Exhibit 10.1

 

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AMENDED AND RESTATED

CREDIT AND SECURITY AGREEMENT

 

among

 

SHILOH INDUSTRIES, INC.,

as Borrower,

 

THE LENDERS NAMED HEREIN,

as Lenders,

 

and

 

LASALLE BANK NATIONAL ASSOCIATION,

as Lead Arranger, Sole Book Runner and Administrative Agent,

 

NATIONAL CITY BANK,

as Co-Syndication Agent,

 

KEYBANK NATIONAL ASSOCIATION,

as Co-Syndication Agent,

 

CITIZENS BANK OF PENNSYLVANIA,

as Co-Documentation Agent

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agent

 

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dated as of

January 18, 2005

 

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TABLE OF CONTENTS

 

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ARTICLE I. DEFINITIONS

   2

Section 1.1.

  

Definitions

   2

Section 1.2.

  

Accounting Terms

   24

Section 1.3.

  

Terms Generally

   24

ARTICLE II. AMOUNT AND TERMS OF CREDIT

   24

Section 2.1.

  

Amount and Nature of Credit

   24

Section 2.2.

  

Revolving Credit

   25

Section 2.3.

  

Term Loan

   30

Section 2.4.

  

Interest

   30

Section 2.5.

  

Evidence of Indebtedness

   31

Section 2.6.

  

Notice of Credit Event; Funding of Loans

   32

Section 2.7.

  

Payment on Loans and Other Obligations

   33

Section 2.8.

  

Prepayment

   34

Section 2.9.

  

Commitment and Other Fees

   34

Section 2.10.

  

Modifications to Commitment

   34

Section 2.11.

  

Computation of Interest and Fees

   36

Section 2.12.

  

Mandatory Payment

   36

Section 2.13.

  

Extension of Commitment

   38

ARTICLE III. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED
CAPITAL; TAXES

   38

Section 3.1.

  

Requirements of Law

   38

Section 3.2.

  

Taxes

   39

Section 3.3.

  

Funding Losses

   41

Section 3.4.

  

Eurodollar Rate Lending Unlawful; Inability to Determine Rate

   41

ARTICLE IV. CONDITIONS PRECEDENT

   42

Section 4.1.

  

Conditions to Each Credit Event

   42

Section 4.2.

  

Conditions to the First Credit Event

   42

Section 4.3.

  

Post-Closing Conditions

   44

ARTICLE V. COVENANTS

   45

Section 5.1.

  

Insurance

   45

Section 5.2.

  

Money Obligations

   45

Section 5.3.

  

Financial Statements and Information

   46

Section 5.4.

  

Financial Records

   47

Section 5.5.

  

Franchises; Change in Business

   47

Section 5.6.

  

ERISA Compliance

   47

Section 5.7.

  

Financial Covenants

   48

Section 5.8.

  

Borrowing

   48

Section 5.9.

  

Liens

   49

Section 5.10.

  

Regulations T, U and X

   50

Section 5.11.

  

Investments, Loans and Guaranties

   50

Section 5.12.

  

Merger and Sale of Assets

   52

Section 5.13.

  

Acquisitions

   52

Section 5.14.

  

Notice

   53

 

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Section 5.15.

  

Environmental Compliance

   53

Section 5.16.

  

Affiliate Transactions

   53

Section 5.17.

  

Restricted Payments

   54

Section 5.18.

  

Use of Proceeds

   54

Section 5.19.

  

Corporate Names and Locations of Collateral

   54

Section 5.20.

  

Lease Rentals

   54

Section 5.21.

  

Subsidiary Guaranties, Security Documents and Pledge of Stock or Other Ownership
Interest.

   54

Section 5.22.

  

Restrictive Agreements

   55

Section 5.23.

  

Other Covenants

   55

Section 5.24.

  

Collateral

   55

Section 5.25.

  

Property Acquired Subsequent to the Closing Date and Right to Take Additional
Collateral

   57

Section 5.26.

  

Amendment of Organizational Documents

   57

Section 5.27.

  

Interest Rate Protection

   57

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

   57

Section 6.1.

  

Corporate Existence; Subsidiaries; Foreign Qualification

   57

Section 6.2.

  

Corporate Authority

   58

Section 6.3.

  

Compliance with Laws and Contracts

   58

Section 6.4.

  

Litigation and Administrative Proceedings

   58

Section 6.5.

  

Title to Assets

   59

Section 6.6.

  

Liens and Security Interests

   59

Section 6.7.

  

Tax Returns

   59

Section 6.8.

  

Environmental Laws

   59

Section 6.9.

  

Locations

   60

Section 6.10.

  

Continued Business

   60

Section 6.11.

  

Employee Benefits Plans

   60

Section 6.12.

  

Consents or Approvals

   61

Section 6.13.

  

Solvency

   61

Section 6.14.

  

Financial Statements

   61

Section 6.15.

  

Regulations

   61

Section 6.16.

  

Material Agreements

   61

Section 6.17.

  

Intellectual Property

   62

Section 6.18.

  

Insurance

   62

Section 6.19.

  

Deposit Accounts

   62

Section 6.20.

  

Accurate and Complete Statements

   62

Section 6.21.

  

Investment Company; Holding Company

   62

Section 6.22.

  

Defaults

   62

ARTICLE VII. SECURITY

   62

Section 7.1.

  

Security Interest in Collateral

   62

Section 7.2.

  

Collections and Receipt of Proceeds by Borrower

   62

Section 7.3.

  

Collections and Receipt of Proceeds by Agent

   64

Section 7.4.

  

Use of Inventory and Equipment

   64

 

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ARTICLE VIII. EVENTS OF DEFAULT

   65

Section 8.1.

  

Payments

   65

Section 8.2.

  

Special Covenants

   65

Section 8.3.

  

Other Covenants

   65

Section 8.4.

  

Representations and Warranties

   65

Section 8.5.

  

Cross Default

   65

Section 8.6.

  

ERISA Default

   65

Section 8.7.

  

Change in Control

   65

Section 8.8.

  

Money Judgment

   65

Section 8.9.

  

Material Adverse Change

   66

Section 8.10.

  

Security

   66

Section 8.11.

  

Validity of Loan Documents

   66

Section 8.12.

  

Solvency of MTD

   66

Section 8.13.

  

Solvency of Certain Company

   66

Section 8.14.

  

Solvency of Certain Other Companies

   66

ARTICLE IX. REMEDIES UPON DEFAULT

   67

Section 9.1.

  

Optional Defaults

   67

Section 9.2.

  

Automatic Defaults

   68

Section 9.3.

  

Letters of Credit

   68

Section 9.4.

  

Offsets

   68

Section 9.5.

  

Equalization Provision

   68

Section 9.6.

  

Collateral

   70

Section 9.7.

  

Other Remedies

   70

Section 9.8.

  

Application of Proceeds

   71

ARTICLE X. THE AGENT

   72

Section 10.1.

  

Appointment and Authorization

   72

Section 10.2.

  

Note Holders

   72

Section 10.3.

  

Consultation With Counsel

   72

Section 10.4.

  

Documents

   72

Section 10.5.

  

Agent and Affiliates

   72

Section 10.6.

  

Knowledge of Default

   73

Section 10.7.

  

Action by Agent

   73

Section 10.8.

  

Release of Collateral or Guarantor of Payment

   73

Section 10.9.

  

Notice of Default

   73

Section 10.10.

  

Delegation of Duties

   73

Section 10.11.

  

Indemnification of Agent

   74

Section 10.12.

  

Successor Agent

   74

Section 10.13.

  

Other Agents

   74

ARTICLE XI. MISCELLANEOUS

   74

Section 11.1.

  

Lenders’ Independent Investigation

   74

Section 11.2.

  

No Waiver; Cumulative Remedies

   75

Section 11.3.

  

Amendments, Consents

   75

Section 11.4.

  

Notices

   76

Section 11.5.

  

Costs, Expenses and Taxes

   76

Section 11.6.

  

Indemnification

   77

 

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Section 11.7.

  

Obligations Several; No Fiduciary Obligations

   77

Section 11.8.

  

Execution in Counterparts

   77

Section 11.9.

  

Binding Effect; Borrower’s Assignment

   77

Section 11.10.

  

Lender Assignments

   77

Section 11.11.

  

Sale of Participations

   79

Section 11.12.

  

Patriot Act Notice

   80

Section 11.13.

  

Severability of Provisions; Captions; Attachments

   80

Section 11.14.

  

Investment Purpose

   80

Section 11.15.

  

Entire Agreement

   81

Section 11.16.

  

Confidentiality

   81

Section 11.17.

  

Legal Representation of Parties

   81

Section 11.18.

  

Warrant of Attorney

   81

Section 11.19.

  

Governing Law; Submission to Jurisdiction

   82

Section 11.20.

  

Jury Trial Waiver

    

 

Exhibit A    Form of Revolving Credit Note Exhibit B    Form of Swing Line Note
Exhibit C    Form of Term Note Exhibit D    Form of Notice of Loan Exhibit E   
Form of Compliance Certificate Exhibit F    Form of Assignment and Acceptance
Agreement Exhibit G    Form of Request for Extension Exhibit H    Form of Master
Letter of Credit Agreement Schedule 1    Commitment of Lenders Schedule 2   
Guarantors of Payment Schedule 2.2    Existing Letters of Credit Schedule 3   
Real Property Schedule 5.8    Indebtedness Schedule 5.9    Liens Schedule 5.11
   Permitted Mexican Subsidiary Loans and Investments Schedule 5.16    Affiliate
Transactions Schedule 6.1    Corporate Existence/Subsidiaries Schedule 6.4   
Litigation and Administrative Proceedings Schedule 6.9    Locations Schedule
6.11    Employee Benefit Plans Schedule 6.16    Material Agreements Schedule
6.17    Intellectual Property Schedule 6.18    Insurance Schedule 6.19   
Deposit Accounts

 

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This AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (as the same may from
time to time be amended, restated or otherwise modified, this “Agreement”) is
made effective as of the 18th day of January, 2005, among:

 

(a) SHILOH INDUSTRIES, INC., a Delaware corporation (“Borrower”);

 

(b) the lenders listed on Schedule 1 hereto and each other Eligible Transferee,
as hereinafter defined, that becomes a party hereto pursuant to Section 2.10(b)
or 11.10 hereof (collectively, the “Lenders” and, individually, each a
“Lender”);

 

(c) LASALLE BANK NATIONAL ASSOCIATION, as lead arranger, sole book runner and
administrative agent for the Lenders under this Agreement (“Agent”);

 

(d) NATIONAL CITY BANK, as co-syndication agent (“Co-Syndication Agent”);

 

(e) KEYBANK NATIONAL ASSOCIATION, as co-syndication agent (“Co-Syndication
Agent”);

 

(f) CITIZENS BANK OF PENNSYLVANIA, as co-documentation agent (“Co-Documentation
Agent”); and

 

(g) U.S. BANK NATIONAL ASSOCIATION, as co-documentation agent (“Co-Documentation
Agent”).

 

WITNESSETH:

 

WHEREAS, Borrower, the lenders named therein and Agent entered into that certain
Credit and Security Agreement, dated as of January 15, 2004 (the “Original
Credit Agreement”);

 

WHEREAS, this Agreement amends and restates in its entirety the Original Credit
Agreement and, upon the effectiveness of this Agreement, on the Closing Date,
the terms and provisions of the Original Credit Agreement shall be superseded
hereby. All references to “Credit Agreement” contained in the Loan Documents, as
defined in the Original Credit Agreement, delivered in connection with the
Original Credit Agreement shall be deemed to refer to this Agreement.
Notwithstanding the amendment and restatement of the Original Credit Agreement
by this Agreement, the Debt outstanding under the Original Credit Agreement as
of the Closing Date shall remain outstanding and constitute Obligations
hereunder. Such outstanding Obligations and the guaranties of payment thereof
shall in all respects be continuing, and this Agreement shall not be deemed to
evidence or result in a novation or repayment and re-borrowing of such
Obligations. In furtherance of and, without limiting the foregoing, from and
after the Closing Date and except as expressly specified herein, the terms,
conditions, and covenants governing the Indebtedness outstanding under the
Original Credit Agreement shall be solely as set forth in this Agreement, which
shall supersede the Original Credit Agreement in its entirety; and

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WHEREAS, Borrower, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;

 

NOW, THEREFORE, it is mutually agreed as follows:

 

ARTICLE I. DEFINITIONS

 

Section 1.1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:

 

“Account” shall mean all accounts, as defined in the U.C.C.

 

“Account Debtor” shall mean any Person obligated to pay all or any part of any
Account in any manner and includes (without limitation) any Guarantor thereof.

 

“Acquisition” shall mean any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of any Person (other than a Company), or
any business or division of any Person (other than a Company), (b) the
acquisition of in excess of fifty percent (50%) of the stock (or other equity
interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.

 

“Additional Commitment” shall mean that term as defined in Section 2.10(b)
hereof.

 

“Additional Lender” shall mean an Eligible Transferee that shall become a
Revolving Lender during the Commitment Increase Period pursuant to Section
2.10(b) hereof.

 

“Additional Lender Assumption Agreement” shall mean an additional lender
assumption agreement, in form and substance satisfactory to Agent, wherein an
Additional Lender shall become a Revolving Lender.

 

“Additional Lender Assumption Effective Date” shall mean that term as defined in
Section 2.10(b) hereof.

 

“Advantage” shall mean any payment (whether made voluntarily or involuntarily,
by offset of any deposit or other indebtedness or otherwise) received by any
Lender in respect of the Applicable Debt, if such payment results in that Lender
having less than its pro rata share (based upon its Applicable Commitment
Percentage and, in the case of an Equalization Event, based upon its
Equalization Percentage of the Obligations) of the Applicable Debt then
outstanding.

 

“Affiliate” shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and “control” (including
the correlative meanings, the

 

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terms “controlling”, “controlled by” and “under common control with”) shall mean
the power, directly or indirectly, to direct or cause the direction of the
management and policies of a Company, whether through the ownership of voting
securities, by contract or otherwise.

 

“Agent Fee Letter” shall mean the Agent Fee Letter between Borrower and Agent,
dated as of the Closing Date, as the same may from time to time be amended,
restated or otherwise modified.

 

“Applicable Commitment Fee Rate” shall mean:

 

(a) for the period from the Closing Date through March 31, 2005, thirty (30.00)
basis points; and

 

(b) commencing with the Consolidated financial statements of Borrower for the
fiscal quarter ending January 31, 2005, the number of basis points set forth in
the following matrix, based upon the result of the computation of the Leverage
Ratio as set forth in the Compliance Certificate for such fiscal quarter, shall
be used to establish the number of basis points that will go into effect on
April 1, 2005 and thereafter:

 

Leverage Ratio

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   Applicable Commitment Fee Rate

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Greater than 2.50 to 1.00

   50.00 basis points

Greater than 2.00 to 1.00 but less than or equal to 2.50 to 1.00

   37.50 basis points

Greater than 1.50 to 1.00 but less than or equal to 2.00 to 1.00

   30.00 basis points

Greater than 1.00 to 1.00 but less than or equal to 1.50 to 1.00

   25.00 basis points

Less than or equal to 1.00 to 1.00

   20.00 basis points

 

After April 1, 2005, changes to the Applicable Commitment Fee Rate shall be
effective on the first day of each month following the date upon which Agent
should have received, pursuant to Section 5.3(a) or (b) hereof, the Consolidated
financial statements of Borrower. The above matrix does not modify or waive, in
any respect, the requirements of Section 5.7 hereof, the rights of Agent and the
Lenders to charge the Default Rate, or the rights and remedies of Agent and the
Lenders pursuant to Articles VIII and IX hereof. Notwithstanding anything herein
to the contrary, during any period when Borrower shall have failed to timely
deliver the financial statements pursuant to Section 5.3(a) or (b) hereof, or
the Compliance Certificate pursuant to Section 5.3(c) hereof, until such time as
the appropriate financial statements and Compliance Certificate are delivered,
the Applicable Commitment Fee Rate shall be the highest rate per annum indicated
in the above pricing grid regardless of the Leverage Ratio at such time.

 

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“Applicable Commitment Percentage” shall mean, for each Lender, as applicable:

 

(a) with respect to the Revolving Credit Commitment, the percentage, if any, set
forth opposite such Lender’s name under the column headed “Revolving Credit
Commitment Percentage”, as listed in Schedule 1 hereto; and

 

(b) with respect to the Term Loan Commitment, the percentage, if any, set forth
opposite such Lender’s name under the column headed “Term Loan Commitment
Percentage”, as listed in Schedule 1 hereto.

 

“Applicable Debt” shall mean:

 

(a) with respect to the Revolving Credit Commitment, collectively, (i) all
Indebtedness incurred by Borrower to the Revolving Lenders pursuant to this
Agreement and the other Loan Documents, and includes, without limitation, the
principal of and interest on all Revolving Credit Notes and the Swing Line Note
and all obligations with respect to Letters of Credit, (ii) each extension,
renewal or refinancing of the foregoing, in whole or in part, (iii) the
commitment, prepayment and other fees and amounts payable hereunder in
connection with the Revolving Credit Commitment, and (iv) all Related Expenses
incurred in connection with the foregoing; and

 

(b) with respect to the Term Loan Commitment, collectively, (i) all Indebtedness
incurred by Borrower to the Term Lenders pursuant to this Agreement and the
other Loan Documents, and includes, without limitation, the principal of and
interest on all Term Notes, (ii) each extension, renewal or refinancing of the
foregoing in whole or in part, (iii) all prepayment and other fees and amounts
payable hereunder in connection with the Term Loan Commitment, and (iv) all
Related Expenses incurred in connection with the foregoing.

 

“Applicable Margin” shall mean:

 

(a) for the period from the Closing Date through March 31, 2005, one hundred
seventy-five (175) basis points for Eurodollar Loans and zero (0.00) basis
points for Base Rate Loans; and

 

(b) commencing with the Consolidated financial statements of Borrower for the
fiscal quarter ending January 31, 2005, the number of basis points (depending
upon whether Loans are Eurodollar Loans or Base Rate Loans) set forth in the
following matrix, based upon the result of the computation of the Leverage Ratio
as set forth in the Compliance Certificate for such fiscal quarter, shall be
used to establish the number of basis points that will go into effect on April
1, 2005 and thereafter:

 

Leverage Ratio

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Applicable Basis

Points for
Eurodollar Loans

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Applicable Basis

Points for

Base Rate Loans

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Greater than 2.50 to 1.00

   225.00    25.00

Greater than 2.00 to 1.00 but less than or equal to 2.50 to 1.00

   200.00    0.00

Greater than 1.50 to 1.00 but less than or equal to 2.00 to 1.00

   175.00    0.00

Greater than 1.00 to 1.00 but less than or equal to 1.50 to 1.00

   150.00    0.00

Less than or equal to 1.00 to 1.00

   125.00    0.00

 

4

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After April 1, 2005, changes to the Applicable Margin shall be effective on the
first day of each month following the date upon which Agent should have
received, pursuant to Section 5.3(a) or (b) hereof, the Consolidated financial
statements of Borrower. The above matrix does not modify or waive, in any
respect, the requirements of Section 5.7 hereof, the rights of Agent and the
Lenders to charge the Default Rate, or the rights and remedies of Agent and the
Lenders pursuant to Articles VIII and IX hereof. Notwithstanding anything herein
to the contrary, during any period when Borrower shall have failed to timely
deliver the financial statements pursuant to Section 5.3(a) or (b) hereof, or
the Compliance Certificate pursuant to Section 5.3(c) hereof, until such time as
the appropriate financial statements and Compliance Certificate are delivered,
the Applicable Margin shall be the highest rate per annum indicated in the above
pricing grid regardless of the Leverage Ratio at such time.

 

“Assignment Agreement” shall mean an Assignment and Acceptance Agreement in the
form of the attached Exhibit H.

 

“Authorized Officer” shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.

 

“Base Rate” shall mean a rate per annum equal to the greater of (a) the Prime
Rate or (b) one-half of one percent (.50%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.

 

“Base Rate Loan” shall mean a Revolving Loan or a portion of the Term Loan
described in Section 2.2(a) or 2.3 hereof on which Borrower shall pay interest
at a rate based on the Derived Base Rate.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which national banks are authorized or required to close, and, if the applicable
Business Day relates to a Eurodollar Loan, a day of the year on which dealings
in deposits are carried on in the London interbank Eurodollar market.

 

“Capital Distribution” shall mean a payment made, liability incurred or other
consideration given by a Company to any Person that is not a Company, for the
purchase, acquisition, redemption, repurchase or retirement of any capital stock
or other equity interest of such Company or as a dividend, return of capital or
other distribution (other than any stock dividend, stock split or other equity
distribution payable only in capital stock or other equity of such Company) in
respect of such Company’s capital stock or other equity interest.

 

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“Capitalized Lease Obligations” shall mean obligations of the Companies for the
payment of rent for any real or personal property under leases or agreements to
lease that, in accordance with GAAP, have been or should be capitalized on the
books of the lessee and, for purposes hereof, the amount of any such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Collateral Account” shall mean a commercial Deposit Account designated
“cash collateral account” and maintained by Borrower with Agent, without
liability by Agent or the Lenders to pay interest thereon, from which account
Agent, on behalf of the Lenders, subject to the provisions of Section 7.2
hereof, shall have the exclusive right to withdraw funds until all of the
Secured Obligations are paid in full.

 

“Cash Security” shall mean all cash, instruments, Deposit Accounts and other
cash equivalents, whether matured or unmatured, whether collected or in the
process of collection, upon which a Company presently has or may hereafter have
any claim, wherever located, including but not limited to any of the foregoing
that are presently or may hereafter be existing or maintained with, issued by,
drawn upon, or in the possession of Agent or any Lender.

 

“Change in Control” shall mean (a) the acquisition of, or, if earlier, the
shareholder or director approval of the acquisition of, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Closing Date, by any Person (other than MTD) or group (within the meaning of
Rule 13d-3 of the SEC under the Securities Exchange Act of 1934, as then in
effect) of shares representing more than thirty percent (30%) of the aggregate
ordinary Voting Power represented by the issued and outstanding capital stock of
Borrower; (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors or other governing body of Borrower by Persons
who were neither (i) nominated by the board of directors or other governing body
of Borrower nor (ii) appointed by directors so nominated; or (c) the occurrence
of a change in control, or other similar provision, as defined in any Material
Indebtedness Agreement; provided, however, that a “Change of Control” shall not
be deemed to have occurred by virtue of the acquisition or sale of shares of
Borrower by the MTD Pension Master Trust.

 

“Closing Commitment Amount” shall mean One Hundred Seventy-Five Million Dollars
($175,000,000).

 

“Closing Date” shall mean the effective date of this Agreement as set forth in
the first paragraph of this Agreement.

 

“Closing Fee Letter” shall mean the Closing Fee Letter between Borrower and
Agent, dated as of the Closing Date.

 

“Closing Revolving Amount” shall mean One Hundred Twenty-Five Million Dollars
($125,000,000).

 

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“Code” shall mean the Internal Revenue Code of 1986, as amended, together with
the rules and regulations promulgated thereunder.

 

“Collateral” shall mean all of Borrower’s existing and future (a) personal
property; (b) Accounts, instruments, contract rights, supporting obligations,
chattel paper, documents, Investment Property, letter-of-credit rights,
commercial tort claims, General Intangibles, Inventory and Equipment; (c) funds
now or hereafter on deposit in the Cash Collateral Account, if any; (d) Cash
Security; and (e) Proceeds of any of the foregoing; provided that Collateral
shall not include Excluded Assets.

 

“Commitment” shall mean the obligation hereunder of the Lenders to make Loans
and to participate in the issuance of Letters of Credit pursuant to the
Revolving Credit Commitment (during the Commitment Period) and the Term Loan
Commitment, up to the Total Commitment Amount.

 

“Commitment Increase Period” shall mean the period from the Closing Date to the
date that is thirty (30) days prior to the last day of the Commitment Period.

 

“Commitment Period” shall mean the period from the Closing Date to January 17,
2010, or such earlier date on which the Commitment shall have been terminated
pursuant to Article IX hereof.

 

“Companies” shall mean Borrower and all Subsidiaries.

 

“Company” shall mean Borrower or a Subsidiary.

 

“Compliance Certificate” shall mean a certificate, substantially in the form of
the attached Exhibit E.

 

“Confidential Information” shall mean all confidential or proprietary
information about the Companies that has been furnished by any Company to Agent
or any Lender, whether furnished before or after the Closing Date and regardless
of the manner in which it is furnished, but does not include any such
information that (a) is or becomes generally available to the public other than
as a result of a disclosure by Agent or such Lender not permitted by this
Agreement, (b) was available to Agent or such Lender on a nonconfidential basis
prior to its disclosure to Agent or such Lender, or (c) becomes available to
Agent or such Lender on a nonconfidential basis from a Person other than any
Company that is not, to the best knowledge of Agent or such Lender, acting in
violation of a confidentiality agreement with a Company or is not otherwise
prohibited from disclosing the information to Agent or such Lender.

 

“Confirmation of Security Documents” shall mean each Confirmation of Security
Documents, relating to Security Documents delivered by the Credit Parties prior
to the Closing Date, executed and delivered by a Credit Party as of the Closing
Date, as the same may from time to time be amended, restated or otherwise
modified.

 

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“Consideration” shall mean, in connection with an Acquisition, the aggregate
consideration paid, including borrowed funds, cash, the issuance of securities
or notes, the assumption or incurring of liabilities (direct or contingent), the
payment of consulting fees or fees for a covenant not to compete and any other
consideration paid for such Acquisition.

 

“Consolidated” shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.14 hereof.

 

“Consolidated Capital Expenditures” shall mean, for any period, the amount of
capital expenditures of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated Depreciation and Amortization Charges” shall mean, for any period,
the aggregate of all depreciation and amortization charges for fixed assets,
leasehold improvements and general intangibles (specifically including goodwill)
and any non-cash amortization related to deferred compensation arrangements of
Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated EBITDA” shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, Consolidated Net Earnings for
such period plus the aggregate amounts deducted in determining such Consolidated
Net Earnings in respect of (a) Consolidated Interest Expense, (b) Consolidated
Income Tax Expense, (c) Consolidated Depreciation and Amortization Charges, (d)
extraordinary or unusual non-cash losses not incurred in the ordinary course of
business but that were counted in the net income calculation for such period,
(e) non-cash charges incurred pursuant to any relevant Statements of Financial
Accounting Standards, (f) any collateral audit and appraisal fees referenced in
Section 2.9(c) or 5.3(g), and any Related Expenses, (g) non-cash restructuring
charges for such period in an aggregate amount not to exceed Ten Million Dollars
($10,000,000) during the term of this Agreement, and (h) non-cash charges
resulting from changes in estimates or assumptions related to employee
retirement and health benefit plans; provided that, with the prior written
consent of the Required Lenders, with respect to any Acquisition permitted by
this Agreement, Consolidated EBITDA may be calculated after giving pro forma
effect to such Acquisition as if such Acquisition had occurred on the first day
of the fiscal quarter such Acquisition took place, which calculations may also
include reasonable expenses.

 

“Consolidated Fixed Charges” shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, without duplication, the
aggregate of (a) scheduled principal payments on Funded Indebtedness (other than
optional prepayments of the Revolving Credit Notes) paid or payable, and (b)
Consolidated Interest Expense paid or payable.

 

“Consolidated Funded Indebtedness” shall mean, for any period, Funded
Indebtedness of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated Income Tax Expense” shall mean, for any period, all provisions for
taxes based on the gross or net income of Borrower (including, without
limitation, any additions to such taxes, and any penalties and interest with
respect thereto), and all franchise taxes of Borrower, as determined on a
Consolidated basis and in accordance with GAAP.

 

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“Consolidated Interest Expense” shall mean, for any period, the interest
expense, both expensed and capitalized, of Borrower for such period, as
determined on a Consolidated basis and in accordance with GAAP, excluding any
amortization of deferred financing fees.

 

“Consolidated Net Earnings” shall mean, for any period, the net income (loss) of
Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.

 

“Consolidated Net Worth” shall mean, at any date, the stockholders’ equity of
Borrower, determined as of such date on a Consolidated basis and in accordance
with GAAP; provided that (a) the amount of foreign currency translation shall be
excluded at all times; (b) any decrease to Consolidated Net Worth due to
non-cash restructuring charges in an aggregate amount not to exceed Ten Million
Dollars ($10,000,000) during the term of this Agreement shall be added back; and
(c) any comprehensive income losses, as defined under GAAP, shall be added back.

 

“Consolidated Total Liabilities” shall mean, at any date, the total of all items
of Indebtedness or liability of the Companies that, in accordance with GAAP,
would be included in determining total liabilities on the liability side of the
balance sheet, as determined on a Consolidated basis.

 

“Control Agreement” shall mean each Deposit Account Control Agreement among a
Credit Party, Agent and a depository institution, executed and delivered to
Agent, for the benefit of the Lenders, prior to, on or after the Closing Date,
as the same may from time to time be amended, restated or otherwise modified.

 

“Controlled Group” shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).

 

“Credit Event” shall mean the making by the Lenders of a Loan, the conversion by
the Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the
Lenders of a Eurodollar Loan after the end of the applicable Interest Period,
the making by the Swing Line Lender of a Swing Loan, or the issuance by the
Fronting Lender of a Letter of Credit.

 

“Credit Exposure” shall mean, at any time, with respect to a Specific
Commitment, the sum of (a) the aggregate principal amount of all Loans
outstanding, and (b) the Letter of Credit Exposure, if any.

 

“Credit Party” shall mean Borrower and any Subsidiary or other Affiliate that is
a Guarantor of Payment.

 

“Currency Hedge Agreement” shall mean any currency swap agreement, forward
currency purchase agreement or similar arrangement or agreement designed to
protect against fluctuations in currency exchange rates entered into by a
Company.

 

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“Debt”, as used under the Original Credit Agreement and the documents executed
in connection therewith, shall mean the Obligations.

