Exhibit 10.15

 
 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

DATED: DECEMBER 14, 2004

$60,000,000

by and among

THE LENDERS NAMED HEREIN,

as Lenders

and

FLEET CAPITAL CORPORATION,

as Agent and a Lender

and

HOME PRODUCTS INTERNATIONAL–NORTH AMERICA, INC.,

as Borrower

 
 

 

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TABLE OF CONTENTS

              Page
SECTION 1. CREDIT FACILITY
    1  
 
       
1.1 Revolving Credit Loans
    1  
1.2 Letters of Credit; LC Guaranties
    3  
 
       
SECTION 2. INTEREST, FEES AND CHARGES
    4  
 
       
2.1 Interest
    4  
2.2 Computation of Interest and Fees
    5  
2.3 Letter of Credit and LC Guaranty Fees
    5  
2.4 Unused Line Fee
    5  
2.5 Audit and Appraisal Fees
    5  
2.6 Reimbursement of Expenses
    6  
2.7 Bank Charges
    6  
 
       
SECTION 3. LOAN ADMINISTRATION
    7  
 
       
3.1 Manner of Borrowing Revolving Credit Loans
    7  
3.2 Payments
    10  
3.3 Mandatory Prepayments
    11  
3.4 Application of Payments and Collections
    12  
3.5 All Loans to Constitute One Obligation
    12  
3.6 Loan Account
    12  
3.7 Statements of Account
    12  
3.8 Increased Costs
    12  
3.9 Basis for Determining Interest Rate Inadequate or Unfair
    14  
 
       
SECTION 4. TERM AND TERMINATION
    14  
 
       
4.1 Term of Agreement
    14  
4.2 Termination
    14  
 
       
SECTION 5. SECURITY INTERESTS
    15  
 
       
5.1 Security Interest in Collateral
    15  
5.2 Other Collateral
    17  
5.3 Lien Perfection; Further Assurances
    17  
5.4 Lien on Realty
    17  
 
       
SECTION 6. COLLATERAL ADMINISTRATION
    18  
 
       
6.1 General
    18  
6.2 Administration of Accounts
    19  
6.3 Administration of Inventory
    20  
6.4 Administration of Equipment
    21  
6.5 Payment of Charges
    21  
 
       
SECTION 7. REPRESENTATIONS AND WARRANTIES
    21  
 
       
7.1 General Representations and Warranties
    21  
7.2 Continuous Nature of Representations and Warranties
    27  
7.3 Survival of Representations and Warranties
    27  
 
       
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
    27  

 

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              Page
8.1 Affirmative Covenants
    27  
8.2 Negative Covenants
    30  
8.3 Specific Financial Covenants
    35  
 
       
SECTION 9. CONDITIONS PRECEDENT
    35  
 
       
9.1 Documentation
    35  
9.2 No Default
    36  
9.3 Other Loan Documents
    36  
9.4 Net Availability
    36  
9.5 No Litigation
    36  
9.6 Collateral Audit
    36  
9.7 Senior Subordinated Notes
    36  
9.8 Tender Offer
    36  
9.9 Equity
    36  
 
       
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
    36  
 
       
10.1 Events of Default
    36  
10.2 Acceleration of the Obligations
    39  
10.3 Other Remedies
    39  
10.4 Remedies Cumulative; No Waiver
    40  
10.5 Set-Off and Sharing of Payments
    41  
 
       
SECTION 11. THE AGENT
    41  
 
       
11.1 Authorization and Action
    41  
11.2 Agent’s Reliance, etc
    42  
11.3 FCC and Affiliates
    43  
11.4 Lender Credit Decision
    43  
11.5 Indemnification
    43  
11.6 Rights and Remedies to be Exercised by Agent Only
    43  
11.7 Agency Provisions Relating to Collateral
    44  
11.8 Successor Agent
    44  
11.9 Audit and Examination Reports; Disclaimer by Lenders
    45  
 
       
SECTION 12. MISCELLANEOUS
    45  
 
       
12.1 Power of Attorney
    45  
12.2 Indemnity
    46  
12.3 Modification of Agreement; Sale of Interest
    46  
12.4 Severability
    49  
12.5 Successors and Assigns
    50  
12.6 Cumulative Effect; Conflict of Terms
    50  
12.7 Execution in Counterparts
    50  
12.8 Notice
    50  
12.9 Consents
    51  
12.10 Credit Inquiries
    51  
12.11 Time of Essence
    51  
12.12 Entire Agreement
    51  
12.13 Interpretation
    52  

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              Page
12.14 GOVERNING LAW; CONSENT TO FORUM
    52  
12.15 WAIVERS BY BORROWER
    53  
12.16 Advertisement
    53  
12.17 No Novation
    53  

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made this 14th day
of December, 2004, by and among HOME PRODUCTS INTERNATIONAL–NORTH AMERICA, INC.
(“Borrower”), a Delaware corporation with its chief executive office and
principal place of business at 4501 West 47th Street, Chicago, Illinois 60632;
the lenders who are signatories hereto (“Lenders”); and FLEET CAPITAL
CORPORATION (“FCC”), a Rhode Island corporation with an office at One South
Wacker Drive, Suite 3400, Chicago, Illinois 60606, as agent for Lenders
hereunder (FCC, in such capacity, being “Agent”). Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.

     WHEREAS, Borrower, Agent and the Lender signatories thereto hereto entered
into that certain Loan and Security Agreement dated October 31, 2001 (said Loan
and Security Agreement, as amended from time to time, the “Original Loan
Agreement”); and

     WHEREAS, Borrower, Agent and Lenders desire to amend and restate the
Original Loan Agreement as provided herein;

     NOW, THEREFORE, in consideration of the following terms and conditions, the
parties agreed as follows:

SECTION 1. CREDIT FACILITY.

     Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to Sixty Million
Dollars ($60,000,000) available upon Borrower’s request therefore, as follows:

     1.1 Revolving Credit Loans.

          1.1.1 Loans and Reserves. The aggregate amount of the Revolving Credit
Loans to be made by each Lender (such Lender’s “Revolving Credit Loan
Commitment”), pursuant to the terms hereof, shall be the amount set below such
Lender’s name on the signature pages hereof. The aggregate principal amount of
the Revolving Credit Loan Commitments is Sixty Million Dollars ($60,000,000).
The percentage equal to the quotient of (x) each Lender’s Revolving Credit Loan
Commitment, divided by (y) the aggregate of all Revolving Credit Loan
Commitments, is that Lender’s “Revolving Credit Percentage”. Subject to all of
the terms and conditions of this Agreement, each Lender agrees, for so long as
no Default or Event of Default exists, to make Revolving Credit Loans to
Borrower from time to time, as requested by Borrower in the manner set forth in
Subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the product of (A) the Borrowing Base at such time minus
the LC Amount and reserves, if any, multiplied by (B) such Lender’s Revolving
Credit Percentage. Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent shall deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this Subsection 1.1.1, including, without limitation,
with respect to: (i) price adjustments, rebates, damages, unearned discounts,
returned

 

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products or other matters for which credit memoranda are issued in the ordinary
course of Borrower’s business; (ii) shrinkage, spoilage and obsolescence of
Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against
Borrower’s Loan Account as Revolving Credit Loans under any section of this
Agreement; (v) amounts owing by Borrower to any Person to the extent secured by
a Lien on, or trust over, any Property of Borrower (other than a Permitted
Lien); (vi) amounts owing by Borrower in connection with Product Obligations;
and (vii) such other matters, events, conditions or contingencies as to which
Agent, in its sole credit judgment, determines reserves should be established
from time to time hereunder. In the event that Agent establishes any such
reserve, Agent shall notify Borrower of such event and shall discuss with
Borrower the facts and circumstances giving rise to the establishment of any
such reserve.

          The Revolving Credit Loans shall be evidenced by amended and restated
promissory notes to be executed and delivered by Borrower at the time of the
Closing Date, the form of which is attached hereto and made a part hereof as
Exhibit 1.1.1 (the “Revolving Credit Notes”). Each Revolving Credit Note shall
be payable to the order of a Lender and shall represent the obligation of
Borrower to pay the amount of such Lender’s Revolving Credit Loan Commitment or,
if less, the aggregate unpaid principal amount of all Revolving Credit Loans
made by such Lender to Borrower with interest thereon as prescribed in
Subsection 2.1.1.

          Insofar as Borrower may request and Lenders may be willing in their
sole and absolute discretion to make Revolving Credit Loans to Borrower at a
time when the unpaid balance of Revolving Credit Loans plus the LC Amount
exceeds, or would exceed with the making of any such Revolving Credit Loan, the
Borrowing Base (any such Loan or Loans being herein referred to individually as
an “Overadvance” and collectively as “Overadvances”), Agent shall enter such
Overadvances as debits in the Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest as provided
in this Agreement for Revolving Credit Loans generally. Any Overadvance to be
made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in
accordance with their Revolving Credit Percentages. Overadvances in the
aggregate amount of Two Million Dollars ($2,000,000) or less may, prior to the
occurrence and during the continuation of a Default or Event of Default, be made
in the sole and absolute discretion of Agent. Overadvances in an aggregate
amount of more than Two Million Dollars ($2,000,000) but less than Three Million
Dollars ($3,000,000) may, prior to the occurrence and during continuation of a
Default or an Event of Default, be made in the sole and absolute discretion of
Required Lenders. Overadvances in an aggregate amount of Three Million Dollars
($3,000,000) or more and Overadvances to be made after the occurrence and during
the continuation of a Default or an Event of Default shall require the consent
of all Lenders. The forgoing notwithstanding, in no event, unless otherwise
consented to by all Lenders, (x) shall any Overadvances be outstanding for more
than ninety (90) consecutive days, (y) after all outstanding Overadvances have
been repaid, shall Agent or Lenders make any additional Overadvances unless
thirty (30) days or more have expired since the last date on which any
Overadvances were outstanding or (z) shall Overadvances be outstanding on more
than one hundred twenty (120) days within any one hundred eighty day
(180) period.

          1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely
to (i) provide for Borrower’s general operating capital needs in a manner
consistent with the provisions of this Agreement, (ii) to provide for the
payment of costs and expenses due in

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connection with the consummation of the Tender Offer, including, without
limitation, any severance costs that become due or vested upon the consummation
of the Tender Offer so long as the aggregate amount of such costs and expenses
to be paid by Borrower from the proceeds of such Revolving Credit Loans do not
exceed Eleven Million Dollars ($11,000,000) and (iii) to provide for such other
purposes as permitted by this Agreement.

     1.2 Letters of Credit; LC Guaranties.(i) Agent agrees, on behalf of
Lenders, for so long as no Default or Event of Default exists and if requested
by Borrower, (x) to issue its, or cause to be issued its Affiliate’s Letters of
Credit for the account of Borrower or (y) to execute LC Guaranties by which
Lenders shall guaranty the payment or performance by Borrower of its
reimbursement obligation with respect to Letters of Credit; provided that the
aggregate undrawn available amount of all Letters of Credit and LC Guaranties
outstanding at any time shall not exceed Eight Million Dollars ($8,000,000). No
Letter of Credit or LC Guarantee may have an expiration date that is after the
last day of the Original Term, unless, after the expiration of the Original
Term, such Letter of Credit or LC Guaranty is cash collateralized or a
back-to-back letter of credit is issued to Agent’s satisfaction. Any amounts
paid by Agent or any Lender under any LC Guaranty or in connection with any
Letter of Credit (x) shall become part of the Obligations, (y) unless paid by
Borrower pursuant to Subsection 1.3(iii) below, shall be paid from the proceeds
of a Revolving Credit Loan requested pursuant to Subsection 3.1.1 below, to the
extent Lenders are required to make Revolving Credit Loans pursuant to the terms
hereof and (z) otherwise, shall be payable on demand.

          (ii) Immediately upon the issuance of each Letter of Credit by Agent
or its Affiliate or LC Guaranty by Agent or its Affiliate hereunder, each Lender
shall be deemed to have automatically, irrevocably and unconditionally purchased
from Agent an undivided interest and participation in and to such Letter of
Credit or LC Guaranty, the obligations of Borrower in respect thereof and the
liability of Agent or its Affiliate thereunder in an amount equal to the maximum
amount available for drawing under such Letter of Credit or, in the case of a LC
Guaranty, the amount guaranteed thereunder, multiplied by such Lender’s
Revolving Credit Percentage. Agent will notify each Lender promptly upon
presentation to it of a draw under a Letter of Credit or a demand for payment
under a LC Guaranty. On a weekly basis, or more frequently if requested by
Agent, each Lender shall make payment to Agent in immediately available funds,
of an amount equal to such Lender’s pro rata share of the amount of any payment
made by Agent in respect to any Letter of Credit or LC Guaranty. The obligation
of each Lender to reimburse Agent under this Section 1.3 shall be unconditional,
continuing, irrevocable and absolute, except in respect of indemnity claims
arising out of Agent’s willful misconduct. In the event that any Lender fails to
make payment to Agent of any amount due under this Section 1.3, Agent shall be
entitled to receive, retain and apply against such obligation the principal and
interest otherwise payable to such Lender hereunder until Agent receives such
payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
Lender of its obligation to reimburse the Agent for such amount in accordance
with this Subsection 1.3(ii).

          (iii) Borrower agrees, unconditionally, irrevocably and absolutely, to
pay immediately to Agent, for the account of Lenders, the amount drawn under a
Letter of Credit or paid pursuant to a LC Guaranty. If Borrower at any time
fails to make such payment in accordance with the terms of this Agreement,
Borrower shall be deemed to have elected to

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borrow from the Lenders on such date Revolving Credit Loans equal in aggregate
amount to the amount paid by Agent or the issuing Lender, as the case may be,
under such Letter of Credit or LC Guaranty. The provisions of Subsections 1.3(i)
and (ii) notwithstanding, in the event that any Lender is prohibited by any
Legal Requirement from issuing or participating in any LC Guaranty (or portion
thereof), then Agent shall issue such LC Guaranty (or such Lender’s portion
thereof) in lieu of such Lender and such Lender shall not be deemed to have a
participation therein. In such event, any payments received by Agent pursuant to
Subsection 1.3(iii) of the Loan Agreement which would otherwise be paid by Agent
to such Lender shall be retained by Agent to reimburse Agent for any amounts
paid by Agent in respect to the LC Guaranty (or portion thereof) Agent issued in
lieu of such Lender.

SECTION 2. INTEREST, FEES AND CHARGES.

     2.1 Interest.

          2.1.1 Rates of Interest. Interest shall accrue on the Revolving Credit
Loans in accordance with the terms hereof and of the Revolving Credit Note.
Interest shall accrue on the principal amount of the Base Rate Advances
outstanding at the end of each day at a fluctuating rate per annum equal to the
Applicable Margin plus the Base Rate. Interest shall accrue on the principal
amount of each of the LIBOR Advances outstanding at the end of each day at a
fixed rate per annum equal to the Applicable Margin plus the LIBOR for the
applicable Interest Period. The rate of interest applicable to Base Rate
Advances shall increase or decrease by an amount equal to any increase or
decrease in the Base Rate, effective as of the opening of business on the day
that any such change in the Base Rate occurs.

          2.1.2 Default Rate of Interest. At the option of Agent or Required
Lenders, upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest at a
rate per annum equal to two percent (2%) above the interest rate otherwise
applicable thereto (the “Default Rate”).

          2.1.3 Maximum Interest. Notwithstanding anything to the contrary set
forth in this Section 2.1, if at any time until payment in full of all of the
Obligations, the interest rate calculated pursuant to Subsections 2.1.1 or 2.2.2
(the “Stated Rate”) exceeds the highest rate of interest permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the “Maximum Lawful Rate”), then in such event and so
long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate; provided, however,
that if at any time thereafter the Stated Rate is less than the Maximum Lawful
Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful
Rate until such time as the total interest received by Lenders from the making
of advances hereunder is equal to the total interest which Lenders would have
received had the Stated Rate (but for the operation of this Subsection 2.1.3)
been the interest rate payable since the Closing Date. Thereafter, the interest
rate payable hereunder shall be the Stated Rate unless and until the Stated Rate
again exceeds the Maximum Lawful Rate, in which event this Subsection 2.1.3
shall again apply. In no event shall the total interest received by Lenders
pursuant to the terms hereof exceed the amount which Lenders could lawfully have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate.

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     2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and unused line fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days.

     2.3 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent
either for its benefit or the ratable benefit of Lenders, as provided below:

          (i) for standby Letters of Credit and LC Guaranties of standby Letters
of Credit, the Applicable Margin per annum of the aggregate undrawn available
amount of such Letters of Credit and LC Guaranties outstanding from time to time
during the term of this Agreement, plus all normal and customary charges
associated with the issuance thereof (including, without limitation, a fronting
fee in the amount of one-eighth of one percent (?%) of the maximum face amount
of the applicable Letter of Credit or LC Guaranty), which fees and charges shall
be deemed fully earned upon issuance of each such Letter of Credit or LC
Guaranty, shall be due and payable on the first Business Day of each month and
shall not be subject to rebate or proration upon the termination of this
Agreement for any reason; and

          (ii) for documentary Letters of Credit and LC Guaranties of
documentary Letters of Credit, the Applicable Margin per annum of the aggregate
undrawn available amount of such Letters of Credit and LC Guaranties outstanding
from time to time during the term of this Agreement, plus all normal and
customary charges associated with the issuance thereof (including, without
limitation, a fronting fee in the amount of one-eighth of one percent (?%) of
the maximum face amount of the applicable Letter of Credit or LC Guaranty),
which fees and charges shall be deemed fully earned upon issuance of each such
Letter of Credit or LC Guaranty, shall be due and payable on the first Business
Day of each month and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason; and

          (iii) Normal and customary charges associated with the issuance of
Letters of Credit or LC Guaranties (including, without limitation, any fronting
fee) shall be paid to Agent for its own benefit. All other amounts paid to Agent
pursuant to this Section 2.4 shall be payable to Agent for the ratable benefit
of Lenders.

     2.4 Unused Line Fee. Borrower shall pay to Agent for the ratable benefit of
Lenders a fee equal to the Applicable Margin per annum of the average monthly
amount by which the Maximum Revolving Loan Amount exceeds the sum of the
outstanding principal balance of the Revolving Credit Loans plus the LC Amount.
The unused line fee shall be payable monthly in arrears on the first day of each
calendar month hereafter.

     2.5 Audit and Appraisal Fees. Borrower shall pay to Agent audit fees in
accordance with Agent’s current schedule of fees in effect from time to time in
connection with audits of the books and records and Properties of Borrower and
its Subsidiaries and such other matters as Agent shall deem appropriate in its
reasonable credit judgment, plus all reasonable out-of-pocket expenses incurred
by Agent in connection with such audits; provided, that so long as no Event of
Default has occurred and is continuing, Borrower shall not be liable for such
audit fees in excess of $40,000 in any fiscal year, whether such audits are
conducted by employees of Agent or by third parties hired by Agent.
Additionally, from time to time, Agent may, at Borrower’s expense, obtain
appraisals from appraisers (who may be personnel of Agent), stating the then

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current fair market value of all or any portion of the real estate or personal
Property of Borrower or any of its Subsidiaries, including without limitation
the Inventory of Borrower and its Subsidiaries; provided, however, that so long
as no Event of Default exists and is continuing, Borrower shall not be required
to reimburse Agent for the costs of such appraisals in excess of $50,000 in any
fiscal year. Such audit fees, appraisal fees and out-of-pocket expenses shall be
payable on the first day of the month following the date of issuance by Agent of
a request for payment thereof to Borrower. Agent may, in its discretion, provide
for the payment of such amounts by making appropriate Revolving Credit Loans to
Borrower and charging Borrower’s Loan Account therefor.

