Exhibit 10.6
 
EXECUTION COPY

CREDIT AGREEMENT
 
dated as of
 
MARCH 18, 2011
 
among
 
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.,
 
The Lenders Party Hereto,
 
and
 
H.I.G. AERT, LLC,
as Administrative Agent
 
___________________________
 

 

 
 

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TABLE OF CONTENTS
 
Page
 
ARTICLE I             DEFINITIONS
2
SECTION 1.01
Defined Terms
2
SECTION 1.02
Reserved
19
SECTION 1.03
Terms Generally
19
SECTION 1.04
Accounting Terms; GAAP
19
ARTICLE II            THE CREDIT FACILITIES
20
SECTION 2.01
Commitments
20
SECTION 2.02
Loans and Borrowings
20
SECTION 2.03
Requests for Loans
20
SECTION 2.04
Reserved
20
SECTION 2.05
Reserved
20
SECTION 2.06
Funding of Loan
21
SECTION 2.07
Reserved
21
SECTION 2.08
Reserved
21
SECTION 2.09
Repayment of Loans; Evidence of Debt
21
SECTION 2.10
Prepayment of Loans
22
SECTION 2.11
Reserved
23
SECTION 2.12
Interest
23
SECTION 2.13
AHYDO Payments
24
SECTION 2.14
Reserved
25
SECTION 2.15
Reserved
25
SECTION 2.16
Taxes
25
SECTION 2.17
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
26
SECTION 2.18
Mitigation Obligations
27
SECTION 2.19
Reliance on Notices
27
ARTICLE III          CONDITIONS PRECEDENT
28
SECTION 3.01
Closing Date
28
SECTION 3.02
Post-Closing
30
ARTICLE IV          REPRESENTATIONS AND WARRANTIES
31

 
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TABLE OF CONTENTS
(continued)
Page
 
SECTION 4.01
Organization; Powers
31
SECTION 4.02
Authorization; Enforceability
31
SECTION 4.03
Approvals; No Conflicts
32
SECTION 4.04
Offering of Loans/Notes
32
SECTION 4.05
Financial Statements; No Material Adverse Effect
32
SECTION 4.06
Properties
33
SECTION 4.07
Litigation and Environmental Matters
33
SECTION 4.08
Compliance with Laws; Governmental Authorizations; No Default
34
SECTION 4.09
Margin Regulations; Investment Company Status
34
SECTION 4.10
Taxes
34
SECTION 4.11
ERISA
35
SECTION 4.12
Disclosure
35
SECTION 4.13
Material Agreements
36
SECTION 4.14
Solvency
36
SECTION 4.15
Insurance
36
SECTION 4.16
Capitalization and Subsidiaries
36
SECTION 4.17
Collateral
36
SECTION 4.18
Labor Matters
36
SECTION 4.19
Reserved
37
SECTION 4.20
Foreign Assets Control Regulations, Etc
37
SECTION 4.21
Common Enterprise
37
SECTION 4.22
Securities Exchange Agreement
38
ARTICLE V            AFFIRMATIVE COVENANTS
38
SECTION 5.01
Financial Statements and Other Information
38
SECTION 5.02
Notices of Material Events
40
SECTION 5.03
Preservation of Existence
41
SECTION 5.04
Payment of Obligations
42
SECTION 5.05
Maintenance of Properties
42
SECTION 5.06
Books and Records; Inspection Rights
42
SECTION 5.07
Compliance with Laws
42

 
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TABLE OF CONTENTS
(continued)
Page
 
SECTION 5.08
Use of Proceeds
43
SECTION 5.09
Insurance
43
SECTION 5.10
Casualty and Condemnation
44
SECTION 5.11
Field Examinations
44
SECTION 5.12
Reserved
44
SECTION 5.13
Additional Collateral; Further Assurances
44
SECTION 5.14
Reserved
45
SECTION 5.15
Material Contracts
46
SECTION 5.16
Securities Exchange Agreement
46
ARTICLE VI          NEGATIVE COVENANTS
46
SECTION 6.01
Indebtedness
46
SECTION 6.02
Liens
47
SECTION 6.03
Fundamental Changes; Change in Nature of Business
47
SECTION 6.04
Investments, Loans, Advances, Guarantees and Acquisitions
48
SECTION 6.05
Dispositions
48
SECTION 6.06
Swap Agreements
49
SECTION 6.07
Restricted Payments; Certain Payments of Indebtedness
49
SECTION 6.08
Transactions with Affiliates
50
SECTION 6.09
Restrictive Agreements
51
SECTION 6.10
Financial Covenants
51
SECTION 6.11
Capital Expenditures
52
SECTION 6.12
Leases
52
SECTION 6.13
Changes in Fiscal Year
52
SECTION 6.14
Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities
53
SECTION 6.15
Sale or Discount of Receivables
53
SECTION 6.16
Intellectual Property Licenses
53
SECTION 6.17
Issuance of Equity Interests
53
SECTION 6.18
Amendment of Organization Documents
53
SECTION 6.19
Terrorism Sanctions Regulations
53

 
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TABLE OF CONTENTS
(continued)
Page
 
ARTICLE VII         EVENTS OF DEFAULT
54
SECTION 7.01
Events of Default
54
SECTION 7.02
Application of Proceeds
57
ARTICLE VIII        THE ADMINISTRATIVE AGENT
58
ARTICLE IX          MISCELLANEOUS
60
SECTION 9.01
Notices
60
SECTION 9.02
Waivers; Amendments
61
SECTION 9.03
Expenses; Indemnity; Damage Waiver
63
SECTION 9.04
Successors and Assigns
64
SECTION 9.05
Survival
67
SECTION 9.06
Counterparts
67
SECTION 9.07
Integration; Effectiveness
67
SECTION 9.08
Severability
67
SECTION 9.09
Right of Setoff
67
SECTION 9.10
Governing Law; Jurisdiction; Consent to Service of Process
68
SECTION 9.11
WAIVER OF JURY TRIAL
68
SECTION 9.12
Headings
69
SECTION 9.13
Confidentiality
69
SECTION 9.14
Interest Rate Limitation
69
SECTION 9.15
USA Patriot Act
70

 
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SCHEDULES:
 
Schedule I                                --          Commitments
Schedule 4.06                           --          Real Property
Schedule 4.07                           --          Litigation
Schedule 4.16                           --          Capitalization
Schedule 4.17                           --          UCC Jurisdictions
Schedule 4.18                           --          Labor Matters
Schedule 6.01                           --          Existing Indebtedness
Schedule 6.02                           --          Existing Liens
Schedule 6.04                           --          Existing Investments
Schedule 6.08                           --          Transactions with Affiliates
 
EXHIBITS:
 
Exhibit A -- Form of Assignment and Assumption
Exhibit B – Form of Borrowing Request
Exhibit C – Form of Compliance Certificate
 

 
 

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This Credit Agreement, dated as of March 18, 2011 (as amended, restated,
supplemented or modified from time to time, this “Agreement”), is made among
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC., a Delaware corporation (the
“Company”), the lenders from time to time parties hereto, and H.I.G. AERT, LLC,
as Administrative Agent.  Capitalized terms used in this opening paragraph or
the recitals set forth below and not otherwise defined herein have the meanings
assigned to them in Section 1.01 below.
 
RECITALS:
 
WHEREAS, immediately prior to the execution of this Agreement, H.I.G. AERT, LLC,
the initial Lender (“H.I.G.”), is the sole beneficial owner of those certain
Adair County Industrial Authority Solid Waste Recovery Facilities Revenue Bonds
(Advanced Environmental Recycling Technologies, Inc. Project) Series 2007 (the
“2007 Bonds”) issued pursuant to that certain Indenture of Trust, dated as of
December 1, 2007, by and between Adair County Industrial Authority (the
“County”) and Bank of Oklahoma, N.A., as trustee.  The 2007 Bonds are secured
by, among other things, the assignment of that certain Loan Agreement (the “2007
Loan Agreement”), dated as of December 1, 2007, by and between the Company and
the County.  As of the date hereof, the aggregate outstanding principal and
accrued interest owed in connection with the 2007 Bonds is $13,281,084
 
WHEREAS, immediately prior to the execution of this Agreement, H.I.G. is the
sole beneficial owner of those certain City of Springdale Arkansas, Industrial
Development Refunding Revenue Bonds (Advanced Environmental Recycling
Technologies, Inc. Project) Series 2008 (the “2008 Bonds” and together with the
2007 Bonds, the “Bonds” or the “Purchased Debt”) issued pursuant to that certain
Indenture of Trust, dated as of February 1, 2008, by and between the City of
Springdale, Arkansas (the “City”) and Bank of Oklahoma, N.A., as trustee.  The
2008 Bonds are secured by, among other things the assignment of that certain
Loan Agreement, dated February 1, 2008, by and between the Company and the
City.  As of the date hereof, the aggregate outstanding principal and accrued
interest owed in connection with the 2008 Bonds is $10,436,409;
 
WHEREAS, immediately prior to the execution of this Agreement, H.I.G. is the
beneficial owner of that certain Secured Promissory Note (the “2010 Note” and
together with the Purchased Debt, the “Existing Debt”), dated December 20, 2010,
issued by the Company in favor of Buyer, which 2010 Note is secured by that
certain Security Agreement, dated December 20, 2010, made by the Company in
favor of Buyer.  As of the date hereof, the aggregate outstanding principal and
accrued interest owed in connection with the 2010 Note is $2,096,667; and
 
WHEREAS, simultaneously with the execution of this Agreement, the Company and
H.I.G. are entering into the Securities Exchange Agreement, pursuant to which,
among other things, H.I.G. has agreed to (i) exchange $10,000,000 of principal
and accrued interest of the Purchased Debt for Series A Notes, representing
funded Series A Loans under this Agreement, in the aggregate principal amount of
$10,000,000 and (ii) exchange all of the outstanding principal and accrued
interest of the 2010 Note for Series B Notes, representing funded Series B Loans
under this Agreement, in the aggregate principal amount of $2,000,000; and

 
 

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WHEREAS, the initial Lender party hereto also desires lend additional amounts to
the Borrower in accordance with this Agreement.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
 
ARTICLE I

 
DEFINITIONS
 
SECTION 1.01  Defined Terms.  As used in this Agreement, the following terms
have the meanings specified below:
 
“Acquisition” shall mean any acquisition or series of acquisitions by any Person
of (a) all or substantially all of the capital stock or other Equity Interests
in another Person, including by way of merger or consolidation, (b) all or
substantially all of the business, assets or operations of another Person or
(c) a portion of the business, assets or operations of another Person
constituting one or more divisions, business units or business lines of such
other Person.
 
“Administrative Agent” shall mean H.I.G., in its capacity as administrative
agent for the Lenders hereunder and any successor thereto appointed in
accordance with this Agreement.
 
“Affiliate” shall mean, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.  Without
limitation, any director, executive officer or beneficial owner of ten percent
(10%) or more of the Equity Interests of a Person shall for the purposes of this
Agreement, be deemed to be an Affiliate of such Person.  Notwithstanding the
foregoing, no Lender shall be deemed an “Affiliate” of any Credit Party or of
any Subsidiary of any Credit Party solely by reason of the provisions of the
Credit Documents, nor shall the Administrative Agent be deemed an “Affiliate” of
any Credit Party for purposes hereof.
 
“Anti-Terrorism Order” shall mean Executive Order No.  13224 of September 24,
2001, Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism, 66 U.S.  Fed.  Reg.  49, 079 (2001), as
amended.
 
“Approved Fund” shall mean any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
 
“Assignment and Assumption” shall mean an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

 
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“Bankruptcy Code” shall mean the provisions of Title 11 of the United States
Code, 11 U.S.C.  §§ 101 et seq., as amended from time to time.
 
“Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.
 
“Borrower” shall mean the Company and each other Subsidiary of the Company that
hereafter becomes a Borrower under this Credit Agreement.
 
“Borrowing Request” shall mean a request by the Borrower for a Loan in
accordance with Section 2.03 in the form of Exhibit B or such other form as the
Administrative Agent and the Borrower shall agree.
 
“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed.
 
“Capital Expenditures” shall mean, without duplication, any expenditure or
commitment to expend money for any purchase or other acquisition of any asset
which would be classified as a fixed or capital asset on a consolidated balance
sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.
 
“Capital Lease Obligations” of any Person shall mean the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
 
“Change in Control” shall mean an event or series of events by which (a) the
stockholders of the Company on the date hereof, either directly or indirectly,
collectively fail to own Equity Interests in the Company representing more than
51% of the combined voting power of all Equity Interests entitled to vote for
members of the board of directors or equivalent governing body of the Company on
a fully-diluted basis, (b) any other “person” or “group” (as such terms are
defined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), owns beneficially or of record an equity percentage in the Borrower
greater than H.I.G. or any Affiliate of H.I.G. or (c) the Company shall cease to
own and control legally and beneficially either directly or indirectly, free and
clear of all Liens (other than Liens created pursuant to any Credit Document),
all of the outstanding Equity Interests of its Subsidiaries (except if and to
the extent otherwise permitted by the Credit Documents).
 
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
 
“Closing Date” shall mean the date on which the conditions specified in
Section 3.01 are satisfied (or waived in accordance with Section 9.02).

 
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“Closing Date Transactions” shall mean (a) the funding of the Loans to be funded
on the Closing Date pursuant to Section 2.01 (including by delivery of the
Exchanged Debt) and (b) the payment of fees and expenses in connection with the
foregoing.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.
 
“Collateral” shall mean any and all property of any Credit Party, now existing
or hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of the Administrative Agent, on behalf of the Secured
Parties, to secure any Secured Obligations.
 
“Collateral Access Agreement” shall mean each landlord agreement, mortgagee
consent or bailee agreement in form and substance satisfactory to the
Administrative Agent executed and delivered by a Credit Party and any of its
landlords, mortgagees or bailees.
 
“Collateral Documents” shall mean, collectively, the Guaranty Agreement, the
Security Agreement, the Mortgages, the Intellectual Property Security
Agreements, the Collateral Access Agreements and any other documents granting a
Lien upon the Collateral as security for payment of the Secured Obligations.
 
“Compliance Certificate” shall mean a certificate substantially in the form of
Exhibit C.
 
“Consolidated Current Assets” means, as of any date of determination, the total
current assets of the Company and its Subsidiaries as of such date, calculated
for the Company and its Subsidiaries on a consolidated basis in accordance with
GAAP.
 
“Consolidated Current Liabilities” means, as of any date of determination, total
current liabilities of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
 
“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for
such period; plus to the extent, and only to the extent, deducted in the
computation of Consolidated Net Income for such period, the aggregate amount of
(i) Consolidated Interest Expense for such period, (ii) federal, state, local
and other tax expense, depreciation expense and amortization expense of the
Company and its Subsidiaries, in each case, for such period, determined on a
consolidated basis for such persons, (iii) non-recurring cash fees and expenses
incurred in connection with the transactions contemplated hereby and approved by
the Administrative Agent in its sole discretion, (iv) non-recurring cash fees
and expenses approved by the Administrative Agent in its sole discretion,
(v) any management fees paid to H.I.G. or its Affiliates, and (vi) any
Registration Delay Payments, as defined in the Registration Rights Agreement.
 
“Consolidated Fixed Charges” shall mean, for any period, the sum (without
duplication) of (i) Consolidated Interest Expense paid or due and payable in
cash for such period and (ii) scheduled principal payments made on Consolidated
Indebtedness during such period.

 
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“Consolidated Indebtedness” shall mean, as of any date of determination, the
aggregate amount of all Indebtedness of the Borrower and its Subsidiaries
outstanding on such date determined on a consolidated basis in accordance with
GAAP, after eliminating all offsetting debits and credits between the Borrower
and its Subsidiaries.
 
“Consolidated Interest Expense” shall mean, for any period, the aggregate amount
of all interest expense or yield maintenance amounts or other prepayment
charges, with respect to Indebtedness, including, without limitation, any unused
commitment fee (or similar fee), imputed interest in respect of capitalized
leases, amortization of discount and expense and all other fees and charges with
respect to letters of credit and bankers’ acceptance financing, the net costs
associated with interest swap obligations, amortization of debt expense and
original issue discount, the interest portion of any deferred payment
obligation, and any interest expense capitalized or deferred and deducted from
revenues in the determination of Consolidated Net Income for such period, of the
Company and its Subsidiaries for such period, determined on a consolidated basis
for such persons and calculated, to the extent applicable, in accordance with
the effective yield method, but, for the avoidance of doubt, excluding the
structuring fees, all in accordance with GAAP.
 