 

“Default” shall mean an event or condition that constitutes, or with the lapse
of any applicable grace period or the giving of notice or both would constitute,
an Event of Default, and that has not been waived by the Required Lenders (or,
if applicable, all of the Lenders) in writing.

 

“Default Rate” shall mean (a) with respect to any Loan, a rate per annum equal
to two percent (2%) in excess of the rate otherwise applicable thereto, and (b)
with respect to any other amount, if no rate is specified or available, a rate
per annum equal to two percent (2%) in excess of the Derived Base Rate from time
to time in effect.

 

“Deposit Account” shall mean (a) a deposit account, as defined in the U.C.C.,
(b) any other deposit account, and (c) any demand, time, savings, checking,
passbook, or a similar account maintained with a bank, savings and loan
association, credit union, or similar organization.

 

“Derived Base Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Base Rate Loans plus the
Base Rate.

 

“Derived Eurodollar Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Eurodollar Loans plus the
Eurodollar Rate.

 

“Dollar” or the sign $ shall mean lawful money of the United States of America.

 

“Domestic Subsidiary” shall mean a Subsidiary that is not a Foreign Subsidiary.

 

“Dormant Subsidiary” shall mean a Company that (a) is not a Credit Party, (b)
has aggregate assets of less than One Hundred Thousand Dollars ($100,000) and
aggregate investments by the Companies of less than One Hundred Thousand Dollars
($100,000), and (c) has no direct or indirect Subsidiaries with aggregate assets
for all such Subsidiaries of more than One Hundred Thousand Dollars ($100,000).

 

“Eligible Transferee” shall mean a commercial bank, financial institution or
other “accredited investor” (as defined in SEC Regulation D) that is not
Borrower, a Subsidiary or an Affiliate.

 

“Environmental Laws” shall mean all provisions of law (including the common
law), statutes, ordinances, codes, rules, guidelines, policies, procedures,
orders-in-council, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by a Governmental
Authority or by any court, agency, instrumentality, regulatory authority or
commission of any of the foregoing concerning environmental health or safety and
protection of, or regulation of the discharge of substances into, the
environment.

 

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“Equalization Event” shall mean the earlier of (a) the occurrence of an Event of
Default under Section 8.14 hereof, or (b) the acceleration of the maturity of
the Obligations after the occurrence of an Event of Default.

 

“Equalization Maximum Amount” shall mean that term as defined in Section 9.5
hereof.

 

“Equalization Percentage” shall mean that term as defined in Section 9.5 hereof.

 

“Equipment” shall mean all equipment, as defined in the U.C.C.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated pursuant thereto.

 

“ERISA Event” shall mean (a) the existence of a condition or event with respect
to an ERISA Plan that presents a material risk of the imposition of an excise
tax or any other liability on a Company or of the imposition of a Lien on the
assets of a Company; (b) the engagement by a Controlled Group member in a
non-exempt “prohibited transaction” (as defined under ERISA Section 406 or Code
Section 4975) or a breach of a fiduciary duty under ERISA that could result in a
material liability to a Company; (c) the application by a Controlled Group
member for a waiver from the minimum funding requirements of Code Section 412 or
ERISA Section 302 or a Controlled Group member is required to provide security
under Code Section 401(a)(29) or ERISA Section 307; (d) the occurrence of a
Reportable Event with respect to any Pension Plan as to which notice is required
to be provided to the PBGC; (e) the withdrawal by a Controlled Group member from
a Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as
such terms are defined in ERISA Sections 4203 and 4205, respectively); (f) the
involvement of, or occurrence or existence of any event or condition that makes
likely the involvement of, a Multiemployer Plan in any reorganization under
ERISA Section 4241; (g) the failure of an ERISA Plan (and any related trust)
that is intended to be qualified under Code Sections 401 and 501 to be so
qualified or the failure of any “cash or deferred arrangement” under any such
ERISA Plan to meet the requirements of Code Section 401(k); (h) the taking by
the PBGC of any steps to terminate a Pension Plan or appoint a trustee to
administer a Pension Plan, or the taking by a Controlled Group member of any
steps to terminate a Pension Plan; (i) the failure by a Controlled Group member
or an ERISA Plan to satisfy any material requirements of law applicable to an
ERISA Plan; (j) the commencement, existence or threatening of a material claim,
action, suit, audit or investigation with respect to an ERISA Plan, other than a
routine claim for benefits; or (k) any incurrence by or any expectation of the
incurrence by a Controlled Group member of any liability for post-retirement
benefits under any Welfare Plan, other than as required by ERISA Section 601,
et. seq. or Code Section 4980B.

 

“ERISA Plan” shall mean an “employee benefit plan” (within the meaning of ERISA
Section 3(3)) that a Controlled Group member at any time sponsors, maintains,
contributes to, has liability with respect to or has an obligation to contribute
to such plan.

 

“Eurodollar” shall mean a Dollar denominated deposit in a bank or branch outside
of the United States.

 

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“Eurodollar Loan” shall mean a Revolving Loan or a portion of the Term Loan
described in Section 2.2(a) or 2.3 hereof on which Borrower shall pay interest
at a rate based upon the Derived Eurodollar Rate.

 

“Eurodollar Rate” shall mean, with respect to a Eurodollar Loan, for any
Interest Period, a rate of interest equal to (a) the per annum rate of interest
at which United States dollar deposits in an amount comparable to the amount of
such Eurodollar Loan and for a period equal to the such Interest Period are
offered in the London Interbank Eurodollar market at 11:00 A.M. (London time)
two Business Days prior to the commencement of such Interest Period (or three
Business Days prior to the commencement of such Interest Period if banks in
London, England were not open and dealing in offshore United States dollars on
such second preceding Business Day), as displayed in the Bloomberg Financial
Markets Information Service system (or other authoritative source selected by
Agent in its sole discretion) or, if the Bloomberg Financial Markets Information
Service system or another authoritative source is not available, as the
Eurodollar Rate is otherwise determined by Agent in its sole and absolute
discretion, divided by (b) a number determined by subtracting from 1.00 the then
stated maximum reserve percentage for determining reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency funding or
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D), such rate to remain fixed for such Interest Period. Agent’s
determination of the Eurodollar Rate shall be conclusive, absent manifest error.

 

“Event of Default” shall mean an event or condition that shall constitute an
event of default as defined in Article VIII hereof.

 

“Excluded Assets” shall mean the Valley City Steel Assets and all of the shares
of capital stock of Manulife Financial Corporation owned by the Companies.

 

“Excluded Taxes” shall mean net income taxes (and franchise taxes imposed in
lieu of net income taxes) imposed on Agent or a Lender by the Governmental
Authority located in the jurisdiction where Agent or such Lender is organized
(other than any such taxes arising solely from Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document).

 

“Existing Letter of Credit” shall mean that term as defined in Section
2.2(b)(vii) hereof.

 

“Federal Funds Effective Rate” shall mean, for any day, the rate per annum
(rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the Closing Date.

 

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“Financial Officer” shall mean any of the following officers: chief executive
officer, president, chief financial officer, treasurer or corporate controller.
Unless otherwise qualified, all references to a Financial Officer in this
Agreement shall refer to a Financial Officer of Borrower.

 

“Fixed Charge Coverage Ratio” shall mean, as determined for the most recently
completed four fiscal quarters of Borrower, on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Consolidated EBITDA, minus (i)
Consolidated Capital Expenditures, minus (ii) Restricted Payments, minus (iii)
Consolidated income taxes paid in cash; to (b) Consolidated Fixed Charges.

 

“Foreign Subsidiary” shall mean a Subsidiary that is organized outside of the
United States.

 

“Fronting Lender” shall mean, (a) as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent
either shall be unable to issue or shall agree that another Revolving Lender may
issue, a Letter of Credit, such other Revolving Lender as shall agree to issue
the Letter of Credit in its own name, but on behalf of the Revolving Lenders
hereunder, or (b) as to any Existing Letter of Credit, LaSalle Bank National
Association.

 

“Funded Indebtedness” shall mean all Indebtedness (other than Indebtedness
pursuant to undrawn Letters of Credit under this Agreement), including, but not
limited to, current, long-term and Subordinated Indebtedness, if any.

 

“GAAP” shall mean generally accepted accounting principles in the United States
as then in effect, which shall include the official interpretations thereof by
the Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower; provided that, if Borrower
notifies Agent that Borrower requests an amendment to any provisions hereof to
eliminate the effect of any change occurring after the Closing Date in GAAP or
in the application thereof on the operation of such provision, regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then Agent and the Required Lenders will negotiate in good
faith with Borrower to appropriately modify such covenants; and further provided
that the existing covenants will remain effective until an appropriate amendment
is executed.

 

“General Intangibles” shall mean all (a) general intangibles, as defined in the
U.C.C.; and (b) choses in action, causes of action, intellectual property,
customer lists, corporate or other business records, inventions, designs,
patents, patent applications, service marks, registrations, trade names,
trademarks, copyrights, licenses, goodwill, computer software, rights to
indemnification and tax refunds.

 

“Governmental Authority” shall mean any nation or government, any state,
province or territory or other political subdivision thereof, any governmental
agency, department, authority, instrumentality, regulatory body, court, central
bank or other governmental entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization.

 

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“Guarantor” shall mean a Person that shall have pledged its credit or property
in any manner for the payment or other performance of the indebtedness, contract
or other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
shall have agreed conditionally or otherwise to make any purchase, loan or
investment in order thereby to enable another to prevent or correct a default of
any kind.

 

“Guarantor of Payment” shall mean each of the Companies set forth on Schedule 2
hereto, that are each executing and delivering a Guaranty of Payment, or any
other Person that shall deliver a Guaranty of Payment to Agent subsequent to the
Closing Date.

 

“Guaranty of Payment” shall mean each Guaranty of Payment and Amended and
Restated Guaranty of Payment executed and delivered on or after the Closing Date
in connection with this Agreement by the Guarantors of Payment, as the same may
from time to time be amended, restated or otherwise modified.

 

“Hedge Agreement” shall mean any Interest Rate Hedge Agreement or Currency Hedge
Agreement.

 

“Indebtedness” shall mean, for any Company (excluding in all cases trade
payables and accrued liabilities relating to working capital and employee
matters payable in the ordinary course of business by such Company), without
duplication, (a) all obligations to repay borrowed money, direct or indirect,
incurred, assumed, or guaranteed (other than obligations incurred for the
purchase of insurance policies, including general commercial liability,
property, casualty, director and officer and foreign liability insurance), (b)
all obligations for the deferred purchase price of capital assets, (c) all
obligations under conditional sales or other title retention agreements, (d) all
obligations (contingent or otherwise) under any letter of credit or banker’s
acceptance, (e) all net obligations under any currency swap agreement, interest
rate swap, cap, collar or floor agreement or other interest rate management
device or any Hedge Agreement, (f) all synthetic leases, (g) all lease
obligations that have been or should be capitalized on the books of such Company
in accordance with GAAP, (h) all obligations of such Company with respect to
asset securitization financing programs, (i) all obligations to advance funds
to, or to purchase assets, property or services from, any other Person in order
to maintain the financial condition of such Person, (j) all indebtedness of any
partnership in which such Company is a general partner, (k) any other
transaction (including forward sale or purchase agreements) having the
commercial effect of a borrowing of money entered into by such Company to
finance its operations or capital requirements, and (l) any guaranty of any
obligation described in subparts (a) through (k) hereof.

 

“Intellectual Property Collateral Assignment Agreement” shall mean the
Intellectual Property Collateral Assignment Agreement, executed and delivered by
Borrower and each Guarantor of Payment in favor of Agent, for the benefit of the
Lenders, dated prior to the Closing Date, granting a security interest in and a
collateral assignment of all intellectual property owned by Borrower or such
Guarantor of Payment, and any other Intellectual Property Collateral Assignment
Agreement executed on or after the Closing Date, as the same may from time to
time be amended, restated or otherwise modified.

 

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“Interest Adjustment Date” shall mean the last day of each Interest Period.

 

“Interest Period” shall mean, with respect to a Eurodollar Loan, the period
commencing on the date such Eurodollar Loan is made and ending on the last day
of such period, as selected by Borrower pursuant to the provisions hereof, and,
thereafter (unless, with respect to a Eurodollar Loan, such Eurodollar Loan is
converted to a Base Rate Loan), each subsequent period commencing on the last
day of the immediately preceding Interest Period and ending on the last day of
such period, as selected by Borrower pursuant to the provisions hereof. The
duration of each Interest Period for a Eurodollar Loan shall be one month, two
months, three months or six months, in each case as Borrower may select upon
notice, as set forth in Section 2.6 hereof; provided that, if Borrower shall
fail to so select the duration of any Interest Period for a Eurodollar Loan at
least three Business Days prior to the Interest Adjustment Date applicable to
such Eurodollar Loan, Borrower shall be deemed to have converted such Eurodollar
Loan to a Base Rate Loan at the end of the then current Interest Period.

 

“Interest Rate Hedge Agreement” shall mean any hedge agreement, interest rate
swap, cap, collar or floor agreement, or other interest rate management device
entered into by a Company with any Person in connection with any Indebtedness of
a Company.

 

“Interest Rate Protection” shall mean, with respect to Indebtedness of Borrower,
that either (a) Borrower shall have obtained a fixed rate of interest on such
Indebtedness, or (b) Borrower shall have entered into an Interest Rate Hedge
Agreement or Interest Rate Hedge Agreements; either of which shall be upon such
terms and conditions as shall be reasonably satisfactory to Agent.

 

“Inventory” shall mean all inventory, as defined in the U.C.C.

 

“Investment Property” shall mean all investment property, as defined in the
U.C.C., unless the Uniform Commercial Code as in effect in another jurisdiction
would govern the perfection and/or priority of a security interest in investment
property, and, in such case, “Investment Property” shall be defined in
accordance with the law of that jurisdiction as in effect from time to time.

 

“Landlord’s Waiver” shall mean a landlord’s waiver or mortgagee’s waiver, each
in form and substance reasonably satisfactory to Agent, executed and delivered
in connection with this Agreement by a Credit Party to Agent, for the benefit of
the Lenders, prior to, on or after the Closing Date, as such waiver may from
time to time be amended, restated or otherwise modified.

 

“Lender Credit Exposure” shall mean, for any Lender, at any time, the aggregate
of such Lender’s respective pro rata shares of the Revolving Credit Exposure and
the Term Loan Exposure.

 

“Letter of Credit” shall mean a commercial documentary letter of credit or
standby letter of credit that shall be issued by the Fronting Lender for the
account of Borrower or a Guarantor of Payment, including amendments thereto, if
any, and shall have an expiration date no later than the earlier of (a) one year
after its date of issuance or (b) thirty (30) days prior to the last day of the
Commitment Period.

 

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“Letter of Credit Commitment” shall mean the commitment of the Fronting Lender,
on behalf of the Revolving Lenders, to issue Letters of Credit in an aggregate
face amount of up to Fifteen Million Dollars ($15,000,000).

 

“Letter of Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate undrawn face amount of all issued and outstanding Letters of Credit,
and (b) the aggregate of the draws made on Letters of Credit that have not been
reimbursed by Borrower or converted to a Revolving Loan pursuant to Section
2.2(b)(v) hereof.

 

“Leverage Ratio” shall mean, as determined on a Consolidated basis and in
accordance with GAAP, the ratio of (a) Consolidated Funded Indebtedness (for the
most recently completed fiscal quarter of Borrower) to (b) Consolidated EBITDA
(for the most recently completed four fiscal quarters of Borrower).

 

“Lien” shall mean any mortgage, deed of trust, security interest, lien
(statutory or other), charge, assignment, hypothecation, encumbrance on, pledge
or deposit of, or conditional sale, leasing (other than operating leases), sale
with a right of redemption or other title retention agreement and any
capitalized lease with respect to any property (real or personal) or asset.

 

“Loan” shall mean a Revolving Loan, a Swing Loan or the Term Loan granted to
Borrower by the Lenders in accordance with Section 2.2 or 2.3 hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, each Note, each
Guaranty of Payment, all documentation relating to each Letter of Credit, each
Security Document, the Master Letter of Credit Agreement, the Agent Fee Letter
and the Closing Fee Letter, as any of the foregoing may from time to time be
amended, restated or otherwise modified or replaced, and any other document
delivered pursuant thereto.

 

“Mandatory Prepayment” shall mean that term as defined in Section 2.12(c)
hereof.

 

“Master Letter of Credit Agreement” shall mean the Master Letter of Credit
Agreement in the form of the attached Exhibit H.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of Borrower, or (b) the business, operations, property, condition (financial or
otherwise) or prospects of the Companies taken as a whole.

 

“Material Indebtedness Agreement” shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing any Indebtedness of any Company or the Companies in
excess of the amount of Five Million Dollars ($5,000,000).

 

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“Material Recovery Determination Notice” shall mean that term as defined in
Section 2.12(c)(iv) hereof.

 

“Material Recovery Event” shall mean (a) any casualty loss in respect of assets
of a Company covered by casualty insurance, and (b) any compulsory transfer or
taking under threat of compulsory transfer of any asset of a Company by any
Governmental Authority; provided that, in the case of either (a) or (b), the
proceeds received by the Companies from such loss, transfer or taking exceeds
Five Hundred Thousand Dollars ($500,000).

 

“Maximum Amount” shall mean, for each Lender, the amount set forth opposite such
Lender’s name under the column headed “Maximum Amount” as set forth on Schedule
1 hereto, subject to decreases determined pursuant to Section 2.10(a) hereof,
increases pursuant to Section 2.10(b) hereof and assignments of interests
pursuant to Section 11.10 hereof; provided, however, that the Maximum Amount for
the Swing Line Lender shall exclude the Swing Line Commitment (other than its
pro rata share), and the Maximum Amount of the Fronting Lender shall exclude the
Letter of Credit Commitment (other than its pro rata share).

 

“Maximum Commitment Amount” shall mean Two Hundred Million Dollars
($200,000,000).

 

“Maximum Revolving Amount” shall mean One Hundred Fifty Million Dollars
($150,000,000).

 

“Mexican Lease” shall mean an operating lease for manufacturing equipment
entered into by a Mexican Subsidiary.

 

“Mexican Subsidiary” shall mean Shiloh De Mexico, S.A. De C.V., Shiloh
International, S.A. De C.V., and any other Foreign Subsidiary created after the
Closing Date that is organized in Mexico.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor to such
company.

 

“Mortgage” shall mean each Open-End Mortgage, Assignment of Leases and Rents and
Security Agreement (or comparable document), relating to the Real Property,
executed and delivered by a Company, on or as of the closing date of the
Original Credit Agreement or on or as of the Closing Date, as the same may from
time to time be amended, restated or otherwise modified.

 

“Mortgage Amendment” shall mean each Open-End Mortgage Modification Agreement,
relating to each Mortgage delivered prior to the Closing Date, executed and
delivered by a Company as of the Closing Date.

 

“MTD” shall mean MTD Holdings Inc, formerly known as MTD Products Inc., an Ohio
corporation, and its subsidiaries (other than Borrower or any direct or indirect
subsidiary of Borrower).

 

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“Multiemployer Plan” shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.

 

“Note” shall mean a Revolving Credit Note, the Swing Line Note or a Term Note,
or any other promissory note delivered pursuant to this Agreement.

 

“Notice of Loan” shall mean a Notice of Loan in the form of the attached Exhibit
D.

 

“Obligations” shall mean, collectively, (a) all Indebtedness and other
obligations incurred by Borrower to Agent, the Fronting Lender, the Swing Line
Lender, or any Lender pursuant to this Agreement and includes the principal of
and accrued interest on all Loans and all obligations pursuant to Letters of
Credit, (b) each extension, renewal or refinancing of the foregoing, in whole or
in part, (c) the commitment and other fees and any prepayment fees payable
hereunder, and all fees and charges in connection with Letters of Credit, and
(d) all Related Expenses.

 

“Organizational Documents” shall mean, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, operating
agreement or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.

 

“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise, ad valorem or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, use taxes, value added
taxes, charges or similar taxes or levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

 

“Overall Commitment Percentage” shall mean a Lender’s percentage of the sum of
the aggregate principal amount of all Loans outstanding plus the Letter of
Credit Exposure.

 

“Patriot Act” shall mean Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as
amended from time to time.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or its successor.

 

“Pension Plan” shall mean an ERISA Plan that is a “pension plan” (within the
meaning of ERISA Section 3(2)).

 

“Permitted Investment” shall mean an investment of a Company in the stock (or
other debt or equity instruments) of a Person (other than a Company), so long as
(a) the Company making the investment is a Credit Party; and (b) the aggregate
amount of all such investments of all Companies does not exceed, at any time, an
aggregate amount of One Million Dollars ($1,000,000).

 

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“Permitted Mexican Subsidiary Loans and Investments” shall mean (a) loans to the
Mexican Subsidiaries from, and investments in the Mexican Subsidiaries by
Borrower or any Domestic Subsidiary in an amount not to exceed, in the aggregate
for all such loans and investments, Five Million Dollars ($5,000,000) at any
time outstanding or existing (exclusive of the loans and investments made prior
to the Closing Date, as listed in Schedule 5.11 hereto) ; and (b) loans to a
Mexican Subsidiary from a Mexican Subsidiary.

 

“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, unincorporated organization, corporation, limited liability company,
unlimited liability company, institution, trust, estate, government or other
agency or political subdivision thereof or any other entity.

 

“Pledge Agreement” shall mean each of the Pledge Agreements, relating to the
Pledged Securities, executed and delivered by Borrower, Shiloh Corporation and
The Sectional Die Company, in favor of Agent, for the benefit of the Lenders,
prior to, on or after the Closing Date, and any other Pledge Agreement executed
by any other Domestic Subsidiary on or after the Closing Date, as any of the
foregoing may from time to time be amended, restated or otherwise modified.

 

“Pledged Securities” shall mean the shares of capital stock or other equity
interest of a Subsidiary of Borrower, whether now owned or hereafter acquired or
created, and all proceeds thereof; provided that, with respect to the Mexican
Subsidiary, Pledged Securities shall only include up to sixty-five percent (65%)
(or sixty-four percent (64%) with respect to Mexico International, S.A. de C.V.)
of the fixed capital shares and shall exclude the variable shares.

 

“Prime Rate” shall mean, for any day, the rate of interest in effect for such
day as publicly announced from time to time by Agent as its prime rate (whether
or not such rate is actually charged by Agent). Any change in the Prime Rate
announced by Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

 

“Proceeds” shall mean (a) proceeds as defined in the U.C.C., and any other
proceeds, and (b) whatever is received upon the sale, exchange, collection or
other disposition of Collateral or proceeds, whether cash or non-cash. Cash
proceeds includes, without limitation, moneys, checks and Deposit Accounts.
Proceeds includes, without limitation, any Account arising when the right to
payment is earned under a contract right, any insurance payable by reason of
loss or damage to the Collateral, and any return or unearned premium upon any
cancellation of insurance. Except as expressly authorized in this Agreement, the
right of Agent and the Lenders to Proceeds specifically set forth herein or
indicated in any financing statement shall never constitute an express or
implied authorization on the part of Agent or any Lender to a Company’s sale,
exchange, collection or other disposition of any or all of the Collateral.

 

“Real Property” shall mean each parcel of real estate owned by a Credit Party as
set forth on Schedule 3 hereto, together with all improvements and buildings
thereon and all appurtenances, easements or other rights thereto belonging, and
being defined collectively as the “Property” in each of the Mortgages.

 

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“Regularly Scheduled Payment Date” shall mean the last day of each March, June,
September and December of each year.

 

“Related Expenses” shall mean any and all costs, liabilities and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
attorneys’ fees, legal expenses, judgments, suits and disbursements) (a)
incurred by Agent (and not previously reimbursed by Borrower), or imposed upon
or asserted against Agent, or any Lender in any attempt by Agent and the Lenders
to (i) obtain, preserve, perfect or enforce any Loan Document or any security
interest evidenced by any Loan Document; (ii) obtain payment, performance or
observance of any and all of the Obligations; or (iii) maintain, insure, audit,
collect, preserve, repossess or dispose of any of the collateral securing the
Obligations or any part thereof, including, without limitation, costs and
expenses for appraisals, assessments and audits of any Company or any such
collateral; or (b) incidental or related to (a) above, including, without
limitation, interest thereupon from the date incurred, imposed or asserted until
paid at the Default Rate.

 

“Related Writing” shall mean each Loan Document and any other assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by any Credit
Party, or any of its officers, to Agent or the Lenders pursuant to or otherwise
in connection with this Agreement.

 

“Reportable Event” shall mean any of the events described in Section 4043 of
ERISA except where notice is waived by the PBGC.

 

“Request for Extension” shall mean a notice, substantially in the form of the
attached Exhibit G.

 

“Required Lenders” shall mean the holders of at least fifty-one percent (51%) of
the sum of (a) the principal outstanding under the Term Notes, and (b) (i)
during the Commitment Period, the Revolving Amount, or (ii) after the Commitment
Period, the aggregate amount outstanding under all of the Revolving Credit Notes
(other than the Swing Line Note) and the Letter of Credit Exposure and the Swing
Line Exposure; provided that, if there shall be two or more Lenders, Required
Lenders shall constitute at least two Lenders.

 

“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or
regulation or determination or policy statement or interpretation of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property.

 

“Restricted Payment” shall mean, with respect to any Company, (a) any Capital
Distribution, (b) any amount paid by such Company in repayment, redemption,
retirement or repurchase, directly or indirectly, of any Subordinated
Indebtedness, if any, or (c) any amount paid by such Company in respect of any
management, consulting or other similar arrangement with any shareholder (other
than a Company) of a Company or Affiliate, excluding any employment agreement or
directors’ compensation.

 

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“Revolving Amount” shall mean the Closing Revolving Amount, as such amount may
be increased up to the Maximum Revolving Amount pursuant to Section 2.10(b)
hereof, or decreased pursuant to Section 2.10(a) hereof.

 

“Revolving Credit Availability” shall mean, at any time, the amount equal to the
Revolving Credit Commitment minus the Revolving Credit Exposure.

 

“Revolving Credit Commitment” shall mean the obligation hereunder, during the
Commitment Period, of (a) each Revolving Lender to make Revolving Loans, (b) the
Fronting Lender to issue, and each Revolving Lender to participate in, Letters
of Credit pursuant to the Letter of Credit Commitment, and (c) the Swing Line
Lender to make, and each Revolving Lender to participate in, Swing Loans
pursuant to the Swing Line Commitment; up to the Maximum Amount for such
Revolving Lender and up to an aggregate principal amount equal to the Revolving
Amount for all Revolving Lenders.

 

“Revolving Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, (b) the Swing
Line Exposure, and (c) the Letter of Credit Exposure.

 

“Revolving Credit Note” shall mean a Revolving Credit Note executed and
delivered pursuant to Section 2.5(a) hereof.

 

“Revolving Lender” shall mean a Lender with a percentage of the Revolving Credit
Commitment as set forth on Schedule 1 hereto.

 

“Revolving Loan” shall mean a Loan granted to Borrower by the Revolving Lenders
in accordance with Section 2.2(a) hereof.

 

“SEC” shall mean the United States Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principal functions.

 

“Secured Obligations” shall mean, collectively, (a) the Obligations, and (b) all
obligations and liabilities of the Companies owing to Lenders under Hedge
Agreements.

 

“Security Agreement” shall mean each Security Agreement executed and delivered
to Agent, for the benefit of the Lenders, by a Guarantor of Payment prior to, on
or after the Closing Date, as the same may from time to time be amended,
restated or otherwise modified.

 

“Security Documents” shall mean each Security Agreement, each Pledge Agreement,
each Intellectual Property Collateral Assignment Agreement, each Mortgage,
Mortgage Amendment, Landlord’s Waiver, each Control Agreement, each Confirmation
of Security Documents, each U.C.C. Financing Statement or similar filing as to a
jurisdiction located outside of the United States of America filed in connection
herewith or perfecting any interest created in any of the foregoing documents,
and any other document pursuant to which any Lien is granted by a Company or any
other Person to Agent, for the benefit of the Lenders, as security for the
Secured Obligations, or any part thereof, and each other agreement executed in
connection with any of the foregoing, as any of the foregoing may from time to
time be amended, restated or otherwise modified or replaced.

 

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“Specific Commitment” shall mean the Revolving Credit Commitments or the Term
Loan Commitment.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Group, a division of
McGraw-Hill, Inc., or any successor to such company.

 

“Subordinated” shall mean, as applied to Indebtedness, Indebtedness that shall
have been subordinated (by written terms or written agreement being, in either
case, in form and substance satisfactory to Agent and the Required Lenders) in
favor of the prior payment in full of the Obligations.

 

“Subsidiary” of a Company shall mean (a) a corporation more than fifty percent
(50%) of the Voting Power of which is owned, directly or indirectly, by such
Company or by one or more other subsidiaries of such Company or by such Company
and one or more subsidiaries of such Company, (b) a partnership, limited
liability company or unlimited liability company of which such Company, one or
more other subsidiaries of such Company or such Company and one or more
subsidiaries of such Company, directly or indirectly, is a general partner or
managing member, as the case may be, or otherwise has an ownership interest
greater than fifty percent (50%) of all of the ownership interests in such
partnership, limited liability company or unlimited liability company, or (c)
any other Person (other than a corporation, partnership, limited liability
company or unlimited liability company) in which such Company, one or more other
subsidiaries of such Company or such Company and one or more subsidiaries of
such Company, directly or indirectly, has at least a majority interest in the
Voting Power or the power to elect or direct the election of a majority of
directors or other governing body of such Person.

 

“Swing Line Commitment” shall mean the commitment of the Swing Line Lender to
make Swing Loans to Borrower up to the aggregate amount at any time outstanding
of Ten Million Dollars ($10,000,000).

 

“Swing Line Exposure” shall mean, at any time, the aggregate principal amount of
all Swing Loans outstanding.

 

“Swing Line Lender” shall mean LaSalle Bank National Association, as holder of
the Swing Line Commitment.