     2.6 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Agent, any Lender or any
Participating Lender incurs reasonable legal or accounting expenses or any other
costs or out-of-pocket expenses in connection with: (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents, or any
sale or attempted sale of any interest herein to another Lender or a
Participating Lender; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby;
(iii) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrower’s affairs; (iv) any attempt to enforce any rights of Agent, any Lender
or any Participating Lender against Borrower or any other Person which may be
obligated to Agent and/or Lenders by virtue of this Agreement or any of the
other Loan Documents, including, without limitation, the Account Debtors; or
(v) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
legal and accounting expenses, other costs and out of pocket expenses of Agent,
any Lender or any Participating Lender shall be charged to Borrower. All amounts
chargeable to Borrower under this Section 2.6 shall be Obligations secured by
all of the Collateral, shall be payable on demand to Agent, such Lender or to
such Participating Lender, as the case may be, and shall bear interest from the
date such demand is made until paid in full at the rate applicable to Base Rate
Advances from time to time. Borrower shall also reimburse Agent for expenses
incurred by Agent in its administration of the Collateral to the extent and in
the manner provided in Section 6 hereof; provided that Borrower shall not be
required to reimburse Agent or any Lender for costs or expenses in connection
with any litigation, contest, dispute, suit, proceeding or action in which
Borrower is, pursuant to a final non-appealable order, the prevailing party.

     2.7 Bank Charges. Borrower shall pay to Agent, on demand, any and all fees,
costs or expenses which Agent, any Lender or any Participating Lender pays to a
bank or other similar institution (including, without limitation, any fees paid
by Agent or any Lender to any Participating Lender) arising out of or in
connection with (i) the forwarding to Borrower or any other Person on behalf of
Borrower, by Agent, any Lender or any Participating Lender, of proceeds of loans
made by Lenders to Borrower pursuant to this Agreement and (ii) the depositing
for collection, by Agent, any Lender or any Participating Lender, of any check
or item of payment received or delivered to Agent, any Lender or any
Participating Lender on account of the Obligations.

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SECTION 3. LOAN ADMINISTRATION.

     3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the credit
facility established pursuant to Section 1 hereof shall be as follows:

          3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower may
give Agent a Notice of Revolving Credit Loan, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date,
provided, however, that no such request may be made at a time when there exists
a Default or an Event of Default; and (ii) the becoming due of any amount
required to be paid under this Agreement, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving Credit
Loan on the due date in the amount required to pay such interest or other
Obligation. As an accommodation to Borrower, Agent may permit telephonic
requests for loans and electronic transmittal of instructions, authorizations,
agreements or reports to Agent by Borrower from such authorized persons
designated by Borrower from time to time. Unless Borrower specifically directs
Agent in writing not to accept or act upon telephonic or electronic
communications from Borrower, Agent shall have no liability to Borrower for any
loss or damage suffered by Borrower as a result of Agent’s honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically or electronically and
purporting to have been sent to Agent by Borrower and Agent shall have no duty
to verify the origin of any such communication or the authority of the person
sending it, except for any loss or damage resulting from Agent’s gross
negligence on willful misconduct. Except as otherwise provided in Subsection
3.1.4, each Revolving Credit Loan shall be made on notice, given not later than
11:00 a.m. (Chicago time) on the Business Day of the proposed Revolving Credit
Loan, by Borrower to Agent, which shall give to each Lender prompt written
notice thereof by facsimile or e-mail. Each such notice (a “Notice of Revolving
Credit Loan”) shall be in writing or by telephone to Agent at (262) 798-4800,
confirmed immediately in writing, specifying therein the requested date and
amount of such Revolving Credit Loan. Each Lender shall, not later than 2:00
p.m. (Chicago time) on each requested date, wire to a bank designated by Agent
the amount of that Lender’s Revolving Credit Percentage of the requested
Revolving Credit Loan. Agent shall, before 2:30 p.m. (Chicago time) on the date
of the proposed Revolving Credit Loan, subject to the provisions hereof, wire to
a bank designated by Borrower and reasonably acceptable to Agent, the amount of
such Revolving Credit Loan to the extent received from Lenders. The failure of
any Lender to make the Revolving Credit Loan to be made by it shall not relieve
any other Lender of its obligation hereunder to make its Revolving Credit Loan.
Neither Agent nor any other Lender shall be responsible for the failure of any
other Lender to make the Revolving Credit Loan to be made by such other Lender.
The foregoing notwithstanding, unless otherwise notified by any Lender, Agent,
in its sole discretion, may, from its own funds, make a Revolving Credit Loan on
behalf of any Lender hereto. In such event, the Lender on behalf of whom Agent
made the Revolving Credit Loan shall reimburse Agent for the amount of Revolving
Credit Loan so made on its behalf, on a weekly (or more frequent basis as
determined by Agent, in its sole discretion) basis and the entire amount of
interest attributable to such Revolving Credit Loan for the period from the date
on which said Revolving Credit Loan was made by Agent on such Lender’s behalf
until Agent is reimbursed by such Lender, shall be paid to Agent.

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          If at any time one or more Lenders refuse or fail to make a requested
Revolving Credit Loan when all conditions to a Revolving Credit Loan have been
satisfied or waived, then Agent may, at its option, but shall have no obligation
whatsoever to, purchase all, but not less than all, of the Revolving Credit
Notes, held by the Lender(s) who so fail or refuse, and to assume such Lender’s
commitments to make Revolving Credit Loans and each such Lender shall be
obligated to sell and transfer such Revolving Credit Notes to Agent for a price
in cash equal to the principal balance outstanding plus all accrued but unpaid
interest thereon plus all accrued but unpaid fees due any such Lender under the
terms hereof, and the foregoing provisions of this Section will be applicable to
Agent with respect to the Revolving Credit Notes so purchased by it. Any such
purchase, however, shall not relieve any such Lender from any breach of contract
claims available to Agent and/or Borrower against such Lender as a result of its
failure to make any such Revolving Credit Loan.

          3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this Subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under Subsection 3.1.1(i) shall be
disbursed by Agent in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Agent from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under Subsection 3.1.1(ii) shall be disbursed by Agent by
way of direct payment of the relevant interest or other Obligation.

          3.1.3 Authorization. Borrower hereby irrevocably authorizes Agent, in
Agent’s sole discretion, to advance to Borrower, and to charge to Borrower’s
Loan Account hereunder as a Base Rate Advance, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all reasonable costs, fees and expenses at any time owed by Borrower to
Agent and/or any Lender hereunder.

          3.1.4 LIBOR Advances. Notwithstanding the provisions of Subsection
3.1.1, in the event Borrower desires to obtain a LIBOR Advance, Borrower shall
give Agent prior, written, irrevocable notice no later than 11:00 a.m. Chicago
time on the 3rd Business Day prior to the requested borrowing date specifying
(i) Borrower’s election to obtain a LIBOR Advance, (ii) the date of the proposed
borrowing (which shall be a Business Day) and (iii) the amount to be borrowed,
which amount shall be in a minimum principal amount of One Million Dollars
($1,000,000) and may increase in integral multiples of One Hundred Thousand
Dollars ($100,000). In no event shall Borrower be permitted to have outstanding
at any one time LIBOR Advances with more than four (4) different Interest
Periods.

          3.1.5 Conversion of Base Rate Advances. Provided that no Event of
Default has occurred which is then continuing, Borrower may, on any Business
Day, convert any Base Rate Advance into a LIBOR Advance. If Borrower desires to
convert a Base Rate Advance, Borrower shall give Agent not less than three
(3) Business Days’ prior written notice (prior to 11:00 a.m. Chicago Time on
such Business Day), specifying the date of such conversion and the amount to be
converted. Each conversion into or conversion of a LIBOR Advance shall

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be in a minimum principal amount of One Million Dollars ($1,000,000) and may
increase in integral multiples of One Hundred Thousand Dollars ($100,000) in
excess thereof. After giving effect to any conversion of Base Rate Advances to
LIBOR Advances, Borrower shall not be permitted to have outstanding at any one
time LIBOR Advances with more than four (4) different Interest Periods. Upon the
day after Agent receives notice from Borrower electing to obtain a LIBOR
Advance, to convert a Base Rate Advance or to continue a LIBOR Advance, Agent
shall notify Borrower of the LIBOR applicable to the requested LIBOR Advance.

          3.1.6 Continuation of LIBOR Advances. Borrower shall have the right on
three (3) Business Days’ prior irrevocable written notice given to Agent by
Borrower (prior to 11:00 a.m. New York City Time on such Business Day), subject
to the provisions hereof, to continue any LIBOR Advance into a subsequent
Interest Period of the same or a different permitted duration, in each case
subject to the satisfaction of the following conditions:

          (i) in the case of a continuation of less than all LIBOR Advances, the
LIBOR Advances continued shall each be in a minimum principal amount of One
Million Dollars ($1,000,000) and may increase in integral multiples of One
Hundred Thousand Dollars ($100,000); and

          (ii) no LIBOR Advance (or portion thereof) may be continued as a LIBOR
Advance if an Event of Default has occurred which is then continuing or if,
after giving effect to such continuation, Borrower shall have outstanding LIBOR
Advances with more than four (4) different Interest Periods.

          If Borrower shall fail to give timely notice of its election to
continue any LIBOR Advance or portion thereof as provided above, or if such
continuation shall not be permitted, such LIBOR Advance or portion thereof,
unless such LIBOR Advance shall be repaid, shall automatically be converted into
a Base Rate Advance at the end of the Interest Period then in effect with
respect to such LIBOR Advance.

          3.1.7 Notice to Lenders. Agent shall promptly notify each Lender of
any notices received by Agent from Borrower in respect to LIBOR Advances,
conversions of Base Rate Advances into LIBOR Advances or continuations of LIBOR
Advances.

          3.1.8 Inability to Make LIBOR Advances. Notwithstanding any other
provision hereof, if any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this Subsection 3.1.8, the term
“Lender” shall include the office or branch where Lender or any corporation or
bank then controlling any Lender makes or maintains any LIBOR Advances) to make
or maintain its LIBOR Advances, or if with respect to any Interest Period, Agent
is unable to determine the LIBOR relating thereto, or adverse or unusual
conditions in, or changes in applicable law relating to, the London interbank
market make it, in the reasonable judgment of Agent, impracticable to fund
therein any of the LIBOR Advances, or make the projected LIBOR unreflective of
the actual costs of funds therefore to Lenders, the obligation of Lenders to
make LIBOR Advances hereunder shall forthwith be suspended during the pendency
of such circumstances and Borrower shall, if any affected LIBOR Advances are
then outstanding,

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promptly upon request from Agent, convert such affected LIBOR Advances into Base
Rate Advances.

     3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrower to Agent or Lenders specifically containing payment
provisions which are in conflict with this Section 3.2 (in which event the
conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:

          3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Agent, for the ratable benefit of Lenders,
immediately upon the earliest of (i) the receipt by Agent or Borrower of any
proceeds of any of the Collateral, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which Agent or Required
Lenders elects to accelerate the maturity and payment of the Obligations, or
(iii) termination of this Agreement pursuant to Section 4 hereof; provided,
however, that if an Overadvance shall exist at any time, Borrower shall, on
demand, repay the Overadvance. Each payment (including principal prepayment) by
Borrower on account of principal of the Revolving Credit Loans shall be applied
first to Base Rate Advances, then to LIBOR Advances.

          3.2.2 Interest. Interest accrued on the Revolving Credit Loans shall
be due on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the last day of the applicable Interest Period for any
LIBOR Advance, (iii) the occurrence of an Event of Default in consequence of
which Agent or Required Lenders elects to accelerate the maturity and payment of
the Obligations or (iv) termination of this Agreement pursuant to Section 4
hereof.

          3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Agent for its benefit and/or the ratable benefit of
Lenders, as applicable, or to any other Person designated by Agent in writing.

          3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Agent for its benefit
and/or the ratable benefit of Lenders, as applicable, as and when provided in
this Agreement, the Other Agreements or the Security Documents, or on demand,
whichever is later.

          3.2.5 Prepayment of LIBOR Advances. Borrower may prepay a LIBOR
Advance only upon three (3) Business Days’ prior written notice to Agent (which
notice shall be irrevocable). In the event of (i) the payment of any principal
of any LIBOR Advance other than on the last day of the Interest Period
applicable thereto (including as a result of an Event of Default), (ii) the
conversion of any LIBOR Advance other than on the last day of the Interest
Period applicable thereto, or (iii) the failure to borrow, convert, continue or
prepay any LIBOR Advance on the date specified in any notice delivered pursuant
hereto (other than for the reasons set forth in Section 3.9), then, in any such
event, Borrow shall compensate Lenders for the loss, cost and expense
attributable to such event, as determined by Agent in a manner consistent with
its customs and practices.

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     3.3 Mandatory Prepayments.

          3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided below or in Subsection 6.4.2 hereof, if Borrower
sells any of the Equipment or real Property, or if any of the Collateral is lost
or destroyed or taken by condemnation, Borrowers shall pay to Agent for the
ratable benefit of Lenders, unless otherwise agreed by Required Lenders, as and
when received by any Borrower and as a mandatory prepayment of the Revolving
Credit Loans, as herein provided, a sum equal to the net cash proceeds
(including insurance payments) received by Borrower from such sale, loss,
destruction or condemnation. To the extent that the Collateral sold, lost,
destroyed or condemned consists of Equipment or real Property, then, except as
otherwise provided below, the applicable prepayment shall be applied to reduce
permanently the Fixed Asset Component. Notwithstanding the foregoing, if the
proceeds of insurance with respect to any loss or destruction of Equipment or
real Property are less than Five Hundred Thousand Dollars ($500,000) or if no
Default or Event of Default exists and is continuing, such larger amount as may
be consented to by Required Lenders upon Borrower’s request, which consent shall
not be unreasonably withheld or delayed, Agent and Lenders shall apply such
proceeds to the outstanding principal balance of the Revolving Credit Loans (and
shall not permanently reduce the Fixed Asset Component) and shall permit
Borrower within 180 days (or such longer period as reasonably consented to by
Agent) after the receipt by Borrower of such proceeds to re-borrow such proceeds
in accordance with the terms of this Agreement for use in replacing or repairing
the damaged or lost Collateral. If such damaged or lost Collateral is not
replaced or repaired within such 180 day (or such longer period as reasonably
consented to by Agent) period, then the Fixed Asset Component shall be
permanently reduced by the amount of such proceeds.

          3.3.2 LIBOR Portions. If the application of any payment made in
accordance with the provisions of this Section 3.3 at a time when no Event of
Default has occurred and is continuing would result in termination of a LIBOR
Advance prior to the last day of the Interest Period for such LIBOR Advance, the
amount of such prepayment shall not be applied to such LIBOR Advance, but will,
at Borrower’s option, be held by Agent in a non-interest bearing account at a
Lender or another bank satisfactory to Agent in its discretion, which account is
in the name of Agent and from which account only Agent can make any withdrawal,
in each case to be applied as such amount would otherwise have been applied
under this Section 3.3 at the earlier to occur of (i) the last day of the
relevant Interest Period or (ii) the occurrence of a Default or an Event of
Default.

          3.3.3 Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Revolving Credit Loans made by it in excess of
its ratable share of payments on account of the Revolving Credit Loans made by
all Lenders, such Lender shall forthwith purchase from each other Lender such
participations in the Revolving Credit Loan as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each other Lender;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender’s ratable share (according to the proportion of (i) the amount of
such Lender’s required repayment to (ii) the total amount so

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recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Subsection 3.3.2 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.

     3.4 Application of Payments and Collections. All items of payment received
by Agent by 12:00 noon, Chicago, Illinois time, on any Business Day shall be
deemed received on that Business Day. All items of payment received after 12:00
noon, Chicago time, on any Business Day shall be deemed received on the
following Business Day. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Agent or any Lender from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that Agent and Lenders shall have,
subject to the requirements of this Agreement, including, without limitation,
subsections 3.2.1, 3.3.1 and 3.3.2 hereof, the continuing exclusive right to
apply and reapply any and all such payments and collections received at any time
or times hereafter by Agent or its agent against the Obligations, in such manner
as Agent and/or Required Lenders may deem advisable, notwithstanding any entry
by Agent or any Lender upon any of its books and records. If as the result of
collections of Accounts as authorized by Subsection 6.2.6 hereof a credit
balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrower, but shall be available to Borrower at any time or
times for so long as no Event of Default exists.

     3.5 All Loans to Constitute One Obligation. The Loans and LC Guaranties
shall constitute one general Obligation of Borrower, and shall be secured by
Agent’s Lien upon all of the Collateral.

     3.6 Loan Account. Agent shall enter all Loans as debits to the Loan Account
and shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Agent, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.

     3.7 Statements of Account. Agent will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrower unless Agent is notified by Borrower in writing to the contrary
within thirty (30) days of the date each accounting is deemed received by
Borrower pursuant to Section 12.8 of this Agreement. Such notice shall only be
deemed an objection to those items specifically objected to therein. In the
event that any item charged to Borrower’s loan account is reversed, Agent shall
also reverse or credit back to Borrower any interest which accrued on such
reversed item.

     3.8 Increased Costs. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted after the date of this Agreement and having general
applicability to all banks within the jurisdiction in which Agent and Lenders
operate (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of

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this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of Agent or Lenders therewith, shall:

          (i) (1) subject any Lender to any tax with respect to this Agreement
(other than any tax based on or measured by net income or otherwise in the
nature of a net income tax, including, without limitation, any franchise tax or
any similar tax based on capital, net worth or comparable basis for measurement)
or (2) change the basis of taxation of payments to any Lender of principal,
fees, interest or any other amount payable hereunder or under any Loan Documents
(other than in respect of any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without limitation, any
franchise tax or any similar tax based on capital, net worth or comparable basis
for measurement);

          (ii) impose, modify or hold applicable any reserve (except any reserve
taken into account in the determination of the applicable LIBOR), special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

          (iii) impose on any Lender or the London interbank market any other
condition with respect to any Loan Document;

and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining Loans hereunder by an amount that any Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans by an amount
that any Lender deems to be material, then, in any such case, Borrower shall pay
Agent for the benefit of such Lender, upon demand and certification not later
than sixty (60) days following its receipt either from Agent or the affected
Lender of notice of the imposition of such increased costs, such additional
amount as will compensate the affected Lender for such additional cost or such
reduction, as the case may be, to the extent such Lender has not otherwise been
compensated, with respect to a particular Loan, for such increased cost as a
result of an increase in the Base Rate or the LIBOR. An officer of the affected
Lender shall determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and shall certify the amount
of such additional cost or reduced amount to Borrower, which certification shall
include a written explanation of such additional cost or reduction to Borrower.
Such certification shall be conclusive absent manifest error. If any Lender
claims any additional cost or reduced amount pursuant to this Section 3.8, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different lending office or to file any certificate
or document reasonably requested by Borrower if the making of such designation
or filing would avoid the need for, or reduce the amount of, any such additional
cost or reduced amount and would not, in the sole discretion of such Lender, be
otherwise disadvantageous to such Lender. In the event that the provisions of
this Section 3.8 result in the effective interest rates being charged to
Borrower being increased, on a per annum basis, by more than one quarter percent
(1/4%), Borrower may require any such affected Lender to sell and transfer all
its interest in this Agreement and its Revolving Credit Note and Revolving
Credit Loan Commitments to a substitute Lender (who shall be reasonably
acceptable to Agent) for a price in cash equal to principal balance of such
affected Lender’s outstanding Loans plus all

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accrued but unpaid interest thereon plus all accrued but unpaid fees due any
such affected Lender under the terms hereof. Any such sale and transfer shall be
made pursuant to the terms of Section 12.3 hereof.