“Consolidated Net Income” shall mean, for any period, net earnings (or net loss)
of the Company and its Subsidiaries for such period, determined in accordance
with GAAP on a consolidated basis for such persons, but excluding (without
duplication): (a) any net earnings of any Person acquired by the Company or any
of its Subsidiaries through purchase, merger or consolidation or otherwise, or
earnings of any person substantially all of whose assets have been acquired by
the Company or any of its Subsidiaries, in each such case for any period prior
to the date of acquisition; (b) any earnings of any person (other than a
Subsidiary) in which the Company or any of its Subsidiaries shall have an
ownership interest except to the extent that all or a portion of such net
earnings shall have actually been received by the Company or any such Subsidiary
in the form of cash distributions; (c) any deferred credit representing the
excess of equity in any Subsidiary at the date of acquisition over the cost of
the investment in such Subsidiary; (d) any gains from the collection of the
proceeds of any insurance policies or settlements; (e) any restoration to income
of any contingency reserve, except to the extent that provision for such reserve
was made out of income accrued during such period; (f) any income or gain (or
loss) during such period from (i) any change in accounting principles in
accordance with GAAP, (ii) any prior period adjustments resulting from any
change in accounting principles in accordance with GAAP, or (iii) any
discontinued operations or disposition thereof, unless with respect to clauses
(i) and (ii), the Borrower and the Required Lenders have amended the applicable
provisions of this Agreement in accordance with Section 1.04 to reflect such
change in accounting principles; (g) any income or gain during such period from
any unusual, non-recurring or extraordinary items; (h) any gains (or any losses
or charges related thereto, including the amount of Taxes attributable to any
such gains) resulting from the retirement or extinguishment of Indebtedness or
the acquisition of any other securities of the Borrower or any Subsidiary; and
(i) any aggregate net gain (and/or any aggregate net loss) during such period
arising from the sale, conversion, exchange or other disposition of capital
assets (such term to include, without limitation, (x) all non-current assets
and, without duplication and (y) all fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets, and all securities, whether or not current).

 
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“Consolidated Working Capital” shall mean, if any, the excess of Consolidated
Current Assets (other than cash, cash equivalents and any tax, indebtedness or
interest related accounts) over Consolidated Current Liabilities (other than any
tax, indebtedness or interest related accounts).
 
“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.  The
terms “Controlling” and “Controlled” have meanings correlative thereto.
 
“Control Account Agreements” shall mean each tri-party agreement by and among a
Credit Party, the Administrative Agent and a depositary bank or securities
intermediary at which such Credit Party maintains a deposit account, bank
account or investment account, granting “control” over such deposit accounts and
investment accounts to the Administrative Agent in a manner that perfects the
Lien of the Administrative Agent under the UCC.
 
“Credit Documents” shall mean this Agreement, any promissory notes issued
pursuant to the Agreement, the Securities Exchange Agreement, the Collateral
Documents and all other agreements, instruments, documents and certificates
identified in Section 3.01 executed and delivered to, or in favor of, the
Administrative Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Credit Party, or any employee of any Credit Party, and
delivered to the Administrative Agent or any Lender in connection with this
Agreement, or the transactions contemplated hereby or thereby.  Any reference in
the Agreement or any other Credit Document to a Credit Document shall include
all appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to this Agreement or
such Credit Document as the same may be in effect at any and all times such
reference becomes operative.
 
“Credit Parties” shall mean the Borrower and the Guarantors.
 
“Default” shall mean any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
 
“Default Rate” shall mean 3.0% per annum.
 
“Defaulting Lender” means, at any time, any Lender that, at such time (a)  has
failed to pay to the Administrative Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Agreement or (b) has been deemed insolvent
or has become subject to a bankruptcy or insolvency proceeding or to a receiver,
trustee or similar official.
 
“Disposition” or “Dispose” shall mean the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person (or the granting of any option or other right to do any of the
foregoing), including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 
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“dollars” or “$” refers to lawful money of the United States of America.
 
“Domestic Subsidiary” shall mean any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.
 
“Eligible Assignee” shall mean (i) any Lender, any Affiliate of any Lender and
any Approved Fund (any two or more Approved Funds being treated as a single
Eligible Assignee for purposes hereof), and (ii) any commercial bank, insurance
company, investment or mutual fund or other entity that is an “accredited
investor” (as defined in Regulation D under the Securities Act) and which
extends credit or buys loans as one of its businesses.
 
“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
 
“Environmental Liability” shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
 
“Environmental Permit” shall mean any permit, approval, identification number,
license or other authorization required under any Environmental Law.
 
“Equity Interests” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
 
“ERISA Affiliate” shall mean any Person under common control or treated as a
single employer with the Borrower pursuant to Section 414(b), (c), (m) or (o) of
the Code.
 
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan; (b) the
failure of any Plan to satisfy the minimum funding standard applicable to such
Plan under ERISA or the Code for any plan years, or the existence with respect
to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (c) the filing
pursuant to Section 412 of the Code or Sections 302 or 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any ERISA Affiliate of any liability
under Title IV of ERISA with respect to the

 
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termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the incurrence by the Borrower or any ERISA Affiliate of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
 
“Event of Default” has the meaning assigned to such term in Article VII.
 
“Excess Cash Flow” shall mean, as of any date on which a prepayment from Excess
Cash Flow is required pursuant to Section 2.10(c), the amount (so long as such
amount is greater than zero) equal to: (a) Consolidated EBITDA for the Fiscal
Year most recently ended prior to such date, minus (b) all cash interest paid by
the Borrower on Indebtedness during such Fiscal Year, minus (c) unfinanced
Capital Expenditures made during such Fiscal Year but solely to the extent
permitted by this Agreement, minus (d) an amount equal to the sum of (i) the
aggregate amount of all regularly scheduled principal payments of the Loans made
during such Fiscal Year plus (ii) the aggregate amount of all optional principal
prepayments of the Loans during such Fiscal Year, minus (e) federal, state,
local and other taxes paid in cash by the Borrower during such Fiscal Year,
minus (f) as of the last day of such Fiscal Year, the amount of any increase in
Consolidated Working Capital (or plus any decrease in Consolidated Working
Capital) as compared to the last day of the immediately prior Fiscal Year, minus
(g) to the extent not already deducted by clause (d) of this definition, the
aggregate amount of all regularly scheduled principal payments made on all
Indebtedness permitted by this Agreement during such Fiscal Year.
 
“Excess Cash Flow Percentage” shall mean 50%.
 
“Exchanged Debt” means, collectively, (i) the $10,000,000 of principal and
accrued interest of the Purchased Debt being delivered to the Company by the
Lenders in satisfaction of their funding obligation of $10,000,000 pursuant to
Section 2.06 for the Series A Term Loans under this Agreement and (ii) all
$2,077,778 of principal and accrued interest of the 2010 Note being delivered to
the Company by the Lenders in satisfaction of $2,000,000 of their funding
obligation pursuant to Section 2.06 for the Series B Term Loans under this
Agreement, in each case, in accordance with the terms of the Securities Exchange
Agreement.
 
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.18(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or

 
8

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designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.16(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.16(a).
 
“Extraordinary Receipt” shall mean any cash received by or paid to or for the
account of any Person not in the ordinary course of business, including tax
refunds, pension plan reversions, condemnation awards (and payments in lieu
thereof), indemnity payments and any purchase price adjustments, but excluding
the insurance proceeds.
 
“Federal Funds Rate” shall mean, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
 
“Financial Officer” shall mean the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
 
“Fiscal Month” shall mean any fiscal month of the Borrower.
 
“Fiscal Quarter” shall mean any fiscal quarter of the Borrower.
 
“Fiscal Year” shall mean any fiscal year of the Borrower.
 
“Fixed Charge Coverage Ratio” shall mean, as of any date, the ratio of
(a) (i) Consolidated EBITDA less (ii) the aggregate amount of income taxes of
the Borrower and its Subsidiaries paid or payable in cash during such period,
less (iii) the aggregate amount paid or payable in cash by Borrower and their
Subsidiaries on account of unfinanced Capital Expenditures, to (b) Consolidated
Fixed Charges, in each case measured for the four consecutive Fiscal Quarters
ending on or immediately prior to such date.
 
“Foreign Lender” shall mean, as to the Borrower, any Lender that is organized
under the laws of a jurisdiction other than that in which the Borrower is
located.  For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
 
“GAAP” shall mean generally accepted accounting principles in the United States
of America from time to time approved by the American Association of Certified
Public Accountants.
 
“Governmental Authority” shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising

 
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executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
 
“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
 
“Guarantors” shall mean all Persons that execute the Guaranty Agreement.
 
“Guaranty Agreement” shall mean that the certain Guaranty Agreement, dated as of
the date hereof, by and among the Guarantors party thereto and the
Administrative Agent.
 
“Hazardous Materials” shall mean all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
 
“Indebtedness” shall mean, with respect to any Person, without duplication, the
liabilities of such person with respect to: (a) borrowed money (including
commercial paper and revolving credit line borrowings), or which is evidenced by
bonds, debentures or notes or extensions of credit, whether or not representing
obligations for borrowed money (other than trade, payroll and taxes payable);
(b) the deferred purchase price of property acquired by such Person (excluding
accounts payable arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property); (c) indebtedness of any
other Person secured by any Lien existing on Property owned by such Person
(whether or not such liabilities have been assumed), provided, that, with
respect to any such indebtedness not assumed the amount of such indebtedness
shall be deemed to be the lesser of (i) the fair market value of the assets
securing such indebtedness and (ii) the aggregate amount of such indebtedness;
(d) capitalized leases of such Person; (e) letters of credit, bankers’
acceptances or instruments serving a similar function issued or accepted by
banks and other financial institutions for the account of such Person; (f) the
net value of swaps of such Person; (h) all redemption obligations in respect of
mandatorily redeemable preferred stock and all other obligations for the payment
of money in respect of preferred stock of Subsidiaries of such Person held by
third parties (other than contingent redemption obligations with respect to the
Borrower’s Series E Preferred Stock, unless and until any “Fundamental
Transaction” or
 

 
10

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“Triggering Event” as defined in the Certificate of Designations for Series E
Preferred Stock shall have occurred) ; and (g) any guaranty of such Person of
any obligation or liability of another Person of the types listed in clause
(a) through clause (g) of this definition of Indebtedness.
 
“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
 
“Institutional Investor” shall mean any insurance company, commercial,
investment or merchant bank, finance company, mutual fund, registered money or
asset manager, savings and loan association, credit union, registered investment
advisor, pension fund, investment company, licensed broker or dealer, “qualified
institutional buyer” (as such term is defined under Rule 144A promulgated under
the Securities Act, or any successor law, rule or regulation) or “accredited
investor” (as such term is defined under Regulation D promulgated under the
Securities Act, or any successor law, rule or regulation).
 
“Intellectual Property Security Agreement” has the meaning set forth in the
Security Agreement.
 
“Interest Payment Date” shall mean the last day of each calendar month.
 
“Interest Rate” shall have the meaning set for in Section 2.12(a).
 
“Investment” shall mean any investment in any Person, whether by means of
(a) the purchase or other acquisition of Equity Interests of another Person,
including, without limitation, pursuant to an Acquisition or (b) a loan, advance
or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person.  For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.
 
“Lenders” shall mean the Persons listed on Schedule I and any other Person that
becomes a party hereto pursuant to an Assignment and Assumption (other than any
such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption).
 
“Leverage Ratio” shall mean, as of any date of determination, the ratio of
(a) Consolidated Indebtedness as of such date to (b) Consolidated EBITDA
measured for the four consecutive Fiscal Quarters ending on or immediately prior
to such date.
 
“Liberty” shall mean Liberty Bank of Arkansas.
 
“Liberty Bank Loan” shall mean the Loan Agreement, dated as of January 16, 2005
and amended from time to time by and between the Borrower and Liberty.
 
“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any

 
11

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of the foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
 
“Loan” shall mean an extension of credit by a Lender to the Borrower under
Article II in the form of a Loan.
 
“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and its Subsidiaries taken as a whole, (b) the ability of any
Credit Party to perform any of its obligations under any Credit Documents,
(c) the Collateral, the Administrative Agent’s Liens (on behalf of itself and
the Lenders) on the Collateral or the priority of such Liens, or (d) the rights
of or benefits available to the Administrative Agent or the Lenders under any
Credit Documents.
 
“Material Contract” shall mean, with respect to any Person, each contract to
which such Person is a party that if breached or cancelled could reasonably be
expected to have a material adverse effect on the business, assets, operations,
prospects or financial condition of such Person, in each case as amended,
restated, supplemented, modified or replaced from time to time.
 
“Material Indebtedness” shall mean (b) Indebtedness (other than the Loans), or
obligations in respect of one or more Swap Agreements, of the Borrower or any
Subsidiary in an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) exceeding $500,000.  For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
the Borrower or any Subsidiary in respect of any Swap Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary, as applicable, would be required to pay if
such Swap Agreement were terminated at such time.
 
“Material Suppliers” shall mean the top 15 suppliers to the Borrower and its
Subsidiaries as of the Closing Date, as measured by dollar volume of purchases
from such suppliers in comparison to all other suppliers of the Borrower and its
Subsidiaries.
 
“Maturity Date” shall mean the earlier of (a) March 17, 2017 and (b) the
acceleration of the Obligations pursuant to Section 7.01.
 
“Moody’s” shall mean Moody’s Investors Service, Inc.
 
“Mortgage Policies” has the meaning set forth in Section 3.01(e).
 
“Mortgages” shall mean any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, on real property of a
Credit Party, delivered pursuant to this Agreement, including any amendment,
modification, restatement or supplement thereto.
 
“Multiemployer Plan” shall mean any Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

 
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“Net Proceeds” shall mean, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but excluding any interest payments),
but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event and (iii) the amount of all taxes paid.
 
“Note” shall mean a Series A Note or a Series B Note.
 
“Obligations” shall mean all unpaid principal of and accrued and unpaid interest
on the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Credit Parties to the Lenders or to any
Lender, the Administrative Agent or any indemnified party arising under the
Credit Documents.
 
“Off-Balance Sheet Liability” of a Person shall mean (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any indebtedness, liability or obligation
under any so-called “synthetic lease” transaction entered into by such Person,
or (c) any indebtedness, liability or obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person (other than operating leases).
 
“Organization Documents” shall mean, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
 
“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
 
“Participant” has the meaning set forth in Section 9.04(c).

 
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“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
 
“Permitted Encumbrances” shall mean:
 
(A)           Liens imposed by law for taxes not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are being maintained in accordance with GAAP;
 
(B)           statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law in the ordinary course of business
for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained in accordance with GAAP;
 
(C)           pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;
 
(D)           deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obli­gations of a like nature, in each case in the ordinary course of
business;
 
(E)           judgment and attachment liens not giving rise to an Event of
Default or Liens created by or existing from any litigation or legal proceeding
that are currently being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in accordance with
GAAP;
 
(F)           customary rights of set-off, revocation, refund or chargeback
under deposit agreements or under the Uniform Commercial Code or common law of
banks or other financial institutions where the Borrower or any of its
Subsidiaries maintains deposits (other than deposits intended as cash
collateral) in the ordinary course of business but only to the extent such
rights are not prohibited by the terms of any Control Account Agreement;
 
(G)           any interest or title of a lessor or sublessor under any lease of
real estate permitted hereunder;
 
(H)           purported liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business;
 
(I)           liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;  and

 
14

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(J)           easements, zoning and other statutory restrictions, rights-of-way
and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or materially
interfere with the ordinary conduct of business of the Borrower and its
Subsidiaries taken as a whole;
 
provided, that the term “Permitted Encumbrances” shall not include any Lien
securing Indebtedness.
 
“Permitted Investments” shall mean:
 
(A)           direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States), in each case maturing within one year from the
date of acquisition thereof;
 
(B)           commercial paper having the highest rating, at the time of
acquisition thereof, of S&P or Moody’s and in either case maturing within six
months from the date of acquisition thereof;
 
(C)           certificates of deposit, bankers’ acceptances and time deposits
maturing within 180 days of the date of acquisition thereof issued or guaranteed
by or placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States or any state thereof which has a combined capital and surplus and
undivided profits of not less than $250,000,000.
 
