Exhibit 10.1

 

 

IMPERIAL SUGAR COMPANY,

IMPERIAL DISTRIBUTING, INC.,

IMPERIAL-SAVANNAH LP

and

RAGUS HOLDINGS, INC.,

as Borrowers,

and

THE ADDITIONAL SUBSIDIARIES OF

IMPERIAL SUGAR COMPANY,

as Guarantors

 

 

SECOND AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Dated as of May 18, 2011

$140,000,000 Revolving Credit Facility

 

 

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders

and

BANK OF AMERICA, N.A.,

as Agent

BANK OF AMERICA, N.A.

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Collateral Agents,

and

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

as Co-Lead Arranger and Book Manager

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Lead Arranger

 

 

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TABLE OF CONTENTS

 

                    Page   SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION      1
      1.1    Definitions      1       1.2    Accounting Terms      28       1.3
   Uniform Commercial Code      28       1.4    Certain Matters of Construction
     28    SECTION 2. CREDIT FACILITIES      29       2.1    Revolver Commitment
     29          2.1.1    Revolver Loans      29          2.1.2    Revolver
Notes      29          2.1.3    Use of Proceeds      29          2.1.4   
Voluntary Reduction or Termination of Revolver Commitments      29         
2.1.5    Overadvances      29          2.1.6    Protective Advances      30   
   2.2    [Intentionally omitted.]      30       2.3    Letter of Credit
Facility      30          2.3.1    Issuance of Letters of Credit      30      
   2.3.2    Reimbursement; Participations      32          2.3.3    Cash
Collateral      33          2.3.4    Resignation of Issuing Bank      33   
SECTION 3. INTEREST, FEES AND CHARGES      33       3.1    Interest      33   
      3.1.1    Rates and Payment of Interest      33          3.1.2   
Application of LIBOR to Outstanding Loans      34          3.1.3    Interest
Periods      34          3.1.4    Interest Rate Not Ascertainable      35      
3.2    Fees      35          3.2.1    Unused Line Fee      35          3.2.2   
LC Facility Fees      35          3.2.3    Closing Fee      35          3.2.4   
Agent Fees      35       3.3    Computation of Interest, Fees, Yield Protection
     35       3.4    Reimbursement Obligations      35       3.5    Illegality
     36       3.6    Inability to Determine Rates      36       3.7    Increased
Costs; Capital Adequacy      36          3.7.1    Change in Law      36         
3.7.2    Capital Adequacy      37          3.7.3    Compensation      37      
3.8    Mitigation      37       3.9    Funding Losses      37       3.10   
Maximum Interest      38       3.11    Replacement of Certain Lenders      38   
SECTION 4. LOAN ADMINISTRATION      38       4.1    Manner of Borrowing and
Funding Revolver Loans      38          4.1.1    Notice of Borrowing      38   
      4.1.2    Fundings by Lenders      39   

 

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      4.1.3    Swingline Loans; Settlement      39          4.1.4    Notices   
  40       4.2    Defaulting Lender      40          4.2.1    Reallocation of
Pro Rata Share; Amendments      40          4.2.2    Payments; Fees      40   
      4.2.3    Cure      40       4.3    Number and Amount of LIBOR Loans;
Determination of Rate      40       4.4    Borrower Agent      41       4.5   
One Obligation      41       4.6    Effect of Termination      41    SECTION 5.
PAYMENTS      41       5.1    General Payment Provisions      41       5.2   
Repayment of Revolver Loans      41       5.3    Prepayments of the Revolver
Loans      42       5.4    Payment of Other Obligations      42       5.5   
Marshaling; Payments Set Aside      42       5.6    Post-Default Allocation of
Payments      43          5.6.1    Allocation      43          5.6.2   
Erroneous Application      43       5.7    Application of Payments      43      
5.8    Loan Account; Account Stated      44          5.8.1    Loan Account     
44          5.8.2    Entries Binding      44       5.9    Taxes      44         
5.9.1    Payments Free of Taxes      44          5.9.2    Payment      44      
   5.9.3    Refunds      44       5.10    Lender Tax Information      45      
   5.10.1    Status of Lenders      45          5.10.2    Documentation      45
         5.10.3    Lender Obligations      45       5.11    Nature and Extent of
Each Borrower’s Liability      45          5.11.1    Joint and Several Liability
     45          5.11.2    Waivers      46          5.11.3    Extent of
Liability; Contribution      47          5.11.4    Joint Enterprise      47   
      5.11.5    Subordination      47    SECTION 6. CONDITIONS PRECEDENT      48
      6.1    Conditions Precedent to Initial Loans      48       6.2   
Conditions Precedent to All Credit Extensions      49    SECTION 7. COLLATERAL
     50       7.1    Grant of Security Interest      50       7.2    Lien on
Deposit Accounts; Cash Collateral      51          7.2.1    Deposit Accounts   
  51          7.2.2    Cash Collateral      51       7.3    Real Estate
Collateral      51          7.3.1    Lien on Real Estate      51          7.3.2
   Collateral Assignment of Leases      51       7.4    Other Collateral      51
         7.4.1    Commercial Tort Claims      51   

 

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      7.4.2    Certain After-Acquired Collateral      52       7.5    No
Assumption of Liability      52       7.6    Further Assurances      52      
7.7    Foreign Subsidiary Stock      52       7.8    Commercially Reasonably
Actions      52    SECTION 8. COLLATERAL ADMINISTRATION      53       8.1   
Borrowing Base Certificates      53       8.2    Administration of Accounts     
53          8.2.1    Records and Schedules of Accounts      53          8.2.2   
Taxes      54          8.2.3    Account Verification      54          8.2.4   
Maintenance of Dominion Account      54          8.2.5    Proceeds of Collateral
     54          8.2.6    Principal Depository Relationship      54       8.3   
Administration of Inventory      54          8.3.1    Records and Reports of
Inventory      54          8.3.2    Returns of Inventory      54          8.3.3
   Acquisition, Sale and Maintenance      55       8.4    Administration of
Equipment      55          8.4.1    Records and Schedules of Equipment      55
         8.4.2    Dispositions of Equipment      55          8.4.3    Condition
of Equipment      55       8.5    Administration of Deposit Accounts      55   
   8.6    General Provisions      55          8.6.1    Location of Collateral   
  55          8.6.2    Insurance of Collateral; Condemnation Proceeds      56   
      8.6.3    Protection of Collateral      56          8.6.4    Defense of
Title to Collateral      57       8.7    Power of Attorney      57    SECTION 9.
REPRESENTATIONS AND WARRANTIES      57       9.1    General Representations and
Warranties      57          9.1.1    Organization and Qualification      57   
      9.1.2    Power and Authority      58          9.1.3    Enforceability     
58          9.1.4    Capital Structure      58          9.1.5    Title to
Properties; Priority of Liens      58          9.1.6    Accounts      58      
   9.1.7    Financial Statements      59          9.1.8    Surety Obligations   
  59          9.1.9    Taxes      59          9.1.10    Brokers      59         
9.1.11    Intellectual Property      59          9.1.12    Governmental
Approvals      60          9.1.13    Compliance with Laws      60         
9.1.14    Compliance with Environmental Laws      60          9.1.15   
Burdensome Contracts      60          9.1.16    Litigation      61         
9.1.17    No Defaults      61          9.1.18    ERISA      61          9.1.19
   Trade Relations      62          9.1.20    Labor Relations      62   

 

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      9.1.21    Payable Practices      62          9.1.22    Not a Regulated
Entity      62          9.1.23    Margin Stock      62          9.1.24    Debt
     62          9.1.25    Farm Products, etc.      63          9.1.26    Joint
Venture Agreements      63       9.2    Complete Disclosure      63    SECTION
10. COVENANTS AND CONTINUING AGREEMENTS      63       10.1    Affirmative
Covenants      63          10.1.1    Inspections; Appraisals      63         
10.1.2    Financial and Other Information      64          10.1.3    Notices   
  68          10.1.4    Landlord and Storage Agreements      68          10.1.5
   Compliance with Laws and Joint Venture Agreements      69          10.1.6   
Taxes      69          10.1.7    Insurance      69          10.1.8    Licenses
     69          10.1.9    Future Subsidiaries      69          10.1.10   
[Intentionally omitted.]      70          10.1.11    Farm Products      70      
   10.1.12    Certain Post-Closing Requirements      71       10.2    Negative
Covenants      71          10.2.1    Permitted Debt      71          10.2.2   
Permitted Liens      73          10.2.3    [Intentionally omitted.]      74   
      10.2.4    Distributions; Upstream Payments      74          10.2.5   
Restricted Investments      75          10.2.6    Disposition of Assets      75
         10.2.7    Loans      77          10.2.8    Restrictions on Payment of
Certain Debt      77          10.2.9    Fundamental Changes      78         
10.2.10    Subsidiaries      78          10.2.11    Organic Documents      78   
      10.2.12    Tax Consolidation      78          10.2.13    Accounting
Changes      78          10.2.14    Restrictive Agreements      78         
10.2.15    Hedging Agreements      79          10.2.16    Conduct of Business;
Foreign Subsidiaries      79          10.2.17    Affiliate Transactions      79
         10.2.18    Plans      79          10.2.19    Amendments to Subordinated
Debt      79       10.3    Financial Covenant      79          10.3.1    Minimum
EBITDA      79    SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT      80   
   11.1    Events of Default      80       11.2    Remedies upon Default      81
      11.3    License      82       11.4    Setoff      82       11.5   
Remedies Cumulative; No Waiver      83          11.5.1    Cumulative Rights     
83          11.5.2    Waivers      83   

 

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SECTION 12. AGENT      83       12.1    Appointment, Authority and Duties of
Agent      83          12.1.1    Appointment and Authority      83         
12.1.2    Duties      84          12.1.3    Agent Professionals      84         
12.1.4    Instructions of Required Lenders      84       12.2    Agreements
Regarding Collateral and Field Examination Reports      84          12.2.1   
Lien Releases; Care of Collateral      84          12.2.2    Possession of
Collateral      84          12.2.3    Reports      84       12.3    Reliance By
Agent      85       12.4    Action Upon Default      85       12.5    Ratable
Sharing      85       12.6    Indemnification      85       12.7    Limitation
on Responsibilities of Agent      86       12.8    Successor Agent and Co-Agents
     86          12.8.1    Resignation; Successor Agent      86          12.8.2
   Separate Collateral Agent      86          12.8.3    Resignation of
Co-Collateral Agents      87       12.9    Due Diligence and Non-Reliance     
87       12.10    Remittance of Payments and Collections      87         
12.10.1    Remittances Generally      87          12.10.2    Failure to Pay     
87          12.10.3    Recovery of Payments      87       12.11    Agent in its
Individual Capacity      87       12.12    Agent Titles      88       12.13   
Bank Product Providers      88       12.14    No Third Party Beneficiaries     
88    SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS      88       13.1   
Successors and Assigns      88       13.2    Participations      88         
13.2.1    Permitted Participants; Effect      88          13.2.2    Voting
Rights      89          13.2.3    Benefit of Set-Off      89       13.3   
Assignments      89          13.3.1    Permitted Assignments      89         
13.3.2    Effect; Effective Date      89          13.3.3    Certain Assignees   
  89       13.4    Replacement of Certain Lenders      90    SECTION 14.
MISCELLANEOUS      90       14.1    Consents, Amendments and Waivers      90   
      14.1.1    Amendment      90          14.1.2    Limitations      91      
   14.1.3    Payment for Consents      91          14.1.4    Release of
Collateral and Guarantors      91       14.2    Indemnity      91       14.3   
Notices and Communications      92          14.3.1    Notice Address      92   
      14.3.2    Electronic Communications; Voice Mail      93          14.3.3   
Non-Conforming Communications      93       14.4    Performance of Borrowers’
Obligations      93   

 

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   14.5    Credit Inquiries      93       14.6    Severability      93      
14.7    Cumulative Effect; Conflict of Terms      93       14.8    Counterparts
     93       14.9    Entire Agreement      93       14.10    Relationship with
Lenders      94       14.11    No Advisory or Fiduciary Responsibility      94
      14.12    Confidentiality      94       14.13    [Intentionally Omitted.]
     94       14.14    GOVERNING LAW      95       14.15    Consent to Forum   
  95          14.15.1    Forum      95          14.15.2    [Intentionally
omitted.]      95       14.16    Waivers by Obligors      95       14.17   
Patriot Act Notice      95       14.18    NO ORAL AGREEMENT      95       14.19
   Amendment and Restatement      96       14.20    Ratification of Existing
Liens      96       14.21    Assignment of Continuing Loans      96   

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A    Revolver Note Exhibit B    Assignment and Acceptance Exhibit C   
Assignment Notice Exhibit D    Joinder Agreement

 

Schedule 1.1A    Existing Letters of Credit Schedule 1.1B    Commitments of
Lenders Schedule 1.1C    Gramercy Agreements Schedule 1.1D    Existing Lien
Waivers Schedule 1.1E    Certain Liabilities of Joint Ventures Schedule 8.5   
Deposit Accounts Schedule 8.6.1    Business Locations Schedule 9.1.4    Names
and Capital Structure Schedule 9.1.5    Real Estate Schedule 9.1.9    Tax
Returns Schedule 9.1.11    Patents, Trademarks, Copyrights and Licenses Schedule
9.1.14    Environmental Matters Schedule 9.1.15    Restrictive Agreements
Schedule 9.1.16    Litigation Schedule 9.1.18    Pension Plans Schedule 9.1.20
   Labor Contracts Schedule 9.1.26    Non-Compliance with Joint Venture
Agreements Schedule 10.2.1    Debt Schedule 10.2.2    Existing Liens Schedule
10.2.4    Existing Agreements relating to Repurchases or Redemptions of Certain
Equity Interests Schedule 10.2.17    Existing Affiliate Transactions

 

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SECOND AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of
May 18, 2011, among IMPERIAL SUGAR COMPANY, a Texas corporation (“Parent”),
IMPERIAL DISTRIBUTING, INC., a Delaware corporation (“Imperial Distributing”),
IMPERIAL-SAVANNAH LP, a Delaware limited partnership (“Imperial Savannah”),
RAGUS HOLDINGS, INC., a Delaware corporation (“Ragus”) (each of Parent, Imperial
Distributing, Imperial Savannah and Ragus is, individually, a “Borrower” and
they are, collectively “Borrowers”), the additional Subsidiaries of Parent party
to this Agreement from time to time as Guarantors (including, without
limitation, those Persons listed under the heading “Guarantors” on the signature
pages to this Agreement), the financial institutions party to this Agreement
from time to time as lenders (collectively, “Lenders”), BANK OF AMERICA, N.A., a
national banking association, as agent for Lenders (“Agent”), and MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED, as Lead Arranger and Book Manager.

R E C I T A L S:

Borrowers, Fort Bend Utilities Company (as a co-borrower, which entity was
previously dissolved) and Bank of America, N.A. (individually as a lender and as
agent) are parties to that certain Amended and Restated Credit Agreement dated
as of December 1, 2004, as amended by that certain Omnibus Amendment dated as of
January 1, 2006, Second Amendment to Credit Agreement dated as of March 15,
2006, and Third Amendment to Amended and Restated Credit Agreement dated as of
July 30, 2007 (as amended, the “Existing Credit Agreement”) pursuant to which
Bank of America provides a credit facility to Borrowers to finance their mutual
and collective business enterprise. Borrowers and Guarantors have requested that
Lenders amend and restate the Existing Credit Agreement to, among other things,
increase the amount of the credit facility, and Lenders are willing to do so on
the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1 Definitions. As used herein, the following terms have the meanings set forth
below:

Account: as defined in the UCC, including all rights to payment for goods sold
or leased, or for services rendered.

Account Debtor: a Person who is obligated under an Account, Chattel Paper or
General Intangible.

Accounts Formula Amount: 85% of the Value of Eligible Accounts.

Affiliate: with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

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Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Allocable Amount: as defined in Section 5.11.3.

Anti-Terrorism Laws: any laws relating to terrorism or money laundering,
including the Patriot Act.

Applicable Law: all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.

Applicable Margin: with respect to any Type of Loan, the margin set forth below,
as determined by the Average Availability for the last calendar month:

 

Level

  

Average Availability

   Base Rate
Revolver Loans     LIBOR Revolver
Loans  

I

  

> $90,000,000

     0.75 %      2.00 % 

II

  

> $70,000,000 and £ $90,000,000

     1.00 %      2.25 % 

III

  

> $40,000,000 and £ $70,000,000

     1.25 %      2.50 % 

IV

  

£ $40,000,000

     1.50 %      2.75 % 

Until July 31, 2011, margins shall be determined as if Level II were applicable.
Thereafter, the margins shall be subject to increase or decrease upon receipt by
Agent pursuant to Section 10.1.2 of the financial statements and corresponding
Compliance Certificate for the last calendar month, which change shall be
effective on the first day of the calendar month following receipt. If, by the
first day of a month, any financial statement or Compliance Certificate due in
the preceding month has not been received, then, at the option of Agent or
Required Lenders, the margins shall be determined as if Level IV were
applicable, from such day until the first day of the calendar month following
actual receipt.

Approved Fund: any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in its ordinary course of activities, and is
administered or managed by a Lender, an entity that administers or manages a
Lender, or an Affiliate of either.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including a disposition of Property in
connection with a sale-leaseback transaction or synthetic lease.

Assignment and Acceptance: an assignment agreement between a Lender and Eligible
Assignee, in the form of Exhibit C.

Attributable Indebtedness: on any date, (a) in respect of any Capital Lease of
any Person, the capitalized amount thereof that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP, (b) in respect
of any Synthetic Lease Obligation, the capitalized amount of the remaining lease
or similar payments under the relevant lease or other applicable agreement or
instrument that would appear on a balance sheet of such Person prepared as of
such date in accordance with GAAP if such lease or other agreement or instrument
were accounted for as a Capital Lease, and (c) all Synthetic Debt of such
Person.

Availability: the Borrowing Base minus the principal balance of all Revolver
Loans.

 

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Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank
Product Reserve; (e) the Dilution Reserve; (f) the aggregate amount of
liabilities secured by Liens upon Collateral included in the Borrowing Base that
are senior to Agent’s Liens (but imposition of any such reserve shall not waive
an Event of Default arising therefrom); and (g) such additional reserves, in
such amounts and with respect to such matters, as Agent in its Credit Judgment
may elect to impose from time to time (including, without limitation, reserves
for Grower Liens and trusts created under PACA, and reserves for warehousemen’s
or bailee’s charges) (provided that such reserves, as they relate to the
Accounts Formula Amount and Inventory Formula Amount components of the Borrowing
Base only, shall be established in a manner generally consistent with Agent’s
customary credit policies for asset-based credit facilities predicated upon
Accounts and Inventory).

Average Availability: for any calendar month, the daily average of Availability
during such calendar month.

Bank of America: Bank of America, N.A., a national banking association, and its
successors and assigns.

Bank of America Indemnitees: Bank of America and its officers, directors,
employees, Affiliates, agents and attorneys.

Bank Product: any of the following products, services or facilities extended to
any Borrower or Subsidiary by a Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; and (d) leases and other banking
products or services as may be requested by any Borrower or Subsidiary, other
than Letters of Credit.

Bank Product Debt: Debt and other obligations of an Obligor relating to Bank
Products.

Bank Product Reserve: the aggregate amount of reserves established by Agent from
time to time in its discretion in respect of Secured Bank Product Obligations.

Bankruptcy Code: Title 11 of the United States Code.

Base Rate: for any day, a per annum rate equal to the greater of (a) the Prime
Rate for such day; or (b) the Federal Funds Rate for such day, plus 0.50%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base
Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor, (ii) is
evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments, (iii) accrues interest or is a type upon which interest charges are
customarily paid (excluding trade payables owing in the Ordinary Course of
Business), or (iv) was issued or assumed as full or partial payment for
Property; (b) Capital Leases; (c) reimbursement obligations with respect to
letters of credit, bankers’ acceptances, bank guaranties, surety bonds and
similar instruments; and (d) guaranties of any Debt of the foregoing types owing
by another Person.

Borrower Agent: as defined in Section 4.4.

 

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Borrowing: a group of Loans of one Type that are made on the same day or are
converted into Loans of one Type on the same day.

Borrowing Base: on any date of determination, an amount equal to the lesser of
(a) the aggregate amount of Revolver Commitments, minus the LC Reserve; or
(b) the sum of the Accounts Formula Amount, plus the Inventory Formula Amount,
plus the Fixed Asset Formula Amount, minus the Availability Reserve.

Borrowing Base Certificate: a certificate, in form satisfactory to Agent, by
which Borrower Agent certifies calculation of the Borrowing Base.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, North Carolina and California, and if such day relates to a LIBOR
Loan, any such day on which dealings in Dollar deposits are conducted between
banks in the London interbank Eurodollar market.

Capital Expenditures: all liabilities incurred or expenditures made by a
Borrower or Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its
discretion, which account shall be subject to Agent’s Liens for the benefit of
Secured Parties.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (a) with respect to LC Obligations, 105%
of the aggregate LC Obligations, and (b) with respect to any inchoate,
contingent or other Obligations (including Secured Bank Product Obligations),
Agent’s good faith estimate of the amount due or to become due, including all
fees and other amounts relating to such Obligations. “Cash Collateralization”
has a correlative meaning.

Cash Equivalents: (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States
government, maturing within 12 months of the date of acquisition;
(b) certificates of deposit, time deposits and bankers’ acceptances maturing
within 12 months of the date of acquisition, and overnight bank deposits, in
each case which are issued by Bank of America or a commercial bank organized
under the laws of the United States or any state or district thereof, rated A-1
(or better) by S&P or P-1 (or better) by Moody’s at the time of acquisition;
(c) repurchase obligations with a term of not more than 30 days for underlying
investments of the types described in clauses (a) and (b) entered into with any
bank described in clause (b); (d) commercial paper issued by Bank of America or
rated A-1 (or better) by S&P or P-1 (or better) by Moody’s, and maturing within
nine months of the date of acquisition; and (e) shares of any money market fund
that has substantially all of its assets invested continuously in the types of
investments referred to above, has net assets of at least $500,000,000 and has
the highest rating obtainable from either Moody’s or S&P.

Cash Management Services: any services provided from time to time by Bank of
America or any of its Affiliates to any Borrower or Subsidiary in connection
with operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

 

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CERCLA: the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. § 9601 et seq.).

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof; or (c) the making, issuance or
application of any request, guideline, requirement or directive (whether or not
having the force of law) by any Governmental Authority; provided, however, that,
notwithstanding anything to the contrary contained herein, the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all rules, regulations, requests,
guidelines, requirements or directives thereunder or issued in connection
therewith shall be deemed to be a “Change in Law”, regardless of when enacted,
adopted or issued.

Change of Control: (a) Parent ceases to own and control, beneficially and of
record, directly or indirectly, all Equity Interests in all Borrowers (other
than Parent), except to the extent that such cessation results from the wind up,
liquidation or dissolution of a Borrower as permitted by Section 10.2.6(f) or
the merger or consolidation of a Borrower as permitted by Section 10.2.9;
(b) any Person or two or more Persons acting as a group (as defined in
Section 13d-3 of the Securities Exchange Act of 1934) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission) of 40% or more of the outstanding shares of voting Equity
Interests of Parent; (c) a change in the majority of directors of Parent, unless
approved by the then majority of such directors; or (d) all or substantially all
of a Borrower’s assets are sold or transferred, other than sale or transfer to
another Borrower.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations or replacement of
Agent or any Lender) incurred by any Indemnitee or asserted against any
Indemnitee by any Obligor or other Person, in any way relating to or arising out
of (a) any Loans, Letters of Credit, Loan Documents, or the use thereof or
transactions relating thereto, (b) any action taken or omitted in connection
with any Loan Documents, (c) the existence or perfection of any Liens, or
realization upon any Collateral, (d) exercise of any rights or remedies under
any Loan Documents or Applicable Law, or (e) failure by any Obligor to perform
or observe any terms of any Loan Document, in each case including all costs and
expenses relating to any investigation, litigation, arbitration or other
proceeding (including an Insolvency Proceeding or appellate proceedings),
whether or not the applicable Indemnitee is a party thereto. Notwithstanding the
foregoing, “Claims” shall include “Taxes” payable by Agent or a Lender as a
result of its receipt of interest or fees payable under this Agreement with
respect to the Revolver Commitments, Loans and/or Letters of Credit only to the
extent that a Borrower or other Obligor is obligated to make payment or
indemnification thereof as provided in Section 3.7.1 or 5.9.2.

Closing Date: as defined in Section 6.1.

Co-Collateral Agency Agreement: that certain letter agreement dated May 18,
2011, executed by Agent, Co-Collateral Agents and Obligors regarding various
rights of the Co-Collateral Agents with respect to “Collateral Issues” (as
defined therein).

Co-Collateral Agents: Bank of America and General Electric Capital Corporation
in their capacities as Co-Collateral Agents hereunder.

Code: the Internal Revenue Code of 1986.

 

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Collateral: all Property described in Section 7.1, all Property described in any
Security Document as security for any Obligations, and all other Property that
now or hereafter secures (or is intended to secure) any Obligations.

Commitment: for any Lender, the amount of such Lender’s Revolver Commitment.
“Commitments” means the aggregate amount of all Revolver Commitments.

Commitment Termination Date: the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver
Commitments are terminated pursuant to Section 11.2.

Company Headquarters: Borrowers’ corporate office building and related Real
Estate located at or near 8016 Highway 90A, Sugar Land, Texas.

Compliance Certificate: a certificate, in form and substance satisfactory to
Agent, by which Borrowers certify compliance with Section 10.3, and calculate
the Average Availability for the preceding calendar month and the applicable
Level for the Applicable Margin.

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.

Continuing Loans: as defined in Section 2.1.1.

Covered Asset Disposition: any Asset Disposition permitted by clause (k), (l),
(n) or (o) of Section 10.2.6.

Credit Judgment: Agent’s judgment exercised in good faith, based upon its
consideration of any factor that it believes (a) could adversely affect the
quantity, quality, mix or value of Collateral (including any Applicable Law that
may inhibit collection of an Account), the enforceability or priority of Agent’s
Liens, or the amount that Agent and Lenders could receive in liquidation of any
Collateral; (b) suggests that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material
respect; (c) materially increases the likelihood of any Insolvency Proceeding
involving an Obligor; or (d) creates or could result in a Default or Event of
Default. In exercising such judgment, Agent may consider any factors that could
increase the credit risk of lending to Borrowers on the security of the
Collateral.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: as applied to any Person, without duplication, (a) all items that would be
included as liabilities on a balance sheet in accordance with GAAP,
(b) (i) Borrowed Money, (ii) indebtedness evidenced by bonds, notes, debentures
or similar instruments, and (iii) obligations representing the

 

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balance deferred and unpaid of the purchase price of any Property or services,
(c) all Contingent Obligations, (d) all indebtedness (excluding prepaid interest
thereon) secured by a Lien on Property owed or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited recourse, (e) all net obligations of such Person under any
Hedging Agreement, (f) all Attributable Indebtedness in respect of Capital
Leases and Synthetic Lease Obligations of such Person and all Synthetic Debt of
such Person, (g) all Disqualified Equity Interests, and (h) in the case of a
Borrower, the Obligations; provided, however, that trade payables incurred and
being paid in the Ordinary Course of Business and not past due for more than 90
days shall not constitute “Debt” for purposes of this Agreement. The Debt of a
Person shall include any Debt of any partnership in which such Person is a
general partner or joint venturer unless such Debt is nonrecourse to such
Person.

Default: an event or condition that, with the lapse of time or giving of notice,
would constitute an Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that, as determined by Agent, (a) has failed to
perform any funding obligations hereunder, and such failure is not cured within
three Business Days; (b) has notified Agent or any Borrower that such Lender
does not intend to comply with its funding obligations hereunder or has made a
public statement to the effect that it does not intend to comply with its
funding obligations hereunder or under any other credit facility; (c) has
failed, within three Business Days following request by Agent, to confirm in a
manner satisfactory to Agent that such Lender will comply with its funding
obligations hereunder; or (d) has, or has a direct or indirect parent company
that has, become the subject of an Insolvency Proceeding or taken any action in
furtherance thereof; provided, however, that a Lender shall not be a Defaulting
Lender solely by virtue of a Governmental Authority’s ownership of an equity
interest in such Lender or parent company.

Deposit Account Control Agreements: the Deposit Account control agreements to be
executed by each institution maintaining a Deposit Account for an Obligor, in
favor of Agent, for the benefit of Secured Parties, as security for the
Obligations.

Dilution Percent: the percent, determined for Borrowers’ most recent Fiscal
Quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns,
promotions, credits, credit memos and other dilutive items with respect to
Accounts, divided by (b) gross sales.

Dilution Reserve: a reserve in an amount equal to the product of (a) two,
multiplied by the remainder of (i) the Dilution Percent minus (ii) 7.5%,
multiplied by (b) the Value of Eligible Accounts.

Disqualified Equity Interests: any Equity Interests that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Equity Interests),
or upon the occurrence or happening of any event or circumstance, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder of the Equity Interests, in whole or in
part, on or prior to the date that is 91 days after the earlier of the Revolver
Termination Date or the date of the Full Payment of the Obligations; provided
that only the portion of Equity Interests which so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date shall be deemed to be Disqualified
Equity Interests; provided, further, that if any such Equity Interests is issued
to any employee or to any plan for the benefit of employees of Parent or its
Subsidiaries or by any such plan to such employees, such Equity Interests shall
not constitute Disqualified Equity Interests solely because they may be required
to be repurchased by Parent in order to satisfy applicable statutory or
regulatory obligations or as a result of such employee’s termination, death or
disability; provided, further,

 

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that any class of Equity Interests of such Person that by its terms authorizes
such Person to satisfy its obligations thereunder by delivery of Equity
Interests that are not Disqualified Equity Interests shall not be deemed to be
Disqualified Equity Interests. Notwithstanding the preceding sentence, any
Equity Interests that would constitute Disqualified Equity Interests solely
because the holders of the Equity Interests have the right to require Parent to
repurchase or redeem such Equity Interests upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Equity Interests if
the terms of such Equity Interests provide that Parent may not repurchase or
redeem any such Equity Interests pursuant to such provisions prior to the Full
Payment of the Obligations. The amount (or principal amount) of Disqualified
Equity Interests deemed to be outstanding at any time for purposes of this
Agreement will be the maximum amount that Parent and its Subsidiaries may become
obligated to pay upon the maturity of, or pursuant to any mandatory redemption
provisions of, such Disqualified Equity Interests, exclusive of accrued
dividends.

Distribution: any declaration or payment of a distribution, interest or dividend
on any Equity Interest (other than payment-in-kind); any distribution, advance
or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest.

Dollars: lawful money of the United States.

Dominion Account: a special account established by Borrowers at Bank of America
or another bank acceptable to Agent, over which Agent has exclusive control for
withdrawal purposes.

Dominion Event: an occurrence or event which initiates the commencement of a
Trigger Period.

Dominion Termination Event: an occurrence or event which causes the termination
of a Trigger Period.

EBITDA: determined on a consolidated basis for Borrowers and Subsidiaries, net
income, calculated (a) on hedge accounting basis with respect to commodity
derivatives held by Borrowers in the Ordinary Course of Business, and (b) before
interest expense, provision for income taxes, depreciation and amortization
expense, gains or losses arising from the sale of capital assets, income (or
loss) of any joint venture (except to the extent of the amount of dividends or
other Distributions actually paid to any Borrower or Subsidiary in cash), gains
arising from the write-up of assets, and any extraordinary gains (in each case,
to the extent included in determining net income).

Eligible Account: subject to Section 10.1.1(c), an Account owing to a Borrower
that arises in the Ordinary Course of Business from the sale of goods, is
payable in Dollars and is deemed by Agent, in its Credit Judgment, to be an
Eligible Account. Without limiting the foregoing, no Account shall be an
Eligible Account if (a) it is unpaid for more than 45 days after the original
due date, or more than 60 days after the original invoice date; provided,
however, that Accounts unpaid for not more than 60 days after the original due
date aggregating up to $4,000,000 in amount at any time shall not be excluded
from Eligible Accounts by virtue of this clause (a); (b) 50% or more of the
aggregate dollar amount of the Accounts owing by the Account Debtor are not
Eligible Accounts under the foregoing clause; (c) when aggregated with other
Accounts owing by the Account Debtor or Affiliates of such Account Debtor, it
exceeds 15% (subject to the proviso below) of the aggregate Eligible Accounts
(or such higher percentage as Agent may establish for the Account Debtor from
time to time), but only to the extent of such excess, provided, however, that,
if the Account Debtor is Wal-Mart Stores, Inc. or its subsidiary, such
percentage shall be 20%; (d) it does not conform with a covenant or
representation herein; (e) it is owing by a creditor or supplier, or is
otherwise subject to a known or asserted offset, counterclaim, dispute,
deduction, discount, recoupment, reserve, defense, chargeback, credit or
allowance (but ineligibility shall be limited to the amount thereof); (f) an
Insolvency Proceeding has been commenced by or against the Account Debtor; or
the Account Debtor has failed, has suspended or ceased doing business, is
liquidating,

 

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dissolving or winding up its affairs, or is not Solvent; or the Borrower is not
able to bring suit or enforce remedies against the Account Debtor through
judicial process, unless such inability to seek judicial enforcement is capable
of being remedied without any material delay or material cost; (g) the Account
Debtor is organized or has its principal offices or assets outside the United
States or Canada, unless is fully secured by a letter of credit or is fully
insured by credit insurance, in each case satisfactory to Agent in its
discretion; (h) it is owing by a Governmental Authority, unless the Account
Debtor is the United States or any department, agency or instrumentality thereof
and the Account has been assigned to Agent in compliance with the federal
Assignment of Claims Act; (i) it is not subject to a duly perfected, first
priority Lien in favor of Agent, or is subject to any other Lien; (j) the goods
giving rise to it have not been delivered to the Account Debtor, the services
giving rise to it have not been accepted by the Account Debtor, or it otherwise
does not represent a final sale; (k) it is evidenced by Chattel Paper or an
Instrument of any kind, or has been reduced to judgment; (l) its payment has
been extended or the Account Debtor has made a partial payment; (m) it arises
from a sale to an Affiliate, from a sale on a cash-on-delivery, bill-and-hold,
sale-or-return, sale-on-approval, consignment, or other repurchase or return
basis, or from a sale for personal, family or household purposes; (n) it
represents a progress billing or retainage, or relates to services for which a
performance, surety or completion bond or similar assurance has been issued; or
(o) it includes a billing for interest, fees or late charges, but ineligibility
shall be limited to the extent thereof. In calculating delinquent portions of
Accounts under clauses (a) and (b), credit balances more than 60 days old will
be excluded.

Eligible Assignee: a Person that is (a) a Lender, U.S.-based Affiliate of a
Lender or Approved Fund; (b) any other financial institution approved by Agent
and Borrower Agent (which approval by Borrower Agent shall not be unreasonably
withheld or delayed, and shall be deemed given if no objection is made within
two Business Days after notice of the proposed assignment), that is organized
under the laws of the United States or any state or district thereof, has total
assets in excess of $5 billion, extends asset-based lending facilities in its
ordinary course of business and whose becoming an assignee would not constitute
a prohibited transaction under Section 4975 of the Code or any other Applicable
Law; and (c) during any Event of Default, any Person acceptable to Agent in its
discretion.

Eligible Equipment: subject to Section 1.1(c), means any Equipment owned by any
Borrower that is deemed by Agent, in its Credit Judgment, to be Eligible
Equipment. Without limiting the foregoing, no Equipment shall be Eligible
Equipment unless it is Equipment (a) in which Agent has a perfected, first
priority security interest as security for the payment and performance of the
Obligations, and (b) which has been appraised in the then most recent appraisal
of Equipment delivered and acceptable to Agent in accordance with this
Agreement.

