Exhibit 10.1

 

 

 

 

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LOAN AND SECURITY AGREEMENT

 

Dated as of October 26, 2015

 

______________________________________________________________________________

 

NORTHWEST PIPE COMPANY

 

and

 

PERMALOK CORPORATION

 

as Borrowers

______________________________________________________________________________

 

BANK OF AMERICA, N.A.,

 

as Agent

______________________________________________________________________________

 

BANK OF AMERICA, N.A.,

 

as Sole Lead Arranger and Sole Bookrunner

 

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TABLE OF CONTENTS

 

    Page      

Section 1.

DEFINITIONS; RULES OF CONSTRUCTION

1

1.1.

Definitions

1

1.2.

Accounting Terms

22

1.3.

Uniform Commercial Code

22

1.4.

Certain Matters of Construction

22

1.5.

Currency Equivalents

23

Section 2.

CREDIT FACILITIES

23

2.1.

Revolver Commitment

23

2.2.

[Intentionally Omitted].

25

2.3.

Letter of Credit Facility

25

Section 3.

INTEREST, FEES AND CHARGES

27

3.1.

Interest

27

3.2.

Fees

29

3.3.

Computation of Interest, Fees, Yield Protection

29

3.4.

Reimbursement Obligations

29

3.5.

Illegality

30

3.6.

Inability to Determine Rates

30

3.7.

Increased Costs; Capital Adequacy

30

3.8.

Mitigation

31

3.9.

Funding Losses

31

3.10.

Maximum Interest

31

Section 4.

LOAN ADMINISTRATION

32

4.1.

Manner of Borrowing and Funding Revolver Loans

32

4.2.

Defaulting Lender

33

4.3.

Number and Amount of LIBOR Loans; Determination of Rate

33

4.4.

Borrower Agent

34

4.5.

One Obligation

34

4.6.

Effect of Termination

34

Section 5.

PAYMENTS

34

5.1.

General Payment Provisions

34

5.2.

Repayment of Revolver Loans

34

5.3.

[Intentionally Omitted].

35

5.4.

Payment of Other Obligations

35

5.5.

Marshaling; Payments Set Aside

35

5.6.

Application and Allocation of Payments

35

5.7.

Dominion Account

36

5.8.

Account Stated

36

5.9.

Taxes

36

5.10.

Lender Tax Information

38

5.11.

Nature and Extent of Borrower's Liability

39

Section 6.

CONDITIONS PRECEDENT

41

6.1.

Conditions Precedent to Initial Loans

41

6.2.

Conditions Precedent to All Credit Extensions

43

Section 7.

COLLATERAL

43

7.1.

Grant of Security Interest

43

7.2.

Lien on Deposit Accounts; Cash Collateral

44

7.3.

Real Estate Collateral

44

7.4.

Other Collateral

44

 

 

 
 

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7.5.

Limitations

45

7.6.

Further Assurances

45

7.7.

Foreign Subsidiary Stock

45

Section 8.

COLLATERAL ADMINISTRATION

45

8.1.

Borrowing Base Reports

45

8.2.

Accounts

45

8.3.

Inventory

46

8.4.

Equipment

47

8.5.

Deposit Accounts

47

8.6.

General Provisions

47

8.7.

Power of Attorney

49

Section 9.

REPRESENTATIONS AND WARRANTIES

49

9.1.

General Representations and Warranties

49

9.2.

Complete Disclosure

53

Section 10.

COVENANTS AND CONTINUING AGREEMENTS

54

10.1.

Affirmative Covenants

54

10.2.

Negative Covenants

56

10.3.

Financial Covenants

59

Section 11.

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

59

11.1.

Events of Default

59

11.2.

Remedies upon Default

60

11.3.

License

61

11.4.

Setoff

61

11.5.

Remedies Cumulative; No Waiver

61

Section 12.

AGENT

62

12.1.

Appointment, Authority and Duties of Agent

62

12.2.

Agreements Regarding Collateral and Borrower Materials

63

12.3.

Reliance By Agent

63

12.4.

Action Upon Default

64

12.5.

Ratable Sharing

64

12.6.

Indemnification

64

12.7.

Limitation on Responsibilities of Agent

64

12.8.

Successor Agent and Co-Agents

65

12.9.

Due Diligence and Non-Reliance

65

12.10.

Remittance of Payments and Collections

65

12.11.

Individual Capacities

66

12.12.

Titles

66

12.13.

Bank Product Providers

66

12.14.

No Third Party Beneficiaries

66

Section 13.

BENEFIT OF AGREEMENT; ASSIGNMENTS

66

13.1.

Successors and Assigns

66

13.2.

Participations

67

13.3.

Assignments

67

13.4.

Replacement of Certain Lenders

68

Section 14.

MISCELLANEOUS

68

14.1.

Consents, Amendments and Waivers

68

14.2.

Indemnity

69

14.3.

Notices and Communications

69

14.4.

Performance of Borrower’s Obligations

70

14.5.

Credit Inquiries

71

14.6.

Severability

71

14.7.

Cumulative Effect; Conflict of Terms

71

 

 

 
(ii)

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14.8.

Counterparts; Execution

71

14.9.

Entire Agreement

71

14.10.

Relationship with Lenders

71

14.11.

No Advisory or Fiduciary Responsibility

71

14.12.

Confidentiality

72

14.13.

[Intentionally Omitted].

72

14.14.

GOVERNING LAW

72

14.15.

Consent to Forum

72

14.16.

Waivers by Borrower

73

14.17.

Patriot Act Notice

73

14.18.

NO ORAL AGREEMENT

73

 

 

 LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A

Assignment

Exhibit B

Assignment Notice

 

Schedule 1.1 Commitments of Lenders Schedule 2.3.5 Existing Letters of Credit
Schedule 8.5 Deposit Accounts Schedule 8.6.1 Business Locations Schedule 9.1.4
Names and Capital Structure 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 10.2.2 Existing Liens Schedule 10.2.17 Existing
Affiliate Transactions

 

 

 
(iii)

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LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is dated as of October 26, 2015, among
NORTHWEST PIPE COMPANY, an Oregon corporation ("Borrower 1") and PERMALOK
CORPORATION, a Missouri corporation ("Borrower 2" and together with Borrower 1,
collectively "Borrowers"), the financial institutions party to this Agreement
from time to time as Lenders, and BANK OF AMERICA, N.A., a national banking
association, as agent for the Lenders ("Agent").

 

R E C I T A L S:

 

Borrowers have requested that Lenders provide a credit facility to Borrowers to
finance their mutual and collective business enterprise. Lenders are willing to
provide the credit facility 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 obligated under an Account, Chattel Paper or General
Intangible.

 

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

 

Acquisition: a transaction or series of transactions resulting in (a)
acquisition of a business, division or substantially all assets of a Person; (b)
record or beneficial ownership of 50% or more of the Equity Interests of a
Person; or (c) merger, consolidation or combination of a Borrower or Subsidiary
with another Person.

 

Adjusted EBITDA: EBITDA plus to the extent approved by Agent, non-recurring
restructuring expenses incurred during the measuring period.

 

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

 

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

 

Agreement Currency: as defined in Section 1.5.

 

Allocable Amount: as defined in Section 5.11.3.

 

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

 

 

 
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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: the margin set forth below, as determined by the average
daily Availability for the last Fiscal Quarter:

 

Level

 

Average Daily

Availability

 

 

LIBOR

Revolver Loans

 

Base Rate

Revolver Loans

I

Less than 33 and 1/3%

2.25%

1.25%

II

Greater than or equal to 33 and 1/3% but less than or equal to 66 and 2/3%

2.00%

1.00%

III

Greater than 66 and 2/3%

1.75%

0.75%

Until six months following the Closing Date, margins shall be determined as if
Level II were applicable. Thereafter, margins shall be subject to increase or
decrease by Agent on the first day of the calendar month following each Fiscal
Quarter end. If Agent is unable to calculate average daily Availability for a
Fiscal Quarter due to Borrowers' failure to deliver any Borrowing Base Report
when required hereunder, then, at the option of Agent or Required Lenders,
margins shall be determined as if Level III were applicable until the first day
of the calendar month following its receipt.

 

Approved Fund: any Person (other than a natural Person) engaged in making,
purchasing, holding or otherwise investing in commercial loans in its ordinary
course of activities.

 

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

 

Assignment: an assignment agreement between a Lender and Eligible Assignee, in
the form of Exhibit A or otherwise satisfactory to Agent.

 

Availability: the Borrowing Base minus Revolver Usage.

 

Availability Block: $5,000,000; provided, however that so long as there is no
Default or Event of Default hereunder, the Availability Block shall be reduced
as follows:

 

(a)      to $2,500,000, upon the earlier of (i) the closing of the sale of
Borrower 1's Atchison, Kansas operations for net consideration of not less than
$5,000,000 with such sale extinguishing any continuing liability by Borrowers
with respect to the divested operations (the "Atchison Divestiture"), and (ii)
the date Borrowers provides Agent with evidence acceptable to Agent that
Borrowers have achieved a trailing twelve months Fixed Charge Coverage Ratio of
1.0 to 1.0;

 

(b)     if the Atchison Divestiture occurs, but Borrowers have not then or
previously provided Agent with evidence acceptable to Agent that Borrowers have
achieved a trailing twelve months Fixed Charge Coverage Ratio of 1.0 to 1.0;
then the Availability Block shall be reduced to $1,250,000 the date Borrowers
provide Agent with evidence acceptable to Agent that Borrowers have achieved a
trailing twelve months Fixed Charge Coverage Ratio of 1.0 to 1.0; and

 

 

 
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(c)     to $0, the date Borrowers provide Agent with evidence acceptable to
Agent of a second consecutive quarter of trailing twelve months Fixed Charge
Coverage Ratio of 1.0 to 1.0.

 

Availability Reserve: the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the
aggregate amount of liabilities secured by Liens upon Collateral that are senior
to Agent's Liens (but imposition of any such reserve shall not waive an Event of
Default arising therefrom); (e) the Dilution Reserve; and (f) such additional
reserves, in such amounts and with respect to such matters, as Agent in its
discretion may elect to impose from time to time.

 

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 Affiliate of a Borrower 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) other banking
products or services, other than Letters of Credit.

 

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 for any day, a per annum rate
equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds
Rate for such day, plus 0.50%; or (c) LIBOR for a 30 day interest period as of
such day, plus 1%.

 

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; and (d) guaranties of any Debt of the foregoing types owing
by another Person.

 

Borrower Agent: as defined in Section 4.4.

 

Borrower Materials: Borrowing Base Reports, Compliance Certificates and other
information, reports, financial statements and other materials delivered by
Borrowers hereunder, as well as other Reports and information provided by Agent
to Lenders.

 

Borrowing: a group of Loans that are made or converted together on the same day
and have the same interest option and, if applicable, Interest Period.

 

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

 

 

 
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Borrowing Base Report: a report of the Borrowing Base by Borrowers, in form and
substance satisfactory to Agent.

 

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 the State of Washington, and if such day relates
to a LIBOR Loan, any such day on which dealings in Dollar deposits are conducted
in the London interbank market.

 

Canadian Dollars:  the lawful currency of Canada, as in effect from time to
time.

 

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 a Lien in favor of Agent.

 

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 fees,
expenses and indemnification hereunder. "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 U.S. 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, and (unless issued by a Lender)
not subject to offset rights; (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: services relating to 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.

 

 

 
4

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CEEEB Inventory: Inventory consisting of cost and estimated earnings in excess
of billing on uncompleted contracts.

 

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
"Change in Law" shall include, regardless of the date enacted, adopted or
issued, all requests, rules, guidelines, requirements or directives (i) under or
relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or
(ii) promulgated pursuant to Basel III by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any similar
authority) or any other Governmental Authority.

 

Change of Control: (a) the current shareholders cease to own and control,
beneficially and of record, at least 51% of the Equity Interests of a Borrower;
(b) a change in the majority of directors of a Borrower during any 24 month
period, unless approved by the majority of directors serving at the beginning of
such period; or (c) the sale or transfer of all or substantially all assets of a
Borrowers, except 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 (a) any Loans,
Letters of Credit, Loan Documents, Borrower Materials, 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.

 

Closing Date: as defined in Section 6.1.

 

Code: the Internal Revenue Code of 1986.

 

Collateral: all Property described in Section 7.1, all Property described in any
Security Documents 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 aggregate 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.

 

Commodity Exchange Act: the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Compliance Certificate: a certificate, in form and substance satisfactory to
Agent, by which Borrowers certify compliance with Sections 10.2.3 and 10.3.

 

 

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

 

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.

 

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, including
Capital Leases, but excluding trade payables incurred and being paid in the
Ordinary Course of Business; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of a Borrower, the Obligations. The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.

 

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 (a) has failed to comply with its funding
obligations hereunder, and such failure is not cured within two Business Days;
(b) has notified Agent or any Borrower that such Lender does not intend to
comply with its funding obligations hereunder or under any other credit
facility, or has made a public statement to that effect; (c) has failed, within
three Business Days following request by Agent or any Borrower, to confirm in a
manner satisfactory to Agent and Borrowers 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 (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority); 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 unless the ownership provides
immunity for such Lender from jurisdiction of courts within the United States or
from enforcement of judgments or writs of attachment on its assets, or permits
such Lender or Governmental Authority to repudiate or otherwise to reject such
Lender's agreements.

 

Deposit Account Control Agreement: control agreement satisfactory to Agent
executed by an institution maintaining a Deposit Account for an Obligor, to
perfect Agent's Lien on such account.

 

Designated Jurisdiction: a country or territory that is the subject of a
Sanction.

 

 

 
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Dilution Reserve: an amount, as established by Agent based on Borrower's bad
debt write-downs or write-offs, discounts, returns, promotions, credits, credit
memos and other dilutive items with respect to Accounts.

 

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

 

EBITDA: determined on a consolidated basis for Borrowers and Subsidiaries, net
income, calculated before interest expense, provision for income taxes,
depreciation and amortization expense, gains or losses arising from the sale of
capital assets (other than capital assets that are Accounts, CEEEB or
Inventory), gains or losses arising from the write-up/write-down of assets
(other than capital assets that are Accounts, CEEEB or Inventory), and any
extraordinary gains/extraordinary losses (other than extraordinary
gains/extraordinary losses respecting Accounts, CEEB or Inventory) (in each
case, to the extent included in determining net income).

 

Eligible Account: an Account owing to a Borrower that arises in the Ordinary
Course of Business from the sale of goods and/or provision of services, is
payable in Dollars or Canadian Dollars and is deemed by Agent, in its
discretion, to be an Eligible Account. Without limiting the foregoing, no
Account shall be an Eligible Account if (a) it is unpaid for more than 60 days
after the original due date, or more than 90 days after the original invoice
date; (b) 50% or more 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, it exceeds 15% of the aggregate Eligible
Accounts (or such higher percentage as Agent may establish for the Account
Debtor from time to time), to the extent of the obligations owing by such
Account Debtor in excess of such percentage; (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 potential 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,
dissolving or winding up its affairs, is not Solvent, or is subject to any
Sanction or on any specially designated nationals list maintained by OFAC; or
the Borrower is not able to bring suit or enforce remedies against the Account
Debtor through judicial process; (g) the Account Debtor is organized or has its
principal offices or assets outside the United States or Canada, unless the
Account is supported by a letter of credit (delivered to and directly drawable
by Agent) or credit insurance satisfactory in all respects to Agent; (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; (o) it includes a billing
for interest, fees or late charges, but ineligibility shall be limited to the
extent thereof; or (p) it is an Account generated by the Tubular Division. In
calculating delinquent portions of Accounts under clauses (a) and (b), credit
balances more than 90 days old will be excluded.

 

 

 
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Eligible Assignee: a Person that is (a) a Lender, Affiliate of a Lender or
Approved Fund; (b) an assignee approved by Borrower Agent (which approval 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) and Agent; and (c) during an Event of Default, any Person acceptable
to Agent in its discretion.

 

Eligible CEEEB Inventory: the CEEEB Inventory of a Borrower which Agent, in its
discretion, determines to be Eligible CEEEB Inventory but specifically excluding
any CEEEB Inventory that would be excluded as Eligible Inventory other than by
virtue of it being CEEEB Inventory. Notwithstanding the foregoing, if Borrowers
have not provided Agent with reports and a reporting structure satisfactory to
Agent within six (6) months following the Closing Date that support the CEEEB
and that can be tested and validated by field exam, the Value of the CEEEB
Inventory shall thereafter be deemed to equal such amount, or zero, as Agent in
its discretion, from time to time, deems appropriate.