(D)           fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
 
(E)           mutual funds investing solely in any one or more of the Permitted
Investments described in clauses (a) through (d) above.
 
“Person” shall mean any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
 
“Pro Rata Share” shall mean, with respect to any Lender at any time, a
percentage equal to a fraction, the numerator of which is the outstanding
principal amount of the Loans of
 
 
15

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such Lender at such time and the denominator of which is the aggregate
outstanding amount of the Loans of all Lenders at such time.

“Register” has the meaning set forth in Section 9.04.
 
“Related Parties” shall mean, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
 
“Required Lenders” shall mean, (x) at any time that there are fewer than three
Lenders, all Lenders which are not Defaulting Lenders and (y) at any time that
there are three or more Lenders, Lenders holding more than 50% of the sum of the
aggregate outstanding principal amount of the Loans at such time; provided,
however, that if any Lender shall be a Defaulting Lender at such time, it shall
be excluded from the determination of Required Lenders pursuant to this clause
(y); provided further that if a proposed transaction or amendment or waiver of
this Agreement disproportionately and adversely affects the holders of Series A
Term Loans or Series B Term Loans, the Lenders holding more than 50% of the sum
of the aggregate outstanding principal amount of the Series A Term Loans or
Series B Term Loans, as applicable, shall also be required.
 
“Requirement of Law” for any Person shall mean the Organization Documents of
such Person and any law, treaty, rule or regulation, or determination of a
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
 
“Responsible Officer” shall mean the chief executive officer, president, chief
operating officer, chief financial officer, controller, vice president or chief
accounting officer of the Borrower, as applicable, or any other officer of the
Borrower, as applicable, involved principally in its financial administration or
its controllership function.
 
“Restricted Payment” shall mean (a) any dividend or other distribution (whether
in cash or other property, other than on a pay-in-kind basis) with respect to
any Equity Interests in any Person or any of such Person’s Subsidiaries, or any
payment (whether in cash or other property other than Equity Interests),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests or any option, warrant or other right to acquire any such
Equity Interests; and (b) any payment, repayment, redemption, retirement,
repurchase or other acquisition, direct or indirect, by the Borrower or any
Subsidiary of, on account of or in respect of, the principal of any Indebtedness
that is subordinated to the Obligations prior to the regularly scheduled
maturity date thereof (other than scheduled principal installment payments made
at a time when there is no Event of Default hereunder).
 
“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw
Hill Companies, Inc.
 
“Secured Obligations” shall mean the Obligations and the Secured Swap
Obligations.
 
 
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“Secured Parties” shall mean the holders from time to time of the Secured
Obligations.
 
“Secured Swap Agreement” shall mean any Swap Agreements entered into with
Lenders, Affiliates of Lenders or other Persons acceptable to the Administrative
Agent, in order to effectively cap, collar or exchange interest rates (from
fixed to floating rates, from one floating rate to another floating rate or
otherwise) with respect to any interest-bearing liability or investment of the
Borrower or any Subsidiary; provided that, if at any time such Person ceases to
be a Lender or an Affiliate of a Lender, such Swap Agreement shall no longer be
deemed to be a Secured Swap Agreement.
 
“Secured Swap Obligations” shall mean all Swap Obligations of the Borrower and
its Subsidiaries under each Secured Swap Agreement.
 
“Securities Act” shall mean the Securities Act of 1933, as amended.
 
“Securities Exchange Agreement” shall mean that certain Securities Purchase and
Exchange Agreement, dated as of March 18, 2011, among the Company and H.I.G.
 
“Security Agreement” shall mean that the certain Security Agreement, dated as of
the date hereof, by and among Borrower, each of its Domestic Subsidiaries party
thereto and the Administrative Agent.
 
“Series A Note” shall mean a note representing a Series A Term Loan.
 
“Series A PIK Interest Rate” shall mean a rate of interest equal 4.0% per annum.
 
“Series A Term Loan Commitment” means, with respect to each Lender, the
commitment of such Lender to make a Series A Term Loan on the Closing Date
pursuant to Section 2.01 in an amount not to exceed the amount set forth
opposite such Lender’s name on Schedule I under the caption “Series A Term Loan
Commitment”.
 
“Series B Note” shall mean a note representing a Series B Term Loan.
 
“Series B PIK Interest Rate” shall mean a rate of interest equal 6.0% per annum.
 
“Series B Term Loan Commitment” means, with respect to each Lender, the
commitment of such Lender to make a Series B Term Loan on or after the Closing
Date pursuant to Section 2.01 in an amount not to exceed the amount set forth
opposite such Lender’s name on Schedule I under the caption “Series B Term Loan
Commitment”.
 
“Solvent” shall mean, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including subordinated and contingent liabilities,
of such Person; (b) the present fair saleable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts and liabilities, including subordinated and
contingent liabilities as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay as

 
17

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such debts and liabilities mature; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person’s property would constitute an unreasonably
small capital.  The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that would reasonably be expected to
become an actual or matured liability.
 
“Subordination and Intercreditor Agreement” shall mean that the certain Second
Amended and Restated Subordination and Intercreditor Agreement, dated as of the
date hereof, by and among Borrower, the Administrative Agent and Liberty.
 
“Subsidiary” shall mean, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.  Unless otherwise expressly
stated herein, any reference to Subsidiary shall mean a Subsidiary of the
Borrower.
 
“Swap Agreement” shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Borrower or the Subsidiaries shall be a Swap Agreement.
 
“Swap Obligations” of a Person shall mean any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Swap
Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Swap Agreement transaction.
 
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholding imposed by any Governmental Authority.
 
“UCC” shall mean the Uniform Commercial Code as in effect in the State of New
York.
 
“Unliquidated Obligations” means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time.
 
 
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“USA Patriot Act” shall mean United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT Act) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
 
SECTION 1.02  Reserved.
 
SECTION 1.03  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word
“will” shall be construed to have the same meaning and effect as the word
“shall”.  Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Credit Document), (b) any reference herein to any Person shall
be construed to include such Person’s successors and assigns, (c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement, (e) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights and (f) all references to a specific time shall be
construed to refer to the time in New York, New York.
 
SECTION 1.04  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time.  Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance with
GAAP, applied on a basis consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries delivered pursuant to
Section 5.01(a) or (b)(i) or, if no such statements have been so delivered, the
most recent audited financial statements referred to in Section 4.05.  For
purposes of determining compliance with the financial covenants contained in
this Agreement, including without limitation those set forth in Section 6.10,
any election by the Company or any of its Subsidiaries to measure an item of
Indebtedness using fair value (as permitted by Accounting Standards Codification
Section 825-10 or any similar accounting standard) shall be disregarded and such
determination shall be made as if such election had not been made.
 
 
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ARTICLE II
 
THE CREDIT FACILITIES
 
SECTION 2.01  Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees to make (a) a Series A Term Loan to the Borrower (a
“Series A Term Loan”) on the Closing Date in the principal amount of such
Lender’s Series A Term Loan Commitment specified on Schedule I and (b) a Series
B Term Loan to the Borrower (a “Series B Term Loan”, and collectively with the
Series A Term Loans, the “Loans”) in the principal amount of such Lender’s
Series B Term Loan Commitment specified on Schedule I, provided that only
$5,000,000 of the Series B Term Loan shall be available to be drawn on the
Closing Date and the remaining $2,000,000 of the Series B Term Loan Commitment
may be drawn at a later date agreed to by the Administrative Agent in its sole
discretion.  Once repaid or prepaid, Loans may not be reborrowed.
 
SECTION 2.02  Loans and Borrowings.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.
 
SECTION 2.03  Requests for Loans.  To request a Loan, the Borrower shall notify
the Administrative Agent of such request by telephone not later than 11:00 a.m.
on the Business Day of the proposed borrowing of such Loan.  Such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower.  Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
 
(i)           the aggregate amount of the requested Loan;
 
(ii)          the date of such Loan, which shall be a Business Day;
 
(iii)         the location and number of the Borrower’s account to which funds
are to be disbursed; and
 
(iv)         solely with respect to the Series B Term Loan to be borrowed after
the Closing Date, a detailed schedule as to the uses of the Series B Term Loan.
 
Promptly following receipt of a Borrowing Request in accordance with this
Section, and in the case of a request for Series B Term Loans subsequent to the
Closing Date, provided that the Administrative Agent consents to such borrowing
in its sole discretion, the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender’s Loan to be made as part of
the requested borrowing.
 
SECTION 2.04  Reserved.
 
SECTION 2.05  Reserved.

 
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SECTION 2.06  Funding of Loan. Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by either (i) delivery and transfer of
the Exchanged Debt to the Company (as evidenced by either (A) delivery of
executed instructions to the Depository Trust & Clearing Corporation instructing
that beneficial ownership of the applicable portion of the Bonds be transferred
to the Company or (B) delivery of the 2009 Note and 2010 Note to the Company) in
accordance with the terms and conditions of the Securities Exchange Agreement
or (ii) wire transfer of immediately available funds by 12:00 noon, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders.  With respect to any Loans funded by wire
transfer of immediately available funds, the Administrative Agent will make such
Loans available to the Borrower by promptly crediting the amounts so received,
in like funds, to an account of the Borrower designated by the Borrower in the
applicable Borrowing Request.
 
SECTION 2.07  Reserved.
 
SECTION 2.08  Reserved.
 
SECTION 2.09  Repayment of Loans; Evidence of Debt.
 
(a)           The outstanding principal amount of the Loans and all other
Secured Obligations shall be repaid in full in cash on the Maturity Date.
 
(b)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from the Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
 
(c)           The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.
 
(d)           The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence, absent
manifest error, of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
 
(e)           Any Lender may request that Loans made by it be evidenced by a
promissory note.  In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent.  Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
 
 

 
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SECTION 2.10  Prepayment of Loans.
 
(a)           Optional Prepayments.  The Borrower shall have the right at any
time and from time to time to prepay the Loans, in whole or in part; provided
that the Borrower shall notify the Administrative Agent by telephone (confirmed
by facsimile or PDF) not later than 11:00 a.m. one Business Day prior to the
date of prepayment.  Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of the Loans or portion thereof to be
prepaid.  Promptly following receipt of any such prepayment notice relating to
the Loans, the Administrative Agent shall advise the applicable Lenders of the
contents thereof.  Each partial prepayment of the Loans shall be in a principal
amount of at least $500,000 and integral multiples of $500,000 in excess
thereof.  Each prepayment of the Loans pursuant to this Section 2.10(a) shall be
applied to the remaining outstanding principal balance of Loans and shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid
to the extent required by Section 2.12(d), and each such prepayment shall be
paid to the Lenders in accordance with their respective Pro Rata Shares of the
Loans at the time of prepayment.
 
(b)           Reserved.
 
(c)           Mandatory Prepayments of Excess Cash Flow.  Commencing with the
Fiscal Year ending December 31, 2011, the Borrower shall apply an amount equal
to the Excess Cash Flow Percentage of its Excess Cash Flow for such Fiscal Year
as a mandatory prepayment of the Loans within five Business Days after the
earlier of (i) the date on which financial statements in respect of such Fiscal
Year have been delivered pursuant to Section 5.01(a) and the related Compliance
Certificate has been delivered pursuant to Section 5.01(f) and (ii) the date by
which such financial statements and Compliance Certificate are required to be
delivered pursuant to Sections 5.01(a) and 5.01(f), respectively.
 
(d)           Mandatory Prepayments Upon Receipt of Proceeds from Asset
Dispositions.  If the Borrower or any of its Subsidiaries Disposes of any assets
(other than any Disposition of assets permitted by Section 6.05(a), (b), (c),
(d) or (e)) which results in the realization by such Person of Net Proceeds, the
Borrower shall apply an amount equal to 100% of such Net Proceeds as a mandatory
prepayment of the Loans within five Business Days after receipt thereof by such
Person; provided that, at the election of the Borrower (as notified by the
Borrower to the Administrative Agent on or prior to the date of such Disposition
or within three Business Days after Borrower experiences any casualty or
condemnation judgment pursuant to Section 6.05(f)), and so long as no Default
shall have occurred and be continuing, Borrower or such Subsidiary may apply
such Net Proceeds within 180 days after receipt of such Net Proceeds to acquire
(or replace or rebuild) real property, equipment or other tangible assets
(excluding inventory) that are useful in the business of the Borrower or such
Subsidiary (in which case no prepayment shall be required pursuant to this
paragraph); provided further that, to the extent any such Net Proceeds have not
been so applied by the end of such 180-day period, a prepayment of the Loans
shall be required at such time in an amount equal to the amount of such Net
Proceeds that have not been so applied.
 
(e)           Mandatory Prepayments Upon Receipt of Extraordinary Receipts.  If
any Extraordinary Receipts are received by or paid to or for the account of the
Borrower or any of its Subsidiaries (excluding, unless a Default or Event of
Default has occurred and is continuing,

 
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Extraordinary Receipts in an amount not in excess of $100,000 per Fiscal Year),
the Borrower shall apply an amount equal to 100% of such Extraordinary Receipts
as a mandatory prepayment of the Loans within five Business Days after receipt
thereof by the Borrower or such Subsidiary; provided that, with respect to any
proceeds of insurance, condemnation awards (or payments in lieu thereof) or
indemnity payments, at the election of the Borrower (as notified by the Borrower
to the Administrative Agent on or prior to the date of receipt of such insurance
proceeds, condemnation awards or indemnity payments), and so long as no Default
shall have occurred and be continuing, the Borrower or such Subsidiary may apply
the cash proceeds within 180 days after the receipt of such cash proceeds to
replace or repair the equipment, fixed assets or real property in respect of
which such cash proceeds were received (in which case no prepayment shall be
required pursuant to this paragraph); provided further that, to the extent any
such cash proceeds have not been so applied by the end of such 180-day period, a
prepayment of the Loans shall be required at such time in an amount equal to the
amount of such cash proceeds that have not been so applied.
 
(f)           Mandatory Prepayments Upon Incurrence of Additional Debt.  Within
three Business Days after the consummation by the Borrower or any of its
Subsidiaries of any incurrence or issuance of any Indebtedness (other than
Indebtedness expressly permitted to be incurred or issued pursuant to
Section 6.01 or pursuant to any waiver by Administrative Agent hereunder), the
Borrower shall apply an amount equal to 100% of the Net Proceeds received
therefrom as a mandatory prepayment of the Loans.
 
(g)           Mandatory Prepayments Upon Additional Equity Issuances.  Within
three Business Days after any capital contribution to, or the issuance of any
Capital Stock by, the Borrower or any of its Subsidiaries, the Borrower shall
apply an amount equal to 100% of the Net Proceeds received therefrom as a
mandatory prepayment of the Loans.
 
(h)           Notice to the Administrative Agent of Mandatory Prepayments.  The
Borrower shall notify the Administrative Agent in writing of any prepayment
required to be made pursuant to Section 2.10(d), (e), (f) or (g) at least one
Business Day prior to the date of such prepayment.  Each such notice shall
(i) refer to the Section of this Agreement pursuant to which such prepayment is
required to be made and (ii) specify the amount of such required prepayment.
 
(i)           Application of Mandatory Prepayments of Loans.  Each prepayment
under Section 2.10(d), (e), (f) or (g) shall be applied to the remaining
outstanding principal amount of the Loans plus accrued interest in a total
amount not to exceed the amount of the prepayment.
 
(j)           General Provisions Relating to Mandatory Prepayments.  Each
prepayment of the Loans under Section 2.10(b), (d), (e), (f) or (g) shall be
applied to the Loans of the Lenders in accordance with their respective Pro Rata
Shares of the Loans at the time of prepayment.
 
SECTION 2.11 Reserved.
 
SECTION 2.12  Interest.

 
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(a)           The Series A Term Loan shall, at the option of Borrower, either
(i) bear cash interest at 8.0% per annum or (ii) bear cash interest at 4.0% per
annum plus the Series A PIK Interest Rate, provided that the option in clause
(ii) shall only be available for the first 24 months following the Closing Date,
after which the Series A Term Loan will bear cash interest at 8.0% per annum
(collectively, the “Series A Interest Rate”).