Eligible Inventory: subject to Section 1.1(c), Inventory, other than Foreign
Inventory, owned by a Borrower that Agent, in its Credit Judgment, deems to be
Eligible Inventory. Without limiting the foregoing, no Inventory shall be
Eligible Inventory unless it (a) is raw sugar, refined sugar, flavorings,
finished goods held for resale in the Ordinary Course of Business,
work-in-process and by-products, and is not seed, samples, prototypes, packaging
or shipping materials, labels, samples, display items, empty bags, replacement
parts or manufacturing supplies; (b) is not held on consignment, nor subject to
any deposit or down payment; (c) is in new and saleable condition and is not
damaged, defective, shopworn or otherwise unfit for sale; (d) is not
slow-moving, perishable, obsolete or unmerchantable, and does not constitute
returned or repossessed goods; (e) meets all standards imposed by any
Governmental Authority, and does not constitute hazardous materials under any
Environmental Law; (f) conforms with the covenants and representations herein;
(g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien
(other than a Permitted Grower Lien or a Permitted Lien that is adequately
addressed or reserved for, in Agent’s Credit Judgment, by a related Lien Waiver
or Availability Reserve); (h) is not purchased from a Person engaged in farming
operations unless such Borrower has complied with the requirements of the Food
Security Act to ensure that such inventory is purchased free of any Lien created
by the seller; (i) is not subject to any warehouse receipt or negotiable
Document; (j) is not subject to any License or other arrangement that restricts
such Borrower’s or Agent’s right to dispose of such Inventory,

 

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unless Agent has received an appropriate Lien Waiver; (k) is not located on
leased premises or in the possession of a warehouseman, processor, repairman,
mechanic, shipper, freight forwarder or other Person, unless the lessor or such
Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve
has been established; and (l) is reflected in the details of a current perpetual
inventory report.

Eligible Real Estate: subject to Section 1.1(c), means any Real Estate owned in
fee by any Borrower (a) in which Agent has a perfected, first priority Lien
(subject to any Permitted Lien described in clause (h) of Section 10.2.2) as
security for the payment and performance of the Obligations and which is not
subject to any other Lien (other than a Permitted Lien that is adequately
addressed or reserved for, in Agent’s Credit Judgment, by a related Lien Waiver
or Availability Reserve), and (b) which has been appraised in the then most
recent appraisal of Real Estate delivered and acceptable to Agent in accordance
with this Agreement; provided, however, that, unless otherwise agreed by Agent,
the Eligible Real Estate shall be limited to the Real Estate that comprises a
part of the Primary Plant.

Enforcement Action: any action to enforce any Obligations (other than Secured
Bank Product Obligations) or Loan Documents or to exercise any rights or
remedies relating to any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, exercise of
any right to vote or act in an Obligor’s Insolvency Proceeding, or otherwise).

Environmental Agreement: each agreement of an Obligor with respect to any Real
Estate subject to a Mortgage, pursuant to which such Obligor agrees to indemnify
and hold harmless Agent and Lenders from liability under any Environmental Laws.

Environmental Laws: all Applicable Laws (including all permits and final,
binding and legally enforceable guidance issued by regulatory agencies
thereunder), relating to public health (but excluding occupational safety and
health, except to the extent that OSHA or corresponding state laws regulate
Hazardous Substances) or the protection or pollution of the environment,
including CERCLA, RCRA and CWA.

Environmental Notice: a written notice from any Governmental Authority or other
Person of any actual or alleged noncompliance with, investigation of a possible
violation of, litigation relating to, or potential fine or liability under any
Environmental Law, or with respect to any Environmental Release, environmental
pollution or hazardous materials, including any complaint, summons, citation,
order, claim, demand or request for correction, remediation or otherwise.

Environmental Release: a release as defined in CERCLA (except that the CERCLA
statutory definition of release shall be interpreted, for purposes of the term
“Environmental Release”, not to include any of the exclusions found in that
statutory definition) or under any other Environmental Law.

Equity Interest: the interest of any (a) shareholder in a corporation;
(b) partner in a partnership (whether general, limited, limited liability or
joint venture); (c) member in a limited liability company; or (d) other Person
having any other form of equity security or ownership interest (but excluding
any debt security that is fully convertible into, or exchangeable for, common
stock, but only so long as any conditions to such conversion or exchange have
not been satisfied).

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in

 

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which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA, but only to the extent that any such withdrawal or
cessation could reasonably be expected to individually or in the aggregate give
rise to a Lien either under Section 4068 of ERISA or under the Code (determined
without regard to any collective net worth determination under Section 4068 of
ERISA); (c) a complete or partial withdrawal by any Obligor or ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization, but only to the extent that any such withdrawal could reasonably
be expected to individually or in the aggregate result in a Material Adverse
Effect; (d) excluding any standard termination filing, (i) the filing of a
notice of intent to terminate, (ii) the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or (iii) the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) any Obligor or ERISA Affiliate fails to meet any funding obligations with
respect to any Pension Plan or Multiemployer Plan, but only to the extent that
any such failure could reasonably be expected to individually or in the
aggregate give rise to a Lien either under ERISA or under the Code; (f) any
Obligor or ERISA Affiliate with respect to any Pension Plan or Multiemployer
Plan requests a minimum funding waiver; (g) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (h) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Obligor or ERISA Affiliate which could reasonably be expected to individually or
in the aggregate result in a Material Adverse Effect.

Event of Default: as defined in Section 11.

Excluded Accounts: has the meaning set forth in Section 8.5.

Excluded Assets: subject to the proviso below, (a) the Gramercy Assets, (b) the
Gramercy Agreements, (c) any lease, license, contract, property right or
agreement to which any Obligor is a party or any of its rights or interests
thereunder if and only for so long as the grant of a security interest hereunder
shall constitute or result in a breach, termination or default under any such
lease, license, contract, property right or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Section 9-406,
9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other
Applicable Law or principles of equity), provided, however, that such security
interest shall attach immediately to any portion of such lease, license,
contract, property right or agreement that does not result in any of the
consequences specified above, (d) any Equity Interests in any joint venture
other than LSR, (e) Excluded Accounts, (f) Foreign Inventory, and (g) any
Property subject to a Lien permitted by Section 10.2.2(b), (g) or (n); provided,
however, that “Excluded Assets” shall not include any Accounts, Equipment or
Inventory (other than Foreign Inventory) of any Borrower.

Excluded Tax: with respect to Agent, any Lender, Issuing Bank or any other
recipient of a payment to be made by or on account of any Obligation, (a) taxes
imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located; (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which Borrower Agent is located; (c) any backup
withholding tax required by the Code to be withheld from amounts payable to a
Lender that has failed to comply with Section 5.10; (d) in the case of a Foreign
Lender, any United States withholding tax that is (i) required pursuant to laws
in force at the time such Lender becomes a Lender (or designates a new Lending
Office) hereunder, or (ii) attributable to such Lender’s failure or inability
(other than as a result of a Change in Law) to comply with Section 5.10, except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new Lending Office (or assignment), to receive
additional amounts from Borrowers with respect to such withholding tax; and
(e) taxes imposed on it by reason of Section 1471 or 1472 of the Code.

 

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Existing Letters of Credit: the letters of credit identified on Schedule 1.1A,
which letters of credit were previously issued under the Existing Credit
Agreement and remain outstanding as of the Closing Date.

Extraordinary Expenses: all costs, expenses or advances that Agent may incur
during a Default or Event of Default, or during the pendency of an Insolvency
Proceeding of an Obligor, including those relating to (a) any audit, inspection,
repossession, storage, repair, appraisal, insurance, manufacture, preparation or
advertising for sale, sale, collection, or other preservation of or realization
upon any Collateral; (b) any action, arbitration or other proceeding (whether
instituted by or against Agent, any Lender, any Obligor, any representative of
creditors of an Obligor or any other Person) in any way relating to any
Collateral (including the validity, perfection, priority or avoidability of
Agent’s Liens with respect to any Collateral), Loan Documents, Letters of Credit
or Obligations, including any lender liability or other Claims; (c) the
exercise, protection or enforcement of any rights or remedies of Agent in, or
the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of
any taxes, charges or Liens with respect to any Collateral; (e) any Enforcement
Action; (f) negotiation and documentation of any modification, waiver, workout,
restructuring or forbearance with respect to any Loan Documents or Obligations;
and (g) Protective Advances. Such costs, expenses and advances include transfer
fees, Other Taxes, storage fees, insurance costs, permit fees, utility
reservation and standby fees, legal fees, appraisal fees, brokers’ fees and
commissions, auctioneers’ fees and commissions, accountants’ fees, environmental
study fees, wages and salaries paid to employees of any Obligor or independent
contractors in liquidating any Collateral, and travel expenses.

Farm Products: means all of Obligors’ now owned or hereafter existing or
acquired farm products of every kind and nature, including, without limitation,
crops, livestock, and supplies used or produced in farming operations, and
products of crops or livestock, wherever located, including (a) “farm products”,
as such term is defined in any Farm Products Law and/or the Uniform Commercial
Code, and (b) “perishable agricultural commodities”, as such term is defined in
any Farm Products Law.

Farm Products Law: means (a) the Food Security Act, (b) PACA, or (c) any other
federal, state, or local laws from time to time in effect which regulate any
matters pertaining to Farm Products.

Farm Products Notices: any written notice pursuant to the applicable provisions
of any Farm Products Law from (a) any Farm Products Seller or (b) any lender to
any Farm Products Seller or any other Person with a security interest in the
assets of any Farm Products Seller or (c) the Secretary of State (or equivalent
official) or other Governmental Authority of any state, commonwealth or
political subdivision thereof in which any Farm Products purchased by a Borrower
or Subsidiary are produced, in any case advising or notifying such Borrower or
Subsidiary of the intention of such Farm Products Seller or other Person to
preserve the benefits of any Lien or trust applicable to any assets of such
Borrower or Subsidiary established in favor of such Farm Products Seller or
other Person under the provisions of any law or claiming a Lien or security
interest in and to any perishable agricultural commodity or any other Farm
Products which may be or have been purchased by such Borrower or a Subsidiary or
any related or other assets of such Borrower or Subsidiary, together with any
such similar notices as any Borrower or Subsidiary may at any time receive.

Farm Products Seller: means, individually and collectively, sellers or suppliers
of any Farm Products or related services to any of Obligors or their agents
involved in any transaction.

Federal Funds Rate: (a) the weighted average of interest rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers on the applicable Business Day (or on the preceding
Business Day, if the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if no such
rate is published on the next Business Day, the average rate (rounded up, if
necessary, to the nearest  1/8 of 1%) charged to Bank of America on the
applicable day on such transactions, as determined by Agent.

 

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Fee Letter: the fee letter agreement between Bank of America and Borrowers.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Borrowers and Subsidiaries for accounting and
tax purposes, ending on September 30 of each year.

Fixed Asset Formula Amount: subject to the proviso below, the sum of (a) 85% of
the NOLV Percentage of the value of Borrowers’ Eligible Equipment determined
from the most recent appraisal performed by an appraiser and on terms
satisfactory to Agent plus (b) 50% of the fair market value of the Borrowers’
Eligible Real Estate determined from the most recent appraisal performed by an
appraiser and on terms satisfactory to Agent; provided, however, that in no
event shall the Fixed Asset Formula Amount at any time exceed the Maximum Fixed
Asset Formula Amount at such time. For purposes of this definition, but subject
to the further proviso below, the “Maximum Fixed Asset Formula Amount” shall
mean $40,000,000; provided, however, that (i) such amount shall be automatically
reduced on a cumulative basis from time to time after the Closing Date (A) on
July 1, 2011, in the amount of $700,000, (B) on the first day of each calendar
quarter, commencing October 1, 2011, and continuing thereafter through the
Revolver Termination Date, each of which reductions shall be in the amount of
$1,428,000, (C) concurrently with each consummation of any Asset Disposition of
Eligible Equipment or Eligible Real Estate, except to the extent that the Net
Proceeds thereof are reinvested in similar replacement assets of equal or
greater value used in the Ordinary Course of Business within 90 days after the
date of such Asset Disposition, to the extent that the Fixed Asset Formula
Amount attributable to such Eligible Equipment and/or Eligible Real Estate sold
or otherwise disposed of exceeds $500,000 per Fiscal Year, by an amount equal to
the Net Proceeds thereof, and (D) concurrently with each (if any) voluntary
reduction of the Revolver Commitments in accordance with Section 2.1.4(a), by an
amount equal to 28.6% of the total amount by which the Revolver Commitments are
reduced, and (ii) the “Maximum Fixed Asset Formula Amount” as of any date on or
after July 1, 2011, shall mean the remainder of $40,000,000 minus the cumulative
amount of all such reductions as of such date. For the avoidance of doubt,
nothing contained in clause (i)(C) above shall be construed as permitting any
particular Asset Disposition, and reference is hereby made to Section 10.2.6 for
purposes of determining the Asset Dispositions that are permitted under this
Agreement.

FLSA: the Fair Labor Standards Act of 1938.

Food Security Act: means the Food Security Act of 1985, 7 U.S.C. Section 1631
et. seq., as the same now exists or may hereafter from time to time be amended,
modified, recodified, or supplemented, together with all rules and regulations
thereunder.

Foreign Inventory: means Inventory located outside the U.S.

Foreign Lender: any Lender that is organized under the laws of a jurisdiction
other than the laws of the United States, or any state or district thereof.

Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States; or (b) mandated by a government other than the United States
for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Code.

Fronting Exposure: a Defaulting Lender’s Pro Rata share of LC Obligations or
Swingline Loans, as applicable, except to the extent allocated to other Lenders
under Section 4.2.

 

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Full Payment: with respect to any Obligations (other than (i) Bank Products that
the applicable Lender or Lender Affiliate affirmatively agrees to continue in
effect without the benefit of the Liens granted pursuant to the Loan Documents
and not to terminate and (ii) indemnity obligations that survive the termination
of this Agreement and are unknown and not due and payable at such termination),
(a) the full and indefeasible cash payment thereof, including any interest, fees
and other charges accruing during an Insolvency Proceeding (whether or not
allowed in the proceeding); (b) if such Obligations are LC Obligations or
inchoate or contingent in nature, Cash Collateralization thereof (or delivery of
a standby letter of credit acceptable to Agent, in its discretion, in the amount
of required Cash Collateral); and (c) a release of any Claims of Obligors
against Agent, Lenders and Issuing Bank arising on or before the payment date.
No Loans shall be deemed to have been paid in full until all Commitments related
to such Loans have expired or been terminated.

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: any federal, state, local, foreign or other agency,
authority, body, commission, court, instrumentality, political subdivision, or
other entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions for any governmental, judicial, investigative,
regulatory or self-regulatory authority.

Gramercy Agreements: the agreements identified in Schedule 1.1C.

Gramercy Assets: all Real Estate of Parent and its Subsidiaries located in St.
James Parish, Louisiana, together with all permits and agreements for the
design, engineering, construction, use and occupancy thereof and all rents,
issues, profits, cash deposits, advance rentals and other benefits derived
thereupon.

Grower Lien: any Lien or other interest in property created by any Farm Products
Law in favor of the producer or grower (but not a distributor) of Farm Products
to secure the obligation of the purchaser of such Farm Products to pay the
purchase price therefor.

Guarantor Payment: as defined in Section 5.11.3.

Guarantors: (a) initially, Biomass Corporation, Dixie Crystals Foodservice,
Inc., ICUBE, Inc., Imperial Holly Corporation, Imperial Sweetener Distributors,
Inc., Menu Magic Foods, Inc., Savannah Foods Industrial, Inc., Savannah Foods &
Industries, Inc., Savannah Investment Company, Savannah Molasses & Specialties
Company and Savannah Sugar Refining Corporation (unless and until such Person is
no longer a Subsidiary in accordance with the terms of this Agreement), (b) each
future Subsidiary of Parent (other than a Foreign Subsidiary) created or
acquired after the Closing Date (unless and until such Person is no longer a
Subsidiary in accordance with the terms of this Agreement) to the extent that
such Subsidiary is required to execute a Guaranty pursuant to Section 10.1.9,
and (c) each other Person who guarantees payment or performance of any
Obligations.

Guaranty: each guaranty agreement executed by a Guarantor in favor of Agent.

Hazardous Substance: (a) any pollutant, contaminant, agent, chemical,
by-product, substance, material or waste (whether solid, liquid or gas) that is
or becomes defined as a “toxic substance,” “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “hazardous constituent,” “pollutant,” “solid waste,” “special
waste” or “contaminant” or a word, term or phrase of similar meaning or
regulatory effect under any Environmental Law; (b) any waste, substance,
chemical or agent that is listed, defined, designated, or classified as, or

 

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otherwise determined by any Environmental Law to be, ignitable, corrosive,
radioactive, dangerous, toxic, explosive, infectious, radioactive, mutagenic,
hazardous or a similar designation under any federal, state or local law
(whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation thereof; (c) any petroleum or petroleum product
(including, without limitation, waste or used oil, gasoline, heating oil,
natural gas, kerosene and any other petroleum products or substances or
materials derived from or commingled with any petroleum products),
off-specification commercial chemical product, solid waste, radioactive
materials, infectious medical waste, lead based paint, mold, mycotoxins,
microbial matter and airborne pathogens (naturally occurring or otherwise),
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, polychlorinated biphenyls (PCBs) and radon gas; or (d) any waste,
substance or chemical, the presence of which requires investigation or
remediation under an Environmental Law or constitutes a danger, nuisance,
trespass or health or safety hazard to persons or property (whether under common
law statute, regulation or otherwise).

Hedging Agreement: an agreement relating to any swap, cap, floor, collar,
option, futures, forward, cross right or obligation, or combination thereof or
similar transaction, with respect to interest rate, foreign exchange, currency,
commodity, credit or equity risk.

Indemnified Taxes: Taxes other than Excluded Taxes.

Indemnitees: Agent Indemnitees, Lender Indemnitees, Issuing Bank Indemnitees and
Bank of America Indemnitees.

Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for the benefit of creditors.

Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that a Borrower’s or Subsidiary’s ownership, use, marketing, sale
or distribution of any Inventory, Equipment, Intellectual Property or other
Property violates another Person’s Intellectual Property.

Interest Period: as defined in Section 3.1.3.

Inventory: as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in a Borrower’s business
(but excluding Equipment). “Inventory” includes, without limitation, sugar,
sugar cane, raw sugar, refined sugar, sugar beets, beet seed, thick juice,
molasses, artificial sweetener products, by-products and flavorings.

Inventory Formula Amount: the lesser of (a) 70% of the Value of Eligible
Inventory; or (b) 85% of the NOLV Percentage of the Value of Eligible Inventory.

 

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Inventory Reserve: reserves established by Agent to reflect factors that may
negatively impact the Value of Inventory, including change in salability,
obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or
mix, markdowns and vendor chargebacks.

Investment: any acquisition of all or substantially all assets of a Person; any
acquisition of record or beneficial ownership of any Equity Interests of a
Person; or any advance or capital contribution to or other investment in a
Person.

IRS: the United States Internal Revenue Service.

Issuing Bank: Bank of America or any Affiliate of Bank of America, or any
replacement issuer appointed pursuant to Section 2.3.4.

Issuing Bank Indemnitees: Issuing Bank and its officers, directors, employees,
Affiliates, agents and attorneys.

Joinder Agreement: a Joinder Agreement to be executed by a Subsidiary of Parent
in the form of Exhibit D or in such other form as may be acceptable to Agent.

Joint Ventures: Wholesome Sweeteners, Inc., Comercializadora ISG, S. de R.L. de
C.V., LSR and Natural Sweet Ventures LLC.

Joint Venture Agreements: the Organic Documents of the Joint Ventures and other
agreements to which any Borrower or Subsidiary is a party relating to its
investment in or governance or operation of any Joint Venture.

LC Application: an application by Borrower Agent to Issuing Bank for issuance of
a Letter of Credit, in form and substance satisfactory to Issuing Bank.

LC Conditions: the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total LC Obligations do not exceed the Letter of Credit
Subline, no Overadvance exists and, if no Revolver Loans are outstanding, the LC
Obligations do not exceed the Borrowing Base (without giving effect to the LC
Reserve for purposes of this calculation); (c) the expiration date of such
Letter of Credit is (i) no more than 365 days from issuance, in the case of
standby Letters of Credit, and (ii) no more than 120 days from issuance, in the
case of documentary Letters of Credit; (d) the Letter of Credit and payments
thereunder are denominated in Dollars; and (e) the purpose and form of the
proposed Letter of Credit is satisfactory to Agent and Issuing Bank in their
discretion.

LC Documents: all documents, instruments and agreements (including LC Requests
and LC Applications) delivered by Borrowers or any other Person to Issuing Bank
or Agent in connection with any Letter of Credit.

LC Obligations: the sum (without duplication) of (a) all amounts owing by
Borrowers for any drawings under Letters of Credit; and (b) the stated amount of
all outstanding Letters of Credit.

LC Request: a request for issuance of a Letter of Credit, to be provided by
Borrower Agent to Issuing Bank, in form reasonably satisfactory to Agent and
Issuing Bank.

LC Reserve: the aggregate of all LC Obligations, other than those that have been
Cash Collateralized by Borrowers in a manner reasonably satisfactory to Agent
and Issuing Bank.

 

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Lender Indemnitees: Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.

Lenders: as defined in the preamble to this Agreement, including Agent in its
capacity as a provider of Swingline Loans and any other Person who hereafter
becomes a “Lender” pursuant to an Assignment and Acceptance.

Lending Office: the office designated as such by the applicable Lender at the
time it becomes party to this Agreement or thereafter by notice to Agent and
Borrower Agent.

Letter of Credit: any standby or documentary letter of credit issued by Issuing
Bank for the account of a Borrower, or any indemnity, guarantee, exposure
transmittal memorandum or similar form of credit support issued by Agent or
Issuing Bank for the benefit of a Borrower.

Letter of Credit Subline: $50,000,000.

LIBOR: for any Interest Period with respect to a LIBOR Loan, the per annum rate
of interest (rounded up, if necessary, to the nearest 1/8th of 1%), determined
by Agent at approximately 11:00 a.m. (London time) two Business Days prior to
commencement of such Interest Period, for a term comparable to such Interest
Period, equal to (a) the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source designated by
Agent); or (b) if BBA LIBOR is not available for any reason, the interest rate
at which Dollar deposits in the approximate amount of the LIBOR Loan would be
offered by Bank of America’s London branch to major banks in the London
interbank Eurodollar market. If the Board of Governors imposes a Reserve
Percentage with respect to LIBOR deposits, then LIBOR shall be the foregoing
rate, divided by 1 minus the Reserve Percentage.

LIBOR Loan: each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.

LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.

License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: any Person’s interest in Property securing an obligation owed to, or a
claim by, such Person, whether such interest is based on common law, statute or
contract, including liens, security interests, pledges, hypothecations,
statutory trusts, reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property.

Lien Waiver: an agreement, in form and substance satisfactory to Agent (it being
understood that such agreements (including the forms thereof) entered into by
Parent and its Subsidiaries in connection with the Existing Credit Agreement and
identified on Schedule 1.1D hereto are acceptable to Agent), by which (a) for
any material Collateral located on leased premises, the lessor waives or
subordinates any Lien it may have on the Collateral, and agrees to permit Agent
to enter upon the premises and remove the Collateral or to use the premises to
store or dispose of the Collateral; (b) for any Collateral held by a
warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request;

 

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(c) for any Collateral held by a repairman, mechanic or bailee, such Person
acknowledges Agent’s Lien, waives or subordinates any Lien it may have on the
Collateral, and agrees to deliver the Collateral to Agent upon request; and
(d) for any Collateral subject to a Licensor’s Intellectual Property rights, the
Licensor grants to Agent the right, vis-à-vis such Licensor, to enforce Agent’s
Liens with respect to the Collateral, including the right to dispose of it with
the benefit of the Intellectual Property, whether or not a default exists under
any applicable License.

Loan: a Revolver Loan.

Loan Account: the loan account established by each Lender on its books pursuant
to Section 5.8.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Loan Year: each 12 month period commencing on the Closing Date and on each
anniversary of the Closing Date.

LSR: Louisiana Sugar Refinery, LLC.

Ludlow Ground Lease: means the Lease dated May 27, 2003 by and between The
Cincinnati, New Orleans and Texas Pacific Railway Company, as lessor, and
Imperial Sugar Company, as lessee, covering a tract of land in Ludlow, Kenton
County, Kentucky, as amended.

Margin Stock: as defined in Regulation U of the Board of Governors.

Material Adverse Effect: the effect of any event or circumstance that, taken
alone or in conjunction with other events or circumstances, (a) has or could be
reasonably expected to have a material adverse effect on the business,
operations, Properties or condition (financial or otherwise) of Obligors taken
as a whole, on the value of any material Collateral, on the enforceability of
any Loan Documents, or on the validity or priority of Agent’s Liens on any
Collateral; (b) materially impairs the ability of an Obligor to perform its
obligations under the Loan Documents, including repayment of any Obligations; or
(c) otherwise materially impairs the ability of Agent or any Lender to enforce
or collect any Obligations or to realize upon any Collateral. Notwithstanding
the disclosure on any Schedule hereto or otherwise of any event of circumstance
(including any event or circumstance that could reasonably be expected to have a
Material Adverse Effect at present or in the future), no such disclosure thereof
shall operate to prevent the existence or occurrence of a Material Adverse
Effect (as defined in the immediately preceding sentence) if and when such
Material Adverse Effect exists or has occurred in whole or in part as a result
of such event or circumstance so disclosed.

Material Contract: any agreement or arrangement to which a Borrower or
Subsidiary is party (other than the Loan Documents) (a) that is deemed to be a
material contract under any securities law applicable to such Obligor, including
the Securities Act of 1933; (b) for which breach, termination, nonperformance or
failure to renew could reasonably be expected to have a Material Adverse Effect;
or (c) that relates to any Subordinated Debt, or to any Debt in an aggregate
amount of $2,500,000 or more.

Maximum Rate: means, at any time, the maximum rate of interest that Lenders may
lawfully contract for, charge, or receive in respect of the Obligations as
allowed by any Applicable Law. For purposes of determining the Maximum Rate
under the Applicable Law of the State of Texas, the applicable rate ceiling
shall be (a) the “weekly ceiling” described in and computed in accordance with
the provisions of Section 303.003 of the Texas Finance Code, as amended, or
(b) if the parties subsequently contract as allowed by any Applicable Law, the
“quarterly ceiling” or the “annualized ceiling” computed pursuant to
Section 303.008 of the Texas Finance Code, as amended; provided, however, that
at any time the “weekly ceiling”, the “quarterly ceiling”, or the “annualized
ceiling” shall be less than eighteen percent (18.0%) per annum or more than
twenty-four percent (24.0%) per annum, the provisions of Section 303.009(a) and
Section 303.009(b) of the Texas Finance Code, as amended, shall control for
purposes of such determination, as applicable.

 

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Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a mortgage, deed of trust or deed to secure debt in form and substance
reasonably satisfactory to Agent pursuant to which an Obligor grants a Lien on
its fee owned Real Estate (other than Excluded Assets) to Agent, for the benefit
of Secured Parties, as security for the Obligations, to the extent required by
Section 7.3.

Multiemployer Plan: any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Obligor or ERISA Affiliate makes or is
obligated to make contributions or, during the preceding five plan years, has
made or been obligated to make contributions.

Net Proceeds: with respect to an Asset Disposition, casualty or condemnation,
proceeds (including, when received, any deferred or escrowed payments) received
by a Borrower or Subsidiary in cash from such disposition, net of (a) reasonable
and customary costs and expenses actually incurred in connection therewith,
including legal fees and sales commissions; (b) amounts applied to repayment of
Debt secured by a Permitted Lien senior to Agent’s Liens on Collateral sold;
(c) transfer or similar taxes; and (d) reserves for taxes, liabilities and
indemnities, until such reserves are no longer needed. For purposes of
Section 5.3, (i) Net Proceeds of any Asset Disposition pursuant to
Section 10.2.6(k) shall be limited to the amount of Net Proceeds required by
Section 10.2.6(k) to be applied to the Loans, and (ii) insurance and
condemnation proceeds paid to Agent, as loss payee or otherwise, shall be deemed
Net Proceeds received by an Obligor.

NOLV Percentage: the net orderly liquidation value of Inventory or Eligible
Equipment (as applicable), expressed as a percentage, expected to be realized at
an orderly, negotiated sale held within a reasonable period of time, net of all
liquidation expenses, as determined from the most recent appraisal of Borrowers’
Inventory or Eligible Equipment (as applicable) performed by an appraiser and on
terms satisfactory to Agent.

Notes: each Revolver Note or other promissory note executed by a Borrower to
evidence any Obligations.

Notice of Borrowing: a Notice of Borrowing to be provided by Borrower Agent to
request a Borrowing of Revolver Loans, in form reasonably satisfactory to Agent.

Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be
provided by Borrower Agent to request a conversion or continuation of any Loans
as LIBOR Loans, in form satisfactory to Agent.

Noticed Hedge: Secured Bank Product Obligations arising under a Hedging
Agreement.

Obligations: all (a) Loans and principal of and premium, if any, on the Loans,
(b) LC Obligations and other obligations of Obligors with respect to Letters of
Credit, (c) interest, expenses, fees, indemnification obligations, Extraordinary
Expenses and other amounts payable by any one or more of Obligors under Loan
Documents, (d) Secured Bank Product Obligations, and (e) other Debts,
obligations and liabilities of any kind owing by any one or more of Obligors
pursuant to the Loan Documents, whether now existing or hereafter arising,
whether evidenced by a note or other writing, whether allowed in any Insolvency
Proceeding, whether arising from an extension of credit, issuance of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, and whether
direct or indirect, absolute or contingent, due or to become due, primary or
secondary, or joint or several, provided, that (i) Secured Bank Product
Obligations shall be secured and guaranteed pursuant to the Loan Documents only
to the

 

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extent that, and for so long as, the other Obligations are so secured and
guaranteed and (ii) any release of Collateral or Guarantors effected in the
manner permitted by this Agreement shall not require the consent of holders of
Bank Product Debt (other than in their capacities as Lenders, if applicable).

Obligor: each Borrower, Guarantor, or other Person that is liable for payment of
any Obligations or that has granted a Lien in favor of Agent on its assets to
secure any Obligations.

Ordinary Course of Business: the ordinary course of business of any Borrower or
Subsidiary (as applicable), consistent with past practices and undertaken in
good faith.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, shareholders agreement,
partnership agreement, certificate of partnership, certificate of formation,
voting trust agreement, or similar agreement or instrument governing the
formation or operation of such Person.

OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: each Note; LC Document; Fee Letter; Co-Collateral Agency
Agreement; Lien Waiver; Real Estate Related Document; Borrowing Base
Certificate, Compliance Certificate, financial statement or report delivered
hereunder; or other document, instrument or agreement (other than this Agreement
or a Security Document) now or hereafter delivered by an Obligor or other Person
to Agent or a Lender in connection with any transactions relating hereto.

Other Taxes: all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, any Loan Document.

Overadvance: as defined in Section 2.1.5.

Overadvance Loan: a Base Rate Revolver Loan made when an Overadvance exists or
is caused by the funding thereof.

Participant: as defined in Section 13.2.

Patent Security Agreement: a patent security agreement in which an Obligor
grants a Lien on its interests in patents to Agent, for the benefit of Secured
Parties, as security for the Obligations.

Patriot Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to an Obligor,
including those constituting proceeds of any Collateral.

PACA: the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499A et
seq., as the same now exists or may hereafter from time to time be amended,
modified, recodified, or supplemented, together with all rules and regulations
thereunder.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Plan: any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by any Obligor or ERISA
Affiliate or to which such Obligor or ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

 

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Permitted Acquisitions: (a) acquisitions of all or substantially all of the
assets (other than Equity Interests) of another Person and (b) acquisitions by
an Obligor of all of the issued and outstanding Equity Interests of another
Person (to the extent not already owned by such Obligor); provided, however,
that no such acquisition shall constitute a Permitted Acquisition unless, at the
time of the consummation of such acquisition and after giving effect thereto and
to the requirements of this Agreement and the other Loan Documents (including,
without limitation, the requirements of Section 10.1.9),

(i) no Material Adverse Effect, Default or Event of Default exists or would
result therefrom,

(ii) Availability, after deducting therefrom all expenses and fees which
constitute a part of the Obligations and which are then due and payable, is and
will be in excess of $20,000,000,

(iii) in the case of an acquisition of all issued and outstanding Equity
Interests of another Person, (A) as a result of such acquisition, the issuer of
such Equity Interests (the “acquired entity”) shall have become a direct,
wholly-owned Subsidiary of Parent and shall have complied with each of the
requirements of Section 10.1.9, (B) the acquired entity shall be engaged only in
a line or type of business that is consistent with the requirements of
Section 10.2.16, (C) the board of directors (or other comparable governing body,
as applicable) of the acquired entity shall have duly approved such acquisition,
(D) all representations and warranties regarding the acquired entity as a
Subsidiary and an Obligor set forth in this Agreement and the other Loan
Documents shall be made by such acquired entity and shall be true and correct as
if made on and as of the date of such acquisition (and after giving effect
thereto) except to the extent that such representations and warranties expressly
relate only to an earlier date, (E) the acquired entity as a Subsidiary and an
Obligor shall have agreed to comply with, and shall be in compliance with, all
covenants and agreements of this Agreement and the other Loan Documents
applicable to it, and (F) Borrower Agent shall have delivered to Agent, at least
five Business Days (or such shorter period as Agent may, in its discretion,
agree) prior to the date of the consummation of such acquisition, (1) true and
correct copies of the acquisition agreements and related documents executed, or
to be executed, in connection with such acquisition, (2) evidence, in form and
substance satisfactory to Agent, that the acquired entity is Solvent and
(3) historical financial statements of the acquired entity and pro forma
consolidated financial statements of Parent and its Subsidiaries which give
effect to such acquisition, and

(iv) Borrower Agent has delivered to Agent written evidence, in reasonable form
and detail, that Obligors will be in compliance with Section 10.3.1 on a pro
forma basis and that such acquisition will be in compliance with all
requirements of this definition at the time of consummation of such acquisition.

Permitted Asset Disposition: as long as no Default or Event of Default exists
and the Net Proceeds thereof are remitted to Agent if and to the extent required
by Section 5.2 and/or Section 5.3, an Asset Disposition that is (a) a sale of
Inventory in the Ordinary Course of Business; (b) a disposition of Equipment
(other than the Primary Plant) that, in the aggregate during any 12 month
period, has a fair market or book value (whichever is more) of $5,000,000 or
less; (c) a disposition of Inventory that is obsolete, unmerchantable or
otherwise unsalable in the Ordinary Course of Business; (d) termination of a
lease of real or personal Property that is not necessary for the Ordinary Course
of Business, could not reasonably be expected to have a Material Adverse Effect;
or (e) approved in writing by Agent and Required Lenders.

 

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Permitted Contingent Obligations: Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal
or performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder; (f) arising under the Loan
Documents; (g) in an aggregate outstanding amount up to $5,000,000;
(h) consisting of Guaranties of Debt permitted by Section 10.2.1, or (i) of a
Borrower or Guarantor of liabilities of joint ventures in which a Borrower or
Guarantor is an owner in an aggregate outstanding amount not to exceed the sum
of (i) $5,000,000 plus (ii) the amount of liabilities under Contingent
Obligations which are in existence as of the Closing Date and are described on
Schedule 1.1E hereto.

Permitted Grower Lien: a Grower Lien which (a) secures an obligation that is not
past due, (b) is paid in accordance with the applicable Farm Products Law,
(c) has been disclosed to Agent in accordance with Section 10.1.11.

Permitted IP Dispositions: (a) any non-exclusive licensing of Intellectual
Property rights for fair value which could not reasonably be expected to have
any Material Adverse Effect on any Obligor and (b) any sale or other disposition
of Intellectual Property rights for fair value which could not reasonably be
expected to have any Material Adverse Effect on any Obligor, other than a sale
or other disposition of trademarks, service marks, tradenames, or other
Intellectual Property relating to the Imperial, Dixie Crystals, or Holly brands
or any derivation or variation thereof.

Permitted Lien: as defined in Section 10.2.2.

Permitted Purchase Money Debt: Purchase Money Debt of Borrowers and Subsidiaries
that is unsecured or secured only by a Purchase Money Lien, as long as its
incurrence does not violate Section 10.2.1.

Person: any individual, corporation, limited liability company, partnership,
joint venture, joint stock company, land trust, business trust, unincorporated
organization, Governmental Authority or other entity.

Plan: any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by an Obligor or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, an ERISA Affiliate.

Pledge Agreement: each pledge or security agreement, in form and substance
satisfactory to Agent, executed by an Obligor pursuant to which it grants to
Agent a security interest in Equity Interests issued by its Subsidiaries or
another Obligor owned by it as security for the Obligations.

Primary Plant: means the refineries, plants, facilities, equipment, and other
fixed assets of Obligors (or any one or more of them) located at or near Port
Wentworth, Georgia (also known as the Savannah Sugar Refinery).

