Exhibit 10.1

 

 

SUPERIOR ESSEX COMMUNICATIONS LP,

 

and

 

ESSEX GROUP, INC.,

 

as Borrowers

 

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Dated as of April 14, 2006

 

$225,000,000

 

 

CERTAIN FINANCIAL INSTITUTIONS,

 

as Lenders

 

with

 

GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent,

 

BANC OF AMERICA SECURITIES LLC and
GECC CAPITAL MARKETS, INC.,
as Co-Lead Arrangers

 

and

 

BANK OF AMERICA, N.A.,

 

as Agent

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Section 1.

 

DEFINITIONS; RULES OF CONSTRUCTION

2

1.1.

 

Definitions

2

1.2.

 

Accounting Terms

30

1.3.

 

Certain Matters of Construction

30

 

 

 

 

Section 2.

 

CREDIT FACILITIES

31

2.1.

 

Revolver Commitment

31

2.2.

 

Letter of Credit Facility

32

 

 

 

 

Section 3.

 

INTEREST, FEES AND CHARGES

35

3.1.

 

Interest

35

3.2.

 

Fees

36

3.3.

 

Computation of Interest, Fees, Yield Protection

37

3.4.

 

Reimbursement Obligations

37

3.5.

 

Illegality

38

3.6.

 

Increased Costs

38

3.7.

 

Capital Adequacy

39

3.8.

 

Mitigation

39

3.9.

 

Funding Losses

40

3.10.

 

Maximum Interest

40

 

 

 

 

Section 4.

 

LOAN ADMINISTRATION

41

4.1.

 

Manner of Borrowing and Funding Revolver Loans

41

4.2.

 

Defaulting Lender

42

4.3.

 

Number and Amount of LIBOR Loans; Determination of Rate

43

4.4.

 

Borrower Agent

43

4.5.

 

One Obligation

43

4.6.

 

Effect of Termination

43

 

 

 

 

Section 5.

 

PAYMENTS

44

5.1.

 

General Payment Provisions

44

5.2.

 

Repayment of Revolver Loans

44

5.3.

 

Payment of Other Obligations

44

5.4.

 

Marshaling; Payments Set Aside

44

5.5.

 

Post-Default Allocation of Payments

45

5.6.

 

Application of Payments

46

5.7.

 

Loan Account; Account Stated

46

5.8.

 

Gross Up for Taxes

46

5.9.

 

Withholding Tax Exemption

47

5.10.

 

Nature and Extent of Each Borrower’s Liability

47

 

 

 

 

Section 6.

 

CONDITIONS PRECEDENT

50

6.1.

 

Conditions Precedent to Initial Loans

50

6.2.

 

Conditions Precedent to All Credit Extensions

51

6.3.

 

Limited Waiver of Conditions Precedent

51

 

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Page

 

 

 

 

Section 7.

 

COLLATERAL

52

7.1.

 

Grant of Security Interest

52

7.2.

 

Lien on Deposit Accounts; Cash Collateral

53

7.3.

 

Real Estate Collateral

53

7.4.

 

Other Collateral

53

7.5.

 

No Assumption of Liability

54

7.6.

 

Further Assurances

54

7.7.

 

Foreign Subsidiary Stock

54

 

 

 

 

Section 8.

 

COLLATERAL ADMINISTRATION

54

8.1.

 

Borrowing Base Certificates

54

8.2.

 

Administration of Eligible Accounts

55

8.3.

 

Administration of Inventory

56

8.4.

 

Administration of Equipment

57

8.5.

 

Administration of Deposit Accounts.

58

8.6.

 

General Provisions

58

8.7.

 

Power of Attorney

59

 

 

 

 

Section 9.

 

REPRESENTATIONS AND WARRANTIES

60

9.1.

 

General Representations and Warranties

60

9.2.

 

Complete Disclosure

65

 

 

 

 

Section 10.

 

COVENANTS AND CONTINUING AGREEMENTS

66

10.1.

 

Affirmative Covenants

66

10.2.

 

Negative Covenants

69

10.3.

 

Consolidated Fixed Charge Coverage Ratio.

76

 

 

 

 

Section 11.

 

EVENTS OF DEFAULT; REMEDIES ON DEFAULT

76

11.1.

 

Events of Default

76

11.2.

 

Remedies upon Default

78

11.3.

 

License

79

11.4.

 

Setoff

79

11.5.

 

Remedies Cumulative; No Waiver

79

 

 

 

 

Section 12.

 

AGENT

80

12.1.

 

Appointment, Authority and Duties of Agent

80

12.2.

 

Agreements Regarding Collateral and Field Examination Reports

81

12.3.

 

Reliance By Agent

82

12.4.

 

Action Upon Default

82

12.5.

 

Ratable Sharing

83

12.6.

 

Indemnification of Agent Indemnitees

83

12.7.

 

Limitation on Responsibilities of Agent

84

12.8.

 

Successor Agent and Co-Agents

84

12.9.

 

Due Diligence and Non-Reliance

85

12.10.

 

Replacement of Certain Lenders

85

12.11.

 

Remittance of Payments and Collections

86

 

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Page

 

 

 

 

12.12.

 

Agent in its Individual Capacity

86

12.13.

 

Syndication Agent

87

12.14.

 

No Third Party Beneficiaries

87

 

 

 

 

Section 13.