(b)           The Series B Term Loan shall, at the option of Borrower, either
(i) bear cash interest at 10.0% per annum or (ii) bear cash interest at 4.0% per
annum plus the Series B PIK Interest Rate (collectively, the “Series B Interest
Rate” and collectively with the Series A Interest Rate, the “Interest Rate”).
 
(c)           While an Event of Default exists or after acceleration, the
Borrower shall pay interest with respect to all Loans at a rate equal to the
Interest Rate plus the Default Rate, and with respect to all other Obligations
hereunder (other than Loans), at a rate equal to the Default Rate.  All interest
accrued at the foregoing rate shall be payable on demand in cash.
 
(d)           Accrued interest on each Loan shall be payable in cash in arrears
on each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand and
(ii) the portion of the Interest Rate equal to the Series A PIK Interest Rate
and the Series B PIK Interest Rate shall instead be payable in kind and added to
the outstanding principal amount of the Series A Term Loan or the Series B Term
Loan, as the case may be, on each Interest Payment Date.
 
(e)           All interest hereunder shall be computed on the basis of a year of
360 days.
 
(f)           Notwithstanding anything to the contrary provided herein, to the
extent that pursuant to Section 10 of the Subordination and Intercreditor
Agreement the Administrative Agent cannot receive cash payments of interest from
the Borrower, all payments of cash interest on the Series A Term Loan and the
Series B Term Loan shall instead be payable in kind and added to the outstanding
principal amount of the Series A Term Loan or the Series B Term Loan, as the
case may be, on each Interest Payment Date.
 
SECTION 2.13  AHYDO Payments.  Notwithstanding any other provision of this
Agreement, if on any Interest Payment Date occurring after the fifth anniversary
of the Closing Date, the aggregate amount of interest which would be included in
gross income with respect to any Loan for periods ending on or before such
interest payment date (within the meaning of Section 163(i) of the Code) exceeds
an amount equal to the sum of (i) the aggregate amount of interest to be paid
(within the meaning of Section 163(i) of the Code) with respect to such Loan
before such Interest Payment Date (determined without regard to this provision)
and (ii) the product of (A) the issue price (as defined in Sections 1273(b) and
1274(a) of the Code) of such Loan and (B) the yield to maturity (interpreted in
accordance with Section 163(i) of the Code) of such Loan (such sum shall be
referred to as the “Maximum Amount”), the Borrower shall pay an amount in cash
equal to the excess of the amount which would be includible in gross income with
respect to such Loan for periods ending on or before such Interest Payment Date
over the Maximum Amount.  The intent of this Section 2.13 is that the Borrower
shall be obligated to make payments under such Loan such that no payment shall
be deferred beyond a date that

 
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would result in such Loan being treated as an “applicable high yield debt
obligation” under Sections 163(e)(5) and 163(i) of the Code and shall be
interpreted consistently with such intent.
 
SECTION 2.14  Reserved.
 
SECTION 2.15  Reserved.
 
SECTION 2.16  Taxes.
 
(a)           Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes other than to the extent any then applicable
law requires any withholding or other payment of Taxes with respect to or based
upon income of the Lenders; provided that if the Borrower shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), each Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
 
(b)           In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
 
(c)           The Borrower shall indemnify the Administrative Agent and each
Lender within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent and such
Lender, as the case may be, on or with respect to any payment by or on account
of any of the Obligations (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
 
(d)           As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
 
(e)           Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.

 
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(f)           If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.16, unless an
Event of Default has occurred and is continuing, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.16 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority.  This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.
 
SECTION 2.17  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
 
(a)           The Borrower shall make each payment required to be made by the
Borrower hereunder (whether of principal, interest or fees, or of amounts
payable under Section 2.16, or otherwise) prior to 12:00 noon, on the date when
due, in immediately available funds, without set-off or counterclaim.  Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such payments
shall be made to the Administrative Agent at its office in Miami, Florida, into
such account as directed by the Administrative Agent; provided that payments
pursuant to Sections 2.16 and 9.03 shall be made directly to the Persons
entitled thereto.  The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All
payments hereunder shall be made in Dollars.
 
(b)           If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
 
(c)           If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be

 
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shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans; provided that
(i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply).  The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
 
(d)           Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of any or all of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the applicable Lenders, as the case
may be, the amount due.  In such event, if the Borrower has not in fact made
such payment, then each of the applicable Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.
 
(e)           If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.17(d) or 9.03(c), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.
 
SECTION 2.18  Mitigation Obligations .  If the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.16, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.16 in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
 
SECTION 2.19  Reliance on Notices.  Administrative Agent shall be entitled to
rely upon, and shall be fully protected in relying upon, any Borrowing Request
believed by

 
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Administrative Agent to be genuine.  Administrative Agent may assume that each
Person executing and delivering any such request in accordance herewith was duly
authorized, unless the Administrative Agent has actual notice to the contrary.
 
ARTICLE III
 
CONDITIONS PRECEDENT
 
SECTION 3.01  Closing Date.  This Agreement shall not become effective and the
Lenders shall have no obligation to make Loans until the date on which each of
the following conditions is satisfied (or waived in accordance with
Section 9.02):
 
(a)           The Lenders shall have received executed counterparts of (i) the
Credit Documents and (ii) the Subordination and Intercreditor Agreement.
 
(b)           The Lenders shall have received for each of the Credit Parties:
 
(i)           a copy of such Credit Party’s Organization Documents, as amended
up to and including the Closing Date, (A) certified (to the extent such
certification can be obtained) as of a recent date by the applicable
Governmental Authority of such Credit Party’s jurisdiction of incorporation,
organization or formation, and (B) certified as of the date hereof by the
secretary or assistant secretary of such Credit Party or a Responsible Officer
of such Credit Party as being in full force and effect without further
modification or amendment;
 
(ii)           a good standing certificate or certificate of status from the
applicable Governmental Authority of such Credit Party’s (A) jurisdiction of
incorporation, organization or formation and (B) in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires it to be qualified as a foreign corporation or other entity to do
business except in the case of this clause (B) those jurisdictions where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect, each dated a recent date prior to the Closing Date;
 
(iii)           signature and incumbency certificates of the officers of such
Credit Party executing the Credit Documents to which it is a party, dated as of
the date hereof; and
 
(iv)           duly adopted resolutions of the board of directors or similar
governing body of such Credit Party approving and authorizing the execution,
delivery and performance of this Agreement and the other Credit Documents to
which it is a party or by which it or its assets may be bound as of the Closing
Date, certified as of the date hereof by the secretary or assistant secretary of
such Credit Party or a Responsible Officer of such Credit Party, as being in
full force and effect without modification or amendment.
 
(c)           The Lenders shall have received favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Closing
Date) of counsel for the Credit Parties, in form and substance reasonably
satisfactory to the Lenders, covering such matters

 
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relating to the Credit Parties or this Agreement as the Lenders shall reasonably
request.  The Borrower hereby requests such counsel deliver such opinion.
 
(d)           The Lenders shall have received:
 
(i)           the results of recent lien searches where the Credit Parties are
located (within the meaning of the UCC) and each other jurisdiction that the
Lenders may reasonably request, and each such search shall reveal no Liens on
any assets of the Credit Parties, except for Liens permitted by Section 6.02 or
which are discharged on or prior to the Closing Date pursuant to documentation
reasonably satisfactory to the Lenders;
 
(ii)           any instruments evidencing any Indebtedness owed to any Credit
Party pledged pursuant to any Collateral Document, indorsed in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof; and
 
(iii)           proper Uniform Commercial Code financing statements either filed
in, or in form appropriate for filing in, all jurisdictions that the Lenders may
deem necessary or advisable in order to perfect the Liens created under the
Collateral Documents.
 
(e)           The Lenders shall have received certified (by a Responsible
Officer of Borrower) copies of all consents, approvals, authorizations,
registrations and filings and orders required or advisable to be made or
obtained under any Requirement of Law, or by any contractual obligation of each
Credit Party, in connection with the execution, delivery, performance, validity
and enforceability of the Credit Documents or any of the transactions
contemplated thereby, and such consents, approvals, authorizations,
registrations, filings and orders shall be in full force and effect and all
applicable waiting periods shall have expired, and no investigation or inquiry
by any governmental authority regarding the Commitment, the Loans  or any
transaction being financed with the proceeds of the Commitments and Loans shall
be ongoing.
 
(f)           The Administrative Agent shall have received a true and complete
copy of all lease agreements with respect to real property of the Borrower.
 
(g)           The Lenders shall have received a certificate, dated the Closing
Date and signed by a Responsible Officer of the Borrower, certifying that (the
truth and accuracy of which shall be a condition to the Closing Date hereunder):
 
(i)           the representations and warranties of the Credit Parties set forth
in the Credit Documents are true and correct on and as of the Closing Date;
 
(ii)           at the time of and immediately after giving effect to the Loans
to be made on the Closing Date, no Default or Event of Default has occurred and
is continuing and no default or event of default under any other agreement,
instrument or document relating to any other Indebtedness or under any material
contract or agreement, in each case, of the Credit Parties has occurred and is
continuing; and

 
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(iii)           (1) there has occurred no material adverse change in the
business, operations, properties or assets of the Borrowers and its
Subsidiaries, taken as a whole, from that reflected on the combined financial
statements of the Borrower and its Subsidiaries as of December 31, 2009, and
(2) there shall be no material pending or threatened (in writing) litigation,
proceeding, bankruptcy or insolvency, injunction, order or claims with respect
to the Borrower and its Subsidiaries.

(h)           The Lenders shall have received a certificate from a Responsible
Officer of each Credit Party, in form and substance satisfactory to the Lenders,
attesting that after giving effect to the Closing Date Transactions, each Credit
Party is Solvent.
 
(i)           Reserved.
 
(j)           The Administrative Agent and the Lenders shall have received all
fees required to be paid to the Administrative Agent and the Lenders on or prior
to the Closing Date pursuant to this Agreement and all other amounts due and
payable on or prior to the Closing Date, including reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder or under any other Credit Document.
 
(k)           The Lenders shall have received on or prior to the Closing Date,
to the extent requested, all documentation and other information with respect to
the Borrower and its Subsidiaries required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including the USA Patriot Act.
 
(m)           The Lenders shall have received evidence that the Liberty Bank
Loan has been amended on terms and conditions satisfactory to the Administrative
Agent in its sole discretion.
 
SECTION 3.02  Post-Closing.  Within sixty (60) days after the Closing Date (or
such later date as the Administrative Agent may agree in its sole discretion)
each of the following conditions must be satisfied (or waived in accordance with
Section 9.02):
 
(a)           The Lenders shall have received Mortgages covering the fee
properties listed on Schedule 4.06 (but not the leasehold properties), duly
executed and delivered by the appropriate Credit Party, together with:
 
(i)           evidence that counterparts of such Mortgages are in form suitable
for filing or recording in all filing or recording offices that the Lenders may
deem necessary or desirable in order to create a valid first and subsisting Lien
on the property described therein in favor of the Administrative Agent for the
benefit of the Secured Parties and that all filing, documentary, stamp,
intangible and recording taxes and fees have been paid or escrowed with the
title company issuing the Mortgage Policies;
 
(ii)           (A) with respect to each of the fee properties subject to a
Mortgage, fully paid American Land Title Association Lender’s Extended Coverage
title insurance policies (the “Mortgage Policies”), or commitments to issue the
same, in form and substance, with endorsements (as applicable) and in amounts
acceptable to the Lenders, issued by title insurers acceptable to the Lenders,
insuring the Mortgages to be

 
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valid first and subsisting Liens on applicable Credit Party’s interest in the
property described therein, free and clear of all encumbrances (including, but
not limited to, mechanics’ and materialmen’s Liens), excepting only Liens
permitted by Section 6.02, and providing for zoning and other endorsements
requested by Lenders;
 
(iii)           a current survey of each of the fee owned properties subject to
a Mortgage, prepared by a land surveyor duly registered and licensed in the
state in which such property is located and in form and substance acceptable to
the Lenders; and
 
(iv)           evidence regarding flood status, in form and substance sufficient
to satisfy all FIRREA requirements of any financial institution.
 
(b)           The Lenders shall have received Collateral Access Agreements duly
executed by the applicable Credit Parties and all landlords, mortgagees and
bailees of the Credit Parties.
 
(c)           The Lenders shall have received evidence that all insurance
required to be maintained pursuant to the Credit Documents has been obtained and
is in effect, with certificates of insurance and endorsements (in form and
substance satisfactory to the Lenders), naming the Administrative Agent, on
behalf of the Secured Parties, as an additional insured or loss payee, as the
case may be, under (i) all insurance policies maintained with respect to the
assets and properties of the Credit Parties that constitute Collateral, and such
lender loss payee endorsements as the Lenders shall request and (ii) all general
liability insurance policies of the Credit Parties.
 
ARTICLE IV

 
REPRESENTATIONS AND WARRANTIES
 
Each of the Borrower and each other Credit Party represents and warrants to the
Administrative Agent and each Lender as follows (which representations and
warranties made on the date hereof  are given as if the Closing Date
Transactions have been consummated):
 
SECTION 4.01  Organization; Powers.  Each Credit Party and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to carry on its business as now conducted and (c) is duly
qualified to do business in, and is in good standing in, every jurisdiction
where its ownership, lease or operation of properties or the conduct of its
business requires such qualification, except, in the case of this clause (c), to
the extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
 
SECTION 4.02  Authorization; Enforceability.  The execution, delivery and
performance of the Credit Documents are within each Credit Party’s corporate,
partnership, limited liability or other powers and have been duly authorized by
all necessary corporate, partnership, limited liability or other action and, if
required, all necessary action by its equity holders.  Each Credit Document to
which each Credit Party is a party has been duly executed and delivered by such
Credit Party and constitutes a legal, valid and binding obligation of such
Credit Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency,

 
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reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
 
SECTION 4.03  Approvals; No Conflicts.  The execution, delivery and performance
of the Credit Documents (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority
or any other third Person (including members, partners, shareholders or any
class of directors, whether interested or disinterested, of the Borrower or any
other Person), except such as have been obtained or made and are in full force
and effect and except for filings necessary to perfect the Liens created
pursuant to the Credit Documents, (b) will not contravene the terms of the
Organization Documents of the Borrower or any of its Subsidiaries, (c) will not
violate any Requirement of Law applicable to the Borrower or any of its
Subsidiaries (including, without limitation, section 5 of the Securities Act or
Regulation T, U or X of the Board), (d) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any of its Subsidiaries, and
(e) will not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries (other than the Liens created by the
Credit Documents).
 
SECTION 4.04  Offering of Loans/Notes.  Neither the Borrower nor any agent
acting on its behalf has, directly or indirectly, offered the Commitments, Loans
or any similar notes or Indebtedness of any Credit Party for sale to, or
solicited any offers to buy the Commitments, Loans or any similar notes or
Indebtedness of any Credit Party, or otherwise approached or negotiated with
respect thereto with, any Person other than the Lenders on the Closing Date and
not more than 35 other Institutional Investors, and neither the Borrower nor any
agent acting on its behalf has taken or will take any action which would subject
the issuance or sale of the Commitments or Loans to the provisions of section 5
of the Securities Act, the Trust Indenture Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
 
SECTION 4.05  Financial Statements; No Material Adverse Effect.
 
(a)           The Borrower has heretofore furnished to the Lenders (i) the
audited balance sheet and income statements of Borrower and its Subsidiaries as
of December 31, 2009 for the fiscal year then ended and (ii) an unaudited
balance sheet and unaudited income statements of the Borrower and its
Subsidiaries as of December 31, 2010, an unaudited balance sheet of the Borrower
and its Subsidiaries as of January 31, 2011 and unaudited income statements as
of February 28, 2011, each certified by its chief financial officer.  Such
financial statements present fairly, in all material respects, the financial
position and results of operations of the Borrower and its Subsidiaries as of
such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements
referred to in clause (ii) above.
 
(b)           Reserved.
 
(c)           The most recent financial statements furnished pursuant to
Section 5.01(a) fairly present in all material respects (i) the financial
position of the Borrower and its Subsidiaries as of the date thereof and
(ii) the results of operations and cash flows of the Borrower and its
Subsidiaries for the period covered thereby, all in accordance with GAAP.
 