Prime Rate: the rate of interest announced by Bank of America from time to time
as its prime rate. Such rate is set by Bank of America on the basis of various
factors, including its costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such rate. Any change in such rate announced by
Bank of America shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

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Pro Rata: with respect to any Lender, a percentage (rounded to the ninth decimal
place) determined (a) while Revolver Commitments are outstanding, by dividing
the amount of such Lender’s Revolver Commitment by the aggregate amount of all
Revolver Commitments; and (b) at any other time, by dividing the amount of such
Lender’s Loans and LC Obligations by the aggregate amount of all outstanding
Loans and LC Obligations.

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect, nor result in
forfeiture or sale of any assets of the Obligor; (e) no Lien is imposed on
assets of the Obligor, unless bonded and stayed to the satisfaction of Agent;
and (f) if the obligation results from entry of a judgment or other order, such
judgment or order is stayed pending appeal or other judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Protective Advances: as defined in Section 2.1.6.

Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of
the purchase price of fixed assets or Foreign Inventory; (b) Debt (other than
the Obligations) incurred within 30 days before or after acquisition of any
fixed assets or Foreign Inventory, for the purpose of financing any of the
purchase price thereof; and (c) any renewals, extensions or refinancings (but
not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed assets or Foreign Inventory acquired with such Debt, or constituting a
Capital Lease or a purchase money security interest under the UCC.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is
in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced; (b) it has a final maturity no
sooner than, a weighted average life no less than, and an interest rate no
greater than, the Debt being extended, renewed or refinanced; (c) it is
subordinated to the Obligations at least to the same extent as the Debt being
extended, renewed or refinanced; (d) the representations, covenants and defaults
applicable to it are no less favorable to the applicable Obligor(s) than those
applicable to the Debt being extended, renewed or refinanced, taken as a whole;
(e) no additional Lien is granted to secure it; (f) no additional Person is
obligated on such Debt; and (g) upon giving effect to it, no Default or Event of
Default exists.

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1(b), (d) or (f).

Reimbursement Date: as defined in Section 2.3.2.

Related Real Estate Documents: with respect to any Real Estate subject to a
Mortgage, the following, in form and substance satisfactory to Agent, to the
extent requested by Agent: (a) except as to the Real Estate comprising the
Company Headquarters, a mortgagee title policy (or binder therefor) covering
Agent’s interest under the Mortgage, in a form and amount and by an insurer
acceptable to

 

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Agent, which must be fully paid on such effective date; (b) such assignments of
leases, estoppel letters, attornment agreements, consents, waivers and releases
as Agent may reasonably require with respect to other Persons having an interest
in the Real Estate; (c) a current, as-built survey of the Real Estate,
containing a metes-and-bounds property description and certified by a licensed
surveyor reasonably acceptable to Agent; (d) a life-of-loan flood hazard
determination and, if the Real Estate is located in a flood plain, an
acknowledged notice to the owner of such Real Estate and flood insurance in an
amount, with endorsements and by an insurer acceptable to Agent; (e) a current
appraisal of the Real Estate, prepared by an appraiser acceptable to Agent, and
in form and substance satisfactory to Required Lenders; (f) except as to the
Real Estate related to the Company Headquarters, an environmental assessment,
prepared by environmental engineers reasonably acceptable to Agent, and
accompanied by such reports, certificates, studies or data as Agent may
reasonably require, which shall all be in form and substance reasonably
satisfactory to Required Lenders; and (g) an Environmental Agreement and such
other documents, instruments or agreements as Agent may reasonably require with
respect to any environmental risks regarding the Real Estate. Notwithstanding
the foregoing, it is agreed that the amount of title insurance may be limited to
$40,000,000 in the aggregate.

Rent and Charges Reserve: the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder, broker or other Person who possesses any
Collateral or could assert a Lien on any Collateral; and (b) a reserve at least
equal to three months rent and other charges that could be payable to any such
Person, unless it has executed a Lien Waiver.

Report: as defined in Section 12.2.3.

Reportable Event: any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

Required Lenders: two or more Lenders (subject to Section 4.2) having
(a) Revolver Commitments in excess of 50% of the aggregate Revolver Commitments;
and (b) if the Revolver Commitments have terminated, Loans in excess of 50% of
all outstanding Loans; provided, however, that the Commitments and Loans of any
Defaulting Lender shall be excluded from such calculation.

Reserve Percentage: the reserve percentage (expressed as a decimal, rounded up
to the nearest 1/8th of 1%) applicable to member banks under regulations issued
by the Board of Governors for determining the maximum reserve requirement for
Eurocurrency liabilities.

Restricted Investment: any Investment by a Borrower or Subsidiary, other than
(a) Investments in Borrowers and Guarantors (including any Person that, as a
result of such transaction, becomes a Subsidiary in connection with a Permitted
Acquisition or is merged or consolidated into Parent or any Subsidiary thereof
in connection with a merger or consolidation permitted by this Agreement and
becomes a Borrower or Guarantor pursuant to the terms of this Agreement),
provided that any such Investments made in the form of intercompany loans or
advances shall either not be evidenced by a promissory note or other instrument
or shall be evidenced by a promissory note which shall be pledged and assigned
to Agent to secure the payment and performance of the Obligations;
(b) Investments in Foreign Subsidiaries, non-Guarantor Subsidiaries and joint
ventures (including a Person that, as a result of such transaction, becomes a
Foreign Subsidiary, a non-Guarantor Subsidiary or a joint venture) in an
aggregate outstanding amount equal to the sum of (i) the amount of such
Investments in existence as of the Closing Date plus (ii) such Investments made
on or after the Closing Date in an aggregate amount at any time outstanding not
to exceed $10,000,000; (c) Cash Equivalents that are subject to Agent’s Lien and
control, pursuant to documentation in form and substance satisfactory to Agent;
(d) loans and advances permitted under Section 10.2.7; and (e) the following if
made when no Event of Default exists or would result therefrom: (i) acquisitions
of Equipment and Real Estate to be used in the business of such Person so long
as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder;

 

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(ii) acquisitions of Inventory in the Ordinary Course of Business of such
Person; (iii) acquisitions of other current assets acquired in the Ordinary
Course of Business of such Person; (iv) investments in direct obligations of the
U.S., or any agency thereof, or obligations guaranteed by the U.S., provided
that such obligations mature within one year from the date of acquisition
thereof; (v) investments in certificates of deposit maturing within one year
from the date of investment, bankers’ acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the U.S. or any state thereof having
capital and surplus aggregating at least $100,000,000; (vi) investments in
(A) commercial paper given a rating of “A2” or better by Standard & Poor’s
Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing
not more than 90 days from the date of creation thereof and (B) variable rate
demand notes or variable rate demand obligations that are credit enhanced or
money market funds; (vii) Hedging Agreements; (viii) Permitted Acquisitions;
(ix) any contribution of the Gramercy Assets to LSR in accordance with the Joint
Venture Agreements of LSR; (x) Investments constituting Permitted Contingent
Obligations; (xi) any Investment paid from the net cash proceeds of, or in
exchange for, Equity Interests of Parent, and (xii) if (but only if) no Default
or Event of Default has occurred and is continuing or would result therefrom and
Availability after giving effect thereto would exceed $25,000,000, Investments
constituting Parent’s acquisition of the remaining 50% interest in Wholesome
Sweeteners, Inc. not owned by Parent as of the Closing Date.

Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of any Borrower, Subsidiary or other Obligor to incur or
repay Borrowed Money under this Agreement, to grant Liens on any assets in favor
of Agent, to declare or make Distributions to any Obligor, to modify, extend or
renew any agreement evidencing Borrowed Money under this Agreement, or to repay
any intercompany Debt to any Obligor.

Revolver Commitment: for any Lender, its obligation to make Revolver Loans and
to participate in LC Obligations up to the maximum principal amount shown on
Schedule 1.1B, as hereafter modified pursuant to an Assignment and Acceptance to
which it is a party. “Revolver Commitments” means the aggregate amount of such
commitments of all Lenders. As of the Closing Date, the Revolver Commitments
equal $140,000,000 in aggregate amount.

Revolver Loan: a loan made pursuant to Section 2.1 and any Swingline Loan,
Overadvance Loan or Protective Advance.

Revolver Note: a promissory note executed by Borrowers in favor of a Lender in
the form of Exhibit A, in the amount of such Lender’s Revolver Commitment.

Revolver Termination Date: December 31, 2015.

Rights: means rights to purchase Equity Interests of Parent, other than
Disqualified Equity Interests, issued pursuant to the Shareholder Rights Plan.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by an Obligor under a License.

S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.

Secured Bank Product Obligations: Bank Product Debt owing to a Secured Bank
Product Provider, up to the maximum amount (in the case of any Secured Bank
Product Provider other than Bank of America and its Affiliates) specified by
such provider in writing to Agent, which amount may be established or increased
(by further written notice to Agent from time to time) as long as no Default or
Event of Default exists and no Overadvance would result from establishment of a
Bank Product Reserve for such amount and all other Secured Bank Product
Obligations.

 

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Secured Bank Product Provider: (a) Bank of America or any of its Affiliates; and
(b) any other Lender or Affiliate of a Lender that is providing a Bank Product,
provided such provider delivers written notice to Agent, in form and substance
satisfactory to Agent, by the later of the Closing Date or 10 days following
creation of the Bank Product, (i) describing the Bank Product and setting forth
the maximum amount to be secured by the Collateral and the methodology to be
used in calculating such amount, and (ii) agreeing to be bound by Section 12.13.

Secured Parties: Agent, Issuing Bank, Lenders and Secured Bank Product
Providers.

Security Documents: the Guaranties, Mortgages, Patent Security Agreements,
Trademark Security Agreements, Deposit Account Control Agreements, Pledge
Agreements, Joinder Agreements and all other documents, instruments and
agreements now or hereafter securing (or given with the intent to secure) any
Obligations.

Senior Officer: the chairman of the board, president, chief executive officer,
chief financial officer or any vice president of a Borrower or, if the context
requires, an Obligor.

Settlement Report: a report summarizing Revolver Loans and participations in LC
Obligations outstanding as of a given settlement date, allocated to Lenders on a
Pro Rata basis in accordance with their Revolver Commitments.

Shareholder Rights Plan: means the shareholder rights plan provided for by the
Rights Agreement dated as of December 20, 2002 between Parent and The Bank of
New York which provides for the distribution to shareholders of rights to
purchase Equity Interests of Parent other than Disqualified Equity Interests (it
being agreed and understood that such agreement shall not relate to, or permit
any Distribution of, any Disqualified Equity Interests).

Solvent: as to any Person, such Person (a) owns Property whose fair salable
value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present fair salable value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured;
(c) is able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32) of the
Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any Loan
Documents, or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates. “Fair salable value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase.

Subordinated Debt: Debt incurred by an Obligor that is expressly subordinate and
junior in right of payment to Full Payment of all Obligations pursuant to a
subordination agreement satisfactory to Agent and Required Lenders, and is on
terms (including maturity, interest, fees, repayment, covenants and
subordination) satisfactory to Agent and Required Lenders.

Subsidiary: with respect to any specified Person, any entity of which more than
50% of whose voting securities or Equity Interests is owned, directly or
indirectly, by such Person (including indirect ownership by such Person through
other entities in which such Person directly or indirectly owns more than 50% of
the voting securities or Equity Interests).

 

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Swingline Loan: any Borrowing of Revolver Loans funded with Agent’s funds, until
such Borrowing is settled among Lenders or repaid by Borrowers.

Synthetic Debt: with respect to any Person as of any date of determination, all
obligations of such Person in respect of transactions entered into by such
Person that are intended to function primarily as a borrowing of funds but are
not otherwise included in the definition of “Debt” or as a liability on the
balance sheet of such Person prepared as of such date in accordance with GAAP.

Synthetic Lease Obligation: the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of Property (including sale and leaseback
transactions), in each case creating obligations that do not appear on the
balance sheet of such Person prepared as of such date in accordance with GAAP
but which, upon the application of any Insolvency Proceeding to such Person or
its Property, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).

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

Trademark Security Agreement: a trademark security agreement in which an Obligor
grants a Lien on its interests in trademarks to Agent, for the benefit of
Secured Parties, as security for the Obligations.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

Trigger Period: the period (a) except as provided in clause (b) below,
(i) commencing on the initial day that an Event of Default occurs or that
Availability is less than $25,000,000 at any time, and (ii) continuing until,
for each day during any period of three consecutive calendar months, no Event of
Default has existed and Availability has been greater than $40,000,000 at all
times or (b) for purposes of Section 10.3.1 only, (i) commencing on the initial
day that an Event of Default occurs or that Availability is less than
$20,000,000 at any time or is less than $25,000,000 for a period of any five
(5) consecutive Business Days, and (ii) continuing until, for each day during
any period of three consecutive calendar months, no Event of Default has existed
and Availability has been greater than $30,000,000 at all times.

Type: any type of a Loan (i.e., Base Rate Loan or LIBOR Loan) that has the same
interest option and, in the case of LIBOR Loans, the same Interest Period.

UCC: the Uniform Commercial Code as in effect in the State of Texas or, when the
laws of any other jurisdiction govern the perfection or enforcement of any Lien,
the Uniform Commercial Code of such jurisdiction.

Unfunded Pension Liability: the amount (if any) by which the present value of a
Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA,
determined by using actuarial assumptions used by the Pension Plan’s actuary for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year, exceeds the current fair market value of such Pension Plan’s assets
determined in accordance with Section 430 of the Code.

Unused Line Fee Rate: a per annum rate equal to (a) 0.50%, if the average daily
balance of Revolver Loans and stated amount of Letters of Credit was 50% or less
of the Revolver Commitments during the preceding calendar month, or (b) 0.375%,
if such average daily balance was more than 50% of the Revolver Commitments
during the preceding calendar month.

 

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Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower
or by such Subsidiary to another Subsidiary of such Borrower which owns an
Equity Interest in such Subsidiary.

U.S.: the United States of America.

Value: (a) for Inventory, its value determined on the basis of the lower of cost
or market, calculated on a first-in, first-out basis, and excluding any portion
of cost attributable to intercompany profit among Borrowers and their
Affiliates; and (b) for an Account, its face amount, net of any returns,
rebates, discounts (calculated on the shortest terms), credits, allowances or
Taxes (including sales, excise or other taxes) that have been or could be
claimed by the Account Debtor or any other Person.

Weekly Reporting Period: as defined in Section 8.1.

1.2 Accounting Terms. Under the Loan Documents (except as otherwise specified
herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Parent and its Subsidiaries delivered to Agent before
the Closing Date and using the same inventory valuation method as used in such
financial statements. If GAAP changes during the term of this Agreement, or if
Parent interprets or applies GAAP differently (and Parent’s certified public
accountants concur with such interpretation or application) from how it was
interpreted or applied in preparing the financial statements provided to Agent
prior to the Closing Date, such that any financial ratios or covenants contained
herein would then be calculated in a different manner or with different
components, then Borrower Agent shall provide Agent with prior written notice of
any such changes and, upon the request of either Borrower Agent or Agent,
Borrower Agent and Agent agree to negotiate in good faith to amend this
Agreement in such respects as are necessary to conform those financial ratios or
covenants as criteria for evaluating Obligors’ financial condition and/or
financial performance to substantially the same criteria as were effective prior
to such change in GAAP; provided, however, that, until Obligors, Lenders and
Agent so amend this Agreement, all such covenants shall continue to be
calculated in accordance with GAAP as in effect immediately prior to such
change.

1.3 Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of Texas from time to time:
“Chattel Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,”
“Equipment,” “General Intangibles,” “Goods,” “Instrument,” “Investment
Property,” “Letter-of-Credit Right” and “Supporting Obligation.”

1.4 Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the computation of periods of time from a
specified date to a later specified date, “from” means “from and including,” and
“to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section mean, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) time of day
mean time of day at Agent’s notice address under Section 14.3.1 (which, as of
the Closing Date, is Pacific time); or (g) discretion of Agent, Issuing Bank or
any Lender mean the sole and absolute discretion of such Person. All
calculations of Value, fundings of Loans, issuances of Letters of Credit and
payments of Obligations shall be in Dollars and, unless the context otherwise
requires, all determinations (including calculations of Borrowing Base and

 

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financial covenants) made from time to time under the Loan Documents shall be
made in light of the circumstances existing at such time. Borrowing Base
calculations shall be consistent with historical methods of valuation and
calculation, and otherwise satisfactory to Agent (and not necessarily calculated
in accordance with GAAP). Borrowers shall have the burden of establishing any
alleged negligence, misconduct or lack of good faith by Agent, Issuing Bank or
any Lender under any Loan Documents. No provision of any Loan Documents shall be
construed against any party by reason of such party having, or being deemed to
have, drafted the provision. Whenever the phrase “to the best of Borrowers’
knowledge” or words of similar import are used in any Loan Documents, it means
actual knowledge of a Senior Officer, or knowledge that a Senior Officer would
have obtained if he or she had engaged in good faith and diligent performance of
his or her duties, including reasonably specific inquiries of employees or
agents and a good faith attempt to ascertain the matter to which such phrase
relates.

SECTION 2. CREDIT FACILITIES

2.1 Revolver Commitment.

2.1.1 Revolver Loans. Each Lender agrees, severally on a Pro Rata basis up to
its Revolver Commitment, on the terms set forth herein, to make Revolver Loans
to Borrowers from time to time through the Commitment Termination Date. The
Revolver Loans may be repaid and reborrowed as provided herein. In no event
shall any Lender have any obligation to honor a request for a Revolver Loan if
the unpaid balance of Revolver Loans outstanding at such time (including the
requested Loan) would exceed the Borrowing Base. As of the Closing Date, “Loans”
(as defined in the Existing Credit Agreement) in the aggregate principal amount
of $57,897,657.49 remain outstanding under the Existing Credit Agreement (the
“Continuing Loans”). All Continuing Loans shall be deemed to be Revolver Loans
outstanding hereunder for all purposes of this Agreement.

2.1.2 Revolver Notes. The Revolver Loans made by each Lender and interest
accruing thereon shall be evidenced by the records of Agent and such Lender. At
the request of any Lender, Borrowers shall deliver a Revolver Note to such
Lender.

2.1.3 Use of Proceeds. The proceeds of Revolver Loans shall be used by Borrowers
solely (a) to satisfy existing Debt; (b) to pay fees and transaction expenses
associated with the closing of this credit facility; (c) to pay Obligations in
accordance with this Agreement; and (d) for working capital and other lawful
corporate purposes of Borrowers and their Subsidiaries.

2.1.4 Voluntary Reduction or Termination of Revolver Commitments.

(a) The Revolver Commitments shall terminate on the Revolver Termination Date,
unless sooner terminated in accordance with this Agreement. Upon at least 30
days prior written notice to Agent (or such shorter period as may be agreed to
by Agent in its sole discretion), Borrowers may, at their option, terminate the
Revolver Commitments. Any notice of termination given by Borrowers shall be
irrevocable. On such termination date, Borrowers shall make Full Payment of all
Obligations.

(b) Borrowers may permanently reduce the Revolver Commitments, on a Pro Rata
basis for each Lender, upon at least 30 days prior written notice to Agent,
which notice shall specify the amount of the reduction and shall be irrevocable
once given. Each reduction shall be in a minimum amount of $10,000,000, or an
increment of $1,000,000 in excess thereof.

2.1.5 Overadvances. If the aggregate Revolver Loans exceed the Borrowing Base
(an “Overadvance”) at any time, the excess amount shall be payable by Borrowers
on demand by Agent, but all such Revolver Loans shall nevertheless constitute
Obligations secured by the Collateral and entitled to

 

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all benefits of the Loan Documents. Agent may require Lenders to honor requests
for Overadvance Loans and to forbear from requiring Borrowers to cure an
Overadvance, (a) when no other Event of Default is known to Agent, as long as
(i) the Overadvance does not continue for more than 30 consecutive days (and no
Overadvance may exist for at least five consecutive days thereafter before
further Overadvance Loans are required), and (ii) the Overadvance is not known
by Agent to exceed $10,000,000; and (b) regardless of whether an Event of
Default exists, if Agent discovers an Overadvance not previously known by it to
exist, as long as from the date of such discovery the Overadvance (i) is not
increased by more than $2,000,000, and (ii) does not continue for more than 30
consecutive days (provided, however, that, for purposes of the requests and
forbearances referred to in this sentence above only, the aggregate amount of
Overadvances outstanding under clauses (a) and (b) at any time shall not exceed
$5,000,000 without the prior consent of Required Lenders). In no event shall
Overadvance Loans be required that would cause the outstanding Revolver Loans
and LC Obligations to exceed the aggregate Revolver Commitments. Any funding of
an Overadvance Loan or sufferance of an Overadvance shall not constitute a
waiver by Agent or Lenders of the Event of Default caused thereby. Required
Lenders may at any time revoke Agent’s authority to require Lenders to honor
requests for Overadvance Loans and to forbear from requiring Borrowers to cure
an Overadvance by their giving of written notice Agent. In no event shall any
Borrower or other Obligor be deemed a beneficiary of this Section nor authorized
to enforce any of its terms.

2.1.6 Protective Advances. Agent shall be authorized, in its discretion, at any
time that any conditions in Section 6 are not satisfied, and without regard to
the aggregate Commitments, to make Base Rate Revolver Loans (“Protective
Advances”) during the continuation of any Default or Event of Default (a) up to
an aggregate amount of $10,000,000 outstanding at any time, if Agent deems such
Loans necessary or desirable to preserve or protect Collateral, or to enhance
the collectibility or repayment of Obligations (provided, however, that (i) the
aggregate amount of Protective Advances outstanding at any time and used for the
purposes of enhancing the collectability of the Obligations, and not used for
the purpose of preserving or protecting Collateral or repaying Obligations,
shall not exceed $3,000,000 without the prior consent of Required Lenders and
(ii) no such Protective Advances shall, for any Lender, cause the sum of the
aggregate outstanding principal amount of the Revolver Loans of such Lender plus
the aggregate amount of such Lender’s participation interest in outstanding
Letters of Credit to exceed such Lender’s Revolver Commitment as then most
recently in effect immediately prior to the occurrence of such Default or Event
of Default that resulted in the making of such Protective Advances); or (b) to
pay any other amounts chargeable to Obligors under any Loan Documents, including
costs, fees and expenses. Each Lender shall participate in each Protective
Advance on a Pro Rata basis. Required Lenders may at any time revoke Agent’s
authority to make further Protective Advances under clause (a) by written notice
to Agent. Absent such revocation, Agent’s determination that funding of a
Protective Advance is appropriate shall be conclusive.

2.2 [Intentionally omitted.]

2.3 Letter of Credit Facility.

2.3.1 Issuance of Letters of Credit. Issuing Bank shall issue Letters of Credit
from time to time until 30 days prior to the Revolver Termination Date (or until
the Commitment Termination Date, if earlier), on the terms set forth herein,
including the following:

(a) Each Borrower acknowledges that Issuing Bank’s issuance of any Letter of
Credit is conditioned upon Issuing Bank’s receipt of a LC Application with
respect to the requested Letter of Credit, as well as such other instruments and
agreements as Issuing Bank may customarily require for issuance of a letter of
credit of similar type and amount. Issuing Bank shall have no obligation to
issue any Letter of Credit unless (i) Issuing Bank receives a LC Request and LC
Application at least three Business Days prior to the requested date of
issuance; (ii) each LC Condition is satisfied; and (iii) if a

 

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Defaulting Lender exists, such Lender or Borrowers have entered into
arrangements satisfactory to Agent and Issuing Bank to eliminate any Fronting
Exposure associated with such Lender. If, in sufficient time to act, Issuing
Bank receives written notice from Required Lenders that a LC Condition has not
been satisfied, Issuing Bank shall not issue the requested Letter of Credit.
Prior to receipt of any such notice, Issuing Bank shall not be deemed to have
knowledge of any failure of LC Conditions. With respect to any Letter of Credit
which contains any “evergreen” or automatic extension renewal provision, no such
documents referred to in the first sentence of this clause (a) above shall be
required, and each Lender shall be deemed to have consented to any such
extension or renewal unless such Lender shall have provided to Agent written
notice that such Lender declines to consent to such extension or renewal at
least 30 days prior to the date on which the applicable Issuing Bank is entitled
to decline to extend or renew such Letter of Credit.

(b) Letters of Credit may be requested by a Borrower to support obligations
incurred in the Ordinary Course of Business, or as otherwise approved by Agent.
The renewal or extension of any Letter of Credit shall be treated as the
issuance of a new Letter of Credit, except that delivery of a new LC Application
shall be required at the discretion of Issuing Bank.

(c) Borrowers assume all risks of the acts, omissions or misuses of any Letter
of Credit by the beneficiary. In connection with issuance of any Letter of
Credit, none of Agent, Issuing Bank or any Lender shall be responsible for the
existence, character, quality, quantity, condition, packing, value or delivery
of any goods purported to be represented by any Documents; any differences or
variation in the character, quality, quantity, condition, packing, value or
delivery of any goods from that expressed in any Documents; the form, validity,
sufficiency, accuracy, genuineness or legal effect of any Documents or of any
endorsements thereon; the time, place, manner or order in which shipment of
goods is made; partial or incomplete shipment of, or failure to ship, any goods
referred to in a Letter of Credit or Documents; any deviation from instructions,
delay, default or fraud by any shipper or other Person in connection with any
goods, shipment or delivery; any breach of contract between a shipper or vendor
and a Borrower; errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail,
telephone or otherwise; errors in interpretation of technical terms; the
misapplication by a beneficiary of any Letter of Credit or the proceeds thereof;
or any consequences arising from causes beyond the control of Issuing Bank,
Agent or any Lender, including any act or omission of a Governmental Authority.
The rights and remedies of Issuing Bank under the Loan Documents shall be
cumulative. Issuing Bank shall be fully subrogated to the rights and remedies of
each beneficiary whose claims against Borrowers are discharged with proceeds of
any Letter of Credit.

(d) In connection with its administration of and enforcement of rights or
remedies under any Letters of Credit or LC Documents, Issuing Bank shall be
entitled to act, and shall be fully protected in acting, upon any certification,
documentation or communication in whatever form believed by Issuing Bank, in
good faith, to be genuine and correct and to have been signed, sent or made by a
proper Person. Issuing Bank may consult with and employ legal counsel,
accountants and other experts to advise it concerning its obligations, rights
and remedies, and shall be entitled to act upon, and shall be fully protected in
any action taken in good faith reliance upon, any advice given by such experts.
Issuing Bank may employ agents and attorneys-in-fact in connection with any
matter relating to Letters of Credit or LC Documents, and shall not be liable
for the negligence or misconduct of agents and attorneys-in-fact selected with
reasonable care.

 

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(e) Each of the Existing Letters of Credit shall be deemed to be a Letter of
Credit issued and outstanding under, and in compliance with the terms and
provisions of, this Section 2.3.

2.3.2 Reimbursement; Participations.

(a) If Issuing Bank honors any request for payment under a Letter of Credit,
Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement Date”), the
amount paid by Issuing Bank under such Letter of Credit, together with interest
at the interest rate for Base Rate Revolver Loans from the Reimbursement Date
until payment by Borrowers. The obligation of Borrowers to reimburse Issuing
Bank for any payment made under a Letter of Credit shall be absolute,
unconditional, irrevocable, and joint and several, and shall be paid without
regard to any lack of validity or enforceability of any Letter of Credit or the
existence of any claim, setoff, defense or other right that Borrowers may have
at any time against the beneficiary. Whether or not Borrower Agent submits a
Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing of
Base Rate Revolver Loans in an amount necessary to pay all amounts due Issuing
Bank on any Reimbursement Date and each Lender agrees to fund its Pro Rata share
of such Borrowing whether or not the Commitments have terminated, an Overadvance
exists or is created thereby, or the conditions in Section 6 are satisfied.

(b) Upon issuance of a Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased from Issuing Bank, without recourse or
warranty, an undivided Pro Rata interest and participation in all LC Obligations
relating to the Letter of Credit. If Issuing Bank makes any payment under a
Letter of Credit and Borrowers do not reimburse such payment on the
Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall
promptly (within one Business Day) and unconditionally pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon
request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit
and LC Documents in its possession at such time.

(c) The obligation of each Lender to make payments to Agent for the account of
Issuing Bank in connection with Issuing Bank’s payment under a Letter of Credit
shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, setoff, qualification or exception whatsoever, and shall be made
in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or the
existence of any setoff or defense that any Obligor may have with respect to any
Obligations. Issuing Bank does not assume any responsibility for any failure or
delay in performance or any breach by any Borrower or other Person of any
obligations under any LC Documents. Issuing Bank does not make to Lenders any
express or implied warranty, representation or guaranty with respect to the
Collateral, LC Documents or any Obligor. Issuing Bank shall not be responsible
to any Lender for any recitals, statements, information, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, any LC Documents; the validity, genuineness,
enforceability, collectibility, value or sufficiency of any Collateral or the
perfection of any Lien therein; or the assets, liabilities, financial condition,
results of operations, business, creditworthiness or legal status of any
Obligor.

(d) No Issuing Bank Indemnitee shall be liable to any Lender or other Person for
any action taken or omitted to be taken in connection with any LC Documents
except

 

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as a result of its actual gross negligence or willful misconduct. Issuing Bank
shall not have any liability to any Lender if Issuing Bank refrains from any
action under an Letter of Credit or LC Documents until it receives written
instructions from Required Lenders.

2.3.3 Cash Collateral. If any LC Obligations, whether or not then due or
payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that Availability is less than zero, (c) after the
Commitment Termination Date, or (d) within 20 Business Days prior to the
Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s
request, Cash Collateralize the stated amount of all outstanding Letters of
Credit and pay to Issuing Bank the amount of all other LC Obligations. Borrowers
shall, on demand by Issuing Bank or Agent from time to time, Cash Collateralize
the Fronting Exposure of any Defaulting Lender. If Borrowers fail to provide any
Cash Collateral as required hereunder, Lenders may (and shall upon direction of
Agent) advance, as Revolver Loans, the amount of the Cash Collateral required
(whether or not the Commitments have terminated, an Overadvance exists or the
conditions in Section 6 are satisfied). Such Cash Collateral shall be applied to
satisfy such LC Obligations as they become due (or, if an Event of Default then
exists, to any other Obligations in accordance with this Agreement), and any
Cash Collateral remaining thereafter shall promptly be returned to Borrowers
unless an Event of Default has then occurred and is continuing, in which case
only any Cash Collateral remaining after Full Payment of all Obligations shall
be returned to Borrowers. If Borrowers are required to provide an amount of Cash
Collateral hereunder as a result of the occurrence of an Event of Default or
because Availability is less than zero, such amount (to the extent not applied
as aforesaid) shall be returned to Borrowers within three Business Days after
all Events of Default have been cured or waived or Availability is greater than
zero (unless an Event of Default has then occurred), as applicable.

2.3.4 Resignation of Issuing Bank. Issuing Bank may resign at any time upon
notice to Agent and Borrowers. On the effective date of such resignation,
Issuing Bank shall have no further obligation to issue, amend, renew, extend or
otherwise modify any Letter of Credit, but shall continue to have all rights and
obligations of an Issuing Bank hereunder, including under Sections 2.3, 12.6 and
14.2, relating to any Letter of Credit issued prior to such date. Agent shall
promptly appoint a replacement Issuing Bank, which, as long as no Default or
Event of Default exists, shall be reasonably acceptable to Borrower Agent.

SECTION 3. INTEREST, FEES AND CHARGES

3.1 Interest.

3.1.1 Rates and Payment of Interest.

(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time plus the Applicable Margin; (ii) if a LIBOR
Loan, at LIBOR for the applicable Interest Period plus the Applicable Margin;
and (iii) if any other Obligation (including, to the extent permitted by law,
interest not paid when due), at the Base Rate in effect from time to time plus
the Applicable Margin for Base Rate Revolver Loans (except if and to the extent
otherwise expressly provided in the applicable agreement governing any Bank
Product Debt, in which case such agreement shall control as to the rate of such
interest); provided, however, that each Swingline Loan shall bear interest at
LIBOR for an Interest Period of 30 days plus the Applicable Margin (for LIBOR
Revolver Loans), which interest rate shall be redetermined on each Business Day
for such Business Day until the next succeeding Business Day; provided, further,
however, that, during any Default, Agent may in its discretion and without prior
notice to any Borrower or otherwise elect to have Swingline Loans accrue
interest at the Base Rate in effect from time to time plus the Applicable Margin
(for Base Rate Revolver Loans). Interest shall accrue from the date the Loan is
advanced or the Obligation is incurred or payable, until paid by Borrowers. If a
Loan is repaid on the same day made, one day’s interest shall accrue.

 

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(b) During an Insolvency Proceeding with respect to any Borrower, or during any
other Event of Default if Agent or Required Lenders in their discretion so
elect, Obligations shall bear interest at the Default Rate (whether before or
after any judgment). Each Borrower acknowledges that the cost and expense to
Agent and Lenders due to an Event of Default are difficult to ascertain and that
the Default Rate is a fair and reasonable estimate to compensate Agent and
Lenders for this.

(c) Interest accrued on the Loans shall be due and payable in arrears, (i) on
the first day of each month; (ii) on any date of prepayment, with respect to the
principal amount of Loans being prepaid; and (iii) on the Commitment Termination
Date. Interest accrued on any other Obligations shall be due and payable as
provided in the Loan Documents and, if no payment date is specified, shall be
due and payable on demand. Notwithstanding the foregoing, interest accrued at
the Default Rate shall be due and payable on demand.

3.1.2 Application of LIBOR to Outstanding Loans.

(a) Borrowers may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans to,
or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan. During any Default or Event of Default, Agent may (and shall at the
direction of Required Lenders) declare that no Loan may be made, converted or
continued as a LIBOR Loan.

(b) Whenever Borrowers desire to convert or continue Loans as LIBOR Loans,
Borrower Agent shall give Agent a Notice of Conversion/Continuation no later
than 11:00 a.m. at least three Business Days before the requested conversion or
continuation date. Promptly after receiving any such notice, Agent shall notify
each Lender thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the amount of Loans to be converted or continued,
the conversion or continuation date (which shall be a Business Day), and the
duration of the Interest Period (which shall be deemed to be 30 days if not
specified). If, upon the expiration of any Interest Period in respect of any
LIBOR Loans, Borrowers shall have failed to deliver a Notice of
Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Loans.

3.1.3 Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, Borrowers shall select an interest period
(“Interest Period”) to apply, which interest period shall be 30, 60, 90 or 180
days; provided, however, that:

(a) the Interest Period shall commence on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;

(b) if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month; and if any Interest Period would
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and

(c) no Interest Period shall extend beyond the Revolver Termination Date.

 

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3.1.4 Interest Rate Not Ascertainable. If Agent shall determine that on any date
for determining LIBOR, due to any circumstance affecting the London interbank
market, adequate and fair means do not exist for ascertaining such rate on the
basis provided herein, then Agent shall immediately notify Borrowers of such
determination. Until Agent notifies Borrowers that such circumstance no longer
exists, the obligation of Lenders to make LIBOR Loans shall be suspended, and no
further Loans may be converted into or continued as LIBOR Loans.

3.2 Fees.

3.2.1 Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata benefit of
Lenders, a fee equal to the Unused Line Fee Rate times the amount by which the
Revolver Commitments exceed the average daily balance of Revolver Loans and
undrawn amount of Letters of Credit issued and outstanding during any month.
Such fee shall be payable in arrears, on the first day of each month and on the
Commitment Termination Date.

3.2.2 LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro Rata
benefit of Lenders, a fee equal to the Applicable Margin in effect for LIBOR
Revolver Loans times the average daily stated amount of Letters of Credit, which
fee shall be payable monthly in arrears, on the first day of each month; (b) to
Agent, for its own account, a fronting fee equal to 0.125% per annum on the
stated amount of each Letter of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; and (c) to Issuing Bank, for its own
account, all customary charges associated with the issuance, amending,
negotiating, payment, processing, transfer and administration of Letters of
Credit, which charges shall be paid as and when incurred. During an Event of
Default, the fee payable under clause (a) shall be increased by 2% per annum.

3.2.3 Closing Fee. On the Closing Date, Borrowers shall pay to Agent, for the
Pro Rata benefit of Lenders, a closing fee in the amount of $700,000.

3.2.4 Agent Fees. Borrowers shall pay to Agent, for its own account (unless
otherwise stated in the Fee Letter), the fees described in the Fee Letter.