 

BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

87

13.1.

 

Successors and Assigns

87

13.2.

 

Participations

87

13.3.

 

Assignments

88

13.4.

 

Tax Treatment

88

13.5.

 

Representation of Lenders

89

 

 

 

 

Section 14.

 

MISCELLANEOUS

89

14.1.

 

Consents, Amendments and Waivers

89

14.2.

 

General Indemnity

91

14.3.

 

Limitations of Indemnities

91

14.4.

 

Notices and Communications

91

14.5.

 

Performance of Borrowers’ Obligations

92

14.6.

 

Credit Inquiries

92

14.7.

 

Severability

92

14.8.

 

Cumulative Effect; Conflict of Terms

92

14.9.

 

Counterparts; Facsimile Signatures

93

14.10.

 

Entire Agreement

93

14.11.

 

Obligations of Lenders

93

14.12.

 

Confidentiality

93

14.13.

 

Certifications Regarding Indentures

94

14.14.

 

Governing Law

94

14.15.

 

Consent to Forum

94

14.16.

 

Waivers by Borrowers

94

14.17.

 

Patriot Act Notice

95

14.18.

 

JV Europe

95

 

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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of April 14,
2006, among SUPERIOR ESSEX COMMUNICATIONS LP, a Delaware limited partnership
(“Communications”), ESSEX GROUP, INC., a Michigan corporation (“Essex”, and
together with Communications, collectively, “Borrowers”), the financial
institutions party to this Agreement from time to time as lenders (collectively,
“Lenders”), and BANK OF AMERICA, N.A., a national banking association, as agent
for the Lenders (“Agent”).

 

R E C I T A L S:

 

Each Borrower has requested that Lenders make available a revolving credit
facility to Borrowers, which shall be used by Borrowers to finance their mutual
and collective business enterprise.  In order to utilize the financial powers of
each Borrower in the most efficient and economical manner, and in order to
facilitate the financing of each Borrower’s needs, Lenders will, at the request
of Borrower Agent, make loans to all Borrowers under the revolving credit
facility on a combined basis and in accordance with the provisions hereinafter
set forth.  Borrowers’ business is a mutual and collective enterprise and
Borrowers believe that the consolidation of all revolving credit loans under
this Agreement will enhance the aggregate borrowing powers of each Borrower and
ease the administration of their revolving credit loan relationship with
Lenders, all to the mutual advantage of Borrowers.  Lenders’ willingness to
extend credit to Borrowers and to administer each Borrower’s collateral security
therefor, on a combined and joint and several basis as more fully set forth in
this Agreement, is done solely as an accommodation to Borrowers and at
Borrowers’ request in furtherance of Borrowers’ mutual and collective
enterprise.

 

Each Borrower has agreed to guarantee the obligations of each of the other
Borrowers under this Agreement and each of the other Loan Documents.

 

Borrowers, Agents, Lenders and the other parties named therein were parties to a
certain Credit Agreement dated November 10, 2003 (as amended from time to time
prior to the date hereof, the “Original Credit Agreement”), pursuant to which
Lenders made certain revolving credit loans, letters of credit, and other
financial accommodations to Borrowers.

 

The parties to the Original Credit Agreement have requested that the Original
Credit Agreement be amended and restated in its entirety to become effective and
binding on Borrowers pursuant to the terms hereof, and Agent and Lenders have
agreed, subject to the terms of this Agreement, to amend and restate the
Original Credit Agreement in its entirety to read as set forth herein, and it
has been agreed by the parties hereto that (a) the commitments which the Lenders
that are parties hereto extended to the Borrowers under the Original Credit
Agreement shall be extended or advanced upon the amended and restated terms and
conditions contained in this Agreement and (b) the Loans and other Obligations
outstanding under the Original Credit Agreement shall be governed by and deemed
to be outstanding under the amended and restated terms and conditions contained
herein.

 

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All existing Obligations are and shall continue to be (and all Obligations
incurred pursuant hereto shall be) secured by, among other things, the Security
Documents and the other Loan Documents and shall be guaranteed pursuant to the
Guaranties, and

 

NOW, THEREFORE, the parties hereto hereby agree to amend and restate the
Original Credit Agreement and the Original Credit Agreement is hereby amended
and restated, in its entirety as follows:

 

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

 

SECTION 1.              DEFINITIONS; RULES OF CONSTRUCTION

 

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

 

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

 

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

 

Accounts Formula Amount - 85% of the net amount of Eligible Accounts.  “Net
amount” means the face amount of an Account, minus any returns, rebates,
discounts (which may, at Agent’s option, be calculated on the shortest terms
then being offered by the applicable Borrower), credits, allowances or Taxes
(including sales, excise or other taxes but excluding income or franchise taxes
of the Account Debtor) that have been or could be claimed by the Account Debtor
or any other Person.

 

Adjusted LIBOR - for any Interest Period, with respect to LIBOR Loans, the per
annum rate of interest determined pursuant to the following formula:

 

 

Offshore Base Rate

LIBOR   =

1.00 - Eurodollar Reserve Percentage

 

Where,

 

“Offshore Base Rate” means the rate per annum (rounded upward, if necessary, to
the nearest 1/8th of 1%) appearing on Telerate Page 3750, or if such page is
unavailable, the Reuters Screen LIBO Page (or any successor page of either, as
applicable), as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if the Reuters Screen LIBO Page is used and more than one
rate is shown on such page, the applicable rate shall be the arithmetic mean
thereof.  If for any reason none of the foregoing rates is available, the
Offshore Base Rate shall be the rate per annum determined by Agent as the rate
of interest at which Dollar deposits in the approximate amount of the applicable
LIBOR Loan would be offered to major banks in the offshore Dollar market at or
about 11:00

 

2

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

 

a.m. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period.