 

“Swing Line Note” shall mean the Swing Line Note executed and delivered pursuant
to Section 2.5(b) hereof.

 

“Swing Loan” shall mean a loan granted to Borrower by the Swing Line Lender
under the Swing Line Commitment.

 

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“Swing Loan Maturity Date” shall mean, with respect to any Swing Loan, the
earlier of (a) thirty (30) days after the date such Swing Loan is made, or (b)
the last day of the Commitment Period.

 

“Taxes” shall mean any and all present or future taxes of any kind, including
but not limited to, levies, imposts, duties, charges, fees, deductions or
withholdings now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority (together with any interest, penalties, additions
to taxes or similar liabilities with respect thereto) other than Excluded Taxes.

 

“Term Lender” shall mean a Lender with a percentage of the Term Loan Commitment
as set forth on Schedule 1 hereto.

 

“Term Loan” shall mean the Loan granted to Borrower by the Term Lenders in
accordance with Section 2.3 hereof.

 

“Term Loan Commitment” shall mean the obligation hereunder of the Term Lenders
to make a Term Loan in the original principal amount of Fifty Million Dollars
($50,000,000), with each Term Lender’s obligation to participate therein being
in the amount set forth opposite such Term Lender’s name under the column headed
“Term Loan Commitment Amount” as set forth on Schedule 1 hereto.

 

“Term Loan Exposure” shall mean, at any time, the outstanding principal amount
of the Term Loan.

 

“Term Note” shall mean a Term Note executed and delivered pursuant to Section
2.5(c) hereof.

 

“Total Commitment Amount” shall mean the Closing Commitment Amount, as such
amount may be increased up to the Maximum Commitment Amount pursuant to Section
2.10(b) hereof, or decreased pursuant to Section 2.10(a) hereof.

 

“U.C.C.” shall mean the Uniform Commercial Code, as in effect from time to time
in Ohio.

 

“U.C.C. Financing Statement” shall mean a financing statement filed or to be
filed in accordance with the Uniform Commercial Code, as in effect from time to
time, in the relevant state or states.

 

“Valley City Steel Assets” shall mean (a) the forty-nine percent (49%) ownership
interest of VCS Properties, LLC in Valley City Steel, LLC, (b) the one hundred
percent (100%) ownership interest of Shiloh Corporation in VCS Properties, LLC,
and (c) all of the assets (including personal property and real property) of VCS
Properties, LLC.

 

“Voting Power” shall mean, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or

 

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otherwise, the election of members of the board of directors or other similar
governing body of such Person. The holding of a designated percentage of Voting
Power of a Person means the ownership of shares of capital stock, partnership
interests, membership interests or other interests of such Person sufficient to
control exclusively the election of that percentage of the members of the board
of directors or similar governing body of such Person.

 

“Welfare Plan” shall mean an ERISA Plan that is a “welfare plan” within the
meaning of ERISA Section 3(l).

 

“Wholly-Owned Subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, unlimited liability company or other
entity, all of the securities or other ownership interest of which having
ordinary Voting Power to elect a majority of the board of directors, or other
persons performing similar functions, are at the time directly or indirectly
owned by such Person.

 

Section 1.2. Accounting Terms. Any accounting term not specifically defined in
this Article I shall have the meaning ascribed thereto by GAAP.

 

Section 1.3. Terms Generally. The foregoing definitions shall be applicable to
the singular and plurals of the foregoing defined terms. Unless otherwise
defined in this Article I, terms that are defined in the U.C.C. are used herein
as so defined.

 

ARTICLE II. AMOUNT AND TERMS OF CREDIT

 

Section 2.1. Amount and Nature of Credit.

 

(a) Subject to the terms and conditions of this Agreement, the Lenders, during
the Commitment Period and to the extent hereinafter provided, shall make Loans
to Borrower, participate in Swing Loans made by the Swing Line Lender to
Borrower, and issue or participate in Letters of Credit at the request of
Borrower, in such aggregate amount as Borrower shall request pursuant to the
Commitment; provided, however, that in no event shall the aggregate principal
amount of all Loans and Letters of Credit outstanding under this Agreement be in
excess of the Total Commitment Amount.

 

(b) Each Lender, for itself and not one for any other, agrees to make Loans,
participate in Swing Loans, and issue or participate in Letters of Credit,
during the Commitment Period, on such basis that, immediately after the
completion of any borrowing by Borrower or the issuance of a Letter of Credit:

 

(i) the aggregate outstanding principal amount of Loans made by such Lender
(other than Swing Loans made by the Swing Line Lender), when combined with such
Lender’s pro rata share, if any, of the Letter of Credit Exposure and the Swing
Line Exposure, shall not be in excess of the Maximum Amount for such Lender; and

 

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(ii) with respect to each Specific Commitment, the aggregate outstanding
principal amount of Loans (other than the Swing Loans) made by such Lender with
respect to such Specific Commitment shall represent that percentage of the
aggregate principal amount then outstanding on all Loans (other than Swing
Loans) within such Specific Commitment that shall be such Lender’s Applicable
Commitment Percentage. Within each Specific Commitment, each borrowing (other
than Swing Loans which shall be risk participated on a pro rata basis) from the
Lenders shall be made pro rata according to the respective Applicable Commitment
Percentages of the Lenders.

 

(c) The Loans may be made as Revolving Loans as described in Section 2.2(a)
hereof, as a Term Loan as described in Section 2.3 hereof, and as Swing Loans as
described in Section 2.2(c) hereof, and Letters of Credit may be issued in
accordance with Section 2.2(b) hereof.

 

Section 2.2. Revolving Credit.

 

(a) Revolving Loans. Subject to the terms and conditions of this Agreement,
during the Commitment Period, the Revolving Lenders shall make a Revolving Loan
or Revolving Loans to Borrower in such amount or amounts as Borrower may from
time to time request, but not exceeding in aggregate principal amount at any
time outstanding hereunder the Revolving Amount, when such Revolving Loans are
combined with the Letter of Credit Exposure and the Swing Line Exposure.
Borrower shall have the option, subject to the terms and conditions set forth
herein, to borrow Revolving Loans, maturing on the last day of the Commitment
Period, by means of any combination of Base Rate Loans or Eurodollar Loans.
Subject to the provisions of this Agreement, Borrower shall be entitled under
this Section 2.2(a) to borrow funds, repay the same in whole or in part and
re-borrow hereunder at any time and from time to time during the Commitment
Period.

 

(b) Letters of Credit.

 

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Fronting Lender shall, in its own name, on behalf of the
Revolving Lenders, issue such Letters of Credit for the account of a Credit
Party, as Borrower may from time to time request. Borrower shall not request any
Letter of Credit (and the Fronting Lender shall not be obligated to issue any
Letter of Credit) if, after giving effect thereto, (A) the Letter of Credit
Exposure would exceed the Letter of Credit Commitment or (B) the Revolving
Credit Exposure would exceed the Revolving Amount. The issuance of each Letter
of Credit shall confer upon each Revolving Lender the benefits and liabilities
of a participation consisting of an undivided pro rata interest in the Letter of
Credit to the extent of such Revolving Lender’s Applicable Commitment
Percentage.

 

(ii) Request for Letter of Credit. Each request for a Letter of Credit shall be
delivered to Agent (and to the Fronting Lender, if the Fronting Lender is a
Lender other than Agent) by an Authorized Officer not later than 11:00 A.M.
(Eastern time) three Business Days prior to the day upon which the Letter of
Credit is to be issued. Each such

 

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request shall be in a form acceptable to Agent (and to the Fronting Lender, if
the Fronting Lender is a Lender other than Agent) and shall specify the face
amount thereof, whether such Letter of Credit is a commercial documentary or a
standby Letter of Credit, the account party, the beneficiary, the intended date
of issuance, the expiry date thereof, and the nature of the transaction to be
supported thereby. Concurrently with each such request, Borrower, and any
Guarantor of Payment for whose account the Letter of Credit is to be issued,
shall execute and deliver to the Fronting Lender an appropriate application and
agreement, being in the standard form of the Fronting Lender for such letters of
credit (which as of the Closing Date is, with respect to Agent as Fronting
Lender, the Master Letter of Credit Agreement), as amended to conform to the
provisions of this Agreement if required by Agent. (Unless otherwise agreed by
Agent as Fronting Lender, in the event of a conflict between this Agreement and
the Master Letter of Credit Agreement, which conflict cannot be reasonably
resolved to give meaning to the provisions of both agreements, the Master Letter
of Credit Agreement will control.) Agent shall give the Fronting Lender and each
Revolving Lender notice of each such request for a Letter of Credit.

 

(iii) Commercial Documentary Letters of Credit. With respect to each Letter of
Credit that shall be a commercial documentary letter of credit and the drafts
thereunder, whether issued for the account of Borrower or any other Credit
Party, Borrower agrees to (A) pay to Agent, for the pro rata benefit of the
Revolving Lenders, a non-refundable commission based upon the face amount of
such Letter of Credit, which shall be paid quarterly in arrears, on each
Regularly Scheduled Payment Date, at a rate per annum equal to the Applicable
Margin for Eurodollar Loans (in effect on the date such payment is to be made)
multiplied by the face amount of such Letter of Credit; (B) pay to Agent, for
the sole benefit of the Fronting Lender, an additional Letter of Credit fee,
which shall be paid on the date that any draw shall be made on such on such
Letter of Credit, at the rate of one-eighth percent (1/8%) of the amount drawn
under such Letter of Credit; and (C) pay to Agent, for the sole benefit of the
Fronting Lender, such other issuance, amendment, negotiation, draw, acceptance,
telex, courier, postage and similar transactional fees as are generally charged
by the Fronting Lender under its fee schedule as in effect from time to time.

 

(iv) Standby Letters of Credit. With respect to each Letter of Credit that shall
be a standby letter of credit and the drafts thereunder, if any, whether issued
for the account of Borrower or any other Credit Party, Borrower agrees to (A)
pay to Agent, for the pro rata benefit of the Revolving Lenders, a
non-refundable commission based upon the face amount of such Letter of Credit,
which shall be paid quarterly in arrears, on each Regularly Scheduled Payment
Date, at a rate per annum equal to the Applicable Margin for Eurodollar Loans
(in effect on the date such payment is to be made) multiplied by the face amount
of such Letter of Credit; (B) pay to Agent, for the sole benefit of the Fronting
Lender, an additional Letter of Credit fee, which shall be paid on each date
that such Letter of Credit shall be issued, amended or renewed at the rate of
one-eighth percent (1/8%) of the face amount of such Letter of Credit; and (C)
pay to Agent, for the sole benefit of the Fronting Lender, such other issuance,
amendment, negotiation, draw, acceptance, telex, courier, postage and similar
transactional fees as are generally charged by the Fronting Lender under its fee
schedule as in effect from time to time.

 

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(v) Refunding of Letters of Credit with Revolving Loans. Whenever a Letter of
Credit shall be drawn, Borrower shall immediately reimburse the Fronting Lender
for the amount drawn. In the event that the amount drawn shall not have been
reimbursed by Borrower on the date of the drawing of such Letter of Credit, at
the sole option of Agent (and the Fronting Lender, if the Fronting Lender is a
Lender other than Agent), Borrower shall be deemed to have requested a Revolving
Loan, subject to the provisions of Sections 2.2(a) and 2.6 hereof (other than
the requirement set forth in Section 2.6(d) hereof), in the amount drawn. Such
Revolving Loan shall be evidenced by the Revolving Credit Notes. Each Revolving
Lender agrees to make a Revolving Loan on the date of such notice, subject to no
conditions precedent whatsoever. Each Revolving Lender acknowledges and agrees
that its obligation to make a Revolving Loan pursuant to Section 2.2(a) hereof
when required by this Section 2.2(b)(v) shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, the occurrence and continuance of a Default or Event of Default, and
that its payment to Agent, for the account of the Fronting Lender, of the
proceeds of such Revolving Loan shall be made without any offset, abatement,
recoupment, counterclaim, withholding or reduction whatsoever and whether or not
such Lender’s Revolving Credit Commitment shall have been reduced or terminated.
Borrower irrevocably authorizes and instructs Agent to apply the proceeds of any
borrowing pursuant to this subsection (v) to reimburse, in full (other than the
Fronting Lender’s pro rata share of such borrowing), the Fronting Lender for the
amount drawn on such Letter of Credit. Each such Revolving Loan shall be deemed
to be a Base Rate Loan unless otherwise requested by and available to Borrower
hereunder. Each Revolving Lender is hereby authorized to record on its records
relating to its Revolving Credit Note such Revolving Lender’s pro rata share of
the amounts paid and not reimbursed on the Letters of Credit.

 

(vi) Participation in Letters of Credit. If, for any reason, Agent (and the
Fronting Lender, if the Fronting Lender is a Lender other than Agent) shall be
unable to or, in the opinion of Agent, it shall be impracticable to, convert any
Letter of Credit to a Revolving Loan pursuant to the preceding subsection, Agent
(and the Fronting Lender, if the Fronting Lender is a Lender other than Agent)
shall have the right to request that each Revolving Lender purchase a
participation in the amount due with respect to such Letter of Credit, and Agent
shall promptly notify each Revolving Lender thereof (by facsimile or telephone,
confirmed in writing). Upon such notice, but without further action, the
Fronting Lender hereby agrees to grant to each Revolving Lender, and each
Revolving Lender hereby agrees to acquire from the Fronting Lender, an undivided
participation interest in the amount due with respect to such Letter of Credit
in an amount equal to such Revolving Lender’s Applicable Commitment Percentage
of the principal amount due with respect to such Letter of Credit. In
consideration and in furtherance of the foregoing, each Revolving Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to Agent, for the account of the Fronting Lender, such Revolving Lender’s
ratable share of the amount due with respect to such Letter of Credit
(determined in accordance with such Revolving Lender’s Applicable

 

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Commitment Percentage). Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in the amount due under any Letter of
Credit that is drawn but not reimbursed by Borrower pursuant to this subsection
(b)(vi) shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Lender’s Revolving Credit
Commitment shall have been reduced or terminated. Each Revolving Lender shall
comply with its obligation under this subsection (b)(vi) by wire transfer of
immediately available funds in the same manner as provided in Section 2.6 hereof
with respect to Revolving Loans. Each Revolving Lender is hereby authorized to
record on its records such Revolving Lender’s pro rata share of the amounts paid
and not reimbursed on the Letters of Credit. In addition, each Lender agrees to
risk participate in the Existing Letters of Credit as provided in subsection
(b)(vii) below.

 

(vii) Existing Letters of Credit. Schedule 2.2 hereto contains a description of
all letters of credit outstanding on, and to continue in effect after, the
Closing Date. Each such letter of credit issued by a bank that is or becomes a
Lender under this Agreement on the Closing Date (each, an “Existing Letter of
Credit”) shall constitute a “Letter of Credit” for all purposes of this
Agreement, issued, for purposes of Section 2.2(b)(vi) hereof, on the Closing
Date. Borrower, Agent and the applicable Lenders hereby agree that, from and
after such date, the terms of this Agreement shall apply to the Existing Letters
of Credit, superseding any other agreement theretofore applicable to them to the
extent inconsistent with the terms hereof. Notwithstanding anything to the
contrary in any reimbursement agreement applicable to the Existing Letters of
Credit, the fees payable in connection with each Existing Letter of Credit to be
shared with the Lenders shall accrue from the Closing Date at the rate provided
in this Section 2.2(b).

 

(c) Swing Loans.

 

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Swing Line Lender shall make a Swing Loan or Swing Loans
to Borrower in such amount or amounts as Borrower, through an Authorized
Officer, may from time to time request; provided that Borrower shall not request
any Swing Loan if, after giving effect thereto, (A) the Revolving Credit
Exposure would exceed the Revolving Amount, or (B) the Swing Line Exposure would
exceed the Swing Line Commitment. Each Swing Loan shall be due and payable on
the Swing Loan Maturity Date applicable thereto.

 

(ii) Refunding of Swing Loans. If the Swing Line Lender so elects, by giving
notice to Borrower and the Revolving Lenders, Borrower agrees that the Swing
Line Lender shall have the right, in its sole discretion, to require that any
Swing Loan be refinanced as a Revolving Loan. Such Revolving Loan shall be a
Base Rate Loan unless otherwise requested by and available to Borrower
hereunder. Upon receipt of such notice by Borrower and the Revolving Lenders,
Borrower shall be deemed, on such day, to have requested a Revolving Loan in the
principal amount of the Swing Loan in accordance

 

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with Section 2.2(a) and Section 2.6 hereof (other than the requirement set forth
in Section 2.6(d) hereof). Such Revolving Loan shall be evidenced by the
Revolving Credit Notes. Each Revolving Lender agrees to make a Revolving Loan on
the date of such notice, subject to no conditions precedent whatsoever. Each
Revolving Lender acknowledges and agrees that such Revolving Lender’s obligation
to make a Revolving Loan pursuant to Section 2.2(a) hereof when required by this
subsection (c)(ii) is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that its payment to Agent, for
the account of the Swing Line Lender, of the proceeds of such Revolving Loan
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not such Lender’s Revolving
Credit Commitment shall have been reduced or terminated. Borrower irrevocably
authorizes and instructs Agent to apply the proceeds of any borrowing pursuant
to this subsection (c)(ii) to repay in full such Swing Loan. Each Revolving
Lender is hereby authorized to record on its records such Revolving Lender’s pro
rata share of the amounts paid to refund such Swing Loan.

 

(iii) Participation in Swing Loans. If, for any reason, Agent is unable to or,
in the opinion of Agent, it is impracticable to, convert any Swing Loan to a
Revolving Loan pursuant to the preceding subsection (c)(ii), then on any day
that a Swing Loan is outstanding (whether before or after the maturity thereof),
Agent shall have the right to request that each Revolving Lender purchase a
participation in such Swing Loan, and Agent shall promptly notify each Revolving
Lender thereof (by facsimile or telephone, confirmed in writing). Upon such
notice, but without further action, the Swing Line Lender hereby agrees to grant
to each Revolving Lender, and each Revolving Lender hereby agrees to acquire
from the Swing Line Lender, an undivided participation interest in such Swing
Loan in an amount equal to such Revolving Lender’s Applicable Commitment
Percentage of the principal amount of such Swing Loan. In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the benefit of the Swing Line Lender, such Revolving Lender’s ratable
share of such Swing Loan (determined in accordance with such Revolving Lender’s
Applicable Commitment Percentage). Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swing Loans pursuant to this
subsection (c)(iii) is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, recoupment, counterclaim,
withholding or reduction whatsoever and whether or not such Lender’s Revolving
Credit Commitment shall have been reduced or terminated. Each Revolving Lender
shall comply with its obligation under this subsection (c)(iii) by wire transfer
of immediately available funds, in the same manner as provided in Section 2.6
hereof with respect to Revolving Loans to be made by such Revolving Lender.

 

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Section 2.3. Term Loan.

 

Subject to the terms and conditions of this Agreement, the Term Lenders shall
make the Term Loan to Borrower on the Closing Date, in the amount of the Term
Loan Commitment. The Term Loan shall be payable in nineteen (19) consecutive
quarter-annual installments of Two Million Five Hundred Thousand Dollars
($2,500,000) each, commencing March 31, 2005, and continuing on each Regularly
Scheduled Payment Date thereafter, with the balance thereof payable in full on
December 31, 2009. Borrower shall notify Agent, in accordance with the notice
provisions of Section 2.6 hereof, whether the Term Loan will be a Base Rate Loan
or Eurodollar Loans. The Term Loan may be a mixture of a Base Rate Loan and
Eurodollar Loans.

 

Section 2.4. Interest.

 

(a) Revolving Loans.

 

(i) Base Rate Loan. Borrower shall pay interest on the unpaid principal amount
of a Base Rate Loan outstanding from time to time from the date thereof until
paid at the Derived Base Rate from time to time in effect. Interest on such Base
Rate Loan shall be payable, commencing March 31, 2005, and on each Regularly
Scheduled Payment Date thereafter and at the maturity thereof.

 

(ii) Eurodollar Loans. Borrower shall pay interest on the unpaid principal
amount of each Eurodollar Loan outstanding from time to time, fixed in advance
on the first day of the Interest Period applicable thereto through the last day
of the Interest Period applicable thereto (but subject to changes in the
Applicable Margin), at the Derived Eurodollar Rate. Interest on such Eurodollar
Loan shall be payable on each Interest Adjustment Date with respect to an
Interest Period (provided that if an Interest Period shall exceed three months,
the interest must be paid every three months, commencing three months from the
beginning of such Interest Period).

 

(b) Swing Loans. Borrower shall pay interest to Agent, for the sole benefit of
the Swing Line Lender (and any Revolving Lender that shall have purchased a
participation in such Swing Loan), on the unpaid principal amount of each Swing
Loan outstanding from time to time from the date thereof until paid at the
Derived Base Rate from time to time in effect. Interest on each Swing Loan shall
be payable on the Swing Loan Maturity Date applicable thereto. Each Swing Loan
shall bear interest for a minimum of one day.

 

(c) Term Loan.

 

(i) Base Rate Loan. With respect to any portion of the Term Loan that shall be a
Base Rate Loan, Borrower shall pay interest on the unpaid principal amount
thereof outstanding from time to time from the date thereof until paid at the
Derived Base Rate from time to time in effect. Interest on such Base Rate Loan
shall be payable, commencing March 31, 2005, and continuing on each Regularly
Scheduled Payment Date thereafter and at the maturity thereof.

 

(ii) Eurodollar Loans. With respect to any portion of the Term Loan that shall
be a Eurodollar Loan, Borrower shall pay interest on the unpaid principal amount
of such

 

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Eurodollar Loan outstanding from time to time, fixed in advance on the first day
of the Interest Period applicable thereto through the last day of the Interest
Period applicable thereto (but subject to changes in the Applicable Margin), at
the Derived Eurodollar Rate. Interest on such Eurodollar Loan shall be payable
on each Interest Adjustment Date with respect to an Interest Period (provided
that if an Interest Period shall exceed three months, the interest must be paid
every three months, commencing three months from the beginning of such Interest
Period).

 

(d) Default Rate. Anything herein to the contrary notwithstanding, if an Event
of Default shall occur, upon the election of the Required Lenders (i) the
principal of each Loan and the unpaid interest thereon shall bear interest,
until paid, at the Default Rate, (ii) the fee for the aggregate undrawn face
amount of all issued and outstanding Letters of Credit shall be increased by two
percent (2%) in excess of the rate otherwise applicable thereto, and (iii) in
the case of any other amount due from Borrower hereunder or under any other Loan
Document, such amount shall bear interest at the Default Rate; provided that,
during an Event of Default under Section 8.14 hereof, the applicable Default
Rate shall apply without any election or action on the part of Agent or any
Lender.

 

(e) Limitation on Interest. In no event shall the rate of interest hereunder
exceed the maximum rate allowable by law. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the “Maximum Rate”). If Agent or any
Lender shall receive interest in an amount that exceeds the Maximum Rate, the
excess interest shall be applied to the principal of the Loans or, if it exceeds
such unpaid principal, refunded to Borrower. In determining whether the interest
contracted for, charged, or received by Agent or a Lender exceeds the Maximum
Rate, such Person may, to the extent permitted by applicable law, (i)
characterize any payment that is not principal as an expense, fee, or premium
rather than interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations.

 

Section 2.5. Evidence of Indebtedness.

 

(a) Revolving Loans. The obligation of Borrower to repay the Revolving Loans
made by each Revolving Lender and to pay interest thereon shall be evidenced by
a Revolving Credit Note of Borrower in the form of the attached Exhibit A,
payable to the order of such Revolving Lender in the principal amount of its
Revolving Credit Commitment, or, if less, the aggregate unpaid principal amount
of Revolving Loans made by such Revolving Lender.

 

(b) Swing Loan. The obligation of Borrower to repay the Swing Loans and to pay
interest thereon shall be evidenced by a Swing Line Note of Borrower in the form
of the attached Exhibit B, and payable to the order of the Swing Line Lender in
the principal amount of the Swing Line Commitment, or, if less, the aggregate
unpaid principal amount of Swing Loans made by the Swing Line Lender.

 

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(c) Term Loan. The obligation of Borrower to repay the portion of the Term Loan
made by each Term Lender and to pay interest thereon shall be evidenced by a
Term Note of Borrower in the form of the attached Exhibit C, payable to the
order of such Term Lender in the principal amount of its Applicable Commitment
Percentage of the Term Loan Commitment.

 

Section 2.6. Notice of Credit Event; Funding of Loans.

 

(a) Notice of Credit Event. Borrower, through an Authorized Officer, shall
provide to Agent a Notice of Loan prior to (i) 11:00 A.M. (Eastern time) on the
proposed date of borrowing or conversion of any Base Rate Loan, (ii) 11:00 A.M.
(Eastern time) three Business Days prior to the proposed date of borrowing,
conversion or continuation of any Eurodollar Loan, and (iii) 2:00 P.M. (Eastern
time) on the proposed date of borrowing of any Swing Loan. Borrower shall comply
with the notice provisions set forth in Section 2.2(b) hereof with respect to
Letters of Credit.

 

(b) Funding of Loans. Agent shall notify the appropriate Lenders of the date,
amount and Interest Period (if applicable) promptly upon the receipt of a Notice
of Loan, and, in any event, by 2:00 P.M. (Eastern time) on the date such Notice
of Loan is received. On the date that the Credit Event set forth in such Notice
of Loan is to occur, each such Lender shall provide to Agent, not later than
3:00 P.M. (Eastern time), the amount in Dollars, in federal or other immediately
available funds, required of it. If Agent shall elect to advance the proceeds of
such Loan prior to receiving funds from such Lender, Agent shall have the right,
upon prior notice to Borrower, to debit any account of Borrower or otherwise
receive such amount from Borrower, on demand, in the event that such Lender
shall fail to reimburse Agent in accordance with this Section 2.6(b). Agent
shall also have the right to receive interest from such Lender at the Federal
Funds Effective Rate in the event that such Lender shall fail to provide its
portion of the Loan on the date requested and Agent shall elect to provide such
funds.

 

(c) Conversion of Loans. At the request of Borrower to Agent, subject to the
notice and other provisions of this Section 2.6, the appropriate Lenders shall
convert a Base Rate Loan to one or more Eurodollar Loans at any time and shall
convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment Date
applicable thereto. Swing Loans may be converted by the Swing Line Lender to
Revolving Loans in accordance with Section 2.2(c)(ii) hereof.

 

(d) Minimum Amount. Each request for:

 

(i) a Base Rate Loan shall be in an amount of not less than One Million Dollars
($1,000,000), increased by increments of One Hundred Thousand Dollars
($100,000);

 

(ii) a Eurodollar Loan shall be in an amount of not less than One Million Five
Hundred Thousand Dollars ($1,500,000), increased by increments of Five Hundred
Thousand Dollars ($500,000); and

 

(iii) a Swing Loan shall be in an amount of not less than One Hundred Thousand
Dollars ($100,000).

 

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(e) Interest Periods. At no time shall Borrower request that Eurodollar Loans be
outstanding for more than six different Interest Periods.

 

Section 2.7. Payment on Loans and Other Obligations.

 

(a) Payments Generally. Each payment made hereunder by Borrower shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever.

 

(b) Payments from Borrower. With respect to (i) any Loan, or (ii) any other
payment to Agent and the Lenders, all such payments (including prepayments) to
Agent of the principal of or interest on such Loan or other payment, including
but not limited to principal, interest, fees or any other amount owed by
Borrower under this Agreement, shall be made in Dollars. All payments described
in this subsection (b) shall be remitted to Agent, at the address of Agent for
notices referred to in Section 11.4 hereof, for the account of the appropriate
Lenders (or the Fronting Lender or the Swing Line Lender, as appropriate) not
later than 11:00 A.M. (Eastern time) on the due date thereof in immediately
available funds. Any such payments received by Agent after 11:00 A.M. (Eastern
time) shall be deemed to have been made and received on the next Business Day.

 

(c) Payments to Lenders. Upon Agent’s receipt of payments hereunder, Agent shall
immediately distribute to the appropriate Lenders (except with respect to Swing
Loans, which shall be paid to the Swing Line Lender or, with respect to Letters
of Credit, certain of which payments shall be paid to the Fronting Lender) their
respective ratable shares, if any, of the amount of principal, interest, and
commitment and other fees received by Agent for the account of such Lender.
Payments received by Agent shall be delivered to the Lenders in immediately
available funds. Each appropriate Lender shall record any principal, interest or
other payment, the principal amounts of Base Rate Loans, Eurodollar Loans, Swing
Loans and Letters of Credit, all prepayments and the applicable dates, including
Interest Periods, with respect to the Loans made, and payments received by such
Lender, by such method as such Lender may generally employ; provided, however,
that failure to make any such entry shall in no way detract from the obligations
of Borrower under this Agreement or any Note. The aggregate unpaid amount of
Loans, types of Loans, Interest Periods and similar information with respect to
the Loans and Letters of Credit set forth on the records of Agent shall be
rebuttably presumptive evidence with respect to such information, including the
amounts of principal, interest and fees owing to each Lender.

 

(d) Timing of Payments. Whenever any payment to be made hereunder, including,
without limitation, any payment to be made on any Loan, shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the next
Business Day and such extension of time shall in each case be included in the
computation of the interest payable on such Loan; provided, however, that, with
respect to any Eurodollar Loan, if the next Business Day shall fall in the
succeeding calendar month, such payment shall be made on the preceding Business
Day and the relevant Interest Period shall be adjusted accordingly.

 

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Section 2.8. Prepayment.

 

(a) Right to Prepay. Borrower shall have the right at any time or from time to
time to prepay, on a pro rata basis for all of the appropriate Lenders (except
with respect to Swing Loans, which shall be paid to the Swing Line Lender), all
or any part of the principal amount of the Loans, as designated by Borrower.
Such payment shall include interest accrued on the amount so prepaid to the date
of such prepayment and any amount payable under Article III hereof with respect
to the amount being prepaid. Prepayments of Base Rate Loans shall be without any
premium or penalty, other than any prepayment fees, penalties or other charges
that may be contained in any Hedge Agreement. Each prepayment of the Term Loan
shall be applied to the principal installments thereof, on a pro rata basis
among the remaining principal installments.