 

Eligible Equipment: Equipment of a Borrower which Agent, in its discretion,
determines to be Eligible Equipment and that is listed on an appraisal of
Equipment acceptable to Agent completed during the 30 days prior to the Closing
Date. Without limiting the discretion of the Lender to establish other criteria
of ineligibility, Eligible Equipment shall not include any Equipment: (a) that
is not legally owned by a Borrower; (b) that is not subject to the Lender's
Liens, which are perfected as to such Inventory, or that are subject to any
other Lien whatsoever other than Permitted Liens; (c) that is not in good
working condition for its intended use or for sale; (d)  that is located outside
the United States or at a location other than a place of business of a Borrower;
or (e) that is located in a facility leased by a Borrower, if the lessor has not
delivered to the Lender, if requested by the Lender, a landlord waiver in form
and substance satisfactory to the Lender or if a Reserve for rents has not been
established for Equipment at that location.  Borrowers, by including Equipment
in any computation of the Borrowing Base, shall be deemed to represent and
warrant to the Lender that such Equipment is not of the type described in any of
(a) through (e) above, and if any Equipment at any time ceases to be Eligible
Equipment, then such Equipment shall promptly be excluded from the calculation
of Eligible Equipment. For avoidance of doubt, no Equipment acquired after the
Closing Date or not reflected in an appraisal of Equipment acceptable to Agent
completed during the 30 days prior to the Closing Date shall be treated as
Eligible Equipment.

 

Eligible Inventory: Inventory owned by a Borrower that Agent, in its discretion,
deems to be Eligible Inventory. Without limiting the foregoing, no Inventory
shall be Eligible Inventory unless it (a) is finished goods or raw materials,
and not work-in-process, packaging or shipping materials, labels, samples,
display items, 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, has not been acquired from a Person
subject to any Sanction or on any specially designated nationals list maintained
by OFAC, 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; (h) is within
the continental United States or Canada, is not in transit except between
locations of a Borrower or the Borrowers, and is not consigned to any Person;
(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, unless Agent has received an
appropriate Lien Waiver; and (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; (l) is
reflected in the details of a current perpetual inventory report, (m) does not
relate to services for which a performance, surety or completion bond or similar
assurance has been issued and (n) is not Inventory generated by the Tubular
Division. For avoidance of doubt, Eligible Inventory excludes CEEEB Inventory.

 

 

 
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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, setoff or recoupment, credit bid, action in an
Obligor's Insolvency Proceeding or otherwise).

 

Environmental Laws: Applicable Laws (including programs, permits and guidance
promulgated by regulators) relating to public health (other than occupational
safety and health regulated by OSHA) or the protection or pollution of the
environment, including CERCLA, RCRA and CWA.

 

Environmental Notice: a notice (whether written or oral) from any Governmental
Authority or other Person of any possible 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 or under any other
Environmental Law.

 

Equipment: all of Borrowers' now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory), including embedded software, motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, molds and office equipment, as well as all of such types of property
leased by Borrowers and all of Borrowers' rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.

 

Equipment Formula Amount: the lesser of (a) $15,000,000; and (b) 85% of the NOLV
Percentage of the Value of Eligible Equipment, in each case as reduced by the
Value of Eligible Equipment sold, transferred or otherwise disposed of by
Borrowers; provided, however, that the Value of Eligible Equipment shall be
subject to quarterly step-downs starting on the first day of the first full
calendar quarter following the Closing Date and on the 1st day of each calendar
quarter thereafter based on a level 10-year straight line amortization schedule.

 

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.

 

Existing Credit Agreement: that certain Second Amended and Restated Credit
agreement dated as of October 24, 2012, among Borrower 1, each lender from time
to time party hereto, and Agent as agent, as amended through the date hereof.

 

Existing Letters of Credit: as defined in Section 2.3.5.

 

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).

 

 

 
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ERISA Event: (a) a Reportable Event with respect to a Pension Plan; (b)
withdrawal of an Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or
partial withdrawal by an Obligor or ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) filing of a
notice of intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the institution of
proceedings by the PBGC to terminate a Pension Plan; (e) determination that any
Pension Plan is considered an at-risk plan or a plan in critical or endangered
status under the Code or ERISA; (f) an event or condition that constitutes
grounds under Section 4042 of ERISA for termination of, or appointment of a
trustee to administer, any Pension Plan; (g) 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; or (h) failure by an
Obligor or ERISA Affiliate to meet all applicable requirements under the Pension
Funding Rules in respect of a Pension Plan, whether or not waived, or to make a
required contribution to a Multiemployer Plan.

 

Event of Default: as defined in Section 11.

 

Excluded Swap Obligation: with respect to an Obligor, each Swap Obligation as to
which, and only to the extent that, such Obligor's guaranty of or grant of a
Lien as security for such Swap Obligation is or becomes illegal under the
Commodity Exchange Act because the Obligor does not constitute an "eligible
contract participant" as defined in the act (determined after giving effect to
any keepwell, support or other agreement for the benefit of such Obligor and all
guarantees of Swap Obligations by other Obligors) when such guaranty or grant of
Lien becomes effective with respect to the Swap Obligation. If a Hedging
Agreement governs more than one Swap Obligation, only the Swap Obligation(s) or
portions thereof described in the foregoing sentence shall be Excluded Swap
Obligation(s) for the applicable Obligor.

 

Excluded Taxes: (a) Taxes imposed on or measured by a Recipient's net income
(however denominated), franchise Taxes and branch profits Taxes (i) as a result
of such Recipient being organized under the laws of, or having its principal
office or applicable Lending Office located in, the jurisdiction imposing such
Tax, or (ii) constituting Other Connection Taxes; (b) U.S. federal withholding
Taxes imposed on amounts payable to or for the account of a Lender with respect
to its interest in a Loan or Commitment pursuant to a law in effect when the
Lender acquires such interest (except pursuant to an assignment request by
Borrower Agent under Section 13.4) or changes its Lending Office, unless the
Taxes were payable to its assignor immediately prior to such assignment or to
the Lender immediately prior to its change in Lending Office; (c) Taxes
attributable to a Recipient's failure to comply with Section 5.10; and (d) U.S.
federal withholding Taxes imposed pursuant to FATCA. In no event shall "Excluded
Taxes" include any withholding Tax imposed on amounts paid by or on behalf of a
foreign Obligor to a Recipient that has complied with Section 5.10.2.

 

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
of any rights or remedies of Agent in, or the monitoring of, any Insolvency
Proceeding; (d) settlement or satisfaction of taxes, charges or Liens with
respect to any Collateral; (e) any Enforcement Action; and (f) negotiation and
documentation of any modification, waiver, workout, restructuring or forbearance
with respect to any Loan Documents or Obligations. 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' and 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.

 

 

 
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FATCA: Sections 1471 through 1474 of the Code (including any amended or
successor version if substantively comparable and not materially more onerous to
comply with), and any agreements entered into pursuant to Section 1471(b)(1) of
the Code.

 

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.

 

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 December 31 of each year.

 

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
Borrowers and Subsidiaries for the most recent 12 months, of (a) Adjusted EBITDA
minus Capital Expenditures (except those financed with Borrowed Money other than
Revolver Loans) and cash taxes paid, to (b) Fixed Charges.

 

Fixed Charges: the sum of interest expense (other than payment-in-kind),
principal payments made on Borrowed Money, and Distributions made.

 

FLSA: the Fair Labor Standards Act of 1938.

 

Foreign Lender: any Lender that is not a U.S. Person.

 

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, such that a guaranty by such Subsidiary of the
Obligations or a Lien on the assets of such Subsidiary to secure the Obligations
would result in material tax liability to Borrowers.

 

Fronting Exposure: a Defaulting Lender's interest in LC Obligations and
Protective Advances, except to the extent Cash Collateralized by the Defaulting
Lender or allocated to other Lenders hereunder.

 

Full Payment: with respect to any Obligations, (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); and
(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). No Loans shall be deemed to have been paid in full unless all
Commitments related to such Loans have 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.

 

 

 
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Governmental Authority: any federal, state, local, foreign or other agency,
authority, body, commission, court, instrumentality, political subdivision,
central bank, or other entity or officer exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions for any
governmental, judicial, investigative, regulatory or self-regulatory authority
(including the Financial Conduct Authority, the Prudential Regulation Authority
and any supra-national bodies such as the European Union or European Central
Bank).

 

Guarantor Payment: as defined in Section 5.11.3.

 

Guarantors: Thompson Tank Holdings, Inc., an Oregon corporation and each other
Person that guarantees payment or performance of Obligations.

 

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

 

Hedging Agreement: a "swap agreement" as defined in Section 101(53B)(A) of the
Bankruptcy Code.

 

Indemnified Taxes: (a) Taxes, other than Excluded Taxes, imposed on or relating
to any payment of an Obligation; and (b) to the extent not otherwise described
in clause (a), Other 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), including any CEEEB Inventory.

 

Inventory Formula Amount: the sum of (a) the lesser of (i) 65% of the Value of
Eligible Inventory; or (ii) 85% of the NOLV Percentage of the Value of Eligible
Inventory plus (b) the lesser of (i) $5,000,000; (ii) 65% of the Value of
Eligible CEEEB Inventory; or (ii) 85% of the NOLV Percentage of the Value of
Eligible CEEEB 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: an Acquisition, an acquisition of record or beneficial ownership of
any Equity Interests of a Person, or an advance or capital contribution to or
other investment in a Person.

 

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

 

IRS: the United States Internal Revenue Service.

 

Issuing Bank: Bank of America (including any Lending Office 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.

 

Judgment Currency: as defined in Section 1.5.

 

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 and
Agent.

 

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 Revolver Usage does not exceed the Borrowing
Base; (c) the Letter of Credit and payments thereunder are denominated in
Dollars or other currency satisfactory to Agent and Issuing Bank; and (d) the
purpose and form of the proposed Letter of Credit are 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 of (a) all amounts owing by Borrowers for 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 satisfactory to Agent and Issuing Bank.

 

Lender Indemnitees: Lenders and Secured Bank Product Providers, and their
officers, directors, employees, Affiliates, agents and attorneys.

 

Lenders: lenders party to this Agreement and any Person who hereafter becomes a
"Lender" pursuant to an Assignment, including any Lending Office of the
foregoing.

 

Lending Office: the office (including any domestic or foreign Affiliate or
branch) designated as such by a Lender or Issuing Bank by notice to Agent and
Borrower Agent.

 

Letter of Credit: any standby or documentary letter of credit, foreign guaranty,
documentary bankers acceptance or similar instrument issued by Issuing Bank for
the account or benefit of a Borrower or Affiliate of a Borrower.

 

Letter of Credit Subline: $25,000,000.

 

 

 
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LIBOR: the per annum rate of interest (rounded up to the nearest 1/100th of 1%
and in no event less than zero) determined by Agent at or about 11:00 a.m.
(London time) two Business Days prior to an Interest Period, for a term
equivalent to such period, equal to the London Interbank Offered Rate, or
comparable or successor rate approved by Agent, as published on the applicable
Reuters screen page (or other commercially available source designated by Agent
from time to time); provided, that any comparable or successor rate shall be
applied by Agent, if administratively feasible, in a manner consistent with
market practice.

 

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: a Person's interest in Property securing an obligation owed to, or a claim
by, such Person, including any lien, security interest, pledge, hypothecation,
assignment, trust, reservation, encroachment, easement, right-of-way, covenant,
condition, restriction, lease, or other title exception or encumbrance.

 

Lien Waiver: an agreement, in form and substance satisfactory 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; (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 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.

 

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 the 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) impairs the ability of the Obligor (taken as a
whole) to perform its obligations under the Loan Documents, including repayment
of any Obligations; or (c) otherwise impairs the ability of Agent or any Lender
to enforce or collect any Obligations or to realize upon any Collateral.

 

 

 
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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 Person, 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 Subordinated Debt, or to Debt in an aggregate amount of
$2,000,000 or more.

 

Material Obligor: (i) each Borrower and (ii) any other Obligor to the extent
such other Obligor has a tangible net worth in excess of $5,000,000.

 

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

 

Mortgage: a mortgage or deed of trust in which an Obligor grants a Lien on its
Real Estate to Agent, as security for its Obligations.

 

Multiemployer Plan: any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which an 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.

 

Multiple Employer Plan: a Plan that has two or more contributing sponsors,
including an Obligor or ERISA Affiliate, at least two of whom are not under
common control, as described in Section 4064 of ERISA.

 

Net Proceeds: with respect to an Asset Disposition, 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 indemnities, until such reserves are no
longer needed.

 

NOLV Percentage: the net orderly liquidation value of Inventory (including
without limitation CEEEB Inventory) and Equipment, 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 Equipment, as applicable, performed
by an appraiser and on terms satisfactory to Agent.

 

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

 

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

 

Obligations: all (a) 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 Obligors under Loan Documents, (d) Secured
Bank Product Obligations, and (e) other Debts, obligations and liabilities of
any kind owing by 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 Obligations of an Obligor shall not include its Excluded Swap
Obligations.

 

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

 

 

 
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OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

 

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

 

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 Agreements: each LC Document, fee letter, Lien Waiver, Borrowing Base
Report, Compliance Certificate, Borrower Materials, or other note, 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 Connection Taxes: Taxes imposed on a Recipient due to a present or former
connection between it and the taxing jurisdiction (other than connections
arising from the Recipient having executed, delivered, become party to,
performed obligations or received payments under, received or perfected a Lien
or engaged in any other transaction pursuant to, enforced, or sold or assigned
an interest in, any Loan or Loan Document).

 

Other Taxes: all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 13.4(c)).

 

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.

 

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 a Borrower,
including those constituting proceeds of any Collateral.

 

PBGC: the Pension Benefit Guaranty Corporation.

 

Pension Funding Rules: Code and ERISA rules regarding minimum required
contributions (including installment payments) to Pension Plans set forth in,
for plan years ending prior to the Pension Protection Act of 2006 effective
date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior
to such act, and thereafter, Sections 412, 430, 431, 432 and 436 of the Code and
Sections 302, 303, 304 and 305 of ERISA.

 

Pension Plan: any employee pension benefit plan (as 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 an Obligor or ERISA Affiliate or to which the
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 preceding five plan years.

 

 

 
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Permitted Acquisition: any Acquisition as long as (a) no Default or Event of
Default exists or is caused thereby; (b) the Acquisition is consensual; (c) the
assets, business or Person being acquired is useful or engaged in the business
of Borrowers and Subsidiaries, is located or organized within the United States,
and had positive Adjusted EBITDA for the 12 month period most recently ended;
(d) no Debt or Liens are assumed or incurred, except as permitted by Sections
10.2.1(f), 10.2.1(i) and 10.2.2(j); (e) upon giving pro forma effect thereto,
(A) for the 30 days preceding and as of the Acquisition and projected for 30
days following the Acquisition, Availability is at least 20% of the aggregate
Revolver Commitments or (B) for the 30 days preceding and as of the Acquisition
and projected for 30 days following the Acquisition, (1) Availability is at
least 15% of the aggregate Revolver Commitments and (2) Borrowers maintains a
Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 and (f) Borrowers
deliver to Agent, at least 10 Business Days prior to the Acquisition, the
current drafts (with final executed versions to be delivered promptly after
execution thereof) of all material agreements relating thereto and a
certificate, in form and substance satisfactory to Agent, stating that the
Acquisition is a "Permitted Acquisition" and demonstrating compliance with the
foregoing requirements.

 

Permitted Asset Disposition: as long as no Default or Event of Default exists or
is caused thereby and all Net Proceeds are remitted to Agent, an Asset
Disposition that is (a) a sale of Inventory in the Ordinary Course of Business;
(b) a disposition of Equipment that, in the aggregate during any 12 month
period, has a fair market or book value (whichever is more) of $1,000,000 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
and does not result from an Obligor's default; or (e) approved in writing by
Agent and Required Lenders or (f) any Asset Disposition consisting solely of a
disposition of the Tubular Division and/or the related Real Estate utilized to
the Tubular Division located in Houston, Texas.

 

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; or (g) in an aggregate amount of $2,000,000 or less at any time.

 

Permitted Distribution: any Distribution so long as (a) no Default or Event of
Default exists or is caused thereby and (b) upon giving pro forma effect
thereto, (i) for the 30 days preceding and as of the Distribution and projected
for 30 days following the Distribution, Availability is at least 25% of the
aggregate Revolver Commitments or (ii) for the 30 days preceding and as of the
Distribution and projected for 30 days following the Distribution, (A)
Availability is at least 15% of the aggregate Revolver Commitments and (B)
Borrowers maintains a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0.

 

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 the
aggregate amount does not exceed $2,000,000 at any time and its incurrence does
not violate Section 10.2.3.

 

 

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

 

Plan: an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
for employees of an Obligor or ERISA Affiliate, or to which an Obligor or ERISA
Affiliate is required to contribute on behalf of its employees.

 

Platform: as defined in Section 14.3.3.

 

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 publicly
announced by Bank of America shall take effect at the opening of business on the
day specified in the announcement.

 

Pro Rata: with respect to any Lender, a percentage (rounded to the ninth decimal
place) determined (a) by dividing the amount of such Lender's Revolver
Commitment by the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, by dividing the amount of such Lender's
Loans and LC Obligations by the aggregate outstanding Loans and LC Obligations
or, if all Loans and LC Obligations have been paid in full and/or Cash
Collateralized, by dividing such Lender's and its Affiliates' remaining
Obligations by the aggregate remaining 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; (b) Debt (other than the Obligations)
incurred within 10 days before or after acquisition of any fixed assets, 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 acquired with such Debt and constituting a Capital Lease or a
purchase money security interest under the UCC.