3.3 Computation of Interest, Fees, Yield Protection. All interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days. Each determination by
Agent of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error. All fees shall
be fully earned when due and shall not be subject to rebate, refund or
proration. All fees payable under Section 3.2 are compensation for services and
are not, and shall not be deemed to be, interest or any other charge for the
use, forbearance or detention of money. A certificate or other statement as to
amounts payable by Borrowers under Section 3.4, 3.7, 3.9 or 5.9 shall be
submitted to Borrower Agent by Agent (with a copy to the affected Lender)
setting forth in reasonable detail the amount payable to such affected Lender,
and such certificate or other statement shall be final, conclusive and binding
for all purposes, absent manifest error, and Borrowers shall pay such amounts to
the appropriate party within 10 Business Days following receipt of such
certificate or other statement.

3.4 Reimbursement Obligations. Borrowers shall promptly reimburse Agent for all
Extraordinary Expenses. Borrowers shall also reimburse Agent and, with respect
to the matters referred to in clauses (b) and (c) (solely with respect to
inspection and audit rights) succeeding, each Co-Collateral Agent, within 10
Business Days of Borrower Agent’s receipt of the certificate or other statement
relating thereto as referred to in Section 3.3, for all reasonable legal,
accounting, appraisal, consulting, and other fees, costs and expenses incurred
by it in connection with (a) negotiation, preparation, execution and delivery of
any Loan Documents, including any amendment or other modification thereof and
any due diligence relating thereto; (b) administration of and actions relating
to any Collateral, Loan Documents and transactions contemplated thereby,
including any actions taken to perfect or maintain priority of

 

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Agent’s Liens on any Collateral, to maintain any insurance required hereunder or
to verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each
inspection, audit or appraisal with respect to any Obligor or Collateral,
whether prepared by Agent’s personnel or a third party. All legal, accounting
and consulting fees shall be charged to Borrowers by Agent’s professionals at
their full hourly rates, regardless of any reduced or alternative fee billing
arrangements that Agent, any Lender or any of their Affiliates may have with
such professionals with respect to this or any other transaction. If, for any
reason (including inaccurate reporting on financial statements or a Compliance
Certificate), it is determined that a higher Applicable Margin should have
applied to a period than was actually applied, then the proper margin shall be
applied retroactively and Borrowers shall immediately pay to Agent, for the Pro
Rata benefit of Lenders, an amount equal to the difference between the amount of
interest and fees that would have accrued using the proper margin and the amount
actually paid. All amounts payable by Borrowers under this Section shall be due
on demand.

3.5 Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund LIBOR
Loans, or to determine or charge interest rates based upon LIBOR, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to Agent, any
obligation of such Lender to make or continue LIBOR Loans or to convert Base
Rate Loans to LIBOR Loans shall be suspended until such Lender notifies Agent
that the circumstances giving rise to such determination no longer exist. Upon
delivery of such notice, Borrowers shall prepay or, if applicable, convert all
LIBOR Loans of such Lender to Base Rate Loans, either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such
LIBOR Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such LIBOR Loans. Upon any such prepayment or conversion,
Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.6 Inability to Determine Rates. If Required Lenders notify Agent for any
reason in connection with a request for a Borrowing of, or conversion to or
continuation of a LIBOR Loan that (a) Dollar deposits are not being offered to
banks in the London interbank Eurodollar market for the applicable amount and
Interest Period of such Loan, (b) adequate and reasonable means do not exist for
determining LIBOR for the requested Interest Period, or (c) LIBOR for the
requested Interest Period does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, then Agent will promptly so notify Borrower
Agent and each Lender. Thereafter, the obligation of Lenders to make or maintain
LIBOR Loans shall be suspended until Agent (upon instruction by Required
Lenders) revokes such notice. Upon receipt of such notice, Borrower Agent may
revoke any pending request for a Borrowing of, conversion to or continuation of
a LIBOR Loan or, failing that, will be deemed to have submitted a request for a
Base Rate Loan.

3.7 Increased Costs; Capital Adequacy.

3.7.1 Change in Law. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement reflected in LIBOR) or Issuing Bank;

(b) subject any Lender or Issuing Bank to any Tax with respect to any Loan, Loan
Document, Letter of Credit or participation in LC Obligations, or change the
basis of taxation of payments to such Lender or Issuing Bank in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 5.9 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or Issuing Bank); or

 

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(c) impose on any Lender, Issuing Bank or interbank market any other condition,
cost or expense affecting any Loan, Loan Document, Letter of Credit,
participation in LC Obligations, or Commitment;

and the result thereof shall be to increase the cost to such Lender of making or
maintaining any Loan or Commitment, or to increase the cost to such Lender or
Issuing Bank of participating in, issuing or maintaining any Letter of Credit,
or to reduce the amount of any sum received or receivable by such Lender or
Issuing Bank hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender or Issuing Bank, Borrowers will, within 10
Business Days of Borrower Agent’s receipt of the certificate or other statement
relating thereto as referred to in Section 3.3, pay to such Lender or Issuing
Bank, as applicable, such additional amount or amounts as will compensate such
Lender or Issuing Bank, as applicable, for such additional costs incurred or
reduction suffered.

3.7.2 Capital Adequacy. If any Lender or Issuing Bank determines that any Change
in Law affecting such Lender or Issuing Bank or any Lending Office of such
Lender or such Lender’s or Issuing Bank’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender’s, Issuing Bank’s or holding company’s capital as a consequence
of this Agreement, or such Lender’s or Issuing Bank’s Commitments, Loans,
Letters of Credit or participations in LC Obligations, to a level below that
which such Lender, Issuing Bank or holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s, Issuing Bank’s and
holding company’s policies with respect to capital adequacy), then from time to
time Borrowers will, within 10 Business Days of Borrower Agent’s receipt of the
certificate or other statement relating thereto as referred to in Section 3.3,
pay to such Lender or Issuing Bank, as the case may be, such additional amount
or amounts as will compensate it or its holding company for any such reduction
suffered.

3.7.3 Compensation. Failure or delay on the part of any Lender or Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
its right to demand such compensation, but Borrowers shall not be required to
compensate a Lender or Issuing Bank for any increased costs incurred or
reductions suffered more than six months prior to the date that the Lender or
Issuing Bank notifies Borrower Agent of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or Issuing Bank’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

3.8 Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if Borrowers are required to pay additional
amounts with respect to a Lender under Section 5.9, then such Lender shall use
reasonable efforts to designate a different Lending Office or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(a) would eliminate the need for such notice or reduce amounts payable or to be
withheld in the future, as applicable; and (b) would not subject the Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
it or be unlawful. Borrowers shall pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

3.9 Funding Losses. If for any reason (other than default by a Lender) (a) any
Borrowing of, or conversion to or continuation of a LIBOR Loan does not occur on
the date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (b) any repayment or
conversion of a LIBOR Loan occurs on a day other than the end of its Interest
Period, (c) Borrowers fail to repay a LIBOR Loan when required hereunder, or
(d) a Lender (other than a Defaulting Lender) is required to assign a LIBOR Loan
prior to the end of its Interest Period pursuant to Section 13.4, then Borrowers
shall, within 10 Business Days of Borrower Agent’s receipt of the certificate or
other statement relating thereto as referred to in Section 3.3, pay to Agent its
customary

 

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administrative charge and to each Lender all resulting losses and expenses,
including loss of anticipated profits and any loss or expense arising from
liquidation or redeployment of funds or from fees payable to terminate deposits
of matching funds. Lenders shall not be required to purchase Dollar deposits in
any interbank or offshore Dollar market to fund any LIBOR Loan, but this Section
shall apply as if each Lender had purchased such deposits.

3.10 Maximum Interest. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents
shall not exceed the Maximum Rate. If Agent or any Lender shall receive interest
in an amount or at a rate that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Obligations or, if it exceeds such
unpaid principal, refunded to Borrowers. In determining whether the interest
contracted for, charged or received by Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by Applicable Law,
(a) characterize any payment that is not principal as an expense, fee or premium
rather than interest; (b) exclude voluntary prepayments and the effects thereof;
and (c) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations
hereunder.

3.11 Replacement of Certain Lenders. If a Lender (a) requests compensation under
Section 3.7 which was not similarly requested by Required Lenders, (b) Borrowers
are required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.9 and a similar
payment was not required with respect to Required Lenders, or (c) any Lender
gives notice under Section 3.5 and similar notice is not given by Required
Lenders, then, at Borrowers’ request, Agent shall require (by Agent’s giving of
written notice thereof to such Lender) such Lender to assign (and such Lender
shall thereupon assign) all of its rights and obligations under the Loan
Documents to Eligible Assignee(s) (which Agent in good faith believes are not at
the time subject to or affected by any of the matters referred to in clause (a),
clause (b) or clause (c) preceding), pursuant to appropriate Assignment and
Acceptance(s), within 20 days after such Lender’s receipt of such request. Agent
is irrevocably appointed as attorney-in-fact to execute any such Assignment and
Acceptance if such Lender fails to execute it within 20 days of such Lender’s
receipt of such request for assignment. Such assigning Lender shall be entitled
to receive, in cash, concurrently with such assignment, all amounts owed to it
under the Loan Documents, including all principal, interest, fees and other
amounts through the date of assignment (but excluding any prepayment charge).

SECTION 4. LOAN ADMINISTRATION

4.1 Manner of Borrowing and Funding Revolver Loans.

4.1.1 Notice of Borrowing.

(a) Whenever Borrowers desire funding of a Borrowing of Revolver Loans, Borrower
Agent shall give Agent a Notice of Borrowing. Such notice must be received by
Agent no later than 11:00 a.m. (i) on the Business Day of the requested funding
date, in the case of Base Rate Loans, and (ii) at least three Business Days
prior to the requested funding date, in the case of LIBOR Loans. Notices
received after 11:00 a.m. shall be deemed received on the next Business Day.
Each Notice of Borrowing shall be irrevocable and shall specify (A) the amount
of the Borrowing, (B) the requested funding date (which must be a Business Day),
(C) whether the Borrowing is to be made as Base Rate Loans or LIBOR Loans, and
(D) in the case of LIBOR Loans, the duration of the applicable Interest Period
(which shall be deemed to be 30 days if not specified).

(b) Unless payment is otherwise timely made by Borrowers, the becoming due of
any Obligations (whether principal, interest, fees or other charges, including
Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product

 

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Obligations) shall be deemed to be a request for Base Rate Revolver Loans on the
due date, in the amount of such Obligations. The proceeds of such Revolver Loans
shall be disbursed as direct payment of the relevant Obligation. In addition,
Agent may, at its option, charge such Obligations against any operating,
investment or other account of a Borrower maintained with Agent or any of its
Affiliates.

(c) With respect to the controlled disbursement account maintained by Borrowers
with Agent or any Affiliate of Agent, the presentation for payment of any check,
ACH or electronic debit, or other payment item at a time when there are
insufficient funds to cover it shall be deemed to be a request for Base Rate
Revolver Loans on the date of such presentation, in the amount of such payment
item. The proceeds of such Revolver Loans may be disbursed directly to the
controlled disbursement account or other appropriate account.

4.1.2 Fundings by Lenders. Each Lender shall timely honor its Revolver
Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans
that is properly requested hereunder. Except for Borrowings to be made as
Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of
Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed
funding date for Base Rate Loans or by 3:00 p.m. at least two Business Days
before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent such
Lender’s Pro Rata share of the Borrowing to the account specified by Agent in
immediately available funds not later than 2:00 p.m. on the requested funding
date, unless Agent’s notice is received after the times provided above, in which
case Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business
Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse
the proceeds of the Revolver Loans as directed by Borrower Agent. Unless Agent
shall have received (in sufficient time to act) written notice from a Lender
that it does not intend to fund its Pro Rata share of a Borrowing, Agent may
assume that such Lender has deposited or promptly will deposit its share with
Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s
share of any Borrowing or of any settlement pursuant to Section 4.1.3(b) is not
received by Agent, then Borrowers agree to repay to Agent on demand the amount
of such share, together with interest thereon from the date disbursed until
repaid, at the rate applicable to the Borrowing.

4.1.3 Swingline Loans; Settlement.

(a) Agent may, but shall not be obligated to, advance Swingline Loans to
Borrowers, up to an aggregate outstanding amount of $14,000,000, unless the
funding is specifically required to be made by all Lenders hereunder. Each
Swingline Loan shall constitute a Revolver Loan for all purposes, except that
payments thereon shall be made to Agent for its own account. The obligation of
Borrowers to repay Swingline Loans shall be evidenced by the records of Agent
and need not be evidenced by any promissory note.

(b) Settlement of Swingline Loans and other Revolver Loans among Lenders and
Agent shall take place on a date determined from time to time by Agent (but at
least weekly), in accordance with the Settlement Report delivered by Agent to
Lenders. Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Swingline Loans, regardless of any designation by Borrower
Agent or any Borrower or any provision herein to the contrary. Each Lender’s
obligation to make settlements with Agent is absolute and unconditional, without
offset, counterclaim or other defense, and whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied.
If, due to an Insolvency Proceeding with respect to a Borrower or otherwise, any
Swingline Loan may not be settled among Lenders hereunder, then each Lender
shall be deemed to have purchased from Agent a Pro Rata participation in such
Loan and shall transfer the amount of such participation to Agent, in
immediately available funds, within one Business Day after Agent’s request
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4.1.4 Notices. Borrowers may request, convert or continue Loans, select interest
rates and transfer funds based on telephonic or e-mailed instructions to Agent.
Borrowers shall confirm each such request by prompt delivery to Agent of a
Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but, if
it differs materially from the action taken by Agent or Lenders, the records of
Agent and Lenders shall govern. Neither Agent nor any Lender shall have any
liability for any loss suffered by a Borrower as a result of Agent or any Lender
acting upon its understanding of telephonic or e-mailed instructions from a
Person believed in good faith by Agent or any Lender to be a Person authorized
to give such instructions on a Borrower’s behalf.

4.2 Defaulting Lender.

4.2.1 Reallocation of Pro Rata Share; Amendments. For purposes of determining
Lenders’ obligations to fund or participate in Loans or Letters of Credit, Agent
may exclude the Commitments and Loans of any Defaulting Lender(s) from the
calculation of Pro Rata shares (provided, however, that, without the prior
written consent of such Lender, no Lender shall be obligated, as a result of
such exclusion, to fund or participate in Loans or Letters of Credit in excess
of its Revolver Commitment). A Defaulting Lender shall have no right to vote on
any amendment, waiver or other modification of a Loan Document, except as
provided in Section 14.1.1(c).

4.2.2 Payments; Fees. Agent may, in its discretion, receive and retain any
amounts payable to a Defaulting Lender under the Loan Documents, and a
Defaulting Lender shall be deemed to have assigned to Agent such amounts until
all Obligations owing to Agent, non-Defaulting Lenders and other Secured Parties
have been paid in full. Agent may apply such amounts to the Defaulting Lender’s
defaulted obligations, use the funds to Cash Collateralize such Defaulting
Lender’s Fronting Exposure, or readvance the amounts to Borrowers hereunder. A
Lender shall not be entitled to receive any fees accruing hereunder during the
period in which it is a Defaulting Lender, and the unfunded portion of its
Commitment shall be disregarded for purposes of calculating the unused line fee
under Section 3.2.1. If any LC Obligations owing to a Defaulted Lender are
reallocated to other Lenders, fees attributable to such LC Obligations under
Section 3.2.2 shall be paid to such Lenders. Agent shall be paid all fees
attributable to LC Obligations that are not reallocated.

4.2.3 Cure. Borrowers, Agent and Issuing Bank may agree in writing that a Lender
is no longer a Defaulting Lender. At such time, Pro Rata shares shall be
reallocated without exclusion of such Lender’s Commitments and Loans, and all
outstanding Revolver Loans, LC Obligations and other exposures under the
Revolver Commitments shall be reallocated among Lenders and settled by Agent
(with appropriate payments by the reinstated Lender) in accordance with the
readjusted Pro Rata shares. Unless expressly agreed by Borrowers, Agent and
Issuing Bank, no reinstatement of a Defaulting Lender shall constitute a waiver
or release of claims against such Lender. The failure of any Lender to fund a
Loan, to make a payment in respect of LC Obligations or otherwise to perform its
obligations hereunder shall not relieve any other Lender of its obligations, and
no Lender shall be responsible for default by another Lender.

4.3 Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of
LIBOR Loans (other than Swingline Loans) when made shall be in a minimum amount
of $1,000,000, plus any increment of $500,000 in excess thereof. No more than 10
Borrowings of LIBOR Loans may be outstanding at any time, and all LIBOR Loans
having the same length and beginning date of their Interest Periods shall be
aggregated together and considered one Borrowing for this purpose. Upon
determining LIBOR for any Interest Period requested by Borrowers, Agent shall
promptly notify Borrowers thereof by telephone or electronically and, if
requested by Borrowers, shall confirm any telephonic notice in writing.

 

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4.4 Borrower Agent. Each Borrower hereby designates Parent as its representative
and agent for all purposes under the Loan Documents (“Borrower Agent”),
including requests for Loans and Letters of Credit, designation of interest
rates, delivery or receipt of communications, preparation and delivery of
Borrowing Base and financial reports, receipt and payment of Obligations,
requests for waivers, amendments or other accommodations, actions under the Loan
Documents (including in respect of compliance with covenants), and all other
dealings with Agent, Issuing Bank or any Lender. Borrower Agent hereby accepts
such appointment. Agent and Lenders shall be entitled to rely upon, and shall be
fully protected in relying upon, any notice or communication (including any
notice of borrowing) delivered by Borrower Agent on behalf of any Borrower.
Agent and Lenders may give any notice or communication with a Borrower hereunder
to Borrower Agent on behalf of such Borrower. Each of Agent, Issuing Bank and
Lenders shall have the right, in its discretion, to deal exclusively with
Borrower Agent for any or all purposes under the Loan Documents. Each Borrower
agrees that any notice, election, communication, representation, agreement or
undertaking made on its behalf by Borrower Agent shall be binding upon and
enforceable against it.

4.5 One Obligation. The Loans, LC Obligations and other Obligations constitute
one general obligation of Borrowers and are secured by Agent’s Lien on all
Collateral; provided, however, that Agent and each Lender shall be deemed to be
a creditor of, and the holder of a separate claim against, each Borrower to the
extent of any Obligations jointly or severally owed by such Borrower.

4.6 Effect of Termination. On the effective date of any termination of the
Commitments, all Obligations shall be immediately due and payable (other than
(i) Bank Products that the applicable Lender affirmatively agrees to continue in
effect without the benefit of the Liens granted pursuant to the Loan Documents
and not to terminate and (ii) indemnity obligations that survive the termination
of this Agreement and are unknown and not due and payable at such termination),
and any Lender may terminate its and its Affiliates’ Bank Products (including,
only with the consent of Agent, any Cash Management Services). All undertakings
of Borrowers contained in the Loan Documents shall survive any termination, and
Agent shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents until Full Payment of the Obligations.
Notwithstanding Full Payment of the Obligations, Agent shall not be required to
terminate its Liens in any Collateral unless, with respect to any damages Agent
may incur as a result of the dishonor or return of Payment Items applied to
Obligations, Agent receives (a) a written agreement satisfactory to Agent,
executed by Borrowers and any Person whose advances are used in whole or in part
to satisfy the Obligations, indemnifying Agent and Lenders from such damages;
and (b) such Cash Collateral as Agent, in its discretion, deems appropriate to
protect against such damages. Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10,
12, 14.2, 14.12 and this Section, and the obligation of each Obligor and Lender
with respect to each indemnity given by it in any Loan Document, shall survive
Full Payment of the Obligations and any release relating to this credit
facility.

SECTION 5. PAYMENTS

5.1 General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free of (and
without deduction for) any Taxes (other than certain applicable Excluded Taxes,
as provided herein), and in immediately available funds, not later than 12:00
noon on the due date. Any payment after such time shall be deemed made on the
next Business Day. Any payment of a LIBOR Loan prior to the end of its Interest
Period shall be accompanied by all amounts due under Section 3.9. Any prepayment
of Loans shall be applied first to Swingline Loans, second to Base Rate Loans
and then to LIBOR Loans.

5.2 Repayment of Revolver Loans. Revolver Loans shall be due and payable in full
on the Revolver Termination Date, unless payment is sooner required hereunder.
Revolver Loans may be prepaid from time to time, without penalty or premium. If,
during the existence of a Trigger Period, any Asset Disposition includes the
disposition of Accounts or Inventory, then Net Proceeds equal to the greater of
(a) the net book value of such Accounts and Inventory, or (b) the reduction in
the Borrowing

 

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Base upon giving effect to such disposition, shall be applied to the Revolver
Loans. Notwithstanding anything herein to the contrary, if an Overadvance
exists, Borrowers shall, on the sooner of Agent’s demand or the first Business
Day after any Borrower has knowledge thereof, repay the outstanding Revolver
Loans in an amount sufficient to reduce the principal balance of Revolver Loans
to the Borrowing Base. Revolver Loans shall also be subject to the mandatory
prepayment requirements set forth in Section 5.3; provided that, in the event
that a mandatory prepayment is required under both this Section 5.2 and
Section 5.3, such Section that requires the greater prepayment amount shall
control.

5.3 Prepayments of the Revolver Loans.

5.3.1 Promptly upon receipt by any of Borrowers or their Subsidiaries of any Net
Proceeds of any Covered Asset Disposition, Borrowers shall prepay the Revolver
Loans in an amount equal to the lesser of (a) the outstanding amount of the
Revolver Loans and (b) the amount of all Net Proceeds of such Covered Asset
Disposition; provided, however, that an amount of such Net Proceeds not to
exceed $250,000 during any Fiscal Year shall not be required to be used to
prepay the Revolver Loans if and to the extent that such amount is, within 45
days after the date of such Covered Asset Disposition, reinvested in assets used
in the Ordinary Course of Business or applied toward Capital Expenditures
permitted hereunder. In addition, if and to the extent that Obligors have not
timely utilized any insurance and condemnation proceeds, released by Agent in
accordance with Section 8.6.2, to replace, repair, restore, or rebuild the
affected Equipment or Real Estate in accordance with Section 8.6.2, then
Borrowers shall prepay the Revolver Loans in an amount equal to such Net
Proceeds not so utilized, to the extent such unused proceeds exceed $250,000.
Any such prepayment pursuant to this Section 5.3.1 shall be applied in
accordance with Section 5.3.2.

5.3.2 Prepayments from Net Proceeds of all Covered Asset Dispositions and from
all insurance and condemnation Net Proceeds, in each case if and to the extent
that such prepayments are required in accordance with Section 5.3.1, shall be
applied as follows: first, to accrued interest with respect to the Revolver
Loans, second, to pay the principal of the Revolver Loans, and third, to Cash
Collateralize outstanding Letters of Credit (subject to the immediately
succeeding proviso), provided that Cash Collateral for outstanding Letters of
Credit shall not be required if Availability is greater than zero and cash
initially used to Collateralize outstanding Letters of Credit shall be reapplied
to accrued interest with respect to the Revolver Loans and the principal of the
Revolver Loans as provided in clauses “first” and “second” preceding as and when
Revolver Loans are thereafter advanced at a time when Availability is greater
than zero. No such application shall result in a permanent reduction of the
Commitments.

5.3.3 No provision contained in this Section 5.3 shall constitute a consent to
an Asset Disposition that is otherwise not permitted by the terms of this
Agreement.

5.4 Payment of Other Obligations. Obligations other than Loans, including LC
Obligations and Extraordinary Expenses, shall be paid by Borrowers as provided
in the Loan Documents or, if no payment date is specified, on demand.

5.5 Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of Borrowers is made to Agent,
Issuing Bank or any Lender, or Agent, Issuing Bank or any Lender exercises a
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee,
receiver or any other Person, then, to the extent of such recovery, the
Obligation originally intended to be satisfied, and all Liens, rights and
remedies relating thereto, shall be revived and continued in full force and
effect as if such payment had not been made or such setoff had not occurred.

 

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5.6 Post-Default Allocation of Payments.

5.6.1 Allocation. Notwithstanding anything herein to the contrary, during an
Event of Default, monies to be applied to the Obligations, whether arising from
payments by Obligors, realization on Collateral, setoff or otherwise, shall be
allocated as follows:

(a) first, to all costs and expenses, including Extraordinary Expenses, owing to
Agent;

(b) second, to all amounts owing to Agent on Swingline Loans;

(c) third, to all amounts owing to Issuing Bank;

(d) fourth, to all Obligations constituting fees (other than Secured Bank
Product Obligations);

(e) fifth, to all Obligations constituting interest (other than Secured Bank
Product Obligations);

(f) sixth, to Cash Collateralization of LC Obligations;

(g) seventh, to all Loans;

(h) eighth, to all Noticed Hedges, including Cash Collateralization of Noticed
Hedges; and

(i) last, to all other Obligations.

Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. Amounts distributed with respect to any Secured
Bank Product Obligations shall be the lesser of the maximum Secured Bank Product
Obligations last reported to Agent or the actual Secured Bank Product
Obligations as calculated by the methodology reported to Agent for determining
the amount due. Agent shall have no obligation to calculate the amount to be
distributed with respect to any Secured Bank Product Obligations, and may
request a reasonably detailed calculation of such amount from the applicable
Secured Party. If a Secured Party fails to deliver such calculation within five
days following request by Agent, Agent may assume the amount to be distributed
is zero. The allocations set forth in this Section are solely to determine the
rights and priorities of Agent and Secured Parties as among themselves, and may
be changed by agreement among them without the consent of any Obligor. This
Section is not for the benefit of or enforceable by any Borrower or other
Obligor.

5.6.2 Erroneous Application. Agent shall not be liable for any application of
amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by
any Lender, such Lender hereby agrees to return it).

5.7 Application of Payments. The ledger balance in the main Dominion Account as
of the end of a Business Day shall be applied to the Obligations at the
beginning of the next Business Day, during any Trigger Period. If, as a result
of such application, a credit balance exists, the balance shall not accrue
interest in favor of Borrowers and shall be made available to Borrowers as long
as no Default or Event of Default exists. Each Borrower irrevocably waives the
right to direct the application of any

 

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payments or Collateral proceeds, and agrees that Agent shall have the
continuing, exclusive right to apply and reapply same against the Obligations,
in the manner specified in this Agreement or, if not so specified, in such
manner as Agent deems advisable.

5.8 Loan Account; Account Stated.

5.8.1 Loan Account. Agent shall maintain in accordance with its usual and
customary practices an account or accounts (“Loan Account”) evidencing the Debt
of Borrowers resulting from each Loan or issuance of a Letter of Credit from
time to time. Any failure of Agent to record anything in the Loan Account, or
any error in doing so, shall not limit or otherwise affect the obligation of
Borrowers to pay any amount owing hereunder. Agent may maintain a single Loan
Account in the name of Borrower Agent, and each Borrower confirms that such
arrangement shall have no effect on the joint and several character of its
liability for the Obligations.

5.8.2 Entries Binding. Entries made in the Loan Account shall constitute
presumptive evidence of the information contained therein. If any information
contained in the Loan Account is provided to or inspected by any Person, then
such information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

5.9 Taxes.

5.9.1 Payments Free of Taxes. All payments by Obligors of Obligations shall be
free and clear of and without reduction for any Taxes (except if and to the
extent that Applicable Law requires any Obligor or Agent to withhold or deduct
any Tax). If Applicable Law requires any Obligor or Agent to withhold or deduct
any Tax (including backup withholding or withholding Tax), the withholding or
deduction shall be based on information provided pursuant to Section 5.10 and
Agent shall pay the amount withheld or deducted to the relevant Governmental
Authority. If the withholding or deduction is made on account of Indemnified
Taxes or Other Taxes, the sum payable by Borrowers shall be increased so that
Agent, Lender or Issuing Bank, as applicable, receives an amount equal to the
sum it would have received if no such withholding or deduction (including
deductions applicable to additional sums payable under this Section) had been
made. Without limiting the foregoing, Borrowers shall timely pay all Other Taxes
to the relevant Governmental Authorities.

5.9.2 Payment. Borrowers shall indemnify, hold harmless and reimburse (within 10
days after demand therefor) Agent, Lenders and Issuing Bank for any Indemnified
Taxes or Other Taxes (including those attributable to amounts payable under this
Section) withheld or deducted by any Obligor or Agent, or paid by Agent, any
Lender or Issuing Bank, with respect to any Obligations, Letters of Credit or
Loan Documents, whether or not such Taxes were properly asserted by the relevant
Governmental Authority, and including all penalties, interest and reasonable
expenses relating thereto, as well as any amount that a Lender or Issuing Bank
fails to pay indefeasibly to Agent under Section 5.10. A certificate as to the
amount of any such payment or liability delivered to Borrower Agent by Agent, or
by a Lender or Issuing Bank (with a copy to Agent), shall be conclusive, absent
manifest error. As soon as practicable after any payment of Taxes by a Borrower,
Borrower Agent shall deliver to Agent a receipt from the Governmental Authority
or other evidence of payment satisfactory to Agent.

5.9.3 Refunds. If Agent or any Lender determines, in its reasonable discretion,
that it has received a refund of any Indemnified Taxes or Other Taxes as to
which it has been indemnified by Borrowers or with respect to which Borrowers
have paid additional amounts pursuant to this Section 5.9, it shall pay over
such refund to Borrower Agent (but only to the extent of indemnity payments
made, or additional amounts paid, by Borrowers under this Section 5.9 with
respect to the Indemnified Taxes or Other Taxes), net of all reasonable
out-of-pocket expenses of Agent or such Lender, as the case may be, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to

 

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such refund) within 10 Business Days of such determination; provided, that
Borrowers, upon the request of Agent or such Lender, agree to repay the amount
paid over to Borrower Agent (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to Agent or such Lender in the
event Agent or such Lender is required to repay such refund to such Governmental
Authority. This Section shall not be construed to require Agent or any Lender to
make available its tax returns (or any other information relating to its taxes
which it deems confidential) to Borrowers or any other Person.

5.10 Lender Tax Information.

5.10.1 Status of Lenders. Each Lender shall deliver documentation and
information to Agent and Borrower Agent, at the times and in form required by
Applicable Law or reasonably requested by Agent or Borrower Agent, sufficient to
permit Agent or Borrowers to determine (a) whether or not payments made with
respect to Obligations are subject to Taxes, (b) if applicable, the required
rate of withholding or deduction, and (c) such Lender’s entitlement to any
available exemption from, or reduction of, applicable Taxes for such payments or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction.

5.10.2 Documentation. If a Borrower is resident for tax purposes in the United
States, any Lender that is a “United States person” within the meaning of
section 7701(a)(30) of the Code shall deliver to Agent and Borrower Agent IRS
Form W-9 or such other documentation or information prescribed by Applicable Law
or reasonably requested by Agent or Borrower Agent to determine whether such
Lender is subject to backup withholding or information reporting requirements.
If any Foreign Lender is entitled to any exemption from or reduction of
withholding tax for payments with respect to the Obligations, it shall deliver
to Agent and Borrower Agent, on or prior to the date on which it becomes a
Lender hereunder (and from time to time thereafter upon request by Agent or
Borrower Agent, but only if such Foreign Lender is legally entitled to do so),
(a) IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to
which the United States is a party; (b) IRS Form W-8ECI; (c) IRS Form W-8IMY and
all required supporting documentation; (d) in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under section
881(c) of the Code, IRS Form W-8BEN and a certificate showing such Foreign
Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (ii) a “10 percent shareholder” of any Obligor within the meaning of
section 881(c)(3)(B) of the Code, or (iii) a “controlled foreign corporation”
described in section 881(c)(3)(C) of the Code; or (e) any other form prescribed
by Applicable Law as a basis for claiming exemption from or a reduction in
withholding Tax (including the withholding Tax set forth in sections 1471 and
1472 of the Code), together with such supplementary documentation necessary to
allow Agent and Borrowers to determine the withholding or deduction required to
be made.

5.10.3 Lender Obligations. Each Lender and Issuing Bank shall promptly notify
Borrowers and Agent of any change in circumstances that would change any claimed
Tax exemption or reduction. Each Lender and Issuing Bank shall indemnify, hold
harmless and reimburse (within 10 days after demand therefor) Borrowers and
Agent for any Taxes, losses, claims, liabilities, penalties, interest and
expenses (including reasonable attorneys’ fees) incurred by or asserted against
a Borrower or Agent by any Governmental Authority due to such Lender’s or
Issuing Bank’s failure to deliver, or inaccuracy or deficiency in, any
documentation required to be delivered by it pursuant to this Section. Each
Lender and Issuing Bank authorizes Agent to set off any amounts due to Agent
under this Section against any amounts payable to such Lender or Issuing Bank
under any Loan Document.

5.11 Nature and Extent of Each Borrower’s Liability.

5.11.1 Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Agent and
Lenders the prompt payment and performance of, all Obligations and all
agreements under the Loan Documents. Each Borrower agrees that its guaranty
obligations hereunder constitute a continuing guaranty of payment and not of
collection,

 

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that such obligations shall not be discharged until Full Payment of the
Obligations, and that such obligations are absolute and unconditional,
irrespective of (a) the genuineness, validity, regularity, enforceability,
subordination or any future modification of, or change in, any Obligations or
Loan Document, or any other document, instrument or agreement to which any
Obligor is or may become a party or be bound; (b) the absence of any action to
enforce this Agreement (including this Section) or any other Loan Document, or
any waiver, consent or indulgence of any kind by Agent or any Lender with
respect thereto; (c) the existence, value or condition of, or failure to perfect
a Lien or to preserve rights against, any security or guaranty for the
Obligations or any action, or the absence of any action, by Agent or any Lender
in respect thereof (including the release of any security or guaranty); (d) the
insolvency of any Obligor; (e) any election by Agent or any Lender in an
Insolvency Proceeding for the application of Section 1111(b)(2) of the
Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower or
Obligor, as debtor-in-possession under Section 364 of the Bankruptcy Code or
otherwise; (g) the disallowance of any claims of Agent or any Lender against any
Obligor for the repayment of any Obligations under Section 502 of the Bankruptcy
Code or otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.

5.11.2 Waivers.

(a) Each Borrower expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel Agent
or Lenders to marshal assets or to proceed against any Obligor, other Person or
security for the payment or performance of any Obligations before, or as a
condition to, proceeding against such Borrower. Each Borrower waives all
defenses available to a surety, guarantor or accommodation co-obligor other than
Full Payment of all Obligations. It is agreed among each Borrower, Agent and
Lenders that the provisions of this Section 5.11 are of the essence of the
transaction contemplated by the Loan Documents and that, but for such
provisions, Agent and Lenders would decline to make Loans and issue Letters of
Credit. Each Borrower acknowledges that its guaranty pursuant to this Section is
necessary to the conduct and promotion of its business, and can be expected to
benefit such business.

(b) Agent and Lenders may, in their discretion, pursue such rights and remedies
as they deem appropriate, including realization upon Collateral or any Real
Estate by judicial foreclosure or non-judicial sale or enforcement, without
affecting any rights and remedies under this Section 5.11. If, in taking any
action in connection with the exercise of any rights or remedies, Agent or any
Lender shall forfeit any other rights or remedies, including the right to enter
a deficiency judgment against any Borrower or other Person, whether because of
any Applicable Laws pertaining to “election of remedies” or otherwise, each
Borrower consents to such action and waives any claim based upon it, even if the
action may result in loss of any rights of subrogation that any Borrower might
otherwise have had. Any election of remedies that results in denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower’s obligation to pay the
full amount of the Obligations. Each Borrower waives all rights and defenses
arising out of an election of remedies, such as nonjudicial foreclosure with
respect to any security for the Obligations, even though that election of
remedies destroys such Borrower’s rights of subrogation against any other
Person. Agent may bid all or a portion of the Obligations at any foreclosure or
trustee’s sale or at any private sale, and the amount of such bid need not be
paid by Agent but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether Agent or any other Person is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral, and the difference between such bid amount and the remaining
balance of the Obligations shall be

 

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conclusively deemed to be the amount of the Obligations guaranteed under this
Section 5.11, notwithstanding that any present or future law or court decision
may have the effect of reducing the amount of any deficiency claim to which
Agent or any Lender might otherwise be entitled but for such bidding at any such
sale.

5.11.3 Extent of Liability; Contribution.

(a) Notwithstanding anything herein to the contrary, each Borrower’s liability
under this Section 5.11 shall be limited to the greater of (i) all amounts for
which such Borrower is primarily liable, as described below, and (ii) such
Borrower’s Allocable Amount.