 

“Eurodollar Reserve Percentage” means the reserve percentage (expressed as a
decimal, rounded upward to the next 1/16th of 1%) applicable to member banks
under regulations issued from time to time by the Board of Governors for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as “Eurocurrency liabilities”).

 

Adjusted Net Earnings - determined for any fiscal period, on a Consolidated
basis in accordance with GAAP for Borrowers and Subsidiaries, means net earnings
(or loss) for such period, excluding, without duplication (a) any gain or loss
arising from the sale of capital assets; (b) any gain arising from write-up of
assets; (c) earnings of any entity (other than a Subsidiary) in which a Borrower
has an ownership interest unless such earnings have actually been received by
such Borrower in the form of cash Distributions; (d) any earnings of a
Subsidiary that for any reason are unavailable for payment of Distributions to a
Borrower; (e) earnings of any Person to which assets of a Borrower have been
sold or transferred, or with which a Borrower has merged, consolidated or
otherwise combined, prior to the date of such transaction (excluding any
transfers, mergers or consolidations among members of the Consolidated Group);
(f) any gain arising from the acquisition of Equity Interests of a Borrower; and
(g) any gain arising from extraordinary or non-recurring items.

 

Affiliate - with respect to any Person, another Person (a) who directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such first Person; (b) who beneficially owns 10% or
more of the voting securities or any class of Equity Interests of such first
Person; (c) at least 10% of whose voting securities or any class of Equity
Interests is beneficially owned, directly or indirectly, by such first Person;
or (d) who is an officer, director, partner or managing member of such first
Person.  “Control” means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through ownership of Equity Interests, by contract or otherwise. Notwithstanding
the foregoing, no Lender shall be deemed to be an “Affiliate” of any Borrower.

 

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

 

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

 

Allocable Amount - as defined in Section 5.10.3.

 

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

 

Applicable Law - all laws, rules and regulations applicable to the Person,
conduct, transaction, material agreement or matter in question, including all
applicable statutory law,

 

3

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common law and equitable principles, and all provisions of constitutions,
treaties, statutes, rules, regulations, orders and decrees of Governmental
Authorities.

 

Applicable Margin - with respect to any Type of Loan, the margin set forth
below, as determined by the Average Availability of the Borrowers for the last
Fiscal Quarter:

 

Level

 

Average Availability

 

Base Rate
Revolver Loans

 

LIBOR Revolver
Loans

 

Unused Line Fee

 

I

 

< $35,000,000

 

0.75

%

2.00

%

0.25

%

 

 

 

 

 

 

 

 

 

 

II

 

> $35,000,000 but
< $70,000,000

 

0.50

%

1.75

%

0.25

%

 

 

 

 

 

 

 

 

 

 

III

 

> $70,000,000 but
< $105,000,000

 

0.25

%

1.50

%

0.25

%

 

 

 

 

 

 

 

 

 

 

IV

 

> $105,000,000 but
< $140,000,000

 

0.00

%

1.25

%

0.25

%

 

 

 

 

 

 

 

 

 

 

V

 

> $140,000,000

 

0.00

%

1.00

%

0.25

%

 

The margins shall be subject to increase or decrease upon receipt by Agent of
the Borrowing Base Certificates for the last applicable Fiscal Quarter, which
change shall be effective on the first Business Day of the calendar month
following receipt.Any increase or decrease in the Applicable Margin provided for
herein shall be effective three (3) Business Days after the end of each Fiscal
Quarter of Borrowers.

 

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

 

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

 

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

 

Availability - determined as of any date, the amount that Borrowers are entitled
to borrow as Revolver Loans, being the Borrowing Base minus the principal
balance of all Revolver Loans.

 

Availability Condition – maintenance by Borrowers of Availability of no less
than $30,000,000 at all times for the ninety (90) consecutive day period
preceding any calculation date and after giving effect to any proposed
transaction in connection with which Availability of Borrowers is being tested.

 