 

Qualified ECP: an Obligor with total assets exceeding $10,000,000, or that
constitutes an "eligible contract participant" under the Commodity Exchange Act
and can cause another Person to qualify as an "eligible contract participant"
under Section 1a(18)(A)(v)(II) of such act.

 

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.

 

 

 
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Recipient: Agent, Issuing Bank, any Lender or any other recipient of a payment
to be made by an Obligor under a Loan Document or on account of an Obligation.

 

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 Borrowers than those applicable to the
Debt being extended, renewed or refinanced; (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.

 

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 up to an
amount 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 event set forth in Section 4043(c) of ERISA, other than an
event for which the 30 day notice period has been waived.

 

Required Lenders: two or more unaffiliated Secured Parties holding more than 50%
of (a) the aggregate outstanding Revolver Commitments; or (b) following
termination of the Revolver Commitments, the aggregate outstanding Loans and LC
Obligations or, if all Loans and LC Obligations have been Paid in Full, the
aggregate remaining Obligations; provided, however, that Commitments, Loans and
other Obligations held by a Defaulting Lender and its Affiliates shall be
disregarded in making such calculation, but any related Fronting Exposure shall
be deemed held as a Loan or LC Obligation by the Secured Party that funded the
applicable Loan or issued the applicable Letter of Credit.

 

Restricted Investment: any Investment by a Borrower or Subsidiary, other than
(a) Investments in Subsidiaries to the extent existing on the Closing Date; (b)
Cash Equivalents that are subject to Agent's Lien and control, pursuant to
documentation in form and substance satisfactory to Agent; (c) loans and
advances permitted under Section 10.2.7; and (d) Permitted Acquisitions.

 

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, to grant Liens on any assets, to declare or make
Distributions, to modify, extend or renew any agreement evidencing Borrowed
Money, or to repay any intercompany Debt.

 

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 1.1, as hereafter modified pursuant to Section 2.1.7 or an Assignment
to which it is a party. "Revolver Commitments" means the aggregate amount of
such commitments of all Lenders.

 

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

 

 

 
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Revolver Termination Date: October 25, 2018.

 

Revolver Usage: (a) the aggregate amount of outstanding Revolver Loans; plus (b)
the aggregate Stated Amount of outstanding Letters of Credit, except to the
extent Cash Collateralized by Borrowers.

 

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

 

S&P: Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., and any successor thereto.

 

Sanction: any sanction administered or enforced by the U.S. Government
(including OFAC), United Nations Security Council, European Union, Her Majesty’s
Treasury or other sanctions authority.

 

Secured Bank Product Obligations: Debt, obligations and other liabilities with
respect to Bank Products owing by a Borrower or Affiliate of a Borrower to a
Secured Bank Product Provider; provided, that Secured Bank Product Obligations
of an Obligor shall not include its Excluded Swap Obligations.

 

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, within 10 days following the later of the Closing Date or
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, IP Assignments, Deposit Account Control
Agreements, and all other documents, instruments and agreements now or hereafter
securing (or given with the intent to secure) any Obligations.

 

Senior Officer: the president, chief executive officer or chief financial
officer 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.

 

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.

 

 

 
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Specified Obligor: an Obligor that is not then an "eligible contract
participant" under the Commodity Exchange Act (determined prior to giving effect
to Section 5.11).

 

Spot Rate: the exchange rate, as determined by Agent, that is applicable to
conversion of one currency into another currency, which is (a) the exchange rate
reported by Bloomberg (or other commercially available source designated by
Agent) as of the end of the preceding business day in the financial market for
the first currency; or (b) if such report is unavailable for any reason, the
spot rate for the purchase of the first currency with the second currency as in
effect during the preceding business day in Agent's principal foreign exchange
trading office for the first currency.

 

Stated Amount: the outstanding amount of a Letter of Credit, including any
automatic increase or tolerance (whether or not then in effect) provided by the
Letter of Credit or related LC Documents.

 

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

 

Subsidiary: any entity at least 50% of whose voting securities or Equity
Interests is owned by a Borrower or combination of Borrowers (including indirect
ownership through other entities in which a Borrower directly or indirectly owns
50% of the voting securities or Equity Interests).

 

Swap Obligations: with respect to an Obligor, its obligations under a Hedging
Agreement that constitutes a "swap" within the meaning of Section 1a(47) of the
Commodity Exchange Act.

 

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.

 

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

 

Trigger Period: the period (a) commencing on the day that an Event of Default
occurs, or Availability is less than the greater of (i) $12,000,000; or (ii) 15%
of the Borrowing Base at any time; and (b) continuing until, during each of the
preceding 60 consecutive days, no Event of Default has existed and Availability
has been equal to or greater than the greater of (i) $12,000,000; or (ii) 15% of
the Borrowing Base.

 

Tubular Division: Borrower 1's tubular products group operated at Borrower 1's
Atchison, Kansas facility. Borrower 1's tubular products group operates an
electric resistance weld mill with diameters ranging from 4.5-inches through
16-inches. The tubular products group serves a wide-range of markets and its
certified pipe and tube products are utilized for applications including: oil
and gas, structural, industrial, fire protection and low pressure uses.

 

UCC: the Uniform Commercial Code as in effect in the State of New York 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 excess of a Pension Plan's benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to the Code, ERISA or the Pension Protection Act of
2006 for the applicable plan year.

 

Unused Line Fee Rate: a per annum rate equal to (a) 0.25%, if average daily
Availability is more than 50% of the aggregate Revolver Commitments during the
preceding calendar quarter, or (b) 0.375%, if average daily Availability is 50%
or less of the aggregate Revolver Commitments during the preceding calendar
quarter; provided, however that, until six months following the Closing Date,
the Unused Line Fee Rate shall be 0.375%.

 

 

 
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Upstream Payment: a Distribution by a Subsidiary of a Borrower to such Borrower.

 

U.S. Person: "United States Person" as defined in Section 7701(a)(30) of the
Code.

 

U.S. Tax Compliance Certificate: as defined in Section 5.10.2(b)(iii).

 

Value: (a) for Inventory, its value (i) for raw materials, determined on the
basis of the lower of cost or market calculated on average costing, (ii) for
finished goods, calculated on a first-in, first-out basis, and (iii) for CEEEB
Inventory, calculated using cost-to-cost percentage of completion method; in
each case 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.

 

1.2.        Accounting Terms. Under the Loan Documents (except as otherwise
specified therein), 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 Borrowers delivered to Agent before the Closing Date and
using the same inventory valuation method as used in such financial statements,
except for any change required or permitted by GAAP if Borrowers' certified
public accountants concur in such change, the change is disclosed to Agent, and
all relevant provisions of the Loan Documents are amended in a manner
satisfactory to Required Lenders to take into account the effects of the 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 Oregon 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 include all related regulations, interpretations,
supplements, 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 means time of day in
the Pacific time zone; or (g) discretion of Agent, Issuing Bank or any Lender
mean the sole and absolute discretion of such Person. All determinations
(including calculations of Borrowing Base and 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. Reference to a Borrower's "knowledge" or similar concept 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.

 

 

 
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1.5.         Currency Equivalents.

 

1.5.1.      Calculations. All references in the Loan Documents to Loans, Letters
of Credit, Obligations, Borrowing Base components and other amounts shall be
denominated in Dollars, unless expressly provided otherwise. The Dollar
equivalent of any amounts denominated or reported under a Loan Document in a
currency other than Dollars shall be determined by Agent on a daily basis, based
on the current Spot Rate. Borrowers shall report Value and other Borrowing Base
components to Agent in Dollars, and unless expressly provided otherwise, shall
deliver financial statements and calculate financial covenants in Dollars.
Notwithstanding anything herein to the contrary, if any Obligation is funded and
expressly denominated in a currency other than Dollars, Borrowers shall repay
such Obligation in such other currency.

 

1.5.2.        Judgments. If, for purposes of obtaining judgment in any court, it
is necessary to convert a sum from the currency provided under a Loan Document
("Agreement Currency") into another currency, the Spot Rate shall be used as the
rate of exchange. Notwithstanding any judgment in a currency ("Judgment
Currency") other than the Agreement Currency, a Borrower shall discharge its
obligation in respect of any sum due under a Loan Document only if, on the
Business Day following receipt by Agent of payment in the Judgment Currency,
Agent can use the amount paid to purchase the sum originally due in the
Agreement Currency. If the purchased amount is less than the sum originally due,
such Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify Agent and Lenders against such loss. If the purchased
amount is greater than the sum originally due, Agent shall return the excess
amount to such Borrower (or to the Person legally entitled thereto).

 

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; provided,
however, that all payment of Revolver Loans shall be made in Dollars. In no
event shall Lenders have any obligation to honor a request for a Revolver Loan
if Revolver Usage at such time plus the requested Loan would exceed the
Borrowing Base.

 

2.1.2.          Notes. Loans and interest accruing thereon shall be evidenced by
the records of Agent and the applicable Lender. At the request of a Lender,
Borrowers shall deliver promissory note(s) to such Lender, evidencing its
Loan(s).

 

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 lawful corporate
purposes of Borrowers, including working capital. Borrowers shall not, directly
or indirectly, use any Letter of Credit or Loan proceeds, nor use, lend,
contribute or otherwise make available any Letter of Credit or Loan proceeds to
any Subsidiary, joint venture partner or other Person, (i) to fund any
activities of or business with any Person, or in any Designated Jurisdiction,
that, at the time of issuance of the Letter of Credit or funding of the Loan, is
the subject of any Sanction; (ii) in any manner that would result in a violation
of a Sanction by any Person (including any Secured Party or other individual or
entity participating in a transaction); or (iii) for any purpose that would
breach the U.S. Foreign Corrupt Practices Act of 1977, UK Bribery Act 2010 or
similar law in any jurisdiction.

 

 

 
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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
10 Business Days prior written notice to Agent at any time after the first Loan
Year, Borrowers may, at their option, terminate the Revolver Commitments and
this credit facility. Any notice of termination given by Borrowers shall be
irrevocable. On the termination date, Borrowers shall make Full Payment of all
Obligations.

 

(b)     Borrowers may permanently reduce the Revolver Commitments, on a ratable
basis for all Lenders, upon at least 10 Business Days prior written notice to
Agent delivered at any time after the First Loan Year, which notice shall
specify the amount of the reduction and shall be irrevocable once given. Each
reduction shall be in a minimum amount of $5,000,000, or an increment of
$1,000,000 in excess thereof.

 

(c)     [Intentionally omitted].

 

2.1.6.      Overadvances. If Revolver Usage exceeds the Borrowing Base
("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 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% of the
Borrowing Base; 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 is not increased by more than
10% of the Borrowing Base and does not continue for more than 30 consecutive
days. In no event shall Overadvance Loans be required that would cause Revolver
Usage 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. 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, to make Base Rate
Revolver Loans ("Protective Advances") (a) up to an aggregate amount of 10% of
the Borrowing Base outstanding at any time, if Agent deems such Loans necessary
or desirable to preserve or protect Collateral, or to enhance the collectability
or repayment of Obligations, as long as such Loans do not cause Revolver Usage
to exceed the aggregate Revolver Commitments; or (b) to pay any other amounts
chargeable to Obligors under any Loan Documents, including interest, costs, fees
and expenses. Lenders shall participate on a Pro Rata basis in Protective
Advances outstanding from time to time. 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.

 

 

 
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2.1.7.      Increase in Revolver Commitments. Borrowers may request an increase
in Revolver Commitments from time to time upon notice to Agent, as long as (a)
the requested increase is in a minimum amount of $5,000,000 and is offered on
the same terms as existing Revolver Commitments, except for a closing fee
specified by Borrowers, (b) increases under this Section do not exceed
$40,000,000 in the aggregate and no more than three increases are made, (c) no
reduction in Commitments pursuant to Section 2.1.4 has occurred prior to the
requested increase, and (d) the requested increase does not cause the
Commitments to exceed 90% of any applicable cap under any Subordinated Debt
agreement. Agent shall promptly notify Lenders of the requested increase and,
within 10 Business Days thereafter, each Lender shall notify Agent if and to
what extent such Lender commits to increase its Revolver Commitment. Any Lender
not responding within such period shall be deemed to have declined an increase.
If Lenders fail to commit to the full requested increase, Eligible Assignees may
issue additional Revolver Commitments and become Lenders hereunder. Agent may
allocate, in its discretion, the increased Revolver Commitments among committing
Lenders and, if necessary, Eligible Assignees. Provided the conditions set forth
in Section 6.2 are satisfied, total Revolver Commitments shall be increased by
the requested amount (or such lesser amount committed by Lenders and Eligible
Assignees) on a date agreed upon by Agent and Borrower Agent, but no later than
45 days following Borrowers' increase request. Agent, Borrowers, and new and
existing Lenders shall execute and deliver such documents and agreements as
Agent deems appropriate to evidence the increase in and allocations of Revolver
Commitments. On the effective date of an increase, the Revolver Usage and other
exposures under the Revolver Commitments shall be reallocated among Lenders, and
settled by Agent if necessary, in accordance with Lenders' adjusted shares of
such Commitments.

 

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 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
Agent or 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.

 

(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.
Increase, renewal or extension of a Letter of Credit shall be treated as
issuance of a new Letter of Credit, except that Issuing Bank may require a new
LC Application in its discretion.

 

(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.

 

 

 
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(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.

 

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 shall 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)     Each Lender hereby irrevocably and unconditionally purchases from
Issuing Bank, without recourse or warranty, an undivided Pro Rata participation
in all LC Obligations outstanding from time to time. Issuing Bank is issuing
Letters of Credit in reliance upon this participation. If Borrowers do not make
a payment to Issuing Bank when due hereunder, Agent shall promptly notify
Lenders and each Lender shall within one Business Day after such notice 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 provide copies of 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, noncompliant, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
any waiver by Issuing Bank of a requirement that exists for its protection (and
not a Borrower's protection) or that does not materially prejudice a Borrower;
any honor of an electronic demand for payment even if a draft is required; any
payment of an item presented after a Letter of Credit's expiration date if
authorized by the UCC or applicable customs or practices; or any setoff or
defense that an 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 any Letter of Credit,
Collateral, LC Document or 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,
collectability, 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.

 

 

 
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(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 Letter of
Credit or LC Document except as a result of its gross negligence or willful
misconduct. Issuing Bank may refrain from taking any action with respect to a
Letter of Credit until it receives written instructions (and in its discretion,
appropriate assurances) from the Lenders.

 

2.3.3.      Cash Collateral. Subject to Section 2.1.5, if at any time (a) an
Event of Default exists, (b) the Commitment Termination Date has occurred, or
(c) the Revolver Termination Date is scheduled to occur within 10 Business Days,
then Borrowers shall, at Issuing Bank's or Agent's request, Cash Collateralize
all outstanding Letters of Credit. Borrowers shall, at Issuing Bank's or Agent's
request at any 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 Cash Collateral required (whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied).

 

2.3.4.     Resignation of Issuing Bank. Issuing Bank may resign at any time upon
notice to Agent and Borrowers. From the effective date of such resignation,
Issuing Bank shall have no obligation to issue, amend, renew, extend or
otherwise modify any Letter of Credit, but shall continue to have all rights and
other obligations of an Issuing Bank hereunder relating to any Letter of Credit
issued by it 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 Borrowers.

 

2.3.5.     Existing Letters of Credit. Schedule 2.3.5 sets forth a list of
certain letters of credit issued prior to the Closing Date for the account of a
Borrower under the Existing Credit Agreement (the “Existing Letters of Credit”).
On the Closing Date, (a) the Existing Letters of Credit shall be deemed to be
Letters of Credit issued pursuant to this Section 2 and shall be subject to all
of the provisions applicable to Letters of Credit under this Credit Agreement
and (b) all liabilities of any Borrower with respect to the Existing Letters of
Credit shall constitute Obligations of Borrowers with respect to Letters of
Credit in accordance with this Credit Agreement and the Loan Documents as though
Borrowers had delivered a Letter of Credit Application under this Credit
Agreement. On the Closing Date, any letter of credit fees owing with respect to
the Existing Letters of Credit under the Existing Credit Agreement shall be
calculated and paid in full. From and after the Closing Date, Borrowers shall
pay Letter of Credit Fees and such other fees as provided in Section 3.2.2, in
each case when due pursuant to Section 3.2.2, with respect to each of the
Existing Letters of Credit.

 

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 LIBOR Loan, at LIBOR for
the applicable Interest Period, plus the Applicable Margin; and (ii) 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.

 

 

 
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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 fair and reasonable compensation for this.