(b) If any Borrower makes a payment under this Section 5.11 of any Obligations
(other than amounts for which such Borrower is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Borrower’s
Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment. The “Allocable Amount” for any
Borrower shall be the maximum amount that could then be recovered from such
Borrower under this Section 5.11 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.

(c) Nothing contained in this Section 5.11 shall limit the liability of any
Borrower to pay Loans made directly or indirectly to that Borrower (including
Loans advanced to any other Borrower and then re-loaned or otherwise transferred
to, or for the benefit of, such Borrower), LC Obligations relating to Letters of
Credit issued to support such Borrower’s business, and all accrued interest,
fees, expenses and other related Obligations with respect thereto, for which
such Borrower shall be primarily liable for all purposes hereunder. Agent and
Lenders shall have the right, at any time in their discretion, to condition
Loans and Letters of Credit upon a separate calculation of borrowing
availability for each Borrower and to restrict the disbursement and use of such
Loans and Letters of Credit to such Borrower.

5.11.4 Joint Enterprise. Each Borrower has requested that Agent and Lenders make
this credit facility available to Borrowers on a combined basis, in order to
finance Borrowers’ business most efficiently and economically. Borrowers’
business is a mutual and collective enterprise, and the successful operation of
each Borrower is dependent upon the successful performance of the integrated
group. Borrowers believe that consolidation of their credit facility will
enhance the borrowing power of each Borrower and ease administration of the
facility, all to their mutual advantage. Borrowers acknowledge that Agent’s and
Lenders’ willingness to extend credit and to administer the Collateral on a
combined basis hereunder is done solely as an accommodation to Borrowers and at
Borrowers’ request.

5.11.5 Subordination. Each Borrower hereby subordinates any claims, including
any rights at law or in equity to payment, subrogation, reimbursement,
exoneration, contribution, indemnification or set off, that it may have at any
time against any other Obligor, howsoever arising, to the Full Payment of all
Obligations.

 

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SECTION 6. CONDITIONS PRECEDENT

6.1 Conditions Precedent to Initial Loans. In addition to the conditions set
forth in Section 6.2, Lenders shall not be required to fund any requested Loan,
issue any Letter of Credit, or otherwise extend credit to Borrowers hereunder,
until the date (“Closing Date”) that each of the following conditions has been
satisfied:

(a) Notes shall have been executed by Borrowers and delivered to each Lender
that requests issuance of a Note. Each other Loan Document shall have been duly
executed and delivered to Agent by each of the signatories thereto, and each
Obligor shall be in compliance with all terms thereof. All stock certificates
and other evidences of Equity Interests and all instruments in which Agent is
granted a security interest as security for the Obligations shall have been duly
delivered to Agent, together with duly executed stock powers, endorsements or
other instruments of transfer in form and substance satisfactory to Agent.

(b) Agent shall have received acknowledgments of all filings or recordations
necessary to perfect its Liens in the Collateral, as well as UCC and Lien
searches, Lien Waivers and other evidence satisfactory to Agent that such Liens
are the only Liens upon the Collateral, except Permitted Liens.

(c) Agent shall have received the Related Real Estate Documents for all Real
Estate subject to a Mortgage.

(d) Agent shall have received duly executed agreements establishing each
Dominion Account and related lockbox, in form and substance, and with financial
institutions, satisfactory to Agent.

(e) Agent shall have received certificates, in form and substance satisfactory
to it, from a knowledgeable Senior Officer of each Obligor certifying that,
after giving effect to the initial Loans and transactions hereunder, (i) such
Obligor is Solvent; (ii) no Default or Event of Default exists; (iii) the
representations and warranties set forth in Section 9 are true and correct; and
(iv) such Obligor has complied with all agreements and conditions to be
satisfied by it under the Loan Documents.

(f) Agent shall have received a certificate of a duly authorized officer of each
Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents
are true and complete, and in full force and effect, without amendment except as
shown; (ii) that an attached copy of resolutions authorizing execution and
delivery of the Loan Documents is true and complete, and that such resolutions
are in full force and effect, were duly adopted, have not been amended, modified
or revoked, and constitute all resolutions adopted with respect to this credit
facility; and (iii) to the title, name and signature of each Person authorized
to sign the Loan Documents. Agent may conclusively rely on this certificate
until it is otherwise notified by the applicable Obligor in writing.

(g) Agent shall have received a written opinion of Baker Botts L.L.P., as well
as any local counsel to Borrowers or Agent, in form and substance satisfactory
to Agent.

(h) Agent shall have received copies of the charter documents of each Obligor,
certified by the Secretary of State or other appropriate official of such
Obligor’s jurisdiction of organization. Agent shall have received good standing
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each Obligor, issued by the Secretary of State or other appropriate official of
such Obligor’s jurisdiction of organization and each jurisdiction where such
Obligor’s conduct of business or ownership of Property necessitates
qualification.

(i) Agent shall have received copies of policies or certificates of insurance
for the insurance policies carried by Borrowers, all in compliance with the Loan
Documents.

(j) Agent shall have completed its business, financial and legal due diligence
of Obligors, with results satisfactory to Agent. No material adverse change in
the financial condition of any Obligor or in the quality, quantity or value of
any Collateral taken as a whole shall have occurred since March 31, 2011.

(k) Borrowers shall have paid all fees and expenses to be paid to Agent and
Lenders on the Closing Date.

(l) Agent shall have received a Borrowing Base Certificate prepared as of [April
30], 2011. Upon giving effect to the initial funding of Loans and issuance of
Letters of Credit, and the payment by Borrowers of all fees and expenses
incurred in connection herewith as well as any payables stretched beyond their
customary payment practices, Availability shall be at least $50,000,000.

(m) Agent shall have received satisfactory appraisals of Borrowers’ Equipment
and Real Estate proposed for inclusion as Eligible Real Estate.

(n) Borrowers shall have paid in full all interest accrued on the “Loans” (as
defined in the Existing Credit Agreement) and all fees, costs, expenses and
other “Obligations” (as defined in the Existing Credit Agreement) which are
accrued and remain unpaid or are outstanding as of the Closing Date under the
Existing Credit Agreement (i.e., all such “Obligations” other then the principal
amount of such “Loans”, which shall be deemed to be Revolving Loans outstanding
hereunder as provided in Section 2.1.1).

(o) Without in any way limiting any term or provision of this Agreement, Agent
shall have received any warehouse receipts or similar documents and Lien Waivers
as Agent determines are necessary or appropriate to perfect, and ensure the
required priority of, Agent’s Liens in any Inventory or other Collateral in the
possession of any warehouseman, bailee or similar Person, except to the extent
that an Availability Reserve is established in lieu thereof.

6.2 Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and
Lenders shall not be required to fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation to or for the benefit of
Borrowers, unless the following conditions are satisfied:

(a) No Default or Event of Default shall exist at the time of, or result from,
such funding, issuance or grant;

(b) The representations and warranties of each Obligor in the Loan Documents
shall be true and correct on the date of, and upon giving effect to, such
funding, issuance or grant (except for representations and warranties that
expressly relate only to an earlier date, which shall be true and correct on
such earlier date);

 

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(c) No event shall have occurred or circumstance exist that has or could
reasonably be expected to have a Material Adverse Effect; and

(d) With respect to issuance of a Letter of Credit, the LC Conditions shall be
satisfied.

Each request (or deemed request) by Borrowers for funding of a Loan, issuance of
a Letter of Credit or grant of an accommodation shall constitute a
representation by Borrowers that each of the foregoing conditions are satisfied
on the date of such request and on the date of such funding, issuance or grant.

SECTION 7. COLLATERAL

7.1 Grant of Security Interest. To secure the prompt payment and performance of
all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all personal Property
of such Obligor, including all of the following Property, whether now owned or
hereafter acquired, and wherever located:

(a) all Accounts;

(b) all Chattel Paper, including electronic chattel paper;

(c) all Commercial Tort Claims, including those shown on Schedule 9.1.16;

(d) all Deposit Accounts;

(e) all Documents;

(f) all General Intangibles, including Intellectual Property;

(g) all Goods, including Inventory, Equipment and fixtures;

(h) all Instruments;

(i) all Investment Property;

(j) all Letter-of-Credit Rights;

(k) all Supporting Obligations;

(l) all monies, whether or not in the possession or under the control of Agent,
a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash
Collateral;

(m) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral; and

(n) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing;

provided, however, that the Collateral shall not include any Excluded Assets.

 

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7.2 Lien on Deposit Accounts; Cash Collateral.

7.2.1 Deposit Accounts. To further secure the prompt payment and performance of
all Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all amounts credited to
any Deposit Account of such Obligor, including any sums in any blocked or
lockbox accounts or in any accounts into which such sums are swept (but
excluding the Excluded Accounts). Each Obligor hereby authorizes and directs
each bank or other depository to deliver to Agent, upon request, all balances in
any Deposit Account maintained by such Obligor, without inquiry into the
authority or right of Agent to make such request (provided that such Obligor
does not waive any obligations of Agent under this Agreement in connection
therewith).

7.2.2 Cash Collateral. Any Cash Collateral may be invested, at Agent’s
discretion (and with the consent of Borrowers, as long as no Event of Default
exists), but Agent shall have no duty to do so, regardless of any agreement or
course of dealing with any Obligor, and shall have no responsibility for any
investment or loss. Each Obligor hereby grants to Agent, for the benefit of
Secured Parties and as security for the Obligations, a security interest in all
Cash Collateral held from time to time and all proceeds thereof, whether held in
a Cash Collateral Account or otherwise. Agent may apply Cash Collateral to the
payment of Obligations as they become due, in the manner specified in this
Agreement or, if not so specified, in such manner or order as Agent may elect.
Each Cash Collateral Account and all Cash Collateral shall be under the sole
dominion and control of Agent, and no Obligor or other Person shall have any
right to any Cash Collateral, until Full Payment of the Obligations so Cash
Collateralized.

7.3 Real Estate Collateral.

7.3.1 Lien on Real Estate. The Obligations shall also be secured by Mortgages
upon all Real Estate owned in fee and located in the U.S. by each Obligor with a
fair market value in excess of $250,000, including the Primary Plant and the
Company Headquarters but excluding the Gramercy Assets and any Property subject
to Lien permitted by Section 10.2.2(b). The Mortgages shall be duly recorded, at
Borrowers’ expense, in each office where such recording is required to
constitute a fully perfected Lien on the Real Estate covered thereby. If any
Obligor acquires Real Estate hereafter with a fair market value in excess of
$250,000 and located in the U.S. (other than Property subject to Lien permitted
by Section 10.2.2(b)), such Obligor shall, within 30 days after each such
acquisition or, in the case of an environmental assessment referred to in clause
(f) of the definition of “Related Real Estate Documents”, prior to each such
acquisition (or such later dates as Agent may consent), execute, deliver and
record a Mortgage sufficient to create a first priority Lien in favor of Agent
(subject to Permitted Liens) on such Real Estate and deliver all other Related
Real Estate Documents to Agent.

7.3.2 Collateral Assignment of Leases. The Obligations shall also be secured by
Mortgages upon all of such Obligor’s right, title and interest in, to and under
all now or hereafter existing leases of real Property to which such Obligor is a
party with annual aggregate lease payments in excess of $250,000 and located in
the U.S. (but excluding the Gramercy Assets, the Ludlow Ground Lease and any
other lease which prohibits such assignment), whether as lessor or lessee, and
all extensions, renewals, modifications and proceeds thereof.

7.4 Other Collateral.

7.4.1 Commercial Tort Claims. Borrowers shall promptly notify Agent in writing
if any Obligor has a Commercial Tort Claim (other than, as long as no Default or
Event of Default exists, a Commercial Tort Claim for less than $250,000), shall
promptly amend Schedule 9.1.16 to include such claim, and shall take such
actions as Agent deems reasonably appropriate to subject such claim to a duly
perfected, first priority Lien in favor of Agent (for the benefit of Secured
Parties). While no Event of Default exists, Obligors may settle, adjust or
compromise any such Commercial Tort Claim.

 

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7.4.2 Certain After-Acquired Collateral. Borrowers shall promptly notify Agent
in writing if, after the Closing Date, any Obligor obtains any interest in any
Collateral consisting of Deposit Accounts (excluding the Excluded Accounts),
Chattel Paper, Documents, Instruments, Intellectual Property, Investment
Property or Letter-of-Credit Rights and (other than, so long as no Default or
Event of Default exists, Collateral having an aggregate fair market value of
less than the $250,000, but excluding the Gramercy Assets), upon Agent’s
request, shall promptly take such actions as Agent deems reasonably appropriate
to effect Agent’s duly perfected, first priority Lien upon such Collateral,
including using commercially reasonable efforts in obtaining any appropriate
possession, control agreement or Lien Waiver. If any Collateral is in the
possession of a third party, at Agent’s request, Borrowers shall use
commercially reasonable efforts to obtain an acknowledgment that such third
party holds the Collateral for the benefit of Agent.

7.5 No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of Obligors relating to any Collateral.

7.6 Further Assurances. Promptly upon request by Agent, each Obligor shall
deliver such instruments, assignments, title certificates, or other documents or
agreements, and shall take such actions, as Agent deems reasonably appropriate
under Applicable Law to evidence or perfect Agent’s Lien on any Collateral, or
otherwise to give effect to the intent of this Agreement. In addition to and
without limiting the generality of the foregoing, each Obligor shall, at
Borrowers’ expense, (a) deliver to Agent warehouse receipts covering any portion
of the Collateral (other than, so long as no Default or Event of Default exists,
Collateral having an aggregate fair market value of less than $250,000) located
in warehouses and for which warehouse receipts are issued and certificates of
title covering any portion of the Collateral for which certificates of title
have been issued, provided, however, that, subject to the succeeding proviso,
each Obligor shall not be required to deliver a certificate of title with
respect to any individual motor vehicle or other item of rolling stock with a
fair market value of less than $100,000, provided, further, however, that the
aggregate book value of all motor vehicles or other items of rolling stock of
Obligors as to which Agent shall not have certificates of title with its Liens
noted thereon shall not at any time exceed $250,000; (b) when an Event of
Default has occurred and is continuing, transfer Inventory to warehouses or
other locations designated by Agent; (c) place notations on each Obligor’s books
of account to disclose Agent’s Lien; (d) if any Collateral to be included in the
Borrowing Base having an aggregate fair market value greater than $250,000 is at
any time in the possession or control of any warehouseman, bailee or any of an
Obligor’s agents or processors, notify Agent thereof and use such Obligor’s
commercially reasonable efforts to obtain a Lien Waiver acknowledged by the
bailee that notifies such Person of Agent’s Lien in such Collateral and
instructs such Person to hold all such Collateral for Agent’s account subject to
Agent’s instructions; and (e) take such other actions as are reasonably deemed
necessary or desirable by Agent to maintain and protect Agent’s Liens on the
Collateral. Each Obligor authorizes Agent to file any financing statement that
indicates the Collateral as “all assets” or “all personal property” of such
Obligor, or words to similar effect, and ratifies any action taken by Agent
before the Closing Date to effect or perfect its Lien on any Collateral.

7.7 Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral shall
include only 65% of the voting Equity Interests of any Foreign Subsidiary.

7.8 Commercially Reasonably Actions. If and to the extent that Applicable Law
imposes duties on Agent to exercise remedies in a commercially reasonable
manner, each Obligor acknowledges and agrees that it is not commercially
unreasonable for Agent (a) to fail to incur expenses reasonably deemed
significant by Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not requited by other
Applicable Law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against Account

 

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Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (d) to exercise collection remedies against
Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f) to
contact other Persons, whether or not in the same business as such Obligor, for
expressions of interest in acquiring all or any portion of such Collateral,
(g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (i) to dispose
of assets in wholesale rather than retail markets, (j) to disclaim disposition
warranties, such as title, possession or quiet enjoyment, (k) to purchase
insurance or credit enhancements to insure Agent against risks of loss,
collection or disposition of Collateral or to provide to Agent a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Obligor acknowledges that the
purpose of this Section 7.8 is to provide non-exhaustive indications of what
actions or omissions by Agent would not be commercially unreasonable in Agent’s
exercise of remedies against the Collateral and that other actions or omissions
by Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 7.8. Without limitation upon the foregoing,
nothing contained in this Section 7.8 shall be construed to grant any rights to
any Obligor or to impose any duties on Agent that would not have been granted or
imposed by this Agreement or by Applicable Law in the absence of this
Section 7.8.

SECTION 8. COLLATERAL ADMINISTRATION

8.1 Borrowing Base Certificates. By the 20th day of each month, Borrower Agent
shall deliver to Agent (and Agent shall promptly deliver same to Lenders) a
Borrowing Base Certificate prepared as of the close of business of the previous
month; provided, however, that if (and after) Availability is $25,000,000 or
less at any time or, unless Agent otherwise agrees, if a Default then exists,
Borrower Agent shall during such period deliver to Agent Borrowing Base
Certificates on a weekly basis on or before the third Business Day of each week
for the last Business Day of the preceding week; provided, further, however,
that if Average Availability thereafter exceeds $25,000,000 for three
consecutive calendar months, Borrower Agent’s obligation to deliver Borrowing
Base Certificates to Agent shall revert to monthly reporting as provided above
(subject, again, to reinstatement of weekly reporting as stated in the proviso
above) (any such period being referred to as a “Weekly Reporting Period”). All
calculations of Availability in any Borrowing Base Certificate shall originally
be made by Borrowers and certified by a Senior Officer, provided that Agent may
from time to time review and adjust any such calculation (a) to reflect its
reasonable estimate of declines in value of any Collateral, due to collections
received in the Dominion Account or otherwise; (b) to adjust advance rates to
reflect changes in dilution, quality, mix and other factors affecting
Collateral; and (c) to the extent the calculation is not made in accordance with
this Agreement or does not accurately reflect the Availability Reserve.

8.2 Administration of Accounts.

8.2.1 Records and Schedules of Accounts. Each Obligor shall keep accurate and
complete records of its Accounts, including all payments and collections
thereon. Borrower Agent shall also provide to Agent, on or before the 20th day
of each month, a detailed aged trial balance of all Accounts as of the end of
the preceding month, specifying each Account’s Account Debtor name, amount,
invoice date and due date, and including such proof of delivery, copies of
invoices and invoice registers, copies of related documents, repayment
histories, status reports, sales, collection, reconciliation reports and other
information as Agent may reasonably request. If Accounts of an individual
Account Debtor and its affiliates in an aggregate face amount of $2,000,000 or
more cease to be Eligible Accounts, Borrower Agent shall notify Agent of such
occurrence promptly after any Borrower has knowledge thereof.

 

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8.2.2 Taxes. If an Account of any Borrower includes a charge for any Taxes,
Agent is authorized, in its discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that neither Agent nor Lenders shall be liable for
any Taxes that may be due from Borrowers (or any other Obligor) or with respect
to any Collateral.

8.2.3 Account Verification. Whether or not a Default or Event of Default exists,
Agent shall have the right at any time, in the name of Agent, any designee of
Agent or any Borrower, to verify the validity, amount or any other matter
relating to any Account of any Borrower by mail, telephone or otherwise.
Borrowers shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process.

8.2.4 Maintenance of Dominion Account. Borrowers shall maintain Dominion
Accounts pursuant to lockbox or other arrangements reasonably acceptable to
Agent. Borrowers shall obtain an agreement (in form and substance reasonably
satisfactory to Agent) from each lockbox servicer and Dominion Account bank,
establishing Agent’s control over and Lien in the lockbox or Dominion Account,
which may be exercised by Agent only during any Trigger Period, requiring
immediate deposit of all remittances received in the lockbox to a Dominion
Account, and waiving offset rights of such servicer or bank, except for
customary administrative charges. If a Dominion Account is not maintained with
Bank of America, Agent may, during any Trigger Period, require immediate
transfer of all funds in such account to a Dominion Account maintained with Bank
of America. Agent and Lenders assume no responsibility to Borrowers for any
lockbox arrangement or Dominion Account, including any claim of accord and
satisfaction or release with respect to any Payment Items accepted by any bank.

8.2.5 Proceeds of Collateral. Borrowers shall request in writing and otherwise
take all necessary steps to ensure that all payments on Accounts or otherwise
relating to Collateral are made directly to a Dominion Account (or a lockbox
relating to a Dominion Account). If any Borrower or Subsidiary receives cash or
Payment Items with respect to any Collateral, it shall hold the same in trust
for Agent and promptly (not later than the next Business Day) deposit same into
a Dominion Account.

8.2.6 Principal Depository Relationship. To facilitate the requirements of this
Section 8.2 and Agent’s administration of this Agreement, Borrowers shall
utilize Bank of America as their principal depository bank, including for the
maintenance of Dominion Accounts and related lockboxes, for operating and
deposit accounts and for funds transfer, information reporting, cash management
and other treasury management services.

8.3 Administration of Inventory.

8.3.1 Records and Reports of Inventory. Each Obligor shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions, and Borrower Agent shall submit to Agent inventory and reconciliation
reports in form satisfactory to Agent, on or before the 20th day of each month.
Each Borrower shall conduct a physical inventory at least once per calendar year
(and on a more frequent basis if requested by Agent when an Event of Default
exists) and periodic cycle counts consistent with historical practices, and
Borrower Agent shall provide to Agent a report based on each such inventory and
count promptly upon completion thereof, together with such supporting
information as Agent may reasonably request. Agent may participate in and
observe each physical count.

8.3.2 Returns of Inventory. No Borrower shall return any Inventory to a
supplier, vendor or other Person, whether for cash, credit or otherwise, unless
(a) such return is in the Ordinary

 

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Course of Business; (b) no Default, Event of Default or Overadvance exists or
would result therefrom; and (c) Agent is promptly notified if the aggregate
Value of all Inventory returned in any month exceeds $2,000,000.

8.3.3 Acquisition, Sale and Maintenance. No Borrower shall acquire or accept any
Inventory on consignment or approval, and shall take all steps to assure that
all Inventory is produced in the U.S. in accordance with Applicable Law,
including the FLSA. No Borrower shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require a
Borrower to repurchase such Inventory. Borrowers shall use, store and maintain
all Inventory with reasonable care and caution, in accordance with applicable
standards of any insurance and in conformity with all Applicable Law, and shall
make current rent payments (within applicable grace periods provided for in
leases) at all locations where any Collateral is located.

8.4 Administration of Equipment.

8.4.1 Records and Schedules of Equipment. Each Borrower shall keep accurate and
complete records of its Equipment, including kind, quality, quantity, cost,
acquisitions and dispositions thereof, and shall submit to Agent, on such
periodic basis as Agent may request, a current schedule thereof, in form
reasonably satisfactory to Agent. Promptly upon request, Borrowers shall deliver
to Agent evidence of their ownership or interests in any Equipment.

8.4.2 Dispositions of Equipment. No Borrower shall sell, lease or otherwise
dispose of any Equipment except as permitted by Section 10.2.6.

8.4.3 Condition of Equipment. The Eligible Equipment shall be kept in good
operating condition and repair, and all necessary replacements and repairs shall
be made so that the value and operating efficiency of the Eligible Equipment is
preserved at all times, reasonable wear and tear excepted. Each Borrower shall
ensure that the Eligible Equipment is mechanically and structurally sound, and
capable of performing the functions for which it was designed, in accordance
with manufacturer specifications. No Borrower shall permit any Eligible
Equipment to become affixed to Real Estate owned by another Person unless any
landlord or mortgagee delivers a Lien Waiver or an Availability Reserve is
established with respect thereto.

8.5 Administration of Deposit Accounts. Schedule 8.5 sets forth all Deposit
Accounts maintained by Obligors, including all Dominion Accounts and Excluded
Accounts (which Excluded Accounts are designated as such on Schedule 8.5). Each
Borrower shall take all actions necessary to establish Agent’s control of each
such Deposit Account (other than (a) any account exclusively used for payroll,
payroll taxes or employee benefits, and (b) any account containing not more that
$10,000 at any time) (collectively, the “Excluded Accounts”). Each Borrower
shall be the sole account holder of each Deposit Account and shall not allow any
other Person (other than Agent) to have control over a Deposit Account or any
Property deposited therein. Borrower Agent shall promptly notify Agent of any
opening or closing of a Deposit Account of any Borrower and, with the consent of
Agent, not to be unreasonably withheld or delayed, will update Schedule 8.5 to
reflect same.

8.6 General Provisions.

8.6.1 Location of Collateral. All tangible items of Collateral of each Obligor,
other than Inventory in transit and motor vehicles, shall at all times be kept
by such Obligor at one or more of the locations set forth in Schedule 8.6.1, as
updated from time to time, except that Obligors may (a) make sales or other
dispositions of Collateral in accordance with Section 10.2.6; (b) temporarily
remove Equipment in connection with the repair thereof; and (c) move Collateral
to another location in the United States, upon 30 Business Days prior written
notice to Agent. Borrowers may update Schedule 8.6.1 to add additional locations
pursuant to clause (i) of Section 10.1.2(m).

 

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8.6.2 Insurance of Collateral; Condemnation Proceeds.

(a) Each Obligor shall maintain insurance with respect to the Collateral,
covering casualty, hazard, theft, malicious mischief, flood and other risks, in
amounts, with endorsements and with insurers (with a Best’s Financial Strength
Rating of at least A_ VII, unless otherwise approved by Agent) reasonably
satisfactory to Agent. From time to time upon request, Obligors shall deliver to
Agent the originals or certified copies of their insurance policies and flood
plain certifications and related information. Unless Agent shall agree
otherwise, each policy shall include satisfactory endorsements (i) showing Agent
as loss payee; (ii) requiring 30 days prior written notice to Agent in the event
of cancellation of the policy for any reason whatsoever; and (iii) specifying
that the interest of Agent shall not be impaired or invalidated by any act or
neglect of any Obligor or the owner of the Property, nor by the occupation of
the premises for purposes more hazardous than are permitted by the policy. If
any Obligor fails to provide and pay for any insurance, Agent may, at its
option, but shall not be required to, procure the insurance and charge Borrowers
therefor. Each Obligor agrees to deliver to Agent, promptly as rendered, copies
of all reports made to insurance companies. While no Event of Default exists,
Obligors may settle, adjust or compromise any insurance claim relating to
property insurance with respect to the Collateral or business interruption
insurance. If an Event of Default exists, only Agent shall be authorized to
settle, adjust and compromise such claims.

(b) Any proceeds of property insurance relating to Collateral or business
interruption insurance and any awards arising from condemnation of any
Collateral shall be paid to Agent if a Trigger Period is then in effect or if
and to the extent the aggregate amount of such proceeds or awards paid to Agent
from any single casualty or condemnation exceeds $250,000. Any such proceeds or
awards that relate to Inventory or other Collateral included in the Borrowing
Base shall be applied to payment of the Revolver Loans, and then to any other
Obligations outstanding to the extent required by Section 5.3.1.

(c) If requested by Borrower Agent in writing within 15 days after Agent’s
receipt of any insurance proceeds or condemnation awards relating to any loss or
destruction of Equipment or Real Estate constituting Collateral, Obligors may
use such proceeds or awards to repair or replace such Equipment or Real Estate
(and until so used, the proceeds shall be applied to reduce the outstanding
principal balance of the Revolving Loans (which application shall not result in
a permanent reduction of the Commitments) or held by Agent as Cash Collateral
(upon payment of all Revolving Loans) and, upon such application, Agent may
establish an Availability Reserve against the Borrowing Base in an amount equal
to the amount of such proceeds so applied to the Revolving Loans) as long as
(i) no Default or Event of Default exists; (ii) such repair or replacement is
promptly undertaken and concluded, in accordance with plans satisfactory to
Agent; (iii) replacement buildings are constructed on the sites of the original
casualties and are of comparable size, quality and utility to the destroyed
buildings; (iv) the repaired or replaced Property is free of Liens, other than
Permitted Liens that are not Purchase Money Liens; and (v) Obligors comply with
disbursement procedures for such repair or replacement as Agent may reasonably
require.

8.6.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for

 

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reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency or other Person whatsoever, but
the same shall be at Obligors’ sole risk.

8.6.4 Defense of Title to Collateral. Each Obligor shall at all times defend its
title to Collateral and Agent’s Liens therein against all Persons, claims and
demands whatsoever, except Permitted Liens.

8.7 Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Obligor’s true and lawful
attorney (and agent-in-fact) for the purposes provided in this Section. Agent,
or Agent’s designee, may, without notice and in either its or an Obligor’s name,
but at the cost and expense of Borrowers:

(a) Endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b) During an Event of Default, (i) notify any Account Debtors of the assignment
of their Accounts, demand and enforce payment of Accounts by legal proceedings
or otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Agent deems advisable;
(iv) collect, liquidate and receive balances in Deposit Accounts or investment
accounts, and take control, in any manner, of proceeds of Collateral;
(v) prepare, file and sign an Obligor’s name to a proof of claim or other
document in a bankruptcy of an Account Debtor, or to any notice, assignment or
satisfaction of Lien or similar document; (vi) receive, open and dispose of mail
addressed to an Obligor, and notify postal authorities to deliver any such mail
to an address designated by Agent; (vii) endorse any Chattel Paper, Document,
Instrument, bill of lading, or other document or agreement relating to any
Accounts, Inventory or other Collateral; (viii) use an Obligor’s stationery and
sign its name to verifications of Accounts and notices to Account Debtors;
(ix) use information contained in any data processing, electronic or information
systems relating to Collateral; (x) make and adjust claims under insurance
policies relating to any Collateral or for business interruption; (xi) take any
action as may be necessary or appropriate to obtain payment under any letter of
credit, banker’s acceptance or other instrument for which an Obligor is a
beneficiary; and (xii) take all other actions as Agent deems appropriate to
fulfill any Obligor’s obligations under the Loan Documents.

SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1 General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Commitments, Loans and Letters of
Credit, each Obligor represents and warrants that:

9.1.1 Organization and Qualification. Each Borrower and Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Each Borrower and Subsidiary is duly
qualified, authorized to do business and in good standing as a foreign
corporation in each jurisdiction where failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.

 

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9.1.2 Power and Authority. Each Obligor is duly authorized to execute, deliver
and perform its Loan Documents. The execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary action by each Obligor
party thereto, and do not (a) require any consent or approval of any holders of
Equity Interests of any Obligor, other than those already obtained;
(b) contravene the Organic Documents of any Obligor; (c) violate or cause a
default under any Applicable Law or Material Contract; or (d) result in or
require the imposition of any Lien (other than Permitted Liens) on any Property
of any Obligor.

9.1.3 Enforceability. Each Loan Document is a legal, valid and binding
obligation of each Obligor party thereto, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally.

9.1.4 Capital Structure. As of the Closing Date, Schedule 9.1.4 shows, for each
Borrower and Subsidiary, its name, its jurisdiction of organization, its
authorized and issued Equity Interests, the holders of its Equity Interests
(other than as to Parent), and all agreements binding on such holders with
respect to their Equity Interests (other than as to Parent). Except as disclosed
on Schedule 9.1.4, in the five years preceding the Closing Date, no Borrower or
Subsidiary has acquired any substantial assets from any other Person nor been
the surviving entity in a merger or combination. Each Obligor has good title to
its Equity Interests in its Subsidiaries, subject only to Agent’s Lien, and all
such Equity Interests are duly issued, fully paid and non-assessable. Except as
may exist in any agreement relating to a proposed sale of Equity Interests of
any Subsidiary which is permitted under Section 10.2.6, there are no outstanding
purchase options, warrants, subscription rights, agreements to issue or sell,
convertible interests, phantom rights or powers of attorney relating to Equity
Interests of any Borrower (other than Parent) or Subsidiary.

9.1.5 Title to Properties; Priority of Liens. Each Borrower and Subsidiary has
good and marketable (or in the case of Real Estate located in Texas,
indefeasible) fee simple title to (or valid leasehold interests in) all of its
Real Estate as to which a Mortgage is required to be provided pursuant to the
terms of this Agreement, and good title to all of its personal Property,
including all Property reflected in any financial statements delivered to Agent
or Lenders (except to the extent disposed of in accordance with the terms of
this Agreement), in each case free of Liens except Permitted Liens. All Real
Estate owned or leased by any Obligor as of the Closing Date is disclosed on
Schedule 9.1.5. Each Borrower and Subsidiary has paid and discharged all lawful
claims that, if unpaid, could become a Lien on its Properties, other than
Permitted Liens. All Liens of Agent in the Collateral are duly perfected, first
priority Liens, subject only to Permitted Liens.

9.1.6 Accounts. Agent may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by Borrowers with respect
thereto. Borrowers warrant, with respect to each Account at the time it is shown
as an Eligible Account in a Borrowing Base Certificate, that:

(a) it is genuine and in all respects what it purports to be, and is not
evidenced by a judgment;

(b) it arises out of a completed, bona fide sale and delivery of goods in the
Ordinary Course of Business, and substantially in accordance with any purchase
order, contract or other document relating thereto;

(c) it is for a sum certain, maturing as stated in the invoice covering such
sale, a copy of which has been furnished or is available to Agent on request;

(d) it is not subject to any offset, Lien (other than Agent’s Lien), deduction,
defense, dispute, counterclaim or other adverse condition, in each case except
as arising in the Ordinary Course of Business and, with respect to Liens,
disclosed to Agent; and it is absolutely owing by the Account Debtor, without
contingency in any respect;

 

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(e) no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC, the
restriction is ineffective), and the applicable Borrower is the sole payee or
remittance party shown on the invoice;

(f) no extension, compromise, settlement, modification, credit, deduction or
return has been authorized with respect to the Account, except discounts or
allowances granted in the Ordinary Course of Business; and

(g) to the best of Borrowers’ knowledge, (i) there are no facts or circumstances
that are reasonably likely to impair the enforceability or collectibility of
such Account; (ii) the Account Debtor had the capacity to contract when the
Account arose, continues to meet the applicable Borrower’s customary credit
standards, is Solvent, is not contemplating or subject to an Insolvency
Proceeding, and has not failed, or suspended or ceased doing business; and
(iii) there are no proceedings or actions threatened or pending against any
Account Debtor that could reasonably be expected to have a material adverse
effect on the Account Debtor’s financial condition.

9.1.7 Financial Statements. The consolidated and consolidating balance sheets,
and related statements of income, retained earnings, cash flow and shareholder’s
equity, of Borrowers and Subsidiaries that have been and are hereafter delivered
to Agent and Lenders, are prepared in accordance with GAAP, and fairly present
in all material respects the financial positions and results of operations of
Borrowers and Subsidiaries at the dates and for the periods indicated (except,
with respect to unaudited financial statements, for the absence of applicable
footnotes and subject to normal year-end adjustments). All projections and
operating budgets for future periods delivered from time to time by or on behalf
of Obligors to Agent and Lenders have been prepared in good faith on the basis
of the assumptions set forth therein, which assumptions Borrowers believe are
fair and reasonable in light of current and reasonably foreseeable business
conditions at the time such projections or operating budgets are submitted to
Agent. Since March 31, 2011, there has been no change in the condition,
financial or otherwise, of any Borrower or Subsidiary that could reasonably be
expected to have a Material Adverse Effect. Each Borrower and Subsidiary is
Solvent.

9.1.8 Surety Obligations. No Borrower or Subsidiary is obligated as surety or
indemnitor under any bond or other contract that assures payment or performance
of any obligation of any Person, except as permitted by Section 10.2.1.

9.1.9 Taxes. As of the Closing Date, except as set forth on Schedule 9.1.9, each
Borrower and Subsidiary has filed all federal, state and local tax returns and
other reports that it is required by law to file (or appropriate extensions have
been timely filed), and has paid, or made provision for the payment of, all
Taxes upon it, its income and its Properties that are due and payable, except to
the extent being Properly Contested or such unpaid Taxes would constitute a
Permitted Lien. The provision for Taxes on the books of each Borrower and
Subsidiary is adequate for all years not closed by applicable statutes, and for
its current Fiscal Year.

9.1.10 Brokers. There are no brokerage commissions, finder’s fees or investment
banking fees payable in connection with any transactions contemplated by the
Loan Documents.