4

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Availability Reserve - on any date of determination thereof, an amount equal to
the sum of the following (without duplication): (i) an amount equal to the
product of the then applicable Inventory advance rate percentage (as set forth
in the definition of “Inventory Formula Amount”) multiplied by the sum of (1)
the Inventory Reserve, (2) the Toll/Price Adjustment Reserve and (3) the Forward
Revaluation Reserve; (ii) the Rent Reserve and all amounts of past due rent,
fees or other charges owing at such time by any Obligor to any landlord of any
premises where any of the Inventory is located or to any processor, repairman,
mechanic or other Person who is in possession of any Inventory or has asserted
any Lien or claim thereto; (iii) any amounts which any Obligor is obligated to
pay pursuant to the provisions of any of the Loan Documents that Agent or any
Lender elects to pay for the account of such Obligor in accordance with
authority contained in any of the Loan Documents; (iv) the LC Reserve; (v) an
amount equal to the product of the then applicable Accounts advance rate
percentage (as set forth in the definition of “Accounts Formula Amount”)
multiplied by the sum of (1) all customer deposits or other prepayments held by
Borrowers, (2) all sales Taxes accrued and owing by Borrowers and (3) all
accrued discounts, rebates and allowances; (vi) the aggregate amount of
all liabilities and obligations that are secured by Liens upon any of the
Inventory that are senior in priority to Agent’s Liens if such Liens are not
Permitted Liens (provided that the imposition of a reserve hereunder on account
of such Liens shall not be deemed a waiver of any Event of Default that may
arise from the existence of such Liens) or are Permitted Liens under Section
10.2.2(e) of the Agreement; and (vii) the aggregate amount of reserves
established by Agent from time to time in its discretion in respect of
Bank Products Debt; and (viii) such additional reserves, in such amounts and
with respect to such matters, as Agent may elect to impose from time to time.
Notwithstanding anything in the immediately preceding sentence to the contrary,
no Availability Reserve shall be instituted with respect to clauses (i) or (v)
above to the extent that any such items are used as a basis for not classifying
an Account or any Inventory as an Eligible Account or as Eligible Inventory, as
the case may be.

 

Average Availability – for any period, an amount obtained by adding the
aggregate of the actual amount of Availability as of the close of business each
Business Day during such period (as determined in good faith by Agent) and
dividing such sum by the actual number of Business Days elapsed in such period.

 

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

 

Bank Product - any of the following products, services or facilities extended to
any Borrower or Subsidiary by any Lender or any of its Affiliates: (a) Cash
Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; and (d) other banking products or
services as may be requested by any Borrower or Subsidiary, other than Letters
of Credit; provided, however, that for any of the foregoing to be included as an
“Obligation” for purposes of a distribution under Section 5.5.1, the applicable
Secured Party and Obligor must have previously provided written notice to Agent
of (i) the existence of such Bank Product, (ii) the maximum dollar amount of
obligations arising thereunder to be included as a Bank Product Reserve (“Bank
Product Amount”), and (iii) the methodology to be used by such parties in
determining the Bank Product Debt owing from time to time.  The Bank Product
Amount may be changed from time to time upon written notice to Agent by the
Secured Party and Obligor.  No Bank Product Amount may be established or

 

5

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

 

increased at any time that a Default or Event of Default exists, or if a reserve
in such amount would cause an Overadvance.

 

Bank Product Amount - as defined in the definition of Bank Product.

 

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

 

Bankruptcy Code - Title 11 of the United States Code.

 

Base Rate - the rate of interest announced by Bank of America from time to time
as its prime rate.  Such rate is a reference rate only and Bank of America may
make loans or other extensions of credit at, above or below it.  Any change in
the prime rate announced by Bank of America shall take effect at the opening of
business on the effective day specified in the public announcement of the
change.

 

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

 

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

 

Belden Equipment Locations - those locations designated as “Belden Equipment
Locations” on Schedule 8.6.1.

 

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

 

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

 

Borrower Agent - as defined in Section 4.4.

 

Borrowers’ 9% Senior Notes due 2012 - those 9% Senior Notes due 2012 issued by
Borrowers pursuant to that certain Indenture dated as of April 14, 2004 among
Borrowers, Parent, SEI, Essex International, Inc. and certain Subsidiaries of
Borrowers, with The Bank of New York, as Trustee in the original principal
amount of $257,100,000 and including any “Exchange Notes” issued in connection
therewith.

 

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

 

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

 

6

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Borrowing Base Certificate - a certificate, in form and substance satisfactory
to Agent (which certificate shall be substantially consistent with certificates
required by Agent from its other customers in the same or similar business as
Borrowers (other than changes necessary due to Borrowers’ specific business
operations)), by which Borrowers certify calculation of the Borrowing Base.

 

Brownwood Lease - the Lease Agreement, dated as of December 16, 1993, as
amended, between Communications (f/k/a Superior Telecommunications Inc.) and ST
(TX) LP.

 

Business Day - any day (a) excluding Saturday, Sunday and any other day on which
banks are permitted to be closed under the laws of the State of Georgia or the
State of North Carolina; and (b) when used with reference to a LIBOR Loan, also
excluding any day on which banks do not conduct dealings in Dollar deposits on
the London interbank market.

 

Capital Adequacy Regulation - any law, rule, regulation, guideline, request or
directive of any central bank or other Governmental Authority, whether or not
having the force of law, regarding capital adequacy of a bank or any Person
controlling a bank.

 

Capital Expenditures - expenditures made by a Borrower or Subsidiary for the
acquisition of any fixed assets, or any improvements, replacements,
substitutions or additions thereto which are required to be capitalized for
financial reporting purposes in accordance with GAAP.

 

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

 

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

 

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

 

Cash Collateralize - the delivery of cash to Agent, as security for the payment
of Obligations, in an amount equal to (with respect to LC Obligations), 105% of
the aggregate LC Obligations.  “Cash Collateralization” has a correlative
meaning.