 

(c)     Interest shall accrue from the date a Loan is advanced or Obligation is
incurred or payable, until paid in full by Borrowers. 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
Continuation, elect 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 desires to continue Loans as LIBOR Loans, Borrower
Agent shall give Agent a Notice of Continuation, no later than 11:00 a.m. at
least two 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 for any LIBOR Loan, Borrowers shall have
failed to deliver a Notice of Continuation, they shall be deemed to have elected
to convert such Loan into a Base Rate Loan. Agent does not warrant or accept
responsibility for, nor shall it have any liability with respect to,
administration, submission or any other matter related to any rate described in
the definition of LIBOR.

 

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, or 90 days
(if available from all Lenders); provided, however, that:

 

(a)     the Interest Period shall begin 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 begins 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
otherwise 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.

 

3.1.4.        Interest Rate Not Ascertainable. If, due to any circumstance
affecting the London interbank market, Agent determines that adequate and fair
means do not exist for ascertaining LIBOR on any applicable date or that any
Interest Period is not available 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 affected LIBOR Loans shall be suspended and no further Loans may be
converted into or continued as such LIBOR Loans.

 

 

 
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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 Revolver Usage 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.        Fee Letters. Borrowers shall pay all fees set forth in any fee
letter executed in connection with this Agreement, including without limitation
a closing fee and any agency fee.

 

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 as to amounts payable by
Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.9, submitted to Borrower Agent
by Agent or the affected Lender shall be final, conclusive and binding for all
purposes, absent manifest error, and Borrowers shall pay such amounts to the
appropriate party within 10 days following receipt of the certificate.

 

3.4.        Reimbursement Obligations. Borrowers shall pay all Extraordinary
Expenses promptly upon request. Borrowers shall also reimburse Agent for all
legal, accounting, appraisal, consulting, and other fees, costs and expenses
incurred by it in connection with (a) negotiation and preparation of any Loan
Documents, including any amendment or other modification thereof; (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 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 alternative
fee arrangements that Agent, any Lender or any of their Affiliates may have with
such professionals that otherwise might apply to this or any other transaction.
Borrowers acknowledge that counsel may provide Agent with a benefit (such as a
discount, credit or accommodation for other matters) based on counsel's overall
relationship with Agent, including fees paid hereunder. If, for any reason
(including inaccurate reporting in any Borrower Materials), 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 ratable 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.

 

 

 
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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 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. Agent will promptly notify Borrower
Agent and Lenders if, in connection with any Loan or request for a Loan, (a)
Agent determines that (i) Dollar deposits are not being offered to banks in the
London interbank Eurodollar market for the applicable Loan amount or Interest
Period, or (ii) adequate and reasonable means do not exist for determining LIBOR
for the Interest Period; or (b) Agent or Required Lenders determine for any
reason that LIBOR for the Interest Period does not adequately and fairly reflect
the cost to Lenders of funding the Loan. Thereafter, Lenders' obligations to
make or maintain affected LIBOR Loans and utilization of the LIBOR component (if
affected) in determining Base Rate shall be suspended until Agent (upon
instruction by Required Lenders) withdraws the notice. Upon receipt of such
notice, Borrower Agent may revoke any pending request for a LIBOR Loan or,
failing that, will be deemed to have requested a Base Rate Loan.

 

3.7.         Increased Costs; Capital Adequacy.

 

3.7.1.        Increased Costs Generally. If any Change in Law shall:

 

(a)     impose, modify or deem applicable any reserve, liquidity, 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 calculating LIBOR)
or Issuing Bank;

 

(b)     subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii)
Taxes described in clauses (b) through (d) of the definition of Excluded Taxes,
and (iii) Connection Income Taxes) with respect to any Loan, Letter of Credit,
Commitment or other obligations, or its deposits, reserves, other liabilities or
capital attributable thereto; or

 

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

 

and the result thereof shall be to increase the cost to a Lender of making or
maintaining any Loan or Commitment, or converting to or continuing any interest
option for a Loan, or to increase the cost to a Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit (or of maintaining
its obligation to participate in or to issue any Letter of Credit), or to reduce
the amount of any sum received or receivable by a Lender or Issuing Bank
hereunder (whether of principal, interest or any other amount) then, upon
request of such Lender or Issuing Bank, Borrowers will pay to it such additional
amount(s) as will compensate it for the additional costs incurred or reduction
suffered.

 

 

 
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3.7.2.          Capital Requirements. If a Lender or Issuing Bank determines
that a Change in Law affecting such Lender or Issuing Bank or its holding
company, if any, regarding capital or liquidity 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 or Loans, 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 its policies with respect to capital adequacy), then from time to
time Borrowers will pay to such Lender or Issuing Bank, as the case may be, such
additional amounts as will compensate it or its holding company for the
reduction suffered.

 

3.7.3.         LIBOR Loan Reserves. Without duplication of any amounts payable
pursuant to Section 3.7.1, if any Lender is required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits, Borrowers shall pay additional interest to such Lender on each
LIBOR Loan equal to the costs of such reserves allocated to the Loan by the
Lender (as determined by it in good faith, which determination shall be
conclusive). The additional interest shall be due and payable on each interest
payment date for the Loan; provided, however, that if the Lender notifies
Borrowers (with a copy to Agent) of the additional interest less than 10 days
prior to the interest payment date, then such interest shall be payable 10 days
after Borrowers' receipt of the notice.

 

3.7.4.          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 or reductions suffered more than 180 days(plus any period of retroactivity
of the Change in Law giving rise to the demand) prior to the date that the
Lender or Issuing Bank notifies Borrower Agent of the applicable Change in Law
and of such Lender's or Issuing Bank's intention to claim compensation therefor.

 

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 any
Indemnified Taxes or additional amounts with respect to a Lender under Section
5.9, then at the request of Borrower Agent, 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 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 (a) any Borrowing, conversion 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 pay to Agent its customary
administrative charge and to each Lender all losses, expenses and fees arising
from redeployment of funds or termination of match funding. For purposes of
calculating amounts payable under this Section, a Lender shall be deemed to have
funded a LIBOR Loan by a matching deposit or other borrowing in the London
interbank market for a comparable amount and period, whether or not the Loan was
in fact so funded.

 

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 of non-usurious interest permitted
by Applicable Law ("maximum rate"). If Agent or any Lender shall receive
interest in an amount 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.

 

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 Revolver Loans, Borrower Agent
shall give Agent a Notice of Borrowing. Such notice must be received by Agent by
11:00 a.m. (i) on the requested funding date, in the case of Base Rate Loans,
and (ii) at least two Business Days prior to the requested funding date, in the
case of LIBOR Loans. Notices received after such time 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 a
Base Rate Loan or LIBOR Loan, and (D) in the case of a LIBOR Loan, the
applicable Interest Period (which shall be deemed to be 30 days if not
specified).

 

(b)     Unless payment is otherwise made by Borrowers, the becoming due of any
Obligation (whether principal, interest, fees or other charges, including
Extraordinary Expenses, LC Obligations, Cash Collateral and Secured Bank Product
Obligations) shall be deemed to be a request for a Base Rate Revolver Loan on
the due date in the amount due and the Loan proceeds shall be disbursed as
direct payment of such Obligation. In addition, Agent may, at its option, charge
such amount against any operating, investment or other account of a Borrower
maintained with Agent or any of its Affiliates.

 

(c)     If a Borrower maintains a disbursement account with Agent or any of its
Affiliates, then presentation for payment in the account of a Payment Item when
there are insufficient funds to cover it shall be deemed to be a request for a
Base Rate Revolver Loan on the presentation date, in the amount of the Payment
Item. Proceeds of the Loan may be disbursed directly to the account.

 

4.1.2.       Fundings by Lenders. Agent shall endeavor to notify Lenders of each
Notice of Borrowing (or deemed request for a Borrowing) by 3:00 p.m. at least
two Business Days before a proposed funding of a LIBOR Loan. Each Lender shall
fund its Pro Rata share of a Borrowing in immediately available funds not later
than 3:00 p.m. on the requested funding date, unless Agent's notice is received
after the times provided above, in which case Lender shall fund by 11:00 a.m. on
the next Business Day. Subject to its receipt of such amounts from Lenders,
Agent shall disburse the Borrowing proceeds 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 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 a Borrowing or of a settlement under 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. A Lender or Issuing Bank may fulfill its
obligations under Loan Documents through one or more Lending Offices, and this
shall not affect any obligation of Obligors under the Loan Documents or with
respect to any Obligations.

 

4.1.3.     Settlement.

 

(a)     [Intentionally omitted].

 

 

 
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(b)     Settlement of Loans among Lenders and Agent shall take place on a date
determined from time to time by Agent (but at least weekly, unless the
settlement amount is de minimis), on a Pro Rata basis in accordance with the
Settlement Report delivered by Agent to Lenders. Lenders' obligations to make
settlements and to fund participations are absolute, irrevocable 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.

 

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. Notwithstanding anything herein to the contrary:

 

4.2.1.      Reallocation of Pro Rata Share; Amendments. For purposes of
determining Lenders' obligations or rights to fund, participate in or receive
collections with respect to Loans and Letters of Credit (including existing
Protective Advances and LC Obligations), Agent may in its discretion reallocate
Pro Rata shares by excluding a Defaulting Lender's Commitments and Loans from
the calculation of shares. 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 use such amounts to cover the Defaulting
Lender's defaulted obligations, to Cash Collateralize such Lender's Fronting
Exposure, to readvance the amounts to Borrowers or to repay Obligations. A
Lender shall not be entitled to receive any fees accruing hereunder while it is
a Defaulting Lender and its unfunded 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.       Status; Cure.   Agent may determine in its discretion that a Lender
constitutes a Defaulting Lender and the effective date of such status shall be
conclusive and binding on all parties, absent manifest error. Borrowers, Agent
and Issuing Bank may agree in writing that a Lender has ceased to be a
Defaulting Lender, whereupon Pro Rata shares shall be reallocated without
exclusion of the reinstated Lender's Commitments and Loans, and the Revolver
Usage and other exposures under the Revolver Commitments shall be reallocated
among Lenders and settled by Agent (with appropriate payments by the reinstated
Lender, including payment of any breakage costs for reallocated LIBOR Loans) 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 obligations hereunder shall not relieve any other Lender of
its obligations under any Loan Document. 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 when made shall be in a minimum amount of $2,500,000,
plus an increment of $100,000 in excess thereof. No more than six 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 Northwest Pipe
Company ("Borrower Agent") as its representative and agent for all purposes
under the Loan Documents, including requests for and receipt of Loans and
Letters of Credit, designation of interest rates, delivery or receipt of
communications, delivery of Borrower Materials, 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 all purposes under the Loan Documents. Each Borrower agrees
that any notice, election, communication, delivery, representation, agreement,
action, omission or undertaking 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 the termination of
all Commitments, the Obligations shall be immediately due and payable, and each
Secured Bank Product Provider may terminate its Bank Products. Until Full
Payment of the Obligations, all undertakings of Borrowers contained in the Loan
Documents shall continue, and Agent shall retain its Liens in the Collateral and
all of its rights and remedies under the Loan Documents. Agent shall not be
required to terminate its Liens unless it receives Cash Collateral or a written
agreement, in each case reasonably satisfactory to it, protecting Agent and
Lenders from dishonor or return of any Payment Item previously applied to the
Obligations. Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5, 5.9, 5.10, 12, 14.2, this
Section, and each indemnity or waiver given by an Obligor or Lender in any Loan
Document, shall survive Full Payment of the Obligations.

 

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 and
clear of (and without deduction for) any Taxes (except as permitted by Section
5.9.1(a)), 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. Except as set forth in
Section 5.6, Borrowers agrees that Agent shall have the continuing, exclusive
right to apply and reapply payments and proceeds of Collateral against the
Obligations, in such manner as Agent deems advisable.

 

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. Subject to Section 2.1.5, if an Overadvance exists at any time,
Borrowers shall, on the sooner of Agent's demand or the first Business Day after
any Borrower has knowledge thereof, repay Revolver Loans in an amount sufficient
to reduce Revolver Usage to the Borrowing Base. If any Asset Disposition
includes the disposition of Accounts or Inventory and results in an Overadvance,
Borrowers shall apply (i) so long as there is no Event of Default, Net Proceeds
to repay Revolver Loans in an amount sufficient to eliminate such Overadvance
and (ii) during the continuance of an Event of Default, Net Proceeds to repay
Revolver Loansequal to the greater of (a) the net book value of such Accounts
and Inventory, or (b) the reduction in Borrowing Base resulting from the
disposition.

 

 

 
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5.3.       Mandatory Prepayments.

 

5.3.1.     Insurance Proceeds; Condemnation Awards. Concurrently with the
receipt of any proceeds of insurance or condemnation awards paid in respect of
any Inventory or Equipment and if an Overadvance then exists, Borrowers shall
repay Revolving Loans in an amount equal to the greater of (a) the amount of
such Overadvance and (b) such proceeds, subject to Section 8.6.2.

 

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 if Agent, Issuing Bank or any Lender exercises a
right of setoff, and any of such payment or setoff 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 a Lender in
its discretion) to be repaid to a trustee, receiver or any other Person, then
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 or setoff had not occurred.

 

5.6.        Application and Allocation of Payments.

 

5.6.1.     Application. Payments made by Borrowers hereunder shall be applied
(a) first, as specifically required hereby; (b) second, to Obligations then due
and owing; (b) third, to other Obligations specified by Borrowers; and (c)
fourth, as determined by Agent in its discretion.

 

5.6.2.    Post-Default Allocation. Notwithstanding anything in any Loan Document
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 fees, indemnification, costs and expenses, including
Extraordinary Expenses, owing to Agent;

 

(b)     second, to all amounts owing to Agent on Protective Advances, and Loans
and participations that a Defaulting Lender has failed to settle or fund;

 

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

 

(d)     fourth, to all Obligations (other than Secured Bank Product Obligations)
constituting fees, indemnification, costs or expenses owing to Lenders;

 

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

 

(f)     sixth, to Cash Collateralize all LC Obligations;

 

(g)     seventh, to all Loans, and to Secured Bank Product Obligations arising
under Hedge Agreements (including Cash Collateralization thereof) up to the
amount of Reserves existing therefor;

 

 

 
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(h)     eighth, to all other Secured Bank Product Obligations; and

 

(i)     last, to all remaining Obligations.

 

Amounts shall be applied to payment of each category of Obligations only after
Full Payment of amounts payable from time to time under all preceding
categories. If amounts are insufficient to satisfy a category, they shall be
paid ratably among outstanding Obligations in the category. Monies and proceeds
obtained from an Obligor shall not be applied to its Excluded Swap Obligations,
but appropriate adjustments shall be made with respect to amounts obtained from
other Obligors to preserve the allocations in any applicable category. Agent
shall have no obligation to calculate the amount of any Secured Bank Product
Obligation and may request a reasonably detailed calculation thereof from a
Secured Bank Product Provider. If the provider fails to deliver the calculation
within five days following request, Agent may assume the amount is zero. The
allocations set forth in this Section are solely to determine the rights and
priorities among Secured Parties, and may be changed by agreement of the
affected Secured Parties, without the consent of any Obligor. This Section 5.6.2
is not for the benefit of or enforceable by any Obligor, and each Borrower
irrevocably waives the right to direct the application of any payments or
Collateral proceeds subject to this Section 5.6.2.

 

5.6.3.      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 a
Secured Party, the Secured Party agrees to return it).

 

5.7.        Dominion Account. 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 a credit
balance results from such application, it 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.

 

5.8.        Account Stated. Agent shall maintain, in accordance with its
customary practices, loan account(s) evidencing the Debt of Borrowers hereunder.
Any failure of Agent to record anything in a loan account, or any error in doing
so, shall not limit or otherwise affect the obligation of Borrowers to pay any
amount owing hereunder. Entries made in a loan account shall constitute
presumptive evidence of the information contained therein. If any information
contained in a loan account is provided to or inspected by any Person, the
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; Obligation to Withhold; Tax Payment.

 

(a)     All payments of Obligations by Obligors shall be made without deduction
or withholding for any Taxes, except as required by Applicable Law. If
Applicable Law (as determined by Agent in its discretion) requires the deduction
or withholding of any Tax from any such payment by Agent or an Obligor, then
Agent or such Obligor shall be entitled to make such deduction or withholding
based on information and documentation provided pursuant to Section 5.10.

 

(b)     If Agent or any Obligor is required by the Code to withhold or deduct
Taxes, including backup withholding and withholding taxes, from any payment,
then (i) Agent shall pay the full amount that it determines is to be withheld or
deducted to the relevant Governmental Authority pursuant to the Code, and (ii)
to the extent the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the applicable Obligor shall be increased as necessary
so that the Recipient receives an amount equal to the sum it would have received
had no such withholding or deduction been made.

 

 

 
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(c)     If Agent or any Obligor is required by any Applicable Law other than the
Code to withhold or deduct Taxes from any payment, then (i) Agent or such
Obligor, to the extent required by Applicable Law, shall timely pay the full
amount to be withheld or deducted to the relevant Governmental Authority, and
(ii) to the extent the withholding or deduction is made on account of
Indemnified Taxes, the sum payable by the applicable Obligor shall be increased
as necessary so that the Recipient receives an amount equal to the sum it would
have received had no such withholding or deduction been made.