     3.9 Basis for Determining Interest Rate Inadequate or Unfair. In the event
that Agent shall have determined that:

          (i) reasonable means do not exist for ascertaining the LIBOR for any
Interest Period; or

          (ii) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank market with respect to a
proposed LIBOR Advance, or a proposed conversion of a Base Rate Advance into a
LIBOR Advance; then

Agent shall give Borrower prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested
LIBOR Advance shall be made as a Base Rate Advance, unless Borrower shall notify
Agent no later than 11:00 a.m. (Chicago Time) two (2) Business Days prior to the
date of such proposed borrowing that the request for such borrowing shall be
canceled or made as an unaffected type of LIBOR Advance, and (ii) any Base Rate
Advance which was to have been converted to an affected type of LIBOR Advance
shall be continued as or converted into a Base Rate Advance, or, if Borrower
shall notify Agent, no later than 11:00 a.m. (Chicago Time) two (2) Business
Days prior to the proposed conversion, shall be maintained as an unaffected type
of LIBOR Advance.

SECTION 4. TERM AND TERMINATION.

     4.1 Term of Agreement. Subject to Agent’s and Lenders’ right to cease
making Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period of four (4) years from
the date hereof, through and including December 13, 2008 (the “Original Term”).

     4.2 Termination.

          4.2.1 Termination by Agent or Lenders. Agent may and, at the direction
of Required Lenders, shall terminate this Agreement without notice upon the
occurrence and during the continuance of an Event of Default.

          4.2.2 Termination by Borrower. Upon at least thirty (30) days prior
written notice to Agent, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of all monetary Obligations arising hereunder or under any of the other
Loan Documents (other than contingent claims with respect to indemnification
obligations) in immediately available funds and all Letters of Credit and LC
Guaranties have expired or have been cash collateralized or back-to-back letters
of credit have been provided to Agent’s satisfaction. Any notice of termination
given by Borrower shall be irrevocable unless Required Lenders and Agent
otherwise agree in writing, and Agent and Lenders shall have no obligation to
make any Loans or issue or procure any Letters of Credit or LC Guaranties on or
after the termination date stated in such notice. Borrower may elect to

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terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.

          4.2.3 Effect of Termination. All of the Obligations arising under any
Loan Document shall be immediately due and payable upon the termination date
stated in any notice of termination of this Agreement. All undertakings,
agreements, covenants, warranties and representations of Borrower contained in
the Loan Documents shall survive any such termination and Agent shall retain its
Liens in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrower has paid all monetary
Obligations arising hereunder or under any of the other Loan Documents (other
than contingent claims with respect to indemnification obligations) to Agent for
the ratable benefit of Lenders, in full, in immediately available funds,
together with the applicable termination charge, if any. Notwithstanding the
payment in full of the Obligations, Agent shall not be required to terminate its
security interests in the Collateral unless, with respect to any loss or damage
Agent or Lenders may incur as a result of dishonored checks or other items of
payment received by Agent or any Lender from Borrower or any Account Debtor and
applied to the Obligations, Agent shall, at its option, (i) have received a
written agreement, executed by Borrower and by any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Agent and Lenders from any such loss or damage; or (ii) have
retained such monetary reserves and Liens on the Collateral for such period of
time as Agent, in its reasonable discretion, may deem necessary to protect Agent
and Lenders from any such loss or damage.

SECTION 5. SECURITY INTERESTS.

     5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, Borrower hereby grants to
Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon
all of Borrower’s assets, including all of the following Property and interests
in Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:

          (i) Accounts;

          (ii) Certificated Securities;

          (iii) Chattel Paper;

          (iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;

          (v) Contract Rights;

          (vi) Deposit Accounts;

          (vii) Documents;

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          (viii) Equipment;

          (ix) Financial Assets;

          (x) Fixtures;

          (xi) General Intangibles, including Payment Intangibles and Software;

          (xii) Goods (including all of its Equipment, Fixtures and Inventory),
and all accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor;

          (xiii) Instruments;

          (xiv) Intellectual Property;

          (xv) Inventory;

          (xvi) Investment Property;

          (xvii) money (of every jurisdiction whatsoever);

          (xviii) Letter-of-Credit Rights;

          (xix) Payment Intangibles;

          (xx) Security Entitlements;

          (xxi) Software;

          (xxii) Supporting Obligations;

          (xxiii) Uncertificated Securities; and

          (xxiv) to the extent not included in the foregoing, all other personal
property of any kind or description;

together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest therein, Agent will not enforce
its security interest in Borrower’s rights under such lease or license (other
than in respect of the Proceeds thereof) for so long as such prohibition
continues, it being understood that upon request of Agent, Borrower will in good
faith use reasonable efforts to obtain consent for the creation of a security
interest in favor of Agent (and to Agent’s enforcement of such security
interest) in Agent’s rights under such lease or license; provided, further, that
notwithstanding any other provision of this Agreement or the Loan Documents, the

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Collateral shall not include, at any time, securities representing more than 65%
of the presently existing and hereafter arising issued and outstanding shares of
capital stock owned by Borrower of any foreign subsidiary which shares entitle
the holder thereof to vote for directors or any other matter.

     5.2 Other Collateral.

          5.2.1 Commercial Tort Claims. Borrower shall promptly notify Agent in
writing upon incurring or otherwise obtaining a Commercial Tort Claim after the
Closing Date against any third party and, upon request of Agent, promptly enter
into an amendment to this Agreement and do such other acts or things deemed
appropriate by Agent to give Agent a security interest in any such Commercial
Tort Claim.

          5.2.2 Other Collateral. Borrower shall promptly notify Agent in
writing upon acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit
Rights or Electronic Chattel Paper and, upon the request of Agent, promptly
execute such other documents, and do such other acts or things deemed reasonably
appropriate by Agent to deliver to Agent control with respect to such
Collateral; promptly notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Documents or
Instruments and, upon the request of Agent, will promptly execute such other
documents, and do such other acts or things deemed reasonably appropriate by
Agent to deliver to Agent possession of such Documents which are negotiable and
Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of Agent; and with respect to
Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an acknowledgement from
the third party that it is holding the Collateral for the benefit of Agent.

     5.3 Lien Perfection; Further Assurances. Borrower shall execute such UCC-1
financing statements as are required by the UCC and such other instruments,
assignments or documents as are necessary to perfect Agent’s Lien upon any of
the Collateral and shall take such other action as may be required to perfect or
to continue the perfection of Agent’s Lien upon the Collateral. Unless
prohibited by applicable law, Borrower hereby irrevocably authorizes Agent to
execute and file any such financing statements, including, without limitation,
financing statements that indicate the Collateral (i) as all assets of Borrower
or words of similar effect, or (ii) as being of an equal or lesser scope, or
with greater or lesser detail, than as set forth in Section 5.1, on Borrower’s
behalf. Borrower also hereby ratifies its authorization for Agent to have filed
in any jurisdiction any like financing statements or amendments thereto if filed
prior to the date hereof. The parties agree that a photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof. At Agent’s request,
Borrower shall also promptly execute or cause to be executed and shall deliver
to Agent any and all documents, instruments and agreements deemed reasonably
necessary by Agent to give effect to or carry out the terms or intent of the
Loan Documents.

     5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages upon all
real Property described therein. If Borrower shall acquire at any time or times
hereafter any interest in other

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real Property (other than leasehold interests in sales offices or storage
facilities with an original lease term of less than five years), Borrower agrees
promptly to execute and deliver to Agent, as additional security and Collateral
for the Obligations, deeds of trust, security deeds, mortgages or other
collateral assignments reasonably satisfactory in form and substance to Agent
and its counsel (herein collectively referred to as “New Mortgages”) covering
such real Property. The Mortgages and each New Mortgage shall be duly recorded
(at Borrower’s expense) in each office where such recording is required to
constitute a valid Lien on the real Property covered thereby. In respect to each
Mortgage and each New Mortgage, Borrower shall deliver to Agent, at such
Borrower’s expense, mortgagee title insurance policies issued by a title
insurance company reasonably satisfactory to Agent insuring Agent, as mortgagee;
such policies shall be in form and substance reasonably satisfactory to Agent
and shall insure a valid first Lien in favor of Agent on the Property covered
thereby, subject only to those exceptions reasonably acceptable to Agent and its
counsel. Said policies shall be in form and substance reasonably satisfactory to
Agent. Such Borrower shall also deliver to Agent such other documents,
including, without limitation, ALTA Surveys of the real Property, as Agent and
its counsel may reasonably request relating to the real Property subject to any
such New Mortgage.

SECTION 6. COLLATERAL ADMINISTRATION.

     6.1 General.

          6.1.1 Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrower and its
Subsidiaries at one or more of the business locations set forth in Exhibit 6.1.1
hereto and shall not, without the prior written approval of Agent, be moved
therefrom except, prior to an Event of Default and Agent’s or Required Lender’s
acceleration of the maturity of the Obligations in consequence thereof, for (i)
sales of Inventory in the ordinary course of business; and (ii) removals in
connection with dispositions of Equipment that are authorized by Subsection
6.4.2 hereof.

          6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower’s
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower shall deliver the originals of such policies to Agent with
satisfactory lender’s loss payable endorsements, naming Agent as loss payee,
assignee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
thirty (30) days prior written notice to Agent in the event of cancellation of
the policy for any reason whatsoever and a clause specifying that the interest
of Agent shall not be impaired or invalidated by any act or neglect of Borrower
or the owner of the Property or by the occupation of the premises for purposes
more hazardous than are permitted by said policy. If Borrower fails to provide
and pay for such insurance, Agent may, at its option, but shall not be required
to, procure the same and charge Borrower therefor. Borrower agrees to deliver to
Agent, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies.

          6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the

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Collateral or in respect of the sale thereof shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof when due, Agent
may, at its option, but shall not be required to, pay the same and charge
Borrower therefor. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent’s
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower’s sole risk.

     6.2 Administration of Accounts.

          6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Agent on such periodic basis as Agent
shall request a sales and collections report for the preceding period, in form
reasonably satisfactory to Agent. On or before the fifteenth day of each month
from and after the date hereof, Borrower shall deliver to Agent, in form
acceptable to Agent, a detailed aged trial balance of all Accounts existing as
of the last day of the preceding month, specifying the names, addresses, face
value, dates of invoices and due dates for each Account Debtor obligated on an
Account so listed (“Schedule of Accounts”), and, upon Agent’s request therefor,
copies of proof of delivery and the original copy of all documents, including,
without limitation, repayment histories and present status reports relating to
the Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Agent shall reasonably request. If requested
by Agent, after and during the occurrence of an Event of Default, Borrower shall
execute and deliver to Agent formal written assignments of all of its Accounts
weekly or daily, which shall include all Accounts that have been created since
the date of the last assignment, together with copies of invoices or invoice
registers related thereto.

          6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of One Million Dollars
($1,000,000) are in dispute between Borrower and any Account Debtor, Borrower
shall provide Agent with written notice thereof within five (5) Business Days of
Borrower becoming aware of any such dispute, explaining in detail the reason for
the dispute, all claims related thereto and the amount in controversy. Upon and
after the occurrence of an Event of Default, Agent shall have the right to
settle or adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Agent may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including reasonable attorney’s fees,
to Borrower.

          6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Agent is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor, provided, however that Agent shall not
be liable for any taxes to any governmental taxing authority that may be due by
Borrower.

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          6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Agent’s officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of
Agent, or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, electronic communication or otherwise.
Borrower shall cooperate fully with Agent in an effort to facilitate and
promptly conclude any such verification process. If no Default or Event of
Default has occurred and is continuing, Agent shall give Borrower reasonable
advance written notice of any such telephone confirmation.

          6.2.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Agent with such
banks as may be selected by Borrower and be reasonably acceptable to Agent.
Borrower shall issue to any such banks an irrevocable letter of instruction
directing such banks to deposit all payments or other remittances received in
the lockbox to the Dominion Account for application on account of the
Obligations. All funds deposited in the Dominion Account shall immediately
become the property of Agent and Borrower shall obtain the agreement by such
banks in favor of Agent to waive any recoupment, setoff rights, and any security
interest in, or against the funds so deposited. Agent assumes no responsibility
for such lockbox arrangement, including, without limitation, any claim of accord
and satisfaction or release with respect to deposits accepted by any bank
thereunder.

          6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Agent’s property by Borrower as trustee of an express trust for Agent’s benefit
and Borrower shall immediately deposit same in kind in the Dominion Account.
Agent retains the right at all times after the occurrence of a Default or an
Event of Default to notify Account Debtors that Accounts have been assigned to
Agent and to collect Accounts directly in its own name, or in the name of
Agent’s agent, and to charge the collection costs and expenses, including
reasonable attorneys’ fees to Borrower.

     6.3 Administration of Inventory.

          6.3.1 Records and Reports of Inventory. Borrower shall keep accurate
and complete records of its Inventory. Borrower shall furnish to Agent Inventory
reports in form and detail reasonably satisfactory to Agent at such times as
Agent may request, but at least once each month, not later than the fifteenth
(15th) day of such month, concurrently with the delivery of the Borrowing Base
Certificate as required by Subsection 8.1.4. Borrower shall conduct a physical
inventory no less frequently than annually and shall provide to Agent a report
based on each such physical inventory promptly thereafter, together with such
supporting information as Agent shall request.

          6.3.2 Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which generated
an Account on which such Account Debtor is obligated in excess of Five Hundred
Thousand Dollars ($500,000), Borrower shall immediately notify Agent of the
same, specifying the reason for such return and the location, condition and
intended disposition of the returned Inventory.

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     6.4 Administration of Equipment.

          6.4.1 Records and Schedules of Equipment. Borrower shall keep accurate
records itemizing and describing the kind, type, quality, quantity and value of
its Equipment and all dispositions made in accordance with Subsection 6.4.2
hereof, and shall furnish Agent with a current schedule containing the foregoing
information on at least an annual basis and more often if requested by Agent.
Immediately on request therefor by Agent, Borrower shall deliver to Agent any
and all evidence of ownership, if any, of any of the Equipment.

          6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
voluntarily otherwise dispose of or transfer any of the Equipment or any part
thereof without the prior written consent of Agent; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of Five Hundred Thousand Dollars ($500,000) or less, provided
that all proceeds thereof are remitted to Agent for application to the Revolving
Credit Loans, or (ii) in connection with replacements of Equipment with
Equipment of like or better kind, function or value, provided that the
replacement Equipment shall be acquired prior to, concurrently with or within
180 days (or such longer period as reasonably consented to by Agent) after any
disposition of the Equipment that is to be replaced, the replacement Equipment
shall be free and clear of Liens other than Permitted Liens that are not
Purchase Money Liens, and Borrower shall have given Agent at least five (5) days
prior written notice of any such disposition.

     6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Base Rate Advances from time to time.

SECTION 7. REPRESENTATIONS AND WARRANTIES.

     7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders that, except as disclosed in the
Exhibits:

          7.1.1 Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions in
which the failure of Borrower or any of its Subsidiaries to be so qualified
would have a material adverse effect on the financial condition, business or
Properties of Borrower or any of its Subsidiaries.

          7.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiaries, who are parties to this Agreement or any of the Loan Documents, is
duly authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all

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necessary corporate action and do not and will not (i) require any consent or
approval of the shareholders (or members, in the case of a limited liability
company) of Borrower or any of its Subsidiaries; (ii) contravene Borrower’s or
any of its Subsidiaries’ charter, articles or certificate of incorporation or
by-laws; (iii) violate, or cause Borrower or any of its Subsidiaries to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or any of its
Subsidiaries is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Borrower or any of its Subsidiaries.

          7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms, subject, as to
enforcement, to general principles of equity, and to bankruptcy, insolvency and
similar rights affecting creditors’ rights generally.

          7.1.4 Capital Structure. Exhibit 7.1.4 hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (ii) the name of each
of Borrower’s corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each domestic Subsidiary of Borrower and Mexican Subsidiary and
(iv) the number of authorized, issued and treasury shares of Borrower and each
domestic Subsidiary of Borrower and Mexican Subsidiary. Borrower has good title
to all of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
Except as set forth in Exhibit 7.1.4, there are no outstanding agreements or
instruments binding upon any of Borrower’s shareholders (or members, in the case
of a limited liability company) relating to the ownership of its shares of
capital stock (or member interests, in the case of a limited liability company).

          7.1.5 Corporate Names, etc. Neither Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
within the last five (5) years, except those listed on Exhibit 7.1.5 hereto.
Except as set forth on Exhibit 7.1.5, within the last five (5) years, neither
Borrower nor any of its Subsidiaries has been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person. Each of Borrower’s, its domestic Subsidiaries’ and Mexican
Subsidiary’s state(s) of incorporation or organization, Type of Organization (if
any) and Organizational I.D. Number is set forth on Exhibit 7.1.5. The exact
legal name of Borrower and each of its Subsidiaries is set forth on
Exhibit 7.1.5.

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          7.1.6 Business Locations. Each of Borrower’s and its Subsidiaries’
chief executive office and other places of business are as listed on
Exhibit 6.1.1 hereto. During the preceding one-year period, neither Borrower nor
any of its Subsidiaries has had an office or place of business other than as
listed on Exhibit 6.1.1. Except as shown on Exhibit 6.1.1, no Inventory is
stored with a bailee, warehouseman or similar party, nor is any Inventory
consigned to any Person.

          7.1.7 Title to Properties; Priority of Liens. Each of Borrower and its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Borrower has
paid or discharged all lawful claims which, if unpaid, might become a Lien
against any of Borrower’s Properties that is not a Permitted Lien. The Liens
granted to Agent for its benefit and the ratable benefit of Lenders under
Section 5 hereof are first-priority Liens, subject only to Permitted Liens.