 

(b) Notice of Prepayment. Borrower shall give Agent notice of prepayment of a
Base Rate Loan or Swing Loan by no later than 11:00 A.M. (Eastern time) on the
Business Day on which such prepayment is to be made and written notice of the
prepayment of any Eurodollar Loan not later than 1:00 P.M. (Eastern time) three
Business Days before the Business Day on which such prepayment is to be made.

 

(c) Minimum Amount. Each prepayment of a Eurodollar Loan shall be in the
principal amount of not less than One Million Dollars ($1,000,000), except in
the case of a mandatory payment pursuant to Section 2.12 or Article III hereof.

 

Section 2.9. Commitment and Other Fees.

 

(a) Commitment Fee. Borrower shall pay to Agent, for the ratable account of the
Revolving Lenders, as a consideration for the Revolving Credit Commitment, a
commitment fee from the Closing Date to and including the last day of the
Commitment Period, payable quarterly, at a rate per annum equal to (i) the
Applicable Commitment Fee Rate in effect on the payment date, times (ii)(A) the
average daily Revolving Amount in effect during such quarter minus (B) the
average daily Revolving Credit Exposure (exclusive of the Swing Line Exposure)
during such quarter. The commitment fee shall be payable in arrears, on March
31, 2005 and on each Regularly Scheduled Payment Date thereafter, and on the
last day of the Commitment Period.

 

(b) Agent Fee. Borrower shall pay to Agent, for its sole benefit, the fees set
forth in the Agent Fee Letter.

 

(c) Collateral Audit and Appraisal Fees. Borrower shall reimburse Agent for all
out-of-pocket expenses relating to (i) collateral field audits, (ii) fixed asset
appraisals, and (iii) any other collateral assessment expenses, that may be
conducted by or on behalf of Agent.

 

Section 2.10. Modifications to Commitment.

 

(a) Optional Reduction of Commitment. Borrower may at any time and from time to
time permanently reduce in whole or ratably in part the Revolving Amount to an
amount not less than the then existing Revolving Credit Exposure, by giving
Agent not fewer than five Business

 

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Days’ (or thirty (30) days if the Revolving Credit Commitments are to be reduced
or terminated in their entirety) written notice of such reduction, provided that
any such partial reduction shall be in an aggregate amount, for all of the
Revolving Lenders, of not less than One Million Dollars ($1,000,000), increased
by increments of One Hundred Thousand Dollars ($100,000). Agent shall promptly
notify each Revolving Lender of the date of each such reduction and such
Revolving Lender’s proportionate share thereof. After each such reduction, the
commitment fees payable hereunder shall be calculated upon the Revolving Amount
as so reduced. If Borrower reduces in whole the Revolving Credit Commitments of
the Lenders, on the effective date of such reduction (Borrower having prepaid in
full the unpaid principal balance, if any, of the Loans, together with all
interest and commitment and other fees accrued and unpaid, and provided that no
Letter of Credit Exposure or Swing Line Exposure shall exist), all of the
Revolving Credit Notes and the Swing Line Note shall be delivered to Agent
marked “Canceled” and Agent shall redeliver such Notes to Borrower. Any partial
reduction in the Revolving Amount shall be effective during the remainder of the
Commitment Period.

 

(b) Increase in Commitment. At any time during the Commitment Increase Period,
Borrower may request that Agent increase the Revolving Amount from the Closing
Revolving Amount up to the Maximum Revolving Amount by either (i) increasing,
for one or more Revolving Lenders, with their prior written consent, their
respective Applicable Commitment Percentage of the Revolving Credit Commitment,
or (ii) with the prior written consent of Agent, including one or more
Additional Lenders, each with a new commitment under the Revolving Credit
Commitment and the Term Loan Commitment, as a party to this Agreement
(collectively, the “Additional Commitment”). During the Commitment Increase
Period, all of the Lenders agree that Agent, in its sole discretion, may permit
one or more Additional Commitments upon satisfaction of the following
requirements: (A) each Additional Lender, if any, shall execute an Additional
Lender Assumption Agreement, (B) Agent shall provide to Borrower and each Lender
a revised Schedule 1 to this Agreement, including revised Applicable Commitment
Percentages for each of the Lenders with respect to the Revolving Credit
Commitment and the Term Loan Commitment (revised so that each Lender will have a
new Applicable Commitment Percentage for the Revolving Credit Commitment and the
Term Loan Commitment), at least three Business Days prior to the date of the
effectiveness of such Additional Commitments (each an “Additional Lender
Assumption Effective Date”), and (C) Borrower shall execute and deliver to Agent
and the Lenders such replacement or additional Revolving Credit Notes as shall
be required by Agent. The Revolving Lenders hereby authorize Agent to execute
each Additional Lender Assumption Agreement on behalf of the Lenders. On each
Additional Lender Assumption Effective Date, the Lenders shall make adjustments
among themselves with respect to the Revolving Loans and the Term Loans then
outstanding and amounts of principal, interest, commitment fees and other
amounts paid or payable with respect thereto as shall be necessary, in the
opinion of Agent, in order to reallocate among such Lenders such outstanding
amounts, based on the revised Applicable Commitment Percentages and to otherwise
carry out fully the intent and terms of this subsection (b). In connection
therewith, it is understood and agreed that the Maximum Amount of any Lender
will not be increased (or decreased except pursuant to Section 2.10(a) hereof)
without the prior written consent of such Lender. Borrower shall not request any
increase in the Revolving Amount pursuant to this subsection (b) if a Default or
an Event of Default shall then exist, or immediately after giving effect to any
such increase would exist. Upon the increase of the Revolving Amount, the Total
Commitment Amount shall be increased by the amount of the increase in the
Revolving Amount.

 

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Section 2.11. Computation of Interest and Fees. With the exception of Base Rate
Loans, interest on Loans, Related Expenses and commitment and other fees and
charges hereunder shall be computed on the basis of a year having three hundred
sixty (360) days and calculated for the actual number of days elapsed. With
respect to Base Rate Loans, interest shall be computed on the basis of a year
having three hundred sixty-five (365) days or three hundred sixty-six (366)
days, as the case may be, and calculated for the actual number of days elapsed.

 

Section 2.12. Mandatory Payment.

 

(a) Revolving Credit Exposure. If, at any time, the Revolving Credit Exposure
shall exceed the Revolving Amount, Borrower shall, as promptly as practicable,
but in no event later than the next Business Day, prepay an aggregate principal
amount of the Revolving Loans sufficient to bring the Revolving Credit Exposure
within the Revolving Amount.

 

(b) Swing Line Exposure. If, at any time, the Swing Line Exposure shall exceed
the Swing Line Commitment, Borrower shall, as promptly as practicable, but in no
event later than the next Business Day, prepay an aggregate principal amount of
the Swing Loans sufficient to bring the Swing Line Exposure within the Swing
Line Commitment.

 

(c) Mandatory Prepayments. Borrower shall make Mandatory Prepayments (each a
“Mandatory Prepayment”) in accordance with the following provisions:

 

(i) Sale of Assets. Upon the sale or other disposition of any assets by a Credit
Party (permitted pursuant to Section 5.12 hereof) to any Person other than in
the ordinary course of business, and to the extent the proceeds of such sale or
other disposition are in excess of Five Million Dollars ($5,000,000) during any
fiscal year of Borrower and are not to be reinvested in fixed assets or other
similar assets within one hundred-eighty (180) days, Borrower shall make a
Mandatory Prepayment, on the date of such sale or other disposition, in an
amount equal to one hundred percent (100%) of the net proceeds of such
disposition.

 

(ii) Additional Indebtedness. If, at any time, any of the Companies shall incur
Funded Indebtedness in addition to Indebtedness permitted pursuant to Section
5.8(a) through (h) hereof (which shall not be incurred without the prior written
consent of Agent and the Required Lenders), Borrower shall make a Mandatory
Prepayment, on the date that such Funded Indebtedness is incurred, in an amount
equal to one hundred percent (100%) of such Funded Indebtedness.

 

(iii) Additional Equity. Within thirty (30) days after any equity (other than
the offering or exercise of stock options pursuant to management incentive
plans) offering by a Company (which shall be only with the prior written consent
of Agent and the Required Lenders), Borrower shall make a Mandatory Prepayment
in an amount equal to seventy-five percent (75%) of the net cash proceeds of
such equity offering.

 

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(iv) Material Recovery Event. Within ten days after the occurrence of a Material
Recovery Event, Borrower shall furnish to Agent written notice thereof. Within
sixty (60) days after such Material Recovery Event, Borrower shall notify Agent
of Borrower’s determination as to whether or not to replace, rebuild or restore
the affected property (a “Material Recovery Determination Notice”). If Borrower
decides not to replace, rebuild or restore such property or if Borrower has not
delivered the Material Recovery Determination Notice within sixty (60) days
after the Material Recovery Event, then the proceeds of insurance paid in
connection with such Material Recovery Event shall be paid as a Mandatory
Prepayment. If Borrower decides to replace, rebuild or restore such property,
then any such replacement, rebuilding or restoration must be (A) commenced
within six months of the date of the Material Recovery Event, and (B)
substantially completed within twelve months of such commencement date, with
such net proceeds and other funds available to the Companies. Any amounts not
applied to the costs of replacement or restoration shall be applied as a
Mandatory Prepayment.

 

(d) Application of Mandatory Prepayments.

 

(i) Involving a Company Prior to an Event of Default. So long as no Event of
Default shall have occurred, each Mandatory Prepayment required to be made
pursuant to subsection (c) hereof shall be applied to the Term Loan, pro rata
among future principal installments thereof, based on the amount of each such
principal installment.

 

(ii) Involving a Company After an Event of Default. If a Mandatory Prepayment is
required to be made pursuant to subsection (c) hereof at the time that an Event
of Default shall have occurred and be continuing (provided that, if a waiver of
an Event of Default is being granted, such waiver may, at the option of the
Required Lenders, be granted subject to application of a Mandatory Prepayment in
accordance with this subsection (ii)), then such Mandatory Prepayment shall be
paid by Borrower to Agent to be applied to the following, on a pro rata basis
among: (A) the Revolving Amount (with payments to be made in the following
order: Revolving Loans, Swing Loans, and to be held by Agent in a special
account as security for any Letter of Credit Exposure pursuant to subsection
(iii) hereof), and (B) the unpaid principal balance of the Term Loan. Unless
otherwise agreed by the Required Lenders, the Revolving Amount shall be
permanently reduced by the amount of such Mandatory Prepayment allocated
thereto, whether or not there shall be any Revolving Credit Exposure thereunder;
provided that, if there shall be no Credit Exposure under any Specific
Commitment, the then remaining Mandatory Prepayment shall be paid to the other
Specific Commitments.

 

(iii) Involving Letters of Credit. Any amounts to be distributed for application
to a Revolving Lender’s liabilities with respect to any Letter of Credit
Exposure shall be held by Agent in an interest bearing trust account (the
“Special Trust Account”) as collateral security for such liabilities until a
drawing on any Letter of Credit, at which time such amounts, together with
interest accrued thereon, shall be released by Agent and applied to such
liabilities. If any such Letter of Credit shall expire without having been drawn
upon in full, the amounts held in the Special Trust Account with respect to the
undrawn portion of such Letter of Credit, together with interest accrued
thereon, shall be applied by Agent in accordance with the provisions of
subsections (i) and (ii) above.

 

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(e) Mandatory Payments Generally. Unless otherwise designated by Borrower, each
Mandatory Prepayment made with respect to a Specific Commitment pursuant to
subsection (a) or (c) hereof shall be applied in the following order (i) first,
to the outstanding Base Rate Loans, and (ii) second, to the outstanding
Eurodollar Loans, provided that if the outstanding principal amount of any
Eurodollar Loan shall be reduced to an amount less than the minimum amount set
forth in Section 2.6(d) hereof as a result of such prepayment, then such
Eurodollar Loan shall be converted into a Base Rate Loan on the date of such
prepayment. Any prepayment of a Eurodollar Loan pursuant to this Section 2.12
shall be subject to the prepayment provisions set forth in Article III hereof.

 

Section 2.13. Extension of Commitment. Contemporaneously with the delivery of
the financial statements required pursuant to Section 5.3(b) hereof (beginning
with the financial statements for the fiscal year of Borrower ending October 31,
2005), Borrower may deliver a Request for Extension, requesting that the Lenders
extend the maturity of the Revolving Credit Commitment for an additional year.
Each such extension shall require the unanimous written consent of all of the
Lenders and, subject to Section 11.3(b) hereof, shall be upon such terms and
conditions as may be agreed to by Agent, Borrower and the Lenders. Borrower
shall pay any attorneys’ fees or other expenses of Agent in connection with the
documentation of any such extension, as well as such other fees as may be agreed
upon between Borrower and Agent.

 

ARTICLE III. ADDITIONAL PROVISIONS RELATING

TO EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

 

Section 3.1. Requirements of Law.

 

(a) If, after the Closing Date, (i) the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or (ii) the
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority:

 

(A) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Taxes and Excluded Taxes which are governed by Section 3.2 hereof);

 

(B) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender that
is not otherwise included in the determination of the Eurodollar Rate; or

 

(C) shall impose on such Lender any other condition;

 

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and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, Borrower shall pay to such
Lender, promptly after receipt of a written request therefor, any additional
amounts necessary to compensate such Lender for such increased cost or reduced
amount receivable. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection (a), such Lender shall promptly notify
Borrower (with a copy to Agent) of the event by reason of which it has become so
entitled.

 

(b) If any Lender shall have determined that, after the Closing Date, the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder, or
under or in respect of any Letter of Credit, to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender or corporation
with respect to capital adequacy), then from time to time, upon submission by
such Lender to Borrower (with a copy to Agent) of a written request therefor
(which shall include the method for calculating such amount), Borrower shall
promptly pay or cause to be paid to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.

 

(c) A certificate as to any additional amounts payable pursuant to this Section
3.1 submitted by any Lender to Borrower (with a copy to Agent) shall be
conclusive absent manifest error. In determining any such additional amounts,
such Lender may use any method of averaging and attribution that it (in its sole
but reasonable discretion) shall deem applicable. The obligations of Borrower
pursuant to this Section 3.1 shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.

 

Section 3.2. Taxes.

 

(a) All payments made by any Credit Party under any Loan Document shall be made
free and clear of, and without deduction or withholding for or on account of any
Taxes or Other Taxes. If any Taxes or Other Taxes are required to be deducted or
withheld from any amounts payable to Agent or any Lender hereunder, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after deducting, withholding and payment of all
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in the Loan Documents.

 

(b) In addition, the Credit Parties shall pay Taxes and Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

 

(c) Whenever any Taxes or Other Taxes are required to be withheld and paid by a
Credit Party, such Credit Party shall timely withhold and pay such taxes to the
relevant

 

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Governmental Authorities. As promptly as possible thereafter, Borrower shall
send to Agent for its own account or for the account of the relevant Lender, as
the case may be, a certified copy of an original official receipt received by
such Credit Party showing payment thereof. If such Credit Party shall fail to
pay any Taxes or Other Taxes when due to the appropriate Governmental Authority
or fails to remit to Agent the required receipts or other required documentary
evidence, Borrower shall indemnify Agent and the appropriate Lenders on demand
for any incremental taxes, interest or penalties that may become payable by
Agent or such Lender as a result of any such failure.

 

(d) If any Lender shall be so indemnified by a Credit Party, such Lender shall
use reasonable efforts to obtain the benefits of any refund, deduction or credit
for any taxes or other amounts with respect to the amount paid by such Credit
Party and shall reimburse such Credit Party to the extent, but only to the
extent, that such Lender shall receive a refund with respect to the amount paid
by such Credit Party or an effective net reduction in taxes or other
governmental charges (including any taxes imposed on or measured by the total
net income of such Lender) of the United States or any state or subdivision or
any other Governmental Authority thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to such Lender. If, at the time any audit of such Lender’s income tax
return is completed, such Lender determines, based on such audit, that it shall
not have been entitled to the full amount of any refund reimbursed to such
Credit Party as aforesaid or that its net income taxes shall not have been
reduced by a credit or deduction for the full amount reimbursed to such Credit
Party as aforesaid, such Credit Party, upon request of such Lender, shall
promptly pay to such Lender the amount so refunded to which such Lender shall
not have been so entitled, or the amount by which the net income taxes of such
Lender shall not have been so reduced, as the case may be.

 

(e) Each Lender that is not (i) a citizen or resident of the United States of
America, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States of America (or any jurisdiction thereof),
or (iii) an estate or trust that is subject to federal income taxation
regardless of the source of its income (any such Person, a “Non-U.S. Lender”)
shall deliver to Borrower and Agent two copies of either U.S. Internal Revenue
Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a statement
with respect to such interest and a Form W-8BEN, or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by Credit Parties under this Agreement
and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement or such other
Loan Document. In addition, each Non-U.S. Lender shall deliver such forms or
appropriate replacements promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify Borrower at any time it determines that such Lender is no longer
in a position to provide any previously delivered certificate to Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this subsection (e), a Non-U.S.
Lender shall not be required to deliver any form pursuant to this subsection (e)
that such Non-U.S. Lender is not legally able to deliver.

 

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(f) The agreements in this Section 3.2 shall survive the termination of the Loan
Documents and the payment of the Loans and all other amounts payable hereunder.

 

Section 3.3. Funding Losses. Borrower agrees to indemnify each Lender, promptly
after receipt of a written request therefor, and to hold each Lender harmless
from, any loss or expense that such Lender may sustain or incur as a consequence
of (a) default by Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after Borrower has given a notice requesting
the same in accordance with the provisions of this Agreement, (b) default by
Borrower in making any prepayment of or conversion from Eurodollar Loans after
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, (c) the making of a prepayment of a Eurodollar Loan on a day that is
not the last day of an Interest Period applicable thereto, or (d) any conversion
of a Eurodollar Loan to a Base Rate Loan on a day that is not the last day of an
Interest Period applicable thereto. Such indemnification shall be in an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amounts so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the appropriate London interbank market, along with any administration fee
charged by such Lender. A certificate as to any amounts payable pursuant to this
Section 3.3 submitted to Borrower (with a copy to Agent) by any Lender shall be
conclusive absent manifest error. The obligations of Borrower pursuant to this
Section 3.3 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.

 

Section 3.4. Eurodollar Rate Lending Unlawful; Inability to Determine Rate.

 

(a) If any Lender shall determine (which determination shall, upon notice
thereof to Borrower and Agent, be conclusive and binding on Borrower) that,
after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any Governmental Authority
asserts that it is unlawful, for such Lender to make or continue any Loan as, or
to convert (if permitted pursuant to this Agreement) any Loan into, a Eurodollar
Loan, the obligations of such Lender to make, continue or convert any such
Eurodollar Loan shall, upon such determination, be suspended until such Lender
shall notify Agent that the circumstances causing such suspension no longer
exist, and all outstanding Eurodollar Loans payable to such Lender shall
automatically convert (if conversion is permitted under this Agreement) into a
Base Rate Loan, or be repaid (if no conversion is permitted) at the end of the
then current Interest Periods with respect thereto or sooner, if required by law
or such assertion.

 

(b) If Agent determines that for any reason adequate and reasonable means do not
exist for determining the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Loan, or that the Eurodollar Rate for any
requested Interest Period with

 

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respect to a proposed Eurodollar Loan does not adequately and fairly reflect the
cost to the Lenders of funding such Loan, Agent will promptly so notify Borrower
and each Lender. Thereafter, the obligation of the Lenders to make or maintain
such Eurodollar Loan shall be suspended until Agent revokes such notice. Upon
receipt of such notice, Borrower may revoke any pending request for a borrowing
of, conversion to or continuation of such Eurodollar Loan or, failing that, will
be deemed to have converted such request into a request for a borrowing of a
Base Rate Loan in the amount specified therein.

 

ARTICLE IV. CONDITIONS PRECEDENT

 

Section 4.1. Conditions to Each Credit Event. The obligation of the Lenders, the
Fronting Lender and the Swing Line Lender to participate in any Credit Event
shall be conditioned, in the case of each Credit Event, upon the following:

 

(a) all conditions precedent as listed in Section 4.2 hereof required to be
satisfied prior to the first Credit Event shall have been satisfied prior to or
as of the first Credit Event;

 

(b) Borrower shall have submitted a Notice of Loan (or with respect to a Letter
of Credit, complied with the provisions of Section 2.2(b) hereof) and otherwise
complied with Section 2.6 hereof;

 

(c) no Default or Event of Default shall then exist or immediately after such
Credit Event would exist; and

 

(d) each of the representations and warranties contained in Article VI hereof
shall be true in all material respects as if made on and as of the date of such
Credit Event, except to the extent that any thereof expressly relate to an
earlier date.

 

Each request by Borrower for a Credit Event shall be deemed to be a
representation and warranty by Borrower as of the date of such request as to the
satisfaction of the conditions precedent specified in subsections (c) and (d)
above.

 

Section 4.2. Conditions to the First Credit Event. Borrower shall cause the
following conditions to be satisfied on or prior to the Closing Date. The
obligation of the Lenders, the Fronting Lender and the Swing Line Lender to
participate in the first Credit Event is subject to Borrower satisfying each of
the following conditions prior to or concurrently with such Credit Event:

 

(a) Notes. Borrower shall have executed and delivered to (i) each Revolving
Lender a Revolving Credit Note, (ii) each Term Lender a Term Note, and (iii) the
Swing Line Lender the Swing Line Note.

 

(b) Guaranties of Payment. Each Guarantor of Payment shall have executed and
delivered to Agent a Guaranty of Payment.

 

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(c) Confirmation of Security Documents. Each (i) Credit Party that was a Credit
Party prior to the Closing Date shall have executed and delivered to Agent, for
the benefit of the Lenders, a Confirmation of Security Documents, and (ii)
Credit Party that was not a Credit Party prior to the Closing Date, shall have
executed and delivered to Agent, for the benefit of the Lenders, a Security
Agreement and other Security Documents as required by Agent; and such other
documents or instruments, as may be required by Agent to create the Liens of
Agent, for the benefit of the Lenders, in the assets of such Credit Party, all
to be in form and substance reasonably satisfactory to Agent and the Lenders.

 

(d) Real Estate Matters. With respect to each parcel of the Real Property,
Borrower shall (i) have provided to Lender two fully executed originals of each
Mortgage Amendment, and (ii) have delivered to Agent evidence, to Agent’s
satisfaction, in its sole discretion, that no portion of Real Property is
located in a Special Flood Hazard Area or is otherwise classified as Class A or
Class BX on the Flood Maps maintained by the Federal Emergency Management
Agency.

 

(e) Insurance Certificate. Borrower shall have delivered to Agent evidence of
insurance on ACORD 27 form, and otherwise satisfactory to Agent and the Lenders,
of adequate personal property and liability insurance of each Company, with
Agent, on behalf of the Lenders, listed as loss payee and additional insured.

 

(f) Officer’s Certificate, Resolutions, Organizational Documents. Each Credit
Party shall have delivered to Agent an officer’s certificate (or comparable
domestic or foreign documents) certifying the names of the officers of such
Credit Party authorized to sign the Loan Documents, together with the true
signatures of such officers and certified copies of (i) the resolutions of the
board of directors (or comparable domestic or foreign documents) of such Credit
Party evidencing approval of the execution and delivery of the Loan Documents
and the execution of other Related Writings to which such Credit Party is a
party, and (ii) the Organizational Documents of such Credit Party.

 

(g) Good Standing and Full Force and Effect Certificates. Borrower shall have
delivered to Agent a good standing certificate or full force and effect
certificate, as the case may be, for each Credit Party, issued on or about the
Closing Date by the Secretary of State in the state or states where such Credit
Party is incorporated or formed, or qualified as a foreign entity.

 

(h) Legal Opinion. Borrower shall have delivered to Agent an opinion of counsel
for each Credit Party, in form and substance satisfactory to Agent and the
Lenders.

 

(i) Closing and Legal Fees; Fee Letters. Borrower shall have (i) executed and
delivered to Agent, the Agent Fee Letter and paid to Agent, for its sole
account, the fees stated therein, (ii) executed and delivered to Agent, the
Closing Fee Letter and paid to Agent, for the account of the Lenders, the fees
stated therein, and (iii) paid all legal fees and expenses of Agent in
connection with the preparation and negotiation of the Loan Documents.

 

(j) Lien Searches. With respect to the property owned or leased by Borrower and
each Guarantor of Payment and any other property securing the Obligations,
Borrower shall have

 

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caused to be delivered to Agent (i) the results of Uniform Commercial Code lien
searches, satisfactory to Agent and the Lenders, (ii) the results of federal and
state tax lien and judicial lien searches, satisfactory to Agent and the
Lenders, and (iii) Uniform Commercial Code termination statements reflecting
termination of all financing statements previously filed by any Person and not
expressly permitted pursuant to Section 5.9 hereof; provided that updates only
shall be required with respect to any searches that were conducted in connection
with the Original Credit Agreement.

 

(k) Financial Reports. Borrower shall have delivered to Agent audited financial
statements of Borrower, prepared on a Consolidated basis, in accordance with
GAAP, for the fiscal years ended October 31, 2001, October 31, 2002, October 31,
2003 and October 31, 2004.

 

(l) Pro-Forma Projections. Borrower shall have delivered to Agent an annual
pro-forma projection of financial statements of Borrower for the fiscal years
ending October 31, 2005 through October 31, 2009, prepared consistently in
accordance with Borrower’s past practices, and in form and substance reasonably
acceptable to Agent.

 

(m) Closing Certificate. Borrower shall have delivered to Agent and the Lenders
an officer’s certificate certifying that, as of the Closing Date, (i) all
conditions precedent set forth in this Article IV have been satisfied, (ii) no
Default or Event of Default exists nor immediately after the making of the first
Loan or the issuance of the first Letter of Credit will exist, and (iii) each of
the representations and warranties contained in Article VI hereof are true and
correct as of the Closing Date.

 

(n) Letter of Direction. Borrower shall have delivered to Agent a letter of
direction authorizing Agent, on behalf of the Lenders, to disburse the proceeds
of the Loans, which includes the transfer of funds under this Agreement and wire
instructions setting forth the locations to which such funds shall be sent.

 

(o) No Material Adverse Change. No material adverse change, in the opinion of
Agent, shall have occurred in the financial condition, operations or prospects
of the Companies since October 31, 2004.

 

(p) Miscellaneous. Borrower shall have provided to Agent and the Lenders such
other items and shall have satisfied such other conditions as may be reasonably
required by Agent or the Lenders.

 

Section 4.3. Post-Closing Conditions.

 

(a) Control Agreements. No later than twenty (20) days after the Closing Date,
Borrower shall deliver to Agent an executed Control Agreement, in form and
substance satisfactory to Agent, for each deposit account maintained by Borrower
and any Domestic Subsidiary, unless (i) a Control Agreement was already provided
for such deposit account in connection with the Original Credit Agreement, or
(ii) as otherwise agreed to by Agent.

 

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(b) Bailee’s Waivers and Processor’s Waivers. No later than twenty (20) days
after the Closing Date, each Credit Party shall have delivered a bailee’s waiver
or processor’s waiver, as applicable, in form and substance satisfactory to
Agent, for each location of such Credit Party, where any material amount (as
determined in Agent’s reasonable discretion) of Inventory of such Credit Party
is in the possession of a bailee, consignee or other third party, unless (i) a
bailee’s wavier or processor’s waiver, as applicable, was already provided for
such location in connection with the Original Credit Agreement and remains in
effect, or (ii) such location is owned by the Credit Party that owns the
collateral located there.

 

ARTICLE V. COVENANTS

 

Section 5.1. Insurance. Each Company shall at all times maintain insurance upon
its Inventory, Equipment and other personal and real property in such form,
written by such companies, in such amounts, for such periods, and against such
risks as may be acceptable to Agent, with provisions satisfactory to Agent for
payment of all losses thereunder to Agent, for the benefit of the Lenders, and
such Company as their interests may appear (loss payable endorsement in favor of
Agent, for the benefit of the Lenders), and, if required by Agent, Borrower
shall deposit a copy of the policies with Agent. Any such policies of insurance
shall provide for no fewer than thirty (30) days prior written notice of
cancellation to Agent and the Lenders. Any sums received by Agent, for the
benefit of the Lenders, in payment of insurance losses, returns, or unearned
premiums under the policies shall be applied in accordance with Sections
2.12(c)(iv) and 2.12(d) hereof. Agent is hereby authorized to act as
attorney-in-fact for the Companies in, after the occurrence of and during an
Event of Default, obtaining, adjusting, settling and canceling such insurance
and indorsing any drafts. In the event of failure to provide such insurance as
herein provided, Agent may, at its option, provide such insurance and Borrower
shall pay to Agent, upon demand, the cost thereof. Should Borrower fail to pay
such sum to Agent upon demand, interest shall accrue thereon, from the date of
demand until paid in full, at the Default Rate. Within ten days of Agent’s
written request, Borrower shall furnish to Agent such information about the
insurance of the Companies as Agent may from time to time reasonably request,
which information shall be prepared in form and detail satisfactory to Agent and
certified by a Financial Officer of Borrower.

 

Section 5.2. Money Obligations. Each Company shall pay in full (a) prior in each
case to the date when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long as and to the extent
that the same shall be contested in good faith by appropriate and timely
proceedings and for which adequate provisions have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) in all material respects,
all of its wage obligations to its employees in compliance with the Fair Labor
Standards Act (29 U.S.C. §§ 206-207) or any comparable provisions; and (c) all
of its other material obligations calling for the payment of money (except only
those so long as and to the extent that the same shall be contested in good
faith and for which adequate provisions have been established in accordance with
GAAP) before such payment becomes overdue.

 

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Section 5.3. Financial Statements and Information.