 

5.9.2.        Payment of Other Taxes.   Without limiting the foregoing,
Borrowers shall timely pay to the relevant Governmental Authority in accordance
with Applicable Law, or at Agent's option, timely reimburse Agent for payment
of, any Other Taxes.

 

5.9.3.        Tax Indemnification.

 

(a)     Each Borrower shall indemnify and hold harmless, on a joint and several
basis, each Recipient against any Indemnified Taxes (including those imposed or
asserted on or attributable to amounts payable under this Section) payable or
paid by a Recipient or required to be withheld or deducted from a payment to a
Recipient, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. Each
Borrower shall indemnify and hold harmless Agent against any amount that a
Lender or Issuing Bank fails for any reason to pay indefeasibly to Agent as
required pursuant to this Section. Each Borrower shall make payment within 10
days after demand for any amount or liability payable under this Section. A
certificate as to the amount of such payment or liability delivered to Borrowers
by a Lender or Issuing Bank (with a copy to Agent), or by Agent on its own
behalf or on behalf of any Recipient, shall be conclusive absent manifest error.

 

(b)     Each Lender and Issuing Bank shall indemnify and hold harmless, on a
several basis, (i) Agent against any Indemnified Taxes attributable to such
Lender or Issuing Bank (but only to the extent Borrowers have not already paid
or reimbursed Agent therefor and without limiting Borrowers' obligation to do
so), (ii) Agent and Obligors, as applicable, against any Taxes attributable to
such Lender's failure to maintain a Participant register as required hereunder,
and (iii) Agent and Obligors, as applicable, against any Excluded Taxes
attributable to such Lender or Issuing Bank, in each case, that are payable or
paid by Agent or an Obligor in connection with any Obligations, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Each Lender and Issuing Bank shall make payment
within 10 days after demand for any amount or liability payable under this
Section. A certificate as to the amount of such payment or liability delivered
to any Lender or Issuing Bank by Agent shall be conclusive absent manifest
error.

 

5.9.4.         Evidence of Payments.   If Agent or an Obligor pays any Taxes
pursuant to this Section, then upon request, Agent shall deliver to Borrower
Agent or Borrower Agent shall deliver to Agent, respectively, a copy of a
receipt issued by the appropriate Governmental Authority evidencing the payment,
a copy of any return required by Applicable Law to report the payment, or other
evidence of payment reasonably satisfactory to Agent or Borrower Agent, as
applicable.

 

5.9.5.         Treatment of Certain Refunds. Unless required by Applicable Law,
at no time shall Agent have any obligation to file for or otherwise pursue on
behalf of a Lender or Issuing Bank, nor have any obligation to pay to any Lender
or Issuing Bank, any refund of Taxes withheld or deducted from funds paid for
the account of a Lender or Issuing Bank. If a Recipient determines in its
discretion that it has received a refund of any Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower has paid
additional amounts pursuant to this Section, it shall pay Borrowers an amount
equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrowers with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses (including Taxes) incurred by
such Recipient, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided that
Borrowers agree, upon request by the Recipient, to repay the amount paid over to
Borrowers (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Recipient if the Recipient is required to repay
such refund to the Governmental Authority. Notwithstanding anything herein to
the contrary, no Recipient shall be required to pay any amount to Borrowers if
such payment would place the Recipient in a less favorable net after-Tax
position than it would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. In no event shall Agent or any Recipient be required to
make its tax returns (or any other information relating to its taxes that it
deems confidential) available to any Obligor or other Person.

 

 

 
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5.9.6.       Survival. Each party's obligations under Sections 5.9 and 5.10
shall survive the resignation or replacement of Agent or any assignment of
rights by or replacement of a Lender or Issuing Bank, the termination of the
Commitments, and the repayment, satisfaction, discharge or Full Payment of any
Obligations.

 

5.10.       Lender Tax Information.

 

5.10.1.        Status of Lenders. Any Lender that is entitled to an exemption
from or reduction of withholding Tax with respect to payments of Obligations
shall deliver to Borrowers and Agent properly completed and executed
documentation reasonably requested by Borrowers or Agent as will permit such
payments to be made without or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by Borrowers or Agent, shall deliver such
other documentation prescribed by Applicable Law or reasonably requested by
Borrowers or Agent to enable them to determine whether such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding the
foregoing, such documentation (other than documentation described in Sections
5.10.2(a), (b) and (d)) shall not be required if a Lender reasonably believes
delivery of the documentation would subject it to any material unreimbursed cost
or expense or would materially prejudice its legal or commercial position.

 

5.10.2.       Documentation. Without limiting the foregoing, if any Borrower is
a U.S. Person,

 

(a)     Any Lender that is a U.S. Person shall deliver to Borrowers and Agent on
or prior to the date on which such Lender becomes a Lender hereunder (and from
time to time thereafter upon reasonable request of Borrowers or Agent), executed
originals of IRS Form W-9, certifying that such Lender is exempt from U.S.
federal backup withholding Tax;

 

(b)     Any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrowers and Agent (in such number of copies as shall be requested
by the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender hereunder (and from time to time thereafter upon reasonable request of
Borrowers or Agent), whichever of the following is applicable:

 

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

 

 

 
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(ii)     executed originals of IRS Form W-8ECI;

 

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

 

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

 

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

 

(d)     if payment of an Obligation to a Lender would be subject to U.S. federal
withholding Tax imposed by FATCA if such Lender were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in Section
1471(b) or 1472(b) of the Code), such Lender shall deliver to Borrowers and
Agent at the time(s) prescribed by law and otherwise as reasonably requested by
Borrowers or Agent such documentation prescribed by Applicable Law (including
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by Borrowers or Agent as may be necessary for them to
comply with their obligations under FATCA and to determine that such Lender has
complied with its obligations under FATCA or to determine the amount to deduct
and withhold from such payment. Solely for purposes of this clause (d), "FATCA"
shall include any amendments made to FATCA after the date hereof.

 

5.10.3.      Redelivery of Documentation. If any form or certification
previously delivered by a Lender pursuant to this Section expires or becomes
obsolete or inaccurate in any respect, such Lender shall promptly update the
form or certification or notify Borrowers and Agent in writing of its inability
to do so.

 

5.11.       Nature and Extent of Borrowers' Liability.

 

5.11.1.      Joint and Several Liability. Each Borrower agrees that together
with Guarantors, it is jointly and severally liable for, and absolutely and
unconditionally guarantees to Agent and Lenders the prompt payment and
performance of, all Obligations, except its Excluded Swap Obligations. Each
Borrower agrees that its guaranty obligations hereunder constitute a continuing
guaranty of payment and not of collection, 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 any 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,
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 the Obligations.

 

 

 
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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 Obligations and waives, to the maximum extent permitted by law,
any right to revoke any guaranty of Obligations as long as it is a Borrower. 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 nonjudicial 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 Obligations, even though that election of remedies
destroys such Borrower's rights of subrogation against any other Person. Agent
may bid Obligations, in whole or part, at any foreclosure, trustee or other
sale, including any private sale, and the amount of such bid need not be paid by
Agent but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether Agent or any other Person is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral, and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations 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 not exceed the greater of (i) all
amounts for which such Borrower is primarily liable, as described in clause (c)
below, and (ii) such Borrower's Allocable Amount.

 

 

 
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(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, ratably based on 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)     Section 5.11.3(a) shall not limit the liability of any Borrower to pay
or guarantee Loans made directly or indirectly to it (including Loans advanced
hereunder to any other Person 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 its business, Secured Bank Product Obligations incurred to
support its 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 Loans and Letters of Credit to a Borrower based on
that calculation.

 

(d)     Each Obligor that is a Qualified ECP when its guaranty of or grant of
Lien as security for a Swap Obligation becomes effective hereby jointly and
severally, absolutely, unconditionally and irrevocably undertakes to provide
funds or other support to each Specified Obligor with respect to such Swap
Obligation as may be needed by such Specified Obligor from time to time to honor
all of its obligations under the Loan Documents in respect of such Swap
Obligation (but, in each case, only up to the maximum amount of such liability
that can be hereby incurred without rendering such Qualified ECP's obligations
and undertakings under this Section 5.11 voidable under any applicable
fraudulent transfer or conveyance act). The obligations and undertakings of each
Qualified ECP under this Section shall remain in full force and effect until
Full Payment of all Obligations. Each Obligor intends this Section to
constitute, and this Section shall be deemed to constitute, a guarantee of the
obligations of, and a "keepwell, support or other agreement" for the benefit of,
each Obligor for all purposes of the Commodity Exchange Act.

 

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 its
Obligations.

 

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:

 

 

 
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(a)     Each 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.

 

(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 and other evidence satisfactory to Agent that such Liens are the only
Liens upon the Collateral, except Permitted Liens.

 

(c)     [Intentionally omitted].

 

(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 Borrower 1 certifying
that, after giving effect to the initial Loans and transactions hereunder, (i)
each Borrower 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) each Borrower 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 Perkins Coie, 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 certificates for 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, including a roll-forward of its previous field
examination, 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 shall have occurred since December 31, 2014.

 

(k)      Agent shall have received interim financials for Borrowers since the
last audited financials in December 31, 2014 through August 31, 2015.

 

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

 

 

 
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(m)     Agent shall have received a Borrowing Base Report as of September 30,
2015. 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 $20,000,000.

 

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 to an earlier date);

 

(c)     All conditions precedent in any other Loan Document shall be satisfied;

 

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

 

(e)     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 the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant. As an
additional condition to any funding, issuance or grant, Agent shall have
received such other information, documents, instruments and agreements as it
deems appropriate in connection therewith.

 

Section 7.     COLLATERAL

 

7.1.         Grant of Security Interest. To secure the prompt payment and
performance of its Obligations, each Borrower hereby grants to Agent, for the
benefit of Secured Parties, a continuing security interest in and Lien upon all
Property of such Borrower, 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;

 

 

 
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(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.

 

7.2.        Lien on Deposit Accounts; Cash Collateral.

 

7.2.1.          Deposit Accounts. To further secure the prompt payment and
performance of its Obligations, each Borrower hereby grants to Agent a
continuing security interest in and Lien upon all amounts credited to any
Deposit Account of such Borrower, including sums in any blocked, lockbox, sweep
or collection account. Each Borrower hereby authorizes and directs each bank or
other depository to deliver to Agent, upon request, all balances in any Deposit
Account maintained for such Borrower, without inquiry into the authority or
right of Agent to make such request.

 

7.2.2.          Cash Collateral. 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 Borrower, and shall have no responsibility for any
investment or loss. As security for its Obligations, each Borrower hereby grants
to Agent a security interest in and Lien upon 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 such Obligations as
they become due, in such 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 Borrower or other Person shall have any right to any Cash Collateral,
until Full Payment of the Obligations.

 

7.3.        Real Estate Collateral.

 

7.2.3.           Collateral Assignment of Leases. To further secure the prompt
payment and performance of its Obligations, each Borrowers hereby transfers and
assigns to Agent all of scuh Borrower's right, title and interest in, to and
under all now or hereafter existing leases of real Property to which such
Borrower is a party, whether as lessor or lessee, and all extensions, renewals,
modifications and proceeds thereof, except to the extent that any such
assignment or transfer would constitute a default by such Borrower of its
obligations as lessee under any such lease.

 

7.4.        Other Collateral.

 

7.4.1.          Commercial Tort Claims. Borrowers shall promptly notify Agent in
writing if any Borrower has a Commercial Tort Claim (other than, as long as no
Default or Event of Default exists, a Commercial Tort Claim for less than
$100,000), shall promptly amend Schedule 9.1.16 to include such claim, and shall
take such actions as Agent deems appropriate to subject such claim to a duly
perfected, first priority Lien in favor of Agent.

 

7.4.2.          Certain After-Acquired Collateral. Borrowers shall promptly
notify Agent in writing if, after the Closing Date, any Borrower obtains any
interest in any Collateral consisting of Deposit Accounts, Chattel Paper,
Documents, Instruments, Intellectual Property, Investment Property or
Letter-of-Credit Rights, in each instance, having a value in excess of
$1,000,000, and, upon Agent's request, shall promptly take such actions as Agent
deems appropriate to effect Agent's duly perfected, first priority Lien upon
such Collateral, including 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 exercise commercially reasonable
efforts to obtain an acknowledgment that such third party holds the Collateral
for the benefit of Agent.

 

 

 
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7.5.         Limitations. 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 Borrowers relating to any Collateral. In
no event shall the grant of any Lien under any Loan Document secure an Excluded
Swap Obligation of the granting Obligor.

 

7.6.        Further Assurances. All Liens granted to Agent under the Loan
Documents are for the benefit of Secured Parties. Promptly upon request,
Borrowers shall deliver such instruments and agreements, and shall take such
actions, as Agent deems appropriate under Applicable Law to evidence or perfect
its Lien on any Collateral, or otherwise to give effect to the intent of this
Agreement. Each Borrower authorizes Agent to file any financing statement that
describes the Collateral as "all assets" or "all personal property" of such
Borrower, 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 stock of any Foreign Subsidiary.

 

Section 8.     COLLATERAL ADMINISTRATION

 

8.1.        Borrowing Base Reports.

 

8.1.1.     Weekly Reporting. During a Trigger Period, by Wednesday of each week,
Borrowers shall deliver to Agent (and Agent shall promptly deliver same to
Lenders) a Borrowing Base Report as of the close of business of the previous
week, and at such other times as Agent may request. All information (including
calculation of Availability) in a Borrowing Base Report shall be certified by
Borrowers. Agent may from time to time adjust any such report (a) to reflect
Agent's reasonable estimate of declines in value of 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 any information or calculation does not comply
with this Agreement.

 

8.1.2.     Monthly Reporting. During any period other than a Trigger Period, by
the 20th day of each month, Borrowers shall deliver to Agent (and Agent shall
promptly deliver same to Lenders) a Borrowing Base Report as of the close of
business of the previous month, and at such other times as Agent may request.
All information (including calculation of Availability) in a Borrowing Base
Report shall be certified by Borrowers. Agent may from time to time adjust any
such report (a) to reflect Agent's reasonable estimate of declines in value of
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 any information or
calculation does not comply with this Agreement.

 

8.2.         Accounts.

 

8.2.1.     Records and Schedules of Accounts. Each Borrower shall keep accurate
and complete records of its Accounts, including all payments and collections
thereon, and shall submit to Agent sales, collection, reconciliation and other
reports in form reasonably satisfactory to Agent, on such periodic basis as
Agent may request. Each Borrower 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 and
address, amount, invoice date and due date, showing any discount, allowance,
credit, authorized return or dispute, and including such proof of delivery,
copies of invoices and invoice registers, copies of related documents, repayment
histories, status reports and other information as Agent may reasonably request.
If Accounts in an aggregate face amount of $1,000,000 or more cease to be
Eligible Accounts, Borrowers shall notify Agent of such occurrence promptly (and
in any event within one Business Day) 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 during the continuance of an Event of
Default, 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 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 Accounts of Borrowers 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 acceptable to Agent.
Borrowers shall obtain an agreement (in form and substance 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 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
(other than, so long as no Trigger Period is then in effect, Accounts paid in
Canadian Dollars) or otherwise relating to Collateral are made directly to a
Dominion Account (or a lockbox relating to a Dominion Account). So long as no
Trigger Period is in effect and solely with respect to Accounts paid in Canadian
Dollars, Borrowers shall have additional time to deposit or cause to be
deposited payments on such Accounts into a Dominion Account (or a lockbox
relating to a Dominion Account) so long as such payments are delivered to and
held by Agent’s foreign exchange group within not more than one (1) Business Day
following receipt, but, in any event, such payments must be made into a Dominion
Account (or a lockbox relating to a Dominion Account) no more than five (5)
Business Days after receipt thereof. If any Borrower or Subsidiary receives cash
or Payment Items with respect to any Collateral, it shall hold same in trust for
Agent and deposit same into a Dominion Account not later than: (i) the next
Business Day with respect to (A) all Accounts during a Trigger Period and (B)
all Accounts other than Accounts Paid in Canadian Dollars so long as no Trigger
Period is in effect or (ii) so long as such receipts are delivered to and held
by Agent’s foreign exchange group within not more than one (1) Business Day
following receipt, five (5) Business Days after receipt for Accounts Paid in
Canadian Dollars so long as no Trigger Period is in effect).

 

8.3.        Inventory.

 

8.3.1.      Records and Reports of Inventory. Each Borrower shall keep accurate
and complete records of its Inventory, including costs and daily withdrawals and
additions, and shall submit to Agent inventory and reconciliation reports in
form reasonably satisfactory to Agent, on such periodic basis as Agent may
request. 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 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 request. Agent may participate in and observe each
physical count.

 

 

 
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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 Course of Business; (b) no Default, Event of
Default or Overadvance exists or would result therefrom; (c) Agent is promptly
notified if the aggregate Value of all Inventory returned in any month exceeds
$1,000,000; and (d) any payment received by a Borrower for a return is promptly
remitted to Agent for application to the Obligations.