          7.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Agent, with respect to each Account:

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

          (ii) it arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the contract
between Borrower and the Account Debtor;

          (iii) it is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of which
has been furnished or is available to Agent;

          (iv) such Account, and Agent’s security interest therein, is not, and
will not (by voluntary act or omission of Borrower) be in the future, subject to
any offset, Lien, deduction, recoupment, defense, dispute, counterclaim or any
other adverse condition except for disputes resulting in returned goods where
the amount in controversy is deemed by Agent to be immaterial, and each such
Account is absolutely owing to Borrower and is not contingent in any respect or
for any reason;

          (v) Borrower has made no agreement with any Account Debtor thereunder
for any extension, compromise, settlement or modification of any such Account or
any deduction therefrom, except discounts or allowances which are granted by
Borrower in the ordinary course of its business for prompt payment and which are
reflected in the calculation of the net amount of each respective invoice
related thereto and are reflected in the Schedules of Accounts submitted to
Agent pursuant to Subsection 6.2.1 hereof;

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          (vi) there are no facts, events or occurrences which in any way impair
the validity or enforceability of any Accounts or tend to reduce the amount
payable thereunder from the face amount of the invoice and statements delivered
to Agent with respect thereto;

          (vii) to Borrower’s knowledge, the Account Debtor thereunder (1) had
the capacity to contract at the time any contract or other document giving rise
to the Account was executed and (2) such Account Debtor is Solvent; and

          (viii) to Borrower’s knowledge, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in such Account Debtor’s financial
condition or the collectibility of such Account.

          7.1.9 Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted, except where the failure to
maintain, replace or repair any item of Equipment could not reasonably be
expected to have a Material Adverse Effect. Borrower will not permit any of the
Equipment to become affixed to any real Property leased to Borrower so that an
interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form acceptable to Agent, and
Borrower will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to first-priority (except
for Permitted Liens) Liens in favor of Agent.

          7.1.10 Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheets of Borrower and such other Persons described
therein (including the accounts of all Subsidiaries of Borrower for the
respective periods during which a Subsidiary relationship existed) as of
September 25, 2004 and the related statements of income, changes in
stockholder’s equity, and changes in financial position for the periods ended on
such dates, have been prepared in accordance with GAAP, and present fairly the
financial positions of Borrower and such Persons at such dates and the results
of Borrower’s and such Persons’ operations for such periods. Since June 26,
2004, no material change in the condition, financial or otherwise, of Borrower
and such other Persons as shown on the Consolidated balance sheet as of such
date and no change in the aggregate value of Equipment and real Property owned
by Borrower or such other Persons, except changes in the ordinary course of
business, none of which individually or in the aggregate has been materially
adverse. The fiscal year of Borrower and each of its Subsidiaries ends on or
about December 31 of each year.

          7.1.11 Full Disclosure. The financial statements referred to in
Subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Agent, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Agent in writing which has or evidences a Material Adverse Effect or, so far as
Borrower can now foresee, could reasonably be expected to have or evidence a
Material Adverse Effect.

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          7.1.12 Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made and the
Letters of Credit and LC Guaranties to be issued hereunder, at all times will
be, Solvent.

          7.1.13 Surety Obligations. Other than with respect to the guarantee of
obligations under the Senior Subordinated Note Documents, neither Borrower nor
any of its Subsidiaries is obligated as surety or indemnitor under any surety or
similar bond or other contract, or has issued or entered into any agreement to
assure payment, performance or completion of performance of any undertaking or
obligation of any Person.

          7.1.14 Taxes. Borrower’s federal tax identification number is
36-2490451. The federal tax identification number of each of Borrower’s domestic
Subsidiaries, if any, is shown on Exhibit 7.1.14 hereto. Borrower and each of
its Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all taxes, assessments, fees, levies and other governmental charges
upon it, its income and Properties as and when such taxes, assessments, fees,
levies and charges are due and payable, unless and to the extent any thereof are
being actively contested in good faith and by appropriate proceedings and
Borrower maintains reasonable reserves on its books therefor. The provision for
taxes on the books of Borrower and its Subsidiaries are adequate, in Borrower’s
reasonable opinion, for all years not closed by applicable statutes, and for its
current fiscal year.

          7.1.15 Brokers. There are no claims for brokerage commissions,
finder’s fees or investment banking fees in connection with the transactions
contemplated by this Agreement.

          7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of Borrower
and its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such registered patents, trademarks, service marks, trade
names, copyrights, licenses and other similar rights are listed on
Exhibit 7.1.16 hereto.

          7.1.17 Governmental Consents. Each of Borrower and its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it, except where the failure to have or be in good
standing with respect to any such governmental consult, approval, license,
authorization, permit, certificate, inspection or franchise could not reasonably
be expected to have a Material Adverse Effect.

          7.1.18 Compliance with Laws. Each of Borrower and its Subsidiaries has
duly complied with, and its Properties, business operations and leaseholds are
in compliance in all material respects with, the provisions of all federal,
state and local laws, rules and regulations applicable to Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation. Each
of Borrower and its

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Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance with all federal, state and local laws,
rules and regulations applicable to it. No Inventory has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. §201 et seq.), as amended.

          7.1.19 Restrictions. Neither Borrower nor any of its Subsidiaries is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its Properties. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto,
none of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.

          7.1.20 Litigation. Except as set forth on Exhibit 7.1.20 hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of Borrower or any of its Subsidiaries: (i) claiming damages against
Borrower of One Hundred Thousand Dollars ($100,000) or more either individually
or in the aggregate when consolidated with similar or related matters;
(ii) involving any claim for injunctive relief; or (iii) involving other matters
which could reasonably be expected to have a Material Adverse Effect. Neither
Borrower nor any of its Subsidiaries is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal.

          7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower’s performance hereunder, constitute a Default or an Event of Default.
Neither Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed with a principal amount of
One Hundred Thousand Dollars ($100,000) or more.

          7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit 7.1.22(b) hereto
is a complete listing of all operating leases of Borrower and its Subsidiaries
involving annual lease payments of Fifty Thousand Dollars ($50,000) or more.
Each of Borrower and its Subsidiaries is in compliance in all material respects
with all of the terms of each of its respective capitalized and operating
leases.

          7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto,
neither Borrower nor any of its Subsidiaries has any Plan. Borrower and each of
its Subsidiaries is in compliance, in all material respects, with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a material adverse change
in the financial condition of Borrower or any of its Subsidiaries exists in
connection with any Plan. Neither Borrower nor any of its Subsidiaries has any
withdrawal liability in connection with a Multi-employer Plan.

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          7.1.24 Trade Relations. There exists no actual or, to Borrower’s
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between Borrower or any of
its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrower or any
of its Subsidiaries, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially affect
adversely Borrower or any of its Subsidiaries or prevent Borrower or any of its
Subsidiaries from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.

          7.1.25 Labor Relations. Except as described on Exhibit 7.1.25 hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower’s or any of
its Subsidiaries’ employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.

          7.1.26 Foreign Subsidiaries. Agent and Lenders acknowledge that all
warranties and representations made with respect to all foreign Subsidiaries
shall be deemed to have been made to Borrower’s knowledge.

     7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be made on the Closing Date and each subsequent
date on which Borrower draws down any Revolving Credit Loan or requests Bank or
Agent to issue or execute any Letters of Credit or LC Guaranty and shall be
accurate, complete and not misleading as of each of such date, except for
changes in the nature of Borrower’s or its respective Subsidiaries’ business or
operations that would render the information in any exhibit attached hereto or
to any other Loan Document either inaccurate, incomplete or misleading, so long
as (i) Agent has consented to such changes, (ii) such changes are expressly
permitted or contemplated by this Agreement or (iii) such changes could not
reasonably be expected to have or evidence a Material Averse Effect.

     7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and Lenders and the parties thereto and the closing of the transactions
described therein or related thereto.

SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.

     8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or any Lender,
Borrower covenants that, unless otherwise consented to by Required Lenders in
writing, it shall:

          8.1.1 Visits and Inspections. Permit representatives of Agent and any
representatives as of any Lender who wish to accompany Agent’s representatives,
from time to time, as often as may be reasonably requested, but only during
normal business hours and if no Default or Event of Default has occurred and is
continuing, upon twenty-four (24) hours advance notice, to visit and inspect the
Properties of Borrower and each of its Subsidiaries, inspect, audit

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and make extracts from its books and records, and discuss with its officers, its
employees and its independent accountants, Borrower’s and each of its
Subsidiaries’ business, assets, liabilities, financial condition, business
prospects and results of operations.

          8.1.2 Notices. Promptly notify Agent in writing of the occurrence of
any event or the existence of any fact that renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading, in any manner that could reasonably be expected to
have or evidence a Material Adverse Effect.

          8.1.3 Financial Statements. Keep, and cause each Subsidiary to 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 its
financial transactions; and cause to be prepared and furnished to Agent (with
sufficient copies for all Lenders) the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower’s certified
public accountants concur in any change therein and such change is disclosed to
Agent and is consistent with GAAP):

          (i) not later than ninety (90) days after the close of each fiscal
year of Borrower, unqualified, audited financial statements of Parent, Borrower
and Borrower’s Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Parent but acceptable to Agent
(except for a qualification for a change in accounting principles with which the
accountant concurs);

          (ii) not later than thirty (30) days after the end of each month
hereafter, including the last month of Borrower’s fiscal year, unaudited,
interim financial statements of Parent, Borrower and Borrower’s Subsidiaries as
of the end of such month and of the portion of Borrower’s financial year then
elapsed, on a Consolidated and consolidating basis, certified by the principal
financial officer of Borrower as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of operations of
Parent, Borrower and Borrower’s Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that such
statements need not contain notes;

          (iii) promptly after the sending or filing thereof, as the case may
be, copies of any financial statements or reports which Borrower has made
available to its public debt holders and copies of any regular, periodic and
special reports or registration statements which Borrower files with the
Securities and Exchange Commission or any governmental authority which may be
substituted therefor, or any national securities exchange; provided, however,
that with respect to Form 8-K or any registration statements, Borrower shall
notify Agent of the filing of any such form or statement and shall supply a copy
thereof to Agent upon Agent’s request.

          (iv) promptly after the filing thereof, notice that Borrower has filed
any annual report to be filed with ERISA in connection with each Plan; upon
request of Agent, Borrower shall deliver to Agent a copy of any such report; and

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          (v) such other data and information (financial and otherwise) as Agent
or Required Lenders, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower’s and each of its Subsidiaries’ financial
condition or results of operations.

          Concurrently with the delivery of the financial statements described
in clause (i) of this Subsection 8.1.3, Borrower shall forward to Agent a copy
of the accountants’ letter to Borrower’s management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall furnish to Agent a confirmation by such public accountants of
Borrower’s calculations of the financial covenants contained in Section 8.3.
Concurrently with the delivery of the financial statements described in Clauses
(i) and (ii) of this Subsection 8.1.3, or more frequently if requested by Agent,
Borrower shall cause to be prepared and furnished to Lender a Compliance
Certificate in the form of Exhibit 8.1.3 hereto executed by the Chief Financial
Officer of Borrower.

          Within five (5) days after the earlier of the last day of each fiscal
year of Borrower and the date Parent or Borrower engaged independent certified
public accountants to audit Parent and Borrower’s financial statements, Borrower
shall deliver to such independent certified public accountants a letter from
Parent and/or Borrower addressed to such independent certified public
accountants indicating that it is a primary intention of Parent and Borrower in
engaging such accountants that Agent and Lenders rely upon such financial
statements of Parent, Borrower and Borrower’s Subsidiaries.

          8.1.4 Borrowing Base Certificates. On or before the 15th day of each
month from and after the date hereof, Borrower shall deliver to Agent a
Borrowing Base Certificate, in the form attached hereto as Exhibit 8.1.4 (as
modified from time to time by Agent), as of the last day of the immediately
preceding month (or shorter period as is applicable), with such supporting
materials as Agent shall reasonably request. If Borrower deems it advisable, or
Agent shall request, Borrower shall execute and deliver to Agent Borrowing Base
Certificates more frequently than monthly.

          8.1.5 Landlord, Storage and Other Agreements. Provide Agent with
copies of all agreements (other than modifications or amendments to existing
agreements that do not affect, in any material respect, either Borrower’s or any
other party’s respective obligations) between Borrower or any of its
Subsidiaries and any landlord, warehouseman, processor, distributor or consignee
which owns or is the lessee of any premises at which any Collateral may, from
time to time, be kept. With respect to any lease (other than leases for sales
offices), warehousing agreement or any processing agreement in any case entered
into after the Closing Date, Borrower shall provide Agent with landlord waivers,
bailee letters or processor letters with respect to such premises. Such landlord
waivers, bailee letters or processor letters shall be in a form supplied by
Agent to Borrower with such reasonable revisions as are customarily accepted by
Agent or by similar financial institutions in similar financial transactions.

          8.1.6 Projections. No later than thirty (30) days prior to the end of
each fiscal year of Borrower, deliver to Agent Projections of Borrower for the
forthcoming fiscal year, month by month and, to the extent available, any
Projections (or partial Projections) for succeeding years.

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          8.1.7 Deposit and Brokerage Accounts. For each deposit account or
brokerage account that Borrower at any time opens or maintains, Borrower shall,
at Agent’s request and option, pursuant to an agreement in form and substance
reasonably satisfactory to Agent, cause the depository bank or securities
intermediary, as applicable, to agree to comply at any time with instructions
from Agent to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of Borrower.

          8.1.8 Cash Management Services. During the Original Term, Borrower
shall maintain its lockbox deposit and disbursement accounts with Bank and shall
use Bank for its other cash management services so long as Bank charges
competitive rates for such services.

     8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Agent or any Lender, Borrower
covenants that, unless Required Lenders has first consented thereto in writing,
it will not:

          8.2.1 Mergers; Consolidations; Acquisitions; Structural Changes.
Except for Permitted Acquisitions, merge or consolidate, or permit any
Subsidiary of Borrower to merge or consolidate, with any Person; nor change its
or any of its Subsidiaries’ state of incorporation or organization or Type of
Organization or Organizational I.D. Number; nor change its or any of its
Subsidiaries’ legal names; nor acquire, nor permit any of its Subsidiaries to
acquire all or any substantial part of the Properties of any Person, except for:

          (i) mergers of any Subsidiary of Borrower into Borrower or another
wholly owned Subsidiary of Borrower; and

          (ii) acquisitions of assets consisting of fixed assets or real
Property that constitute Capital Expenditures permitted under Subsection 8.2.8.

          (iii) changes in Borrower’s or any Subsidiaries’ state of
incorporation, name, Type of Incorporation or Organization I.D. Number if
Borrower gives Agent thirty (30) days’ advance written notice of any such change
and executes any UCC statement or amendment which Agent reasonably requests
Borrower to execute as a result of such change.

          8.2.2 Loans. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money to any Person other than (i) for salary, travel
advances, advances against commissions and other similar advances in the
ordinary course of business), (ii) extensions of trade Credit in the ordinary
course of business, (iii) deposits with financial institutions permitted under
this Agreement, (iv) prepaid expenses and (v) intercompany loans or advances to
Mexican Subsidiary (or to Parent for re-advance to Mexican Subsidiary) to fund
Mexican Subsidiary’s working capital needs or Capital Expenditures provided that
after giving effect to any such loan or advance the aggregate amount of Parent’s
and/or Borrower’s investment (including Distributions permitted by subsection
8.2.7(vi)) in Mexican Subsidiary, as represented by Parent’s or Borrower’s
intercompany account, accounted for on a consistent basis does not exceed One
Million Five Hundred Thousand Dollars ($1,500,000).

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          8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except:

          (i) Obligations owing to Agent and Lenders;

          (ii) Indebtedness arising from Borrower’s guarantee of Parent’s
obligations under the Senior Subordinated Note Documents;

          (iii) Indebtedness of any Subsidiary of Borrower to Borrower;

          (iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than ninety
(90) days from billing date or more than thirty (30) days from the due date, in
each case incurred in the ordinary course of business and paid within such time
period, unless the same are being actively contested in good faith and by
appropriate and lawful proceedings; and Borrower or such Subsidiary shall have
set aside such reserves, if any, with respect thereto as are required by GAAP
and deemed adequate by Borrower or such Subsidiary and its independent
accountants;

          (v) Obligations to pay Rentals permitted by Subsection 8.2.13;

          (vi) Permitted Purchase Money Indebtedness;

          (vii) Contingent liabilities arising out of endorsements of checks and
other negotiable instruments for deposit or collection in the ordinary course of
business;

          (viii) Indebtedness existing on the Closing Date and listed on
Exhibit 8.2.3;

          (ix) Indebtedness not included in paragraphs (i) through (viii) above
which does not exceed at any time, in the aggregate, the sum of Five Hundred
Thousand Dollars ($500,000); and

          (x) extensions, refinancings, modifications, amendments and
restatements of any of the foregoing; provided that the principal amount thereof
is not increased or the terms thereof are not modified to impose more burdensome
restrictions, as determined by Agent in its reasonable discretion and provided,
further, that Borrower gives Agent reasonable prior written notice of any such
event which notice shall be in reasonable detail.

          Agent and Lenders acknowledge that Borrower may repay the IRB
Indebtedness either in accordance with scheduled terms or by voluntary
prepayment.

          8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of Borrower to enter into or be a party to, any transaction with
any Affiliate of Borrower or stockholder, except (a) Permitted Transactions and
(b) in the ordinary course of and pursuant to the reasonable requirements of
Borrower’s or such Subsidiary’s business and upon fair and reasonable terms
which are fully disclosed to Agent and are no less favorable to

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Borrower than would obtain in a comparable arm’s length transaction with a
Person not an Affiliate or stockholder of Borrower or such Subsidiary.

          8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:

          (i) Liens at any time granted in favor of Agent for its benefit and
the ratable benefit of Lenders;

          (ii) Liens for taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA) not yet due, or being contested in the manner described
in Subsection 7.1.14 hereto, but only if in Agent’s judgment such Lien does not
adversely affect Agent’s rights or the priority of Agent’s Lien in the
Collateral;

          (iii) Liens arising in the ordinary course of Borrower’s business by
operation of law or regulation, but only if payment in respect of any such Lien
is not at the time required and such Liens do not, in the aggregate, materially
detract from the value of the Property of Borrower or materially impair the use
thereof in the operation of Borrower’s business;

          (iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;

          (v) Liens securing Indebtedness of one of Borrower’s Subsidiaries to
Borrower or another such Subsidiary;

          (vi) Such other Liens as appear on Exhibit 8.2.5 hereto;

          (vii) Liens incurred or deposits made in the ordinary course of
business (1) in connection with worker’s compensation, social security,
unemployment insurance and other like laws, or (2) in connection with sales
contracts, leases, statutory obligations, work in progress advances and other
similar obligations not incurred in connection with the borrowing of money or
the payment of the deferred purchase price of property;

          (viii) Title exceptions or encumbrances granted in the ordinary course
of business, affecting real Property owned by Borrower; provided that such
exceptions do not in the aggregate materially detract from the value of such
Property or materially interfere with its use in the ordinary conduct of
Borrower’s business; and

          (ix) Such other Liens which are not reasonably expected to have a
material adverse effect on the value of the Collateral as Agent may hereafter
approve in writing.

          8.2.6 Subordinated Debt.

          (i) Except as provided below, make, or permit any Subsidiary of
Borrower to make, any direct or indirect prepayment of any part or all of any

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Subordinated Debt or take any other action or omit to take any other action in
respect of any Subordinated Debt, except in accordance with the subordination
provisions or agreement relative thereto. Make or permit any Subsidiary of
Borrower to make any other direct or indirect payment of any part or all of any
Subordinated Debt or take any other action or omit to take any other action in
respect of any Subordinated Debt in contravention of the subordination
provisions or agreement relative thereto. Amend or modify any of the terms of
the Senior Subordinated Note Documents in any manner materially adverse to
Borrower or Agent and Lenders.