9.1.11 Intellectual Property. Each Borrower and Subsidiary owns or has the
lawful right to use all Intellectual Property necessary for the conduct of its
business, without, to the best of its knowledge, conflict with any rights of
others. There is no pending or, to the best of any Borrower’s

 

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knowledge, threatened Intellectual Property Claim with respect to any Borrower,
any Subsidiary or any of their Property (including any Intellectual Property).
Except as disclosed on Schedule 9.1.11, no Borrower or Subsidiary pays or owes
any Royalty or other compensation to any Person with respect to any Intellectual
Property. Schedule 9.1.11 shows, as of the Closing Date, (a) all Intellectual
Property owned by any Borrower or Subsidiary which is the subject of a
government registration or grant, or application therefor, and (b) all other
Intellectual Property (other than trade secrets), owned, used or licensed by, or
otherwise subject to any interests of, any Borrower or Subsidiary, as to which a
loss of the right to use such Intellectual Property could reasonably be expected
to have a Material Adverse Effect.

9.1.12 Governmental Approvals. Except as disclosed on Schedule 9.1.14, each
Borrower and Subsidiary has, is in compliance with, and is in good standing with
respect to, all Governmental Approvals (including Environmental Laws) necessary
to conduct its business and to own, lease and operate its Properties, except
where noncompliance could not reasonably be expected to have a Material Adverse
Effect. All necessary import, export or other licenses, permits or certificates
for the import or handling of any goods or other Collateral have been procured
and are in effect, and Borrowers and Subsidiaries have complied with all foreign
and domestic laws with respect to the shipment and importation of any goods or
Collateral, except where noncompliance could not reasonably be expected to have
a Material Adverse Effect.

9.1.13 Compliance with Laws. Except as disclosed on Schedule 9.1.14, each
Borrower and Subsidiary has duly complied, and its Properties and business
operations are in compliance, in all material respects with all Applicable Law
(including Environmental Laws), except where noncompliance could not reasonably
be expected to have a Material Adverse Effect. Except as disclosed on Schedule
9.1.14, there have been no citations, notices or orders of noncompliance issued
to any Borrower or Subsidiary under any Applicable Law which are pending or
unresolved, except where noncompliance could not reasonably be expected to have
a Material Adverse Effect. No Inventory has been produced in the United States
in violation of the FLSA.

9.1.14 Compliance with Environmental Laws. As of the Closing Date, except as
disclosed on Schedule 9.1.14, no Borrower’s or Subsidiary’s past or present
operations, Real Estate or other Properties are subject to any federal, state or
local investigation to determine whether any remedial action is needed to
address any Environmental Release, environmental pollution, hazardous material
or environmental clean-up. Except as disclosed on Schedule 9.1.14, no Borrower
or Subsidiary has received any Environmental Notice which could (or which
relates to any matter which could) reasonably be expected to have a Material
Adverse Effect. As of the Closing Date, except as disclosed on Schedule 9.1.14,
no Borrower or Subsidiary has any contingent liability with respect to any
Environmental Release, environmental pollution or hazardous material on any Real
Estate now or previously owned, leased or operated by it. Except as disclosed on
Schedule 9.1.14, no Borrower or Subsidiary has agreed to indemnify or hold
harmless any other Person for any violation of any Environmental Law or any
remediation required thereunder pursuant to an agreement that is in effect as of
the Closing Date and, to the extent that any Borrower or Subsidiary is subject
to such an agreement, neither such Borrower nor such Subsidiary has been subject
to a claim to so indemnify or hold harmless any such other Person, and, to
Borrowers’ knowledge, as of the Closing Date, there are not any circumstances
that could reasonably be expected to result to such a claim in the future. As of
the Closing Date, to the knowledge of Borrowers, the general status of the
environmental permits and the Voluntary Remediation Program involving LSR are
disclosed on Schedule 9.1.14. The representations and warranties contained in
each Environmental Agreement are true and correct on the Closing Date.

9.1.15 Burdensome Contracts. No Borrower or Subsidiary is a party or subject to
any contract, agreement or Organic Document that could reasonably be expected to
have a Material Adverse Effect. As of the Closing Date, no Borrower or
Subsidiary is party or subject to any Restrictive Agreement, except as shown on
Schedule 9.1.15 or otherwise permitted by clauses (b) through (g) of
Section 10.2.14. No such Restrictive Agreement prohibits the execution, delivery
or performance of any Loan Document by an Obligor.

 

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9.1.16 Litigation. As of the Closing Date, except as shown on Schedule 9.1.16 or
otherwise disclosed to Agent in writing on or about the Closing Date, (a) there
are no proceedings or investigations pending or, to the best of any Borrower’s
knowledge, threatened against any Borrower or Subsidiary, or any of their
businesses, operations, Properties, prospects or conditions, that (i) relate to
any Loan Documents or transactions contemplated thereby, or (ii) could
reasonably be expected to have a Material Adverse Effect, and (b) there has been
no material adverse change relating to the legal proceedings disclosed in ITEM 3
of Parent’s Form 10-Q filed for its Fiscal Quarter ended March 31, 2011. As of
the Closing Date, except as shown on such Schedule or otherwise disclosed to
Agent in writing on or about the Closing Date, no Obligor has a Commercial Tort
Claim (other than, as long as no Default or Event of Default exists, a
Commercial Tort Claim for less than $250,000). No Borrower or Subsidiary is in
default with respect to any order, consent decree, injunction or judgment of any
Governmental Authority which could reasonably be expected to have a Material
Adverse Effect. To the best of each Borrower’s knowledge, as of the Closing
Date, except as shown on Schedule 9.1.16 or otherwise disclosed to Agent in
writing on or about the Closing Date, all claims against any Borrower or
Subsidiary relating to the Port Wentworth, Georgia refinery accident during 2008
have been fully paid or are fully covered by insurance.

9.1.17 No Defaults. No event or circumstance has occurred or exists that
constitutes a Default or Event of Default. As of the Closing Date, no Borrower
or Subsidiary is in default, and no event or circumstance has occurred or exists
that with the passage of time or giving of notice would constitute a default,
under any Material Contract or in the payment of any Borrowed Money. As of the
Closing Date, there is no basis upon which any party (other than a Borrower or
Subsidiary) could terminate a Material Contract prior to its scheduled
termination date.

9.1.18 ERISA. Except as disclosed on Schedule 9.1.18:

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code, and other federal and state laws. Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently pending with the IRS with respect thereto and, to the knowledge of
Borrowers, nothing has occurred which would prevent, or cause the loss of, such
qualification. Each Obligor and ERISA Affiliate has made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of Borrowers, threatened
claims (other than ordinary claims for benefits by participants and
beneficiaries), actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted in or
could reasonably be expected to have a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability which could reasonably be
expected to result in a Material Adverse Effect; (iii) no Obligor or ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA); (iv) no Obligor or ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under

 

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Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan which could reasonably be
expected to result in a Material Adverse Effect; and (v) no Obligor or ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.

(d) With respect to any Foreign Plan, (i) all employer and employee
contributions required by law or by the terms of the Foreign Plan have been
made, or, if applicable, accrued, in accordance with applicable generally
accepted accounting practices; (ii) the fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any Foreign Plan funded
through insurance, or the book reserve established for any Foreign Plan,
together with any accrued contributions, is sufficient to procure or provide for
the accrued benefit obligations with respect to all current and former
participants in such Foreign Plan according to the actuarial assumptions and
valuations most recently used to account for such obligations in accordance with
applicable generally accepted accounting principles; and (iii) it has been
registered, if required, and has been maintained in good standing with
applicable regulatory authorities.

9.1.19 Trade Relations. There exists no actual, or, to any Borrower’s knowledge,
threatened, termination, limitation or modification of any business relationship
between any Borrower or Subsidiary and any customer or supplier, or any group of
customers or suppliers which could reasonably be expected to have a Material
Adverse Effect.

9.1.20 Labor Relations. As of the Closing Date, except as described on Schedule
9.1.20, (a) no Borrower or Subsidiary is party to or bound by any collective
bargaining agreement and (b) there are no grievances, disputes or controversies
with any union or other organization of any Borrower’s or Subsidiary’s
employees, or, to the best of any Borrower’s knowledge, any asserted or
threatened strikes, work stoppages or demands for collective bargaining, in each
case which could reasonably be expected to have a Material Adverse Effect.

9.1.21 Payable Practices. No Borrower or Subsidiary has made any material change
in its historical accounts payable practices from those in effect on the Closing
Date.

9.1.22 Not a Regulated Entity. No Obligor is (a) an “investment company” or a
“person directly or indirectly controlled by or acting on behalf of an
investment company” within the meaning of the Investment Company Act of 1940; or
(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any public utilities code or any other Applicable Law regarding its
authority to incur Debt.

9.1.23 Margin Stock. No Borrower or Subsidiary is engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock. No Loan proceeds or Letters of
Credit will be used by Borrowers to purchase or carry, or to reduce or refinance
any Debt incurred to purchase or carry, any Margin Stock or for any related
purpose governed by Regulations T, U or X of the Board of Governors.

9.1.24 Debt. As of the Closing Date, and after giving effect to the making of
the Loans to be made on the Closing Date and the issuance of the Letters of
Credit to be issued on the Closing Date (if any), neither any Borrower nor any
Subsidiary has any Debt except Debt permitted by Section 10.2.1.

 

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9.1.25 Farm Products, etc.

(a) Each Borrower and Subsidiary has utilized its best efforts, in connection
with its purchase or other acquisition of Farm Products, to ensure that all
Liens (except Permitted Grower Liens) in such Farm Products have been terminated
or released.

(b) If and to the extent that the provisions of PACA are applicable, each
Borrower and Subsidiary has complied in all material respects with PACA so that
the trust created thereby for the benefit of unpaid cash sellers of perishable
agricultural commodities shall not arise in connection with its purchase of any
such commodities or other Farm Products. No Borrower or Subsidiary has taken any
action which would impair its ability to benefit from the trust established
under PACA in connection with any sales by such Person of commodities covered by
PACA.

(c) Neither any Borrower nor any Subsidiary is engaged in raising, fattening or
grazing of livestock or other animals or other farming operations.

9.1.26 Joint Venture Agreements. Each Borrower and Subsidiary is in compliance
in all material respects with each Joint Venture Agreement to which it is a
party. As of the Closing Date, except as disclosed on Schedule 9.1.26, to each
Borrower’s knowledge, no party to any Joint Venture Agreement is in material
non-compliance therewith and no Joint Venture is in material non-compliance with
any Applicable Law or any material agreement or contract to which it is a party.

9.2 Complete Disclosure. No Loan Document contains any untrue statement by any
Obligor of a material fact, nor fails to disclose any material fact necessary to
make the statements by any Obligor contained therein, in light of the
circumstances under which they were made, not materially misleading at the time
when made or delivered. There is no fact or circumstance known to any Obligor
(other than industry-wide risks normally associated with types of business
conducted by Obligors) that any Obligor has failed to disclose to Agent in
writing that could reasonably be expected to have a Material Adverse Effect.

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1 Affirmative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall, and shall cause each Subsidiary to:

10.1.1 Inspections; Appraisals.

(a) Permit Agent from time to time, subject (except when a Default or Event of
Default exists) to three Business Days’ prior written notice, to (i) visit and
inspect the Properties of any Borrower or Subsidiary during normal business
hours, (ii) audit and make extracts from any Borrower’s or Subsidiary’s books
and records, and (iii) discuss with its officers, employees, agents, advisors
and independent accountants such Borrower’s or Subsidiary’s business, financial
condition, assets, prospects and results of operations, provided Borrower Agent
shall be given an opportunity to participate in such discussions so long as no
Default or Event of Default exists. Lenders may participate in any such visit or
inspection, at their own expense. Neither Agent nor any Lender shall have any
duty to any Obligor to make any inspection, nor to share any results of any
inspection, appraisal or report with any Obligor. Obligors acknowledge that all
inspections, appraisals and reports are prepared by Agent and Lenders for their
purposes, and Obligors shall not be entitled to rely upon them. Notwithstanding
anything to the contrary contained herein, Agent shall have the right, in its
discretion from time to time, to obtain a copy of any report or other
information regarding the polarity of any raw

 

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sugar Inventory, including any raw sugar Inventory in/transit to any Borrower or
Subsidiary, and Agent shall have the right to request the delivery to Agent of
all documents, invoices, and bills of lading relating to any in/transit
Inventory if and to the extent possession of the same is necessary or
appropriate to ensure the required perfection or priority of Agent’s Liens with
respect to such documents, invoices, or bills of lading or the property covered
thereby.

(b) Reimburse Agent and, with respect to examinations referred to in clause
(i) of this Section 10.1.1(b), each Co-Collateral Agent for all charges, costs
and expenses of Agent in connection with (i) examinations of any Obligor’s books
and records or any other financial or Collateral matters as Agent deems
appropriate, up to four times per Loan Year; (ii) appraisals of Inventory up to
two times per Loan Year, and (iii) appraisals of Equipment and Real Estate
subject to a Mortgage up to one time per Loan Year; provided, however, that if
an examination or appraisal is initiated during a Default or Event of Default,
such examinations and appraisals may occur at such times and as often as Agent
may require and all charges, costs and expenses therefor shall be reimbursed by
Borrowers without regard to such limits. Borrowers agree to pay Agent’s then
standard charges for examination activities, including the standard charges of
Agent’s internal examination and appraisal groups, as well as the charges of any
third party used for such purposes.

(c) Notwithstanding anything to the contrary contained herein, and unless
otherwise agreed by Agent and Required Lenders, no Accounts, Inventory,
Equipment or Real Estate acquired pursuant to a Permitted Acquisition shall
constitute Eligible Accounts, Eligible Inventory, Eligible Equipment or Eligible
Real Estate, respectively, unless and until Agent has undertaken a field
examination and, if requested by Agent, an appraisal of such assets; provided,
however, that Agent shall use all reasonable efforts to undertake and complete
such field examination and, if requested, appraisal within 60 days after Agent
has received notice of such Permitted Acquisition or pending Permitted
Acquisition and access to such assets to be acquired sufficient for purposes of
undertaking such field examination and, if applicable, appraisal.

10.1.2 Financial and Other Information. Keep adequate records and books of
account with respect to its business activities, in which proper entries are
made in accordance with GAAP reflecting all financial transactions; and furnish
to Agent (for distribution to Lenders):

(a) as soon as available, and in any event within 90 days after the close of
each Fiscal Year, balance sheets as of the end of such Fiscal Year and the
related statements of income, cash flow and shareholders’ equity for such Fiscal
Year, on consolidated and consolidating bases for Borrowers and Subsidiaries,
which consolidated statements shall be audited and certified (without
qualification) by a firm of independent certified public accountants of
recognized national standing selected by Borrowers, and shall set forth in
comparative form corresponding figures for the preceding Fiscal Year and other
information reasonably acceptable to Agent; provided that delivery of such
consolidated financial statements shall be satisfied if Parent timely delivers
its report for such Fiscal Year on Form 10K to Agent;

(b) as soon as available, and in any event within 45 days after the end of each
Fiscal Quarter that is not the end of a Fiscal Year, unaudited balance sheets as
of the end of such Fiscal Quarter and the related statements of income and cash
flow for such Fiscal Quarter and for the portion of the Fiscal Year then
elapsed, on consolidated basis for Borrowers and Subsidiaries, setting forth in
comparative form corresponding figures for the preceding Fiscal Year and
certified by the chief financial officer of Borrower

 

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Agent as prepared in accordance with GAAP and fairly presenting in all material
respects the financial position and results of operations for such Fiscal
Quarter and period, subject to normal year-end adjustments and the absence of
footnotes; provided that delivery of such financial statements shall be
satisfied if Parent timely delivers its report for such Fiscal Quarter on Form
10Q to Agent;

(c) as soon as available, and in any event within 30 days after the end of each
month that is not the end of a Fiscal Quarter, unaudited balance sheets as of
the end of such month and the related statements of income and cash flow for
such month and for the portion of the Fiscal Year then elapsed, on consolidated
basis for Borrowers and Subsidiaries, setting forth in comparative form
corresponding figures for the preceding Fiscal Year and certified by the chief
financial officer of Borrower Agent as prepared in accordance with GAAP and
fairly presenting in all material respects the financial position and results of
operations for such month and period, subject to normal year-end adjustments and
the absence of footnotes;

(d) concurrently with delivery of financial statements under clauses (a),
(b) and (c) above, or more frequently if requested by Agent while a Default or
Event of Default exists, a Compliance Certificate executed by the chief
financial officer of Borrower Agent; each Compliance Certificate shall (i) set
forth in reasonable detail the calculations required to establish Obligors’
compliance with the financial covenants set forth in Section 10.3 during the
period covered by such financial statements and as of the end thereof and
(ii) except as explained in reasonable detail in such certificate, shall
(A) state that all of the representations and warranties of Obligors contained
in this Agreement and the other Loan Documents are correct and complete in all
material respects as at the date of such certificate as if made at such time,
except for those that speak only as of a particular date, (B) state that
Obligors are, at the date of such certificate, in compliance in all material
respects with all of their respective covenants and agreements in this Agreement
and the other Loan Documents, (C) state that no Default or Event of Default then
exists or existed during the period covered by such financial statements, (D) in
the case of the delivery of financial statements under clause (a) and (b) only,
describe and analyze in reasonable detail all material trends, changes, and
developments in each and all such financial statements, provided that the
requirement in this clause (D) may be satisfied by delivery of Parent’s report
on Form 10-Q (as to quarterly financial statements) or Form 10-K (as to annual
financial statements), and (E) state that (1) a Dominion Event did not occur
during the period covered by such financial statements or, if such a Dominion
Event did occur during such period, state that a Dominion Event did occur during
such period, describe such event and state the initial date upon which such
event occurred, and (2) if a Dominion Event did not occur during such period but
did occur during a prior period and a Dominion Termination Event with respect to
such Dominion Event did not occur during a prior period but occurred during the
period covered by such financial statements, state that a Dominion Termination
Event did occur during such period, describe such event and state the initial
date upon which such event occurred; if such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action Obligors have taken or propose to
take with respect thereto;

(e) [intentionally omitted];

(f) concurrently with the delivery with each of the audited financial statements
delivered pursuant to Section 10.1.2(a) during a time when the Average
Availability for the Fiscal Quarter then most recently ended is equal to or less
than

 

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$20,000,000, a certificate of the independent certified public accountants that
audited such financial statements that, in auditing such financial statements,
they did not become aware of any fact or condition which then constituted a
Default or Event of Default with respect to a financial covenant, except for
those, if any, described in reasonable detail in such certificate;

(g) not more than 30 days after the end of each Fiscal Year and for Parent and
its Subsidiaries, projections of consolidated balance sheets, results of
operations, cash flow and Availability for the next Fiscal Year and an annual
operating budget, month by month, within 10 Business Days after any material
update, amendment, supplement, or other modification thereof or thereto has been
prepared by a Borrower or Subsidiary, a copy of each such update, amendment,
supplement, or other modification thereof or thereto;

(h) [intentionally omitted];

(i) promptly upon Agent’s request therefor: (A) copies of any proxy statements,
financial statements or reports that any Obligor has made generally available to
its shareholders; (B) copies of any regular, periodic and special reports or
registration statements or prospectuses that any Obligor files with the
Securities and Exchange Commission or any other Governmental Authority, or any
securities exchange; and (C) copies of any press releases or other statements
made available by an Obligor to the public concerning material changes to or
developments in the business of such Obligor;

(j) promptly upon Agent’s request therefor after the sending or filing thereof,
copies of any annual report to be filed in connection with each Plan or Foreign
Plan;

(k) as soon as available, but in any event not later than 15 days after Parent’s
or any Subsidiaries’ receipt thereof, a copy of all material management reports
and management letters prepared by Borrowers’ independent certified public
accountants;

(l) if requested by Agent, promptly after the filing thereof with the IRS or any
other Governmental Authority, a copy of each tax return filed by Parent or any
Subsidiary;

(m) the following documents, in form reasonably satisfactory to Agent:

(i) within 30 days after the end of each calendar month, or more frequently if
requested by Agent during a Default or an Event of Default and upon 3 Business
Days’ notice from Agent, (A) a schedule of each Borrower’s accounts receivable
created since the last such schedule which shall be reconciled to the Borrowing
Base Certificate and such Borrower’s general ledger as of such last day of the
immediately preceding month, (B) if requested by Agent, information indicating,
in the aggregate, the estimated amounts owing to any Farm Products Seller, (C) a
schedule of Inventory which shall be reconciled to the Borrowing Base
Certificate and the general ledger as of the end of the prior month itemizing
and describing the components and quantity of all Inventory, the cost thereof,
and the location thereof, and (D) information regarding any change in the owner
or lessor of any leased premises, warehouses, processors, or other third parties
from time to time in possession of any Collateral, and information regarding any
change in any location where any Collateral is located, together with the
address of the new location, the name, telephone number, and other

 

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appropriate contact information of the appropriate sales representative, agent,
contractor, or other Person at such location, a description of the nature of the
contractual arrangement at such location, and the cost of the Inventory and the
net book value of Equipment and Real Estate at such location (which shall
include, as necessary, an updated Schedule 8.6.1);

(ii) within 30 days after the end of each calendar month, or more frequently if
requested by Agent during a Default or an Event of Default and upon 3 Business
Days’ notice from Agent, (A) an aging of each Borrower’s trade accounts payable,
and (B) a schedule of each Borrower’s accounts receivable created since the last
such schedule which (1) shall be as of the last day of the immediately preceding
month, and (2) shall set forth a detailed aged final balance of all then
existing accounts receivable specifying the names, addresses (if requested by
Agent), and balances due for each Account Debtor obligated on an account
receivable so listed;

(iii) prompt written notice of any material changes to any farm bill or any
material changes to any tariffs, quotas, or other restrictions on imported
sugar; and

(iv) with the delivery of each of the documents in clauses (i) and (ii) above, a
certificate of Obligors executed by a Senior Officer of Parent on behalf of all
Obligors certifying as to the accuracy and completeness of the foregoing;

if any of Obligors’ records or reports of the Collateral are prepared by an
accounting service or other agent, each Obligor hereby authorizes, and shall
cause each other Obligor to authorize, such service or agent to deliver such
records, reports, and related documents to Agent, for distribution to Lenders;

(n) during any Weekly Reporting Period, the following documents, in form
reasonably satisfactory to Agent:

(i) as soon as available, but in any event not later than the third Business Day
of the succeeding week and at such other times as may be requested by Agent,
(A) a current schedule of sales, collections and credit memos since the date of
the then most recent report previously provided pursuant to this clause (A),
(B) a schedule of Inventory which shall be reconciled to the Borrowing Base
Certificate itemizing and describing the components and quantity of all
Inventory, the cost thereof, and the location thereof, and (C) if requested by
Agent, information indicating the estimated amounts owing to any Farm Products
Seller;

(ii) upon Agent’s request, copies of invoices in connection with each Borrower’s
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, and shipping and delivery documents in connection with each
Borrower’s Accounts and for Equipment acquired by each Borrower, purchase
orders, and invoices; and

(iii) such other reports as to the Collateral as Agent may reasonably request
from time to time; and

 

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(o) prompt written notice of any anticipated, imminent or actual product recall
or similar action with respect to any goods or products sold by any Obligor or
its Subsidiary; and

(p) such other reports and information (financial or otherwise) as Agent may
reasonably request from time to time in connection with any Collateral or any
Borrower’s, Subsidiary’s or other Obligor’s financial condition or business.

Documents required to be delivered pursuant to Section 10.1.2(a), (b) and
(i) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and, if so delivered, shall be
deemed to have been delivered on the date (i) on which Borrowers post such
documents, or provide a link thereto on Parent’s website on the Internet at the
website address www.ImperialSugar.com, or (ii) on which such documents are
posted on Borrowers’ behalf on an Internet or intranet website, if any, to which
each Lender and Agent have access (whether a commercial, third-party website or
whether sponsored by Agent); provided that: (A) Borrower Agent shall deliver
paper copies of such documents to Agent or any Lender that requests Borrower
Agent to deliver such paper copies until a written request to cease delivering
paper copies is given by Agent or such Lender and (B) Borrower Agent shall
notify Agent and each Lender (by telecopier or electronic mail) of the posting
of any such documents and provide to Agent by electronic mail electronic
versions (i.e., soft copies) of such documents. Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
Borrowers with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such
documents.

10.1.3 Notices. Notify Agent and Lenders in writing, promptly after a Borrower’s
Senior Officer obtaining knowledge thereof, of any of the following occurring on
or after the Closing Date that affects an Obligor: (a) the threat (by written
notice from a Governmental Authority or other Person to an Obligor) or
commencement of any proceeding or investigation (by written notice from a
Governmental Authority or other Person to an Obligor), whether or not covered by
insurance, which could reasonably be expected to have a Material Adverse Effect;
(b) any pending or threatened labor dispute, strike or walkout, or the
expiration of any material labor contract, in each case which could reasonably
be expected to have a Material Adverse Effect; (c) any default under or
termination of a Material Contract which could reasonably be expected to have a
Material Adverse Effect; (d) the existence of any Default or Event of Default;
(e) any judgment in an amount exceeding $2,500,000; (f) the assertion of any
Intellectual Property Claim which could reasonably be expected to have a
Material Adverse Effect; (g) any violation or asserted (by written notice to an
Obligor) violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws) which could reasonably be expected to have a Material
Adverse Effect; (h) any Environmental Release by an Obligor or on any Property
owned, leased or occupied by an Obligor, or receipt of any Environmental Notice,
where the alleged release or violation is material or could reasonably be
expected to have a Material Adverse Effect; (i) the occurrence of any ERISA
Event; (j) the discharge of or any withdrawal or resignation by Borrowers’
independent accountants; or (k) any opening of a new office or place of
business, at least 30 days prior to such opening.

10.1.4 Landlord and Storage Agreements. (a) Upon request, provide Agent with
copies of all existing agreements, and promptly after execution thereof provide
Agent with copies of all future agreements, between an Obligor and any landlord,
warehouseman, processor, shipper, bailee or other Person that owns any premises
at which any Collateral may be kept or that otherwise may possess or handle any
Collateral, in each case in form and substance reasonably acceptable to Agent;
and (b) request a Lien Waiver, in form and substance reasonably acceptable to
Agent, with respect to each tenant leasehold interest of an Obligor in Real
Estate and each warehouse or similar location whereat any Collateral which may
be included in the Borrowing Base is located; provided that (i) Agent may, in
its discretion, defer delivery of any such Lien Waiver and establish a Rent and
Charges Reserve and/or other

 

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Availability Reserves with respect to any Collateral located on or at any Real
Estate or warehouse for which Agent has not received such an acceptable
agreement, and (ii) no such Lien Waiver will be required with respect to any
particular leasehold interest in Real Estate or warehouse as to which the
Collateral located thereon or thereat has a fair market value of $250,000 or
less, provided, further, that Obligors will use all reasonable efforts to ensure
that the aggregate fair market value of all Collateral to be included in the
Borrowing Base located at any and all leasehold interests in Real Estate and/or
any and all warehouses for which no such acceptable Lien Waiver exists shall not
exceed $1,000,000 at any time.

10.1.5 Compliance with Laws and Joint Venture Agreements. Comply with (a) all
Applicable Laws, including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism
Laws, and laws regarding collection and payment of Taxes and (b) all Joint
Venture Agreements, and maintain all Governmental Approvals necessary to the
ownership of its Properties or conduct of its business, unless failure to comply
(other than failure to comply with Anti-Terrorism Laws) with such Applicable
Laws or Joint Venture Agreements or maintain such Governmental Approvals could
not reasonably be expected to have a Material Adverse Effect. Without limiting
the generality of the foregoing, if any Environmental Release occurs at or on
any Properties of any Borrower or Subsidiary which could reasonably be expected
to have a Material Adverse Effect, it shall act promptly and diligently to
investigate and report to Agent and, as required by applicable Environmental
Laws, all appropriate Governmental Authorities the extent of, and to make
appropriate remedial action to address, such Environmental Release, whether or
not directed to do so by any Governmental Authority.

10.1.6 Taxes. Pay and discharge all Taxes prior to the date on which they become
delinquent or penalties attach, unless such Taxes are being Properly Contested
or unless the nonpayment thereof could not result in the creation of any Lien
other than a Permitted Lien.

10.1.7 Insurance. In addition to the insurance required hereunder with respect
to Collateral, maintain the following insurance with financial sound and
reputable insurers with a Best Rating of at least A7, unless otherwise approved
by Agent: (a) with respect to the Properties and business of Borrowers and
Subsidiaries of such type (including product liability, workers’ compensation,
larceny, embezzlement, or other criminal misappropriation insurance), in such
amounts, and with such coverages and deductibles as are customary for companies
similarly situated; and (b) business interruption insurance in an amount not
less than $40,000,000, with deductibles reasonably satisfactory to Agent.

10.1.8 Licenses. Keep each material License affecting any Collateral (including
the manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries (excluding the Gramercy Assets) in full
force and effect; promptly notify Agent of any proposed modification to any such
License, or entry into any new material License, in each case at least 30 days
prior to its effective date (or such lesser time as agreed to by Agent); pay all
Royalties when due; and notify Agent of any default or breach asserted by any
Person to have occurred under any material License.

10.1.9 Future Subsidiaries. Promptly notify Agent upon any Person becoming a
Subsidiary and, if such Person is not a Foreign Subsidiary, cause such
Subsidiary to promptly (a) guaranty payment of all Obligations pursuant to a
Guaranty in a manner satisfactory to Agent (whether by execution of a Guaranty
or a Joinder Agreement, as Agent may require), (b) grant a perfected, first
priority Lien (subject to Permitted Liens) on all of its Property (excluding any
Excluded Assets and subject to the limitations of Section 7.7) to Agent as
security for the payment and performance of all Obligations, in each case
pursuant to such agreements, documents and instruments (which shall constitute
Security Documents) and in a manner as are reasonably satisfactory to Agent,
(c) execute and deliver a Joinder Agreement pursuant to which, among other
things, such Subsidiary becomes a party to and bound by this Agreement and makes
all of the representations, warranties, covenants and agreements of a Subsidiary
and/or an Obligor as if such Subsidiary were originally a signatory hereto, and
(d) execute and deliver other agreements, documents and instruments and to take
such other actions as Agent shall

 

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reasonably require in connection with the foregoing, including delivery of such
legal opinions, in form and substance reasonably satisfactory to Agent, as it
shall deem appropriate. In addition, subject to the limitations set forth in
Section 7.7, each applicable Obligor shall grant to Agent, pursuant to a Pledge
Agreement, a security interest in all of the issued and outstanding Equity
Interests of each new Subsidiary owned by such Obligor, and shall deliver to
Agent all certificates (if any) evidencing such Equity Interests, together with
undated stock powers or other appropriate instruments of transfer for any such
certificates executed in blank (or, if any such Equity Interests are
uncertificated, confirmation and evidence reasonably satisfactory to Agent that
its security interest in such uncertificated securities has been transferred to
and perfected by Agent in accordance with Sections 8-106 and 9-106 of the UCC).
Notwithstanding anything to the contrary contained in this Section 10.1.9 but
subject to the proviso below, no such Subsidiary referred to in the preceding
sentence shall be obligated to guaranty the Obligations or to grant, evidence or
perfect a Lien on its assets unless such Subsidiary owns assets with an
aggregate book value or fair market value in excess of $500,000 or has revenue
in any Fiscal Year in excess of $1,000,000; provided, however, that the
aggregate book value or fair market value of all assets owned by such
Subsidiaries and the aggregate revenue in any Fiscal Year of all such
Subsidiaries which have not so guaranteed the Obligations or which have not
granted, evidenced and perfected such Liens on their assets (excluding Foreign
Subsidiaries) shall not exceed $500,000 or $1,000,000 respectively, and Obligors
shall cause such Subsidiaries to so guaranty the Obligations and to so grant,
evidence and perfect such Liens on their assets to the extent necessary to
comply with this proviso.

10.1.10 [Intentionally omitted.]

10.1.11 Farm Products. Unless otherwise agreed to in writing by Agent:

(a) Each Borrower and Subsidiary shall obtain Agent’s written consent prior to
purchasing any Farm Products from a Person who produces such Farm Products in a
state with a central filing system certified by the United States Secretary of
Agriculture, and, to the extent required by applicable law or necessary to
obtain the benefits of any Applicable Law, shall register as a buyer with the
Secretary of State of such state (or the designated system operator). Each
Borrower and Subsidiary shall forward promptly to Agent a copy of such
registration as well as a copy of all relevant portions of the master list
periodically distributed by any such Secretary of State (or the designated
system operator). Each Borrower and Subsidiary shall comply with any payment of
obligations in connection with the purchase of any Farm Products imposed by a
secured party as a condition of the waiver or release of a trust or Lien
effective under any Farm Products Law, whether or not as a result of direct
notice or the filing under any applicable central filing system. Each Borrower
and Subsidiary shall also (i) promptly notify Agent, in writing, of the receipt
of any direct notice received pursuant to any Farm Products Law (including,
without limitation, any invoice which asserts rights under any Farm Products
Law) and provide Agent with a true and complete copy of the same, and (ii) not
later than the fifth (5th) day of each month, provide to Agent true and correct
copies of all state filings recorded in any such central filing system in
respect of a Person from whom an Obligor has purchased Farm Products within the
preceding 12 months.

(b) Each Borrower and Subsidiary shall at all times comply with all existing and
future Farm Products Notices during their period of effectiveness under any Farm
Products Law, including, without limitation, directions to make payments to the
Farm Products Seller by issuing payment instruments directly to the secured
party with respect to any assets of the Farm Products Seller or jointly payable
to the Farm Products Seller and any secured party with respect to the assets of
such Farm Products Seller, as specified in the Farm Products Notice, so as to
terminate or release the security interest in any Farm Products maintained by
such Farm Products Seller or any secured party with respect to the assets of
such Farm Products Seller under any Farm Products Law.

 

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(c) Each Borrower and Subsidiary shall take all other actions as may be
reasonably required, if any, to ensure that any perishable agricultural
commodity (in whatever form) or other Farm Products are purchased free and clear
of any security interest, lien or other claims in favor of any Farm Products
Seller or any secured party with respect to the assets of any Farm Products
Seller. Without limiting the generality of the foregoing, if and to the extent
that the provisions of PACA are applicable to any Farm Products purchased by it,
each Borrower and Subsidiary shall comply with PACA so that the trust created
thereby for the benefit of unpaid cash sellers of perishable agricultural
commodities shall not arise in connection with its purchase of any such
commodities or other Farm Products.

(d) Each Borrower and Subsidiary shall notify Agent in writing within two
Business Days after receipt by such Person or any other Obligor of any Farm
Products Notice or amendment to a previous Farm Products Notice, and within such
two Business Days, such Person shall provide Agent with a true, correct and
complete copy of such Farm Products Notice or amendment, as the case may be, and
including any master lists of effective financing statements delivered to such
Person or such other Obligor pursuant to any Farm Products Law.

(e) In the event any Borrower or Subsidiary receives a Farm Products Notice,
such Person shall pay the related invoice within the payment terms specified
therein and notify Agent of such receipt; provided, however, that such invoice
may remain unpaid if, and only so long as (i) appropriate legal or
administrative action has been commenced in good faith and is being diligently
pursued or defended by such Person, (ii) adequate reserves with respect to such
contest are maintained on the books of such Person, in accordance with GAAP,
(iii) Agent shall have established a reserve in an amount at least equal to the
amount claimed to be due by such vendor under the relevant invoice, (iv) such
Person shall promptly pay or discharge such contested invoice and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent
evidence reasonably acceptable to Agent of such payment, if such contest is
terminated or discontinued adversely to such Person or any of the conditions set
forth in this Section 10.1.11 are no longer met, and (v) Agent has not advised
such Person in writing that Agent reasonably believes that nonpayment thereof
could have or result in a Material Adverse Effect.

(f) Borrower Agent shall, at least 30 days prior to the time when any Borrower
purchases any Farm Products from a Farm Products Seller which are subject to
PACA or from a Farm Products Seller engaged in farming operations within the
meaning of the Food Security Act, notify Agent and each Co-Collateral Agent in
writing of such Borrower’s intention to do so and provide information, in
reasonable detail, as Agent may request in connection therewith, including,
without limitation, the purchase price payable to such Farm Products Seller.

10.1.12 Certain Post-Closing Requirements. Within 30 days after the Closing Date
(or such longer time as may be agreed to by Co-Collateral Agents), Obligors
shall (a) cause LSR to execute and deliver to Agent a Lien Waiver executed by
LSR and in form and substance reasonably satisfactory to Agent relating to the
equipment of Borrowers located in Gramercy, Louisiana, which Lien Waiver shall
include the right of Agent to have access to such equipment, and (b) cause
Georgia counsel reasonably satisfactory to Agent to execute and deliver to Agent
and Lenders a legal opinion in form and substance reasonably satisfactory to
Agent relating to the enforceability of the Mortgage covering the Primary Plant.