 

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 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.       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 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, without the prior written consent of Agent,
other than (a) a Permitted Asset Disposition; and (b) replacement of Equipment
that is worn, damaged or obsolete with Equipment of like function and value, if
the replacement Equipment (if any is needed) is acquired substantially
contemporaneously with such disposition and is free of Liens.

 

8.4.3.       Condition of Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements and repairs have been made
so that the value and operating efficiency of the Equipment is preserved at all
times, reasonable wear and tear excepted. Each Borrower shall ensure that the
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 Equipment to become affixed to real
Property unless any landlord or mortgagee delivers a Lien Waiver.

 

8.5.       Deposit Accounts. Schedule 8.5 sets forth all Deposit Accounts
maintained by Borrowers, including all Dominion Accounts. Each Borrower shall
take all actions necessary to establish Agent's control of each such Deposit
Account (other than an account exclusively used for payroll, payroll taxes or
employee benefits, or an account containing not more than $10,000 at any time).
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. Each Borrower shall promptly notify
Agent of any opening or closing of a Deposit Account and, with the consent of
Agent, will amend Schedule 8.5 to reflect same.

 

 

 
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8.6.        General Provisions.

 

8.6.1.     Location of Collateral. All tangible items of Collateral, other than
Inventory in transit, shall at all times be kept by Borrowers at the business
locations set forth in Schedule 8.6.1, except that Borrowers may (a) make sales
or other dispositions of Collateral in accordance with Section 10.2.6; and (b)
move Collateral to another location in the United States, upon 30 Business Days
prior written notice to Agent.

 

8.6.2.     Insurance of Collateral; Condemnation Proceeds.

 

(a)     Each Borrower 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 rating of at least A+,
unless otherwise approved by Agent in its discretion) satisfactory to Agent. All
proceeds under each policy shall be payable to Agent. From time to time upon
request, Borrowers shall deliver to Agent the originals or certified copies of
its insurance policies and updated flood plain searches. 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 Borrower 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 Borrower 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 Borrower agrees to deliver to Agent, promptly as
rendered, copies of all reports made to insurance companies. While no Event of
Default exists, Borrowers may settle, adjust or compromise any insurance claim,
as long as the proceeds are delivered to Agent. If an Event of Default exists,
only Agent shall be authorized to settle, adjust and compromise such claims.

 

(b)     Any proceeds of insurance (other than proceeds from workers'
compensation or D&O insurance) paid or payable in connection with any damage or
casualty to any of Borrower's property and any awards arising from condemnation
of any Collateral shall be paid to Agent. Any such proceeds or awards that
relate to Inventory shall be applied to payment of the Revolver Loans, and then
to other Obligations. Subject to clause (c) below, any proceeds or awards that
relate to Equipment or Real Estate shall be applied first to Revolver Loans and
then to other Obligations.

 

(c)     If requested by Borrowers in writing within 30 days after Agent's
receipt of any insurance proceeds or condemnation awards relating to any loss or
destruction of Equipment or Real Estate, Borrowers may use such proceeds or
awards to repair or replace such Equipment or Real Estate (and until so used,
the proceeds shall be held by Agent as Cash Collateral) 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 reasonably 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 except to the extent the
repaired or replaced Property exceeds the value of the original Property and
then only to the extent of such excess; (v) Borrowers comply with disbursement
procedures for such repair or replacement as Agent may reasonably require; and
(vi) the aggregate amount of such proceeds or awards from any single casualty or
condemnation does not exceed $5,000,000.

 

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 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 Borrowers' sole risk.

 

 

 
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8.6.4.       Defense of Title. Each Borrower shall defend its title to
Collateral and Agent's Liens therein against all Persons, claims and demands,
except Permitted Liens.

 

Power of Attorney. Each Borrower hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Borrower'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 a Borrower's name,
but at the cost and expense of Borrowers:

 

(a)     Endorse a Borrower'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 a Borrower'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 and open mail addressed
to a Borrower, 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 a Borrower'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; (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 a Borrower is a beneficiary; and (xii) take all other actions as Agent
deems appropriate to fulfill any Borrower'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 Borrower 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.

 

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, and do
not (a) require any consent or approval of any holders of Equity Interests of
any Obligor, except 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 imposition of a Lien (other than
Permitted Liens) on any Obligor's Property.

 

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.

 

 

 
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9.1.4.     Capital Structure. Schedule 9.1.4 shows, for each Borrower and
Subsidiary, its name, jurisdiction of organization, authorized and issued Equity
Interests, each holders that owns at least five percent (5%) of its Equity
Interests, and agreements binding on such holders with respect to such Equity
Interests. 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 Borrower 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. 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 or Subsidiary.

 

9.1.5.     Title to Properties; Priority of Liens. Each Borrower and Subsidiary
has good and marketable title to (or valid leasehold interests in) all of its
Real Estate, and good title to all of its personal Property, including all
Property reflected in any financial statements delivered to Agent or Lenders, in
each case free of Liens except Permitted Liens. 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 the filing of
financing statements, the filing of the Trademark Security Agreement, , in each
case, in the appropriate filing offices, the establishment of control over any
Deposit Accounts, the termination of existing Liens being paid by the initial
Borrowing hereunder and Permitted Liens that are expressly allowed to have
priority over Agent's 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 shown as an Eligible
Account in a Borrowing Base Report, that:

 

(a)     it is genuine and in all respects what it purports to be;

 

(b)     it arises out of a completed, bona fide sale and delivery of goods or
provision of services 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 applicable invoice, 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 except as
arising in the Ordinary Course of Business and disclosed to Agent; and it is
absolutely owing by the Account Debtor, without contingency in any respect;

 

(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 or is in process with respect to the Account, except
discounts or allowances granted in the Ordinary Course of Business for prompt
payment that are reflected on the face of the invoice related thereto and in the
reports submitted to Agent hereunder; and

 

(g)     to the best of Borrowers' knowledge, (i) there are no facts or
circumstances that are reasonably likely to impair the enforceability or
collectability 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.

 

 

 
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9.1.7.     Financial Statements. The consolidated and consolidating balance
sheets, and related statements of income, cash flow and shareholders 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 the
financial positions and results of operations of Borrowers and Subsidiaries at
the dates and for the periods indicated, subject to normal year-end adjustments
and the absence of footnotes. All projections delivered from time to time to
Agent and Lenders have been prepared in good faith, based on reasonable
assumptions in light of the circumstances at such time. Since December 31, 2014,
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, except with respect to the financial performance of the Tubular
Division as disclosed in financial statements delivered to Agent for periods
after 2014. 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 hereunder.

 

9.1.9.     Taxes. Each Borrower and Subsidiary has filed all federal, state and
local tax returns and other reports that it is required by law to file, 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. 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 conflict with any rights of others. There is no pending or, to
any Borrower's 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. All Intellectual Property owned, used or
licensed by, or otherwise subject to any interests of, any Borrower or
Subsidiary is shown on Schedule 9.1.11.

 

9.1.12.     Governmental Approvals. Each Borrower and Subsidiary has, is in
compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties. 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. Each Borrower and Subsidiary has duly
complied, and its Properties and business operations are in compliance, in all
material respects with all Applicable Laws, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Borrower or
Subsidiary under any Applicable Law. No Inventory has been produced in violation
of the FLSA.

 

9.1.14.     Compliance with Environmental Laws. 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
pollution, hazardous material or environmental clean-up. No Borrower or
Subsidiary has received any Environmental Notice. 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.

 

 

 
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9.1.15.     Burdensome Contracts. No Borrower or Subsidiary is a party or
subject to any contract, agreement or charter restriction that could reasonably
be expected to have a Material Adverse Effect. No Borrower or Subsidiary is
party or subject to any Restrictive Agreement, except as shown on Schedule
9.1.15. No such Restrictive Agreement prohibits the execution, delivery or
performance of any Loan Document by an Obligor.

 

9.1.16.      Litigation. Except as shown on Schedule 9.1.16, there are no
proceedings or investigations pending or, to any Borrower's knowledge,
threatened against any Borrower or Subsidiary, or any of their businesses,
operations, Properties, prospects or conditions, that (a) relate to any Loan
Documents or transactions contemplated thereby; or (b) could reasonably be
expected to have a Material Adverse Effect if determined adversely to any
Borrower or Subsidiary. Except as shown on such Schedule, 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 $100,000). No Borrower or
Subsidiary is in default with respect to any order, injunction or judgment of
any Governmental Authority.

 

9.1.17.     No Defaults. No event or circumstance has occurred or exists that
constitutes a Default or Event of Default. 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. 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 being processed by 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 met all applicable
requirements under the Code, ERISA and the Pension Protection Act of 2006, and
no application for a waiver of the minimum funding standards or an extension of
any amortization period has been made with respect to any Plan.

 

(b)     There are no pending or, to the knowledge of Borrowers, threatened
claims, 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)
as of the most recent valuation date for any Pension Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code) is at least
60%, and no Obligor or ERISA Affiliate knows of any reason that the funding
target attainment percentage could reasonably be expected to drop below 60%;
(iii) no Obligor or ERISA Affiliate has incurred any liability to the PBGC
except for the payment of premiums, and no premium payments are due and unpaid;
(iv) no Obligor or ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (v) no Pension Plan has been
terminated by its plan administrator or the PBGC, and no fact or circumstance
exists that could reasonably be expected to cause the PBGC to institute
proceedings to terminate a Pension Plan.

 

 

 
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(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 normal 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 as required and has been
maintained in good standing with applicable regulatory authorities.

 

9.1.19.     Trade Relations. There exists no actual or 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,
who individually or in the aggregate are material to the business of Borrower or
Subsidiary. There exists no condition or circumstance that could reasonably be
expected to impair the ability of any Borrower or Subsidiary to conduct its
business at any time hereafter in substantially the same manner as conducted on
the Closing Date.

 

9.1.20.     Labor Relations. Except as described on Schedule 9.1.20, no Borrower
or Subsidiary is party to or bound by any collective bargaining agreement,
management agreement or consulting agreement. There are no material grievances,
disputes or controversies with any union or other organization of any Borrower's
or Subsidiary's employees, or, to any Borrower's knowledge, any asserted or
threatened strikes, work stoppages or demands for collective bargaining.

 

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.     OFAC. No Borrower, Subsidiary or any director, officer, employee,
agent, affiliate or representative thereof, is or is owned or controlled by any
individual or entity that is currently the subject or target of any Sanction or
is located, organized or resident in a Designated Jurisdiction.

 

9.1.25.     Anti-Corruption Laws. Each Borrower and Subsidiary has conducted its
business in accordance with applicable anti-corruption laws and has instituted
and maintained policies and procedures designed to promote and achieve
compliance with such laws.

 

9.2.        Complete Disclosure. No Loan Document contains any untrue statement
of a material fact, nor fails to disclose any material fact necessary to make
the statements contained therein not materially misleading. There is no fact or
circumstance that any Obligor has failed to disclose to Agent in writing that
could reasonably be expected to have a Material Adverse Effect.

 

 

 
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Section 10.     COVENANTS AND CONTINUING AGREEMENTS

 

10.1.        Affirmative Covenants. As long as any Commitments or Obligations
are outstanding, each Borrower 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 reasonable notice and normal business hours, to visit and
inspect the Properties of any Borrower or Subsidiary, inspect, audit and make
extracts from any Borrower's or Subsidiary's books and records, and discuss with
its officers, employees, agents, advisors and independent accountants Borrower's
or Subsidiary's business, financial condition, assets, prospects and results of
operations. Lenders may participate in any such visit or inspection, at their
own expense. Neither Agent nor any Lender shall have any duty to any Borrower to
make any inspection, nor to share any results of any inspection, appraisal or
report with any Borrower. Borrowers acknowledge that all inspections, appraisals
and reports are prepared by Agent and Lenders for their purposes, and Borrowers
shall not be entitled to rely upon them.

 

(b)     Reimburse 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, once per Loan Year
unless Availability is at any time less than 25% of the aggregate Revolver
Commitments then twice per Loan Year; and (ii) appraisals of Inventory,
including without limitation CEEEB Inventory, at such frequency as Agent deems
appropriate, but not more frequently than twice per Loan Year; provided,
however, that if an examination or appraisal is initiated during a Default or
Event of Default, there shall be no limitation on frequency and all charges,
costs and expenses relating thereto shall be reimbursed by Borrowers without
regard to such limits. Borrowers agree to pay Agent's then standard charges for
examination activities, including charges for Agent's internal examination and
appraisal groups, as well as the charges of any third party used for such
purposes. No Borrowing Base calculation shall include Collateral acquired in a
Permitted Acquisition or otherwise outside the Ordinary Course of Business until
completion of applicable field examinations and appraisals (which shall not be
included in the limits provided above) satisfactory to Agent.

 

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 and 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 standing selected by Borrowers and acceptable to Agent, and shall set
forth in comparative form corresponding figures for the preceding Fiscal Year
and other information acceptable to Agent;

 

(b)     as soon as available, and in any event within 30 days after the end of
each month (but within 45 days after the last month in any 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 and consolidating bases for Borrowers and
Subsidiaries, setting forth in comparative form corresponding figures for the
preceding Fiscal Year and certified by a Senior Officer of Borrower Agent in
his/her official capacity and not as an individual as prepared in accordance
with GAAP and fairly presenting the financial position and results of operations
for such month and period, subject to normal year-end adjustments and the
absence of footnotes;

 

 

 
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(c)     concurrently with delivery of financial statements under clauses (a) and
(b) above, or more frequently if requested by Agent while a Default or Event of
Default exists, a Compliance Certificate executed by a Senior Officer of
Borrower Agent in his/her official capacity and not as an individual;

 

(d)     concurrently with delivery of financial statements under clause (a)
above, copies of all management letters and other material reports submitted to
Borrowers by their accountants in connection with such financial statements;

 

(e)     not later than 30 days after the end of each Fiscal Year, projections of
Borrowers' consolidated balance sheets, results of operations, cash flow and
Availability for the next Fiscal Year, month by month, and for the next three
Fiscal Years, year by year;

 

(f)     at Agent's request, but not more frequently than monthly in the absence
of an Event of Default, a listing of each Borrower's trade payables, specifying
the trade creditor and balance due, and a detailed trade payable aging, all in
form reasonably satisfactory to Agent;

 

(g)     promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that any Borrower has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Borrower files with
the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements
made available by a Borrower to the public concerning material changes to or
developments in the business of such Borrower;

 

(h)     promptly after the sending or filing thereof, copies of any annual
report to be filed in connection with each Plan or Foreign Plan; and

 

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

 

10.1.3.      Notices. Notify Agent and Lenders in writing, promptly after a
Borrower's obtaining knowledge thereof, of any of the following that affects an
Obligor: (a) the threat or commencement of any proceeding or investigation,
whether or not covered by insurance, if an adverse determination could have a
Material Adverse Effect; (b) any pending or threatened labor dispute, strike or
walkout, or the expiration of any material labor contract; (c) any default under
or termination of a Material Contract; (d) the existence of any Default or Event
of Default; (e) any judgment in an amount exceeding $1,000,000; (f) the
assertion of any Intellectual Property Claim, if an adverse resolution could
reasonably be expected to have a Material Adverse Effect; (g) any violation or
asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws), if an adverse resolution could 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; (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. 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.

 

10.1.5.      Compliance with Laws. Comply with all Applicable Laws, including
ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding
collection and payment of Taxes, 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) or
maintain 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, it shall act
promptly and diligently to investigate and report to Agent and all appropriate
Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.

 

 

 
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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.

 

10.1.7.      Insurance. In addition to the insurance required hereunder with
respect to Collateral, maintain insurance with insurers (with a Best rating of
at least A+, unless otherwise approved by Agent in its discretion) satisfactory
to 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 $5,000,000, with deductibles and subject to an Insurance Assignment
satisfactory to Agent.

 

10.1.8.      Licenses. Keep each License affecting any Collateral (including the
manufacture, distribution or disposition of Inventory) in any material respect
or any other material Property of Borrowers and Subsidiaries in full force and
effect; promptly notify Agent of any proposed modification to any such License,
or entry into any new License, in each case at least 30 days prior to its
effective date; pay all Royalties when due; and notify Agent of any default or
breach asserted by any Person to have occurred under any 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 it
to guaranty the Obligations in a manner satisfactory to Agent, and to execute
and deliver such documents, instruments and agreements and to take such other
actions as Agent shall require to evidence and perfect a Lien in favor of Agent
on all assets of such Person, including delivery of such legal opinions, in form
and substance satisfactory to Agent, as it shall deem appropriate.

 

10.1.10.     Anti-Corruption Laws. Conduct its business in compliance with
applicable anti-corruption laws and maintain policies and procedures designed to
promote and achieve compliance with such laws.