 
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(d)           The most recent financial statements furnished pursuant to
Section 5.01(b) fairly present in all material respects (i) the financial
position of the Borrower and its Subsidiaries as of the date thereof and
(ii) the results of operations and cash flows of the Borrower and its
Subsidiaries for the period covered thereby, all in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes.
 
SECTION 4.06  Properties.
 
(a)           Each of the Borrower and its Subsidiaries has good and
indefeasible title to, or valid leasehold interests in, all its real and
personal property, including all such properties reflected in the most recent
audited consolidated balance sheet of the Borrower referred to in Section 4.05
or purported to have been acquired by the Borrower or any Subsidiary after said
date (except as sold or otherwise disposed of in the ordinary course of
business), free and clear of all Liens other than those permitted by
Section 6.02.  As of the Closing Date, Schedule 4.06 identifies each parcel of
real property that is owned or leased by each Credit Party.  Each of such leases
and subleases, if any, is valid and enforceable in accordance with its terms and
is in full force and effect, and no default by any party to any such lease or
sublease exists.
 
(b)           No Mortgage encumbers improved real property that is located in an
area that has been identified by the Secretary of Housing and Urban Development
as an area having special flood hazards within the meaning of the National Flood
Insurance Act of 1968 unless flood insurance available under such Act has been
obtained.
 
(c)           Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, trade names, service marks, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person.
 
SECTION 4.07  Litigation and Environmental Matters.
 
(a)           Except as set forth on Schedule 4.07, there are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (i) as to which, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve any Credit Document.
 
(b)           The Borrower has delivered to the Administrative Agent and Lenders
any Environmental Site Assessments delivered to or prepared by the Borrower with
respect to the Borrower’s and each of its Subsidiary’s properties within the
five years preceding the Closing Date.
 
(c)           Except with respect to any matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has received notice
of any claim with respect to any Environmental Liability that remains
outstanding or unresolved or knows of any basis for any Environmental Liability,
(ii) has failed to comply with any Environmental Law or to obtain, maintain or
comply
 

 
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with any permit, license or other approval required under any Environmental Law
or (iii) has become subject to any Environmental Liability.
 
SECTION 4.08  Compliance with Laws; Governmental Authorizations; No Default.
 
(a)           Each of the Borrower and its Subsidiaries is in compliance in all
material respects with all laws, regulations and orders of any Governmental
Authority applicable to it or its property, including without limitation the
Securities Act and all securities laws and regulations applicable to the
transactions contemplated hereby.
 
(b)           Neither any Credit Party nor any of its Subsidiaries is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any judgment, decree, indenture, agreement,
contract or Organization Documents to which it is a party that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
(c)           Each of the Borrower and its Subsidiaries possesses all licenses,
permits, franchises, exemptions, approvals and other governmental authorizations
necessary for the ownership of its property and the conduct of its business,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
 
(d)           No Default under this Credit Agreement has occurred and is
continuing.
 
SECTION 4.09  Margin Regulations; Investment Company Status.
 
(a)           Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any “margin stock” as defined
in Regulation U of the Board.  No part of the proceeds of the Loans made to the
Borrower has been or will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation T, U or X of the Board.
 
(b)           Neither the Borrower nor any of its Subsidiaries is (A) an
“investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (B) otherwise subject to any other regulatory
scheme limiting its ability to incur debt or requiring any approval or consent
from or registration or filing with, any Governmental Authority in connection
therewith.
 
SECTION 4.10  Taxes.  Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
(subject to any available extensions) and has paid or caused to be paid all
Taxes required to have been paid by it, except Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP.  There is no proposed tax assessment against the Borrower
or any of its Subsidiaries that would, if made, have a Material Adverse Effect.
 
 
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SECTION 4.11  ERISA.
 
(a)           Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state laws.  Each
Plan that is intended to qualify under Section 401(a) of the Code has either
received a favorable determination letter from the Internal Revenue Service or
is operating by adoption of a prototype or similar plan which has received a
favorable opinion letter from the Internal Revenue Service and, to the best
knowledge of the Borrower, nothing has occurred which could prevent, or cause
the loss of, such qualification.  The Borrower, each Subsidiary and each ERISA
Affiliate have made all required contributions to each Plan subject to Section
412 of the Code or Section 302 of ERISA, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
or Sections 302, 303 or 304 of ERISA has been made with respect to any Plan.
 
(b)           There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect.  There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
 
(c)           No ERISA Event has occurred or is reasonably expected to occur.
 
(d)           The present value of all accumulated benefit obligations under
each Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No.  87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of
the assets of such Plan.
 
(e)           No liability to the PBGC has been or is expected by the Borrower
or any ERISA Affiliate to be incurred with respect to any Plan by the Borrower,
any Subsidiary or any ERISA Affiliate which is or would be materially adverse to
the business, condition (financial or otherwise) or operations of the Borrower
or the Subsidiaries taken as a whole.  None of the Borrower, any Subsidiary nor
any ERISA Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the business, condition (financial or
otherwise) or operations of the Borrower or the Subsidiaries taken as a
whole.  The execution, delivery and performance of the Credit Documents will be
exempt from, or will not involve any transaction which is subject to, the
prohibitions of Section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under Section 502(i) of ERISA
or a tax could be imposed pursuant to Section 4975 of the Code.
 
SECTION 4.12  Disclosure.  The Borrower understands and confirms that the
Lenders will rely on the foregoing representations in effecting transactions in
securities of the Borrower.  All disclosure provided to the Lenders regarding
the Borrower and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Credit Agreement, furnished
by or on behalf of the Borrower or any of its Subsidiaries is true and correct.
Neither this Credit Agreement, any Schedule or Exhibit to this Agreement nor any
other statements, documents or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make
 
 
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the statements made therein, in the light of the circumstances under which they
were made, not misleading, except that the financial projections that have been
provided to the Lenders were prepared by the Borrower in good faith and on the
basis of assumptions the Borrower believes reasonable and such projections
reflect such assumptions and are the best currently available estimates by the
Borrower.
 
SECTION 4.13  Material Agreements.  After giving effect to the Closing Date
Transactions, neither any Credit Party nor any of their respective Subsidiaries
is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any Material Contract to
which it is a party or (ii) any agreement or instrument evidencing or governing
Material Indebtedness.  As of the Closing Date, Borrower has delivered to the
Administrative Agent complete and correct copies of each Material Contract, and
all employment agreements, consulting agreements and leases of real property to
which any Credit Party is a party.  As of the Closing Date, no Credit Party has
received notification that any Material Supplier will stop or materially
decrease the rate of, or seek a material reduction in supplying materials,
products or services to the Credit Parties.
 
SECTION 4.14  Solvency.  After giving effect to the Closing Date Transactions,
Borrower and its Subsidiaries are Solvent.
 
SECTION 4.15  Insurance.  The properties of the Borrower and its Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.
 
SECTION 4.16  Capitalization and Subsidiaries.  The Equity Interests in the
Borrower and its Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable.  As of the Closing Date, Schedule 4.16 sets
forth a correct and complete list of the name and relationship to the Borrower
of each and all of the Borrower’s Subsidiaries.
 
SECTION 4.17  Collateral.  The provisions of the Collateral Documents are
effective to create in favor of the Administrative Agent for the benefit of the
Secured Parties a legal, valid and enforceable first priority Lien (subject to
Liens permitted by Section 6.02) on all right, title and interest of the
respective Borrower and its Subsidiaries in the Collateral described therein,
and upon filing of UCC financing statements, as necessary, the taking of actions
or making of filings with respect to Intellectual Property registrations or
applications issued or pending, and, in the case of real property, filing of the
Mortgages as necessary, such Liens constitute perfected and continuing Liens on
such Collateral, securing the Secured Obligations, enforceable against the
applicable Credit Party and all third parties, and having priority over all
other Liens on such Collateral except Liens permitted under Section 6.02.  As of
the Closing Date, the jurisdictions in which the filing of UCC financing
statements are necessary are listed on Schedule 4.17 and the jurisdictions in
which the filing of the Mortgages are necessary are listed on Schedule 4.17.
 
SECTION 4.18  Labor Matters.  Except as described on Schedule 4.18, there are no
collective bargaining agreements or Multiemployer Plans covering the employees
of the Borrower or any of the Subsidiaries as of the Closing Date.  There are no
strikes, lockouts or

 
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other material labor disputes or grievances against the Borrower or any of the
Subsidiaries, or, to the Borrower’s knowledge, threatened against or affecting
the Borrower or any of the Subsidiaries.  No significant unfair labor practice,
charges or grievances are pending against the Borrower or any of the
Subsidiaries, or to the Borrower’s knowledge, threatened against any of them
before any Governmental Authority, nor have there been any in the last five
years.  All payments due from the Borrower or any of the Subsidiaries pursuant
to the provisions of any collective bargaining agreement have been paid or
accrued as a liability on the books of the Borrower or any such Subsidiary,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
 
SECTION 4.19  Reserved.
 
SECTION 4.20  Foreign Assets Control Regulations, Etc.
 
(a)           Neither the making of the Loans to the Borrower hereunder nor the
use of the proceeds thereof has violated or will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
 
(b)           Neither the Borrower nor any of its Subsidiaries (a) is a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (b) engages in any dealings or transactions with any
such Person.  Each of the Borrower and its Subsidiaries are in compliance, in
all material respects, with the USA Patriot Act.
 
(c)           No part of the proceeds from the Loans has been or will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Borrower or any of its Subsidiaries.
 
SECTION 4.21  Common Enterprise.  The successful operation and condition of the
Borrower and each of the Subsidiaries is dependent on the continued successful
performance of the functions of the group of such Credit Parties as a whole and
the successful operation of each of such Credit Parties is dependent on the
successful performance and operation of each other such Credit Party.  Each
Credit Party expects to derive benefit (and its board of directors or other
governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from (i) successful operations of each of the
other Credit Parties and (ii) the credit extended by the Lenders to the Borrower
hereunder, both in its separate capacity and as a member of the group of
companies.  Each Credit Party has determined that execution, delivery, and
performance of this Agreement and any other Credit Documents to be executed by
such Credit Party is within its purpose, will be of direct and indirect benefit
to such Credit Party, and is in its best interest.
 
 
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SECTION 4.22   Securities Exchange Agreement.  All of the representations and
warranties made by the Company in Section 3 of the Securities Exchange Agreement
are true and correct.
 
ARTICLE V
 
AFFIRMATIVE COVENANTS
 
Until the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, each of the Borrower and each other Credit Party
covenants and agrees with the Lenders that:
 
SECTION 5.01  Financial Statements and Other Information.  Each of the Borrower
and each other Credit Party will furnish to the Administrative Agent, which will
furnish to each Lender:
 
(a)           within 90 days after the end of each Fiscal Year, the audited
consolidated balance sheet of the Borrower and its Subsidiaries and the related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all reported on by Hogan Taylor LLP or
other independent public accountants of recognized national standing reasonably
acceptable to the Administrative Agent (other than for the Fiscal Year ended
December 31, 2010, without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
 
(b)           (i) within 45 days after the end of each Fiscal Quarter the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such Fiscal Quarter and the then elapsed portion of the then
current Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by a Financial
Officer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries, as applicable, on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
 
(c)           within 30 days after the end of each month, consolidated balance
sheets of the Borrower and its Subsidiaries and the related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
Fiscal Month and the then elapsed portion of the then current Fiscal Year,
setting forth in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
Fiscal Year, all certified by a Financial Officer of the Borrower as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated
 
 
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Subsidiaries, on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
 
(d)           concurrently with any delivery of financial statements under
clause (a) or (b) above, a Compliance Certificate signed by a Financial Officer
of the Borrower, (i) certifying as to whether a Default or Event of Default has
occurred and, if a Default or Event of Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.10 and 6.11, (iii) stating whether any change in GAAP
or in the application thereof has occurred since the date of the audited
financial statements initially delivered pursuant to clause (a) above and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate, and (iv) if delivered with
the financial statements referred to in Section 5.01(a), accompanied by a
detailed calculation of Consolidated Excess Cash Flow;
 
(e)           concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default or Event of
Default (which certificate may be limited to the extent required by accounting
rules or guidelines);
 
(f)           concurrently with the delivery of the financial statements under
clause (b) above, a detailed report of all Capital Expenditures, including an
itemized list of all such expenditures by date made during the period commencing
with the beginning of the Fiscal Year for which such statements are being
delivered and the Fiscal Quarter most recently ended and a description of the
source of funds for each such expenditure; and
 
(g)           as soon as available, but in any event within 30 days after the
first day of each Fiscal Year, a copy of the forecast (including a projected
consolidated balance sheet, income statement and cash flow statement) of the
Borrower and its Subsidiaries for the upcoming Fiscal Year, in a form
satisfactory to the Administrative Agent;
 
(h)           promptly, but in any event within 3 Business Days after any
request by the Administrative Agent or any Lender, copies of any detailed audit
reports, management letters or recommendations submitted to the stockholders (or
to the board of directors or to the audit committee of the board of directors)
of the Borrower by independent accountants in connection with the accounts or
books of the Borrower or any of its Subsidiaries, or any audit of any of them;
 
(i)           promptly after the furnishing thereof, copies of any material
statement or report furnished to any holder of debt securities of Borrower and
its Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lenders
pursuant to any other clause of this Section 5.01;
 
(j)           as soon as available, but in any event within 30 days after the
end of each Fiscal Year, a report summarizing the insurance coverage (specifying
type, amount and carrier)
 

 
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in effect for the Borrower and its Subsidiaries and containing such additional
information as the Administrative Agent, or any Lender through the
Administrative Agent, may request;
 
(k)           promptly after the filing or receiving thereof, copies of all
reports and notices which the Borrower or any Subsidiary files under ERISA with
the Internal Revenue Service or the PBGC or the U.S.  Department of Labor or
which the Borrower or any Subsidiary receives from such corporation;
 
(l)           promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Govern­mental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders or members generally, as the case may be;
 
(m)         promptly following any request therefor, such financial and other
information as any Lender may determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the Securities
Act in connection with the assignment or participation of Commitments or Loans
hereunder, except at such times as the applicable Credit Party is subject to the
reporting requirements of section 13 or 15(d) of the Exchange Act, all to be
provided to such Lender and any qualified institutional buyer (as defined in
Rule 144A under the Securities Act) designated by such Lender; and
 
(n)          promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any of its Subsidiaries, or compliance with the terms of this
Agreement or the other Credit Documents, as the Administrative Agent or any
Lender may reasonably request.
 
SECTION 5.02  Notices of Material Events.  Borrower will furnish to the
Administrative Agent and each Lender prompt (and in any event, within 3 Business
Days) written notice of the following:
 
(a)           the occurrence of any Default or Event of Default;
 
(b)          the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Subsidiary of any of them that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
 
(c)           the occurrence of any event or any other development by which the
Borrower or any of its Subsidiaries (i) fails to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) becomes subject to any Environmental
Liability, (iii) receives notice of any claim with respect to any Environmental
Liability, or (iv) becomes aware of any basis for any Environmental Liability
and in each of the preceding clauses, which individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;
 
 
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(d)          the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$100,000; and
 
(e)           any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect. Each notice delivered under
this Section shall be accompanied by a statement of a Financial Officer or other
executive officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
 
In addition to the foregoing, in the event that the Borrower or any ERISA
Affiliates have participated, now participates or will participate in any Plan
or Multiemployer Plan, the Borrower will, or will cause any such ERISA Affiliate
to, deliver to the Administrative Agent and each Lender:  (i) promptly and in
any event within 10 days after it knows or has reason to know of the occurrence
of a “reportable event, as defined in Section 4043 of ERISA or the regulations
issued thereunder, with respect to a Plan, a copy of any materials required to
be filed with the PBGC with respect to such reportable event, together with a
statement of the chief financial officer of the Borrower setting forth details
as to such reportable event and the action which the Borrower and the ERISA
Affiliate propose to take with respect thereto; (ii) at least 10 days prior to
the filing by any plan administrator of a Plan of a notice of intent to
terminate such Plan, a copy of such notice; (iii) promptly upon the request of
any Lender, and in no event more than 10 days after such request, copies of each
annual report on Form 5500 that is filed with the Internal Revenue Service,
together with certified financial statements for the Plan (if any) as of the end
of such year and actuarial statements on Schedule B to such Form 5500;
(iv) promptly and in any event within 10 days after it knows or has reason to
know of any event or condition which might constitute grounds under section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, a statement of the chief financial officer of the Borrower describing
such event or condition; (v) promptly and in no event more than 10 days after
its or any ERISA Affiliate’s receipt thereof, the notice concerning the
imposition of any withdrawal liability under section 4202 of ERISA; and
(vi) promptly after receipt thereof, a copy of any notice the Borrower or any
ERISA Affiliate may receive from the PBGC or the Internal Revenue Service with
respect to any Plan or Multiemployer Plan; provided, however, that this final
paragraph of Section 5.02 shall not apply to notices of general application
promulgated by the PBGC or the Internal Revenue Service.
 