 

Cash Equivalents - (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States
government, maturing within 12 months of the date of acquisition; (b)
certificates of deposit, time deposits and bankers’ acceptances maturing within
12 months of the date of acquisition, and overnight bank deposits, in each case
which are issued by a commercial bank organized under the laws of the United
States or any state or district thereof, rated A-1 (or better) by S&P or P-1 (or
better) by Moody’s at the time of acquisition, and (unless issued by a Lender)
not subject to offset rights; (c) repurchase obligations with a term of not more
than thirty (30) days for underlying investments of the types described in
clauses (a) and (b) entered into with any financial institution meeting the
qualifications specified in clause (b); (d) commercial paper rated A-1 (or
better) by S&P or P-1 (or better) by Moody’s, and maturing within nine months of
the date of acquisition; and (e) shares of any money market fund that has
substantially all of its assets invested continuously in

 

7

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

 

the types of investments referred to above, has net assets of at least
$500,000,000 and has the highest rating obtainable from either Moody’s or S&P.

 

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

 

Catch Up Pension Contributions – any contribution made by Borrowers to the
Retirement Income Plan for Salaried Employees of Essex Group, Inc. and the
Retirement Plan for Hourly Employees of Essex Group, Inc. over the amount of any
contributions with respect to such Plans shown as expenses in Borrowers’ income
statements for such period and/or calculated in Borrowers’ Consolidated net
income for such period.

 

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

 

Change of Control – the occurrence of any of the following events after the date
of this Agreement unless such event occurs in connection with a transaction
otherwise permitted under this Agreement:  (a) SEI ceases to own and control,
beneficially and of record, directly or indirectly, 100% of the common stock of
Parent; (b) Parent and Essex International, Inc. cease to own and control,
beneficially and of record, 100% of the common stock of the Borrowers; (c) Essex
shall cease to own 100% of any of its now existing and wholly-owned Subsidiaries
(other than as a result of the merger of any such Subsidiary with Essex and/or
any Subsidiary Guarantor); or (d) any “Change of Control”, “Change in Control”
or similar event or circumstance, however defined or designated under the
Indenture for the Borrowers’ 9% Senior Notes due 2012.

 

Chattel Paper - as defined in the UCC.

 

China Investment - Investments, loans, advances, guarantees, capital
contributions, sales or transfers of Property, made directly or indirectly,
without duplication, by one or more Borrowers in connection with the
development, construction and operation of a magnet wire, distribution and
related businesses in China in an amount up to $30,000,000 (excluding from such
$30,000,000 limit Investments made at a time when Borrowers satisfied the
Availability Condition and no Event of Default existed).

 

Claims - all liabilities, obligations, losses, damages, penalties, judgments,
proceedings, costs and expenses of any kind (including remedial response costs,
reasonable attorneys’ fees and Extraordinary Expenses) at any time (including
after Full Payment of the Obligations, resignation or replacement of Agent, or
replacement of any Lender) incurred by or asserted against any Indemnitee in any
way relating to (a) any Loan Documents or transactions relating thereto, (b) any
action taken or omitted to be taken by any Indemnitee in connection with any
Loan Documents, (c) the existence or perfection of any Liens, or realization
upon any Collateral, (d) exercise of any rights or remedies under any Loan
Documents or Applicable Law, or (e) failure by any Obligor to perform or observe
any terms of any Loan Document, in each case including all costs and expenses
relating to any investigation, litigation, arbitration or other

 

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proceeding (including an Insolvency Proceeding or appellate proceedings),
whether or not the applicable Indemnitee is a party thereto.

 

Closing Date - as defined in Section 6.1.

 

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

 

Commercial Tort Claim - as defined in the UCC.

 

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

 

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

 

Compliance Certificate - a Compliance Certificate to be provided by Borrowers to
Agent pursuant to this Agreement, in the form of Exhibit C, and all supporting
schedules

 

Consigned Inventory - Inventory of a Borrower that is in the possession of
another Person on a consignment or other basis that does not constitute a final
sale and acceptance of such Inventory.

 

Consigned Inventory Conditions - the following conditions:  (i) the Inventory is
owned by a Borrower, (ii) the Inventory has been consigned to an Eligible
Consignee, (iii) the Inventory is located in the United States or Canada (other
than the Province of Quebec), and (iv) the Inventory would otherwise constitute
Eligible Inventory if it were not Consigned Inventory.

 

Consolidated – consolidated in accordance with GAAP, but excluding to the extent
consolidated under GAAP, SE Holding and its Subsidiaries.

 

Consolidated EBITDA – for the Borrowers on a Consolidated Basis, an amount equal
to the sum for any fiscal period of (i) Adjusted Net Earnings plus without
duplication (ii) provision for Taxes based on income plus (iii) Consolidated
interest expense, plus (iv) depreciation and amortization plus (v) other
non-cash expenses (including non-cash compensation relating to restricted stock,
stock-option grants and other equity awards) and any amounts deducted as a
result of the amortization of any one-time fees or expenses incurred in
connection with the initial incurrence of the Obligations on the Closing Date,
plus (vi) any amount deducted from earnings in respect of dividends in such
period (whether paid or accrued) on preferred Stock pursuant to Financial
Accounting Standard No. 150, plus (vii) to the extent deducted in determining
Adjusted Net Earnings, any non-recurring charge or restructuring charge in
connection with the implementation of the Plan of Reorganization (including,
without limitation, (1) all fees and expenses incurred in connection with the
execution, delivery and performance of the Indenture for the Borrowers’ 9%
Senior Notes due 2012; (2) payments made to Rothschild Inc. in its capacity as
financial advisor to the Debtors; and (3) all other reorganization and
restructuring costs and expenses incurred.