 

10.2.      Negative Covenants. As long as any Commitments or Obligations are
outstanding, each Borrower 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)     Permitted Purchase Money Debt;

 

(d)     Borrowed Money (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;

 

 

 
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(e)     Debt with respect to Bank Products incurred in the Ordinary Course of
Business;

 

(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 $2,000,000 in the aggregate at any time;

 

(g)     Permitted Contingent Obligations;

 

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

 

(i)     Debt that is not included in any of the preceding clauses of this
Section, is not secured by a Lien and does not exceed $2,000,000 in the
aggregate at any time.

 

Permitted Liens. Create or suffer to exist any Lien upon any of its Property
(including without limitation its Real Estate), 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 not yet due or being Properly Contested;

 

(d)     statutory Liens (other than 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 yet due or is being Properly Contested, and
(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;

 

(e)     Liens incurred or deposits made in the Ordinary Course of Business to
secure the performance of government tenders, bids, contracts, statutory
obligations and other similar obligations, as long as such Liens are at all
times junior to Agent's Liens and are required or provided by law;

 

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

 

(g)     Liens arising by virtue of a judgment or judicial order against any
Borrower or Subsidiary, or any Property of a Borrower or Subsidiary, as long as
such Liens are (i) in existence for less than 20 consecutive days or being
Properly Contested, and (ii) at all times junior to Agent's Liens;

 

(h)     easements, rights-of-way, restrictions, covenants or other 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;

 

(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)     Liens on assets (other than Accounts and Inventory) acquired in a
Permitted Acquisition, securing Debt permitted by Section 10.2.1(f); and

 

(k)     existing Liens shown on Schedule 10.2.2.

 

10.2.3.     [Intentionally omitted].

 

10.2.4.     Distributions; Upstream Payments. Declare or make any Distributions,
except Upstream Payments and Permitted Distributions; 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 in effect on the Closing Date as shown on Schedule 9.1.15.

 

 

 
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10.2.5.     Restricted Investments. Make any Restricted Investment.

 

10.2.6.     Disposition of Assets. Make any Asset Disposition, except a
Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, or
a transfer of Property by a Subsidiary or Obligor to a Borrower.

 

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; and (d) as long as
no Default or Event of Default exists, intercompany loans by a Borrower to
another Borrower.

 

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); or (b) Borrowed Money (other than the Obligations) prior to its
due date under the agreements evidencing such Debt as in effect on the Closing
Date (or as amended thereafter with the consent of Agent); provided, however,
that so long as Borrowers maintain a Fixed Charge Coverage Ratio of at least 1.0
to 1.0 both before and after effect to giving any payment thereof, Borrowers
shall have the right to prepay any Capital Lease on which a Borrower is
personally obligated.

 

10.2.9.     Fundamental Changes. Change its name or conduct business under any
fictitious name; change its tax, charter or other organizational identification
number; change its form or state of organization; liquidate, wind up its affairs
or dissolve itself; or merge, combine or consolidate with any Person, whether in
a single transaction or in a series of related transactions, except for (a)
mergers or consolidations of a wholly-owned Subsidiary with another wholly-owned
Subsidiary or into a Borrower; or (b) Permitted Acquisitions.

 

10.2.10.     Subsidiaries. Form or acquire any Subsidiary after the Closing
Date, except in accordance with Sections 10.1.9, 10.2.5 and 10.2.9; or permit
any existing Subsidiary to issue any additional Equity Interests except
directors' qualifying shares.

 

10.2.11.     Organic Documents. Amend, modify or otherwise change any of its
Organic Documents, except in connection with a transaction permitted under
Section 10.2.9.

 

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; or (c) constituting customary restrictions on
assignment in leases and other contracts.

 

 

 
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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. Engage in any business, other than its
business as conducted on the Closing Date and any activities incidental thereto.

 

10.2.17.     Affiliate Transactions. Enter into or be party to any transaction
with an Affiliate, except (a) transactions expressly permitted by the Loan
Documents; (b) payment of reasonable compensation to officers and employees for
services actually rendered, and payment of customary directors' fees and
indemnities; (c) transactions solely among Obligors; (d) transactions with
Affiliates consummated prior to the Closing Date, as shown on Schedule 10.2.17;
and (e) transactions with Affiliates in the Ordinary Course of Business, upon
fair and reasonable terms fully disclosed to Agent and no less favorable than
would be obtained in a comparable arm's-length transaction with a non-Affiliate.

 

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.      Negative Pledge on Real Estate. Permit any Real Estate owned by
such party to be pledged or otherwise encumbered in favor of any party as
collateral for borrowed money.

 

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

 

Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio for each 12
month period of at least 1.0 to 1.0 while a Trigger Period is in effect,
measured monthly for the most recent period for which financial statements were
delivered hereunder pursuant to Section 10.1.2(b) prior to the Trigger Period
and each monthly period ending thereafter until the Trigger Period is no longer
in effect.

 

Section 11.     EVENTS OF DEFAULT; REMEDIES ON DEFAULT

 

11.1.     Events of Default. Each of the following shall be an "Event of
Default" if it occurs for any reason whatsoever, whether voluntary or
involuntary, by operation of law or otherwise:

 

(a)     Any Borrower fails to pay its Obligations when due (whether at stated
maturity, on demand, upon acceleration or otherwise);

 

(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)     A Borrower breaches or fail to perform any covenant contained in Section
7.2, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 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 15 days after
a Senior Officer of such Obligor has knowledge thereof or receives notice
thereof from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period or is a willful breach by an Obligor;

 

(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);

 

 

 
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(f)     Any breach or default of an Obligor occurs under (i) any Hedging
Agreement; or (ii) any instrument or agreement to which it is a party or by
which it or any of its Properties is bound, relating to any Debt (other than the
Obligations) in excess of $2,000,000, if the maturity of or any payment with
respect to such Debt may be accelerated or demanded due to such breach;

 

(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, $2,000,000 (net of
insurance coverage therefor that has not been denied by the insurer), unless a
stay of enforcement of such judgment or order is in effect;

 

(h)     A loss, theft, damage or destruction occurs with respect to any
Collateral if the amount not covered by insurance exceeds $2,000,000;

 

(i)     A Material Obligor is enjoined, restrained or in any way prevented by
any Governmental Authority from conducting any material part of its business; a
Material Obligor suffers the loss, revocation or termination of any material
license, permit, lease or agreement necessary to its business; there is a
cessation of any material part of a Material Obligor's business for a material
period of time; any material Collateral or Property of a Material Obligor is
taken or impaired through condemnation; a Material Obligor agrees to or
commences any liquidation, dissolution or winding up of its affairs; or a
Material 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 30 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, 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 any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan; 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 could lead to forfeiture of any material Property or any
Collateral; 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 Borrower, 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 Borrowers 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 their LC Obligations, Secured
Bank Product Obligations and other Obligations that are contingent or not yet
due and payable, and if Obligors fail 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 Borrowers 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 a
Borrower, Borrowers 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 Borrower agrees that 10 days
notice of any proposed sale or other disposition of Collateral by Agent shall be
reasonable, and that any sale conducted on the internet or to a licensor of
Intellectual Property shall be commercially reasonable. Agent may conduct sales
on any Obligor's premises, without charge, and any sale 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) during the continuance of an Event of Default
any or all Intellectual Property of Borrowers, 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. Each
Borrower's rights and interests under Intellectual Property shall inure to
Agent's benefit.

 

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 Lender or such Affiliate to or for the credit or the
account of an Obligor against its Obligations, 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 under the Loan Documents 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.

 

 

 
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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 any
Obligor under any Loan Document, 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. 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. Any action
taken by Agent in accordance with the provisions of the Loan Documents, and the
exercise by Agent 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; (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 or under any Loan
Documents, Applicable Law or otherwise. Agent alone shall be authorized to
determine eligibility and applicable advance rates under the Borrowing Base,
whether to impose or release any reserve, or whether any conditions to funding
or 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 Secured Party or other Person for any error in judgment.

 

12.1.2.     Duties. The title of "Agent" is used solely as a matter of market
custom and the duties of Agent are administrative in nature only. Agent has no
duties except those expressly set forth in the Loan Documents, and in no event
does Agent have any agency, fiduciary or implied duty to or relationship with
any Secured Party or other Person by reason of any Loan Document or related
transaction. 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
joining any other party, unless required by Applicable Law. In determining
compliance with a condition for any action hereunder, including satisfaction of
any condition in Section 6, Agent may presume that the condition is satisfactory
to a Secured Party unless Agent has received notice to the contrary from such
Secured Party before Agent takes the action. 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 or Collateral, and may
seek assurances to its satisfaction from Secured Parties of their
indemnification obligations against Claims that could be incurred by Agent.
Agent may refrain from any act until it has received such instructions or
assurances, and 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 pursuant to
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 it
determines in its discretion is contrary to Applicable Law or any Loan Documents
or could subject any Agent Indemnitee to liability.

 

 

 
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12.2.     Agreements Regarding Collateral and Borrower Materials.

 

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 a disposition or Lien that Borrowers
certify in writing is a Permitted Asset Disposition or 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 constitute a material
part of the Collateral; or (d) subject to Section 14.1, with the consent of
Required Lenders. Secured Parties authorize Agent to subordinate its Liens to
any Purchase Money Lien or other Lien entitled to priority hereunder. Agent has
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 provide to Lenders, when complete, any
field examination, audit or appraisal report prepared for Agent with respect to
any Obligor or Collateral ("Report"). Reports and other Borrower Materials may
be made available to Lenders by providing access to them on the Platform, but
Agent shall not be responsible for system failures or access issues that may
occur from time to time. Each Lender agrees (a) that Reports are not intended to
be comprehensive audits or examinations, and that Agent or any other Person
performing an audit or examination will inspect only limited information and
will rely significantly upon Borrowers' books, records and representations; (b)
that Agent makes no representation or warranty as to the accuracy or
completeness of any Borrower Materials and shall not be liable for any
information contained in or omitted from any Borrower Materials, including any
Report; and (c) to keep all Borrower Materials confidential and strictly for
such Lender's internal use, not to distribute any Report or other Borrower
Materials (or the contents thereof) to any Person (except to such Lender's
Participants, attorneys and accountants), and to use all Borrower Materials
solely for administration of the Obligations. Each Lender shall indemnify and
hold harmless 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 Borrower
Materials, as well as from any Claims arising as a direct or indirect result of
Agent furnishing same to such Lender, via the Platform or otherwise.

 

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. 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 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 assert any rights relating to any Collateral.

 

12.5.      Ratable Sharing. If any Lender obtains any payment or reduction of
any Obligation, whether through set-off or otherwise, in excess of its ratable
share of such Obligation, such Lender shall forthwith purchase from Secured
Parties participations in the affected Obligation as are necessary to share the
excess payment or reduction on a Pro Rata basis or in accordance with Section
5.6.2, 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 full 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 a Dominion Account without Agent's
prior consent.

 

12.6.      Indemnification. EACH SECURED PARTY 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 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, trustee 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 Secured Party to the extent of its Pro Rata share.

 

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, Liens, 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 or Borrower Materials; the execution, validity, genuineness,
effectiveness or enforceability of any Loan Documents; the genuineness,
enforceability, collectability, value, sufficiency, location or existence of any
Collateral, or the validity, extent, perfection or priority of any Lien therein;
the validity, enforceability or collectability 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.

 

 

 
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12.8.      Successor Agent and Co-Agents.

 

12.8.1.     Resignation; Successor Agent. Agent may resign at any time by giving
at least 30 days written notice thereof to Lenders and Borrowers. Required
Lenders may appoint a successor to replace the resigning Agent, which successor
shall be (a) a Lender or an Affiliate of a Lender; or (b) a financial
institution reasonably acceptable to Required Lenders and (provided no Default
or Event of Default exists) Borrowers. If no successor agent is appointed prior
to the effective date of Agent's resignation, then Agent may appoint a successor
agent that is a financial institution acceptable to it (which shall be a Lender
unless no Lender accepts the role) or in the absence of such appointment,
Required Lenders shall on such date assume all rights and duties of Agent
hereunder. Upon acceptance by any successor Agent of its appointment hereunder,
such successor Agent shall thereupon succeed to and become vested with all the
powers and duties of the retiring Agent without further act. On the effective
date of its resignation, the retiring Agent shall be discharged from its duties
and obligations hereunder but shall continue to have all rights and protections
under the Loan Documents with respect to actions taken or omitted to be taken by
it while Agent, including the indemnification set forth in Sections 12.6 and
14.2, and all rights and protections under this Section 12. 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 any Secured Party or
Obligor.

 

12.8.2.     Co-Collateral Agent. If appropriate under Applicable Law, Agent may
appoint a Person to serve as a co-collateral agent or separate collateral agent
under any Loan Document. Each right, remedy and protection intended to be
available to Agent under the Loan Documents shall also be vested in such agent.
Secured Parties shall execute and deliver any instrument or agreement that Agent
may request to effect such appointment. If any such agent shall die, dissolve,
become incapable of acting, resign or be removed, then all the rights and
remedies of the agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new 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 1:00 p.m. on a
Business Day, payment shall be made by Lender not later than 3:00 p.m. on such
day, and if request is made after 1:00 p.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.

 

 

 
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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 in full, at the greater of the Federal
Funds Rate or the rate determined by Agent as customary for interbank
compensation for two Business Days and thereafter at the Default Rate for Base
Rate Revolver Loans. In no event shall Borrowers be entitled to credit for any
interest paid by a Secured Party to Agent, nor shall a Defaulting Lender be
entitled to interest on amounts held by Agent pursuant to Section 4.2.

 

12.10.3.     Recovery of Payments. If Agent pays an 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 the Secured Party. If Agent determines that an amount received by it must
be returned or paid to an Obligor or other Person pursuant to Applicable Law or
otherwise, then Agent shall not be required to distribute such amount to any
Secured Party. If any amounts received and applied by Agent to Obligations held
by a Secured Party are later required to be returned by Agent pursuant to
Applicable Law, such Secured Party shall pay to Agent, on demand, its share of
the amounts required to be returned.

 

12.1.     Individual Capacities. As a Lender, Bank of America shall have the
same rights and remedies under the 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. Agent, Lenders and their 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 they were not Agent or Lenders hereunder, without
any duty to account therefor to any Secured Party. In their individual
capacities, Agent, Lenders and their Affiliates may receive information
regarding Obligors, their Affiliates and their Account Debtors (including
information subject to confidentiality obligations), and shall have no
obligation to provide such information to any Secured Party.

 

12.2.     Titles. Each Lender, other than Bank of America, that is designated in
connection with this credit facility as an "Arranger," "Bookrunner" or "Agent"
of any kind shall have no right or duty under any Loan Documents other than
those applicable to all Lenders, and shall in no event have any fiduciary duty
to any Secured Party.

 

12.3.     Bank Product Providers. Each Secured Bank Product Provider, by
delivery of a notice to Agent of a Bank Product, agrees to be bound by the Loan
Documents, including Sections 5.6, 14.3.3 and 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.

 

12.4.      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
Borrowers or any other Person. As between Borrowers 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 Borrowers, Agent, Lenders, Secured Parties, and their
respective successors and assigns, except that (a) no Borrower 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.

 

 

 
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13.2.      Participations.

 

13.2.1.     Permitted Participants; Effect. Subject to Section 13.3.3, any
Lender may 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's obligations under the Loan Documents shall remain unchanged, it shall
remain solely responsible to the other parties hereto for performance of such
obligations, it shall remain the holder of its Loans and Commitments for all
purposes, all amounts payable by Borrowers shall be determined as if it 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 a Loan Document 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 substantially all Collateral.

 

13.2.3.     Participant Register. Each Lender that sells a participation shall,
acting as a non-fiduciary agent of Borrowers (solely for tax purposes), maintain
a register in which it enters the Participant's name, address and interest in
Commitments, Loans (and stated interest) and LC Obligations. Entries in the
register shall be conclusive, absent manifest error, and such Lender shall treat
each Person recorded in the register as the owner of the participation for all
purposes, notwithstanding any notice to the contrary. No Lender shall have an
obligation to disclose any information in such register except to the extent
necessary to establish that a Participant's interest is in registered form under
the Code.

 

13.2.4.     Benefit of Setoff. Borrowers 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 $15,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 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 an Assignment to Agent for acceptance and
recording. Nothing herein shall limit the right of a Lender to pledge or assign
any rights under the Loan Documents to secure obligations of such Lender,
including a pledge or assignment to a Federal Reserve Bank; provided, however,
that no such pledge or assignment shall release the Lender from its obligations
hereunder nor substitute the pledge or assignee for such Lender as a party
hereto.

 

 

 
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13.3.2.     Effect; Effective Date. Upon delivery to Agent of an assignment
notice in the form of Exhibit B 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, if 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. Agent
have no obligation to determine whether any assignee is permitted under the Loan
Documents. Assignment by a Defaulting Lender shall be effective only if there is
concurrent satisfaction of all outstanding obligations of the Defaulting Lender
under the Loan Documents in a manner satisfactory to Agent, including 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 methods acceptable to Agent) to satisfy all funding and
payment liabilities of the Defaulting Lender. If assignment by a Defaulting
Lender occurs (by operation of law or otherwise) without compliance with the
foregoing sentence, the assignee shall be deemed a Defaulting Lender for all
purposes until compliance occurs.