          (ii) The foregoing notwithstanding, Borrower may make repurchases of
Senior Subordinated Notes or may make Distributions to Parent to permit Parent
to make repurchases of Senior Subordinated Notes if after giving effect to any
such repurchase or Distribution each of the following conditions are satisfied:
(v) no Default or Event of Default exists and is outstanding; (w) there had
occurred no event of Default resulting from the failure to comply with the
financial covenants contained in Section 8.3 in either of the two most recently
ended fiscal quarters; (x) Borrower shall have given Agent at least five (5)
Business Days’ prior written notice of its intent to make any such repurchase or
Distribution; (y) average Net Availability for the fifteen days immediately
prior to the date of the proposed repurchase or Distribution and, on a pro forma
basis for the fifteen days immediately after the date of the proposed repurchase
or distribution equals or exceeds Twenty Million Dollars ($20,000,000); and
(z) the aggregate amount paid by Borrower directly, or indirectly through
Distributions, to Parent to repurchase Senior Subordinated Notes pursuant to the
provision of this Section 8.2.6 (ii) does not exceed Fifteen Million Dollars
($15,000,000); and

          (iii) The foregoing note withstanding Borrower may make repurchases of
Senior Subordinated Notes or may make Distributions to Parent to permit Parent
to make repurchases of Senior Subordinated Notes if such repurchases or
Distributions are funded solely from the proceeds of capital stock or
Subordinated Debt issued by Borrower, which capital stock or Subordinated Debt
shall contain terms and conditions as are reasonably acceptable to Agent,
including without limitation terms requiring payment of interest or dividends
thereon in kind.

          8.2.7 Distributions. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions, except for:

          (i) Distributions by any Subsidiary of Borrower to Borrower;

          (ii) Distributions paid solely in capital stock of Borrower or any of
its Subsidiaries;

          (iii) Distributions by Borrower to Parent in amounts necessary to
(x) repurchase capital stock of Parent from employees of Borrower or Parent or
any of Borrower’s Subsidiaries upon the termination of their employment, so long
as no Default or Event of Default exists at the time of or would be caused by
such making of such Distributions and the aggregate cash amount of such
Distributions, measured at the time when made, does not exceed One Million
Dollars ($1,000,000) in any fiscal year of

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Borrower and (y) to permit Parent to pay the expenses contemplated in connection
with the consummation of the transactions described in clause (i) of the
definition of Permitted Transactions;

          (iv) so long as no Default or Event of Default exists at the time of
or would be caused by the making of such Distributions, Distributions by
Borrower in an amount sufficient to permit Parent to pay Consolidated tax
liabilities of Parent, Borrower and Borrower’s Subsidiaries, so long as Parent
applies the amount of such Distributions for such purpose;

          (v) Distributions by Borrower to the extent necessary to permit Parent
to pay administrative costs and expenses related to the business of Borrower and
its Subsidiaries, not to exceed Five Million Dollars ($5,000,000) in any fiscal
year of Borrower, so long as Parent applies the amount of such Distributions for
such purpose and does not use such funds to make Distributions to Parent’s
stockholders or other payments which would be prohibited by subsection 8.2.4 if
made by Borrower;

          (vi) Distributions by Borrower to Parent to the extent necessary to
permit Borrower to make regularly scheduled payments of interest due on the
Senior Subordinated Notes; and

          (vii) Distributions to Parent to permit Parent to fund Mexican
Subsidiary’s working capital needs or Capital Expenditures; provided that after
giving effect to any such Distribution, the aggregate amount of Parent and/or
Borrower’s investment in Mexican Subsidiary as represented by Borrower’s or
Parent’s inter-company account (including loans or advances permitted by such
Section 8.2.2), accounted for on a consistent basis, does not exceed One Million
Five Hundred Thousand Dollars ($1,500,000).

          8.2.8 Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower and its Subsidiaries, exceed Ten Million Dollars ($10,000,000) during
any fiscal year of Borrower.

          8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose of
any of, its Properties, including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder and Agent has not requested Borrower to cease such sales of
Inventory following acceleration of the Obligations, (ii) a transfer of Property
to Borrower by a Subsidiary of Borrower or (iii) dispositions expressly
authorized by this Agreement or (iv) dispositions of investments described in
paragraphs (iv), (v), (vi) and (vii) of the term “Restricted Investments.”

          8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue
any additional shares of its capital stock except director’s qualifying shares.

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          8.2.11 Bill-and-Hold Sales, Etc. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.

          8.2.12 Restricted Investment. Except as otherwise permitted by
subsection 8.2.2, make or have, or permit any Subsidiary of Borrower to make or
have, any Restricted Investment.

          8.2.13 Leases. Become, or permit any of its Subsidiaries to become, a
lessee under any operating lease (other than a lease under which Borrower or any
of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of twelve (12) consecutive months under the
lease in question and all other leases under which Borrower or any of its
Subsidiaries is then lessee would exceed Eight Million Dollars ($8,000,000). The
term “Rentals” means, as of the date of determination, all payments which the
lessee is required to make by the terms of any lease.

          8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower or Parent.

          8.2.15 Tender Offer Expenses. The aggregate amount of all expenses
paid or to be paid by Borrower, in connection with, or as a result of the
consummation of the Tender Offer, including, without limitation, any severance
costs that become due or vested upon the consummation of the Tender Offer, shall
not exceed Eleven Million Dollars ($11,000,000).

     8.3 Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Agent or Lenders,
Borrower covenants that it will be in full compliance with each of the financial
covenants set forth on Exhibit 8.3 hereto. If GAAP changes from the basis used
in preparing the audited financial statements delivered to Agent by Borrower on
or before the Closing Date, Borrower will provide Agent with certificates
demonstrating compliance with such financial covenants and will include, at the
election of Borrower or upon the request of Agent, calculations setting forth
the adjustments necessary to demonstrate how Borrower is in compliance with such
financial covenants based upon GAAP as in effect on the Closing Date.

SECTION 9. CONDITIONS PRECEDENT.

     Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Agent or
Lenders under the other sections of this Agreement, Lenders shall not be
required to make any Loan under this Agreement unless and until each of the
following conditions has been and continues to be satisfied:

     9.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent, a duly executed copy of this Agreement and the other Loan
Documents, together with such additional documents, instruments, opinions and
certificates as Agent shall require in connection therewith from time to time,
all in form and substance satisfactory to Agent and its counsel.

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     9.2 No Default. No Default or Event of Default shall exist.

     9.3 Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.

     9.4 Net Availability. Agent shall have determined that immediately after
Lenders have made the initial Loans and issued the initial Letters of Credit and
LC Guaranties contemplated hereby, and Borrower has paid or has reserved for the
payment of all closing costs incurred in connection with the Tender Offer and
the other transactions contemplated hereby, including, without limitation,
payment of all costs and expenses to be incurred in connection with the
consummation of the Tender Offer and all severance costs that become due and/or
vested upon the consummation of the Tender Offer, Net Availability shall not be
less than Fifteen Million Dollars ($15,000,000).

     9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.

     9.6 Collateral Audit. Agent shall have completed a collateral audit of
Borrower’s Accounts and Inventory and the results of such collateral audit shall
be acceptable to Agent.

     9.7 Senior Subordinated Notes. Agent shall have determined that the
consummation of the Tender Offer and the other transactions contemplated hereby
shall not result in or cause an event of default with the Senior Subordinated
Loan Documents.

     9.8 Tender Offer. The Tender Offer shall have been consummated pursuant to
terms and conditions acceptable to Agent.

     9.9 Equity. Purchaser shall have funded the disbursing agent so as to
permit the disbursing agent to fund the payment of the cash consideration due
upon consummation of the Tender Offer, which funding shall equal or exceed Ten
Million Dollars ($10,000,000).

     Upon the effectiveness of this Agreement, FCC, as sole Lender under the
Original Loan Agreement, shall return the promissory note delivered to it in
connection with closing of the Original Loan Agreement to Borrower marked
“Amended and Superceded”.

SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.

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

          10.1.1 Payment of Interest, Principal or Fees. Borrower fails to pay
any installment of principal, interest or premium, if any, due in respect to
outstanding Revolving Credit Loans or fees payable in respect to unused
Revolving Credit Loans or outstanding Letters of Credit or LC Guaranties on the
due date thereof, whether as mandatory prepayments, as payments necessary to
eliminate Overadvances or otherwise.

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          10.1.2 Payment of Other Obligations. Borrower shall fail to pay any of
the Obligations not covered by Subsection 10.1.1 hereof on the due date thereof
(whether due at stated maturity, on demand, upon acceleration or otherwise).

          10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent and/or Lenders by or on behalf of Borrower,
any Subsidiary of Borrower, or any Parent in this Agreement, any of the other
Loan Documents or any instrument, certificate or financial statement furnished
in compliance with or in reference thereto proves to have been false or
misleading in manner which could reasonably be expected to have or evidence a
Material Adverse Effect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.

          10.1.4 Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 5.3, 5.4,
6.1.1, 6.1.2, 6.2.5, 6.2.6, 8.1.1, 8.1.2, 8.1.4, 8.1.7, 8.2 or 8.3 hereof on the
date that Borrower is required to perform, keep or observe such covenant.

          10.1.5 Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Agent’s satisfaction within
fifteen (15) days (five (5) days with respect to Section 8.1.3) after the sooner
to occur of Borrower’s receipt of notice of such breach from Agent or the date
on which such failure or neglect first becomes known to any executive officer or
the controller of Borrower or Parent.

          10.1.6 Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.

          10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations), in a
principal amount of One Hundred Thousand Dollars ($100,000) or more if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.

          10.1.8 Uninsured Losses. Any loss, theft, damage or destruction of any
of the Collateral with a fair market value of Five Hundred Thousand Dollars
($500,000) or more not fully covered (subject to such deductibles and
self-insurance retentions as Agent shall have permitted) by insurance.

          10.1.9 Insolvency and Related Proceedings. Borrower or Parent shall
cease to be Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
Borrower or Parent under the Bankruptcy Code (if against Borrower or Parent, the
continuation of such proceeding for more than sixty (60) days), or Borrower or

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Parent shall make any offer of settlement, extension or composition to their
respective unsecured creditors generally.

          10.1.10 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower, any Subsidiary of
Borrower or Parent for a period which significantly affects Borrower’s or
Parent’s capacity to continue its business, on a profitable basis; or Borrower,
any Subsidiary of Borrower or Parent shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by Borrower or Parent which is
necessary to the continued or lawful operation of its business; or Borrower or
Parent shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which
Borrower or Parent’s leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term; or any part of the
Collateral shall be taken through condemnation or the value of such Property
which event, with respect to all of the foregoing, could reasonably be expected
to have a Material Adverse Effect.

          10.1.11 Change of Ownership. (a) EGI or any of its Affiliates (as
defined in clause (i) of the definition of such term) shall cease to own, as a
result of a sale, transaction or other disposition, less than 75% of the amount
of EGI’s and said Affiliates’ original pecuniary investment (as determined by
reference to percentage of economic ownership rights) in Parent (either directly
or indirectly through Purchaser) or EGI or Triyar collectively with their
respective Affiliates (as defined in clause (i) of the definition of such term)
shall cease to hold, as a result of a sale, transaction or other disposition, a
larger economic interest in Parent (directly or indirectly through Purchaser)
than any other Person (including such Person’s Affiliates (as defined in clause
(i) of the definition of such term); (b) Parent shall cease to own and control,
beneficially and of record, all of the issued and outstanding capital stock of
Borrower; or (c) a Change of Control shall occur.

          10.1.12 ERISA. A Reportable Event shall occur which Agent, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower, any Subsidiary of Borrower or Parent is in
“default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multi-employer Plan resulting from Borrower’s, such Subsidiary’s or
Parent’s complete or partial withdrawal from such Plan and any such event could
reasonably be expected to have or evidence a Material Adverse Effect.

          10.1.13 Challenge to Agreement. Borrower, any Subsidiary of Borrower
or Parent, or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement, or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent.

          10.1.14 Repudiation of or Default Under Guaranty Agreement. Parent
shall revoke or attempt to revoke the Guaranty Agreement signed by Parent, or
shall repudiate Parent’s liability thereunder or shall be in default under the
terms thereof.

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          10.1.15 Criminal Forfeiture. Borrower, any Subsidiary of Borrower or
Parent shall be criminally indicted or convicted under any law that could lead
to a forfeiture of any Property of Borrower, any Subsidiary of Borrower or
Parent.

          10.1.16 Judgments. Final judgment or judgments (after the expiration
of all times to appeal therefrom) for the payment of money in excess of Two
Hundred Fifty Thousand Dollars ($250,000) with respect to any one judgment or
Five Hundred Thousand Dollars ($500,000) with respect to all outstanding
judgments in the aggregate shall be rendered against Borrower and the same shall
not (i) be fully covered by insurance, or (ii) within thirty days after the
entry thereof, have been discharged or paid or bonded over or execution thereof
stayed pending appeal, or shall not have been discharged within five days after
the expiration of any such stay.

     10.2 Acceleration of the Obligations. Without in any way limiting the right
of Agent or Required Lenders, to demand payment of any portion of the
Obligations payable on demand in accordance with Section 3.2 hereof, upon or at
any time after the occurrence of an Event of Default, all or any portion of the
Obligations shall, at the option of Agent either acting on its own or at the
direction of Required Lenders and without presentment, demand, protest or
further notice by Agent, become at once due and payable and Borrower shall
forthwith pay to Agent for its benefit and the ratable benefit of Lenders, the
full amount of such Obligations, provided, that upon the occurrence of an Event
of Default specified in Subsection 10.1.9 hereof, all of the Obligations shall
become automatically due and payable without declaration, notice or demand by
Agent or Required Lenders.

     Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; provided that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of Agent and Lenders taken as a whole, including any action (or the
failure to act) pursuant to the Loan Documents.

     10.3 Other Remedies. Upon and after the occurrence of an Event of Default,
Agent and/or Lenders shall have and may exercise from time to time the following
other rights and remedies:

          10.3.1 All of the rights and remedies of a secured party under the UCC
or under other applicable law, and all other legal and equitable rights to which
Agent or Lenders may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.

          10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower’s expense, and
make it available to Agent at a place designated by Agent which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Agent for storage thereof).

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          10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Agent may, at Agent’s option, disclaim any and all
warranties regarding the Collateral in connection with any such sale. Borrower
agrees that ten (10) days written notice to Borrower of any public or private
sale or other disposition of Collateral shall be reasonable notice thereof, and
such sale shall be at such locations as Agent may designate in said notice.
Agent shall have the right to conduct such sales on Borrower’s premises, without
charge therefor, and such sales may be adjourned from time to time in accordance
with applicable law. Agent shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Agent may purchase all or any part of the Collateral at
public or, if permitted by law, private sale and, in lieu of actual payment of
such purchase price, may set off the amount of such price against the
Obligations. The proceeds realized from the sale of any Collateral may be
applied, after allowing two (2) Business Days for collection, first to the
reasonable costs, expenses and attorneys’ fees incurred by Agent in collecting
the Obligations, in enforcing the rights of Agent and Lenders under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral; second to
the interest due upon any of the Obligations; and third, to the principal of the
Obligations. If any deficiency shall arise, Borrower and Parent shall remain
liable to Agent and Lenders therefor.

          10.3.4 Agent is hereby granted a license or other right to use,
without charge, Borrower’s labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower’s rights under all licenses and
all franchise agreements shall inure to Agent’s benefit.

          10.3.5 Agent or Required Lenders may, at its or their option, require
Borrower to deposit with Agent funds equal to the LC Amount and, if Borrower
fails to promptly make such deposit, Lenders may advance such amount as a Base
Rate Advance (whether or not an Overadvance is created thereby). Any such
deposit or advance shall be held by Agent as a reserve to fund future payments
on such LC Guaranties and future drawings against such Letters of Credit. At
such time as all LC Guaranties have been paid or terminated and all Letters of
Credit have been drawn upon or expired, any amounts remaining in such reserve
shall be applied against any outstanding Obligations, or, if all Obligations
have been indefeasibly paid in full, returned to Borrower.

     10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to Agent or Lenders or contained in
any other agreement between Agent and/or Lenders, and Borrower, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative to and not
in derogation or substitution of any of the terms, covenants, conditions, or
agreements of Borrower herein contained. The failure or delay of Agent or
Lenders to require strict performance by Borrower of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other

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documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from Borrower
to Agent and/or Lenders shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by Borrower under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Agent or Lenders, unless
such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Agent,
Lenders or Required Lenders (as applicable) and directed to Borrower.

     10.5 Set-Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with prior written
consent of Agent and with reasonably prompt subsequent notice to Borrower (any
prior or contemporaneous notice to Borrower being hereby expressly waived) to
set off and to appropriate and to apply any and all (i) balance held by such
Lender at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (ii) other property at any time held or owing by such
Lender to or for the credit or for the account of Borrower or any of its
Subsidiaries, against and on account of any of the Obligations. Any Lender
exercising a right to set off shall, to the extent the amount of any such set
off exceeds its Revolving Credit Percentage of the amount set off, purchase for
cash (and the other Lenders shall sell) interests in each such other Lender’s
pro rata share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender in accordance with their respective
Revolving Credit Percentages. Borrower agrees, to the fullest extent permitted
by law, that any Lender may exercise its right to set off with respect to
amounts in excess of its pro rata share of the Obligations and upon doing so
shall deliver such excess to Agent for the benefit of all Lenders in accordance
with the Revolving Credit Percentages.

SECTION 11. THE AGENT

     11.1 Authorization and Action. Each Lender hereby appoints and authorizes
Agent to take such action on its behalf and to exercise such powers under this
Agreement, and the other Loan Documents as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. Each Lender hereby acknowledges that Agent shall not have by reason of
this Agreement assumed a fiduciary relationship in respect of any Lender. In
performing its functions and duties under this Agreement, Agent shall act solely
as agent of Lenders and shall not assume, or be deemed to have assumed, any
obligation toward, or relationship of agency or trust with or for, Borrower. As
to any matters not expressly provided for by this Agreement and the other Loan
Documents (including, without limitation, enforcement or collection of the
Notes, Agent may, but shall not be required to, exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
Required Lenders, whenever such instruction shall be requested by Agent or
required hereunder, or a greater or lesser number of Lenders if so required
hereunder, and such instructions shall be binding upon all Lenders; provided,
however, that Agent shall be fully justified in failing or refusing to take any
action

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under this Agreement or the other Loan Documents, or in relation hereto or
thereto, unless Agent shall first be indemnified (upon requesting such
indemnification) to its satisfaction by Lenders against any and all liability
and expense which it may incur by reason of taking or continuing to take any
such action. If Agent seeks the consent or approval of Required Lenders (or a
greater or lesser number of Lenders as required in this Agreement), with respect
to any action hereunder, Agent shall send notice thereof to each Lender and
shall notify each Lender at any time that Required Lenders (or such greater or
lesser number of Lenders) have instructed Agent to act or refrain from acting
pursuant hereto.

