
available, but not later than 3 Business Days after the end of each week, a
report setting forth an aging of accounts payable.

(p)      Cash Budgets. To Agent and Lenders, as soon as available, but not later
than 3 Business Days after the end of each week, a weekly cash budget for the
immediately following thirteen (13) week period, in form an substance
satisfactory to the Agent in its sole discretion.

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ANNEX E (Section 4.1(b))
to
CREDIT AGREEMENT

COLLATERAL REPORTS

Borrower shall deliver or cause to be delivered the following:

(a)      To Agent, upon its request, and in any event no less frequently than
12:00 p.m. (New York time) on Wednesday of each week (together with a copy of
all or any part of the following reports requested by any Lender in writing
after the Closing Date), each of the following reports, each of which shall be
prepared by the applicable Borrower as of the last day of the immediately
preceding week:

     
(i)      a Borrowing Base Certificate with respect to Borrower, accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;

     
(ii)      with respect to Borrower, a monthly trial balance showing Accounts
outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion.
   

(b)      To Agent, on a weekly basis or at such more frequent intervals as Agent
may request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), collateral
reports with respect to Borrower, including all additions and reductions (cash
and non-cash) with respect to Accounts of Borrower, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion each of which shall be prepared by Borrower as of the last
day of the immediately preceding week or the date 2 days prior to the date of
any such request;

(c)      To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex D:

 
(i)      a reconciliation of the Accounts trial balance of Borrower to its most
recent Borrowing Base Certificate, general ledger and monthly Financial
Statements delivered pursuant to Annex D, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;

     
(ii)      a cumulative roll-forward of Borrower’s inventory balance since the
date of the most recent physical inventory taken by Borrower, accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;

     
(iii)      an aging of accounts payable and a reconciliation of that accounts
payable aging to Borrower’s general ledger and monthly Financial Statements
delivered pursuant to Annex D, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;

     
(iv)      a reconciliation of the outstanding Loans as set forth in the monthly
Loan Account statement provided by Agent to Borrower’s general ledger and
monthly Financial Statements delivered pursuant to Annex D, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
   

(e)      To Agent, within 30 days after the end of each Fiscal Quarter, a
detailed list of all Equipment of Borrower, setting forth additions and
deletions of Equipment since the end of the previous Fiscal Quarter;

 

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(f)      To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to Annex D, (i) a listing of government contracts
of Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Patent, Trademark or
Copyright filed by any Credit Party with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
the prior Fiscal Quarter;

(g)      Borrower, at its own expense, shall deliver to Agent the results of
each physical verification, if any, that Borrower or any of its Subsidiaries may
in their discretion have made, or caused any other Person to have made on their
behalf, of all or any portion of their Inventory (including all Inventory
consisting of tools), which Borrower shall conduct no less frequently than
semi-annually (and, if a Default or an Event of Default has occurred and is
continuing, Borrower shall, upon the request of Agent, conduct, and deliver the
results of, such physical verifications as Agent may require);

(h)      Borrower, at its own expense, shall deliver to Agent such appraisals of
the Forced Liquidation Value (and other values if requested by Agent) of the
Eligible Term Equipment performed by Acceptable Appraisers, promptly upon
Agent’s request, such appraisals to be conducted no more frequently than twice
per year, unless a Default or Event of Default has occurred and is continuing,
and then as frequently as Agent may request, such appraisals to be in form and
substance reasonably satisfactory to Agent; Borrower, at its own expense, shall
also deliver such appraisals of its other assets to Agent after the occurrence
and during the continuance of a Default or an Event of Default promptly upon
Agent’s request, such appraisals to be conducted by an appraiser, and in form
and substance, reasonably satisfactory to Agent; and

(i)      Such other reports, statements and reconciliations with respect to the
Borrowing Base, Collateral or Obligations of any or all Credit Parties as Agent
shall from time to time request in its reasonable discretion.

All reports, statements and reconciliations described in this Annex E shall be
delivered to Agent at its address set forth on Annex H, with no copies to its
outside or internal counsel, but with copies to:

GE Corporate Financial Services
201 Merritt 7
Norwalk, CT 06856-5201
Attention: Operations Department
Telecopier No.: (203) 229-5792

 

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ANNEX F (Section 6.10)
to
CREDIT AGREEMENT

FINANCIAL COVENANTS

Borrower shall not breach or fail to comply with any of the following financial
covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

(a)      Maximum Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during any Fiscal Year in
an aggregate amount in excess of $3,000,000.

(b)      Minimum Fixed Charge Coverage Ratio. Borrower and its Subsidiaries
shall have on a consolidated basis at the end of each Fiscal Month, commencing
with the Fiscal Month ending December 31, 2004and continuing thereafter, a Fixed
Charge Coverage Ratio for the 12-month period then ended of not less than
1.5:1.0.