 

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Consolidated Fixed Charge Coverage Ratio - with respect to any period, the ratio
of (a) the amount for any fiscal period of (i) Consolidated EBITDA for such
period minus (ii) Capital Expenditures made during such period (and not financed
by Debt other than the Loans or equity) minus (iii) Taxes paid in cash during
such period minus (iv) Catch Up Pension Contributions made during such period
minus (v) any Distribution by any Borrower directly or indirectly to Parent the
proceeds of which are used by Parent to make payment of dividends with respect
to the Parent Preferred Stock minus (vi) Included Investments, if any, during
such period, to (b) all scheduled principal and cash interest payments on Money
Borrowed for such period (excluding any prepayments of Revolver Loans which do
not result in a permanent reduction of the Revolver Commitment).

 

Contingent Obligation - any obligation of a Person arising from a guaranty
(excluding guarantees of performance), indemnity or other assurance of payment
or performance of any Debt, lease, dividend or other obligation (“primary
obligations”) of another obligor (“primary obligor”) in any manner, whether
directly or indirectly, including any obligation of such Person under any (a)
guaranty, endorsement, co-making or sale with recourse of an obligation of a
primary obligor; (b) obligation to make take-or-pay or similar payments
regardless of nonperformance by any other party to an agreement; and (c)
arrangement (i) to purchase any primary obligation or security therefor, (ii) to
supply funds for the purchase or payment of any primary obligation, (iii) to
maintain or assure working capital, equity capital, net worth or solvency of the
primary obligor, (iv) to purchase Property or services for the purpose of
assuring the ability of the primary obligor to perform a primary obligation, or
(v) otherwise to assure or hold harmless the holder of any primary obligation
against loss in respect thereof; provided, however, that the term “Contingent
Obligation” shall not include (i) any product warranties extended in the
Ordinary Course of Business, (ii) indemnities made to officers and directors of
any such Person whether pursuant to the governing organizational documents of
such Person or otherwise, and (iii) any environmental indemnities identified on
Schedule 9.1.15.  The amount of any Contingent Obligation shall be deemed to be
the stated or determinable amount of the primary obligation (or, if less, the
maximum amount for which such Person may be liable under the instrument
evidencing the Contingent Obligation) or, if not stated or determinable, the
maximum reasonably anticipated liability with respect thereto (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.

 

Contribution Agreement - that certain Contribution and Formation Agreement,
dated July 27, 2005, between Essex, Nexans and the other parties named therein,
together with any exhibits thereto.

 

Credit Judgment - Agent’s judgment exercised in a manner consistent with its
customary practices or otherwise in good faith, based upon its consideration of
any factor that it reasonably believes (a) could adversely affect the quantity,
quality, mix or value of Collateral (including any Applicable Law that may
inhibit collection of an Account), the enforceability or priority of Agent’s
Liens, or the amount that Agent and Lenders could receive in liquidation of any
Collateral; (b) suggests that any collateral report or financial information
delivered by any Obligor is incomplete, inaccurate or misleading in any material
respect; (c) materially increases the likelihood of any Insolvency Proceeding
involving an Obligor; or (d) creates or could result in a Default or Event of
Default.  In exercising such judgment, Agent may consider factors already
included in the definitions of Eligible Accounts or Eligible Inventory, as well
as the financial and business climate of Borrowers’ industry, changes in
collection history and dilution

 

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of Accounts, changes in demand for and pricing of Inventory, changes in
concentration risks, and any factors that could materially increase the credit
risk of lending to Borrowers on the security of the Collateral.

 

Customer Contract Inventory – Inventory of another Person at any time in the
possession of any Borrower for processing, repairing or otherwise.

 

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

 

Debt - as applied to any Person, without duplication, (a) all items that would
be included as liabilities on a balance sheet in accordance with GAAP, including
Capital Leases but excluding trade payables incurred and being paid in the
Ordinary Course of Business; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of a Borrower, the Obligations.  The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.

 

Debtor – each of Superior TeleCom, Inc., Superior Telecommunications Inc.,
Superior Telecommunications Realty Company, Essex International Inc., Essex,
Superior Essex Realty Company, Active Industries, Inc., Diamond Wire & Cable
Co., Essex Funding, Inc., Essex Services, Inc., Essex Canada, Inc., Essex
Technology, Inc., Essex Wire Corporation, Essex Group Mexico Inc. and Essex
Mexico Holdings, L.L.C., and, collectively “Debtors”.

 

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

 

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

 

Delphi – means the domestic subsidiaries of Delphi Corporation.

 

Deposit Account - as defined in the UCC.

 

Deposit Account Control Agreements - the Deposit Account control agreements to
be executed by each depository institution of a Borrower in favor of Agent, for
the benefit of Secured Parties, as security for the Obligations.

 

Designated Account - a deposit account of Borrowers established with Agent or an
Affiliate of Agent, into which Agent shall fund Loans hereunder.

 

Distribution - any declaration or payment of a distribution, interest or
dividend on any Equity Interest (other than payment-in-kind); any distribution,
advance or repayment of Debt to a holder of Equity Interests; or any purchase,
redemption, or other acquisition or retirement for value of any Equity Interest
unless (x) made substantially contemporaneously from the net proceeds of the
sale of Equity Interests or (y) such purchase, redemption or other acquisition
or retirement was effected solely by the exchange of other Equity Interests
therefor.