 

(a) Quarterly Financials. Borrower shall deliver to Agent and the Lenders,
within forty-five (45) days after the end of each of the first three
quarter-annual periods of each fiscal year of Borrower, balance sheets of the
Companies as of the end of such period and related statements of income and cash
flow as required in Form 10Q filed for such periods, all prepared on a
Consolidated basis, in accordance with GAAP, and in form and detail satisfactory
to Agent and the Lenders and certified by a Financial Officer of Borrower.

 

(b) Annual Audit Report. Borrower shall deliver to Agent and the Lenders, within
one hundred five (105) days after the end of each fiscal year of Borrower, an
annual audit report of the Companies for that year prepared on a Consolidated
basis, in accordance with GAAP, and in form and detail satisfactory to Agent and
the Lenders and certified by an independent public accountant satisfactory to
Agent, which report shall include balance sheets and statements of income
(loss), stockholders’ equity and cash-flow for that period.

 

(c) Compliance Certificate. Borrower shall deliver to Agent and the Lenders,
concurrently with the delivery of the financial statements set forth in
subsections (a) and (b) above, a Compliance Certificate.

 

(d) Management Report. Borrower shall deliver to Agent and the Lenders,
concurrently with the delivery of the annual financial statements set forth in
subsection (b) above, a copy of any management report, letter or similar writing
furnished to the Companies by the accountants in respect of the Companies’
systems, operations, financial condition or properties.

 

(e) Pro-Forma Projections. Borrower shall deliver to Agent and the Lenders,
within one hundred twenty (120) days after the end of each fiscal year of
Borrower, annual pro-forma projections of the Companies for the then current
fiscal year and the next two succeeding fiscal years, to be in form and detail
reasonably satisfactory to Agent.

 

(f) Shareholder and SEC Documents. Borrower shall deliver to Agent and the
Lenders, as soon as available, copies of all notices, reports, definitive proxy
or other statements and other documents sent by Borrower to its shareholders, to
the holders of any of its debentures or bonds or the trustee of any indenture
securing the same or pursuant to which they are issued, or sent by Borrower (in
final form) to any securities exchange or over the counter authority or system,
or to the SEC or any similar federal agency having regulatory jurisdiction over
the issuance of Borrower’s securities.

 

(g) Collateral Audits. If requested by Agent, Borrower shall deliver to Agent
and the Lenders annual collateral audits, to be in form and detail reasonably
satisfactory to Agent.

 

(h) Financial Information of Companies. Borrower shall deliver to Agent and the
Lenders, within ten days of the written request of Agent or any Lender, such
other information about the financial condition, properties and operations of
any Company as Agent or such Lender may from time to time reasonably request,
which information shall be submitted in form and detail satisfactory to Agent or
such Lender and certified by a Financial Officer of the Company or Companies in
question.

 

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Section 5.4. Financial Records. Each Company shall at all times maintain true
and complete records and books of account, including, without limiting the
generality of the foregoing, appropriate provisions for possible losses and
liabilities, all in accordance with GAAP, and at all reasonable times (during
normal business hours and upon notice to such Company) permit Agent, or any
representative of Agent, to examine such Company’s books and records and to make
excerpts therefrom and transcripts thereof.

 

Section 5.5. Franchises; Change in Business.

 

(a) Each Company (other than a Dormant Subsidiary) shall preserve and maintain
at all times its existence, rights and franchises, except where the failure to
preserve and maintain such rights or franchises will not result in a Material
Adverse Effect.

 

(b) No Company shall engage in any business if, as a result thereof, the general
nature of the business of the Companies taken as a whole would be substantially
changed from the general nature of the business the Companies are engaged in on
the Closing Date.

 

Section 5.6. ERISA Compliance. No Company shall incur any material accumulated
funding deficiency within the meaning of ERISA, or any material liability to the
PBGC, established thereunder in connection with any ERISA Plan. Borrower shall
furnish to the Lenders (a) as soon as possible and in any event within thirty
(30) days after any Company knows or has reason to know that any Reportable
Event with respect to any ERISA Plan has occurred, a statement of a Financial
Officer of such Company, setting forth details as to such Reportable Event and
the action that such Company proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event given to the PBGC if a copy
of such notice is available to such Company, and (b) promptly after receipt
thereof a copy of any notice such Company, or any member of the Controlled Group
may receive from the PBGC or the Internal Revenue Service with respect to any
ERISA Plan administered by such Company; provided, that this latter clause shall
not apply to notices of general application promulgated by the PBGC or the
Internal Revenue Service. Borrower shall promptly notify the Lenders of any
material taxes assessed, proposed to be assessed or that Borrower has reason to
believe may be assessed against a Company by the Internal Revenue Service with
respect to any ERISA Plan. As used in this Section 5.6, “material” means the
measure of a matter of significance that shall be determined as being an amount
equal to five percent (5%) of Consolidated Net Worth. As soon as practicable,
and in any event within twenty (20) days, after any Company shall become aware
that an ERISA Event shall have occurred, such Company shall provide Agent with
notice of such ERISA Event with a certificate by a Financial Officer of such
Company setting forth the details of the event and the action such Company or
another Controlled Group member proposes to take with respect thereto. Borrower
shall, at the request of Agent or any Lender, deliver or cause to be delivered
to Agent or such Lender, as the case may be, true and correct copies of any
documents relating to the ERISA Plan of any Company.

 

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Section 5.7. Financial Covenants

 

(a) Fixed Charge Coverage Ratio. Borrower shall not suffer or permit at any time
the Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.

 

(b) Leverage Ratio. Borrower shall not suffer or permit at any time the Leverage
Ratio to exceed 2.75 to 1.00.

 

(c) Consolidated Net Worth. Borrower shall not suffer or permit at any time
Consolidated Net Worth, for the most recently completed fiscal quarter of
Borrower, to be less than the current minimum amount required, which current
minimum amount required shall be One Hundred Million Dollars ($100,000,000) on
the Closing Date through January 30, 2005, with such current minimum amount
required to be positively increased by the Increase Amount on January 31, 2005,
and by an additional Increase Amount on the last day of each succeeding fiscal
quarter thereafter. As used herein, the term “Increase Amount” shall mean an
amount equal to (i) fifty percent (50%) of positive Consolidated Net Earnings
for the fiscal quarter then ended (with no deduction for losses), plus (ii) one
hundred percent (100%) of the proceeds of any equity offering by the Companies,
or any debt offering of the Companies, to the extent converted into equity.

 

Section 5.8. Borrowing. No Company shall create, incur or have outstanding any
Indebtedness of any kind; provided that this Section 5.8 shall not apply to the
following:

 

(a) the Loans, the Letters of Credit and any other Indebtedness under this
Agreement;

 

(b) any loans granted to or Capitalized Lease Obligations entered into by any
Company for the purchase or lease of fixed assets (and refinancings of such
loans or Capitalized Lease Obligations), which loans and Capitalized Lease
Obligations shall only be secured by the fixed assets being purchased, so long
as the aggregate principal amount of all such loans and Capitalized Lease
Obligations for all Companies, when combined with Indebtedness permitted under
subsection (f) hereof, shall not exceed Twenty Million Dollars ($20,000,000) at
any time outstanding;

 

(c) the Indebtedness existing on the Closing Date, in addition to the other
Indebtedness permitted to be incurred pursuant to this Section 5.8, as set forth
in Schedule 5.8 hereto (and any extension, renewal or refinancing thereof so
long as the principal amount thereof shall not be increased after the Closing
Date);

 

(d) loans to a Company (including Foreign Subsidiaries) from a Company so long
as each such Company is a Credit Party;

 

(e) Indebtedness under any Hedge Agreement, so long as such Hedge Agreement
shall have been entered into in the ordinary course of business and not for
speculative purposes;

 

(f) loans to a Company pursuant to state or other Governmental Authority
industrial revenue bond financing, so long as the aggregate principal amount of
all such financing for all Companies, when combined with Indebtedness permitted
under subsection (b) hereof, shall not exceed Twenty Million Dollars
($20,000,000) at any time outstanding;

 

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(g) Indebtedness of a Mexican Subsidiary (whether or not secured by assets of
such Foreign Subsidiary) up to the aggregate principal amount, for all Mexican
Subsidiaries of Twenty Million Dollars ($20,000,000), provided that neither
Borrower nor any Domestic Subsidiary shall be a Guarantor of such obligations;

 

(h) unsecured Subordinated Indebtedness created pursuant to documentation in
form and substance reasonably satisfactory to Agent, not to exceed Twenty-Five
Million Dollars ($25,000,000), so long as the proceeds are applied in accordance
with Section 2.12(c)(ii) hereof and Agent approves the form and substance of the
documentation prior to the incurrence of the Indebtedness;

 

(i) Permitted Mexican Subsidiary Loans and Investments; and

 

(j) Indebtedness of VCS Properties, LLC solely secured by any of the Valley City
Steel Assets in an amount not to exceed Five Million Dollars ($5,000,000) at any
time outstanding.

 

Section 5.9. Liens.

 

(a) Negative Pledge. No Company shall create, assume or suffer to exist (upon
the happening of a contingency or otherwise) any Lien upon any of its property
or assets, whether now owned or hereafter acquired; provided that this Section
5.9 shall not apply to the following:

 

(i) Liens for taxes not yet due or that are being actively contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;

 

(ii) any Lien granted to Agent, for the benefit of the Lenders;

 

(iii) other statutory Liens incidental to the conduct of its business or the
ownership of its property and assets that (i) were not incurred in connection
with the borrowing of money or the obtaining of advances or credit, and (ii) do
not in the aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;

 

(iv) Liens on property or assets of a Subsidiary to secure obligations of such
Subsidiary to a Credit Party;

 

(v) purchase money Liens on fixed assets securing the loans and Capitalized
Lease Obligations pursuant to Section 5.8 (b) hereof, provided that such Lien is
limited to the purchase price and only attaches to the property being acquired;

 

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(vi) the Liens existing on the Closing Date as set forth in Schedule 5.9 hereto
and replacements, extensions, renewals, refundings or refinancings thereof, but
only to the extent that the amount of debt secured thereby shall not be
increased;

 

(vii) easements or other minor defects or irregularities in title of real
property not interfering in any material respect with the use of such property
in the business of any Company;

 

(viii) liens on assets of the Mexican Subsidiaries securing the Indebtedness
described in Section 5.8(g) hereof;

 

(ix) liens on the Valley City Steel Assets securing the Indebtedness described
in Section 5.8(j) hereof; or

 

(x) Liens on fixed assets securing the loans incurred pursuant to Section 5.8(f)
hereof, provided that each such Lien is limited to the assets purchased or
leased.

 

(b) State of Ohio 166 Loan Program. With respect to the loan (the “166 Loan”)
obtained by Borrower (or a Subsidiary) from the State of Ohio’s 166 Loan Program
and to be secured by the Soudronics Lazer weld line and equipment attached or
ancillary thereto located at 5580 Wegman Drive, Valley City, Ohio, Agent and the
Lenders agree that, so long as the 166 Loan is outstanding and the Lien of the
State of Ohio is perfected, the Lien of the State of Ohio shall have priority
over the Lien of Agent, for the benefit of the Lenders. In connection therewith,
if further documentation of this subordination is requested by the State of
Ohio, Agent shall execute such documentation necessary to evidence the
subordination of the Lien of Agent to the Lien of the State of Ohio.

 

(c) Other Agreements. No Company shall enter into any contract or agreement
(other than a contract or agreement entered into in connection with the purchase
or lease of fixed assets that prohibits Liens on such fixed assets) that would
prohibit Agent or the Lenders from acquiring a security interest, mortgage or
other Lien on, or a collateral assignment of, any of the property or assets of
such Company.

 

Section 5.10. Regulations T, U and X. No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations T, U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.

 

Section 5.11. Investments, Loans and Guaranties. No Company shall, without the
prior written consent of Agent and the Required Lenders, (a) create, acquire or
hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership, (d) make or keep outstanding any advance or loan to any Person, or
(e) be or become a Guarantor of any kind; provided that this Section 5.11 shall
not apply to the following:

 

(i) any endorsement of a check or other medium of payment for deposit or
collection through normal banking channels or similar transaction in the normal
course of business;

 

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(ii) any investment in direct obligations of the United States of America or in
certificates of deposit issued by a member bank (having capital resources in
excess of One Hundred Million Dollars ($100,000,000)) of the Federal Reserve
System;

 

(iii) any investment in commercial paper or securities that at the time of such
investment is assigned the highest quality rating in accordance with the rating
systems employed by either Moody’s or Standard & Poor’s;

 

(iv) the holding of Subsidiaries listed on Schedule 6.1 hereto, and the
creation, acquisition and holding of any new Subsidiary after the Closing Date,
so long as such new Subsidiary shall have been created, acquired or held in
accordance with the terms and conditions of this Agreement;

 

(v) any money market account or similar account maintained with Agent for
overnight funds;

 

(vi) any Permitted Investment, so long as no Default or Event of Default shall
then exist or would result therefrom;

 

(vii) loans to, investments by and guaranties of the Indebtedness of, a Company
from or by a Company so long as each such Company is a Credit Party;

 

(viii) the creation of a Domestic Subsidiary for the purposes of making an
Acquisition permitted by Section 5.13 hereof, so long as such Subsidiary becomes
a Guarantor of Payment promptly following such Acquisition;

 

(ix) joint ventures (on a fifty percent (50%) ownership basis) in which
contributed assets and capital on or after the Closing Date do not exceed (A)
Fifteen Million Dollars ($15,000,000) at any time when the Leverage Ratio is
greater than 2.00 to 1.00, and (B) Twenty-Five Million Dollars ($25,000,000) at
any time when the Leverage Ratio is equal to or less than 2.00 to 1.00;

 

(x) Permitted Mexican Subsidiary Loans and Investments; or

 

(xi) other investments, loans or guarantees (other than investments in, loans to
or guaranties of Indebtedness of, a Mexican Subsidiary) not to exceed, in the
aggregate, Ten Million Dollars ($10,000,000) at any time outstanding or
existing.

 

Notwithstanding anything in this Section 5.11 to the contrary, no Company may,
on or after the Closing Date, make an investment in or have outstanding any loan
to VCS Properties, LLC or Valley City Steel, LLC.

 

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Section 5.12. Merger and Sale of Assets. No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:

 

(a) any Subsidiary may merge with (i) Borrower (provided that Borrower shall be
the continuing or surviving Person) or (ii) any one or more Guarantors of
Payment;

 

(b) any Subsidiary may sell, lease, transfer or otherwise dispose of any of its
assets to a Credit Party;

 

(c) any Company may sell, lease, transfer or otherwise dispose of any assets
that are obsolete or no longer useful in such Company’s business;

 

(d) Acquisitions may be effected in accordance with the provisions of Section
5.13 hereof; or

 

(e) the Companies may sell, lease, transfer of otherwise dispose of assets to
MTD, up to an aggregate amount, during the Commitment Period, not to exceed One
Million Dollars ($1,000,000) per fiscal year of Borrower.

 

Section 5.13. Acquisitions. No Company shall effect an Acquisition; provided,
however, that a Credit Party may effect an Acquisition so long as:

 

(a) in the case of a merger, amalgamation or other combination including
Borrower, Borrower shall be the surviving entity;

 

(b) in the case of a merger, amalgamation or other combination including a
Credit Party (other than Borrower), a Credit Party shall be the surviving
entity;

 

(c) the business to be acquired shall be similar to the lines of business of the
Companies;

 

(d) the Companies shall be in full compliance with the Loan Documents both prior
to and subsequent to the transaction;

 

(e) no Default or Event of Default shall exist prior to or after giving effect
to such Acquisition;

 

(f) Borrower shall have provided to Agent and the Lenders, at least twenty (20)
days prior to such Acquisition, historical financial statements of the target
entity and a pro forma financial statement of the Companies accompanied by a
certificate of a Financial Officer of Borrower showing pro forma compliance with
Section 5.7 hereof, both before and for the four fiscal quarters of Borrower
ending after the date of the proposed Acquisition;

 

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(g) such Acquisition is not actively opposed by the board of directors (or
similar governing body) of the selling Persons or the Persons whose equity
interests are to be acquired;

 

(h) the Revolving Credit Availability shall be no less than Fifteen Million
Dollars ($15,000,000) after giving effect to such Acquisition; and

 

(i) the aggregate Consideration paid by the Companies (i) shall not exceed,
during any fiscal year of Borrower, the aggregate amount of Fifty Million
Dollars ($50,000,000), and (ii) when added to the Consideration for all other
Acquisitions for all Companies during the period when this Agreement is in
effect, would not exceed the aggregate amount of One Hundred Million Dollars
($100,000,000).

 

Section 5.14. Notice. Borrower shall cause a Financial Officer of Borrower to
promptly notify Agent and the Lenders, in writing, whenever any Default or Event
of Default may occur hereunder or any representation or warranty made in Article
VI hereof or elsewhere in this Agreement or in any Related Writing may for any
reason cease in any material respect to be true and complete.

 

Section 5.15. Environmental Compliance. Each Company shall comply in all
material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which such Company owns
or operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrower shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority, private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
ownership interest or performs any of its operations, in violation of any
Environmental Law. As used in this Section, “litigation or proceeding” means any
demand, claim, notice, suit, suit in equity action, administrative action,
investigation or inquiry whether brought by any Governmental Authority, private
Person or otherwise. Borrower shall defend, indemnify and hold Agent and the
Lenders harmless against all costs, expenses, claims, damages, penalties and
liabilities of every kind or nature whatsoever (including attorneys’ fees)
arising out of or resulting from the noncompliance of any Company with any
Environmental Law. Such indemnification shall survive any termination of this
Agreement.

 

Section 5.16. Affiliate Transactions. No Company shall, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate (other than a Company that is a Credit Party) on
terms that shall be less favorable to such Company than those that might be
obtained at the time in a transaction with a non-Affiliate; provided, however,
that the foregoing shall not prohibit the payment of customary and reasonable
directors’ fees to directors who are not employees of a Company or an Affiliate;
and further provided that the provisions of this Section 5.16 shall not apply
with regard to the agreements with MTD (or shareholders of MTD) as identified on
Schedule 5.16 hereof.

 

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Section 5.17. Restricted Payments. No Company shall make or commit itself to pay
any Restricted Payment at any time, except that, if no Default or Event of
Default shall then exist or immediately thereafter shall begin to exist,
Borrower may make Capital Distributions.

 

Section 5.18. Use of Proceeds. Borrower’s use of the proceeds of the Loans shall
be solely for working capital and other general corporate purposes of the
Companies and as otherwise permitted under this Agreement.

 

Section 5.19. Corporate Names and Locations of Collateral. No Company shall
change its corporate name, unless, in each case, such Company shall provide
Agent and the Lenders with at least thirty (30) days prior written notice
thereof. Borrower shall also promptly notify Agent and the Lenders of (a) any
material change in any location where any Company’s Inventory or Equipment is
maintained, and any new locations where any material amount of a Company’s
Inventory or Equipment is to be maintained; (b) any change in the location of
the office where any Company’s records pertaining to its Accounts are kept; (c)
the location of any new places of business and the changing or closing of any of
its existing places of business; and (d) any change in the location of any
Company’s chief executive office. In the event of any of the foregoing or if
otherwise deemed appropriate by Agent, Agent is hereby authorized to file new
U.C.C. Financing Statements describing the Collateral and otherwise in form and
substance sufficient for recordation wherever necessary or appropriate, as
determined in Agent’s sole discretion, to perfect or continue perfected the
security interest of Agent, for the benefit of the Lenders, in the Collateral.
Borrower shall pay all filing and recording fees and taxes in connection with
the filing or recordation of such U.C.C. Financing Statements and shall
immediately reimburse Agent therefor if Agent pays the same. Such amounts shall
be Related Expenses hereunder.

 

Section 5.20. Lease Rentals. The Companies shall not pay or commit themselves to
pay lease rentals on operating leases, for all Companies, in excess of the
aggregate amount of Twelve Million Dollars ($12,000,000) during any fiscal year
of Borrower, commencing with the current fiscal year.

 

Section 5.21. Subsidiary Guaranties, Security Documents and Pledge of Stock or
Other Ownership Interest.

 

(a) Guaranties and Security Documents. Each Domestic Subsidiary (that is not a
Dormant Subsidiary) created, acquired or held subsequent to the Closing Date,
shall immediately execute and deliver to Agent, for the benefit of the Lenders,
a Guaranty of Payment of all of the Obligations and a Security Agreement and
Mortgages, as appropriate, such agreements to be in form and substance
acceptable to Agent, along with any such other supporting documentation,
Security Documents, corporate governance and authorization documents, and an
opinion of counsel as may be deemed necessary or advisable by Agent.

 

(b) Pledge of Stock. With respect to the creation or acquisition of a
Subsidiary, Borrower shall deliver to Agent, for the benefit of the Lenders, all
of the share certificates (or

 

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other evidence of equity) owned by a Credit Party pursuant to the terms of a
Pledge Agreement executed by the appropriate Credit Party; provided, however,
that no Company shall be required to pledge more than sixty-five percent (65%)
of the outstanding shares or other ownership interest of any Foreign Subsidiary
(or sixty-five percent (65%) of the fixed shares of Shiloh DeMexico S.A. de C.V.
or sixty-four percent (64%) of the fixed shares of Shiloh International, S.A. de
C.V.).

 

(c) Perfection or Registration of Interest in Foreign Shares. With respect to
any foreign shares pledged to Agent, for the benefit of the Lenders, on or after
the Closing Date, Agent shall at all times, in the discretion of Agent or the
Required Lenders, have the right to perfect, at Borrower’s cost, payable upon
request therefor (including, without limitation, any foreign counsel, or foreign
notary, filing, registration or similar, fees, costs or expenses), its security
interest in such shares in the respective foreign jurisdiction.

 

Section 5.22. Restrictive Agreements. Except as set forth in this Agreement,
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) make,
directly or indirectly, any Capital Distribution to Borrower, (b) make, directly
or indirectly, loans or advances or capital contributions to Borrower or (c)
transfer, directly or indirectly, any of the properties or assets of such
Subsidiary to Borrower; except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) customary non-assignment
provisions in leases or other agreements entered in the ordinary course of
business and consistent with past practices, or (iii) customary restrictions in
security agreements or mortgages securing Indebtedness or capital leases, of a
Company to the extent such restrictions shall only restrict the transfer of the
property subject to such security agreement, mortgage or lease.

 

Section 5.23. Other Covenants. In the event that any Company shall enter into,
or shall have entered into, any Material Indebtedness Agreement (other than the
Mexican Leases), wherein the covenants, defaults or agreements contained therein
shall be more restrictive than the covenants, defaults or agreements set forth
herein, then the Companies shall be bound hereunder by such more restrictive
covenants, defaults and agreements with the same force and effect as if such
covenants, defaults and agreements were written herein.

 

Section 5.24. Collateral. Borrower shall:

 

(a) at all reasonable times and after reasonable prior notice, allow Agent or
any Lender by or through any of its officers, agents, employees, attorneys, or
accountants to (i) examine, inspect, and make extracts from Borrower’s books and
other records, including, without limitation, the tax returns of Borrower; (ii)
arrange for verification of Borrower’s Accounts, under reasonable procedures,
only during the continuance of an Event of Default, directly with Account
Debtors or by other methods; and (iii) examine and inspect Borrower’s Inventory
and Equipment, wherever located;

 

(b) promptly furnish to Agent or any Lender upon reasonable request (i)
additional statements and information with respect to the Collateral, and all
writings and information

 

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relating to or evidencing any of Borrower’s Accounts (including, without
limitation, computer printouts or typewritten reports listing the mailing
addresses of all present Account Debtors), and (ii) any other writings and
information as Agent or such Lender may reasonably request;

 

(c) notify Agent in writing immediately upon the creation of any Accounts with
respect to which the Account Debtor is the United States of America or any other
Governmental Authority, or any foreign government or instrumentality thereof or
any business that is located in a foreign country;

 

(d) notify Agent in writing immediately upon the creation by any Company of a
Deposit Account not listed on Schedule 6.19 hereto and provide for the execution
of a Control Agreement with respect thereto, if required by Agent or the
Required Lenders;

 

(e) notify Agent in writing whenever the Inventory of the Companies, valued in
excess of Five Million Dollars ($5,000,000), is located at a location of a third
party (other than a Company) that is not listed on Schedule 6.9 hereto and
request to be executed any bailee’s waiver, processor’s waiver or similar
document or notice that may be requested by Agent or the Required Lenders;

 

(f) immediately notify Agent and the Lenders in writing of any information that
any Company has or may receive with respect to the Collateral or the Real
Property that might in any manner materially and adversely affect the value
thereof or the rights of Agent or the Lenders with respect thereto;

 

(g) maintain Borrower’s Equipment in good operating condition and repair,
ordinary wear and tear excepted, making all necessary replacements thereof so
that the value and operating efficiency thereof shall at all times be maintained
and preserved;

 

(h) deliver to Agent to hold as security for the Secured Obligations, within ten
Business Days upon the written request of Agent, all certificated Investment
Property owned by a Credit Party, in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Agent, or in the event such Investment
Property is in the possession of a securities intermediary or credited to a
securities account, execute with the related securities intermediary an
investment property control agreement over such securities account in favor of
Agent, for the benefit of the Lenders, in form and substance satisfactory to
Agent; and

 

(i) upon request of Agent, promptly take such action and promptly make, execute,
and deliver all such additional and further items, deeds, assurances,
instruments and any other writings as Agent may from time to time deem necessary
or appropriate, including, without limitation, chattel paper, to carry into
effect the intention of this Agreement or so as to completely vest in and ensure
to Agent and the Lenders their respective rights hereunder and in or to the
Collateral or the Real Property.

 

Borrower hereby authorizes Agent, on behalf of the Lenders, to file U.C.C.
Financing Statements with respect to the Collateral. If certificates of title or
applications for title are issued or

 

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outstanding with respect to any of the Inventory or Equipment of Borrower,
Borrower shall, upon request of Agent, (i) execute and deliver to Agent a short
form security agreement, in form and substance satisfactory to Agent, and (ii)
deliver such certificate or application to Agent and cause the interest of
Agent, for the benefit of the Lenders, to be properly noted thereon. Borrower
hereby authorizes Agent or Agent’s designated agent (but without obligation by
Agent to do so) to incur Related Expenses (whether prior to, upon, or subsequent
to any Default or Event of Default), and Borrower shall promptly repay,
reimburse, and indemnify Agent and the Lenders for any and all Related Expenses.
If Borrower fails to keep and maintain its Equipment in good operating
condition, ordinary wear and tear excepted, Agent may (but shall not be required
to) so maintain or repair all or any part of Borrower’s Equipment and the cost
thereof shall be a Related Expense. All Related Expenses are payable to Agent
upon demand therefor; Agent may, at its option, debit Related Expenses directly
to any deposit account of a Company located at Agent or the Revolving Credit
Notes.

 

Section 5.25. Property Acquired Subsequent to the Closing Date and Right to Take
Additional Collateral. Borrower shall provide Agent with prompt written notice
with respect to any real property acquired by any Company subsequent to the
Closing Date. In addition to any other right Agent and the Lenders may have
pursuant to this Agreement or otherwise, upon written request of Agent, whenever
made, Borrower shall grant to Agent as additional security for the Secured
Obligations, a security interest in or Lien on such real property of Borrower.
Borrower agrees, promptly after the date of such written request, to secure all
of such Indebtedness by delivering to Agent security agreements, mortgages (or
deeds of trust, if applicable) or other documents, instruments or agreements or
such thereof as Agent may require. In addition, if any Subsidiary acquires any
federally registered intellectual property (including, without limitation, any
patents, patent applications, trademarks, service marks, copyrights, licenses,
and rights with respect to the foregoing) subsequent to the Closing Date,
Borrower shall (within a reasonable time period) provide written notice to Agent
and such Subsidiary shall promptly execute and deliver an Intellectual Property
Collateral Assignment Agreement with respect to such federally registered
intellectual property. Borrower shall pay all recordation, legal and other
expenses in connection with the foregoing.

 

Section 5.26. Amendment of Organizational Documents. No Company shall amend its
Organizational Documents to change its name or state of organization, or
otherwise amend its Organizational Documents in any material respect, without
the prior written consent of Agent.

 

Section 5.27. Interest Rate Protection. Borrower shall maintain Interest Rate
Protection as in effect on the Closing Date.

 

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

 

Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification. Each
Company is duly organized, validly existing, and in good standing under the laws
of its state or jurisdiction of incorporation or organization and is duly
qualified and authorized to do business and is in good standing as a foreign
entity in the jurisdictions set forth opposite its name on Schedule 6.1 hereto,
which are all of the states or jurisdictions where the character of its property
or its business

 

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activities makes such qualification necessary, except where a failure to qualify
will not result in a Material Adverse Effect. Schedule 6.1 hereto sets forth, as
of the Closing Date, each Subsidiary of Borrower (and whether such Subsidiary is
a Dormant Subsidiary), its state of formation, its relationship to Borrower,
including the percentage of each class of stock or membership interests owned by
a Company, each Person that owns the stock or other equity interest of each
Company, the location of its chief executive office and its principal place of
business. Borrower owns all of the equity interests of each of its Subsidiaries.
As of the Closing Date, each of the Companies designated as a “Dormant
Subsidiary” on Schedule 6.1 hereto (A) has aggregate assets of less than One
Hundred Thousand Dollars ($100,000) and aggregate investments in such Company by
the Companies of less than One Hundred Thousand Dollars ($100,000), and (B) has
no direct or indirect Subsidiaries with aggregate assets for all such
Subsidiaries of more than One Hundred Thousand Dollars ($100,000).

 

Section 6.2. Corporate Authority. Each Credit Party has the right and power and
is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Credit Party is a party
have been duly authorized and approved by such Credit Party’s board of directors
or other governing body, as applicable, and are the valid and binding
obligations of such Credit Party, enforceable against such Credit Party in
accordance with their respective terms. The execution, delivery and performance
of the Loan Documents will not conflict with, result in any breach in any of the
provisions of, constitute a default under, or result in the creation of any Lien
(other than Liens permitted under Section 5.9 hereof) upon any assets or
property of any Company, under the provisions of, such Company’s Organizational
Documents or any material agreement.