     11.2 Agent’s Reliance, etc. Neither Agent, any Affiliate of Agent, nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, Agent: (i) may treat the payee of any Notes or Note as the holder
thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent;
(ii) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranties or representations to any
Lender and shall not be responsible to any Lender for any recitals, statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Documents; (iv) shall not have any duty beyond Agent’s customary
practices in respect of loans in which Agent is the only lender, to ascertain or
to inquire as to the performance or observance of any terms, covenants or
conditions of this Agreement or performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Loan Documents on the
part of Borrower, to inspect the property (including the books and records) of
Borrowers or to monitor the financial condition of Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; (vi) shall not be liable to any Lender for any action taken, or
inaction, by Agent upon the instructions of Required Lenders pursuant to
Section 11.1 hereof or refraining to take any action pending such instructions;
(vii) shall not be liable for any apportionment or distributions of payments
made by it in good faith pursuant to the terms hereof; (viii) shall incur no
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certification, message or other instrument or
writing (which may be by telephone, facsimile, telegram, cable or telex)
believed in good faith by it to be genuine and signed or sent by the proper
party or parties; and (ix) may assume that no Event of Default has occurred and
is continuing, unless Agent has actual knowledge of the Event of Default, has
received notice from Borrower or Borrower’s independent certified public
accountants stating the nature of the Event of Default, or has received notice
from a Lender stating the nature of the Event of Default and that such Lender
considers the Event of Default to have occurred and to be continuing. In the
event any apportionment or distribution described in clause (vii) above is
determined to have been made in error, the sole recourse of any Person to whom
payment was due but not made shall be to recover from the recipients of such
payments any payment in excess of the amount to which they are determined to
have been entitled.

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     11.3 FCC and Affiliates. With respect to its commitment hereunder to make
Revolving Credit Loans and to issue or procure Letters of Credit and LC
Guaranties, FCC shall have the same rights and powers under this Agreement and
the other Loan Documents as any other Lender and may exercise the same as though
it were not Agent; and the terms “Lender”, “Lenders” or “Required Lenders”
shall, unless otherwise expressly indicated, include FCC in its individual
capacity as a Lender. FCC and its Affiliates may lend money to, and generally
engage in any kind of business with, Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of Borrower or any such
Subsidiary, all as if FCC were not Agent and without any duty to account
therefor to Lenders.

     11.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Subsection 7.1.10 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. Except as otherwise explicitly provided
for herein, Agent shall not have any duty or responsibility, either initially or
on an ongoing basis, to provide any Lender with any credit information as
similar information regarding Borrowers.

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

     11.6 Rights and Remedies to be Exercised by Agent Only. In the event any
remedy may be exercised with respect to this Agreement, any other Loan Document
or the Collateral, Agent shall pursue remedies designated by Required Lenders,
provided that Agent shall not be required to act or not to act if to do so would
expose Agent to liability or would be contrary to this Agreement, any other Loan
Document or to applicable law. Each Lender agrees that without the consent of
Agent, except as otherwise set forth in Section 10.5 of the Agreement, no Lender
shall have any right individually (i) to realize upon the security created by
this Agreement or any other Loan Document, (ii) to enforce any provision of this
Agreement or any other Loan Document (other than such Lender’s Notes and this
Agreement to the extent necessary to enforce any such note), or (iii) to make
demand under this Agreement or any other Loan Document

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(other than such Lender’s Notes and this Agreement to the extent necessary to
enforce any such note).

     11.7 Agency Provisions Relating to Collateral. Each Lender authorizes and
ratifies Agent’s entry into this Agreement and the Security Documents for the
benefit of Lenders. Each Lender agrees that any action taken by Agent with
respect to the Collateral in accordance with the provisions of this Agreement or
the Security Documents, and the exercise by Agent of the powers set forth herein
or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders. Agent is hereby
authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender, from time to time prior to an Event of Default,
to take any action with respect to any Collateral or the Loan Documents which
may be necessary to perfect and maintain perfected Agent’s Liens upon the
Collateral, for its benefit and the ratable benefit of Lenders. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral: (i) upon termination of
the Agreement and payment and satisfaction of all Obligations; or
(ii) constituting property being sold or disposed of if Borrower certifies to
Agent that the sale or disposition is made in compliance with Subsection 3.3.1
and Subsection 7.2.9 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry); or (iii) in connection with any
foreclosure sale or other disposition of Collateral after the occurrence and
during the continuation of an Event of Default or (iv) if approved, authorized
or ratified in writing by Agent at the direction of all Lenders. Upon request by
Agent at any time, Lenders will confirm in writing Agent’s authority to release
particular types or items of Collateral pursuant hereto. Agent shall have no
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by Borrower or is cared for, protected or insured
or has been encumbered or that the Liens granted to Agent herein or pursuant to
the Security Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of its rights,
authorities and powers granted or available to Agent in this Section 11.7 or in
any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its sole discretion, but consistent with the
provisions of this Agreement, given Agent’s own interest in the Collateral as a
Lender.

     11.8 Successor Agent. Agent may resign at any time by giving written notice
thereof to Lenders and Borrower. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent which shall be reasonably
acceptable to Borrower. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent’s giving notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a
commercial bank or financial institution organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least Five Hundred Million Dollars ($500,000,000) and unless an
Event of Default has occurred and is continuing, which shall be reasonably
acceptable to Borrower. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this

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Agreement and the other Loan Documents. After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 11 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Loan Documents.

     11.9 Audit and Examination Reports; Disclaimer by Lenders. By signing this
Agreement, each Lender:

          (a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each audit or examination report
(each a “Report” and collectively, “Reports”) prepared by or on behalf of Agent;

          (b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report and (ii) shall not
be liable for any information contained in any Report;

          (c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon Borrower’s books and records, as well as on
representations of Borrower’s personnel;

          (d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner, in accordance with the provisions of Section 12.3;
and

          (e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of a loan or
loans of Borrower; and (ii) to pay and protect, and indemnify, defend and hold
Agent and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including attorney’s fees and expenses) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

SECTION 12. MISCELLANEOUS.

     12.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower’s true and lawful attorney (and agent-in-fact) and Agent, or Agent’s
agent, may, without notice to Borrower and in either Borrower’s or Agent’s name,
but at the cost and expense of Borrower:

          12.1.1 At such time or times upon or after the occurrence of a Default
or an Event of Default as Agent or said agent, in its sole discretion, may
determine, endorse Borrower’s name on any checks, notes, acceptances, drafts,
money orders or any other evidence

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of payment or proceeds of the Collateral which come into the possession of Agent
or under Agent’s control.

          12.1.2 At such time or times upon or after the occurrence of an Event
of Default as Agent or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower’s rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable and, at Agent’s option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower’s
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower’s stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Agent’s
determination, to fulfill Borrower’s obligations under this Agreement.

     12.2 Indemnity. Borrower hereby agrees to indemnify Agent and Lenders and
hold Agent and Lenders harmless from and against any liability, loss, damage,
suit, action or proceeding ever suffered or incurred by Agent or any Lender
(including reasonable attorneys fees and legal expenses) as the result of
Borrower’s failure to observe, perform or discharge Borrower’s duties hereunder.
In addition, Borrower shall defend Agent and Lenders against and save it
harmless from all claims of any Person with respect to the Collateral. Without
limiting the generality of the foregoing, these indemnities shall extend to any
claims asserted against Agent or any Lender by any Person under any
Environmental Laws or similar laws by reason of Borrower’s or any other Person’s
failure to comply with laws applicable to solid or hazardous waste materials or
other toxic substances. Notwithstanding any contrary provision in this
Agreement, the obligation of Borrower under this Section 12.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.

     12.3 Modification of Agreement; Sale of Interest.

          (i) The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered or amended except by an agreement in writing signed by Borrower,
Required Lenders or all Lenders as required by the terms hereof, and, if
required by the terms hereof, Agent. Borrower may not sell,

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assign or transfer any of the Loan Documents or any portion thereof, including
without limitation, such Borrower’s rights, title, interests, remedies, powers
and duties hereunder or thereunder. Borrower hereby consents to Agent’s and any
Lender’s sale of participations, assignment, transfer or other disposition in
accordance with the terms hereof, at any time or times, of any of the Loan
Documents or of any portion thereof or interest therein, including, without
limitation, Agent’s and any Lender’s rights, title, interests, remedies, powers
or duties thereunder, whether evidenced in writing or not; Borrower agrees that
it will use commercially reasonable efforts to assist and cooperate with Agent
and any Lender in any manner reasonably requested by Agent or such Lender to
effect the sale of participations in or assignment of any of the Loan Documents
or of any portion thereof or interest therein, including, without limitation,
assistance in the preparation of appropriate disclosure documents or placement
memoranda and executing appropriate amendments to the signature pages hereto to
reflect the addition of any Lenders and such Lender’s respective commitments. In
addition, Borrower will make their management available to meet with potential
Lenders or Participating Lenders from time to time as reasonably requested by
Agent. The foregoing notwithstanding, except with respect to sales, assignments
or transfers to Affiliates under common control pursuant to which the selling,
assigning or transferring Lender retains its voting rights, no Lender shall sell
participations or assign, transfer or otherwise dispose of any of the Loan
Documents or any portion thereof or interest therein, without the prior written
consent of Agent, and if no Event of Default has occurred and is continuing,
Borrower, which consent shall not be unreasonably withheld or delayed.

          (ii) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Credit Loans owed to it
and the Revolving Credit Note held by it), (x) each such assignment shall be of
a uniform, and not a varying, percentage of all rights and obligations, (y)
except in the case of an assignment of all of a Lender’s rights and obligations
under this Agreement, (A) the aggregate amount of the Revolving Loan Commitment
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, and in integral multiples
of $1,000,000 thereafter, or such lesser amount as to which Borrower and Agent
may consent to and (B) after giving effect to each such assignment, the amount
of the Revolving Loan Commitment of the assigning Lender shall in no event be
less than $5,000,000, (z) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance, an Assignment and Acceptance in the
form of Exhibit 12.3(ii) hereto (an “Assignment and Acceptance”), together with
any Revolving Credit Note, subject to such assignment and a processing and
recordation fee of $3,500, (aa) any such assignee shall be a Qualified Assignee
and (bb) any Lender may without the consent of Borrower or the Agent, and
without paying any fee, assign to any Affiliate of such Lender that is a bank or
financial institution all of its rights and obligations under this Agreement.
The foregoing notwithstanding, no Person may become a Lender or a Participating
Lender hereunder, unless such Person is a financial institution having
stockholders’ equity (or the equivalent) of at least One Hundred Million Dollars
($100,000,000). Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and

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obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). If, pursuant to this
Section 12.3, any interest in this Agreement or any Revolving Credit Loan,
Revolving Credit Note, Letter of Credit or LC Guaranty is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any state thereof, the transferor Lender shall cause such
transferee (other than any Participating Lender), and may cause any
Participating Lender, concurrently with the effectiveness of such transfer,
(a) to represent to the transferor Lender (for the benefit of the transferor
Lender, Agent, and Borrower) that under applicable law and treaties no Taxes
will be required to be withheld by Agent, Borrower or the transferor Lender with
respect to any payments to be made to such transferee in respect of the
Revolving Credit Loans, Revolving Credit Notes, Letters of Credit or LC
Guaranties, (b) to furnish to the transferor Lender, Agent and Borrower either
U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form
W-8ECI (wherein such transfer claims entitlement to complete exemption form U.S.
federal withholding tax on all interest payments hereunder), and (c) to agree
(for the benefit of the transferor Lender, Agent and Borrower) to provide the
transferor Lender, Agent and Borrower a new Form W-8BEN or Form W-8ECI upon the
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

          (iii) In the event any Lender assigns or otherwise transfers all or
any part of its Revolving Credit Note, any such Lender shall so notify Borrower
and Borrower shall, upon the request of such Lender, issue new Revolving Credit
Notes in exchange for the old Revolving Credit Note.

          (iv) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Borrowers (a
“Participating Lender”) participating interests in any Loans, the commitments of
that Lender and the other interests of that Lender (the “originating Lender”)
hereunder and under the other Loan Documents; provided, however, that (x) no
participation shall be for an amount of less than Five Million Dollars
($5,000,000), (y) the originating Lender’s obligations under this Agreement
shall remain unchanged, (z) the originating Lender shall remain solely
responsible for the performance of such obligations, (aa) Borrower and the Agent
shall continue to deal solely and directly with the originating Lender in
connection with the originating Lender’s rights and obligations under this
Agreement and the other Loan Documents, and (bb) no Lender shall grant any
participation under which the Participating Lender shall have rights to approve
any amendment to or waiver of this Agreement or the Loan Documents, except to
the extent such amendment or waiver would: (A) extend the final maturity date
for payment of the Loans in which such Participating Lender is participating;
(B) reduce the interest rate or the amount of principal or fees applicable to
the Loans in which such Participating Lender is participating; or (C) release
all or substantially all of the Collateral, except as expressly provided herein.
In those cases in which an originating Lender grants rights to a Participating
Lender to approve any amendment to or waiver of this Agreement or the other Loan
Documents respecting the matters described in clauses (A) through (C) of the
preceding sentence, the relevant participation agreements shall provide for a
voting

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mechanism whereby a majority of the amount of such Lender’s portion of the Loans
(irrespective of whether held by such Lender or a Participating Lender) shall
control the vote for all of such Lender’s portion of the Loans. In the case of
any participation, the Participating Lender shall not have any rights under this
Agreement or any of the other Loan Documents entered into in connection herewith
(the Participating Lender’s right against such Lender in respect of such
participation to be those set forth in the participation or other agreement
executed by such Lender and the Participating Lender relating thereto). In no
event shall any Participating Lender grant a participation in its participation
interest in the Loans without the prior written consent of Agent, which approval
shall not be unreasonably withheld or delayed. All amounts payable by Borrower
hereunder shall be determined as if the originating Lender had not sold any such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participating Lender shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.

          (v) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board or U.S. Treasury Regulation 31
CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

          (vi) No amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure by Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however: (x) that no amendment, waiver or consent shall, unless
in writing and signed by each Lender affected thereby do any of the following:
a) increase the aggregate Revolving Loan Commitments or subject any Lender to
any additional obligations, (b) reduce the principal of, or decrease the rate of
interest on, the Notes or other amount payable hereunder other than those
payable only to FCC in its capacity as Agent which may be reduced by FCC
unilaterally, (c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or other amounts payable hereunder, other than those
payable only to FCC in its capacity as Agent which may be postponed by FCC
unilaterally, (d) reduce the aggregate unpaid principal amount of the Notes, or
the number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (e) release or discharge any Person liable for the
performance of any obligations of Borrower hereunder or under any of the Loan
Documents except in accordance with the terms of such Loan Documents or as
otherwise permitted herein, (f) increase the advance rates contained in the
definition of the Borrowing Base, (g) to the extent Agent’s or Lenders’ consent
is required by the terms hereof, release all or substantially all of the
Collateral or (h) amend this Section 12.3; and (y) that no amendment, waiver or
consent shall be effective unless in writing and signed by either Required
Lenders or all Lenders, as required by the terms hereof and, if such amendment,
waiver or consent affects Agent or its rights hereunder, Agent.

     12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision

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of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

     12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 12.3
hereof.

     12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.

     12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.

     12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier against receipt or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, three (3) Business Days after deposit in the mail, postage prepaid, one
(1) Business Day after delivery to an overnight courier or, in the case of
facsimile notice, when sent (with electronic confirmation of receipt), addressed
as follows:

         
(A)
  If to Agent:   Fleet Capital Corporation

      c/o Bank of America Business Capital

      One South Wacker Drive

      Suite 3400

      Chicago, IL 60606

      Attention: Senior Portfolio Manager

      Facsimile No.: 312.332.6537
 
       

  With copies to:   Vedder, Price, Kaufman & Kammholz, P.C.

      222 North LaSalle Street

      Suite 2500

      Chicago, IL 60601

      Attention: John T. McEnroe

      Facsimile No.: 312.609.5005
 
       

      and
 
       

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      Fleet Capital Corporation

      c/o Bank of America Business Capital

      20800 Swenson Drive, Suite 350

      Waukesha, WI 53186

      Attention: Edward Bartkowski

      Facsimile No.: 262.798.4882
 
       
(B)
  If to Borrower:   c/o Home Products International, Inc.

      4501 West 47th Street

      Chicago, IL 60632

      Attention: Chief Financial Officer

      Facsimile No.: 773.890.0523
 
       

  With a copy to:   Equity Group Investments, L.L.C.

      Two North Riverside Plaza, Suite 600

      Chicago, IL 60606

      Attention: Ellen Havdala

      Facsimile No.: 312.454.9678

     (C) If to any Lender, as its address indicated on the signature pages
hereof or in a notice to borrower of an assignment of a Note,

or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent pursuant to Subsections 3.1.1 or 4.2.2 hereof
shall not be effective until received by Agent.

     12.9 Consents. Whenever Agent’s, Required Lenders’ or Lenders’ consent is
required to be obtained under this Agreement, any of the Other Agreements or any
of the Security Documents as a condition to any action, inaction, condition or
event, unless otherwise specifically provided, Agent, Required Lenders or
Lenders, as applicable, shall be authorized to give or withhold such consent in
its or their sole and absolute discretion and to condition its consent upon the
giving of additional collateral security for the Obligations, the payment of
money or any other matter.

     12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries or any Guarantor.

     12.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.

     12.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.

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     12.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.

     12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF AGENT’S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT’S OR LENDERS’
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR AGENT OR ANY
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK
COUNTY, ILLINOIS, OR, AT AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR
LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.

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     12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER AGENT OR ANY LENDER MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT OR
LENDERS TO EXERCISE ANY OF AGENT’S OR LENDERS’ REMEDIES (EXCEPT AS OTHERWISE
WOULD BE PERMITTED OR UNENFORCEABLE BY LAW); (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND
(vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS
ARE A MATERIAL INDUCEMENT TO AGENT’S AND LENDERS’ ENTERING INTO THIS AGREEMENT
AND THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL 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.

     12.16 Advertisement. Borrower hereby authorizes Agent to publish the name
of Borrower and the amount of the credit facility provided hereunder in any
“tombstone” or comparable advertisement which Agent elects to publish.

     12.17 No Novation. Notwithstanding anything to the contrary contained
herein, this Agreement is not intended to and does not serve to effect a
novation of the Obligations. Instead, it is the express intention of the parties
hereto to reaffirm the indebtedness created under the Original Loan Agreement
which is evidenced by the notes provided for therein and secured by the
Collateral. Borrower acknowledges and confirms that the liens and security
interests granted pursuant to the Loan Documents secured the indebtedness,
liabilities and obligations of Borrower to Agent and Lenders under the Original
Loan Agreement, as amended and restated hereby, and that the term “Obligations”
as used in the Loan Documents (or any other terms used therein to describe or
refer to the indebtedness, liabilities and obligations of Borrower to Agent and
Lenders) includes, without limitation, the indebtedness, liabilities and
obligations of Borrower under the Notes to be delivered hereunder, and under the
Original Loan Agreement, as amended and restated hereby, as the same may be
further amended, modified, supplemented or

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restated from time to time. The Loan Documents and all agreements, instruments
and documents executed or delivered in connection with any of the foregoing
shall each be deemed to be amended to the extent necessary to give effect to the
provisions of this Agreement. Cross-references in the Loan Documents to
particular section numbers in the Original Loan Agreement shall be deemed to be
cross-references to the corresponding sections, as applicable, to this
Agreement.