SECTION 5.03  Preservation of Existence.  The Borrower will, and will cause each
of its Subsidiaries to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
qualifications, licenses, permits, privileges, franchises, governmental
authorizations and intellectual property rights material to the conduct of its
business, and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted, provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.
 
 
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SECTION 5.04  Payment of Obligations.  The Borrower will, and will cause each of
its Subsidiaries to, pay and discharge as the same shall become due and payable,
all its obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (ii) the applicable Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (iii) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect; (b) all
lawful claims which, if unpaid, would by law become a Lien upon its property not
permitted under the terms of this Agreement; and (c) all Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness.
 
SECTION 5.05  Maintenance of Properties.  The Borrower will, and will cause each
of its Subsidiaries to, (a) keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and (b) make all necessary repairs thereto and renewals and
replacements thereof, in each case, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
 
SECTION 5.06  Books and Records; Inspection Rights.  The Borrower will, and will
cause each of its Subsidiaries to, (a) keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities and (b) permit any
representatives designated by the Administrative Agent or any Lender (including
employees of the Administrative Agent or any Lender or any consultants,
accountants, lawyers and appraisers retained by the Administrative Agent), upon
prior notice and at the expense of the Borrower, to visit and inspect its
properties, to examine and make extracts from its books and records, including
environmental assessment reports and Phase I or Phase II studies, and to discuss
its affairs, finances and condition with its officers and independent
accountants, all at such times and as often as requested.
 
SECTION 5.07  Compliance with Laws.
 
(a)           The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
 
(b)           For each existing, or hereafter adopted, Plan, Borrower will, and
will cause each Domestic Subsidiary to, in a timely fashion comply with and
perform in all material respects all of its obligations under and in respect of
such Plan, including under any funding agreements and all applicable laws.  All
employer or employee payments, contributions or premiums required to be
remitted, paid to or in respect of each Plan by such a Credit Party shall be
paid or remitted by such Credit Party and each Domestic Subsidiary of Borrower
in a timely fashion in accordance with the terms thereof, any funding agreements
and all applicable laws.  The Borrower shall deliver to each Lender (i) if
requested by such Lender, copies of each annual and other return, report or
valuation with respect to each Plan as filed with any applicable Governmental
Authority; (ii) promptly after receipt thereof, a copy of any material
direction, order, notice, ruling or opinion that Borrower or any Domestic
Subsidiary may receive from any
 
 
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applicable Governmental Authority with respect to any Plan; (iii) notification
within 30 days of any increases having a cost to one or more of the Credit
Parties and their Domestic Subsidiaries in excess of $100,000 per annum in the
aggregate, in the benefits of any existing Plan, or the establishment of any new
Plan, or the commencement of contributions to any such plan to which any such
Credit Party was not previously contributing; and (iv) notification within 30
days of any voluntary or involuntary termination of, or participation in, a
Plan.
 
(c)           The  Borrower will, and will cause each of its Subsidiaries to,
(a) comply, and use commercially reasonable efforts to cause all lessees and
other Persons operating or occupying its properties to comply, in all material
respects, with all applicable Environmental Laws and Environmental Permits,
(b) obtain and renew all Environmental Permits necessary for its operations and
properties and (c) conduct any investigation, study, sampling and testing
required by Environmental Laws, and undertake any cleanup, removal, remedial or
other action required by Environmental Laws to remove and clean up all Hazardous
Materials from any of its properties, in accordance with the requirements of all
Environmental Laws.  If the Required Lenders have a reasonable basis to believe
that Hazardous Materials have been released, spilled or disposed on the
Borrower’s or any of its Subsidiaries’ property in violation of Environmental
Laws after the Closing Date or that the Borrower or its Subsidiaries is in
material violation of Environmental Laws, at the request of the Required Lenders
from time to time, each of the Borrower will, and will cause each of its
Subsidiaries to, provide to the Lenders within 60 days after such request, at
the expense of the Borrower, an environmental site assessment report for any of
its properties described in such request, prepared by an environmental
consulting firm acceptable to the Administrative Agent, indicating the presence
or absence of Hazardous Materials and the estimated cost of any compliance,
removal or remedial action in connection with any releases of Hazardous
Materials on such properties or any such material violation of Environmental
Laws.
 
SECTION 5.08  Use of Proceeds.  The proceeds of the Loans will be used to
refinance existing Indebtedness of the Borrower and its Subsidiaries,
repurchasing Equity Interests of the Borrower to the extent permitted hereunder,
to pay transaction fees and expenses related to the Closing Date Transactions
and for general corporate purposes.  No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations T, U and X.
 
SECTION 5.09  Insurance.  The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurance
companies having a financial strength rating of at least A by A.M.  Best Company
(or the equivalent of such rating from a comparable foreign equivalent company)
that are not Affiliates of the Borrower, (a) insurance in such amounts, with
such deductibles and covering such risks as is customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations and (b) all insurance required
pursuant to the Collateral Documents.  The Borrower will furnish to the Lenders,
upon request of the Administrative Agent, information in reasonable detail as to
the insurance so maintained.  The Borrower shall insure that the Administrative
Agent, on behalf of the Secured Parties, is named as additional insured on all
liability policies and as lender loss payee (pursuant to an endorsement
satisfactory to the Administrative Agent) on all property and casualty policies
of the Borrower, including all business interruption policies.
 
 
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SECTION 5.10  Casualty and Condemnation.  The Borrower (a) will furnish to the
Administrative Agent (for delivery to the Lenders) prompt written notice of any
casualty or other insured damage to any portion of the Collateral in excess of,
individually or in the aggregate, $50,000 during any Fiscal Year or the
commencement of any action or proceeding for the taking of any material portion
of the Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds, condemnation awards
or otherwise) are collected and applied in accordance with the applicable
provisions of this Agreement.
 
SECTION 5.11  Field Examinations.  At any time that any Lender requests, the
Borrower will provide such Lender (and any third party retained by it), at the
expense of the Borrower, with access to properties, books, records and employees
of Borrower and its Subsidiaries to conduct field examinations, to inspect the
Collateral and related reporting and control systems.
 
SECTION 5.12  Reserved.
 
SECTION 5.13  Additional Collateral; Further Assurances.
 
(a)           Upon the formation or acquisition of any Domestic Subsidiary of
the Borrower at any time after the Closing Date, or upon any Domestic Subsidiary
becoming a Subsidiary at any time after the Closing Date, the Borrower shall,
within 10 Business Days after such formation or acquisition, or within 10
Business Days after such Domestic Subsidiary becomes a Subsidiary, as the case
may be:
 
(i)           (A) cause such Subsidiary to become a Borrower under this
Agreement by executing and delivering to the Lenders a joinder to this Agreement
in form and substance satisfactory to the Administrative Agent and grant a
security interest to the Administrative Agent on behalf of the Secured Parties
in all of its assets constituting Collateral under the Security Agreement to
secure the Secured Obligations, and (B) take whatever action (including
delivering properly completed Uniform Commercial Code financing statements) that
may be necessary or advisable in the opinion of the Required Lenders to vest in
the Administrative Agent, for the benefit of the Secured Parties, a first
priority perfected security interest in the assets of such Domestic Subsidiary
purported to be subject to the Security Agreement;
 
(ii)           (A) cause all of the Equity Interests in such Domestic Subsidiary
to be pledged to the Administrative Agent to secure the Secured Obligations by
causing the direct owners of such Equity Interests to execute and deliver to the
Lenders a pledge agreement in the form acceptable to the Administrative Agent,
(B) deliver or cause to be delivered to the Administrative Agent all
certificates and undated stock powers duly executed in blank (to the extent the
Equity Interests of such Domestic Subsidiary are certificated) and other
documents required by the Pledge Agreement with respect to such Equity Interests
and (C) take or cause to be taken such other actions as may be necessary to
provide the Administrative Agent with a first priority perfected pledge of and
security interest in such Equity Interests;
 
 
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(iii)           if such Domestic Subsidiary owns any real property, (A) deliver
to the Lenders Mortgages covering such real property, together with each of the
other documents of the types referred to in Section 3.01(e) with respect to such
real property as the Required Lenders shall request, including current Mortgage
Policies, surveys and real estate appraisals and (B) take all such actions and
execute and deliver, or cause to be executed and delivered, all such other
documents, instruments, agreements, opinions and certificates with respect to
such real property and Mortgages that the Required Lenders shall request to
create in favor of the Administrative Agent, for the benefit of Secured Parties,
a valid and, subject to any applicable filings and/or recordings, perfected
first priority security interest in such real property; and
 
(iv)           deliver to the Lenders documents of the types referred to in
clause Section 3.01(b) with respect to such Domestic Subsidiary and, if
requested by the Required Lenders, favorable opinions of counsel (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clauses (i), (ii), (iii) and
(iv) above), all in form, content and scope satisfactory to the Required
Lenders.
 
(b)           In the event that Borrower or any of its Subsidiaries acquires any
real property, then such Credit Party shall (i) as promptly as practicable,
provide notice thereof to the Administrative Agent, and (ii) contemporaneously
with acquiring such real property, (A) deliver to the Lenders a Mortgage
covering such real property, (B) deliver to the Lenders such other documents of
the types referred to in Section 3.01(e) with respect to such real property as
the Required Lenders shall request, including current Mortgage Policies and
current surveys acceptable to the Required Lenders by a land surveyor duly
registered and licensed in the States in which the property described in such
surveys is located and acceptable to the Required Lenders, (C) with respect to
any leased real property, a Collateral Access Agreement in form and substance
acceptable to the Required Lenders; and (D) take all such actions and execute
and deliver, or cause to be executed and delivered, all such other documents,
instruments, agreements, opinions and certificates with respect to such real
property that the Required Lenders shall request to create in favor of the
Administrative Agent, for the benefit of Secured Parties, a valid and, subject
to any applicable filings and/or recordings, perfected first priority security
interest in such real property.
 
(c)           Without limiting the foregoing, the Borrower will, and will cause
each of its Subsidiaries to, execute and deliver, or cause to be executed and
delivered, to the Lenders such documents, agreements and instruments, and will
take or cause to be taken such further actions (including the filing and
recording of financing statements, fixture filings and other documents and such
other actions or deliveries of the type required by Section 3.01, as
applicable), which may be required by law or which the Required Lenders may,
from time to time, request to carry out the terms and conditions of this
Agreement and the other Credit Documents and to ensure perfection and priority
of the Liens created or intended to be created by the Collateral Documents, all
at the expense of the Credit Parties.
 
SECTION 5.14  Reserved.
 
 
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SECTION 5.15  Material Contracts.  Each of the Borrower and each other Credit
Party will, and will cause each of its Subsidiaries to, perform and observe all
the terms and provisions of each Material Contract to be performed or observed
by it, maintain each such Material Contract in full force and effect, and
enforce each such Material Contract in accordance with its terms.
 
SECTION 5.16  Securities Exchange Agreement.  The Company shall comply with all
of its covenants set forth in the Securities Exchange Agreement.
 
ARTICLE VI
 
NEGATIVE COVENANTS
 
Until the principal of and interest on each Loan and all fees, expenses and
other amounts payable under any Credit Document have been paid in full, each of
the Borrower and each other Credit Party covenants and agrees with the Lenders
that:
 
SECTION 6.01  Indebtedness.  The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
except:
 
(a)           Indebtedness under the Credit Documents;
 
(b)           Indebtedness existing on the date hereof and set forth in
Schedule 6.01 or any extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
 
(c)           Indebtedness of any Credit Party owing to any other Credit Party;
provided that such Indebtedness is evidenced by one or more promissory notes
that are pledged to the Administrative Agent for the benefit of the Secured
Parties pursuant to the Security Agreement;
 
(d)           Guarantees by any Credit Party of Indebtedness of any other Credit
Party; provided that (i) the Indebtedness so Guaranteed is permitted by this
Section 6.01, and (ii) Guarantees permitted under this clause (d) shall be
subordinated to the Obligations on the same terms as the Indebtedness so
Guaranteed is subordinated to the Obligations;
 
(e)           Indebtedness which may be deemed to exist pursuant to any
guaranties, performance, surety, statutory, appeal or similar obligations
incurred in the ordinary course of business;
 
(f)           Indebtedness in respect of netting services, overdraft protection
and otherwise in connection with deposit accounts or similar accounts incurred
in the ordinary course of business;
 
(g)           Guarantees in the ordinary course of business of the obligations
of suppliers, customers, franchisees and licensees of the Borrower and its
Subsidiaries;
 
 
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(h)          Indebtedness secured by purchase money security interests and
Capital Leases permitted by Section 6.02(d);
 
(i)           Indebtedness in the form of Swap Agreements permitted under
Section 6.06;
 
(j)           Indebtedness pursuant to the Liberty Bank Loan;
 
(k)           Indebtedness incurred pursuant to the loan agreement dated as of
July 14, 2010 between the Borrower and the Oklahoma Department of Commerce in a
principal amount not to exceed $3,300,000; and
 
(l)           other unsecured Indebtedness of the Borrower and its Subsidiaries
in an aggregate amount not in excess of $100,000 at any time outstanding.
 
SECTION 6.02  Liens.  The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
 
(a)           Liens created pursuant to any Credit Document;
 
(b)           Permitted Encumbrances;
 
(c)           any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower or any Subsidiary (or to any new category of asset, with respect to
collateral categories such as inventory or accounts receivable that turn-over in
the ordinary course of business) and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
 
(d)           Liens created in connection with purchase money Indebtedness and
Capital Lease Obligations with respect to equipment and fixtures acquired by any
Credit Party in the ordinary course of business, involving the incurrence of an
aggregate amount of purchase money Indebtedness and Capital Lease Obligations of
not more than $1,000,000 outstanding at any time for all such Liens; provided
that (i) such Lien shall attach only to the assets subject to such purchase
money Indebtedness or Capital Lease, and (ii) such Indebtedness is incurred
within 60 days following such purchase and does not exceed 100% of the purchase
price of such assets, plus fees or expenses incurred in connection with the
acquisition thereof; and
 
(e)           Liens pursuant to the Indebtedness described in Section 6.01(j) or
(k).
 
SECTION 6.03  Fundamental Changes; Change in Nature of Business.  (a)  The
Borrower will not, and will not permit any of its Subsidiaries to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, or Dispose of (in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except that, if

 
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at the time thereof and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing or would result
therefrom:
 
(i)           any Subsidiary of the Borrower may merge into the Borrower in a
transaction in which the Borrower is the surviving entity;
 
(ii)          any Subsidiary may merge into any Subsidiary in a transaction in
which the surviving entity is a Guarantor;
 
(iii)         any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders;
and
 
(iv)         any Subsidiary that is a Guarantor may Dispose of all or
substantially all of its assets to Borrower or any other of Borrower’s
Subsidiaries.
 
(b)           The Borrower will not, and will not permit any of its Subsidiaries
to, engage in any business other than businesses of the type conducted by the
Borrower and its Subsidiaries on the Closing Date and businesses reasonably
related or complementary thereto.
 
SECTION 6.04  Investments, Loans, Advances, Guarantees and Acquisitions.  The
Borrower will not, and will not permit any of its Subsidiaries to, make, hold or
acquire (including pursuant to any merger) any Investment in any Person, or make
any Acquisition, except:
 
(a)           Permitted Investments;
 
(b)           Investments in existence on the Closing Date and described in
Schedule 6.04;
 
(c)           loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary; provided that any
such loans and advances shall be evidenced by a promissory note pledged pursuant
to the Security Agreement;
 
(d)           Guarantees permitted by Section 6.01(d) and (g);
 
(e)           Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
 
(f)           Loans or advances made to employees in the ordinary course of
business not to exceed $100,000 at any time in the aggregate; and
 
(g)           Investments in the form of Swap Agreements permitted by
Section 6.06.
 