 

Section 6.3. Compliance with Laws and Contracts. Each Company

 

(a) holds all material permits, certificates, licenses, orders, registrations,
franchises, authorizations, and other approvals from any Governmental Authority
necessary for the conduct of its business and is in compliance with all
applicable laws relating thereto;

 

(b) is in substantial compliance with all federal, state, local, or foreign
applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices; and

 

(c) is not in violation of or in default under any material agreement to which
it is a party or by which its assets are subject or bound.

 

Section 6.4. Litigation and Administrative Proceedings. Except for failure to
comply with such matters which will not cause a Material Adverse Effect and
except as set forth on Schedule 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against any Company,
or in respect of which any Company may have any liability, in any court or
before any Governmental Authority, arbitration board, or other tribunal, (b) no
orders, writs, injunctions, judgments, or decrees of any court or government
agency or instrumentality to which any Company is a party or by which the
property or assets of any Company are bound, and (c) no grievances, disputes, or
controversies outstanding with any union or other organization of the employees
of any Company, or threats of work stoppage, strike, or pending demands for
collective bargaining.

 

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Section 6.5. Title to Assets. Each Company has good title to and ownership of
all material property it purports to own, which property is free and clear of
all Liens, except those permitted under Section 5.9 hereof.

 

Section 6.6. Liens and Security Interests. On and after the Closing Date, except
for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will be no
U.C.C. Financing Statement or similar notice of Lien outstanding covering any
personal property of any Company, other than a U.C.C. Financing Statement in
favor of Agent for the benefit of the Lenders; (b) there is and will be no
mortgage outstanding covering any real property of any Company, other than a
mortgage in favor of Agent for the benefit of the Lenders; and (c) no real or
personal property of any Company is subject to any security interest or Lien of
any kind other than any security interest or Lien that may be granted to Agent,
for the benefit of the Lenders. Agent, for the benefit of the Lenders, has a
valid and enforceable first security interest in the Collateral. No Company has
entered into any contract or agreement (other than a contract or agreement
entered into in connection with the purchase or lease of fixed assets that
prohibits Liens on such fixed assets) that exists on or after the Closing Date
that would prohibit Agent or the Lenders from acquiring a Lien on, or a
collateral assignment of, any of the property or assets of any Company.

 

Section 6.7. Tax Returns. All federal, state, provincial and local tax returns
and other reports required by law to be filed in respect of the income,
business, properties and employees of each Company have been filed and all
taxes, assessments, fees and other governmental charges that are due and payable
have been paid, except as otherwise permitted herein, including obtaining
appropriate extensions of time to file such tax returns. The provision for taxes
on the books of each Company is adequate for all years not closed by applicable
statutes and for the current fiscal year.

 

Section 6.8. Environmental Laws. Each Company is in substantial compliance with
all Environmental Laws, including, without limitation, all Environmental Laws in
all jurisdictions in which any Company owns or operates, or has owned or
operated, a facility or site, arranges or has arranged for disposal or treatment
of hazardous substances, solid waste or other wastes, accepts or has accepted
for transport any hazardous substances, solid waste or other wastes or holds or
has held any interest in real property or otherwise. No material litigation or
proceeding arising under, relating to or in connection with any Environmental
Law is pending or, to the best knowledge of each Company, threatened, against
any Company, any real property in which any Company holds or has held an
ownership interest or any past or present operation of any Company. No material
release, threatened release or disposal of hazardous waste, solid waste or other
wastes is occurring, or has occurred (other than those that are currently being
cleaned up in accordance with Environmental Laws), on, under or to any real
property in which any Company holds any interest or performs any of its
operations, in violation of any Environmental Law. As used in this Section 6.8,
“litigation or proceeding” means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry whether brought
by any Governmental Authority or private Person, or otherwise.

 

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Section 6.9. Locations. As of the Closing Date, the Companies have places of
business or maintain their Accounts, Inventory and Equipment at the locations
set forth on Schedule 6.9 hereto and each Company’s chief executive office is
set forth on Schedule 6.9 hereto. Schedule 6.9 further specifies whether each
location, as of the Closing Date, (a) is owned by the Companies, or (b) is
leased by a Company from a third party, and, if leased by a Company from a third
party, if a Landlord’s Waiver has been requested. As of the Closing Date,
Schedule 6.9 correctly identifies the name and address of each third party
location where a material amount of the assets of the Companies are located.

 

Section 6.10. Continued Business. There exists no actual, pending, or, to
Borrower’s knowledge, any threatened termination, cancellation or limitation of,
or any modification or change in the business relationship of any Company and
any customer or supplier, or any group of customers or suppliers, whose
purchases or supplies, individually or in the aggregate, are material to the
business of any Company, and, to the knowledge of Borrower, there exists no
present condition or state of facts or circumstances that would have a Material
Adverse Effect or prevent a Company from conducting such business or the
transactions contemplated by this Agreement in substantially the same manner in
which it was previously conducted.

 

Section 6.11. Employee Benefits Plans. Schedule 6.11 hereto identifies each
ERISA Plan as of the Closing Date. No ERISA Event has occurred or is expected to
occur with respect to an ERISA Plan. Full payment has been made of all amounts
that a Controlled Group member is required, under applicable law or under the
governing documents, to have paid as a contribution to or a benefit under each
ERISA Plan. The liability of each Controlled Group member with respect to each
ERISA Plan has been adequately funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements. No changes have occurred or are expected to occur that
would cause a material increase in the cost of providing benefits under the
ERISA Plan. With respect to each ERISA Plan that is intended to be qualified
under Code Section 401(a), (a) the ERISA Plan and any associated trust
operationally comply with the applicable requirements of Code Section 401(a);
(b) the ERISA Plan and any associated trust have been amended to comply with all
such requirements as currently in effect, other than those requirements for
which a retroactive amendment can be made within the “remedial amendment period”
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely); (c) the ERISA Plan
and any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the ERISA Plan qualifies under Code
Section 401(a), that the associated trust qualifies under Code Section 501(a)
and, if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first adopted at
a time for which the above-described “remedial amendment period” has not yet
expired; (d) the ERISA Plan currently satisfies the requirements of Code Section
410(b), without regard to any retroactive amendment that may be made within the
above-described “remedial amendment period”; and (e) no contribution made to the
ERISA Plan is subject to an excise tax under Code Section 4972. With respect to
any Pension Plan, the “accumulated benefit obligation” of Controlled Group
members with respect to the Pension Plan (as determined in accordance with
Statement of Accounting Standards No. 87, “Employers’ Accounting for Pensions”)
does not exceed the fair market value of Pension Plan assets.

 

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Section 6.12. Consents or Approvals. No consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person is required to be obtained or completed by any Company in
connection with the execution, delivery or performance of any of the Loan
Documents, that has not already been obtained or completed.

 

Section 6.13. Solvency. Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to Agent and the Lenders. Borrower is not insolvent as defined in any
applicable state, federal or relevant foreign statute, nor will Borrower be
rendered insolvent by the execution and delivery of the Loan Documents to Agent
and the Lenders. Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it are or will be an unreasonably
small amount of capital, taking into consideration the obligations to Agent and
the Lenders incurred hereunder. Borrower does not intend to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they mature.

 

Section 6.14. Financial Statements. The audited Consolidated financial
statements of Borrower for the fiscal years ended October 31, 2003 and October
31, 2004, furnished to Agent and the Lenders, are true and complete in all
material respects, have been prepared in accordance with GAAP, and fairly
present the financial condition of the Companies as of the dates of such
financial statements and the results of their operations for the periods then
ending. Since the dates of such statements, there has been no material adverse
change in any Company’s financial condition, properties or business or any
change in any Company’s accounting procedures.

 

Section 6.15. Regulations. No Company 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” (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit will
violate, or be inconsistent with, the provisions of Regulation T, U or X or any
other Regulation of such Board of Governors.

 

Section 6.16. Material Agreements. Except as disclosed on Schedule 6.16 hereto,
on the Closing Date, no Company is a party to any (a) debt instrument (excluding
the Loan Documents); (b) lease (capital, operating or otherwise), whether as
lessee or lessor thereunder; (c) contract, commitment, agreement, or other
arrangement involving the purchase or sale of any inventory by it, or the
license of any right to or by it; (d) contract, commitment, agreement, or other
arrangement with any of its “Affiliates” (as such term is defined in the
Securities Exchange Act of 1934, as amended) other than a Company; (e)
management or employment contract or contract for personal services with any of
its Affiliates that is not otherwise terminable at will or on less than ninety
(90) days’ notice without liability; (f) collective bargaining agreement; or (g)
other contract, agreement, understanding, or arrangement with a third party
that, as to subsections (a) through (g), above, if violated, breached, or
terminated for any reason, would have or would be reasonably expected to have a
Material Adverse Effect.

 

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Section 6.17. Intellectual Property. Except as disclosed in Schedule 6.17
hereto, each Company owns or has the right to use all of the material patents,
patent applications, industrial designs, trademarks, service marks, copyrights
and licenses, and rights with respect to the foregoing, necessary for the
conduct of its business without any known conflict with the rights of others.

 

Section 6.18. Insurance. Each Company maintains with financially sound and
reputable insurers insurance with coverage and limits as required by law and as
is customary with Persons engaged in the same businesses as the Companies.
Schedule 6.18 hereto sets forth all insurance carried by the Companies on the
Closing Date, setting forth in detail the amount and type of such insurance.

 

Section 6.19. Deposit Accounts. Schedule 6.19 hereto lists all banks and other
financial institutions at which any Company maintains deposit or other accounts
as of the Closing Date, and Schedule 6.19 hereto correctly identifies the name,
address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account
number therefor.

 

Section 6.20. Accurate and Complete Statements. Neither the Loan Documents nor
any written statement made by any Company in connection with any of the Loan
Documents contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained therein or in the Loan Documents
not misleading. After due inquiry by Borrower, there is no known fact that any
Company has not disclosed to Agent and the Lenders that has or is likely to have
a Material Adverse Effect.

 

Section 6.21. Investment Company; Holding Company. No Company is (a) an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or (b) subject to
regulation under the Public Utility Holding Company Act of 1935 or the Federal
Power Act, each as amended, or any foreign, federal, state or local statute or
regulation limiting its ability to incur Indebtedness.

 

Section 6.22. Defaults. No Default or Event of Default exists hereunder, nor
will any begin to exist immediately after the execution and delivery hereof.

 

ARTICLE VII. SECURITY

 

Section 7.1. Security Interest in Collateral. In consideration of and as
security for the full and complete payment of all of the Secured Obligations,
Borrower hereby grants to Agent for the benefit of the Lenders a security
interest in and a collateral assignment of the Collateral.

 

Section 7.2. Collections and Receipt of Proceeds by Borrower.

 

(a) Prior to the exercise by Agent and the Required Lenders of their rights
under Article IX hereof, both (i) the lawful collection and enforcement of all
of Borrower’s Accounts, and (ii) the lawful receipt and retention by Borrower of
all Proceeds of all of Borrower’s Accounts and Inventory shall be as agent of
the Lenders.

 

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(b) Upon written notice to Borrower from Agent after the occurrence and during
the continuance of an Event of Default, a Cash Collateral Account shall be
opened by Borrower at the main office of Agent (or such other office as shall be
designated by Agent) and all such lawful collections of Borrower’s Accounts and
such Proceeds of Borrower’s Accounts and Inventory shall be remitted daily by
Borrower to Agent in the form in which they are received by Borrower, either by
mailing or by delivering such collections and Proceeds to Agent, appropriately
endorsed for deposit in the Cash Collateral Account. In the event that such
notice is given to Borrower from Agent, Borrower shall not commingle such
collections or Proceeds with any of Borrower’s other funds or property, but
shall hold such collections and Proceeds separate and apart therefrom upon an
express trust for Agent, for the benefit of the Lenders. In such case, Agent
may, in its sole discretion, and shall, at the request of the Required Lenders,
at any time and from time to time after the occurrence and during the
continuance of an Event of Default, apply all or any portion of the account
balance in the Cash Collateral Account as a credit against (i) the outstanding
principal or interest of the Loans, or (ii) any other Secured Obligations. If
any remittance shall be dishonored, or if, upon final payment, any claim with
respect thereto shall be made against Agent on its warranties of collection,
Agent may charge the amount of such item against the Cash Collateral Account or
any other Deposit Account maintained by Borrower with Agent or with any other
Lender, and, in any event, retain the same and Borrower’s interest therein as
additional security for the Secured Obligations. Agent may, in its sole
discretion, at any time and from time to time, release funds from the Cash
Collateral Account to Borrower for use in Borrower’s business. The balance in
the Cash Collateral Account may be withdrawn by Borrower upon termination of
this Agreement and payment in full of all of the Secured Obligations.

 

(c) At Agent’s request after the occurrence and during the continuance of an
Event of Default, Borrower shall cause all remittances representing collections
and Proceeds of Collateral to be mailed to a lock box at a location acceptable
to Agent to which Agent shall have access for the processing of such items in
accordance with the provisions, terms and conditions of the customary lock box
agreement of Agent. Except as may be required pursuant to the Security Documents
after the occurrence and during the continuance of an Event of Default, Borrower
is not required to authorize Agent to have authority to “sweep” funds of
Borrower through a lock box arrangement for accounts receivable of Borrower or
otherwise.

 

(d) Agent, or Agent’s designated agent, is hereby constituted and appointed
Borrower’s attorney-in-fact with authority and power to endorse, after the
occurrence and during the continuance of an Event of Default, any and all
instruments, documents, and chattel paper upon Borrower’s failure to do so. Such
authority and power, being coupled with an interest, shall be (i) irrevocable
until all of the Secured Obligations are paid, (ii) exercisable by Agent at any
time and without any request upon Borrower by Agent to so endorse, and (iii)
exercisable in Agent’s name or Borrower’s name. Borrower hereby waives
presentment, demand, notice of dishonor, protest, notice of protest, and any and
all other similar notices with respect thereto, regardless of the form of any
endorsement thereof. Agent and the Lenders shall not be bound or obligated to
take any action to preserve any rights therein against prior parties thereto.

 

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Section 7.3. Collections and Receipt of Proceeds by Agent. Borrower hereby
constitutes and appoints Agent, or Agent’s designated agent, as Borrower’s
attorney-in-fact to exercise at any time after the occurrence and during the
continuance of an Event of Default, all or any of the following powers which,
being coupled with an interest, shall be irrevocable until the complete and full
payment of all of the Secured Obligations:

 

(a) to receive, retain, acquire, take, endorse, assign, deliver, accept, and
deposit, in the name of Agent or Borrower, any and all of Borrower’s cash,
instruments, chattel paper, documents, Proceeds of Accounts, Proceeds of
Inventory, collection of Accounts, and any other writings relating to any of the
Collateral;

 

(b) to transmit to Account Debtors, on any or all of Borrower’s Accounts, notice
of assignment thereof to Agent, for the benefit of the Lenders, and the security
interest therein of Agent, for the benefit of the Lenders, and to request from
such Account Debtors at any time, in the name of Agent or Borrower, information
concerning Borrower’s Accounts and the amounts owing thereon;

 

(c) to transmit to purchasers of any or all of Borrower’s Inventory, notice of
Agent’s security interest therein, and to request from such purchasers at any
time, in the name of Agent or Borrower, information concerning Borrower’s
Inventory and the amounts owing thereon by such purchasers;

 

(d) to notify and require Account Debtors on Borrower’s Accounts and purchasers
of Borrower’s Inventory to make payment of their indebtedness directly to Agent;

 

(e) to take or bring, in the name of Agent or Borrower, all steps, actions,
suits, or proceedings deemed by Agent necessary or desirable to effect the
receipt, enforcement, and collection of the Collateral; and

 

(f) to accept all collections in any form relating to the Collateral, including
remittances that may reflect deductions, and to deposit the same, into
Borrower’s Cash Collateral Account or, at the option of Agent, to apply them as
a payment against the Loans or any other Secured Obligations in accordance with
this Agreement.

 

Section 7.4. Use of Inventory and Equipment. Until the exercise by Agent and the
Required Lenders of their rights under Article IX hereof, Borrower may (a)
retain possession of and use its Inventory and Equipment in any lawful manner
not inconsistent with this Agreement or with the terms, conditions, or
provisions of any policy of insurance thereon; (b) sell or lease its Inventory
in the ordinary course of business; provided, however, that a sale or lease in
the ordinary course of business does not include a transfer in partial or total
satisfaction of an Indebtedness; and (c) use and consume any raw materials or
supplies, the use and consumption of which are necessary in order to carry on
Borrower’s business.

 

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ARTICLE VIII. EVENTS OF DEFAULT

 

Each of the following shall constitute an Event of Default hereunder:

 

Section 8.1. Payments. If (a) the interest on any Loan or any commitment or
other fee shall not be paid in full when due and payable or within three
Business Days thereafter, or (b) the principal of any Loan or any obligation
under any Letter of Credit shall not be paid in full when due and payable.

 

Section 8.2. Special Covenants. If any Company shall fail or omit to perform and
observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.16, 5.17 or 5.20 hereof.

 

Section 8.3. Other Covenants. If any Company shall fail or omit to perform and
observe any agreement or other provision (other than those referred to in
Section 8.1 or 8.2 hereof) contained or referred to in this Agreement or any
Related Writing that is on such Company’s part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
earlier of (a) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (b) the giving of written notice thereof to Borrower by
Agent or the Required Lenders that the specified Default is to be remedied.

 

Section 8.4. Representations and Warranties. If any representation or warranty
made in or pursuant to this Agreement or any Related Writing or any other
material information furnished by any Company to Agent or the Lenders or any
thereof or any other holder of any Note, shall be false or erroneous in any
material respect.

 

Section 8.5. Cross Default. If any Company shall default in the payment of
principal or interest due and owing under any Material Indebtedness Agreement
beyond any period of grace provided with respect thereto or in the performance
or observance of any other agreement, term or condition contained in any
agreement under which such obligation is created, if the effect of such default
is to allow the acceleration of the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity.

 

Section 8.6. ERISA Default. The occurrence of one or more ERISA Events that (a)
the Required Lenders determine could have a Material Adverse Effect, or (b)
results in a Lien on any of the assets of any Company.

 

Section 8.7. Change in Control. If any Change in Control shall occur.

 

Section 8.8. Money Judgment. A final judgment or order for the payment of money
shall be rendered against any Company by a court of competent jurisdiction, that
remains unpaid or unstayed and undischarged for a period (during which execution
shall not be effectively stayed) of thirty (30) days after the date on which the
right to appeal has expired, provided that the aggregate of all such judgments
for all such Companies shall exceed Five Million Dollars ($5,000,000).

 

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Section 8.9. Material Adverse Change. There shall have occurred any condition or
event that Agent or the Required Lenders determine has or is reasonably likely
to have a Material Adverse Effect.

 

Section 8.10. Security. If any material Lien granted in this Agreement or any
other Loan Document in favor of Agent, for the benefit of the Lenders, shall be
determined to be (a) void, voidable or invalid, or is subordinated or not
otherwise given the priority contemplated by this Agreement and Borrower has
failed to promptly execute appropriate documents to correct such matters, or (b)
unperfected as to any material amount of Collateral or Real Property (as
determined by Agent, in its reasonable discretion).

 

Section 8.11. Validity of Loan Documents. (a) Any material provision, in the
reasonable opinion of Agent, of any Loan Document shall at any time for any
reason cease to be valid, binding and enforceable against any Credit Party and
Borrower has failed to promptly execute appropriate documents to correct such
matters; (b) the validity, binding effect or enforceability of any Loan Document
against any Credit Party shall be contested by any Credit Party; (c) any Credit
Party shall deny that it has any or further liability or obligation under any
Loan Document; or (d) any Loan Document shall be terminated, invalidated or set
aside, or be declared ineffective or inoperative or in any way cease to give or
provide to Agent and the Lenders the benefits purported to be created thereby.
In addition to any other material Loan Documents, this Agreement, each Note and
each Guaranty of Payment shall be deemed to be “material”.

 

Section 8.12. Solvency of MTD. If MTD Holdings or any of its subsidiaries (other
than a Company) representing in excess of five percent (5%) of the consolidated
total assets, or generating in excess of five percent (5%) of the consolidated
total revenue, of MTD Holdings and its subsidiaries shall (a) make a general
assignment for the benefit of creditors, (b) apply for or consent to the
appointment of an interim receiver, a receiver and manager, an administrator,
sequestrator, monitor, a custodian, a trustee, an interim trustee or liquidator
of all or a substantial part of its assets or of such Person, or (c) file a
voluntary petition in bankruptcy, or file a proposal or notice of intention to
file a proposal or have an involuntary proceeding filed against it and the same
shall continue undismissed for a period of thirty (30) days from commencement of
such proceeding or case, or file a petition, or an answer or an application or a
proposal seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, or admit (by
answer, by default or otherwise) the material allegations of a petition filed
against it in any bankruptcy, reorganization, insolvency or other proceeding
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors.

 

Section 8.13. Solvency of Certain Companies. If any Company (other than a
Dormant Subsidiary, VCS Properties, LLC or a Company described in Section 8.14
hereof) shall engage in any of the activities or become subject to any of the
conditions described in subsections (a) through (j) of Section 8.14 hereof.

 

Section 8.14. Solvency of Certain Other Companies. If Borrower or any other
Company representing in excess of five percent (5%) of the Consolidated total
assets, or generating in

 

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excess of five percent (5%) of the Consolidated total revenue, of Borrower and
its Subsidiaries shall (a) except as permitted pursuant to Section 5.12 hereof,
discontinue business, (b) generally not pay its debts as such debts become due,
(c) make a general assignment for the benefit of creditors, (d) apply for or
consent to the appointment of an interim receiver, a receiver and manager, an
administrator, sequestrator, monitor, a custodian, a trustee, an interim trustee
or liquidator of all or a substantial part of its assets or of such Company, (e)
be adjudicated a debtor or insolvent or have entered against it an order for
relief under Title 11 of the United States Code, or under any other bankruptcy
insolvency, liquidation, winding-up, corporate or similar statute or law,
foreign, federal state or provincial, in any applicable jurisdiction, now or
hereafter existing, as any of the foregoing may be amended from time to time,
(f) file a voluntary petition in bankruptcy, or file a proposal or notice of
intention to file a proposal or have an involuntary proceeding filed against it
and the same shall continue undismissed for a period of thirty (30) days from
commencement of such proceeding or case, or file a petition, or an answer or an
application or a proposal seeking reorganization or an arrangement with
creditors or seeking to take advantage of any other law (whether federal,
provincial or state, or, if applicable, other jurisdiction) relating to relief
of debtors, or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency or other proceeding (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, (g) suffer or
permit to continue unstayed and in effect for thirty (30) consecutive days any
judgment, decree or order entered by a court of competent jurisdiction, that
approves a petition or an application or a proposal seeking its reorganization
or appoints an interim receiver, a receiver and manager, an administrator,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, (h) have an administrative receiver appointed over the whole or
substantially the whole of its assets, or of such Company, (i) take, or omit to
take, any action in order thereby to effect any of the foregoing, or (j) have a
moratorium declared in respect of any of its Indebtedness, or any analogous
procedure or step is taken in any jurisdiction.

 

ARTICLE IX. REMEDIES UPON DEFAULT

 

Notwithstanding any contrary provision or inference herein or elsewhere:

 

Section 9.1. Optional Defaults. If any Event of Default referred to in Section
8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12 or 8.13 hereof
shall occur, Agent may, with the consent of the Required Lenders, and shall, at
the written request of the Required Lenders, give written notice to Borrower to:

 

(a) terminate the Commitment, if not previously terminated, and, immediately
upon such election, the obligations of the Lenders, and each thereof, to make
any further Loan and the obligation of the Fronting Lender to issue any Letter
of Credit immediately shall be terminated; and/or

 

(b) accelerate the maturity of all of the Obligations (if the Obligations are
not already due and payable), whereupon all of the Obligations shall become and
thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by Borrower.

 

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Section 9.2. Automatic Defaults. If any Event of Default referred to in Section
8.14 hereof shall occur:

 

(a) all of the Commitment shall automatically and immediately terminate, if not
previously terminated, and no Lender thereafter shall be under any obligation to
grant any further Loan, nor shall the Fronting Lender be obligated to issue any
Letter of Credit; and

 

(b) the principal of and interest then outstanding on all of the Loans, and all
of the other Obligations, shall thereupon become and thereafter be immediately
due and payable in full (if the Obligations are not already due and payable),
all without any presentment, demand or notice of any kind, which are hereby
waived by Borrower.

 

Section 9.3. Letters of Credit. If the maturity of the Obligations shall be
accelerated pursuant to Section 9.1 or 9.2 hereof, Borrower shall immediately
deposit with Agent, as security for the obligations of Borrower and any
Guarantor of Payment to reimburse Agent and the Revolving Lenders for any then
outstanding Letters of Credit, cash equal to the sum of the aggregate undrawn
balance of any then outstanding Letters of Credit. Agent and the Lenders are
hereby authorized, at their option, to deduct any and all such amounts from any
deposit balances then owing by any Lender (or any affiliate of such Lender,
wherever located) to or for the credit or account of any Company, as security
for the obligations of Borrower and any Guarantor of Payment to reimburse Agent
and the Revolving Lenders for any then outstanding Letters of Credit.

 

Section 9.4. Offsets. If there shall occur or exist any Event of Default
referred to in Section 8.14 hereof or if the maturity of the Obligations is
accelerated pursuant to Section 9.1 or 9.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all of the Obligations then owing by Borrower or a Guarantor
of Payment to such Lender (including, without limitation, any participation
purchased or to be purchased pursuant to Section 2.2 or 9.5 hereof), whether or
not the same shall then have matured, any and all deposit (general or special)
balances and all other indebtedness then held or owing by such Lender
(including, without limitation, by branches and agencies or any affiliate of
such Lender, wherever located) to or for the credit or account of Borrower or
any Guarantor of Payment, all without notice to or demand upon Borrower or any
other Person, all such notices and demands being hereby expressly waived by
Borrower.

 

Section 9.5. Equalization Provision.

 

(a) Equalization Within Commitments Prior to an Equalization Event. Each
Revolving Lender agrees with the other Revolving Lenders that, if it at any time
shall obtain any Advantage over the other Revolving Lenders, or any thereof, in
respect of the Applicable Debt (except as to Swing Loans and Letters of Credit
prior to Agent’s giving of notice to participate and amounts under Article III
hereof), such Revolving Lender shall purchase from the other Revolving Lenders,
for cash and at par, such additional participation in the Applicable Debt as

 

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shall be necessary to nullify the Advantage. Each Term Lender agrees with the
other Term Lenders that, if it at any time shall obtain any Advantage over the
other Term Lenders, or any thereof, in respect of the Applicable Debt (except as
to amounts under Article III hereof), such Term Lender shall purchase from the
other Term Lenders, for cash and at par, such additional participation in the
Applicable Debt as shall be necessary to nullify the Advantage.

 

(b) Equalization Between Commitments After an Equalization Event. After the
occurrence of an Equalization Event, each Lender agrees with the other Lenders
that, if such Lender at any time shall obtain any Advantage over the other
Lenders or any thereof determined in respect of the Obligations (including Swing
Loans and Letters of Credit but excluding amounts under Article III hereof) then
outstanding, such Lender shall purchase from the other Lenders, for cash and at
par, such additional participation in the Obligations as shall be necessary to
nullify the Advantage in respect of the Obligations. For purposes of determining
whether or not, after the occurrence of an Equalization Event, an Advantage in
respect of the Obligations shall exist, Agent shall, as of the date that the
Equalization Event occurs:

 

(i) add the Revolving Credit Exposure and the Term Loan Exposure to determine
the equalization maximum amount (the “Equalization Maximum Amount”); and

 

(ii) determine an equalization percentage (the “Equalization Percentage”) for
each Lender by dividing the aggregate amount of its Lender Credit Exposure by
the Equalization Maximum Amount.

 

After the date of an Equalization Event, Agent shall determine whether an
Advantage exists among the Lenders by using the Equalization Percentage. Such
determination shall be conclusive absent manifest error.

 

(c) Recovery of Amount. If any such Advantage resulting in the purchase of an
additional participation as set forth in subsections (a) or (b) hereof shall be
recovered in whole or in part from the Lender receiving the Advantage, each such
purchase shall be rescinded, and the purchase price restored (but without
interest unless the Lender receiving the Advantage is required to pay interest
on the Advantage to the Person recovering the Advantage from such Lender)
ratably to the extent of the recovery.