 

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10.2 Negative Covenants. As long as any Commitments or Obligations are
outstanding, each Obligor shall not, and shall cause each Subsidiary not to:

10.2.1 Permitted Debt. Create, incur, guarantee or suffer to exist any Debt,
except:

(a) the Obligations;

(b) Subordinated Debt;

(c) Capital Leases and Permitted Purchase Money Debt in an aggregate principal
amount not to exceed $50,000,000 at any time outstanding; provided, however,
that (i) the Liens (if any) securing such Capital Leases and Permitted Purchase
Money Debt shall attach only to the fixed assets, Foreign Inventory and other
assets (other than Eligible Accounts, Eligible Equipment, Eligible Inventory,
Eligible Real Estate and other Inventory located in the U.S.) acquired in
connection with the incurrence of such Capital Leases and Permitted Purchase
Money Debt and, in the case of any such Capital Leases or Permitted Purchase
Money Debt owed to an Affiliate of Agent or any Lender and if and to the extent
permitted by an intercreditor agreement between Agent and such Affiliate of
Agent or any Lender which has been approved by Required Lenders (which approval
shall not be unreasonably withheld, conditioned or delayed), a Lien on other
Collateral which is expressly subordinated to Liens on the Collateral securing
the Obligations;

(d) Debt existing as of the Closing Date and shown on Schedule 10.2.1 (other
than the Obligations, Subordinated Debt and Permitted Purchase Money Debt), but
only to the extent outstanding on the Closing Date and not satisfied with
proceeds of the initial Loans;

(e) Bank Product Debt;

(f) Debt that is in existence when a Person becomes a Subsidiary or that is
secured by an asset when acquired by a Borrower or Subsidiary, as long as such
Debt was not incurred in contemplation of such Person becoming a Subsidiary or
such acquisition, and does not exceed $5,000,000 in the aggregate at any time;

(g) Permitted Contingent Obligations;

(h) Refinancing Debt as long as each Refinancing Condition is satisfied;

(i) Debt owing for intercompany loans and advances; provided, however, that such
intercompany loans and advances constitute Investments permitted by
Section 10.2.5;

(j) unsecured Debt incurred in the Ordinary Course of Business to finance the
payment of insurance premiums not to exceed $10,000,000 in aggregate amount at
any time outstanding;

(k) Debt incurred in the Ordinary Course of Business that is not included in any
of the preceding clauses of this Section, is not secured by a Lien and does not
exceed $25,000,000 in aggregate amount at any time outstanding;

(l) any Capital Lease of the Company Headquarters in connection with a
sale-leaseback permitted by Section 10.2.6(m);

(m) Hedging Obligations permitted by Section 10.2.15; and

 

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(n) liabilities, whether absolute, accrued, contingent, current or deferred,
recorded in accordance with GAAP for (i) operating costs incurred in the
Ordinary Course of Business, (ii) unpaid amounts for the purchase, construction
or installation of capital improvements, (iii) compensation, including payroll
taxes and benefits, whether currently payable or accrued pursuant to a
compensation or benefit plan, (iv) customer allowances, discounts, claims or
rebates, (v) taxes and assessments from any Government Authority, (vi) fines,
assessments, obligations or damages arising from legal, environmental or
regulatory matters, (vii) deferred, prepaid or unearned revenues, and
(viii) accrued interest; in each case other than any of the foregoing items
(i) through (viii) which constitute “Debt” as such term is defined in any of
clause (b), (c), (d), (e), (f), (g) or (h) of the definition of the term “Debt”
as contained herein.

10.2.2 Permitted Liens. Create or suffer to exist any Lien upon any of its
Property, except the following (collectively, “Permitted Liens”):

(a) Liens in favor of Agent;

(b) Purchase Money Liens securing Permitted Purchase Money Debt;

(c) Liens for Taxes being Properly Contested and Liens for Taxes not more than
30 days past due;

(d) statutory Liens and Liens securing the claims or demands of materialmen,
mechanics, carrier’s, warehousemen, landlords and other similar Persons
(including Grower Liens but excluding Liens for Taxes or imposed under ERISA)
arising in the Ordinary Course of Business, but only if (i) payment of the
obligations secured thereby is not more than 30 days past due or is being
Properly Contested, (ii) such Liens do not materially impair the value or use of
the Property or materially impair operation of the business of any Borrower or
Subsidiary, and (iii) if such Liens arise from the nonpayment of any claim or
demand which is not more than 30 days past due and which is not being Properly
Contested, then the aggregate amount of all such claims and demands secured by
such Liens does not exceed $20,000,000 at any time in existence;

(e) Liens on cash or Cash Equivalents incurred or deposits made in the Ordinary
Course of Business to secure the performance of tenders, bids, leases, contracts
(except those relating to Borrowed Money), statutory obligations and other
similar obligations, or arising as a result of progress payments under
government contracts;

(f) Liens arising in the Ordinary Course of Business that are subject to Lien
Waivers;

(g) Liens in favor of any counter party to a commodity Hedging Agreement entered
into by an Obligor in the Ordinary Course of Business and not prohibited by this
Agreement, provided that such Liens (i) do not at any time encumber any property
or asset other than cash in an amount not to exceed the aggregate amount thereof
reasonably required by the counter party to secure the obligations of such
Obligor under such commodity Hedging Agreement and (ii) are not evidenced by any
UCC financing statement or similar filing;

(h) reservations, exceptions, encroachments, easements, rights-of-way,
restrictions, covenants, conditions, leases or other title exceptions and
agreements of record, and other similar charges or encumbrances on Real Estate,
that do not secure any monetary obligation and do not interfere with the
Ordinary Course of Business;

 

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(i) normal and customary rights of setoff upon deposits in favor of depository
institutions, and Liens of a collecting bank on Payment Items in the course of
collection;

(j) any interest, lien or title of a lessor or licensor under any lease or
license entered into by any Borrower or any of its Subsidiaries (and not
prohibited by this Agreement) in the Ordinary Course of Business or permitted by
Section 10.2.1(l) and covering only the property or assets so leased or
licensed;

(k) rights of lessees of property or assets owned by any Borrower or any of its
Subsidiaries, in each case as lessor, not interfering with the normal conduct of
such Borrower’s or such Subsidiary’s business, in each case relating to leases
entered into in the Ordinary Course of Business (and not prohibited by this
Agreement) and relating to only the property or assets so leased;

(l) Liens arising from judgments and attachments in connection with court
proceedings, provided that the attachment or enforcement of such Liens would not
result in an Event of Default hereunder, such Liens (and the related judgments
or attachments) are being Properly Contested, and a stay of execution pending
appeal or proceeding for review is in effect;

(m) Liens existing as of the Closing Date and shown on Schedule 10.2.2, and
Liens resulting from the refinancing of the related Debt secured by such Liens
as of the Closing Date, provided that (i) such related Debt is shown on Schedule
10.2.1, (ii) such related Debt being refinanced is Refinancing Debt and
(iii) such Refinancing Debt and Liens resulting therefrom satisfy all
Refinancing Conditions.

(n) Liens on the Gramercy Assets and any other Real Estate not required by this
Agreement to be subject to a Mortgage, provided that none of such Liens on the
Gramercy Assets shall secure any Debt for Borrowed Money of Parent or any
Subsidiary; and

(o) any negative pledge, right or restriction (including put and call
arrangements) with respect to Equity Interests in any joint venture other than
LSR pursuant to any agreement governing such joint venture (provided, however,
that, for the avoidance of doubt, the grant of a security interest in any Equity
Interests in any Joint Venture other than LSR is not permitted by this clause
(o)).

Notwithstanding anything to the contrary contained herein, in no event shall any
Obligor grant a security interest in or any Lien on any Equity Interests in any
Joint Venture or other joint venture, other than a security interest in and Lien
on the Equity Interests of LSR granted to Agent in accordance with this
Agreement.

10.2.3 [Intentionally omitted.]

10.2.4 Distributions; Upstream Payments. Declare or make any Distributions,
except (a) Upstream Payments, (b) of the Rights, (c) by Parent to redeem all
issued and outstanding Rights for an aggregate consideration not to exceed
$500,000 during the term of this Agreement, and (d) consisting of the issuance
of common or preferred stock of Parent in accordance with the Shareholders
Rights Plan (as opposed to the making or payment of any Distribution on or with
respect to such stock issued or to be issued); or create or suffer to exist any
encumbrance or restriction on the ability of a Subsidiary to make any Upstream
Payment, except for restrictions under the Loan Documents, under Applicable Law
or under Restrictive Agreements permitted by Section 10.2.14. Notwithstanding
the foregoing, Parent may

 

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declare and pay cash dividends on its Equity Interests, and may repurchase any
of its Equity Interests, if (but only if), immediately prior thereto and
immediately after giving effect thereto, (i) no Default or Event of Default
exists or would result therefrom, and (ii) Availability after giving effect
thereto would exceed $30,000,000; provided, however, Parent may declare and pay
cash dividends on its Equity Interests in an aggregate amount not to exceed
$2,000,000 during any Fiscal Year if (but only if), immediately prior thereto
and immediately after giving effect thereto, no Default or Event of Default
exists or would result therefrom. Notwithstanding the foregoing, the preceding
provisions of this Section shall not prohibit (A) the payment of any dividend by
Parent within 60 days after the date of the declaration of such dividend if, at
such date of declaration, the dividend so declared would have complied with the
requirements of this Agreement if paid on the date of declaration thereof, or
(B) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, (1) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of any Obligor held by any current
or former officer, director or employee of any Obligor pursuant to any
restricted stock agreements, restricted stock unit agreements, equity
subscription agreement, stock option agreement, shareholders’ agreement or
similar plan or agreement, or (2) the repurchase of Equity Interests deemed to
occur upon the exercise of stock options to the extent such Equity Interests
represent a portion of the exercise price of those stock options; provided that
the aggregate amount paid under the foregoing clauses (1) and (2) may not exceed
$3,000,000 during any twelve-month period.

10.2.5 Restricted Investments. Make any Restricted Investment.

10.2.6 Disposition of Assets. Make any Asset Disposition, except:

(a) a Permitted Asset Disposition;

(b) sales or other dispositions of Equipment in the Ordinary Course of Business
that are damaged, worn-out, obsolete or no longer used or useable by any Obligor
in its respective business;

(c) the sale, discount or transfer of delinquent Accounts that are not Eligible
Accounts in the Ordinary Course of Business for purposes of collection, so long
as no Default or Event of Default exists;

(d) dispositions constituting mergers and consolidations permitted by
Section 10.2.9;

(e) dispositions necessarily resulting from Investments permitted by
Section 10.2.5 or Distributions permitted by Section 10.2.4;

(f) so long as no Default or Event of Default then exists or arises as a result
thereof, the wind up, liquidation or dissolution of any Obligor, other than a
Borrower (unless such wind up, liquidation or dissolution of a Borrower has been
consented to by Agent, which consent shall not be unreasonably withheld or
delayed) or a Subsidiary, other than a Borrower (unless such wind up,
liquidation or dissolution of a Borrower has been consented to by Agent, which
consent shall not be unreasonably withheld or delayed), if (i) such wind up,
liquidation or dissolution is in the best interest of Parent and is not
disadvantageous to Agent or Lenders in any way and (ii) the assets of such
Obligor or Subsidiary are transferred to the Borrower and/or Guarantor which is
(or are) the owner(s) of such Obligor or Subsidiary;

(g) the issuance of Equity Interests by any Obligor, or any Subsidiary thereof,
to the extent not otherwise prohibited by the terms of this Agreement; provided,
however, that Agent shall, substantially concurrently with such issuance, be
granted a Lien on such Equity Interests so issued to any Obligor as security for
the Obligations;

 

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(h) a transfer of Property by an Obligor to another Obligor or from any
Subsidiary to an Obligor in the Ordinary Course of Business and which complies
with the requirements of Section 10.2.17, provided, however, that each such
transfer of Property must be made subject to the continuation of Agent’s Lien on
such Property so transferred;

(i) the sale or other disposition of any Equipment or Real Estate (including
Equipment which constitutes a part of the Primary Plant, but otherwise excluding
the Primary Plant) to the extent such asset is, within 90 days after the date of
such sale or other disposition, replaced with an asset used in the Ordinary
Course of Business having equal or greater value than the asset sold or
otherwise disposed of or the proceeds thereof are applied to Capital
Expenditures permitted hereunder;

(j) expenditures of cash and Cash Equivalents in the Ordinary Course of Business
(except to the extent that such expenditures are elsewhere restricted or
prohibited by, or are otherwise inconsistent with, this Agreement);

(k) the sale for fair consideration of assets, including Equipment (including
equipment which constitutes a part of the Primary Plant) but excluding the
Primary Plant (other than Equipment) and the Company Headquarters, for which the
aggregate fair market value of all such assets sold pursuant to this
Section 10.2.6(k) does not exceed $20,000,000 in the aggregate during any Fiscal
Year, provided that all Net Proceeds from the sale of Collateral constituting
Equipment and Real Estate pursuant to this Section 10.2.6(k) (other than an
aggregate amount not to exceed $250,000 during any Fiscal Year) are applied to
prepay the Loans if and to the extent necessary to eliminate any Overadvance
that would exist if the Borrowing Base at such time were redetermined to exclude
the Fixed Asset Formula Amount from such determination (or, stated differently,
if the Borrowing Base at such time were redetermined based upon the assumption
that the Fixed Asset Formula Amount were zero), with the balance (if any, after
giving effect to prepayment of the Loans in such amount) remitted to the
owner(s) of the assets so sold or otherwise disposed of (or, if Section 5.3.1
requires a greater amount of such Net Proceeds to be applied to prepay the
Revolver Loans, Section 5.3.1 shall control);

(l) the sale or other disposition of assets, including Equipment which
constitutes a part of the Primary Plant but otherwise excluding the Primary
Plant, for fair market value if (but only if), after giving effect thereto,
Borrowers are in pro forma compliance with the financial covenant set forth in
Section 10.3.1 (as if such financial covenant were in effect (i.e., without
regard to whether any Trigger Period is then in effect) and as if such sale or
other disposition had occurred as of the first day of the earliest Fiscal
Quarter which would then be included in the relevant consecutive Fiscal Quarter
period for purposes of determining compliance with Section 10.3.1 as of the last
day of the Fiscal Quarter then most recently ended);

(m) Parent may sell the Company Headquarters at a price which is equal to or
greater than fair market value or otherwise reasonably acceptable to Agent, and
Parent may enter into a sale and leaseback transaction otherwise prohibited by
this Agreement with respect thereto (such transactions to be excluded from the
limitations on the Net Proceeds set forth above in Section 10.2.6(k);

 

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(n) the sale of any Joint Venture interests in Wholesome Sweeteners, Inc. or LSR
for full and fair consideration;

(o) any Asset Dispositions of (i) the Gramercy Assets to LSR as required by the
Joint Venture Agreements of LSR or (ii) any other Real Estate not required by
this Agreement to be subject to a Mortgage;

(p) the creation or perfection of a Permitted Lien and the exercise by any
Person in whose favor a Permitted Lien is granted of any of its rights in
respect of such Permitted Lien;

(q) the lease or sublease of any property in the Ordinary Course of Business to
the extent not otherwise prohibited by the terms of this Agreement; and

(r) Permitted IP Dispositions;

provided, however, that (i) the sales or other dispositions referred to in
clauses (a) through (r) preceding shall not be permitted unless Agent, for the
benefit of itself and Secured Parties, has a perfected, first priority Lien
(subject only to Permitted Liens) on all proceeds (including, without
limitation, any property or asset received in exchange for or replacement of the
property or asset sold or otherwise disposed of) of such sale or other
disposition at the time of such sale or other disposition, (ii) except for
Permitted IP Dispositions, no trademarks, service marks, tradenames, or other
Intellectual Property of any material value may be sold or otherwise disposed of
without the prior written consent of Agent, and (iii) Borrowers shall at all
times retain the full and complete right to sell all of their Inventory
utilizing all trademarks, service marks, tradenames, and other Intellectual
Property which is, as of the Closing Date, utilized in connection with the sale
thereof, other than packaging Inventory on which is imprinted or otherwise
contained trademarks, service marks, or tradenames which are not owned by any
Borrower or other Obligor and on which trademarks, service marks, tradenames, or
other Intellectual Property of Borrowers and Obligors are not imprinted or
otherwise contained. Obligors shall apply all Net Proceeds of any such Asset
Disposition to the Loans to the extent required by Section 5.2 and/or
Section 5.3.

10.2.7 Loans. Make any loans or other advances of money to any Person, except
(a) advances to an officer or employee for salary, travel expenses, commissions
and similar items in the Ordinary Course of Business; (b) prepaid expenses and
extensions of trade credit made in the Ordinary Course of Business; (c) deposits
with financial institutions permitted hereunder; (d) as long as no Default or
Event of Default exists, intercompany loans permitted by Section 10.2.1(i); and
(e) to the extent permitted by virtue of clauses (b), (d) and (e)(xi) of the
definition of the term “Restricted Investment”.

10.2.8 Restrictions on Payment of Certain Debt. Make any payments (whether
voluntary or mandatory, or a prepayment, redemption, retirement, defeasance or
acquisition) with respect to any:

(a) Subordinated Debt, except regularly scheduled payments of principal,
interest and fees, but only to the extent permitted under any subordination
agreement relating to such Debt (and a Senior Officer of Borrower Agent shall
certify to Agent, not less than five Business Days prior to the date of payment,
that all conditions under such agreement have been satisfied);

(b) Borrowed Money (other than the Obligations) prior to its due date; provided,
however, any Obligor or Subsidiary may make such prepayment, redemption,
retirement, defeasance or acquisition (i) in connection with any Refinancing
Debt permitted by Section 10.2.1(h), (ii) if (A) no Default or Event of Default
exists or would

 

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result therefrom, and (B) Availability after giving effect thereto would exceed
$30,000,000; (iii) if such payment is from the Net Cash Proceeds of, or in
exchange for, any Equity Interests of Parent, (iv) as to Debt secured by a
Permitted Lien, if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Section 10.2.6, (v) as to Debt owing
for intercompany Loans and advances permitted by Section 10.2.1(i), or
(vi) constituting an involuntary prepayment that would not constitute an Event
of Default pursuant to Section 11.1(f); or

(c) any Unfunded Pension Liability prior to its due date; provided, however,
that Borrowers may pay Unfunded Pension Liabilities if (but only if),
immediately prior thereto and immediately after giving effect thereto, no
Default or Event of Default exists or would result therefrom and Availability
after giving effect thereto would exceed $30,000,000.

10.2.9 Fundamental Changes. (a) Merge, combine or consolidate with any Person,
or liquidate, wind up its affairs or dissolve itself, in each case whether in a
single transaction or in a series of related transactions, except for
(i) mergers or consolidations (A) of a Subsidiary (other than a Borrower) with a
wholly-owned Subsidiary or into a Borrower (in which such wholly-owned
Subsidiary or Borrower is the survivor), (B) of a Borrower with or into another
Borrower, and (ii) liquidations, wind ups and dissolutions permitted by
Section 10.2.6(f), or (C) of a Borrower or a Subsidiary in connection with an
acquisition of a Person (other than a Person which is then a Borrower or a
Subsidiary) permitted by clause (a) of the definition of the term “Restricted
Investment”, provided that such Borrower or Subsidiary (as applicable) which is
a party to such merger or consolidation is the survivor; or (b) except upon 60
days’ prior written notice to Agent (or such lesser number of days to which
Agent may, in its discretion, agree) and with the prior written consent of Agent
(which consent shall not be unreasonably withheld), change its tax, charter or
other organizational identification number, or change its form or state of
organization, provided, however, that, prior to or concurrently with any such
change referred to in this clause (b), Obligors shall have executed such
agreements, documents and instruments, and taken such further actions, as Agent
may reasonably request to ensure the validity and enforceability of the
Obligations and the Liens securing the same and compliance with this Agreement
and the other Loan Documents.

10.2.10 Subsidiaries. Form or acquire any Subsidiary after the Closing Date,
except in accordance with Sections 10.1.9 and 10.2.5; or permit any existing
Subsidiary to issue any additional Equity Interests except (a) director’s
qualifying shares or (b) to an Obligor.

10.2.11 Organic Documents. Amend, modify or otherwise change any of its Organic
Documents as in effect on the Closing Date if such change could adversely affect
Agent or any Lender in any way.

10.2.12 Tax Consolidation. File or consent to the filing of any consolidated
income tax return with any Person other than Borrowers and Subsidiaries.

10.2.13 Accounting Changes. Make any material change in accounting treatment or
reporting practices, except as required by GAAP and in accordance with
Section 1.2; or change its Fiscal Year.

10.2.14 Restrictive Agreements. Become a party to any Restrictive Agreement,
except a Restrictive Agreement (a) in effect on the Closing Date; (b) relating
to secured Debt permitted hereunder, as long as the restrictions apply only to
collateral for such Debt; (c) constituting customary restrictions on assignment
in leases and other contracts; (d) with respect to restrictions of the type
permitted in Section 10.2.2(o) pursuant to any agreement governing any joint
venture in which any Investment is permitted to be made in accordance with
Section 10.2.5; (e) with respect to the declaration or making of Distributions

 

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by any Obligor whose Equity Interests or assets are subject to an agreement with
respect to a transaction permitted by Section 10.2.6, to the extent provided in
such agreement (or any other agreement consented to by Agent, which consent
shall not be unreasonably withheld); (f) restrictions on cash or other deposits
imposed under agreements entered into in the Ordinary Course of Business which
require the deposit of or Liens against such cash or other deposits, which
agreements relate to transactions, and which Liens related to Liens, permitted
by this Agreement; and (g) any agreement restricting the granting of Liens on
the Gramercy Assets.

10.2.15 Hedging Agreements. Enter into any Hedging Agreement, except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.

10.2.16 Conduct of Business; Foreign Subsidiaries. Engage in any business, other
than its business as conducted on the Closing Date and any activities incidental
thereto, or permit any Foreign Subsidiary to own any material property or
assets.

10.2.17 Affiliate Transactions. Enter into or be party to any transaction with
an Affiliate, except (a) transactions solely among the Obligors in the Ordinary
Course of Business and consistent with past practices; (b) transactions with
Affiliates pursuant to agreements that were entered into prior to the Closing
Date, as shown on Schedule 10.2.17; (c) transactions with Affiliates in the
Ordinary Course of Business, upon fair and reasonable terms fully disclosed to
Agent and no less favorable to Obligors than would be obtained in a comparable
arm’s-length transaction with a non-Affiliate; and (d) the following
transactions with any other Affiliate in the Ordinary Course of Business and
consistent with past practices, in each case subject to reasonable, fair and
appropriate cost or similar allocations among entities: (i) centralized and
shared accounting and treasury services; (ii) centralized and shared credit and
risk management services; (iii) centralized and shared management services;
(iv) the purchase and sale of products; (v) centralized and shared payroll,
human resources, benefits, and other personnel services; (vi) centralized and
shared communication services; (vii) centralized and shared information
technology services; (viii) centralized and shared disaster recovery contingency
planning services; (ix) centralized and shared Intellectual Property, including
licensing thereof; (x) other transactions expressly permitted by this Agreement;
and (xi) similar transactions in the ordinary course of business consistent with
past practices.

10.2.18 Plans. Become party to any Multiemployer Plan or Foreign Plan, other
than any in existence on the Closing Date.

10.2.19 Amendments to Subordinated Debt. Amend, supplement or otherwise modify
any document, instrument or agreement relating to any Subordinated Debt, if such
modification (a) increases the principal balance of such Debt, or increases any
required payment of principal or interest; (b) accelerates the date on which any
installment of principal or any interest is due, or adds any additional
redemption, put or prepayment provisions; (c) shortens the final maturity date
or otherwise accelerates amortization; (d) increases the interest rate;
(e) increases or adds any fees or charges; (f) modifies any covenant in a manner
or adds any representation, covenant or default that is more onerous or
restrictive in any material respect for any Borrower or Subsidiary, or that is
otherwise materially adverse to any Borrower, any Subsidiary or Lenders; or
(g) results in the Obligations not constituting senior Debt under the documents,
instruments or agreements governing such Subordinated Debt, or otherwise not
being fully benefited by the subordination provisions thereof.

10.3 Financial Covenant. As long as any Commitments or Obligations are
outstanding, Borrowers shall:

10.3.1 Minimum EBITDA. Maintain, as of the last day of each Fiscal Quarter
ending during any Trigger Period, EBITDA at least equal to $20,000,000 for each
period of four Fiscal Quarters ending during any Trigger Period.

 

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SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

11.1 Events of Default. Each of the following shall be an “Event of Default”
hereunder, if the same shall occur for any reason whatsoever, whether voluntary
or involuntary, by operation of law or otherwise:

(a) (i) Any failure by Borrowers to pay the principal (or the equivalent thereof
with respect to any Bank Product Debt) of any of the Loans or any other
Obligations (other than Bank Product Debt if and to the extent, if any, that the
agreement(s) governing such Bank Product Debt expressly provide for a grace
period with respect to the failure to pay such principal or the equivalent
thereof) when due (whether at stated maturity, on demand, upon acceleration or
otherwise) in accordance with the terms of this Agreement, (ii) any failure by
Borrowers to pay any accrued interest or premium (or the equivalent thereof with
respect to any Bank Product Debt) on the Loans or any other Obligations (other
than Bank Product Debt if and to the extent, if any, that the agreement(s)
governing such Bank Product Debt expressly provide for a grace period with
respect to the failure to pay such interest or premium or the equivalent
thereof) within one (1) Business Day after such amount becomes due (whether at
stated maturity, on demand, upon acceleration or otherwise) in accordance with
the terms of this Agreement, or (iii) any failure by Borrowers to pay any fee or
other amount (other than the amounts referred to in clause (i) or
(ii) preceding) or Obligation owing under this Agreement within two Business
Days after such fee or other amount becomes due in accordance with the terms of
this Agreement, in each case whether upon demand or otherwise; or, in the case
of any Bank Product Debt with respect to which the agreement(s) governing such
Bank Product Debt expressly provide for a grace period with respect to any
failure to pay referred to in this clause (a) above, any failure by Borrower to
pay any such principal (or the equivalent thereof) or accrued interest or
premium (or the equivalent thereof) after the expiration of any grace period
applicable thereto in such applicable agreement(s);

(b) Any representation, warranty or other written statement of an Obligor made
in connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect when given;

(c) An Obligor breaches or fails to perform any covenant contained in
Section 7.2, 7.3, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.11, 10.1.2,
10.2 or 10.3;

(d) An Obligor breaches or fails to perform any other covenant contained in any
Loan Documents, and such breach or failure is not cured within 30 days after a
Senior Officer of such Obligor has knowledge thereof or receives notice thereof
from Agent, whichever is sooner;

(e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Agent; or any Loan Document ceases to be in full force or effect for any
reason (other than a waiver or release by Agent and Lenders and other than UCC
financing statements (if any) the effectiveness of which have lapsed as a result
of Agent’s failure to file proper continuation statements as required by the
UCC);

(f) Any breach or default of an Obligor occurs under any Hedging Agreement, or
any document, instrument or agreement to which it is a party or by which it or
any of its Properties is bound, relating to any Debt for Borrowed Money (other
than

 

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the Obligations) in excess of $5,000,000, if the maturity of or any payment with
respect to such Debt may be accelerated or demanded due to such breach (it being
understood that the payment of any Permitted Contingent Obligation shall not be
an Event of Default under this subsection (f));

(g) Any judgment or order for the payment of money is entered against an Obligor
in an amount that exceeds, individually or cumulatively with all unsatisfied
judgments or orders against all Obligors, $5,000,000 (net of any insurance
coverage therefor acknowledged in writing by the insurer) and the same shall
remain unsatisfied, unvacated, and unstayed pending appeal for a period of 30
days after the entry thereof;

(h) A loss, theft, damage or destruction occurs with respect to any Collateral
if the amount not covered by insurance exceeds $5,000,000;

(i) An Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business or
there is a cessation of any material part of an Obligor’s business for a
material period of time, in each case if not covered by business interruption
insurance; or an Obligor is not Solvent;

(j) An Insolvency Proceeding is commenced by an Obligor; an Obligor makes an
offer of settlement, extension or composition to its unsecured creditors
generally; a trustee is appointed to take possession of any substantial Property
of or to operate any of the business of an Obligor; or an Insolvency Proceeding
is commenced against an Obligor and the Obligor consents to institution of the
proceeding, the petition commencing the proceeding is not timely contested by
the Obligor, the petition is not dismissed within 60 days after filing, or an
order for relief is entered in the proceeding;

(k) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan
that has resulted or could reasonably be expected to result in liability of an
Obligor to a Pension Plan, Multiemployer Plan or PBGC in an aggregate amount
which could reasonably be expected to have a Material Adverse Effect or that
constitutes grounds for appointment of a trustee for or termination by the PBGC
of any Pension Plan or Multiemployer Plan; an Obligor or ERISA Affiliate fails
to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan if such failure to pay could reasonably be
expected to have a Material Adverse Effect; or any event similar to the
foregoing occurs or exists with respect to a Foreign Plan;

(l) An Obligor or any of its Senior Officers is criminally indicted or convicted
for (i) a felony committed in the conduct of the Obligor’s business, or
(ii) violating any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act), that, in each case (A) could reasonably be expected to have a
Material Adverse Effect and (B) is not dismissed within 120 days; or

(m) A Change of Control occurs; or any event occurs or condition exists that has
a Material Adverse Effect.

11.2 Remedies upon Default. If an Event of Default described in Section 11.1(j)
occurs with respect to any Obligor, then, to the extent permitted by Applicable
Law, all Obligations (other than Secured Bank Product Obligations) shall become
automatically due and payable and all Commitments shall terminate, without any
action by Agent or notice of any kind. In addition, or if any other Event of
Default exists, Agent may in its discretion (and shall upon written direction of
Required Lenders) do any one or more of the following from time to time:

(a) declare any Obligations (other than Secured Bank Product Obligations)
immediately due and payable, whereupon they shall be due and payable without
diligence, presentment, demand, protest or notice of any kind, all of which are
hereby waived by Obligors to the fullest extent permitted by law;

 

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(b) terminate, reduce or condition any Commitment, or make any adjustment to the
Borrowing Base;

(c) require Obligors to Cash Collateralize LC Obligations, Secured Bank Product
Obligations and other Obligations that are contingent or not yet due and
payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent
may (and shall upon the direction of Required Lenders) advance the required Cash
Collateral as Revolver Loans (whether or not an Overadvance exists or is created
thereby, or the conditions in Section 6 are satisfied); and

(d) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) require Obligors to assemble Collateral, at
Borrowers’ expense, and make it available to Agent at a place designated by
Agent; (iii) enter any premises where Collateral is located and store Collateral
on such premises until sold (and if the premises are owned or leased by an
Obligor, Obligors agree not to charge for such storage); and (iv) sell or
otherwise dispose of any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale, with such notice
as may be required by Applicable Law, in lots or in bulk, at such locations, all
as Agent, in its discretion, deems advisable. Each Obligor agrees that 10 days
notice of any proposed sale or other disposition of Collateral by Agent shall be
reasonable. Agent shall have the right to conduct such sales on any Obligor’s
premises, without charge, and such sales may be adjourned from time to time in
accordance with Applicable Law. Agent shall have the right to sell, lease or
otherwise dispose of any Collateral for cash, credit or any combination thereof,
and Agent may purchase any Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of the purchase price, may credit bid and
set off the amount of such price against the Obligations.

11.3 License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of royalty or other
compensation to any Person) any or all Intellectual Property of Obligors,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral, which license or other right shall not be exercised by Agent
except during the continuance of any Default or Event of Default or if and to
the extent determined by Agent in good faith necessary or appropriate to prevent
the occurrence of, or to mitigate the effects of, a (or an anticipated) Material
Adverse Effect. Each Obligor’s rights and interests under Intellectual Property
shall inure to Agent’s benefit during the period during which Agent is permitted
to exercise such license or other right.

11.4 Setoff. At any time during an Event of Default, Agent, Issuing Bank,
Lenders, and any of their Affiliates are authorized, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
Agent, Issuing Bank, such

 

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Lender or such Affiliate to or for the credit or the account of an Obligor
against any Obligations, irrespective of whether or not Agent, Issuing Bank,
such Lender or such Affiliate shall have made any demand under this Agreement or
any other Loan Document and although such Obligations may be contingent or
unmatured or are owed to a branch or office of Agent, Issuing Bank, such Lender
or such Affiliate different from the branch or office holding such deposit or
obligated on such indebtedness. The rights of Agent, Issuing Bank, each Lender
and each such Affiliate under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Person may have.

11.5 Remedies Cumulative; No Waiver.

11.5.1 Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Obligors under the Loan Documents are cumulative and
not in derogation of each other. The rights and remedies of Agent and Lenders
are cumulative, may be exercised at any time and from time to time, concurrently
or in any order, and are not exclusive of any other rights or remedies available
by agreement, by law, at equity or otherwise. All such rights and remedies shall
continue in full force and effect until Full Payment of all Obligations.

11.5.2 Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by
Obligors with any terms of the Loan Documents, or to exercise any rights or
remedies with respect to Collateral or otherwise; (b) the making of any Loan or
issuance of any Letter of Credit during a Default, Event of Default or other
failure to satisfy any conditions precedent; or (c) acceptance by Agent or any
Lender of any payment or performance by an Obligor under any Loan Documents in a
manner other than that specified therein. It is expressly acknowledged by
Obligors that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.

SECTION 12. AGENT

12.1 Appointment, Authority and Duties of Agent.

12.1.1 Appointment and Authority. Each Secured Party appoints and designates
Bank of America as Agent under all Loan Documents. Agent may, and each Secured
Party authorizes Agent to, enter into all Loan Documents to which Agent is
intended to be a party and accept all Security Documents, for the benefit of
Secured Parties. Each Secured Party agrees that any action taken by Agent or
Required Lenders in accordance with the provisions of the Loan Documents, and
the exercise by Agent or Required Lenders of any rights or remedies set forth
therein, together with all other powers reasonably incidental thereto, shall be
authorized by and binding upon all Secured Parties. Without limiting the
generality of the foregoing, Agent shall have the sole and exclusive authority
to (a) act as the disbursing and collecting agent for Lenders with respect to
all payments and collections arising in connection with the Loan Documents;
(b) execute and deliver as Agent each Loan Document, including any intercreditor
or subordination agreement, and accept delivery of each Loan Document from any
Obligor or other Person; (c) act as collateral agent for Secured Parties for
purposes of perfecting and administering Liens under the Loan Documents, and for
all other purposes stated therein; (d) manage, supervise or otherwise deal with
Collateral; and (e) take any Enforcement Action or otherwise exercise any rights
or remedies with respect to any Collateral under the Loan Documents, Applicable
Law or otherwise. The duties of Agent shall be ministerial and administrative in
nature, and Agent shall not have a fiduciary relationship with any Secured
Party, Participant or other Person, by reason of any Loan Document or any
transaction relating thereto. Agent alone shall be authorized to determine
whether any Accounts, Inventory, Equipment or Real Estate constitute Eligible
Accounts, Eligible Inventory, Eligible Equipment or Eligible Real Estate,
respectively, whether to impose or release any reserve, or whether any
conditions to funding or to issuance of a Letter of Credit have been satisfied,
which determinations and judgments, if exercised in good faith, shall exonerate
Agent from liability to any Lender or other Person for any error in judgment.

 

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12.1.2 Duties. Agent shall not have any duties except those expressly set forth
in the Loan Documents. The conferral upon Agent of any right shall not imply a
duty to exercise such right, unless instructed to do so by Lenders in accordance
with this Agreement.

12.1.3 Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

12.1.4 Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joinder
of any other party, unless required by Applicable Law. Agent may request
instructions from Required Lenders or other Secured Parties with respect to any
act (including the failure to act) in connection with any Loan Documents, and
may seek assurances to its satisfaction from Secured Parties of their
indemnification obligations against all Claims that could be incurred by Agent
in connection with any act. Agent shall be entitled to refrain from any act
until it has received such instructions or assurances, and Agent shall not incur
liability to any Person by reason of so refraining. Instructions of Required
Lenders shall be binding upon all Secured Parties, and no Secured Party shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting in accordance with the instructions of Required Lenders.
Notwithstanding the foregoing, instructions by and consent of specific parties
shall be required to the extent provided in Section 14.1.1. In no event shall
Agent be required to take any action that, in its opinion, is contrary to
Applicable Law or any Loan Documents or could subject any Agent Indemnitee to
personal liability.