Notwithstanding the foregoing, for the purpose of calculating the Fixed Charge
Coverage Ratio (1) Fixed Charges for the twelve month period ending December 31,
2004 shall be calculated as Fixed Charges for the one month period then ending
multiplied by twelve, (2) Fixed Charges for the twelve month period ending
January 31, 2005 shall be calculated as Fixed Charges for the two month period
then ending multiplied by six, (3) Fixed Charges for the twelve month period
ending February 28, 2005 shall be calculated as Fixed Charges for the three
month period then ending multiplied by four, (4) Fixed Charges for the twelve
month period ending March 31, 2005 shall be calculated as Fixed Charges for the
four month period then ending multiplied by three, (5) Fixed Charges for the
twelve month period ending April 30, 2005 shall be calculated as Fixed Charges
for the five month period then ending multiplied by 12/5, (6) Fixed Charges for
the twelve month period ending May 31, 2005 shall be calculated as Fixed Charges
for the six month period then ending multiplied by two, (7) Fixed Charges for
the twelve month period ending June 30, 2005 shall be calculated as Fixed
Charges for the seven month period then ending multiplied by 12/7, (8) Fixed
Charges for the twelve month period ending July 31, 2005 shall be calculated as
Fixed Charges for the eight month period then ending multiplied by 3/2, (9)
Fixed Charges for the twelve month period ending August 31, 2005 shall be
calculated as Fixed Charges for the nine month period then ending multiplied by
4/3, (10) Fixed Charges for the twelve month period ending September 30, 2005
shall be calculated as Fixed Charges for the ten month period then ending
multiplied by 6/5, and (11) Fixed Charges for the twelve month period ending
October 31, 2005 shall be calculated as Fixed Charges for the eleven month
period then ending multiplied by 12/11, (12) EBITDA of the Multi-Shot Division
shall be excluded from the calculation of the Fixed Charge Coverage Ratio and
(13) EBITDA of the Borrower and its Subsidiaries on a consolidated basis for
each of the first eight Fiscal Months of Fiscal Year 2004 shall be increased by
$75,000.

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Unless otherwise specifically provided herein, any accounting term used in the
Agreement shall have the meaning customarily given such term in accordance with
GAAP, and all financial computations hereunder shall be computed in accordance
with GAAP consistently applied. That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a change in the calculation of the financial
covenants, standards or terms used in the Agreement or any other Loan Document,
then Borrower, Agent and Lenders agree to enter into negotiations in order to
amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower’s and its Subsidiaries’ financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
“Accounting Changes” means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower’s certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex F shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.

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ANNEX G (Section 9.9(a))
to
CREDIT AGREEMENT

WIRE TRANSFER INFORMATION

  Name: General Electric Capital Corporation   Bank: Bankers Trust Company    
New York, New York   ABA # 021001033   Account #: 50232854   Account Name:
GECC/CAF Depository   Reference:  CFA6078                        

 

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ANNEX H (Section 11.10)
to
CREDIT AGREEMENT

NOTICE ADDRESSES

    

(A)  If to Agent or GE Capital, at   General Electric Capital Corporation

  500 West Monroe

  Chicago, Illinois 60661

  Attention: Black Warrior Wireline Corp. Account Manager

  Telecopier No.: (312) 463-3840

  Telephone No.: (312) 441-7599    

  with copies to:

      King & Spalding LLP

  191 Peachtree Street, N.E.

  Atlanta, Georgia 30303-1763

  Attention: Carolyn Z. Alford, Esq.

  Telecopier No.: (404) 572-5100

  Telephone No.: (404) 572-4600    

  and

      GE Corporate Financial Services
201 Merritt 7
Norwalk, Connecticut 06856-5201
Attention: Corporate Counsel
Telecopier No.: (203) 956-4001

  Telephone No.: (203) 956-4379

    (B) If to Borrower, at       Black Warrior Wireline Corp.

  100 Rosecrest Lane

  Columbus, Mississippi 39701

  Attention: William L. Jenkins

  Telecopier No.: 662-329-1089

  Telephone No.: 662-329-1047

 

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      with copies to:

      Rosen, Cook, Sledge, Davis, Cade & Shattuck, P.A.   2117 Jack Warner
Parkway   Tuscaloosa, AL 35401

  Attention: James J. Sledge, Esq.

  Telecopier No.: 205-758-8358

  Telephone No.: 205-344-5000

 

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ANNEX I (from Annex A – Commitments definition)
to

CREDIT AGREEMENT

   
Lender(s)
  Revolving Loan Commitment
$10,000,000
General Electric Capital Corporation
   

  Term Loan Commitment:
$8,000,000
General Electric Capital Corporation

     

 

     

 

     

 

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ANNEX J
to
CREDIT AGREEMENT

NON-CONSENTING SUBORDINATED NOTE HOLDERS

Douglas E. Heltne
Allen Neel
Douglas B. Nelson and Jessica M. Swift
CR Puryear Living Trust
Katherine H. Buchanan
William Lear IRA
Woodrow & Barbara Chamberlain
Barry O’Brien IRA
David and Nancy Frej
Delaware Charter Trust Trustee FBO: Frank Harrison IRA
Kenneth H. Buchanan
Harry Bookey

 

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