 

(d) Application and Sharing of Set-Off Amounts. Each Lender further agrees with
the other Lenders that, if it at any time shall receive any payment for or on
behalf of Borrower on any Indebtedness owing by Borrower to that Lender (whether
by voluntary payment, by realization upon security, by reason of offset of any
deposit or other Indebtedness, by counterclaim or cross action, by enforcement
of any right under any Loan Document, or otherwise), it shall apply such payment
first to any and all Indebtedness owing by Borrower to that Lender pursuant to
this Agreement (including, without limitation, any participation purchased or to
be purchased pursuant to this Section or any other Section of this Agreement).
Each Credit Party agrees that any Lender so purchasing a participation from the
other Lenders, or any thereof, pursuant to this Section 9.5 may exercise all of
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

 

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Section 9.6. Collateral. Agent and the Lenders shall at all times have the
rights and remedies of a secured party under the Ohio Revised Code as in effect
from time to time, in addition to the rights and remedies of a secured party
provided elsewhere within this Agreement, in any other Related Writing executed
by Borrower or otherwise provided in law or equity. Upon the occurrence and
during the continuance of an Event of Default and at all times thereafter, Agent
may require Borrower to assemble the Collateral, which Borrower agrees to do,
and make it available to Agent and the Lenders at a reasonably convenient place
to be designated by Agent. Agent may, with or without notice to or demand upon
Borrower and with or without the aid of legal process, make use of such force as
may be necessary to enter any premises where the Collateral, or any thereof, may
be found and to take possession thereof (including anything found in or on the
Collateral that is not specifically described in this Agreement, each of which
findings shall be considered to be an accession to and a part of the Collateral)
and for that purpose may pursue the Collateral wherever the same may be found,
without liability for trespass or damage caused thereby to Borrower. After any
delivery or taking of possession of the Collateral, or any thereof, pursuant to
this Agreement, then, with or without resort to Borrower personally or any other
Person or property, all of which Borrower hereby waives, and upon such terms and
in such manner as Agent may deem advisable, Agent, in its discretion, may sell,
assign, transfer and deliver any of the Collateral at any time, or from time to
time. No prior notice need be given to Borrower or to any other Person in the
case of any sale of Collateral that Agent determines to be perishable or to be
declining speedily in value or that is customarily sold in any recognized
market, but in any other case Agent shall give Borrower not fewer than ten days
prior notice of either the time and place of any public sale of the Collateral
or of the time after which any private sale or other intended disposition
thereof is to be made. Borrower waives advertisement of any such sale and
(except to the extent specifically required by the preceding sentence) waives
notice of any kind in respect of any such sale. At any such public sale, Agent
or the Lenders may purchase the Collateral, or any part thereof, free from any
right of redemption, all of which rights Borrower hereby waives and releases.
After deducting all Related Expenses, and after paying all claims, if any,
secured by Liens having precedence over this Agreement, Agent may apply the net
proceeds of each such sale to or toward the payment of the Secured Obligations,
whether or not then due, in such order and by such division as Agent, in its
sole discretion, may deem advisable. Any excess, to the extent permitted by law,
shall be paid to Borrower, and Borrower shall remain liable for any deficiency.
In addition, Agent shall at all times have the right to obtain new appraisals of
Borrower or the Collateral, the reasonable cost of which shall be paid by
Borrower.

 

Section 9.7. Other Remedies. The remedies in this Article IX are in addition to,
and not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lenders may be entitled. Agent
shall exercise the rights under this Article IX and all other collection efforts
on behalf of the Lenders and no Lender shall act independently with respect
thereto, except as otherwise specifically set forth in this Agreement.

 

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Section 9.8. Application of Proceeds.

 

(a) Payments Prior to Exercise of Remedies. Prior to the exercise by Agent, on
behalf of the Lenders, of remedies under this Agreement or the other Loan
Documents, all monies received by Agent shall be applied, unless otherwise
required by the terms of the other Loan Documents or by applicable law, as
follows (provided that Agent shall have the right at all times to apply any
payment received from Borrower first to the payment of all obligations (to the
extent not paid by Borrower) incurred by Agent pursuant to Section 11.5 hereof
and to the payment of Related Expenses):

 

(i) with respect to payments received in connection with the Revolving Credit
Commitment, to the Revolving Credit Lenders (or the Swing Line Lender or the
Fronting Lender, as appropriate); and

 

(ii) with respect to payments received in connection with the Term Loan
Commitment, to the Term Lenders.

 

(b) Payments Subsequent to Exercise of Remedies. After the exercise by Agent or
the Required Lenders of remedies under this Agreement or the other Loan
Documents, all monies received by Agent shall be applied, unless otherwise
required by the terms of the other Loan Documents or by applicable law, as
follows:

 

(i) first, to the payment of all obligations (to the extent not paid by
Borrower) incurred by Agent pursuant to Section 11.5 hereof and to the payment
of Related Expenses;

 

(ii) second, to the payment pro rata of (A) interest then accrued and payable on
the outstanding Loans, (B) any fees then accrued and payable to Agent, and (C)
any fees then accrued and payable to any Fronting Lender or the holders of the
Letter of Credit Commitment in respect of the Letter of Credit Exposure;

 

(iii) third, (A) to the Lenders, on a pro rata basis, based upon each such
Lender’s Overall Commitment Percentage; provided that the amounts payable in
respect of the Letter of Credit Exposure shall be held and applied by Agent as
security for the reimbursement obligations in respect thereof, and, if any
Letter of Credit shall expire without being drawn, then the amount with respect
to such Letter of Credit shall be distributed to the Lenders, on a pro rata
basis in accordance with this subsection (iii), and (B) the Indebtedness under
any Hedge Agreement, such amount to be based upon the net termination obligation
of Borrower under such Hedge Agreement; with such payment to be pro rata between
(A) and (B) hereof; and

 

(iv) finally, any remaining surplus after all of the Secured Obligations have
been paid in full, to Borrower or to whomsoever shall be lawfully entitled
thereto.

 

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ARTICLE X. THE AGENT

 

The Lenders authorize LaSalle Bank National Association and LaSalle Bank
National Association hereby agrees to act as agent for the Lenders in respect of
this Agreement upon the terms and conditions set forth elsewhere in this
Agreement, and upon the following terms and conditions:

 

Section 10.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers hereunder as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Neither Agent
nor any of its affiliates, directors, officers, attorneys or employees shall (a)
be liable for any action taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct (as determined by a court of competent jurisdiction), or be
responsible in any manner to any of the Lenders for the effectiveness,
enforceability, genuineness, validity or due execution of this Agreement or any
other Loan Documents, (b) be under any obligation to any Lender to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of Borrower or any other Company, or
the financial condition of Borrower or any other Company, or (c) be liable to
any of the Companies for consequential damages resulting from any breach of
contract, tort or other wrong in connection with the negotiation, documentation,
administration or collection of the Loans or Letters of Credit or any of the
Loan Documents.

 

Section 10.2. Note Holders. Agent may treat the payee of any Note as the holder
thereof (or, if there is no Note, the holder of the interest as reflected on the
books and records of Agent) until written notice of transfer shall have been
filed with Agent, signed by such payee and in form satisfactory to Agent.

 

Section 10.3. Consultation With Counsel. Agent may consult with legal counsel
selected by Agent and shall not be liable for any action taken or suffered in
good faith by Agent in accordance with the opinion of such counsel.

 

Section 10.4. Documents. Agent shall not be under any duty to examine into or
pass upon the validity, effectiveness, genuineness or value of any Loan Document
or any other Related Writing furnished pursuant hereto or in connection herewith
or the value of any collateral obtained hereunder, and Agent shall be entitled
to assume that the same are valid, effective and genuine and what they purport
to be.

 

Section 10.5. Agent and Affiliates. LaSalle Bank National Association
(“LaSalle”) and its affiliates may make loans to, issue letters of credit for
the account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Companies and Affiliates as though LaSalle were not Agent
hereunder and without notice to or consent of any Lender. Each Lender
acknowledges that, pursuant to such activities, LaSalle or its affiliates may
receive information regarding any Company or any Affiliate (including
information that may be subject to confidentiality obligations in favor of such
Company or such Affiliate) and acknowledge that Agent shall be under no
obligation to provide such information to them. With respect to Loans and
Letters of Credit (if any), LaSalle and its affiliates shall have the same
rights and powers under this

 

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Agreement as any other Lender and may exercise the same as though LaSalle were
not Agent, and the terms “Lender” and “Lenders” include LaSalle and its
affiliates, to the extent applicable, in their individual capacities.

 

Section 10.6. Knowledge of Default. It is expressly understood and agreed that
Agent shall be entitled to assume that no Default or Event of Default has
occurred, unless Agent has been notified by a Lender in writing that such Lender
believes that a Default or Event of Default has occurred and is continuing and
specifying the nature thereof or has been notified by Borrower pursuant to
Section 5.14 hereof.

 

Section 10.7. Action by Agent. Subject to the other terms and conditions hereof,
so long as Agent shall be entitled, pursuant to Section 10.6 hereof, to assume
that no Default or Event of Default shall have occurred and be continuing, Agent
shall be entitled to use its discretion with respect to exercising or refraining
from exercising any rights that may be vested in it by, or with respect to
taking or refraining from taking any action or actions that it may be able to
take under or in respect of, this Agreement. Agent shall incur no liability
under or in respect of this Agreement by acting upon any notice, certificate,
warranty or other paper or instrument believed by it to be genuine or authentic
or to be signed by the proper party or parties, or with respect to anything that
it may do or refrain from doing in the reasonable exercise of its judgment, or
that may seem to it to be necessary or desirable in the premises.

 

Section 10.8. Release of Collateral or Guarantor of Payment. In the event of a
transfer of assets permitted by Section 5.12 hereof (or otherwise permitted
pursuant to this Agreement) where the proceeds of such transfer are applied in
accordance with the terms of this Agreement to the extent required to be so
applied, Agent, at the request and expense of Borrower, is hereby authorized by
the Lenders to (a) release such Collateral or Real Property from this Agreement,
(b) release a Guarantor of Payment in connection with such permitted transfer,
and (c) duly assign, transfer and deliver to the affected Company (without
recourse and without any representation or warranty) such Collateral or Real
Property as is then (or has been) so transferred or released and as may be in
possession of Agent and has not theretofore been released pursuant to this
Agreement.

 

Section 10.9. Notice of Default. In the event that Agent shall have acquired
actual knowledge of any Default or Event of Default, Agent shall promptly notify
the Lenders and shall take such action and assert such rights under this
Agreement as the Required Lenders shall direct and Agent shall inform the other
Lenders in writing of the action taken. Agent may take such action and assert
such rights as it deems to be advisable, in its discretion, for the protection
of the interests of the holders of the Obligations.

 

Section 10.10. Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.

 

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Section 10.11. Indemnification of Agent. The Lenders agree to indemnify Agent
(to the extent not reimbursed by Borrower) ratably, according to their
respective Overall Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys’ fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
in its capacity as agent in any way relating to or arising out of this Agreement
or any Loan Document or any action taken or omitted by Agent with respect to
this Agreement or any Loan Document, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys’ fees) or
disbursements resulting from Agent’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction, or from any action taken or
omitted by Agent in any capacity other than as agent under this Agreement or any
other Loan Document. No action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 10.11. The undertaking in this Section
10.11 shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
modification, release or discharge of, any or all of the Security Documents,
termination of this Agreement and the resignation or replacement of the
Administrative Agent.

 

Section 10.12. Successor Agent. Agent may resign as agent hereunder by giving
not fewer than thirty (30) days prior written notice to Borrower and the
Lenders. If Agent shall resign under this Agreement, then either (a) the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders (with the consent of Borrower so long as an Event of Default has not
occurred and which consent shall not be unreasonably withheld), or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following Agent’s notice to the Lenders of its resignation, then
Agent shall appoint a successor agent that shall serve as agent until such time
as the Required Lenders appoint a successor agent. Upon its appointment, such
successor agent shall succeed to the rights, powers and duties as agent, and the
term “Agent” shall mean such successor effective upon its appointment, and the
former agent’s rights, powers and duties as agent shall be terminated without
any other or further act or deed on the part of such former agent or any of the
parties to this Agreement.

 

Section 10.13. Other Agents. As used in this Agreement, the term “Agent” shall
only include Agent. No Co-Syndication Agent or Co-Documentation Agent shall have
any rights, obligations or responsibilities hereunder in such capacity.

 

ARTICLE XI. MISCELLANEOUS

 

Section 11.1. Lenders’ Independent Investigation. Each Lender, by its signature
to this Agreement, acknowledges and agrees that Agent has made no representation
or warranty, express or implied, with respect to the creditworthiness, financial
condition, or any other condition of any Company or with respect to the
statements contained in any information memorandum furnished in connection
herewith or in any other oral or written communication between Agent and such
Lender. Each Lender represents that it has made and shall continue to make its
own independent investigation of the creditworthiness, financial condition and
affairs of

 

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the Companies in connection with the extension of credit hereunder, and agrees
that Agent has no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto (other than such notices as may be expressly required to be given by
Agent to the Lenders hereunder), whether coming into its possession before the
first Credit Event hereunder or at any time or times thereafter. Each Lender
further represents that it has reviewed each of the Loan Documents.

 

Section 11.2. No Waiver; Cumulative Remedies. No omission or course of dealing
on the part of Agent, any Lender or the holder of any Note in exercising any
right, power or remedy hereunder or under any of the Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under any of the
Loan Documents. The remedies herein provided are cumulative and in addition to
any other rights, powers or privileges held by operation of law, by contract or
otherwise.

 

Section 11.3. Amendments, Consents.

 

(a) Requirements. Subject to subsection (b) of this Section, no amendment,
modification, termination, or waiver of any provision of any Loan Document nor
consent to any variance therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Anything herein to the contrary notwithstanding, but subject to
subsection (b) of this Section 11.3, unanimous consent of the Lenders shall be
required with respect to (i) any increase in the Commitment hereunder (except as
specified in Section 2.10(b) hereof), (ii) the extension of (A) the maturity of
the Loans, (B) the payment date of interest or any scheduled principal payment,
or (C) the date of payment of commitment fees payable hereunder, (iii) any
reduction in the rate of interest on the Loans (provided that the institution of
the Default Rate and a subsequent removal of the Default Rate shall not
constitute a decrease in interest rate pursuant to this Section 11.3), or in any
amount of interest or scheduled principal due on any Note, or the payment of
commitment fees hereunder, (iv) any change in the manner of pro rata application
of any payments made by Borrower to the Lenders hereunder, (v) any change in any
percentage voting requirement, voting rights, or the Required Lenders definition
in this Agreement, (vi) the release of any Guarantor of Payment with assets in
excess of Five Million Dollars ($5,000,000) except in connection with a merger
or sale of assets permitted pursuant to Section 5.12 hereof, (vii) the release
of all or substantially all of the collateral securing the Obligations, or (vii)
any amendment to this Section 11.3(a) or Section 9.5 hereof. Notice of
amendments or consents ratified by the Lenders shall be forwarded by Agent to
all of the Lenders. Each Lender or other holder of a Note (or interest in any
Loan) shall be bound by any amendment, waiver or consent obtained as authorized
by this Section 11.3(a), regardless of its failure to agree thereto.

 

(b) Replacement of Non-Consenting Lender. If, in connection with any proposed
amendment, waiver or consent hereunder, (i) the consent of all Lenders is
required, but only the consent of Required Lenders is obtained, or (ii) the
consent of Required Lenders is required, but the consent of Lenders holding
fifty-one percent (51%) or more is not obtained (any Lender withholding consent
as described in subsection (a) and (b) hereof being referred to as a
“Non-Consenting Lender”),

 

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then, so long as Agent is not the Non-Consenting Lender, Agent may, at the sole
expense of Borrower, upon notice to such Non-Consenting Lender and Borrower,
require such Non-Consenting Lender to assign and delegate, without recourse (in
accordance with the restrictions contained in Section 11.10 hereof) all of its
interests, rights and obligations under this Agreement to an Eligible Transferee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that such Non-Consenting Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from such Eligible Transferee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other
amounts, including any breakage compensation under Article III hereof).

 

Section 11.4. Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Borrower, mailed or
delivered to it, addressed to it at the address specified on the signature pages
of this Agreement, if to a Lender, mailed or delivered to it, addressed to the
address of such Lender specified on the signature pages of this Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to each of the other parties. All notices, statements,
requests, demands and other communications provided for hereunder shall be
deemed to be given or made when delivered or two Business Days after being
deposited in the mails with postage prepaid by registered or certified mail,
addressed as aforesaid, or sent by facsimile with telephonic confirmation of
receipt, except that notices from Borrower to Agent or the Lenders pursuant to
any of the provisions hereof shall not be effective until received by Agent or
the Lenders, as the case may be.

 

Section 11.5. Costs, Expenses and Taxes. Borrower agrees to pay on demand all
reasonable costs and expenses of Agent and all Related Expenses, including, but
not limited to, (a) reasonable syndication, administration, travel and
out-of-pocket expenses, including but not limited to attorneys’ fees and
expenses, of Agent in connection with the preparation, negotiation and closing
of the Loan Documents and the administration of the Loan Documents, the
collection and disbursement of all funds hereunder and the other instruments and
documents to be delivered hereunder, (b) reasonable extraordinary expenses of
Agent in connection with the administration of the Loan Documents and the other
instruments and documents to be delivered hereunder, and (c) the reasonable fees
and out-of-pocket expenses of special counsel for Agent, with respect to the
foregoing, and of local counsel, if any, who may be retained by said special
counsel with respect thereto. Borrower also agrees to pay on demand all
reasonable costs and expenses of Agent and the Lenders, including reasonable
attorneys’ fees and expenses, in connection with the restructuring or
enforcement of the Obligations, this Agreement or any Related Writing. In
addition, Borrower shall pay any and all stamp, transfer, documentary and other
taxes, assessments, charges and fees payable or determined to be payable in
connection with the execution and delivery of the Loan Documents, and the other
instruments and documents to be delivered hereunder, and agrees to hold Agent
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or failure to pay such taxes or fees.

 

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Section 11.6. Indemnification. Borrower agrees to defend, indemnify and hold
harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys’ fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
or any Lender in connection with any investigative, administrative or judicial
proceeding (whether or not such Lender or Agent shall be designated a party
thereto) or any other claim by any Person relating to or arising out of any Loan
Document or any actual or proposed use of proceeds of the Loans or any of the
Obligations, or any activities of any Company or its Affiliates; provided that
no Lender nor Agent shall have the right to be indemnified under this Section
11.6 for its own gross negligence or willful misconduct as determined by a court
of competent jurisdiction. All obligations provided for in this Section 11.6
shall survive any termination of this Agreement.

 

Section 11.7. Obligations Several; No Fiduciary Obligations. The obligations of
the Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by Agent or the Lenders pursuant hereto shall be
deemed to constitute Agent or the Lenders a partnership, association, joint
venture or other entity. No default by any Lender hereunder shall excuse the
other Lenders from any obligation under this Agreement; but no Lender shall have
or acquire any additional obligation of any kind by reason of such default. The
relationship between Borrower and the Lenders with respect to the Loan Documents
and the Related Writings is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Lender shall have any fiduciary
obligation toward any Credit Party with respect to any such documents or the
transactions contemplated thereby.

 

Section 11.8. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts
and by facsimile signature, each of which counterparts when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.

 

Section 11.9. Binding Effect; Borrower’s Assignment. This Agreement shall become
effective when it shall have been executed by Borrower, Agent and each Lender
and thereafter shall be binding upon and inure to the benefit of Borrower, Agent
and each of the Lenders and their respective successors and assigns, except that
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of Agent and all of the Lenders.

 

Section 11.10. Lender Assignments.

 

(a) Assignments of Commitments. Each Lender shall have the right at any time or
times to assign to an Eligible Transferee (other than to a Lender that shall not
be in compliance with this Agreement), without recourse, all or a percentage of
all of the following: (i) such Lender’s Commitment, (ii) all Loans made by that
Lender, (iii) such Lender’s Notes, and (iv) such Lender’s interest in any Letter
of Credit or Swing Loan, and any participation purchased pursuant to Section 2.2
or 9.5 hereof. Each Lender shall at all times maintain the same Applicable
Commitment Percentages (as rounded to the sixth decimal) with respect to the
Revolving Credit Commitment and the Term Loan Commitment.

 

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(b) Prior Consent. No assignment may be consummated pursuant to this Section
11.10 without the prior written consent of Borrower and Agent (other than an
assignment by any Lender to any affiliate of such Lender which affiliate is an
Eligible Transferee and either wholly-owned by a Lender or is wholly-owned by a
Person that wholly owns, either directly or indirectly, such Lender, or to
another Lender), which consent of Borrower and Agent shall not be unreasonably
withheld; provided, however, that Borrower’s consent shall not be required if,
at the time of the proposed assignment, any Default or Event of Default shall
then exist. Anything herein to the contrary notwithstanding, any Lender may at
any time make a collateral assignment of all or any portion of its rights under
the Loan Documents to a Federal Reserve Bank, and no such assignment shall
release such assigning Lender from its obligations hereunder.

 

(c) Minimum Amount. Each such assignment shall be in a minimum amount of the
lesser of Five Million Dollars ($5,000,000) of the assignor’s Commitment and
interest herein or the entire amount of the assignor’s Commitment and interest
herein.

 

(d) Assignment Fee. Unless the assignment shall be to an affiliate of the
assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to Agent,
for its own account, an administrative fee of Three Thousand Five Hundred
Dollars ($3,500).

 

(e) Assignment Agreement. Unless the assignment shall be due to merger of the
assignor or a collateral assignment for regulatory purposes, the assignor shall
(i) cause the assignee to execute and deliver to Borrower and Agent an
Assignment Agreement, and (ii) execute and deliver, or cause the assignee to
execute and deliver, as the case may be, to Agent such additional amendments,
assurances and other writings as Agent may reasonably require.

 

(f) Non-U.S. Assignee. If the assignment is to be made to an assignee that is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the assignor Lender shall cause such assignee, at least five
Business Days prior to the effective date of such assignment, (i) to represent
to the assignor Lender (for the benefit of the assignor Lender, Agent and
Borrower) that under applicable law and treaties no taxes will be required to be
withheld by Agent, Borrower or the assignor with respect to any payments to be
made to such assignee in respect of the Loans hereunder, (ii) to furnish to the
assignor Lender (and, in the case of any assignee registered in the Register (as
defined below), Agent and Borrower) either U.S. Internal Revenue Service Form
W-8ECI or U.S. Internal Revenue Service Form W-8BEN, as applicable (wherein such
assignee claims entitlement to complete exemption from U.S. federal withholding
tax on all interest payments hereunder), and (iii) to agree (for the benefit of
the assignor, Agent and Borrower) to provide to the assignor Lender (and, in the
case of any assignee registered in the Register, to Agent and Borrower) a new
Form W-8ECI or Form W-8BEN, as applicable, upon the expiration or obsolescence
of any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such assignee, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.

 

78

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(g) Deliveries by Borrower. Upon satisfaction of all applicable requirements
specified in subsections (a) through (f) above, Borrower shall execute and
deliver (i) to Agent, the assignor and the assignee, any consent or release (of
all or a portion of the obligations of the assignor) required to be delivered by
Borrower in connection with the Assignment Agreement, and (ii) to the assignee
and the assignor, if applicable, an appropriate Note or Notes. After delivery of
the new Note or Notes, the assignor’s Note or Notes being replaced shall be
returned to Borrower marked “replaced”.

 

(h) Effect of Assignment. Upon satisfaction of all applicable requirements set
forth in subsections (a) through (g) above, and any other condition contained in
this Section 11.10, (i) the assignee shall become and thereafter be deemed to be
a “Lender” for the purposes of this Agreement, (ii) the assignor shall be
released from its obligations hereunder to the extent that its interest has been
assigned, (iii) in the event that the assignor’s entire interest has been
assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a “Lender” and (iv) the signature pages hereto and Schedule 1
hereto shall be automatically amended, without further action, to reflect the
result of any such assignment.

 

(i) Agent to Maintain Register. Agent shall maintain at the address for notices
referred to in Section 11.4 hereof a copy of each Assignment Agreement delivered
to it and a register (the “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 from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and Borrower, Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

Section 11.11. Sale of Participations. Any Lender may, in the ordinary course of
its commercial banking business and in accordance with applicable law, at any
time sell participations to one or more Eligible Transferees (each a
“Participant”) in all or a portion of its rights or obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Commitment and the Loans and participations owing to it and the
Note held by it); provided, that:

 

(a) any such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged;

 

(b) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations;

 

(c) the parties hereto shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement and each of the other Loan Documents;

 

79

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(d) such Participant shall be bound by the provisions of Section 9.5 hereof, and
the Lender selling such participation shall obtain from such Participant a
written confirmation of its agreement to be so bound; and

 

(e) no Participant (unless such Participant is itself a Lender) shall be
entitled to require such Lender to take or refrain from taking action under this
Agreement or under any other Loan Document, except that such Lender may agree
with such Participant that such Lender will not, without such Participant’s
consent, take action of the type described as follows:

 

(i) increase the portion of the participation amount of any Participant over the
amount thereof then in effect, or extend the Commitment Period, without the
written consent of each Participant affected thereby; or

 

(ii) reduce the principal amount of or extend the time for any payment of
principal of any Loan, or reduce the rate of interest or extend the time for
payment of interest on any Loan, or reduce the commitment fee, without the
written consent of each Participant affected thereby.

 

Borrower agrees that any Lender that sells participations pursuant to this
Section 11.11 shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrower shall not increase as a result of such transfer and Borrower shall have
no obligation to any Participant.

 

Section 11.12. Patriot Act Notice. Each Lender and Agent (for itself and not on
behalf of any other party) hereby notifies the Credit Parties that, pursuant to
the requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Credit Parties, which information includes the
name and address of the Credit Parties and other information that will allow
such Lender or Agent, as applicable, to identify the Credit Parties in
accordance with the Patriot Act. Borrower shall provide, to the extent
commercially reasonable, such information and take such actions as are
reasonably requested by Agent or a Lender in order to assist Agent or such
Lender in maintaining compliance with the Patriot Act.

 

Section 11.13. Severability of Provisions; Captions; Attachments. Any provision
of this Agreement that shall be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to Sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.

 

Section 11.14. Investment Purpose. Each of the Lenders represents and warrants
to Borrower that it is entering into this Agreement with the present intention
of acquiring any Note issued pursuant hereto for investment purposes only and
not for the purpose of distribution or resale, it being understood, however,
that each Lender shall at all times retain full control over the disposition of
its assets.

 

80

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Section 11.15. Entire Agreement. This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions mentioned
herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

 

Section 11.16. Confidentiality. Agent and each Lender shall hold all
Confidential Information in accordance with the customary procedures of Agent or
such Lender for handling confidential information of this nature, and in
accordance with safe and sound banking practices. Notwithstanding the foregoing,
Agent or any Lender may in any event make disclosures of, and furnish copies of
Confidential Information (a) to another agent under this Agreement or another
Lender; (b) when reasonably required by any bona fide transferee or participant
in connection with the contemplated transfer of any Loans or Commitment or
participation therein (provided that each such prospective transferee or
participant shall execute an agreement for the benefit of Borrower with such
prospective transferor Lender or participant containing provisions substantially
identical to those contained in this Section 11.16; (c) to the parent
corporation or other affiliates of Agent or such Lender, and to their respective
auditors and attorneys; and (d) as required or requested by any Governmental
Authority or representative thereof, or pursuant to legal process, provided,
that, unless specifically prohibited by applicable law or court order, Agent or
such Lender, as applicable, shall notify the chief financial officer of Borrower
of any request by any Governmental Authority or representative thereof (other
than any such request in connection with an examination of the financial
condition of Agent or such Lender by such Governmental Authority), and of any
other request pursuant to legal process, for disclosure of any such non-public
information prior to disclosure of such Confidential Information. In no event
shall Agent or any Lender be obligated or required to return any materials
furnished by or on behalf of any Company. Borrower hereby agrees that the
failure of Agent or any Lender to comply with the provisions of this Section
11.16 shall not relieve Borrower of any of the obligations to Agent and the
Lenders under this Agreement and the other Loan Documents.

 

Section 11.17. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.

 

Section 11.18. Warrant of Attorney. Borrower authorizes any attorney at law at
any time or times after the maturity hereof (whether maturity occurs by lapse of
time or by acceleration) to appear in any state or federal court of record in
the United States of America, to waive the issuance and service of process, to
admit the maturity of this Agreement or any Note and the nonpayment thereof when
due, to confess judgment for the amount then appearing due, together with
interest and costs of suit, and thereupon to release all errors and to waive all
rights of appeal and stay of execution. The foregoing warrant of attorney shall
survive any judgment, and, if any judgment be vacated for any reason, the
foregoing warrant of attorney may be used to obtain an additional judgment or
judgments against Borrower. Borrower agrees that Agent’s attorney may confess
judgment pursuant to the foregoing warrant of attorney. Borrower further agrees
that the attorney confessing judgment pursuant to the foregoing warrant of
attorney may receive a legal fee or other compensation from Agent or the
Lenders.

 

81

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Section 11.19. Governing Law; Submission to Jurisdiction. This Agreement, each
of the Notes and any Related Writing shall be governed by and construed in
accordance with the laws of the State of Ohio and the respective rights and
obligations of Borrower, Agent, and the Lenders shall be governed by Ohio law,
without regard to principles of conflicts of laws. Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, the Obligations or any Related Writing, and Borrower
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Borrower agrees that a final, nonappealable 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.

 

[Remainder of page left intentionally blank]

 

82

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Section 11.20. Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW, BORROWER,
AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER,
AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
MODIFY AGENT’S OR ANY LENDER’S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT AMONG BORROWER, AGENT AND THE LENDERS, OR ANY
THEREOF.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Credit
Agreement in Cleveland, Ohio, as of the date first set forth above.

 

Address:    5389 West 130th Street   SHILOH INDUSTRIES, INC.      Cleveland,
Ohio 44130          Attn: Chief Financial Officer                  By:  

/s/ Stephen E. Graham

--------------------------------------------------------------------------------

             Stephen E. Graham              Chief Financial Officer Address:   
135 S. LaSalle Street   LASALLE BANK NATIONAL ASSOCIATION,      Chicago,
Illinois 60603       as Agent and as a Lender      Attn: Commercial Lending    
         By:  

/s/ Robert M. Walker

--------------------------------------------------------------------------------

             Robert M. Walker              Vice President

 

“WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.”

 

Signature Page

1 of 3 of the Credit Agreement

 

--------------------------------------------------------------------------------

Address:    1900 East Ninth Street, 7th Floor   NATIONAL CITY BANK,     
Cleveland, Ohio 44114       as Co-Syndication Agent and as a Lender      Attn:
Large Corporate Lending              By:  

/s/ Robert S. Coleman

--------------------------------------------------------------------------------

             Robert S. Coleman              Senior Vice President               
Address:    127 Public Square   KEYBANK NATIONAL ASSOCIATION,      Cleveland,
Ohio 44114       as Co-Syndication Agent and as a Lender      Attn:
Institutional Lending              By:  

/s/ W. Robert Perkins

--------------------------------------------------------------------------------

         Name:   W. Robert Perkins          Title:   Vice President             
                 Address:    525 William Penn Place   CITIZENS BANK OF
PENNSYLVANIA,      153-2910       as Co-Documentation Agent and as a Lender     
Pittsburgh, Pennsylvania 15219          Attn: Commercial Banking             
By:  

/s/ John J. Ligday Jr.