 

13.3.4.     Register. Agent, acting as a non-fiduciary agent of Borrowers
(solely for tax purposes), shall maintain (a) a copy (or electronic equivalent)
of each Assignment and Acceptance delivered to it, and (b) a register for
recordation of the names, addresses and Commitments of, and the Loans, interest
and LC Obligations owing to, each Lender. Entries in the register shall be
conclusive, absent manifest error, and Borrowers, Agent and Lenders shall treat
each Person recorded in such register as a Lender for all purposes under the
Loan Documents, notwithstanding any notice to the contrary. Agent may choose to
show only one Borrower as the borrower in the register, without any effect on
the liability of any Obligor with respect to the Obligations. The register shall
be available for inspection by Borrowers or any Lender, from time to time upon
reasonable notice.

 

13.4.      Replacement of Certain Lenders. If a Lender (a) within the last 120
days failed to give its consent to any amendment, waiver or action for which
consent of all Lenders was required and Required Lenders consented, (b) is a
Defaulting Lender, or (c) within the last 120 days gave a notice under Section
3.5 or requested payment or compensation under Section 3.7 or 5.9 (and has not
designated a different Lending Office pursuant to Section 3.8), then Agent or
Borrower Agent may, upon 10 days notice to such Lender, require it to assign its
rights and obligations under the Loan Documents to Eligible Assignee(s),
pursuant to appropriate Assignment(s), within 20 days after the notice. Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment 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 through the date of assignment.

 

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 alter
any provision in a Loan Document that relates to any rights, duties or
discretion of Agent;

 

 

 
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(b)     without the prior written consent of Issuing Bank, no modification shall
alter Section 2.3 or any other provision in a Loan Document that relates to
Letters of Credit or 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 (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 (i) alter Section 5.6.2, 7.1 (except to add
Collateral) or 14.1.1; (ii) amend the definition of Borrowing Base, Availability
Block, Accounts Formula Amount or Inventory Formula Amount (or any defined term
used in such definitions) if the effect of such amendment is to increase
borrowing availability, Pro Rata or Required Lenders; (iii) decrease the
Availability Block; (iv) release all or substantially all Collateral; or (v)
except in connection with a merger, disposition or similar transaction expressly
permitted hereby, release any Obligor from liability for any Obligations; and

 

(e)     without the prior written consent of a Secured Bank Product Provider, no
modification shall affect its relative payment priority under Section 5.6.2.

 

14.1.2.     Limitations. The agreement of Borrowers shall not be required for
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 any agreement relating to fees or a Bank Product shall be
required for modification of such agreement, and no Bank Product provider (in
such capacity) shall have any right to consent to modification of any Loan
Document other than its Bank Product agreement. 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 Borrower 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.

 

14.2.      Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE, INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON OR ARISING
FROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan
Document have any obligation thereunder to 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.

 

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 Borrower, 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), or at such other address as a party may
hereafter specify by notice in accordance with this Section 14.3. Each
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 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 Borrowers.

 

 

 
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14.3.2.     Communications. Electronic communications (including e-mail,
messaging and websites) may be used only in a manner acceptable to Agent and
only for routine communications, such as delivery of Borrower Materials,
administrative matters, distribution of Loan Documents and matters permitted
under Section 4.1.4. Secured Parties make no assurance as to the privacy or
security of electronic communications. E-mail and voice mail shall not be
effective notices under the Loan Documents.

 

14.3.3.     Platform. Borrower Materials shall be delivered pursuant to
procedures approved by Agent, including electronic delivery (if possible) upon
request by Agent to an electronic system maintained by Agent ("Platform").
Borrowers shall notify Agent of each posting of Borrower Materials on the
Platform and the materials shall be deemed received by Agent only upon its
receipt of such notice. Borrower Materials and other information relating to
this credit facility may be made available to Secured Parties on the Platform.
The Platform is provided "as is" and "as available." Agent does not warrant the
accuracy or completeness of any information on the Platform nor the adequacy or
functioning of the Platform, and expressly disclaims liability for any errors or
omissions in the Borrower Materials or any issues involving the Platform. NO
WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY AGENT
WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. No Agent Indemnitee shall
have any liability to Borrowers, Secured Parties or any other Person for losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract
or otherwise) relating to use by any Person of the Platform, including any
unintended recipient, nor for delivery of Borrower Materials and other
information via the Platform, internet, e-mail, or any other electronic platform
or messaging system.

 

14.3.4.     Public Information. Obligors and Secured Parties acknowledge that
"public" information may not be segregated from material non-public information
on the Platform. Secured Parties acknowledge that Borrower Materials may include
Obligors' material non-public information, and should not be made available to
personnel who do not wish to receive such information or may be engaged in
investment or other market-related activities with respect to an Obligor's
securities.

 

14.3.5.     Non-Conforming Communications. Agent and Lenders may rely upon any
communications purportedly given by or on behalf of any Borrower even if they
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 Borrower shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
electronic or telephonic communication purportedly given by or on behalf of a
Borrower.

 

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 a Borrower 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 until paid in full, 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.

 

 

 
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14.5.     Credit Inquiries. Agent and Lenders may (but shall have no obligation)
to respond to usual and customary credit inquiries from third parties concerning
any Obligor 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 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; Execution. 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. Agent may (but shall have no obligation to) accept any
signature, contract formation or record-keeping through electronic means, which
shall have the same legal validity and enforceability as manual or paper-based
methods, to the fullest extent permitted by Applicable Law, including the
Federal Electronic Signatures in Global and National Commerce Act, the New York
State Electronic Signatures and Records Act, or any similar state law based on
the Uniform Electronic Transactions Act.

 

14.9.     Entire Agreement. Time is of the essence with respect to all Loan
Documents and Obligations. The Loan Documents constitute the entire agreement,
and supersede all prior understandings and agreements, among the parties
relating to the subject matter thereof.

 

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, joint venture or
similar arrangement, 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, Borrowers acknowledge and
agree that (a)(i) this credit facility and any arranging or other services by
Agent, any Lender, any of their Affiliates or any arranger are arm's-length
commercial transactions between Borrowers and their Affiliates, on one hand, and
Agent, any Lender, any of their Affiliates or any arranger, on the other hand;
(ii) Borrowers have consulted their own legal, accounting, regulatory and tax
advisors to the extent they have deemed appropriate; and (iii) Borrowers 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, 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 Borrower 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.

 

 

 
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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 they 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 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 or to any swap, derivative or other
transaction under which payments are to be made by reference to an Obligor or
Obligor's obligations; (g) 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; (h) on a confidential
basis to a provider of a Platform; or (i) with the consent of Borrower Agent.
Notwithstanding the foregoing, Agent and Lenders may publish or disseminate
general information concerning this credit facility for league table, tombstone
and advertising purposes, and may use Borrowers' logos, trademarks or product
photographs in advertising materials. As used herein, "Information" means
information received from an Obligor or Subsidiary relating to it or its
business except information that is identified as non-confidential when
delivered. A Person required to maintain the confidentiality of Information
pursuant to this Section shall be deemed to have complied if it exercises a
degree of care similar to that accorded its own confidential information. Each
of Agent, Lenders and Issuing Bank acknowledges that (i) Information may include
material non-public information; (ii) it has developed compliance procedures
regarding the use of such information; and (iii) it will handle the material
non-public information in accordance with Applicable Law.

 

14.13.     [Intentionally Omitted].

 

14.14.    GOVERNING LAW. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.

 

14.15.   Consent to Forum.

 

14.15.1.      Forum. EACH BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF ANY STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK OR THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION,
LITIGATION OR OTHER PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND
AGREES THAT ANY DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT
BY IT SOLELY IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY
WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH
COURT'S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM.
EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF
SUCH COURTS AND CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 14.3.1. A final judgment in any proceeding of any such court
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or any other manner provided by Applicable Law.

 

 

 
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14.15.2.      Other Jurisdictions. 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.

 

14.16    Waivers by Borrowers. To the fullest extent permitted by Applicable
Law, each Borrower 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 a Borrower 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 Borrower 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 Borrowers. Each Borrower
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 Borrowers that
pursuant to the Patriot Act, Agent and Lenders are required to obtain, verify
and record information that identifies each Borrower, 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 Borrowers' management and owners, such as legal name,
address, social security number and date of birth. Borrowers shall, promptly
upon request, provide all documentation and other information as Agent, Issuing
Bank or any Lender may request from time to time in order to comply with any
obligations under any "know your customer," anti-money laundering or other
requirements of Applicable Law.

 

14.18     NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

 

[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:

 

NORTHWEST PIPE COMPANY,

an Oregon corporation

 

 

By: ____________________________
Printed Name: Robin Gantt
Title: Chief Financial Officer

Address:

5721 SE Columbia Way

Suite 200

Vancouver, WA 98661-5991

Attn: Robin Gantt, Chief Financial Officer

Facsimile: (360) 397-6257

         

PERMALOK CORPORATION,

a Missouri corporation

 

 

By:                                                                
Printed Name: Scott Montross 
Title: President

 

Address:

                  5721 SE Columbia Way
                  Suite 200
                  Vancouver, WA 98661-5991

                  Attn: Scott Montross, President
                  Facsimile: (360) 397-6257

 

 
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AGENT AND LENDERS:

 

BANK OF AMERICA, N.A.,

as Agent and Lender

 

 

By:  _______________________________
        Gregory A. Jones

        Senior Vice President

Address:

400 4th Street

Mailcode: OR1-110-01-15

Lake Oswego, OR 97034

Attn: Gregory A. Jones

Facsimile: (503) 303-6076

 

       

 

 

 
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ExhibIT A

to

Loan and Security Agreement

 

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Loan and Security Agreement dated as of October 26,
2015, as amended ("Loan Agreement"), among NORTHWEST PIPE COMPANY, an Oregon
corporation ("Borrower 1") and PERMALOK CORPORATION, a Missouri corporation
("Borrower 2" and together with Borrower 1, collectively "Borrowers"), BANK OF
AMERICA, N.A., as agent ("Agent") for the financial institutions from time to
time party to the Loan Agreement ("Lenders"), and such Lenders. Terms are used
herein as defined in the Loan Agreement.

 

______________________________________ ("Assignor") and
_________________________ _____________ ("Assignee") agree as follows:

 

1.     Assignor hereby assigns to Assignee and Assignee hereby purchases and
assumes from Assignor (a) a principal amount of $________ of Assignor's
outstanding Revolver Loans and $___________ of Assignor's participations in LC
Obligations, and (b) the amount of $__________ of Assignor's Revolver Commitment
(which represents ____% of the total Revolver Commitments) (the foregoing items
being, collectively, "Assigned Interest"), together with an interest in the Loan
Documents corresponding to the Assigned Interest. This Agreement shall be
effective as of the date ("Effective Date") indicated in the corresponding
Assignment Notice delivered to Agent, provided such Assignment Notice is
executed by Assignor, Assignee, Agent and Borrower Agent, if applicable. From
and after the Effective Date, Assignee hereby expressly assumes, and undertakes
to perform, all of Assignor's obligations in respect of the Assigned Interest,
and all principal, interest, fees and other amounts which would otherwise be
payable to or for Assignor's account in respect of the Assigned Interest shall
be payable to or for Assignee's account, to the extent such amounts accrue on or
after the Effective Date.

 

2.     Assignor (a) represents that as of the date hereof, prior to giving
effect to this assignment, its Revolver Commitment is $__________, and the
outstanding balance of its Revolver Loans and participations in LC Obligations
is $__________; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Agreement or any other instrument or document furnished pursuant thereto, other
than that Assignor is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; and (c) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers or the performance by
Borrowers of their obligations under the Loan Documents. [Assignor is attaching
the promissory note[s] held by it and requests that Agent exchange such note[s]
for new promissory notes payable to Assignee [and Assignor].]

 

3.     Assignee (a) represents and warrants that it is legally authorized to
enter into this Assignment; (b) confirms that it has received copies of the Loan
Agreement and such other Loan Documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment; (c) agrees that it shall, independently and without reliance upon
Assignor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents; (d) confirms that it is an Eligible
Assignee; (e) appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Agreement as are delegated to
Agent by the terms thereof, together with such powers as are incidental thereto;
(f) agrees that it will observe and perform all obligations that are required to
be performed by it as a "Lender" under the Loan Documents; and (g) represents
and warrants that the assignment evidenced hereby will not result in a
non-exempt "prohibited transaction" under Section 406 of ERISA.

 

 

 
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4.     This Agreement shall be governed by the laws of the State of
______________. 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 this Agreement shall remain in full force and effect.

 

5.     Each notice or other communication hereunder shall be in writing, shall
be sent by messenger, by telecopy or facsimile transmission, or by first-class
mail, shall be deemed given when sent and shall be sent as follows:

 

 

(a)

If to Assignee, to the following address (or to such other address as Assignee
may designate from time to time):

 

__________________________

__________________________

__________________________

 

 

(b)

If to Assignor, to the following address (or to such other address as Assignor
may designate from time to time):

__________________________

__________________________

__________________________

__________________________

 

Payments hereunder shall be made by wire transfer of immediately available
Dollars as follows:

 

If to Assignee, to the following account (or to such other account as Assignee
may designate from time to time):

 

______________________________

______________________________

ABA No._______________________

______________________________

Account No.____________________

Reference: _____________________

 

If to Assignor, to the following account (or to such other account as Assignor
may designate from time to time):

 

______________________________

______________________________

ABA No._______________________

______________________________

Account No.____________________

Reference: _____________________

 

 

 
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IN WITNESS WHEREOF, this Assignment and Acceptance is executed as of
_____________.

 

_____________________________________

("Assignee")

 

 

By___________________________________

     Title:

 

_____________________________________

("Assignor")

 

 

By___________________________________

     Title:

 

 

 

 
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ExhibIT B

to

Loan and Security Agreement

 

 

ASSIGNMENT NOTICE

 

Reference is made to (1) the Loan and Security Agreement dated as of October 26,
2015, as amended ("Loan Agreement"), among NORTHWEST PIPE COMPANY, an Oregon
corporation ("Borrower 1") and PERMALOK CORPORATION, a Missouri corporation
("Borrower 2" and together with Borrower 1, collectively "Borrowers"), BANK OF
AMERICA, N.A., as agent ("Agent") for the financial institutions from time to
time party to the Loan Agreement ("Lenders"), and such Lenders; and (2) the
Assignment and Acceptance dated as of ____________, 20__ ("Assignment"), between
__________________ ("Assignor") and ____________________ ("Assignee"). Terms are
used herein as defined in the Loan Agreement.

 

Assignor hereby notifies Borrowers and Agent of Assignor's intent to assign to
Assignee pursuant to the Assignment (a) a principal amount of $________ of
Assignor's outstanding Revolver Loans and $___________ of Assignor's
participations in LC Obligations, and (b) the amount of $__________ of
Assignor's Revolver Commitment (which represents ____% of the total Revolver
Commitments) (the foregoing items being, collectively, the "Assigned Interest"),
together with an interest in the Loan Documents corresponding to the Assigned
Interest. This Agreement shall be effective as of the date ("Effective Date")
indicated below, provided this Assignment Notice is executed by Assignor,
Assignee, Agent and Borrower Agent, if applicable. Pursuant to the Assignment,
Assignee has expressly assumed all of Assignor's obligations under the Loan
Agreement to the extent of the Assigned Interest, as of the Effective Date.

 

For purposes of the Loan Agreement, Agent shall deem Assignor's Revolver
Commitment to be reduced by $_________, and Assignee's Revolver Commitment to be
increased by $_________.

 

The address of Assignee to which notices and information are to be sent under
the terms of the Loan Agreement is:

 

________________________

________________________

________________________

________________________

 

The address of Assignee to which payments are to be sent under the terms of the
Loan Agreement is shown in the Assignment.

 

This Notice is being delivered to Borrowers and Agent pursuant to Section 13.3
of the Loan Agreement. Please acknowledge your acceptance of this Notice by
executing and returning to Assignee and Assignor a copy of this Notice.

 

 

IN WITNESS WHEREOF, this Assignment Notice is executed as of _____________.

 

_____________________________________

("Assignee")

 

 

By___________________________________

     Title:

 

_____________________________________

("Assignor")

 

 

By___________________________________

     Title:

 

ACKNOWLEDGED AND AGREED,

AS OF THE DATE SET FORTH ABOVE:

 

BORROWER AGENT:*

 

_________________________________

 

 

By_______________________________

     Title:

 

* No signature required if Assignee is a Lender, Affiliate of a Lender or
Approved Fund, or if an Event of Default exists.

 

BANK OF AMERICA, N.A.,

as Agent

 

 

By_______________________________

     Title:

 

 

 
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 SCHEDULE 1.1

to

Loan and Security Agreement

 

 

COMMITMENTS OF LENDERS

 

 

 

Lender

 

Revolver Commitment

Bank of America, N.A.

$60,000,000