 

Document - as defined in the UCC.

 

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Dollars - lawful money of the United States of America.

 

Domestic Subsidiary – a Subsidiary (other than a Subsidiary that is a Borrower
or IP Licensing) that is incorporated under the laws of a state of the United
States or the District of Columbia.

 

Eligible Account - an Account owing to a Borrower that arises in the Ordinary
Course of Business from the sale of goods, is payable in Dollars and is deemed
by Agent, in its Credit Judgment, to be an Eligible Account.  Without limiting
the foregoing, no Account shall be an Eligible Account if (a) it is unpaid for
more than sixty (60) days after the original due date, or more than one hundred
twenty (120) days after the original invoice date; (b) 50% or more of the
Accounts owing by the Account Debtor are not Eligible Accounts under the
foregoing clause; (c) when aggregated with other Accounts owing by the Account
Debtor, it exceeds 20% of the aggregate Eligible Accounts (or such higher
percentage as Agent may establish for the Account Debtor from time to time); (d)
any covenant, representation or warranty in this Agreement with respect to such
Account has been breached; (e) it is owing by a creditor or supplier, or is
otherwise subject to a potential offset, counterclaim, dispute, deduction,
discount, recoupment, reserve, defense, chargeback, credit or allowance (but
ineligibility shall be limited to the amount thereof); (f) an Insolvency
Proceeding has been commenced by or against the Account Debtor (excluding Delphi
to the extent such Account arises post-petition and would otherwise constitute
an Eligible Account hereunder); or the Account Debtor has failed, has suspended
or ceased doing business, is liquidating, dissolving or winding up its affairs,
or is not Solvent; (g) the Account Debtor is organized or has its principal
offices or assets outside the United States, Canada or Puerto Rico, unless the
sale is backed (A) by an irrevocable letter of credit issued or confirmed by a
bank acceptable to Agent and that is in form and substance acceptable to Agent
and payable in the full amount of the Account in freely convertible Dollars at a
place of payment within the United States and, if requested by Agent, such
letter of credit, or amounts payable thereunder, is assigned to Agent (with such
assignment acknowledged by the issuing or confirming bank) or (B) is backed by
credit insurance in form and substance acceptable to Agent and Agent is named as
sole loss payee with respect thereto; (h) it is owing by a Government Authority,
unless the Account Debtor is the United States of America or any department,
agency or instrumentality thereof and the Account has been assigned to Agent in
compliance with the Assignment of Claims Act; (i) it is not subject to a duly
perfected, first priority Lien in favor of Agent, or is subject to any other
Lien (except a Permitted Lien); (j) the goods giving rise to it have not been
delivered to and accepted by the Account Debtor, the services giving rise to it
have not been accepted by the Account Debtor, or it otherwise does not represent
a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind
(unless such Chattel Paper or Instrument has been created in the Ordinary Course
of Business and not as a result of credit problems, has been delivered to Agent
fully endorsed, and is subject to a first priority perfected lien in favor of
Agent) or has been reduced to judgment; (l) its payment has been extended, the
Account Debtor has made a partial payment, or it arises from a sale on a
cash-on-delivery basis; (m) it arises from a sale to an Affiliate or from a sale
on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment (unless such Account arises from Eligible Inventory sold by an
Eligible Consignee to a third party purchaser), or other repurchase or return
basis; (n) it represents a progress billing or retainage; (o) it includes a
billing for interest, fees or late charges, but ineligibility shall be limited
to the extent of such billing; (p) it arises from a retail sale to a Person who
is purchasing for personal, family or household purposes; (q) the Account Debtor
is located in any state which imposes conditions on the right of a creditor to
collect accounts

 

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receivable unless the applicable Borrower has either qualified to transact
business in such state as a foreign entity or filed a Notice of Business
Activities Report or other required report with the appropriate officials in
those states for the then current year; (r) the Account Debtor is located in a
state in which such Borrower is deemed to be doing business under the laws of
such state and which denies creditors access to its courts in the absence of
qualification to transact business in such state or of the filing of any reports
with such state, unless such Borrower has qualified as a foreign entity
authorized to transact business in such state or has filed all required reports;
(s) the Account is evidenced by a “memo” or is otherwise the subject of memo
billing; (t) such Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances which are made in
the Ordinary Course of Business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value of each invoice
related to such Account; or (u) it arises from the sale of any Inventory that is
not Eligible Inventory pursuant to clause (b) of the definition of “Eligible
Inventory.”