SECTION 6.05  Dispositions.  The Borrower will not, nor will it permit any of
its Subsidiaries to, Dispose of any asset, including any Equity Interests owned
by it, nor will the
 
 
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Borrower permit any of its Subsidiaries to issue any additional Equity Interests
in such Subsidiary (other than to the Borrower or another Subsidiary in
compliance with Section 6.04), except:
 
(a)           Dispositions of (i) inventory in the ordinary course of business
and (ii) used, obsolete, worn out or surplus equipment or other tangible
property in the ordinary course of business;
 
(b)           Dispositions of assets to the Borrower or to a wholly-owned
Subsidiary of the Borrower; provided that if the transferor of such assets is a
Credit Party, the transferee thereof must be a Credit Party;
 
(c)           Dispositions permitted by Section 6.03 and 6.04;
 
(d)           Restricted Payments permitted by Section 6.07;
 
(e)           Dispositions of accounts receivable in connection with the
compromise, settlement or collection thereof in the ordinary course of business
and consistent with past practices;
 
(f)           Dispositions resulting from any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of the Borrower or any Subsidiary; and
 
(g)           Dispositions of assets that are not permitted by any other
paragraph of this Section 6.05, so long as the Net Proceeds of any such
Disposition are applied as provided in Section 2.10; provided that (i) the
aggregate fair market value of all assets Disposed of in reliance upon this
paragraph (g) shall not exceed $250,000 during any Fiscal Year;
 
provided that all Dispositions permitted by this Section 6.05 (other than those
permitted by paragraphs (b) and (f) above) shall be made for fair value.
 
SECTION 6.06  Swap Agreements.  The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Equity Interests
or any Indebtedness restricted from being prepaid in accordance with Section
6.07, of the Borrower or any of its Subsidiaries), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates
(from fixed to floating rates, from one floating rate to another floating rate
or otherwise) with respect to any interest-bearing liability or investment of
the Borrower or any Subsidiary.
 
SECTION 6.07  Restricted Payments; Certain Payments of Indebtedness.
 
(a)           The Borrower will not, nor will it permit any of its Subsidiaries
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except:
 
 
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(i)           each Subsidiary of the Borrower may make Restricted Payments to
the Borrower, any Subsidiaries of the Borrower that are Guarantors and any other
Person that owns a direct Equity Interest in such Subsidiary, ratably according
to their respective holdings of the type of Equity Interest in respect of which
such Restricted Payment is being made;
 
(ii)           the Borrower may repurchase, retire or redeem from senior
management of the Borrower and its Subsidiaries, Equity Interests in the
Borrower in an aggregate amount not to exceed $250,000 during any Fiscal Year
and $500,000 in the aggregate; provided that after giving effect to such
repurchase, retirement or redemption, no Default or Event of Default shall have
occurred and be continuing; and
 
(iii)           repayments of Indebtedness to the extent permitted pursuant to
Section 6.07(c).
 
(b)           The Borrower will not, nor will it permit any of its Subsidiaries
to, declare or make, or agree to pay or make, directly or indirectly, any
management, consulting, transaction or similar fees to any stockholder of the
Borrower or any Affiliate of the Borrower, other than fees paid to H.I.G. or its
Affiliates, guaranty fees or lease payments payable to Marjorie Brooks under
arrangements in place as of date hereof, and compensation payments to executives
of the Borrower or its Subsidiaries in the ordinary course of business or as
otherwise approved by the Administrative Agent in its sole discretion.
 
(c)           Each of the Borrower and each other Credit Party will not, nor
will it permit any of its Subsidiaries to, prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Indebtedness,
except:
 
(i)           prepayments of Indebtedness created under the Credit Documents
and, to the extent no Default or Event of Default has occurred and is continuing
or would result therefrom, prepayments of any other Indebtedness to the extent
permitted under the subordination terms governing such Indebtedness;
 
(ii)           prepayments of Indebtedness owed to any Credit Party; and
 
(iii)           refinancings of Indebtedness to the extent permitted by
Section 6.01.
 
SECTION 6.08  Transactions with Affiliates.  The  Borrower will not, and will
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except for: (1) such agreements as set forth on Schedule 6.08
hereof, (2) transactions effectuated pursuant to any of the Transaction
Documents entered into concurrently herewith, or (3) in an aggregate amount not
to exceed $250,000 during any Fiscal Year and $500,000 in the aggregate with
respect to (a) transactions that are (i) in the ordinary course of business and
(ii) at prices and on terms and conditions not less favorable to the applicable
Borrower, such other Credit Party or such Subsidiary than could be obtained on
an
 
 
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arm’s-length basis from unrelated third parties, (b) transactions between or
among the Credit Parties, or (c) any Restricted Payment or other payments
permitted by Section 6.07.
 
SECTION 6.09  Restrictive Agreements.  The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to make Restricted Payments to, to make or
repay loans or advances to, or to transfer assets to, the Borrower or any
Guarantor or to Guarantee Indebtedness of the Borrower; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by any Credit
Document, (ii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder,
(iii) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (iv) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
 
SECTION 6.10  Financial Covenants.
 
(a)           Leverage Ratio.  The Borrower will not permit the Leverage Ratio
for the four Fiscal Quarters ending on the dates below to be less than the
corresponding amounts below to be greater than the ratio set forth below
opposite such period:
 
Period
Ratio
December 31, 2011
5.75:1.00
March 31, 2012
5.50:1.00
June 30, 2012
5.00:1.00
September 30, 2012
4.50:1.00
December 31, 2012
4.00:1.00
March 31, 2013
3.50:1.00
June 30, 2013
3.50:1.00
September 30, 2013
3.25:1.00
December 31, 2013
3.00:1.00
January 1, 2014 and thereafter
3.00:1.00

 
(b)           Fixed Charge Coverage Ratio.  The Borrower will not permit the
Fixed Charge Coverage Ratio as of the end of any Fiscal Quarter to be less than
the ratios set forth below for the four Fiscal Quarters ending on the dates
below:
 
Fiscal Quarter
Ratio
December 31, 2011
1.00:1.00
March 31, 2012
1.00:1.00
June 30, 2012
1.00:1.00
September 30, 2012
1.00:1.00
December 31, 2012
1.25:1.00
March 31, 2013
1.25:1.00
June 30, 2013
1.25:1.00
September 30, 2013
1.50:1.00
December 31, 2013
1.50:1.00
March 31, 2014 and thereafter
1.50:1.00

 
 
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(c)           Minimum EBITDA.  The Borrower shall not permit Consolidated EBITDA
for the four Fiscal Quarters ending on the dates below to be less than the
corresponding amounts below:
 
Fiscal Quarter
Minimum EBITDA
 
December 31, 2011
$ 5,000,000  
March 31, 2012
$ 5,500,000  
June 30, 2012
$ 6,000,000  
September 30, 2012
$ 6,500,000  
December 31, 2012
$ 6,500,000  
March 31, 2013
$ 7,000,000  
June 30, 2013
$ 7,500,000  
September 30, 2013
$ 8,000,000  
December 31, 2013
$ 8,000,000  
March 31, 2014
$ 8,500,000  
June 30, 2014
$ 9,000,000  
September 30, 2014
$ 9,500,000  
December 31, 2014
$ 9,500,000  
March 31, 2015 and thereafter
$ 10,000,000  

 
SECTION 6.11  Capital Expenditures.  The Borrower will not, and will not permit
any of its Subsidiaries to, make or become legally obligated to make any Capital
Expenditures, except for Capital Expenditures not exceeding $3,500,000 in the
aggregate during the Fiscal Year of the Borrower ending December 31, 2011 and
$2,500,000 in the aggregate during any subsequent Fiscal Year of the Borrower;
provided that any capital expenditures committed to be made in a Fiscal Year but
not made until the immediately succeeding Fiscal Year shall be deemed to be made
in the Fiscal Year in which committed rather than the Fiscal Year in which made
for purposes of determining compliance with this Section 6.11.
 
SECTION 6.12  Leases.  The  Borrower will not, and will not permit any
Subsidiary to, become or remain liable, directly or indirectly, as lessee or
guarantor or other surety with respect to operating leases under which the
aggregate amount of all rent and additional payments to be incurred thereunder
at any time would exceed $3,000,000.
 
SECTION 6.13  Changes in Fiscal Year.  The Borrower will not make any change in
its Fiscal Year.
 
 
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SECTION 6.14  Sale and Leaseback Transactions and other Off-Balance Sheet
Liabilities.  The Borrower will not, and will not permit any of its Subsidiaries
to, enter into or suffer to exist any transaction pursuant to which it incurs or
has incurred Off-Balance Sheet Liabilities.
 
SECTION 6.15  Sale or Discount of Receivables.  The Borrower will not and will
not permit any Subsidiary to sell with recourse, or discount or otherwise sell
for less than the face value thereof, any of its notes or accounts receivable,
other than the sale or transfer of impaired receivables to collection agencies
deemed uncollectible by the Borrower in its reasonable business judgment.
 
SECTION 6.16  Intellectual Property Licenses.  Borrower will not, nor will it
permit any of its Subsidiaries to, enter into any arrangement directly or
indirectly, whereby it shall license any rights to intellectual property that it
owns or licenses, except for licenses of intellectual property that are in
furtherance of, or integral to, other business transactions entered into by the
Borrower or any Subsidiary in the ordinary course of business.
 
SECTION 6.17  Issuance of Equity Interests.  The Borrower will not, and will not
permit any Subsidiary to, issue any preferred stock or other preferred equity
interests that (i) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise, (ii) is or may become redeemable or repurchaseable
by the Borrower or such Subsidiary at the option of the holder thereof, in whole
or in part or (iii) is convertible or exchangeable at the option of the holder
thereof for Indebtedness or preferred stock or any other preferred equity
interests described in this paragraph, on or prior to, in the case of clause
(i), (ii) or (iii), the first anniversary of the later of the Maturity
Date.  The Borrower will not, and the Borrower will not permit any Subsidiary of
the Borrower (either directly, or indirectly by the issuance of rights or
options for, or securities convertible into, such shares) to issue, sell or
dispose of any Equity Interests of any class except (i) for directors’
qualifying Equity Interests or other Equity Interests issued to comply with
local ownership legal requirements (but not in excess of the minimum number of
Equity Interests necessary to satisfy such requirement), (ii) to the Borrower or
any wholly owned Subsidiary, (iii) pursuant to any management incentive plan
approved by the Administrative Agent in its sole discretion, (iv) issuances on
the Closing Date and (v) issuances of Equity Interests to fulfill dividends on
preferred Equity Interests.
 
SECTION 6.18  Amendment of Organization Documents.  The Borrower will not, and
will not permit any of its Subsidiaries to, amend any of its Organization
Documents if such amendment would be adverse to the Administrative Agent or the
Lenders (it being understood that any amendments to the provisions of the
Organization Documents, as in effect on the Closing Date, setting forth the
rights required to be granted under Section 5.16 hereof shall be adverse to the
Lenders).
 
SECTION 6.19  Terrorism Sanctions Regulations.  Each of the Borrower and each
other Credit Party will not, and will not permit any of its Subsidiaries to
(i) become a Person described or designated in the Specially Designated
Nationals and Blocked Persons List of the Office of Foreign Assets Control or in
Section 1 of the Anti-Terrorism Order or (ii) engage in any dealings or
transactions with any such Person.
 
 
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ARTICLE VII

 
EVENTS OF DEFAULT
 
SECTION 7.01  Events of Default.  If any of the following events (“Events of
Default”) shall occur:
 
(a)           the Borrower or any other Credit Party (to the extent liable
therefor as Guarantor or otherwise) shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
 
(b)           the Borrower or any other Credit Party (to the extent liable
therefor as Guarantor or otherwise) shall fail to pay any interest on any Loan
or any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any other Credit Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five Business Days;
 
(c)           any representation or warranty made or deemed made by or on behalf
of the Borrower, any Credit Party or any Subsidiary in or in connection with any
Credit Document or any amendment or modification thereof or waiver thereunder,
or in any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Credit Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect or
misleading in any material respect when made or deemed made;
 
(d)           the Borrower or, to the extent applicable, any other Credit Party
shall fail to observe or perform any covenant, condition or agreement contained
in Section 5.01, 5.02(a) or (e), 5.03, 5.04, 5.06, 5.09, 5.10, 5.11, 5.12, 5.13,
or 5.15 or in Article VI;
 
(e)           the Borrower or, to the extent applicable, any other Credit Party
shall fail to observe or perform any covenant, condition or agreement contained
in this Agreement (other than those specified in clause (a), (b) or (d) of this
Article) or any other Credit Document, and such failure shall continue
unremedied for a period of 30 days;
 
(f)           the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) or otherwise
defaults in respect of any Material Indebtedness, when and as the same shall
become due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise);
 
(g)           any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, or to cause an offer to prepay,
repurchase, redeem or defease such Material Indebtedness to be made, prior to
its scheduled maturity; provided that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness so long as such Indebtedness
is repaid in full in connection with such sale or transfer;
 
 
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(h)           an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower, any other Credit Party or any Subsidiary or their
respective debts, or of a substantial part of their respective assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower, any
other Credit Party or any Subsidiary or for a substantial part of their
respective assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
 
(i)           the Borrower, any other Credit Party or any Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower, any
other Credit Party or any Subsidiary or for a substantial part of their
respective assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
 
(j)           the Borrower, any other Credit Party or any Subsidiary shall
become unable, admit in writing its inability or fail generally to pay its debts
as they become due;
 
(k)           there is entered against the Borrower or any Subsidiary (i) one or
more judgments or orders for the payment of money in an aggregate amount (as to
all such judgments and orders) in excess of the $250,000(except to the extent
covered by insurance as to which the insurance carrier has acknowledged
coverage) or (ii) any one or more non-monetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and, in either case, there is a period of more than
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, is not in effect;
 
(l)           an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and/or any Subsidiary in an aggregate amount exceeding $250,000; any Plan shall
fail to satisfy the minimum funding standards of ERISA or the Code for any plan
year; the PBGC shall have instituted proceedings under ERISA Section 4042 to
terminate or appoint a trustee to administer any Plan or the PBGC shall have
notified the Borrower or any ERISA Affiliate that a Plan may become a subject of
such proceedings; the aggregate “amount of unfunded benefit liabilities” (within
the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $125,000; the Borrower or any
ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans; or the Borrower or
any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Borrower or any Subsidiary thereunder;
 
 
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(m)           a Change in Control shall occur;
 
(n)           (i) any provision of the Guaranty Agreement ceases to be valid,
binding and enforceable in accordance with its terms, (ii) the Guaranty
Agreement shall fail to remain in full force or effect (except as the parties
thereto may otherwise agree) or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of the Guaranty Agreement, or
(iii) any Guarantor shall deny that it has any further liability under the
Guaranty Agreement (or shall give notice to such effect) or shall challenge the
enforceability of the Guaranty Agreement or shall assert in writing, or engage
in any action or inaction based on any such assertion, that any provision of the
Guaranty Agreement has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms;
 
(o)           (i) any Collateral Document shall for any reason fail to create a
valid and perfected first priority security interest in any Collateral purported
to be covered thereby, except as permitted by the terms of any Collateral
Document, (ii) any Collateral Document shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the invalidity
or unenforceability of any Collateral Document or (iii) any Credit Party shall
deny that it has any further liability under any Collateral Document to which it
is a party (or shall give notice to such effect) or shall challenge the
enforceability of any Collateral Document or shall assert in writing, or engage
in any action or inaction based on any such assertion, that any provision of any
Collateral Document has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms;
 
(p)           any loss, suspension or revocation of, or failure to renew, any
material license or permit now held or hereafter acquired by the Borrower or any
of its Subsidiaries;
 
(q)           any Material Contract shall have been terminated or shall have
otherwise ceased to be in effect and such Material Contract is not replaced by
an agreement with comparable economic terms at any time prior to its termination
or when it otherwise ceases to be in effect; or
 
(r)           any event or condition occurs that results in the Liberty Bank
Loan becoming due prior to its scheduled maturity or that enables or permits
(with or without the giving of notice) the holder or holders of the Liberty Bank
Loan or any trustee or agent on its or their behalf to cause the Liberty Bank
Loan to become due, or to require the prepayment of the Liberty Bank Loan prior
to its scheduled maturity;
 
then, and in every such event (other than an event with respect to the Borrower
or any other Credit Party described in clause (h) or (i) of this Section), and
at any time thereafter during the continuance of such event, the Administrative
Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take any or all of the following actions, at the same or different
times: (i) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower and the other Credit
Parties accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
 
 
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hereby waived by the Borrower; and in case of any event with respect to the
Borrower or any other Credit Party described in clause (h) or (i) of this
Article, the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrower and the
other Credit Parties accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower and the other Credit
Parties.  Upon the occurrence and during the continuance of an Event of Default,
the Administrative Agent may, and at the request of the Required Lenders shall,
exercise any rights and remedies provided to the Administrative Agent under the
Credit Documents or at law or equity, including all remedies provided under the
UCC.
 