(Signature Page to Follow)

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Signature Page to Loan and Security Agreement

     IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.

              HOME PRODUCTS     INTERNATIONAL-NORTH AMERICA, INC.    
(“Borrower”)
 
       

  By:   /s/ James E. Winslow

      Name: James E. Winslow

      Title: Executive V.P. and CFO

 

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Signature Page to Loan and Security Agreement

                      Accepted in Chicago, Illinois:
 
            FLEET CAPITAL CORPORATION (“Agent”     and “Lender”)
 
       

  By:   /s/ Edward M. Bartkowski

       

      Name: Edward M. Bartkowski

      Title: SVP
 
            Address:
 
            c/o Bank of America Business Capital     One South Wacker Drive,
Suite 3400     Chicago, Illinois 60606     Attention: Senior Portfolio Manager  
  Facsimile No.: 312.332.6537
 
            Revolving Loan Commitment: $50,000,000

 

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Signature Page to Loan and Security Agreement

              Consented and Agreed to this 14th day of December, 2004
 
    HOME PRODUCTS INTERNATIONAL, INC.
 
   
By:
  /s/ James E. Winslow

   

  Name: James E. Winslow

  Title:Executive V.P. and CFO

 

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APPENDIX A

GENERAL DEFINITIONS

     When used in the Amended and Restated Loan and Security Agreement dated as
of December 14, 2004, by and among the lenders signatory hereto (“Lenders”),
Fleet Capital Corporation (“FCC”) as agent for such Lenders (FCC, in such
capacity, “Agent”) and Home Products International – North America, Inc., a
Delaware corporation (“Borrower”), (a) the terms Account, Certificated Security,
Chattel Paper, Deposit Account, Document, Equipment, Financial Asset, Fixture,
General Intangibles, Goods, Instrument, Inventory, Investment Property,
Security, Proceeds, Security Entitlement and Uncertificated Security have the
respective meanings assigned thereto under the UCC (as defined below); (b) the
terms Commercial Tort Claims, Electronic Chattel Paper, Health-Care-Insurance
Receivables, Letter-of-Credit Rights, Payment Intangibles, Software, Supporting
Obligations and Tangible Chattel Paper have the respective meanings assigned
thereto in the UCC Revisions (as defined below); (c) all terms indicating
Collateral having the meanings assigned thereto under the UCC or the UCC
Revisions shall be deemed to mean such Property, whether now owned or hereafter
created or acquired by Borrower or in which Borrower now has or hereafter
acquires any interest; (d) capitalized terms which are not otherwise defined
have the respective meanings assigned thereto in said Loan and Security
Agreement; and (e) the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):

     Account Debtor — any Person who is or may become obligated on or under or
on account of any Account, Contract Right, Chattel Paper or General Intangible.

     Affiliate — a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common Control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.

     Agreement — the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all exhibits thereto and this Appendix A.

     ALTA Survey — a survey prepared in accordance with the standards adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 1997, known as the “Minimum Standard Detail Requirements of Land
Title Surveys”. The ALTA Survey shall be in sufficient form to satisfy the
requirements of Chicago Title Insurance Company to provide extended coverage
over survey defects and shall also show the location of all easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the location of any
flood plain area affecting the subject real estate. The ALTA Survey shall
contain the following certification: “To Home Products International-North
America, Inc., Fleet Capital Corporation, as Agent, and Chicago Title Insurance
Company. This is to certify that this map of plat and the survey on which it is
based were made in accordance with the “Minimum Standard Detail Requirements for
Land

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Title Surveys” jointly established and adopted by ALTA and ACSM in 1997. (signed
(SEAL) License No. ___”.

     Applicable Margin — the percentages set forth below with respect to Base
Rate Advances, LIBOR Advances, letter of credit fees and unused line fees, which
percentages shall be set on the Closing Date and adjusted on the first day of
the month following the month in which the Borrowing Base Certificate for the
period ended December 31, 2004 is delivered to Agent pursuant to Subsection
8.1.4 and quarterly thereafter on the first day of the month following the month
in which the Borrowing Base Certificates for periods ending on each subsequent
March 31, June 30, September 30 and December 31 are delivered to Agent pursuant
to Subsection 8.1.4 by reference to Borrower’s Average Gross Availability the
period ended on December 31, 2005, or the most recent March 31, June 30,
September 30 and December 31, as applicable, in accordance with the following:

                                      Applicable Margin                   LIBOR
    Base Rate     Unused Line     Letter of Credit and   Average Gross
Availability   Advances     Advances     Fee     LC Guaranty Fees  
>$30,000,000
    2.00 %     0.25 %     0.25 %     2.00 %
£$30,000,000 but >$20,000,000
    2.25 %     0.50 %     0.375 %     2.25 %
£$20,000,000
    2.50 %     0.75 %     0.50 %     2.50 %

     Each change in Applicable Margin shall be effective prospectively as of the
first day of the fiscal month of Borrower next following the fiscal month during
which the applicable Borrowing Base Certificates for the periods ended March 31,
2005, and each subsequent June 30, September 30, December 31 and March 31 of
Borrower are delivered to Agent pursuant to Subsection 8.1.4, commencing with
the delivery of the Borrowing Base Certificate for the period ending March 31,
2005.

     From the Closing Date until the first adjustment date as provided above,
the Applicable Margin shall be 2.25% (LIBOR Advances), .50% (Base Rate
Advances), 0.375 % (unused line fee) and 2.25% (Letter of Credit and LC Guaranty
fee). At any time when Borrower has failed to deliver to Agent Borrowing Base
Certificates for any period ended on March 31, June 30, September 30 and
December 31 within the Original Term and such failure has not been cured to
Agent’s reasonable satisfaction, the Applicable Margin shall be the highest
percentages set forth in the above schedule.

     Average Gross Availability — the average of Borrower’s Gross Availability
as determined by Agent for any three-month period ended on any December 31,
March 31, June 30 or September 30 within the Original Term.

     Bank — Fleet National Bank or Bank of America, N.A.

     Base Rate — the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by

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Bank as a standard, a comparable reference rate designated by Bank as a
substitute therefor shall be the Base Rate.

     Base Rate Advances — any Loan bearing interest computed by reference to the
Base Rate.

     Borrowing Base — as at any date of determination thereof, an amount equal
to the lesser of:

     (i) the Maximum Revolving Loan Amount of such date; or

     (ii) an amount equal to the sum of:

          (a) eighty-five percent (85%) of the net amount of Eligible Accounts
outstanding at such date;

PLUS

          (b) the lesser of (1) Twenty-Five Million Dollars ($25,000,000) and
(2) sixty percent (60%) of the value of Eligible Inventory at such date
calculated on the basis of the lower of cost or market with the cost of raw
materials and finished goods calculated on a first-in, first-out basis.

PLUS

          (c) the Fixed Asset Component.

     The sum of (a), (b) and (c) above is hereinafter referred to as the
“Collateral Borrowing Base.” For purposes hereof, the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible Accounts less any
and all returns, rebates, discounts (which may, at Agent’s option, be calculated
on shortest terms), credits, allowances or excise taxes of any nature at any
time issued, owing, claimed by Account Debtors, granted, outstanding or payable
in connection with such Accounts at such time.

     Borrowing Base Certificate — a certificate by a reasonably responsible
officer of Borrower, substantially in the form of Exhibit 8.1.4 (or another form
acceptable to Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to Agent. All calculations of the Borrowing Base in
connection with the preparation of any Borrowing Base Certificate shall
originally be made by Borrower and certified to Agent; provided, that Agent
shall have the right to review and adjust, in the exercise of its reasonable
credit judgment, any such calculation after giving notice thereof to the
Borrower to the extent that such calculation is not in accordance with this
Agreement.

     Business Day — any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the States of Illinois or Wisconsin or is a day
on which banking institutions located in such state are closed.

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     Capital Expenditures — expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.

     Capitalized Lease Obligation — any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.

     Change of Control — means the occurrence of any of the following events:
(i)(A) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have “beneficial ownership” of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than forty percent (40%) of the total voting power of the
Voting Stock of Parent (or its successor by merger, consolidated or purchase of
all or substantially all of its assets); and (B) the Permitted Holders
“beneficially own” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of Parent (or its successor by merger, consolidated or
purchase of all or substantially all of its assets) than such other person and
do not have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority; of the board of directors of Parent or
such successor; or (ii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of Parent
(together with (A) any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of Parent was approved by a
vote of at least a majority of the directors of Parent then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved or (B) any new directors who
are designees of any Permitted Holder or were nominated or elected by such
Permitted Holders or any of their designees) cease for any reason to constitute
a majority of the Board of Directors of Parent then in office; or (iii) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Parent and Borrower taken as a whole to any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
other than a Permitted Holder; or (iv) the adoption by the stockholders of a
plan for the liquidation or dissolution of Parent or Borrower.

     Closing Date — the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.

     Collateral — all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.

     Collateral Borrowing Base — as defined within the definition of Borrowing
Base.

     Computer Hardware and Software — all of Borrower’s rights (including rights
as licensee and lessee) with respect to (i) computer and other electronic data
processing hardware,

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including all integrated computer systems, central processing units, memory
units, display terminals, printers, computer elements, card readers, tape
drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories, peripheral devices and other related
computer hardware; (ii) all Software and all software programs designed for use
on the computers and electronic data processing hardware described in Clause
(i) above, including all operating system software, utilities and application
programs in any form (source code and object code in magnetic tape, disk or hard
copy format or any other listings whatsoever); (iii) any firmware associated
with any of the foregoing; and (iv) any documentation for hardware, Software and
firmware described in Clauses (i), (ii) and (iii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and pseudo
codes.

     Consolidated — the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.

     Contract Right — any right of Borrower to payment under a contract for the
sale or lease of goods or the rendering of services, which right is at the time
not yet earned by performance.

     Control – with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of Voting Stock, by contract or
otherwise.

     Default — an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.

     Default Rate — as defined in Subsection 2.1.2 of the Agreement.

     Derivative Obligations — every obligation of a Person under any forward
contract, futures contract, exchange contract, swap, option or other financing
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreement), the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices, including without
limitation, all Interest Rate Obligations.

     Distribution — in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.

     Dominion Account — a special account established by Borrower pursuant to
the Agreement at a bank selected by Borrower, but acceptable to Agent in its
reasonable discretion, and over which Agent shall have sole and exclusive access
and control for withdrawal purposes.

     EGI — Equity Group Investments, L.L.C., a Delaware limited liability
company.

     Eligible Account — an Account arising in the ordinary course of Borrower’s
business from the sale of goods or rendition of services which Agent, in its
sole credit judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:

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          (i) it arises out of a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower; or

          (ii) it is unpaid for more than sixty (60) days after the original due
date shown on the invoice; or

          (iii) it is due or unpaid more than ninety (90) days after the
original invoice date; or

          (iv) 25% or more of the Accounts from the Account Debtor are not
deemed Eligible Accounts hereunder; or

          (v) the total unpaid Accounts of the Account Debtor (other than
Wal-Mart or Target so long as any of the foregoing’s credit rating is 5-A3 or
better) exceed 20% of the net amount of all Accounts, to the extent of such
excess; the total unpaid Accounts of any of Wal-Mart or Target (to the extent
either of the foregoing’s credit rating is 5-A2 or better) exceed 35% of the net
amount of all Accounts, to the extent of such excess; or the total unpaid
Accounts of any of Wal-Mart or Target (to the extent any of the foregoing’s
credit rating is 5-A3 or better, but is less than 5-A2) exceed 30% of the net
amount of all Accounts, to the extent of such excess; or the total unpaid
Accounts with respect to which KMart or its Affiliates is the Account Debtor
exceeds $20,000,000, to the extent of such excess, provided that such
$20,000,000 limitation shall not be effective so long as KMart’s senior debt is
rated Ba2/BB- or better by each of Moody’s and S&P (in the event KMart’s senior
debt ratings change, Agent and Borrower agree to discuss resetting such
concentration limits for KMart Accounts to mutually agreeable levels); or

          (vi) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or

          (vii) the Account Debtor is also Borrower’s creditor or supplier, or
the Account Debtor has disputed liability with respect to such Account, or the
Account Debtor has made any claim with respect to any other Account due from
such Account Debtor to Borrower, or the Account otherwise is or may become
subject to any right of setoff by the Account Debtor or other contra situation
provided that any such Account shall only be deemed to be not eligible to the
extent of any such dispute, claim or setoff; or

          (viii) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application for
relief under the federal bankruptcy laws has been filed against the Account
Debtor, unless the Account Debtor in question has obtained debtor-in-possession
financing, with terms and conditions acceptable to Agent in its sole discretion,
or if the Account Debtor has failed, suspended business, ceased to be Solvent,
or consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs;
or

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          (ix) it arises from a sale to an Account Debtor outside the United
States or Canada, unless the sale is on letter of credit, guaranty or acceptance
terms, in each case acceptable to Agent in its sole discretion or unless the
Account Debtor is Wal-Mart Mexico; or

          (x) it arises from a sale to the Account Debtor on a bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis; or

          (xi) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its right
to payment of such Account to Lender, in a manner satisfactory to Agent, so as
to comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as
amended); or

          (xii) the Account is subject to a Lien other than a Permitted Lien; or

          (xiii) the goods giving rise to such Account have not been delivered
to and accepted by the Account Debtor or the services giving rise to such
Account have not been performed by Borrower and accepted by the Account Debtor
or the Account otherwise does not represent a final sale; or

          (xiv) the Account is evidenced by chattel paper or an instrument of
any kind, or has been reduced to judgment; or

          (xv) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made in the
ordinary course of business for prompt payment and which discounts or allowances
are reflected in the calculation of the face value of each invoice related to
such Account; or

          (xvi) Borrower has made an agreement with the Account Debtor to extend
the time of payment thereof or has made any compromise, modification or
settlement of such Account; or

          (xvii) the Account is for amounts owing with respect to service
charges, late fees or other similar charges.

     Eligible Inventory — such Inventory of Borrower (other than
work-in-process, packaging materials and supplies) which Agent, in its sole
credit judgment, deems to be Eligible Inventory. Without limiting the generality
of the foregoing, no Inventory shall be Eligible Inventory if:

          (i) it is not raw materials or finished goods that is, in Agent’s
opinion, readily marketable in its current form; or

          (ii) it is not in good, new and saleable condition; or

          (iii) it is slow-moving, obsolete or unmerchantable; or

          (iv) it does not meet, in all material respects, all standards imposed
by any governmental agency or authority; or

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          (v) it does not conform in all respects to the warranties and
representations set forth in the Agreement; or

          (vi) it is not at all times subject to Agent’s duly perfected,
first-priority security interest and no other Lien except a Permitted Lien; or

          (vii) it is not situated at a location in compliance with the
Agreement or is in transit.

     Environmental Laws — all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidances, orders and consent decrees relating to
health, safety and environmental matters.

     Equipment Percentage — as of any date, the percentage equal to (x) one
hundred percent (100%) minus (y) the percentage obtained by dividing the number
of full calendar months elapsed since the Closing Date by eighty-four (84).

     Equipment Ratio — a ratio, expressed as a percentage the numerator of which
is the Net Equipment Appraised Value and the denominator of which is the sum of
the Net Equipment Appraised Value plus the Net Real Estate Appraised Value.

     ERISA — the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.

     Event of Default — as defined in Section 10.1 of the Agreement.

     Exchange Act – the Securities Exchange Act of 1934, as amended.

     Fee Letter — that certain letter agreement dated on or about the Closing
Date between Agent and Borrower.

     Fixed Asset Component — (x) if no Reappraisal has been delivered to Agent,
Ten Million Seven Hundred Forty-Two Thousand Dollars ($10,742,000) reduced by
Three Hundred Twenty Thousand Dollars ($320,000) on each May 1, August 1,
November 1, and February 1 occurring after the Closing Date, commencing May 1,
2005, or (y) if the Reappraisal has been delivered to Agent, the sum of (i) the
Maximum Fixed Asset Amount multiplied by the Equipment Ratio multiplied by the
Equipment Percentage plus (ii) the Fixed Asset Maximum Amount multiplied by the
Real Property Ratio multiplied by the Real Property Percentage, determined as of
each May 1, August 1, November 1 and occurring after the Closing Date.

     GAAP — generally accepted account principles in the United States of
America in effect from time to time.

     Gross Availability — as of any date, the excess (if any) of the Collateral
Borrowing Base as of such date over the sum of the principal amount of the
Revolving Loans then outstanding (including any amounts which Agent may have
paid for the account of Borrower pursuant to the Loan Documents and which have
not been reimbursed by Borrower) and the LC Amount.

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     Guaranty Agreement — the Continuing Guaranty Agreement which is to be
executed by Parent in form and substance satisfactory to Agent.

     Indebtedness — as applied to a Person means, without duplication

          (i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person as at the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations,

          (ii) all obligations of other Persons which such Person has
guaranteed,

          (iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person, and

          (iv) in the case of Borrower (without duplication), the Obligations.

     Intellectual Property — all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain names,
service marks, trade dress, trade names, business names, designs, logos, slogans
(and all translations, adaptations, derivations and combinations of the
foregoing) indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights, unpatented inventions (whether or not
patentable); patent applications and patents; industrial design applications and
registered industrial designs; license agreements related to any of the
foregoing and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source codes,
object codes, executable code, data, databases and other physical
manifestations, embodiments or incorporations of any of the foregoing; the right
to sue for all past, present and future infringements of any of the foregoing;
all other intellectual property; and all common law and other rights throughout
the world in and to all of the foregoing.

     Interest Period — as applicable to any LIBOR Advance, a period commencing
on the date a LIBOR Advance is made, and ending on the date which is one
(1) month, two (2) months, three (3) months, or six (6) months later, as may
then be requested by Borrower; provided that (i) any Interest Period which would
otherwise end on a day which is not a Business Day shall end in the next
preceding or succeeding Business Day as is Agent’s custom in the market to which
such LIBOR Advance relates; (ii) there remains a minimum of one (1) month, two
(2) months, three (3) months or six (6) months (depending upon which Interest
Period Borrower selects) in the Original Term; and (iii) all Interest Periods of
the same duration which commence on the same date shall end on the same date.

     Interest Rate Obligations — all obligations in connection with contracts or
hedging programs, including, but not limited to, all interest rate swaps, caps,
collar agreements, or similar arrangements, designed to provide certain
protections with respect to interest rate fluctuations, or any assurances,
guarantees or other contractual obligations related thereto, including all such

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obligations (i) which are incurred by any Borrower to Agent, any Lender or any
Affiliate of Agent, and (ii) which are incurred in any manner by Agent, any
Lender or any Affiliate of Agent in connection with a Borrower’s interest rate
protection program or contract.

     LC Amount – at any time, the aggregate undrawn available amount of all
Letters of Credit and LC Guaranties then outstanding.

     LC Guaranty — any guaranty pursuant to which Agent or any Affiliate of
Agent shall guaranty the payment or performance by Borrower of its reimbursement
obligation under any letter of credit.