--------------------------------------------------------------------------------

         Name:   John J. Ligday Jr.          Title:   Vice President           
                   Address:    1350 Euclid Avenue, 12th Floor   U.S. BANK
NATIONAL ASSOCIATION,      Cleveland, Ohio 44115       as Co-Documentation Agent
and as a Lender      Attn: National Corporate Banking              By:  

/s/ Brain H. Gallagher

--------------------------------------------------------------------------------

         Name:   Brain H. Gallagher          Title:   Vice President           
    Address:    106 South Main Street   FIRSTMERIT BANK, N.A.      Akron, Ohio
44308              Attn: Commercial Lending   By:  

/s/ Lawrence B. McDonald

--------------------------------------------------------------------------------

             Lawrence B. McDonald              Vice President

 

Signature Page

2 of 3 of the Credit Agreement

 

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Address:   

New York Branch

565 Fifth Avenue

New York, New York 10017

Attn: Loan Administration Dept.

  BANK OF SCOTLAND                     By:  

/s/ Karen Weich

--------------------------------------------------------------------------------

       Name:   Karen Weich        Title:   Assistant Vice President Address:   

600 Superior Avenue, East

MD A6512D

Cleveland, Ohio 44114

Attn: Corporate Banking

  FIFTH THIRD BANK                     By:  

/s/ Martin H. McGinty

--------------------------------------------------------------------------------

           Martin H. McGinty            Vice President Address:   

209 South LaSalle

Suite 500

Chicago, Illinois 60604

Attn: Loan Administration Dept.

  BNP PARIBAS                 By:  

/s/ Brain F. Hewett

--------------------------------------------------------------------------------

       Name:   Brain F. Hewett        Title:              By:  

/s/ Gaye Plunkett

--------------------------------------------------------------------------------

         Name:   Gaye Plunkett          Title:   Vice President

 

“WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.”

 

Signature Page

3 of 3 of the Credit Agreement

 

--------------------------------------------------------------------------------

SCHEDULE 1

 

LENDERS

--------------------------------------------------------------------------------

   REVOLVING
CREDIT
COMMITMENT
PERCENTAGE

--------------------------------------------------------------------------------

    REVOLVING
CREDIT
COMMITMENT
AMOUNT

--------------------------------------------------------------------------------

   TERM LOAN
COMMITMENT
PERCENTAGE

--------------------------------------------------------------------------------

    TERM LOAN
COMMITMENT
AMOUNT

--------------------------------------------------------------------------------

   MAXIMUM
AMOUNT

--------------------------------------------------------------------------------

LaSalle Bank National Association

   14.285714272 %   $ 17,857,142.84    14.285714320 %   $ 7,142,857.16    $
25,000,000.00

National City Bank

   11.428571432 %   $ 14,285,714.29    11.428571420 %   $ 5,714,285.71    $
20,000,000.00

KeyBank National Association

   11.428571432 %   $ 14,285,714.29    11.428571420 %   $ 5,714,285.71    $
20,000,000.00

Citizens Bank of Pennsylvania

   11.428571432 %   $ 14,285,714.29    11.428571420 %   $ 5,714,285.71    $
20,000,000.00

U.S. Bank National Association

   11.428571432 %   $ 14,285,714.29    11.428571420 %   $ 5,714,285.71    $
20,000,000.00

FirstMerit Bank, N.A.

   10.000000000 %   $ 12,500,000.00    10.000000000 %   $ 5,000,000.00    $
17,500,000.00

Bank of Scotland

   10.000000000 %   $ 12,500,000.00    10.000000000 %   $ 5,000,000.00    $
17,500,000.00

Fifth Third Bank

   10.000000000 %   $ 12,500,000.00    10.000000000 %   $ 5,000,000.00    $
17,500,000.00

BNP Paribas

   10.000000000 %   $ 12,500,000.00    10.000000000 %   $ 5,000,000.00    $
17,500,000.00     

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--------------------------------------------------------------------------------

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Total Commitment Amount

   100.000000000 %   $ 125,000,000.00    100.000000000 %   $ 50,000,000.00    $
175,000,000     

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S-1

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SCHEDULE 2

 

GUARANTORS OF PAYMENT

 

Shiloh Corporation

Greenfield Die & Manufacturing Corp.

Jefferson Blanking Inc.

Shiloh Automotive, Inc.

Shiloh Industries, Inc. Dickson Manufacturing Division

Liverpool Coil Processing, Incorporated

Medina Blanking, Inc.

The Sectional Die Company

Sectional Stamping, Inc.

 

S-2

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SCHEDULE 3

 

REAL PROPERTY

 

Georgia      Jefferson Blanking Inc.      234 South Holland Drive     
Pendergrass, Georgia 30567      Michigan      Greenfield Die & Manufacturing
Corp.      7295 Haggerty Road      Canton, Michigan 48187      Ohio     
Liverpool Coil Processing, Incorporated    Shiloh Automotive, Inc. 880 Steel
Drive    Liverpool Stamping Division Valley City, Ohio 44280    700 Liverpool
Drive      Valley City, Ohio 44280 Medina Blanking, Inc.    Medina Blanking,
Inc. 5580 Wegman Drive    Ohio Welded Blank Division Valley City, Ohio 44280   
5569 Innovation Drive      Valley City, Ohio 44280 Shiloh Corporation    The
Sectional Die Company/Sectional Stamping, Inc. Mansfield Blanking Division   
Wellington Stamping Division 402 Ninth Street    350 Maple Street Mansfield,
Ohio 44905    Wellington, Ohio 44090 Tennessee      Shiloh Industries, Inc.,
Dickson Manufacturing Division      One Shiloh Drive      Dickson, Tennessee
37055     

 

S-3

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EXHIBIT A

FORM OF

REVOLVING CREDIT NOTE

 

$                       Cleveland, Ohio     January 18, 2005

 

FOR VALUE RECEIVED, the undersigned, SHILOH INDUSTRIES, INC., a Delaware
corporation (“Borrower”), promises to pay, on the last day of the Commitment
Period, as defined in the Credit Agreement (as hereinafter defined), to the
order of [            ] (“Lender”) at the main office of LASALLE BANK NATIONAL
ASSOCIATION, as Agent, as hereinafter defined, 135 S. LaSalle Street, Suite
1425, Chicago, Illinois 60603, the principal sum of

 

                                                                               
                                        
                                                                           
DOLLARS

 

or the aggregate unpaid principal amount of all Revolving Loans, as defined in
the Credit Agreement made by Lender to Borrower pursuant to Section 2.2(a) of
the Credit Agreement, whichever is less, in lawful money of the United States of
America.

 

As used herein, “Credit Agreement” means the Amended and Restated Credit and
Security Agreement dated as of January 18, 2005, among Borrower, the Lenders, as
defined therein, and LaSalle Bank National Association, as lead arranger, sole
book runner and administrative agent for the Lenders (“Agent”), as the same may
from time to time be amended, restated or otherwise modified. Each capitalized
term used herein that is defined in the Credit Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of each
Revolving Loan from time to time outstanding, from the date of such Revolving
Loan until the payment in full thereof, at the rates per annum that shall be
determined in accordance with the provisions of Section 2.4(a) of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.4(a); provided, however, that interest on any principal portion that
is not paid when due shall be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, and payments of principal of any thereof, shall
be shown on the records of Lender by such method as Lender may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from the obligations of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, until paid, at a rate per annum equal to
the Default Rate. All payments of principal of and interest on this Note shall
be made in immediately available funds.

 

This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.

 

E-1

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Except as expressly provided in the Credit Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind. This Note shall be governed
by and construed in accordance with the laws of the State of Ohio, without
regard to conflicts of laws provisions.

 

The undersigned authorizes any attorney at law at any time or times after the
maturity hereof (whether maturity occurs by lapse of time or by acceleration) to
appear in any state or federal court of record in the United States of America,
to waive the issuance and service of process, to admit the maturity of this Note
and the nonpayment thereof when due, to confess judgment against the undersigned
in favor of the holder of this Note for the amount then appearing due, together
with interest and costs of suit, and thereupon to release all errors and to
waive all rights of appeal and stay of execution. The foregoing warrant of
attorney shall survive any judgment, and if any judgment be vacated for any
reason, the holder hereof nevertheless may thereafter use the foregoing warrant
of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned agrees that Agent’s attorney may confess judgment
pursuant to the foregoing warrant of attorney. The undersigned further agrees
that the attorney confessing judgment pursuant to the foregoing warrant of
attorney may receive a legal fee or other compensation from Agent or the
Lenders.

 

SHILOH INDUSTRIES, INC. By:  

 

--------------------------------------------------------------------------------

Name:  

 

--------------------------------------------------------------------------------

Title:  

 

--------------------------------------------------------------------------------

 

“WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.”

 

E-2

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF

SWING LINE NOTE

 

$10,000,000

  Cleveland, Ohio     January 18, 2005

 

FOR VALUE RECEIVED, the undersigned, SHILOH INDUSTRIES, INC., a Delaware
corporation (“Borrower”), promises to pay to the order of LASALLE BANK NATIONAL
ASSOCIATION (“Lender”) at the main office of LASALLE BANK NATIONAL ASSOCIATION,
as Agent, as hereinafter defined, 135 S. LaSalle Street, Suite 1425, Chicago,
Illinois 60603 the principal sum of

 

TEN MILLION AND 00/100                                         
                                        
                                                                  DOLLARS

 

or the aggregate unpaid principal amount of all Swing Loans, as defined in the
Credit Agreement (as hereinafter defined) made by Lender to Borrower pursuant to
Section 2.2(c) of the Credit Agreement, whichever is less, in lawful money of
the United States of America on the earlier of the last day of the Commitment
Period, as defined in the Credit Agreement, or, with respect to each Swing Loan,
the Swing Loan Maturity Date applicable thereto.

 

As used herein, “Credit Agreement” means the Amended and Restated Credit and
Security Agreement dated as of January 18, 2005, among Borrower, the Lenders, as
defined therein, and LaSalle Bank National Association, as lead arranger, sole
book runner and administrative agent for the Lenders (“Agent”), as the same may
from time to time be amended, restated or otherwise modified. Each capitalized
term used herein that is defined in the Credit Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of each
Swing Loan from time to time outstanding, from the date of such Swing Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(b) of the Credit Agreement. Such
interest shall be payable on each date provided for in such Section 2.4(b);
provided, however, that interest on any principal portion that is not paid when
due shall be payable on demand.

 

The principal sum hereof from time to time and the payments of principal and
interest thereon, shall be shown on the records of Lender by such method as
Lender may generally employ; provided, however, that failure to make any such
entry shall in no way detract from the obligation of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, until paid, at a rate per annum equal to
the Default Rate. All payments of principal of and interest on this Note shall
be made in immediately available funds.

 

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This Note is the Swing Line Note referred to in the Credit Agreement. Reference
is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare this Note due prior to its stated maturity, and other terms and
conditions upon which this Note is issued.

 

Except as expressly provided in the Credit Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind. This Note shall be governed
by and construed in accordance with the laws of the State of Ohio, without
regard to conflicts of laws provisions.

 

The undersigned authorizes any attorney at law at any time or times after the
maturity hereof (whether maturity occurs by lapse of time or by acceleration) to
appear in any state or federal court of record in the United States of America,
to waive the issuance and service of process, to admit the maturity of this Note
and the nonpayment thereof when due, to confess judgment against the undersigned
in favor of the holder of this Note for the amount then appearing due, together
with interest and costs of suit, and thereupon to release all errors and to
waive all rights of appeal and stay of execution. The foregoing warrant of
attorney shall survive any judgment, and if any judgment be vacated for any
reason, the holder hereof nevertheless may thereafter use the foregoing warrant
of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned agrees that Agent’s attorney may confess judgment
pursuant to the foregoing warrant of attorney. The undersigned further agrees
that the attorney confessing judgment pursuant to the foregoing warrant of
attorney may receive a legal fee or other compensation from Agent or the
Lenders.

 

SHILOH INDUSTRIES, INC.

By:

 

 

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Name:

 

 

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Title:

 

 

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“WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.”

 

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EXHIBIT C

FORM OF

TERM NOTE

 

$                        Cleveland, Ohio      January 18, 2005

 

FOR VALUE RECEIVED, the undersigned, SHILOH INDUSTRIES INC., a Delaware
corporation (“Borrower”), promises to pay to the order of [                    ]
(“Lender”) at the main office of LASALLE BANK NATIONAL ASSOCIATION, as Agent, as
hereinafter defined, 135 S. LaSalle Street, Chicago, Illinois 60603 the
principal sum of

 

                                                                               
                                        
                                                                           
DOLLARS

 

in lawful money of the United States of America in consecutive principal
payments as set forth in the Credit Agreement (as hereinafter defined).

 

As used herein, “Credit Agreement” means the Amended and Restated Credit and
Security Agreement dated as of January 18, 2005, among Borrower, the Lenders, as
defined therein, and LaSalle Bank National Association, as lead arranger, sole
book runner and administrative agent for the Lenders (“Agent”), as the same may
from time to time be amended, restated or otherwise modified. Each capitalized
term used herein that is defined in the Credit Agreement and not otherwise
defined herein shall have the meaning ascribed to it in the Credit Agreement.

 

Borrower also promises to pay interest on the unpaid principal amount of the
Term Loan from time to time outstanding, from the date of the Term Loan until
the payment in full thereof, at the rates per annum that shall be determined in
accordance with the provisions of Section 2.4(c) of the Credit Agreement. Such
interest shall be payable on each date provided for in such Section 2.4(c);
provided, however, that interest on any principal portion that is not paid when
due shall be payable on demand.

 

The portions of the principal sum hereof from time to time representing Base
Rate Loans and Eurodollar Loans, and payments of principal of either thereof,
shall be shown on the records of Lender by such method as Lender may generally
employ; provided, however, that failure to make any such entry shall in no way
detract from the obligations of Borrower under this Note.

 

If this Note shall not be paid at maturity, whether such maturity occurs by
reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, until paid, at a rate per annum equal to
the Default Rate. All payments of principal of and interest on this Note shall
be made in immediately available funds.

 

This Note is one of the Term Notes referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare this Note due prior to its stated maturity, and other terms and
conditions upon which this Note is issued.

 

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Except as expressly provided in the Credit Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind. This Note shall be governed
by and construed in accordance with the laws of the State of Ohio, without
regard to conflicts of laws provisions.

 

The undersigned authorizes any attorney at law at any time or times after the
maturity hereof (whether maturity occurs by lapse of time or by acceleration) to
appear in any state or federal court of record in the United States of America,
to waive the issuance and service of process, to admit the maturity of this Note
and the nonpayment thereof when due, to confess judgment against the undersigned
in favor of the holder of this Note for the amount then appearing due, together
with interest and costs of suit, and thereupon to release all errors and to
waive all rights of appeal and stay of execution. The foregoing warrant of
attorney shall survive any judgment, and if any judgment be vacated for any
reason, the holder hereof nevertheless may thereafter use the foregoing warrant
of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned agrees that Agent’s attorney may confess judgment
pursuant to the foregoing warrant of attorney. The undersigned further agrees
that the attorney confessing judgment pursuant to the foregoing warrant of
attorney may receive a legal fee or other compensation from Agent or the
Lenders.

 

SHILOH INDUSTRIES, INC. By:  

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Name:  

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Title:  

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“WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.”

 

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EXHIBIT D

FORM OF

NOTICE OF LOAN

 

[Date]                    , 20        

 

LaSalle Bank National Association, as Agent

2600 West Big Beaver Road

MC M0900 270

Troy, Michigan 48084

Attention: Commercial Lending

 

Ladies and Gentlemen:

 

The undersigned, SHILOH INDUSTRIES, INC., refers to the Amended and Restated
Credit and Security Agreement, dated as of January 18, 2005 (“Credit Agreement”,
the terms defined therein being used herein as therein defined), among the
undersigned, the Lenders, as defined in the Credit Agreement, and LaSalle Bank
National Association, as Agent, and hereby gives you notice, pursuant to Section
2.6 of the Credit Agreement that the undersigned hereby requests a Loan under
the Credit Agreement, and in connection therewith sets forth below the
information relating to the Loan (the “Proposed Loan”) as required by Section
2.6 of the Credit Agreement:

 

  (a) The Business Day of the Proposed Loan is                     , 20        .

 

  (b) The amount of the Proposed Loan is $                    .

 

  (c) The Proposed Loan is to be a Base Rate Loan              / Eurodollar Loan
             / Swing Loan             .

(Check one.)

 

  (d) If the Proposed Loan is a Eurodollar Loan, the Interest Period requested
is one month         , two months         , three months         , six months
        .

(Check one.)

 

The undersigned hereby certifies on behalf of Borrower that the following
statements are true on the date hereof, and will be true on the date of the
Proposed Loan:

 

(i) the representations and warranties contained in each Loan Document are in
all material respects correct, before and after giving effect to the Proposed
Loan and the application of the proceeds therefrom, as though made on and as of
such date;

 

(ii) no event has occurred and is continuing, or would result from such Proposed
Loan, or the application of proceeds therefrom, that constitutes a Default or
Event of Default; and

 

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(iii) the conditions set forth in Section 2.6 and Article IV of the Credit
Agreement have been satisfied.

 

SHILOH INDUSTRIES, INC. By:  

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Name:  

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Title:  

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EXHIBIT E

FORM OF

COMPLIANCE CERTIFICATE

 

For Fiscal Quarter ended             

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

(1) I am the duly elected President or Chief Financial Officer of SHILOH
INDUSTRIES, INC., a Delaware corporation (“Borrower”);

 

(2) I am familiar with the terms of that certain Amended and Restated Credit and
Security Agreement, dated as of January 18, 2005, among the undersigned, the
lenders named on Schedule 1 thereto (together with their respective successors
and assigns, collectively, the “Lenders”), as defined in the Credit Agreement,
and LaSalle Bank National Association, as Agent (as the same may from time to
time be amended, restated or otherwise modified, the “Credit Agreement”, the
terms defined therein being used herein as therein defined), and the terms of
the other Loan Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and condition of
Borrower and its Subsidiaries during the accounting period covered by the
attached financial statements;

 

(3) The review described in paragraph (2) above did not disclose, and I have no
knowledge of, the existence of any condition or event that constitutes or
constituted a Default or Event of Default, at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate;

 

(4) The representations and warranties made by Borrower contained in each Loan
Document are true and correct in all material respects as though made on and as
of the date hereof; and

 

(5) Set forth on Attachment I hereto are calculations of the financial covenants
set forth in Section 5.7 of the Credit Agreement, which calculations show
compliance with the terms thereof.

 

IN WITNESS WHEREOF, I have signed this certificate the      day of             ,
20    .

 

SHILOH INDUSTRIES, INC. By:  

 

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Name:  

 

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Title:  

 

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EXHIBIT F

FORM OF

ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This Assignment and Acceptance Agreement (this “Assignment Agreement”) between
                     (the “Assignor”) and                      (the “Assignee”)
is dated as of             , 20    . The parties hereto agree as follows:

 

1. Preliminary Statement. Assignor is a party to an Amended and Restated Credit
and Security Agreement, dated as of January 18, 2005 among SHILOH INDUSTRIES, a
Delaware corporation (“Borrower”), the lenders named on Schedule 1 thereto
(together with their respective successors and assigns, collectively, the
“Lenders” and, individually, each a “Lender”), and LASALLE BANK NATIONAL
ASSOCIATION, as lead arranger and administrative agent for the Lenders (“Agent”)
(as the same may from time to time be amended, restated or otherwise modified,
the “Credit Agreement”). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Credit Agreement.

 

2. Assignment and Assumption. Assignor hereby sells and assigns to Assignee, and
Assignee hereby purchases and assumes from Assignor, an interest in and to
Assignor’s rights and obligations under the Credit Agreement, effective as of
the Assignment Effective Date (as hereinafter defined), equal to the percentage
interest specified on Annex 1 hereto (hereinafter, “Assignee’s Percentage”) of
Assignor’s right, title and interest in and to (a) the Commitment of Assignor as
set forth on Annex 1 hereto (hereinafter, the “Assigned Amount”), (b) any Loan
made by Assignor that is outstanding on the Assignment Effective Date, (c)
Assignor’s interest in any Letter of Credit outstanding on the Assignment
Effective Date, (d) any Note delivered to Assignor pursuant to the Credit
Agreement, and (e) the Credit Agreement and the other Related Writings. After
giving effect to such sale and assignment and on and after the Assignment
Effective Date, Assignee shall be deemed to have a “Commitment Percentage” under
the Credit Agreement equal to the Commitment Percentage set forth in subpart
II.A on Annex 1 hereto.

 

3. Assignment Effective Date. The Assignment Effective Date (the “Assignment
Effective Date”) shall be [                         ,             ] (or such
other date agreed to by Agent). On or prior to the Assignment Effective Date,
Assignor shall satisfy the following conditions:

 

(a) receipt by Agent of this Assignment Agreement, including Annex 1 hereto,
properly executed by Assignor and Assignee and accepted and consented to by
Agent and, if necessary pursuant to the provisions of Section 11.10(b) of the
Credit Agreement, by Borrower;

 

(b) receipt by Agent from Assignor of a fee of Three Thousand Five Hundred
Dollars ($3,500), if required by Section 11.10(d) of the Credit Agreement;

 

(c) receipt by Agent from Assignee of an administrative questionnaire, or other
similar document, which shall include (i) the address for notices under the
Credit Agreement, (ii) the address of its Lending Office, (iii) wire transfer
instructions for delivery of funds by Agent, (iv) and such other information as
Agent shall request; and

 

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(d) receipt by Agent from Assignor or Assignee of any other information required
pursuant to Section 11.10 of the Credit Agreement or otherwise necessary to
complete the transaction contemplated hereby.

 

4. Payment Obligations. In consideration for the sale and assignment of Loans
hereunder, Assignee shall pay to Assignor, on the Assignment Effective Date, the
amount agreed to by Assignee and Assignor. Any interest, fees and other payments
accrued prior to the Assignment Effective Date with respect to the Assigned
Amount shall be for the account of Assignor. Any interest, fees and other
payments accrued on and after the Assignment Effective Date with respect to the
Assigned Amount shall be for the account of Assignee. Each of Assignor and
Assignee agrees that it will hold in trust for the other party any interest,
fees or other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and to pay the other party any such amounts
which it may receive promptly upon receipt thereof.

 

5. Credit Determination; Limitations on Assignor’s Liability. Assignee
represents and warrants to Assignor, Borrower, Agent and the Lenders (a) that it
is capable of making and has made and shall continue to make its own credit
determinations and analysis based upon such information as Assignee deemed
sufficient to enter into the transaction contemplated hereby and not based on
any statements or representations by Assignor, (b) Assignee confirms that it
meets the requirements to be an assignee as set forth in Section 11.10 of the
Credit Agreement; (c) Assignee confirms that it is able to fund the Loans and
the Letters of Credit as required by the Credit Agreement; (d) Assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement and the Related Writings are required to be
performed by it as a Lender thereunder; and (e) Assignee represents that it has
reviewed each of the Loan Documents. It is understood and agreed that the
assignment and assumption hereunder are made without recourse to Assignor and
that Assignor makes no representation or warranty of any kind to Assignee and
shall not be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectability of the Credit
Agreement or any Related Writings, (ii) any representation, warranty or
statement made in or in connection with the Credit Agreement or any of the
Related Writings, (iii) the financial condition or creditworthiness of Borrower
or Guarantor of Payment, (iv) the performance of or compliance with any of the
terms or provisions of the Credit Agreement or any of the Related Writings, (v)
the inspection of any of the property, books or records of Borrower, or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans or Letters of
Credit. Neither Assignor nor any of its officers, directors, employees, agents
or attorneys shall be liable for any mistake, error of judgment, or action taken
or omitted to be taken in connection with the Loans, the Letters of Credit, the
Credit Agreement or the Related Writings, except for its or their own bad faith
or willful misconduct. Assignee appoints Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are
delegated to Agent by the terms thereof.

 

6. Indemnity. Assignee agrees to indemnify and hold Assignor harmless against
any and all losses, cost and expenses (including, without limitation, attorneys’
fees) and liabilities incurred by Assignor in connection with or arising in any
manner from Assignee’s performance or non-performance of obligations assumed
under this Assignment Agreement.

 

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7. Subsequent Assignments. After the Assignment Effective Date, Assignee shall
have the right pursuant to Section 11.10 of the Credit Agreement to assign the
rights which are assigned to Assignee hereunder, provided that (a) any such
subsequent assignment does not violate any of the terms and conditions of the
Credit Agreement, any of the Related Writings, or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Credit Agreement or any of the Related Writings has been
obtained, (b) the assignee under such assignment from Assignee shall agree to
assume all of Assignee’s obligations hereunder in a manner satisfactory to
Assignor and (c) Assignee is not thereby released from any of its obligations to
Assignor hereunder.

 

8. Reductions of Aggregate Amount of Commitments. If any reduction in the Total
Commitment Amount occurs between the date of this Assignment Agreement and the
Assignment Effective Date, the percentage of the Total Commitment Amount
assigned to Assignee shall remain the percentage specified in Section 1 hereof
and the dollar amount of the Commitment of Assignee shall be recalculated based
on the reduced Total Commitment Amount.

 

9. Acceptance of Agent; Notice by Assignor. This Assignment Agreement is
conditioned upon the acceptance and consent of Agent and, if necessary pursuant
to Section 11.10(b) of the Credit Agreement, upon the acceptance and consent of
Borrower; provided, that the execution of this Assignment Agreement by Agent
and, if necessary, by Borrower is evidence of such acceptance and consent.

 

10. Entire Agreement. This Assignment Agreement embodies the entire agreement
and understanding between the parties hereto and supersedes all prior agreements
and understandings between the parties hereto relating to the subject matter
hereof.

 

11. Governing Law. This Assignment Agreement shall be governed by the laws of
the State of Ohio, without regard to conflicts of laws.

 

12. Notices. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth under each party’s name on the signature pages hereof.

 

[Remainder of page intentionally left blank.]

 

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13. JURY TRIAL WAIVER. EACH OF THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW,
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, ANY OF THE LENDERS, AND
BORROWER, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
INSTRUMENT OR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED HERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY AGENT’S OR ANY
LENDER’S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT AMONG BORROWER, AGENT AND THE LENDERS, OR ANY THEREOF.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement
by their duly authorized officers as of the date first above written.

 

            ASSIGNOR: Address:  

 

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            Attn:  

 

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  By:  

 

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    Fax:  

 

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  Phone:  

 

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    Title:  

 

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  Name:  

 

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                                                ASSIGNEE: Address:  

 

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            Attn:  

 

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  By:  

 

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    Phone:  

 

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  Name:  

 

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    Fax:  

 

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  Title:  

 

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                                    Accepted and Consented to this      day of
            , 20    :   Accepted and Consented to this      day of             ,
20    : LASALLE BANK NATIONAL ASSOCIATION,   SHILOH INDUSTRIES, INC.     as
Agent         By:  

 

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  By:  

 

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Name:  

 

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  Name:  

 

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Title:  

 

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  Title:  

 

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ANNEX 1

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

On and after the Assignment Effective Date, the Commitment of Assignee, and, if
this is less than an assignment of all of Assignor’s interest, Assignor, shall
be as follows:

 

I.       INTEREST OF ASSIGNOR BEING ASSIGNED TO ASSIGNEE

        

A.     Assignee’s Percentage

     ________ %

B.     Assigned Amount

   $ ________  

II.     ASSIGNEE’S COMMITMENT (as of the Assignment Effective Date)

        

A.     Assignee’s Commitment Percentage under the Credit Agreement

     ________ %

B.     Assignee’s Commitment Amount under the Credit Agreement

   $ ________  

III.    ASSIGNOR’S COMMITMENT (as of the Assignment Effective Date)

        

A.     Assignor’s Commitment Percentage under the Credit Agreement

     ________ %

B.     Assignor’s Commitment Amount under the Credit Agreement

   $ ________  

 

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EXHIBIT G

FORM OF

REQUEST FOR EXTENSION

 

                    , 20    

 

LaSalle Bank National Association, as Agent

135 S. LaSalle Street, Suite 1425

Chicago, Illinois 60603

Attention: Commercial Lending

 

Ladies and Gentlemen:

 

The undersigned, SHILOH INDUSTRIES, INC., a Delaware corporation (“Borrower”),
refers to the Amended and Restated Credit and Security Agreement, dated as of
January 18, 2005 (as the same may from time to time be amended, restated or
otherwise modified, the “Credit Agreement”, the terms defined therein being used
herein as therein defined), among Borrower, the Lenders, as defined in the
Credit Agreement, and LaSalle Bank National Association, as lead arranger, sole
book runner and administrative agent for the Lenders (“Agent”), and hereby gives
you notice, pursuant to Section 2.13 of the Credit Agreement that the
undersigned hereby requests an extension as set forth below (the “Extension”)
under the Credit Agreement, and in connection with the Extension sets forth
below the information relating to the Extension as required by Section 2.13 of
the Credit Agreement.

 

The undersigned hereby requests Agent and the Lenders to extend the Commitment
Period from                              , 200     to                     
        , 200    .

 

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Extension: (a) the
representations and warranties contained in each Loan Document are correct,
before and after giving effect to the Extension and the application of the
proceeds therefrom, as though made on and as of such date; (b) no event has
occurred and is continuing, or would result from such Extension, or the
application of proceeds therefrom, which constitutes a Default or an Event of
Default; and (c) the conditions set forth in Section 2.13 and Article IV of the
Credit Agreement have been satisfied.

 

Very truly yours, SHILOH INDUSTRIES, INC. By:  

 

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Name:  

 

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Title:  

 

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EXHIBIT H

FORM OF

MASTER LETTER OF CREDIT AGREEMENT

 

E-16