SECTION 7.02  Application of Proceeds.  Any proceeds received by the
Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral pursuant to the exercise by
the Administrative Agent of its rights and remedies provided under the Credit
Documents or at law or equity, shall be applied by the Administrative Agent in
the following order:
 
First, to the payment of all costs and expenses incurred by the Administrative
Agent in connection with such sale, collection or other realization;
 
Second, to the payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent) payable to the
Administrative Agent in its capacity as such;
 
Third, to the payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest, and unused
commitment fees) payable to the Lenders (including fees, charges and
disbursements of counsel to the respective Lenders), ratably among them in
proportion to the respective amounts described in this clause Third payable to
them;
 
Fourth, to the payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans and other Obligations, ratably among the
Lenders in proportion to the respective amounts described in this clause Fourth
payable to them;
 
Fifth, to the payment of that portion of the Secured Obligations constituting
unpaid principal of the Loans, ratably among the Lenders to whom any such
Secured Obligations are owed in proportion to the respective amounts described
in this clause Fifth held by them;
 
Sixth, to the payment of that portion of the Secured Obligations constituting
amounts owing under Secured Swap Agreements, ratably among the Lenders and any
Affiliates of Lenders to whom any Secured Swap Obligations are owed in
proportion to the respective amounts described in this clause Sixth held by
them; and
 
Last, the balance, if any, after all the Obligations have been indefeasibly paid
in full, to the Borrower or as otherwise required by law.
 
 

 
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ARTICLE VIII

 
THE ADMINISTRATIVE AGENT

Each of the Lenders hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the
terms hereof and of the other Credit Documents, together with such actions and
powers as are reasonably incidental thereto.  Without limiting the generality of
the foregoing, each of the Lenders hereby authorizes the Administrative Agent,
on behalf of and for the benefit of Lenders, to be the agent for and
representative of the Lenders with respect to the Collateral Documents.
 
The Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
 
The Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Credit Documents.  Without limiting
the generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby and
by the other Credit Documents that the Administrative Agent is required to
exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein and in
the other Credit Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Borrower or any of its Subsidiaries that is communicated to or
obtained by the Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Credit Document, (ii) the contents
of any certificate, report or other document delivered under this Agreement or
any other Credit Document or in connection with this Agreement or any other
Credit Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Credit
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other Credit Document or any other agreement, instrument
or document, (v) the creation, perfection or priority of Liens on the Collateral
or the existence of the Collateral, or (vi) the satisfaction of any condition
set forth in Article IV or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
 
 
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The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon.  The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
 
The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
 
Subject to the appointment and acceptance of a successor Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
providing at least 60 days’ prior written notice to the Lenders and the Borrower
and may be removed at any time that it is a Defaulting Lender with or without
cause by the Required Lenders; provided, that, unless a Default or Event of
Default exists, such removal shall require the consent of the Borrower.  Upon
any such resignation or removal, the Required Lenders, shall have the right, in
consultation with the Borrower, to appoint a successor.  If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 60 days after the retiring Administrative Agent gives notice
of its resignation or is notified by the Required Lenders of its removal, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank or insurance company having
a combined capital and surplus of at least $500,000,000 with an office in New
York City, or an Affiliate of any such a Person or other Person engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course of its business.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under the Credit
Documents.  The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After any Administrative Agent’s
resignation or removal hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
 
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this
 
 
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Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Credit Document, any related agreement or any
document furnished hereunder or thereunder.  Each Lender acknowledges that the
Administrative Agent does not owe any fiduciary or other duty to such Lender or
any of its Related Parties.  Each Lender acknowledges that it (a) has received
copies of this Agreement, the other Credit Documents, and such other financial
statements, documents and information as such Lender has deemed necessary or
appropriate for the purpose of making its own credit analysis and decision to
enter into this Agreement and make the Loans and Commitments contained
herein.  Each Lender agrees that the Administrative Agent and the other Lenders
shall have no responsibility to any other party hereto for the completeness of
information obtained by such Lender from any source with respect to the
transactions contemplated hereby, the Credit Parties and their Subsidiaries and
any other matter affecting the credit quality or market value of the Loans, the
Commitments and the other Obligations.
 
Each Lender acknowledges that the Administrative Agent, the other Lenders and
their respective its affiliates may directly or indirectly be an existing holder
of debt securities or equity securities of the Borrower and may possess
information with respect to the  Credit Parties and their Subsidiaries
(including but not limited to information regarding the financial forecasts,
future capital expenditures and business strategy of the Credit Parties and
their Subsidiaries) and other matters affecting the credit quality or market
value of the Obligations that is not known to any other party hereto, including
information that may be material and non-public.  Each party further
acknowledges that it has not received and does not wish to receive any such
information that may be in the other party’s possession.
 
ARTICLE IX

 
MISCELLANEOUS
 
SECTION 9.01  Notices.  (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
 
(i)           if to the Borrower:
 
Advanced Environmental Recycling Technologies, Inc.
914 N. Jefferson
Springdale, Arkansas 72764
Telephone:  (479) 756-7400
Facsimile:  (479) 756-7410
Attention:  Chief Executive Officer

With a copy (for informational purposes only) to:

 
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Cox Smith Matthews Incorporated
112 East Pecan Street
Suite 1800
San Antonio, TX 78205
Telephone:  (210) 554 -5500
Facsimile:  (210) 226-8395
Attention:  J. Patrick Ryan, Esq.

(ii)           if to the Administrative Agent:
 
c/o HIG Capital, LLC
855 Boylston Street, 11th Floor
Boston, MA 02116
Attention:  Michael Phillips
Facsimile: (617) 262-1505

With a copy (for informational purposes only) to:

Paul, Hastings, Janofsky & Walker LLP
191 N. Wacker Drive
30th Floor
Chicago, IL 60606
Telephone:  (312) 499-6000
Facsimile:  (312) 499-6100
Attention:  Amit Mehta, Esq. and Louis Hernandez, Esq.

(iii)           if to any other Lender, to it at its address (or telecopy
number) set forth in its Assignment and Assumption.
 
(b)           Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lenders.  The Administrative Agent or
the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
 
(c)           Any party hereto may change its address or facsimile number for
notices and other communications hereunder by notice to the other parties
hereto.  All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
 
SECTION 9.02  Waivers; Amendments.  No failure or delay by the Administrative
Agent or any Lender in exercising any right or power hereunder or under any
other Credit Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude

 
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any other or further exercise thereof or the exercise of any other right or
power.  The rights and remedies of the Administrative Agent and the Lenders
hereunder and under any other Credit Document are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver
of any provision of this Agreement or any other Credit Document or consent to
any departure by the Borrower or any other Credit Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.  Without limiting the generality
of the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.
 
(a)           Neither this Agreement nor any other Credit Document nor any
provision hereof or thereof may be waived, amended or modified except (i) in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or (ii) in the case of any
other Credit Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Credit Party or Credit Parties that are
parties thereto, with the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender without the written
consent of such Lender, (B) reduce or forgive the principal amount of any Loan
or reduce the rate of interest thereon, or reduce or forgive any interest or
fees payable hereunder, without the written consent of each Lender affected
thereby, (C) postpone any scheduled date of payment of the principal amount of
any Loan, or any date for the payment of any interest, fees or other Obligations
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, or restrict the
ability of the Borrower to prepay the Obligations or amend or waive any remedy
thereunder without the written consent of each Lender affected thereby,
(D) change Section 2.17(b) or 2.17(c) in a manner that would alter the manner in
which payments are shared, without the written consent of each Lender,
(E) change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision of any Credit Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights thereunder
or make any determination or grant any consent thereunder, without the written
consent of each Lender, (F) release any Guarantor from its obligations under the
Guaranty Agreement (except as otherwise permitted herein or in the other Credit
Documents), without the written consent of each Lender, or (G) except as
provided in any Collateral Document, release all or substantially all of the
Collateral, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder without the prior written consent of the
Administrative Agent.
 
(b)           The Lenders hereby irrevocably authorize the Administrative Agent,
at its option and in its sole discretion, to release any Liens granted to the
Administrative Agent by the Credit Parties on any Collateral (i) upon the
termination of all Commitments, payment and satisfaction in full in cash of all
Secured Obligations (other than Unliquidated Obligations), (ii) constituting
property being sold or disposed of if the Credit Party disposing of such
property certifies to the Administrative Agent that the sale or disposition is
made in compliance with the terms of this Agreement (and the Administrative
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property leased to a Credit Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement, or
 
 
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(iv) as required to effect any sale or other disposition of such Collateral in
connection with any exercise of remedies of the Administrative Agent and the
Lenders pursuant to Article VII.  Except as provided in the preceding sentence,
the Administrative Agent will not release any Liens on Collateral without the
prior written authorization of the Required Lenders.  Any such release shall not
in any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Credit Parties
in respect of) all interests retained by the Credit Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
 
SECTION 9.03  Expenses; Indemnity; Damage Waiver.  The Borrower and the other
Credit Parties agree to pay (i) all reasonable out-of-pocket expenses incurred
by the Administrative Agent and its Affiliates, including the fees, charges and
disbursements of counsel for the Administrative Agent and the fees and charges
relating to real estate surveys, appraisals and field examinations, due
diligence, travel, courier, reproduction, printing and delivery costs, the
preparation and administration of this Agreement and the other Credit Documents
and any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated) and (ii)  all out-of-pocket expenses incurred by the Administrative
Agent or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender, in connection with the
enforcement, collection or protection of its rights in connection with this
Agreement or any of the other Credit Documents after the occurrence of an Event
of Default, or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the other Credit
Documents or any of the transactions contemplated hereby or thereby, including
its rights under this Section, or in connection with the Loans made, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.
 
(a)           The Borrower and the other Credit Parties shall indemnify the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
penalties, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee by any Credit Party, any of their affiliates or any third party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any other Credit Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
or the parties to any other Credit Document of their respective obligations
hereunder or thereunder or any other transactions contemplated hereby or
thereby, (ii) any Loan or the use of the proceeds thereof, (iii) any actual or
alleged presence or release of Hazardous Materials on or from any property owned
or operated by the Borrower, any other Credit Party or any of their
Subsidiaries, or any Environmental Liability related in any way to the Borrower,
any other Credit Party or any of their Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, penalties, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence, bad faith or willful
misconduct of such Indemnitee.
 

 
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(b)           To the extent that the Borrower and the Credit Parties fail to pay
any amount required to be paid by it to the Administrative Agent under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, as the case may be, such Lender’s Pro Rata Share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, penalty, liability or related expense, as
the case may be, was incurred by or asserted against the Administrative Agent in
its capacity as such.
 
(c)           To the extent permitted by applicable law, each of the Borrower
and each other Credit Party shall not assert, and each of the Borrower and each
other Credit Party hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any other Credit Document or any agreement or
instrument contemplated hereby or thereby, any Loan or the use of the proceeds
thereof.
 
(d)           All amounts due under this Section shall be payable not later than
five days after written demand therefor.  The obligations
 
SECTION 9.04  Successors and Assigns.
 
(a)           The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) none of the Borrower nor any other Credit
Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower or such other Credit Party without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.  Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto and their respective
successors and assigns permitted hereby, Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
 
(b)           (i)  Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld or delayed) of:
 
(A)           the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund.
 
(ii)           Assignments shall be subject to the following additional
conditions:
 
(A)           except in the case of an assignment to a Lender, an Affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining

 
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amount of the assigning Lender’s Loans, the amount of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000, unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such
consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;
 
(B)           each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;
 
(C)           except in the case of an assignment to an Lender or an Affiliate
of a Lender, the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and
 
(D)           each assignment must be made to an Eligible Assignee unless the
Borrower and the Administrative Agent otherwise consent.
 
(iii)           Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.16 and 9.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 9.04 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
 
(iv)           The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the Register shall be conclusive, and the Borrower,
the Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
 
(v)           Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the processing and recordation
fee

 
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referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Assumption and record the information contained
therein in the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it
pursuant to Section 2.17(d) or 9.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
 
(c)           (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (A) such Lender’s obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Section 2.16 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08 as though it
were a Lender, provided such Participant agrees to be subject to
Section 2.17(c) as though it were a Lender.
 
(i)           A Participant shall not be entitled to receive any greater payment
under Section  2.16 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as
though it were a Lender.
 
(d)           Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
 
 
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SECTION 9.05  Survival.  All covenants, agreements, representations and
warranties made by the Credit Parties herein and in the other Credit Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Credit Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Credit Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
and so long as the Commitments have not expired or terminated.  The provisions
of Section 2.16 and 9.03 and Article VIII shall survive and remain in full force
and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Loans and the Commitments or the termination of
this Agreement or any provision hereof.
 
SECTION 9.06  Counterparts.  This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.
 
SECTION 9.07  Integration; Effectiveness.  This Agreement and the other Credit
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except
as provided in Section 3.01, this Agreement shall become effective when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
 
SECTION 9.08  Severability.  Any provision of this Agreement or any other Credit
Document held to be invalid, illegal or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof or thereof; and the invalidity
of a particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
 
SECTION 9.09  Right of Setoff.  If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or any other Credit Party against any and all of the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or any other Credit Document and although such
obligations may be unmatured.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
 
 
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SECTION 9.10  Governing Law; Jurisdiction; Consent to Service of Process.
 
(a)           This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
 
(b)           The Borrower and each other Credit Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Credit Document, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement or any other
Credit Document shall affect any right that the Administrative Agent or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Credit Document against any Credit Party or its
properties in the courts of any jurisdiction.
 
(c)           The Borrower and each other Credit Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Credit Document in any court referred to in paragraph (b) of this
Section.  Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
 
(d)           Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01.  Nothing in this
Agreement or any other Credit Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
 
SECTION 9.11  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
 
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SECTION 9.12  Headings.  Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
 
SECTION 9.13  Confidentiality.  Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees, agents, shareholders or members, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or under any other Credit
Document or any suit, action or proceeding relating to this Agreement or any
other Credit Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Credit Parties
and their obligations, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Administrative Agent or
any Lender on a nonconfidential basis from a source other than the Credit
Parties.  For the purposes of this Section, “Information” means all information
received from the Credit Parties relating to the Credit Parties or their
businesses, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Credit Party; provided that, in the case of information
received from any Credit Party after the date hereof, such information is
clearly identified at the time of delivery as confidential.  Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
 
SECTION 9.14  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Rate to the date of repayment, shall
have been received by such Lender.
 
 
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SECTION 9.15  USA Patriot Act.  Each Lender that is subject to the requirements
of the USA Patriot Act hereby notifies the Borrower and each other Credit Party
that, pursuant to the requirements of the Act, it is required to obtain, verify
and record information that identifies the Borrower and each other Credit Party,
which information includes the name and address of the Borrower and each other
Credit Party and other information that will allow such Lender to identify the
Borrower and each other Credit Party in accordance with the Act.
 
[Remainder of page intentionally left blank; signature pages follow]
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 
BORROWER:
 
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC
 
By:_________________________________
 
Name:

 
Title:

 

 
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H.I.G. AERT, LLC,

as Administrative Agent and Lender
 
 
By:________________________________  
Name:

Title:
 

 
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SCHEDULE I
 
COMMITMENTS

Lender
 
Series A Term
Loan Commitment
   
Series B Term
Loan Commitment
 
H.I.G. AERT, LLC
  $ 10,000,000     $ 9,000,000  
TOTAL:
  $ 10,000,000     $ 9,000,000  

 
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