12.2 Agreements Regarding Collateral and Field Examination Reports.

12.2.1 Lien Releases; Care of Collateral. Secured Parties authorize Agent to
release any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations; (b) that is the subject of an Asset Disposition which Borrower
Agent certifies in writing to Agent is a Permitted Asset Disposition or a Lien
which Borrower certifies is a Permitted Lien entitled to priority over Agent’s
Liens (and Agent may rely conclusively on any such certificate without further
inquiry); (c) that does not have an aggregate fair market value, as estimated or
otherwise determined by Agent in good faith, in excess of $200,000; or (d) with
the written consent of all Lenders. Secured Parties authorize Agent to
subordinate its Liens to any Purchase Money Lien permitted hereunder. Agent
shall have no obligation to assure that any Collateral exists or is owned by an
Obligor, or is cared for, protected or insured, nor to assure that Agent’s Liens
have been properly created, perfected or enforced, or are entitled to any
particular priority, nor to exercise any duty of care with respect to any
Collateral.

12.2.2 Possession of Collateral. Agent and Secured Parties appoint each Lender
as agent (for the benefit of Secured Parties) for the purpose of perfecting
Liens in any Collateral held or controlled by such Lender, to the extent such
Liens are perfected by possession or control. If any Lender obtains possession
or control of any Collateral, it shall notify Agent thereof and, promptly upon
Agent’s request, deliver such Collateral to Agent or otherwise deal with it in
accordance with Agent’s instructions.

12.2.3 Reports. Agent shall promptly forward to each Lender, when complete,
copies of any field audit, examination or appraisal report prepared by or for
Agent with respect to any Obligor or Collateral (“Report”). Each Lender agrees
(a) that neither Bank of America, Agent nor any Co-Collateral Agent makes any
representation or warranty as to the accuracy or completeness of any Report, and
shall not be liable for any information contained in or omitted from any Report;
(b) that the Reports are not intended to be comprehensive audits or
examinations, and that Agent, each Co-Collateral Agent or any other Person
performing any audit or examination will inspect only specific information
regarding Obligations or the Collateral and will rely significantly upon
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representations of Obligors’ officers and employees; and (c) to keep all Reports
confidential and strictly for such Lender’s internal use, and not to distribute
any Report (or the contents thereof) to any Person (except to such Lender’s
Participants, attorneys and accountants) or use any Report in any manner other
than administration of the Loans and other Obligations. Each Lender shall
indemnify and hold harmless Agent, each Co-Collateral Agent and any other Person
preparing a Report from any action such Lender may take as a result of or any
conclusion it may draw from any Report, as well as from any Claims arising as a
direct or indirect result of Agent furnishing a Report to such Lender.

12.3 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals. Agent shall
have a reasonable and practicable amount of time to act upon any instruction,
notice or other communication under any Loan Document, and shall not be liable
for any delay in acting.

12.4 Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from a Borrower or Required
Lenders specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Secured
Party (other than Agent) agrees that, except as otherwise provided in any Loan
Documents or with the written consent of Agent and Required Lenders, it will not
take any Enforcement Action, accelerate Obligations (other than Secured Bank
Product Obligations), or exercise any right that it might otherwise have under
Applicable Law to credit bid at foreclosure sales, UCC sales or other similar
dispositions of Collateral or to assert any rights relating to any Collateral.

12.5 Ratable Sharing. If any Lender shall obtain any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its share of such
Obligation, determined on a Pro Rata basis or in accordance with Section 5.6.1,
as applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and
the other Lenders such participations in the affected Obligation as are
necessary to cause the purchasing Lender to share the excess payment or
reduction on a Pro Rata basis or in accordance with Section 5.6.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against any Dominion Account without the prior consent of Agent.

12.6 Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT
INDEMNITEES AND ISSUING BANK INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY
OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR
ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY CLAIM AGAINST AN AGENT
INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR AGENT (IN THE CAPACITY
OF AGENT). In no event shall any Lender have any obligation hereunder to
indemnify or hold harmless any Agent Indemnitee or Issuing Bank Indemnitee with
respect to a Claim that is determined in a final, non-appealable judgment by a
court of competent jurisdiction to result from the gross negligence or willful
misconduct of such Indemnitee. In Agent’s discretion, it may reserve for any
Claims made against an Agent Indemnitee or Issuing Bank Indemnitee, and may
satisfy any judgment, order or settlement relating thereto, from proceeds of
Collateral prior to making any distribution of Collateral proceeds to Secured
Parties. If Agent is sued by any receiver, bankruptcy trustee,
debtor-in-possession or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Lender to the extent of its Pro Rata share.

 

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12.7 Limitation on Responsibilities of Agent. Agent shall not be liable to any
Secured Party for any action taken or omitted to be taken under the Loan
Documents, except for losses directly and solely caused by Agent’s gross
negligence or willful misconduct. Agent does not assume any responsibility for
any failure or delay in performance or any breach by any Obligor, Lender or
other Secured Party of any obligations under the Loan Documents. Agent does not
make any express or implied representation, warranty or guarantee to Secured
Parties with respect to any Obligations, Collateral, Loan Documents or Obligor.
No Agent Indemnitee shall be responsible to Secured Parties for any recitals,
statements, information, representations or warranties contained in any Loan
Documents; the execution, validity, genuineness, effectiveness or enforceability
of any Loan Documents; the genuineness, enforceability, collectibility, value,
sufficiency, location or existence of any Collateral, or the validity, extent,
perfection or priority of any Lien therein; the validity, enforceability or
collectibility of any Obligations; or the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Obligor or Account Debtor. No Agent Indemnitee shall have any obligation to
any Secured Party to ascertain or inquire into the existence of any Default or
Event of Default, the observance by any Obligor of any terms of the Loan
Documents, or the satisfaction of any conditions precedent contained in any Loan
Documents.

12.8 Successor Agent and Co-Agents.

12.8.1 Resignation; Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, Agent may resign at any time by giving
at least 30 days written notice thereof to Lenders and Borrowers. Upon receipt
of such notice, Required Lenders shall have the right to appoint a successor
Agent which shall be (a) a Lender or an Affiliate of a Lender; or (b) a
commercial bank that is organized under the laws of the United States or any
state or district thereof, has a combined capital surplus of at least
$200,000,000 and (provided no Default or Event of Default exists) is reasonably
acceptable to Borrowers. If no successor agent is appointed prior to the
effective date of the resignation of Agent, then Agent may appoint a successor
agent from among Lenders or, if no Lender accepts such role, Agent may appoint
Required Lenders as successor Agent. Upon acceptance by a successor Agent of an
appointment to serve as Agent hereunder, or upon appointment of Required Lenders
as successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the powers and duties of the retiring Agent without further act,
and the retiring Agent shall be discharged from its duties and obligations
hereunder but shall continue to have the benefits of the indemnification set
forth in Sections 12.6 and 14.2. Notwithstanding any Agent’ss resignation, the
provisions of this Section 12 shall continue in effect for its benefit with
respect to any actions taken or omitted to be taken by it while Agent. Any
successor to Bank of America by merger or acquisition of stock or this loan
shall continue to be Agent hereunder without further act on the part of the
parties hereto, unless such successor resigns as provided above.

12.8.2 Separate Collateral Agent. It is the intent of the parties that there
shall be no violation of any Applicable Law denying or restricting the right of
financial institutions to transact business in any jurisdiction. If Agent
believes that it may be limited in the exercise of any rights or remedies under
the Loan Documents due to any Applicable Law, Agent may appoint an additional
Person who is not so limited, as a separate collateral agent or co-collateral
agent. If Agent so appoints a collateral agent or co-collateral agent, each
right and remedy intended to be available to Agent under the Loan Documents
shall also be vested in such separate agent. Secured Parties shall execute and
deliver such documents as Agent deems appropriate to vest any rights or remedies
in such agent. If any collateral agent or co-collateral agent shall die or
dissolve, become incapable of acting, resign or be removed, then all the rights
and remedies of such agent, to the extent permitted by Applicable Law, shall
vest in and be exercised by Agent until appointment of a new agent.

 

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12.8.3 Resignation of Co-Collateral Agents. Any Co-Collateral Agent may resign
as such at any time by giving at least two Business Days prior written notice of
such resignation to Agent.

12.9 Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and
based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Secured Party has made such inquiries as it feels necessary
concerning the Loan Documents, Collateral and Obligors. Each Secured Party
acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Secured Party will, independently and without reliance upon
any other Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Secured Party with any
notices, reports or certificates furnished to Agent by any Obligor or any credit
or other information concerning the affairs, financial condition, business or
Properties of any Obligor (or any of its Affiliates) which may come into
possession of Agent or its Affiliates.

12.10 Remittance of Payments and Collections.

12.10.1 Remittances Generally. All payments by any Lender to Agent shall be made
by the time and on the day set forth in this Agreement, in immediately available
funds. If no time for payment is specified or if payment is due on demand by
Agent and request for payment is made by Agent by 11:00 a.m. on a Business Day,
payment shall be made by Lender not later than 2:00 p.m. on such day, and if
request is made after 11:00 a.m., then payment shall be made by 11:00 a.m. on
the next Business Day. Payment by Agent to any Secured Party shall be made by
wire transfer, in the type of funds received by Agent. Any such payment shall be
subject to Agent’s right of offset for any amounts due from such payee under the
Loan Documents.

12.10.2 Failure to Pay. If any Secured Party fails to pay any amount when due by
it to Agent pursuant to the terms hereof, such amount shall bear interest from
the due date until paid at the rate determined by Agent as customary in the
banking industry for interbank compensation. In no event shall Borrowers be
entitled to receive credit for any interest paid by a Secured Party to Agent,
nor shall any Defaulting Lender be entitled to interest on any amounts held by
Agent pursuant to Section 4.2.

12.10.3 Recovery of Payments. If Agent pays any amount to a Secured Party in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
each Secured Party that received it. If Agent determines at any time that an
amount received under any Loan Document must be returned to an Obligor or paid
to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, each Lender shall pay to Agent, on demand, such Lender’s Pro
Rata share of the amounts required to be returned.

12.11 Agent in its Individual Capacity. As a Lender, Bank of America shall have
the same rights and remedies under the other Loan Documents as any other Lender,
and the terms “Lenders,” “Required Lenders” or any similar term shall include
Bank of America in its capacity as a Lender. Bank of America and its Affiliates
may accept deposits from, lend money to, provide Bank Products to, act as
financial or other advisor to, and generally engage in any kind of business
with, Obligors and their Affiliates, as if Bank of America were not Agent
hereunder, without any duty to account therefor to

 

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Lenders. In their individual capacities, Bank of America and its Affiliates may
receive information regarding Obligors, their Affiliates and their Account
Debtors (including information subject to confidentiality obligations), and each
Secured Party agrees that Bank of America and its Affiliates shall be under no
obligation to provide such information to any Secured Party, if acquired in such
individual capacity.

12.12 Agent Titles. Each Lender, other than Bank of America, that is designated
(on the cover page of this Agreement or otherwise) by Bank of America as an
“Agent”, “Arranger” or “Manager” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with any other Lender. Each of Bank of America, in addition to being Agent
hereunder, and General Electric Capital Corporation is hereby designated as a
Co-Collateral Agent for purposes of this Agreement. Notwithstanding such
designation as a Co-Collateral Agent, it is acknowledged and agreed by the
parties hereto that all Liens granted and Guaranties provided pursuant to or as
part of the Loan Documents are and shall continue to be granted in favor of
Agent for the benefit of Secured Parties and, accordingly (but subject to the
last sentence of this Section 12.13), that Agent shall have the exclusive right
to enforce all rights and remedies under the Loan Documents in accordance with
the terms of such Loan Documents. For avoidance of doubt (but subject to the
proviso below), neither Bank of America nor General Electric Capital Corporation
in its capacity as a Co-Collateral Agent shall have any right, power,
responsibility or duty under any Loan Documents or shall have any fiduciary
relationship with any other Person as a result of or in connection with its
being named as such; provided, however, that the parties hereto acknowledge and
agree that General Electric Capital Corporation, in its capacity as a
Co-Collateral Agent, shall have the rights granted to it in such capacity
pursuant to and as specified in the Co-Collateral Agency Agreement.

12.13 Bank Product Providers. Each Secured Bank Product Provider, by delivery of
a notice to Agent of a Bank Product, agrees to be bound by Section 5.6 and this
Section 12. Each Secured Bank Product Provider shall indemnify and hold harmless
Agent Indemnitees, to the extent not reimbursed by Obligors, against all Claims
that may be incurred by or asserted against any Agent Indemnitee in connection
with such provider’s Secured Bank Product Obligations.

12.14 No Third Party Beneficiaries. This Section 12 is an agreement solely among
Secured Parties and Agent, and shall survive Full Payment of the Obligations.
This Section 12 does not confer any rights or benefits upon Obligors or any
other Person. As between Obligors and Agent, any action that Agent may take
under any Loan Documents or with respect to any Obligations shall be
conclusively presumed to have been authorized and directed by Secured Parties.

SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS

13.1 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Obligors, Agent, Lenders, Secured Parties, and their respective
successors and assigns, except that (a) no Obligor shall have the right to
assign its rights or delegate its obligations under any Loan Documents; and
(b) any assignment by a Lender must be made in compliance with Section 13.3.
Agent may treat the Person which made any Loan as the owner thereof for all
purposes until such Person makes an assignment in accordance with Section 13.3.
Any authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.

13.2 Participations.

13.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course of
its business and in accordance with Applicable Law, at any time sell to a
financial institution (“Participant”) a participating interest in the rights and
obligations of such Lender under any Loan Documents. Despite any sale by a
Lender of participating interests to a Participant, such Lender’ss obligations
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Documents shall remain unchanged, such Lender shall remain solely responsible to
the other parties hereto for performance of such obligations, such Lender shall
remain the holder of its Loans and Commitments for all purposes, all amounts
payable by Borrowers shall be determined as if such Lender had not sold such
participating interests, and Borrowers and Agent shall continue to deal solely
and directly with such Lender in connection with the Loan Documents. Each Lender
shall be solely responsible for notifying its Participants of any matters under
the Loan Documents, and Agent and the other Lenders shall not have any
obligation or liability to any such Participant. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.9 unless Borrowers agree otherwise in writing.

13.2.2 Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Commitment in which such Participant has an interest, postpones
the Commitment Termination Date or any date fixed for any regularly scheduled
payment of principal, interest or fees on such Loan or Commitment, or releases
any Borrower, Guarantor or substantial portion of the Collateral.

13.2.3 Benefit of Set-Off. Obligors agree that each Participant shall have a
right of set-off in respect of its participating interest to the same extent as
if such interest were owing directly to a Lender, and each Lender shall also
retain the right of set-off with respect to any participating interests sold by
it. By exercising any right of set-off, a Participant agrees to share with
Lenders all amounts received through its set-off, in accordance with
Section 12.5 as if such Participant were a Lender.

13.3 Assignments.

13.3.1 Permitted Assignments. A Lender may assign to an Eligible Assignee any of
its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $10,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$5,000,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the
Commitments retained by the transferor Lender is at least $10,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to (i) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Loans; provided, however, that any payment by Borrowers to the assigning Lender
in respect of any Obligations assigned as described in this sentence shall
satisfy Borrowers’ obligations hereunder to the extent of such payment, and no
such assignment shall release the assigning Lender from its obligations
hereunder.

13.3.2 Effect; Effective Date. Upon delivery to Agent of an assignment notice in
the form of Exhibit C and a processing fee of $3,500 (unless otherwise agreed by
Agent in its discretion), the assignment shall become effective as specified in
the notice, if it complies with this Section 13.3. From such effective date, the
Eligible Assignee shall for all purposes be a Lender under the Loan Documents,
and shall have all rights and obligations of a Lender thereunder. Upon
consummation of an assignment, the transferor Lender, Agent and Borrowers shall
make appropriate arrangements for issuance of replacement and/or new Notes, as
applicable. The transferee Lender shall comply with Section 5.10 and deliver,
upon request, an administrative questionnaire satisfactory to Agent.

13.3.3 Certain Assignees. No assignment or participation may be made to a
Borrower, Affiliate of a Borrower, Defaulting Lender or natural person. In
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Defaulting Lender, such assignment shall be effective only upon payment by the
Eligible Assignee or Defaulting Lender to Agent of an aggregate amount
sufficient, upon distribution (through direct payment, purchases of
participations or other compensating actions as Agent deems appropriate), (a) to
satisfy all funding and payment liabilities then owing by the Defaulting Lender
hereunder, and (b) to acquire its Pro Rata share of all Loans and LC
Obligations. If an assignment by a Defaulting Lender shall become effective
under Applicable Law for any reason without compliance with the foregoing
sentence, then the assignee shall be deemed a Defaulting Lender for all purposes
until such compliance occurs.

13.4 Replacement of Certain Lenders. If a Lender (a) fails to give its consent
to any amendment, waiver or action for which consent of all Lenders was required
and Required Lenders consented, or (b) is a Defaulting Lender, then, in addition
to any other rights and remedies that any Person may have, Agent or Borrower
Agent may, by notice to such Lender within 120 days after such event, require
such Lender to assign all of its rights and obligations under the Loan Documents
to Eligible Assignee(s), pursuant to appropriate Assignment and Acceptance(s),
within 20 days after the notice. Agent is irrevocably appointed as
attorney-in-fact to execute any such Assignment and Acceptance if the Lender
fails to execute it. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the Loan
Documents, including all principal, interest, fees and other amounts through the
date of assignment (but excluding any prepayment charge).

SECTION 14. MISCELLANEOUS

14.1 Consents, Amendments and Waivers.

14.1.1 Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Agent (with the
consent of Required Lenders) and each Obligor party to such Loan Document;
provided, however, that

(a) without the prior written consent of Agent, no modification shall be
effective with respect to any provision in a Loan Document that relates to any
rights, duties or discretion of Agent;

(b) without the prior written consent of Issuing Bank, no modification shall be
effective with respect to any LC Obligations, Section 2.3 or any other provision
in a Loan Document that relates to any rights, duties or discretion of Issuing
Bank;

(c) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall be effective that would (i) increase
the Commitment of such Lender; (ii) reduce the amount of, or waive or delay
payment of, any principal, interest or fees payable to such Lender (except as
provided in Section 4.2); (iii) extend the Revolver Termination Date applicable
to such Lender’s Obligations; or (iv) amend this clause (c);

(d) without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall be effective that would (i) alter Section 5.6,
7.1 (except to add Collateral) or 14.1.1; (ii) amend the definition of Borrowing
Base (or any defined term used in such definition), Pro Rata or Required
Lenders; (iii) increase any advance rate; (iv) release Collateral with a book
value greater than $5,000,000 during any calendar year, except as currently
contemplated by the Loan Documents; or (v) release any Obligor from liability
for any Obligations, if such Obligor is Solvent at the time of the release;

 

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(e) without the prior written consent of a Secured Bank Product Provider, no
modification shall be effective that affects its relative payment priority under
Section 5.6; and

(f) without the prior written consent of such Co-Collateral Agent, no
modification of the Co-Collateral Agency Agreement or any other provision of
this Agreement, in each case that relates to any rights, duties or discretion of
any Co-Collateral Agent, shall be effective.

14.1.2 Limitations. The agreement of Obligors shall not be necessary to the
effectiveness of any modification of a Loan Document that deals solely with the
rights and duties of Lenders, Agent and/or Issuing Bank as among themselves.
Only the consent of the parties to the Fee Letter or any agreement relating to a
Bank Product shall be required for any modification of such agreement, and any
non-Lender that is party to a Bank Product agreement shall have no right to
participate in any manner in modification of any other Loan Document. Any waiver
or consent granted by Agent or Lenders hereunder shall be effective only if in
writing and only for the matter specified.

14.1.3 Payment for Consents. No Obligor will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee
or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

14.1.4 Release of Collateral and Guarantors.

(a) Upon Full Payment of the Obligations or the consummation of a Permitted
Asset Disposition, the applicable item of Collateral (i.e., in the case of a
Permitted Asset Disposition, the asset subject thereto) shall be automatically
and unconditionally released from the security interest granted under the Loan
Documents and Agent will, at Borrowers’ expense, promptly execute and deliver to
the applicable Obligor all such documents as such Obligor may reasonably request
to evidence such release.

(b) A Guarantor shall be automatically and unconditionally released and
discharged from all of its obligations under this Agreement and the Loan
Documents if (i) (A) all of its Equity Interests are sold or transferred other
than to a Borrower or any of its Subsidiaries or Affiliates, in each case in a
transaction in compliance with this Agreement or (B) such Guarantor merges with
or into, or consolidates with, another Person, other than an Obligor or an
Affiliate of Parent, in accordance with a transaction permitted by
Section 10.2.6, (ii) no Default or Event of Default exists or would result from
such sale or transfer, and (iii) all conditions and other requirements with
respect to such sale or transfer have been complied with. Agent will, at
Borrowers’ expense, promptly execute and deliver to Obligors such documents as
Obligors may reasonably request to evidence such release.

14.2 Indemnity.

(a) EACH OBLIGOR SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY
CLAIMS (AS DEFINED HEREIN) THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE, INCLUDING CLAIMS (AS DEFINED HEREIN) ASSERTED BY ANY OBLIGOR OR
OTHER PERSON OR ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall
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indemnify or hold harmless an Indemnitee with respect to a Claim that is
determined in a final, non-appealable judgment by a court of competent
jurisdiction to result from the gross negligence or willful misconduct of such
Indemnitee.

(b) EACH OBLIGOR SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS THE INDEMNITEES FROM
AND AGAINST ANY AND ALL LOSSES, DAMAGES, ASSESSMENTS, FINES, JUDGMENTS, COSTS
AND EXPENSES (EXCLUSIVE OF ANY DIMINUTION OF VALUE OF THE REAL ESTATE
COLLATERAL) OR LIABILITIES DIRECTLY OR INDIRECTLY, AT ANY TIME, ARISING OUT OF,
RELATED TO OR CAUSED BY THE ACTUAL OR ALLEGED USE, GENERATION, MANUFACTURE,
PRODUCTION, HANDLING, REFINEMENT, TRANSPORTATION, OFF-SITE SHIPMENT, STORAGE,
ENVIRONMENTAL RELEASE, THREATENED ENVIRONMENTAL RELEASE, DISCHARGE, DISPOSAL, OR
PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY OBLIGOR OR ITS OPERATIONS,
BUSINESS, OR PROPERTY, OTHER THAN SUCH LOSS OR LIABILITY RESULTING SOLELY AND
DIRECTLY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNITEE TO BE
INDEMNIFIED AS DETERMINED IN A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS
SUBSTANCE IS ON, UNDER, OR ABOUT ANY OBLIGOR’S PROPERTY OR OPERATIONS, OR
PROPERTY LEASED TO OR OTHERWISE IN THE POSSESSION OF ANY OBLIGOR, OR ANY
PROPERTY OWNED BY ANY OTHER PERSON. THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO
ATTORNEY COSTS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER OBLIGATIONS.
THE INDEMNIFICATION RIGHTS OF AGENT AND LENDERS SET FORTH IN THIS SECTION
14.2(b) SHALL NOT BE ASSIGNED BY AGENT OR LENDERS EXCEPT IN CONNECTION WITH AN
ASSIGNMENT OF THE LOANS, THE COMMITMENTS, AND/OR OTHER RIGHTS UNDER THE LOAN
DOCUMENTS OR, AS TO AGENT, IN CONNECTION WITH THE APPOINTMENT OF A SUCCESSOR OR
REPLACEMENT AGENT IN ACCORDANCE WITH THIS AGREEMENT.

14.3 Notices and Communications.

14.3.1 Notice Address. Subject to Section 4.1.4, all notices and other
communications by or to a party hereto shall be in writing and shall be given to
any Obligor, at Borrower Agent’s address shown on the signature pages hereof,
and to any other Person at its address shown on the signature pages hereof (or,
in the case of a Person who becomes a Lender after the Closing Date, at the
address shown on its Assignment and Acceptance), or at such other address as a
party may hereafter specify by notice in accordance with this Section 14.3. Each
such notice or other communication shall be effective only (a) if given by
facsimile transmission, when transmitted to the applicable facsimile number, if
confirmation of receipt is received; (b) if given by mail, three Business Days
after deposit in the U.S. mail, with first-class postage pre-paid, addressed to
the applicable address; or (c) if given by personal delivery, when duly
delivered to the notice address with receipt acknowledged. Notwithstanding the
foregoing, no notice to Agent pursuant to Section 2.1.4, 2.3, 3.1.2, 4.1.1 or
5.3.3 shall be effective until actually received by the individual to whose
attention at Agent such notice is required to be sent. Any written notice or
other communication that is not sent in conformity with the foregoing provisions
shall nevertheless be effective on the date actually received by the noticed
party. Any notice received by Borrower Agent shall be deemed received by all
Obligors.

 

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14.3.2 Electronic Communications; Voice Mail. Electronic mail and internet
websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents, and
matters permitted under Section 4.1.4. Agent and Lenders make no assurances as
to the privacy and security of electronic communications. Electronic and voice
mail may not be used as effective notice under the Loan Documents.

14.3.3 Non-Conforming Communications. Agent and Lenders may rely upon any
notices purportedly given by or on behalf of any Obligor even if such notices
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Obligor shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of an Obligor.

14.4 Performance of Borrowers’ Obligations. Agent may, in its discretion at any
time and from time to time, at Borrowers’ expense, pay any amount or do any act
required of an Obligor under any Loan Documents or otherwise lawfully requested
by Agent to (a) enforce any Loan Documents or collect any Obligations;
(b) protect, insure, maintain or realize upon any Collateral; or (c) defend or
maintain the validity or priority of Agent’s Liens in any Collateral, including
any payment of a judgment, insurance premium, warehouse charge, finishing or
processing charge, or landlord claim, or any discharge of a Lien. All payments,
costs and expenses (including Extraordinary Expenses) of Agent under this
Section shall be reimbursed to Agent by Borrowers, on demand, with interest from
the date incurred to the date of payment thereof at the Default Rate applicable
to Base Rate Revolver Loans. Any payment made or action taken by Agent under
this Section shall be without prejudice to any right to assert an Event of
Default or to exercise any other rights or remedies under the Loan Documents.

14.5 Credit Inquiries. Each Obligor hereby authorizes Agent and Lenders (but
they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Borrower or Subsidiary.

14.6 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

14.7 Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations, tests or measurements to regulate similar matters, and they agree
that these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document, the provision
herein shall govern and control.

14.8 Counterparts. Any Loan Document may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement shall become effective when Agent
has received counterparts bearing the signatures of all parties hereto. Delivery
of a signature page of any Loan Document by telecopy or other electronic means
shall be effective as delivery of a manually executed counterpart of such
agreement.

14.9 Entire Agreement. Time is of the essence of the Loan Documents. The Loan
Documents constitute the entire contract among the parties relating to the
subject matter hereof, and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.

 

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14.10 Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Commitments
of any other Lender. Amounts payable hereunder to each Lender shall be a
separate and independent debt. It shall not be necessary for Agent or any other
Lender to be joined as an additional party in any proceeding for such purposes.
Nothing in this Agreement and no action of Agent, Lenders or any other Secured
Party pursuant to the Loan Documents or otherwise shall be deemed to constitute
Agent and any Secured Party to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Obligor.

14.11 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Loan Document, Obligors acknowledge and
agree that (a)(i) this credit facility and any related arranging or other
services by Agent, any Lender, any of their Affiliates or any arranger are
arm’s-length commercial transactions between Obligors and such Person;
(ii) Obligors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Obligors are
capable of evaluating, and understand and accept, the terms, risks and
conditions of the transactions contemplated by the Loan Documents; (b) each of
Agent, Lenders, their Affiliates and any arranger is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for Borrowers, any of their Affiliates or any other Person, and has no
obligation with respect to the transactions contemplated by the Loan Documents
except as expressly set forth therein; and (c) Agent, Lenders, their Affiliates
and any arranger may be engaged in a broad range of transactions that involve
interests that differ from those of Borrowers and their Affiliates, and have no
obligation to disclose any of such interests to Borrowers or their Affiliates.
To the fullest extent permitted by Applicable Law, each Obligor hereby waives
and releases any claims that it may have against Agent, Lenders, their
Affiliates and any arranger with respect to any breach of agency or fiduciary
duty in connection with any transaction contemplated by a Loan Document.

14.12 Confidentiality. Each of Agent, Lenders and Issuing Bank shall maintain
the confidentiality of all Information (as defined below), except that
Information may be disclosed (a) to its Affiliates, and to its and their
partners, directors, officers, employees, agents, advisors and representatives
(provided such Persons are informed of the confidential nature of the
Information and instructed to keep it confidential); (b) to the extent requested
by any governmental, regulatory or self-regulatory authority purporting to have
jurisdiction over it or its Affiliates; (c) to the extent required by Applicable
Law or by any subpoena or other legal process; (d) to any other party hereto;
(e) in connection with any action or proceeding, or other exercise of rights or
remedies, relating to any Loan Documents or Obligations; (f) subject to an
agreement containing provisions substantially the same as this Section, to any
Transferee or any actual or prospective party (or its advisors) to any Bank
Product; (g) with the consent of Borrower Agent; or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) is available to Agent, any Lender, Issuing Bank or any of
their Affiliates on a nonconfidential basis from a source other than Borrowers.
Notwithstanding the foregoing, Agent and Lenders may publish or disseminate
general information describing this credit facility, including the names and
addresses of Obligors and a general description of Obligors’ businesses, and may
use Obligors’ logos, trademarks or product photographs in advertising materials.
As used herein, “Information“ means all information received from an Obligor or
Subsidiary relating to it or its business that is identified as confidential
when delivered. Any Person required to maintain the confidentiality of
Information pursuant to this Section shall be deemed to have complied if it
exercises the same degree of care that it accords its own confidential
information. Each of Agent, Lenders and Issuing Bank acknowledges that
(i) Information may include material non-public information concerning an
Obligor or Subsidiary; (ii) it has developed compliance procedures regarding the
use of material non-public information; and (iii) it will handle such material
non-public information in accordance with Applicable Law, including federal and
state securities laws.

14.13 [Intentionally Omitted.]

 

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14.14 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
FEDERAL LAWS RELATING TO NATIONAL BANKS).

14.15 Consent to Forum.

14.15.1 Forum. EACH OBLIGOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER HARRIS COUNTY,
TEXAS, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS,
AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH
COURT. EACH OBLIGOR IRREVOCABLY WAIVES ALL CLAIMS (AS DEFINED HEREIN),
OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR
SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 14.3.1. Nothing herein shall limit the right of Agent or any Lender to
bring proceedings against any Obligor in any other court, nor limit the right of
any party to serve process in any other manner permitted by Applicable Law.
Nothing in this Agreement shall be deemed to preclude enforcement by Agent of
any judgment or order obtained in any forum or jurisdiction.

14.15.2 [Intentionally omitted.]

14.16 Waivers by Obligors. To the fullest extent permitted by Applicable Law,
each Obligor waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding or dispute of any kind relating in any way
to any Loan Documents, Obligations or Collateral; (b) presentment, demand,
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which an Obligor may in any way be liable, and hereby ratifies anything Agent
may do in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent, Issuing
Bank or any Lender, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto; and (g) notice of acceptance hereof.
Each Obligor acknowledges that the foregoing waivers are a material inducement
to Agent, Issuing Bank and Lenders entering into this Agreement and that they
are relying upon the foregoing in their dealings with Obligors. Each Obligor has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

14.17 Patriot Act Notice. Agent and Lenders hereby notify Obligors that,
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Obligor, including
its legal name, address, tax ID number and other information that will allow
Agent and Lenders to identify it in accordance with the Patriot Act. Agent and
Lenders will also require information regarding each personal guarantor, if any,
and may require information regarding Obligors’ management and owners, such as
legal name, address, social security number and date of birth.

14.18 NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN OR AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR,

 

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CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN OR AMONG THE PARTIES.

14.19 Amendment and Restatement. Upon the effectiveness of this Agreement and
effective as of the Closing Date, this Agreement shall constitute an amendment
and restatement of, but not an extinguishment of any of the “Loans” (as defined
in the Existing Credit Agreement), “Obligations” (as defined in the Existing
Credit Agreement) or other indebtedness, liabilities and/or obligations of any
one or more of Obligors under, the Existing Credit Agreement.

14.20 Ratification of Existing Liens. Each of the Obligors hereby (a) ratifies,
confirms and reaffirms any and all Liens that it previously granted to Agent
pursuant to the “Loan Documents” (as defined in the Existing Credit Agreement)
to the extent that such Obligor continues to have an interest in the property or
assets in which any such Lien was granted, (b) acknowledges an agrees that none
of such Liens has expired or has been terminated or released, except if and to
the extent, if any, expressly provided in such “Loan Documents”1 or as may have
been previously and expressly terminated or released by Agent, and
(c) acknowledges and agrees that each of such Liens is valid and enforceable in
accordance with its terms and continues in full force and effect to secure the
payment and performance of the Obligations.

14.21 Assignment of Continuing Loans. On the Closing Date and concurrently with
the effectiveness of this Agreement, Bank of America hereby assigns to General
Electric Capital Corporation $26,500,000 of the outstanding principal amount of
the Continuing Loans for and in consideration of the payment by General Electric
Capital Corporation to Bank of America of cash (in the form of immediately
available funds) in the amount of $26,500,000. Such assignment is made without
representation or warranty of any nature whatsoever, except that Bank of America
hereby represents and warrants to General Electric Capital Corporation that Bank
of America is the legal and beneficial owner of such principal amount being
assigned by it and that such principal amount is free and clear of any adverse
claim.

[Remainder of page intentionally left blank; signatures begin on following
page.]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

BORROWERS: IMPERIAL SUGAR COMPANY By:  

 

Name:  

 

Title:  

 

Address:    

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

IMPERIAL DISTRIBUTING, INC. By:  

 

Name:  

 

Title:  

 

Address:    

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

IMPERIAL-SAVANNAH LP By:   Savannah Molasses & Specialties Company Title:  
General Partner   By:  

 

  Name:  

 

  Title:  

 

Address:      

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

 

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RAGUS HOLDINGS, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

GUARANTORS: BIOMASS CORPORATION By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

DIXIE CRYSTALS FOODSERVICE, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

ICUBE, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

 

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IMPERIAL HOLLY CORPORATION By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

IMPERIAL SWEETENER DISTRIBUTORS, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

MENU MAGIC FOODS, INC By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

SAVANNAH FOODS INDUSTRIAL, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

 

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SAVANNAH FOODS & INDUSTRIES, INC. By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

SAVANNAH INVESTMENT COMPANY By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

SAVANNAH MOLASSES & SPECIALTIES COMPANY By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

SAVANNAH SUGAR REFINING CORPORATION By:  

 

Name:  

 

Title:  

 

Address:  

c/o Imperial Sugar Company

8016 Highway 90A

Sugar Land, Texas 77478

Attn: General Counsel

Telecopy: 281-490-9881

 

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AGENT AND LENDERS:

BANK OF AMERICA, N.A.,

as Agent and a Lender

By:  

/s/ Stephen J. King

Name:   Stephen J. King Title:   Senior Vice President Address:  

55 South Lake Avenue, Suite 900

Pasadena, California 91101

Attn: Stephen J. King

Telecopy: 626-584-4600

By:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

 

 

  Attn:  

 

  Telecopy:  

 

GENERAL ELECTRIC CAPITAL

CORPORATION

By:  

/s/ Michael Todorow

Name:   Michael Todorow Title:   Duly Authorized Signatory Address:  

500 West Monroe Street

Chicago, IL 60661

Attn: Imperial Sugar Account Manager

Telecopy: 312-441-3840

With a copy to:  

General Electric Capital Corporation

10 Riverview Drive

Danbury, CT 06810

Attn: Jill Zellmer

Telecopy: 203-749-4562

 

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and  

General Electric Capital Corporation

500 West Monroe Street

Chicago, IL 60661

Attn: Kim Reich

Telecopy: 312-441-6876

Address for payments:  

ABA No. 021-001-033

Account Number 50279513

Deutsche Bank Trust Company Americas

New York, New York

Account Name: GECC CFS CIF COLLECTION ACCOUNT

Reference: CFK1591/Imperial Sugar Company

 

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