     Legal Requirement — any requirement imposed upon any Lender by any law of
the United States of America or the United Kingdom or by any regulation, order,
interpretation, ruling or official directive (whether or not having the force of
law) of the Federal Reserve Board, the Bank of England or any other board,
central bank or governmental or administrative agency, institution or authority
of the United States of America, the United Kingdom or any political subdivision
of either thereof.

     Letter of Credit — any letter of credit issued by Agent or any of Agent’s
Affiliates for the account of Borrower.

     LIBOR — as applicable to any LIBOR Advance, the rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as determined on the
basis of the offered rates for deposits in U.S. dollars, for a period of time
comparable to such LIBOR Advance which appears on the Telerate page 3750 as of
11:00 a.m. (London time) on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Advance; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page ”LIBO” (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such interest period. If both
the Telerate and Reuters systems are unavailable, then the rate for that date
will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such LIBOR Advance which are offered
by four (4) major banks in the London interbank market at approximately
11:00 a.m. (London time), on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Advance as selected by Agent. The
principal London office of each of the major London Banks so selected will be
requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two (2) such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of time
comparable to such LIBOR Advance offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Advance. In the event that
Agent is unable to obtain any such quotation as provided above, it will be
determined that LIBOR pursuant to a LIBOR Advance cannot be determined. In the
event that the Board of Governors of the Federal Reserve System shall impose a
Reserve Percentage with respect to

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LIBOR deposits of Bank then for any period during which such Reserve Percentage
shall apply, LIBOR shall be equal to the amount determined above divided by an
amount equal to 1 minus the Reserve Percentage.

     LIBOR Advance — any Loan bearing interest computed by reference to the
LIBOR.

     Lien — any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term “Lien” shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.

     Loan Account — the loan account established on the books of Agent pursuant
to Section 3.6 of the Agreement.

     Loan Documents — the Agreement, the Other Agreements and the Security
Documents.

     Loans — all loans and advances of any kind made by Lenders, and/or by any
affiliate of any Lender, pursuant to the Agreement.

     London Banking Day — any date on which commercial banks are open for
business in London, England.

     Material Adverse Effect — (i) a material adverse effect on the business,
condition (financial or otherwise), operation, performance or properties of
Borrower or any of its Subsidiaries, (ii) a material adverse effect on the
rights and remedies of Agent or Lenders under the Loan Documents, (iii) the
material impairment of the ability of Borrower or any of its Subsidiaries to
perform its obligations hereunder or under any Loan Document, or (iv) a material
adverse effect on the value of the Collateral or Agent’s or Lenders’ rights
therein.

     Maximum Fixed Asset Amount — the lesser of (x) Fifteen Million Dollars
($15,000,000) and (y) the sum of the Net Equipment Appraised Value plus the Net
Real Estate Appraised Value.

     Maximum Revolving Loan Amount — shall mean, as of any date, Sixty Million
Dollars ($60,000,000), as reduced from time to time as provided herein. In
addition, Borrower may reduce, upon three days’ prior written notice to Agent,
the amount of the Maximum Revolving Loan. Any such reduction (i) shall be in a
minimum amount of Two Million Dollars ($2,000,000), (ii) shall be an integral
amount of One Million Dollars ($1,000,000) and (iii) shall not exceed an
aggregate amount of Five Million Dollars ($5,000,000) in any one calendar year
or Ten Million Dollars ($10,000,000) during the Original Term. Once the Maximum
Revolving Loan Amount has been reduced it may not be subsequently increased.

     Mexican Subsidiary — Seymour S.A. de C.V.

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     Money Borrowed — means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of Borrower under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by Borrower.

     Mortgages — the mortgages, deeds of trust and/or security deeds to be
executed by Borrower on or about the Closing Date in favor of Agent, for its
benefit and the ratable benefit of Lenders, and by which Borrower shall grant
and convey to Agent, as security for the Obligations, a Lien upon the real
Property of Borrower located at (i) 885 N. Chestnut, Seymour, Indiana; (ii) 201
S. Jackson Park Drive, Seymour, Indiana; (iii) 400 S. Airport Road, Seymour,
Indiana; (iv) 3016 W. Georgia Street, Louisiana, Missouri; (v) 323 Industrial
Boulevard, Thomasville, Georgia; and (vi) 4501 W. 47th Street, Chicago,
Illinois.

     Multiemployer Plan — has the meaning set forth in Section 4001(a)(3) of
ERISA.

     New Mortgages — as defined in Section 5.4 of the Agreement.

     Net Availability — the amount of money which Borrower is entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Agent may have paid for the account of
Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by Borrower) and the LC Amount is subtracted from the Borrowing Base.
If the amount outstanding is equal to or greater than the Borrowing Base, Net
Availability is zero (0).

     Net Equipment Appraised Value – eighty percent (80%) of the orderly
liquidation value of Borrower’s Equipment less liquidation expenses as
determined by the Reappraisal.

     Net Real Estate Appraised Value – sixty percent (60%) of the fair market
value of Borrower’s real Property less liquidation expenses as determined by the
Reappraisal.

     Notes — collectively, Revolving Credit Notes.

     Notice of Revolving Credit Loan and Notice of Equipment Loan — as defined
in Subsection 3.1.1 of the Agreement.

     Obligations — all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from any Borrower to Agent, any
Lender or any of Agent’s Affiliates, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, whether
arising under the Agreement or any of the other Loan Documents or otherwise, and

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whether direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired, and any replacements, renewals,
extensions or other modifications of any of them. Without limiting the
generality of the foregoing, all obligations of any Borrower to Agent, any
Lender or any of Agent’s Affiliates with respect to Product Obligations shall be
deemed Obligations hereunder.

     Organizational I.D. Number — with respect to Borrower, the organizational
identification number assigned to Borrower by the applicable governmental unit
or agency of the jurisdiction of organization of Borrower.

     Original Closing Date — the “Closing Date” as defined in the Original Loan
Agreement.

     Original Term — as defined in Section 4.1 of the Agreement.

     Other Agreements — any and all agreements (including without limitation,
the Fee Letter), instruments and documents (other than the Agreement and the
Security Documents), heretofore, now or hereafter executed by Borrower, any
Subsidiary of Borrower or any other third party and delivered to Agent or any
Lender in respect of the transactions contemplated by the Agreement.

     Overadvance — the amount, if any, by which the outstanding principal amount
of Revolving Credit Loans plus the LC Amount exceeds the Borrowing Base.

     Parent – Home Products International, Inc., a Delaware corporation.

     Participating Lender — each Person who shall be granted the right by a
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to such Lender, which participation agreement shall conform to the
provisions of Subsection 11.3(iv) of the Agreement.

     Patent Security Agreement – the Patent and License Security Agreement
executed by Borrower on or about the Original Closing Date in favor of Agent for
its benefit and the ratable benefit of Lenders, as such Patent and License
Agreement has been or will be amended from time to time.

     Permitted Acquisition(s) — means any acquisition(s) by Borrower of the
business and substantially all of the assets or all of the outstanding capital
stock or other ownership interests of a Person or a merger of a Person with
Borrower or a Subsidiary of Borrower so long as each of the following conditions
precedent (collectively, the “Acquisition Conditions”) have been fulfilled to
the satisfaction of Agent: (i) no Default or Event of Default shall have
occurred and be continuing at the time of such acquisition or would occur as a
result thereof; (ii) the business unit being acquired (the “Target”) is
primarily located in the United States of America and is in the same or related
line of business as Parent and Borrower; (iii) if the acquisition in question is
not an asset acquisition, Borrower and Target shall have executed such
amendments to the Agreement, assumption agreements, security agreements,
guarantees, financing statements, promissory notes or other loan documentation
as reasonably requested by Agent to, inter alia,

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make the Target a guarantor of the Obligations or co-borrower under the Loan
Agreement and to grant to Agent for its benefit and the ratable benefit of
Lenders a perfected security interest, subject only to Permitted Liens, in
substantially all of the assets of the Target or if the acquisition in question
is an asset acquisition, Borrower shall have executed such financing statements
and other collateral documents as reasonably requested by Agent to grant to
Agent a perfected security interest, subject only to Permitted Liens in
substantially all of the acquired assets; (iv) Agent shall have received
(x) copies of Target’s historical financial statements for the two annual
periods preceding the proposed acquisition date and for the most recently
available interim period, (y) a sources and uses statement, in form and
substance reasonably acceptable to Agent, in respect to the proposed acquisition
and (z) the projections referred to in clause (vi) below; (v) Target’s EBITDA
(as adjusted by Borrower which adjustments shall be subject to Agent’s approval)
for the most recently ended annual period and the year to date is equal to or
greater than Zero Dollars ($0); (vi) Agent shall have received Borrower’s and
the Target’s pro forma financial projections, which projections shall
demonstrate that Borrower and the Target, on a Consolidated basis, will be in
compliance with the provisions of this Loan Agreement, including, but without
limitations, Section 8.3 of the Loan Agreement immediately prior to and after
the consummation of the proposed acquisition; (vii) prior to the consummation of
any such transaction, Agent shall have had the opportunity to audit the books,
records and operations of the Target, including, without limitation, the
accounts, inventory, machinery and equipment and real estate of the Target,
which after the consummation of the proposed acquisition would be included in
the Borrowing Base; (viii) Borrower shall have given Agent written notice of any
such transaction at least thirty (30) days prior to the consummation of any such
transaction; and (ix) prior to the consummation of any such transaction,
Borrower shall have delivered to Agent copies of the transaction documents in
substantially final form.

     Permitted Holders — means (i) Purchaser, (ii) any Purchaser Members,
(iii) EGI, (iv) Triyar Capital, LLC, a Delaware limited liability company, and
(v) any of their respective Affiliates that is Controlled by or under common
Control with any Person listed in items (i), (ii), (iii) or (iv) or any
“Permitted Holder” as defined in the Senior Subordinated Note Documents.

     Permitted Liens — any Lien of a kind specified in Subsection 8.2.5 of the
Agreement.

     Permitted Purchase Money Indebtedness — Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed Seven Million Five Hundred Thousand Dollars
($7,500,000). For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of capitalized leases shall be computed
as a Capitalized Lease Obligation.

     Permitted Transactions – (i) transactions entered into in connection with
the Tender Offer including the payment of severance and other amounts owing
under employment agreements or arrangement, and payment of fees, costs and
expenses; (ii) transactions expressly permitted under this Agreement; and
(iii) payment of reasonable fees of directors.

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     Person — an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.

     Plan — an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.

     Pledge Agreement — the Stock Pledge Agreement executed by Parent on or
about the Original Closing Date in favor of Agent for its benefit and the
ratable benefit of Lenders, as such Stock Pledge Agreement has been or will be
amended from time to time.

     Pledge Agreement (Subsidiary) — the Stock Pledge Agreement executed by
Borrower and the Original Closing Date in favor of Agent for its benefit and the
ratable benefit of Lenders, as such Stock Pledge Agreement has been or will be
amended from time to time.

     Product Obligations — every obligation of Borrower under and in respect of
any one or more of the following types of services or facilities extended to
Borrower by Bank, Agent, any Lender or any Affiliate of Bank or Agent:
(i) credit cards, (ii) cash management or related services including the
automatic clearing house transfer of funds for the account of Borrower pursuant
to agreement or overdraft, (iii) cash management, including controlled
disbursement services and (iv) Derivative Obligations.

     Projections — Borrower’s forecasted Consolidated and consolidating
(a) balance sheets, (b) profit and loss statements, (c) cash flow statements,
and (d) capitalization statements, all prepared on a consistent basis with
Borrower’s historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.

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

     Purchase Money Indebtedness — means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within ten (10) days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.

     Purchase Money Lien — a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.

     Purchaser – Storage Acquisition Company, L.L.C., a Delaware limited
liability company.

     Purchaser Members – EGI-Fund (02-04) Investors, L.L.C., a Delaware limited
liability company, Triyar Storage Investment Company, LLC, Joseph Gantz, and
Walnut Investment Partners, L.P., a Delaware limited partnership.

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     Qualified Assignee — any of (a) Lender, any Affiliate of any Lender and,
with respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor and (b) any commercial bank, savings and
loan association or savings bank or any entity which is an “accredited investor”
(as defined in Regulation D under the Securities Act of 1933) which extends
credit or buys loans as one of its businesses, including insurance companies, in
each case, which, through its applicable lending office, is capable of lending
to Borrowers without the imposition of any withholding or similar taxes. The
foregoing notwithstanding, no Person shall be a Qualified Assignee if (a) such
Person is determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser or (b) a Direct Competitor or the owner of an
Affiliate of a Direct Competitor. As used in this definition of Qualified
Assignee, “Direct Competitor” means a Person or entity that engages, as one of
its businesses, in the design, importation, manufacturing, sale, promotion or
distribution of products produced, sold, or distributed by Borrower and its
Subsidiaries or products of the same type or category which are competitive with
such products.

     Real Property Percentage — as of any date, the percentage equal to (x) one
hundred percent (100%) minus the percentage obtained by dividing the number of
full calendar months elapsed since the Closing Date by one hundred twenty (120).

     Real Property Ratio — a ratio, expressed as a fraction, the numerator of
which is the Net Real Estate Appraised Value and the denominator of which is the
sum of the Net Equipment Appraised Value plus the Net Real Estate Appraised
Value.

     Reappraisal — a reappraisal of Borrower’s Equipment and Real Property
conducted within the period from November 1, 2004 and the Closing Date in form
and substance reasonably acceptable to Agent and conducted by an appraisal firm
reasonably acceptable to Agent.

     Rentals — as defined in Subsection 8.2.13 of the Agreement.

     Reportable Event — any of the events set forth in Section 4043(b) of ERISA.

     Required Lenders — as of any date, the Lenders with more than fifty percent
(50%) of the aggregate principal amount of the Revolving Loan Commitments;
provided, that if any time there are two or fewer Lenders, Required Lenders
shall mean all Lenders; and provided, further, that if there are three Lenders,
Required Lenders shall mean any two Lenders with more than fifty percent (50%)
of the aggregate principal amount of the Revolving Loan Commitments.

     Reserve Percentage — the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against “Euro-currency Liabilities” as
defined in Regulation D.

     Restricted Investment — any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:

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          (i) investments in one or more Subsidiaries of Borrower to the extent
existing on the Closing Date;

          (ii) Property to be used in the ordinary course of business;

          (iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries;

          (iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one (1) year from the date
of acquisition thereof;

          (v) investments in certificates of deposit maturing within one
(1) year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof having
capital surplus and undivided profits aggregating at least $100,000,000;

          (vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the date
of creation thereof; and

          (vii) Product Obligations.

     Revolving Credit Commitments — as defined in Subsection 1.1.1 of the
Agreement.

     Revolving Credit Loan — a Loan made by Lenders as provided in Section 1.1
of the Agreement.

     Revolving Credit Note — the Revolving Credit Notes to be executed by
Borrower on or about the Closing Date in favor of each Lender to evidence the
Revolving Credit Loan, which shall be in the form of Exhibit 1.1.1 to the
Agreement.

     Revolving Credit Percentage — as defined in Subsection 1.1.1 of the
Agreement.

     Schedule of Accounts — as defined in Subsection 6.2.1 of the Agreement.

     Security — shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.

     Security Documents — the Guaranty Agreement, the Mortgages, any new
Mortgage, the Patent Security Agreement, the Pledge Agreement, the Pledge
Agreement (Subsidiary), the Trademark Security Agreement and all other
instruments and agreements now or at any time hereafter securing the whole or
any part of the Obligations.

     Senior Subordinated Notes — those certain subordinated promissory notes
dated on or about May 14, 1998, in the original aggregate principal amount of
One Hundred Twenty-Five Million Dollars ($125,000,000) executed by Borrower in
favor of the holders thereof.

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     Senior Subordinated Note Documents — that certain Indenture dated on or
about May 14, 1998 by and among Parent, the subsidiary signatories thereto
(including, without limitation, Borrower) and LaSalle National Bank, predecessor
to HSBC Bank, USA, as Trustee, the Senior Subordinated Notes and all schedules,
exhibits and other documents and agreements executed and/or delivered in
connection therewith.

     Solvent — as to any Person, that such Person (i) owns Property (including,
without limitation, goodwill) whose fair saleable value (on a going concern
basis) is greater than the amount required to pay all of such Person’s
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.

     Subordinated Debt — Indebtedness of Borrower that is subordinated to the
Obligations in a manner satisfactory to Agent.

     Subsidiary — any corporation of which a Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the
time of determination.

     Tax — in relation to any LIBOR Advance and the applicable LIBOR, any tax,
levy, impost, duty, deduction, withholding or charges of whatever nature
required by any Legal Requirement (i) to be paid by Agent or any Lender and/or
(ii) to be withheld or deducted from any payment otherwise required hereby to be
made by Borrower to Agent or any Lender; provided, that the term “Tax” shall not
include any taxes imposed upon the net income of Agent or any Lender.

     Tender Offer — the tender offer as contemplated by the Acquisition
Agreement, dated as of October 28, 2004 by and between Parent and Purchaser.

     Termination Date — the date on which the Agreement has been terminated in
accordance with Section 4.

     Total Credit Facility — Sixty Million Dollars ($60,000,000).

     Trademark Security Agreement — the Trademark and License Security Agreement
executed by Borrower on or about the Original Closing Date in favor for Agent
for its benefit and the ratable benefit of Lenders, as such Trademark and
License Agreement has been or will be amended from time to time.

     Type of Organization — with respect to Borrower, the kind or type of entity
by which Borrower is organized, such as a corporation or limited liability
company.

     UCC — the Uniform Commercial Code as in effect in the State of Illinois on
the date of this Agreement, as the UCC may be amended or otherwise modified,
including by the UCC Revisions.

     UCC Revisions — the revisions to Article 9 and other Articles of the
Uniform Commercial Code, as adopted by the State of Illinois, effective July 1,
2001.

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     Voting Stock — Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

     Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.

     Certain Matters of Construction. The terms “herein,” “hereof” and
“hereunder” and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.

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LIST OF EXHIBITS

     
Exhibit 1.1.1
  Form of Amended and Restated Revolving Credit Note  
Exhibit 6.1.1
  Borrower’s and each Subsidiary’s Business Locations  
Exhibit 7.1.1
  Jurisdictions in which Borrower and each Subsidiary is Authorized to do
Business  
Exhibit 7.1.4
  Capital Structure of Borrower  
Exhibit 7.1.5
  Corporate Names  
Exhibit 7.1.14
  Tax Identification Numbers of Subsidiaries  
Exhibit 7.1.16
  Patents, Trademarks, Copyrights and Licenses  
Exhibit 7.1.19
  Contracts Restricting Borrower’s Right to Incur Debts  
Exhibit 7.1.20
  Litigation  
Exhibit 7.1.22(a)
  Capitalized Leases  
Exhibit 7.1.22(b)
  Operating Leases  
Exhibit 7.1.23
  Pension Plans  
Exhibit 7.1.25
  Labor Contracts  
Exhibit 8.1.3
  Compliance Certificate  
Exhibit 8.1.4
  Form of Borrowing Base Certificate  
Exhibit 8.2.3
  Other Indebtedness  
Exhibit 8.2.5
  Permitted Liens  
Exhibit 8.3
  Financial Covenants  
Exhibit 12.3(ii)
  Assignment and Acceptance Agreement

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