 

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

 

Eligible Consignee - a consignee which Agent, in its reasonable Credit Judgment,
deems to be an eligible consignee.  Without limiting the generality of the
foregoing, no consignee will be an Eligible Consignee unless:  (i) such
consignee shall have executed a consignment agreement, which permits assignment
to Agent, granting the applicable Borrower a security interest under the UCC or
the PPSA, as applicable, in all Consigned Inventory that is consigned by such
Borrower to such consignee; (ii) consignee and such Borrower shall have executed
or otherwise authorized the filing of financing statements under the UCC or the
PPSA, as applicable, based upon the requirements of the filing jurisdiction,
naming such consignee as debtor and such Borrower as secured party (and, if
requested by Agent, naming Agent as assignee), covering the Consigned Inventory;
such financing statement shall have been filed of record in all appropriate
filing locations for the perfection of a first priority security interest in
such Consigned Inventory and the identifiable proceeds thereof, and, after
filing of such financing statements, such Borrower shall have conducted searches
of all filings made against such consignee in such filing offices and taken such
other action as Agent may reasonably request, including notification pursuant to
Section 9-324 of the UCC (and similar applicable provisions under the PPSA) to
each holder of a conflicting Lien in such Consigned Inventory, which shall
confirm that the security interest in the Consigned Inventory in favor of such
Borrower that such Borrower has assigned to Agent is and shall be a first
priority Lien;  (iii) if requested by Agent, Agent shall have received copies of
the consignment agreement, the filed financing statements under the UCC and the
PPSA, as applicable, and the UCC and the PPSA searches; and (v) the
creditworthiness of such consignee is acceptable to Agent, in Agent’s reasonable
credit judgment.

 

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Eligible Inventory - Inventory owned by a Borrower that Agent, in its Credit
Judgment, deems to be Eligible Inventory.  Without limiting the foregoing, no
Inventory shall be Eligible Inventory unless it (a) is raw materials or finished
goods or work in process that is, in Agent’s reasonable Credit Judgment readily
marketable in its current form, and not raw materials, work-in-process,
packaging or shipping materials, labels, samples, display items, bags,
replacement parts or manufacturing supplies; (b) is not held on consignment
unless all Consigned Inventory Conditions have been satisfied with respect to
such Inventory and such Inventory is Permitted Consigned Inventory, nor subject
to any deposit, downpayment, guaranteed sale, sale-or-return, sale-on-approval
or repurchase arrangement; (c) is in saleable condition and is not damaged,
defective, shopworn or otherwise unfit for sale; (d) is not slow-moving,
obsolete or unmerchantable, and does not constitute returned or repossessed
goods; (e) meets all standards imposed by any Governmental Authority; (f)
conforms with the covenants and representations herein; (g) is subject to
Agent’s duly perfected, first priority Lien, and no other Lien except a
Permitted Lien; (h) is within the continental United States, Canada or Puerto
Rico, is not in transit except between locations of Borrowers, and is not
consigned to any Person other than an Eligible Consignee; (i) is not subject to
any warehouse receipt or negotiable Document; (j) is not subject to any License
or other arrangement that restricts such Borrower’s or Agent’s right to dispose
of such Inventory, unless Agent has received an appropriate Lien Waiver; (k) is
not located on leased premises or in the possession of a warehouseman or
processor unless the lessor, warehouseman or processor has delivered a Lien
Waiver or an appropriate Rent Reserve has been established; (l) is not the
subject of a store closing, liquidation, going-out-of business or similar sale;
(m) it does not constitute Customer Contract Inventory or Toll Copper Inventory;
(n) it is in such Borrower’s possession and control, is not in transit or
outside the continental United States and is not consigned to any Person other
than an Eligible Consignee; (o) it has not been sold or leased and such Borrower
has not received any deposit or down payment in respect thereof in anticipation
of a sale; and (p) it is not the subject of an Intellectual Property Claim.

 

Enforcement Action - any action to enforce any Obligations or Loan Documents or
to realize upon any Collateral (whether by judicial action, self-help,
notification of Account Debtors, exercise of setoff or recoupment, or
otherwise).

 

Environmental Laws - all Applicable Laws (including all programs, permits and
guidance promulgated by regulatory agencies, to the extent having the force of
law), relating to public health (but excluding occupational safety and health,
to the extent regulated by OSHA) or the protection or pollution of the
environment, including CERCLA, RCRA and CWA.

 

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

 

Environmental Release - a release as defined in CERCLA or under any other
Environmental Law.

 

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Equipment - as defined in the UCC, including all machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory), and all parts, accessories and special
tools therefor, and accessions thereto.

 

Equity Interest - the interest of any (a) shareholder in a corporation, (b)
partner in a partnership (whether general, limited, limited liability or joint
venture), (c) member in a limited liability company, or (d) other Person having
any other form of equity security or ownership interest.

 

ERISA - the Employee Retirement Income Security Act of 1974 and all rules and
regulations from time to time promulgated thereunder.

 

Event of Default - as defined in Section 11.

 

Excluded Tax - Tax on the overall net income or gross receipts of a Lender
imposed by the jurisdiction in which such Lender’s principal executive office is
located.

 

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

 

Federal Funds Rate - a fluctuating interest rate per annum equal to the weighted
average of the rates on overnight federal funds transactions among members of
the Federal Reserve System arranged by federal funds brokers, as published for
the applicable day (or, if not a Business Day, for the preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published,
the average of the quotations for such day on such transactions received by
Agent for three (3) federal funds brokers of nationally recognized standing
selected by Agent.

 

Fee Letter - the fee letter agreement, dated on or about the Closing Date,
between Agent and Borrowers.

 

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Fiscal Quarter - each period of thirteen (13) weeks, commencing on the first day
of a Fiscal Year (and, in the case of any Fiscal Year of fifty-three (53) weeks,
the fourteen (14) week period occurring at the end thereof.

 

Fiscal Year - the fiscal year of Borrowers and Subsidiaries for accounting and
tax purposes, ending on December 31 of each year.

 

FLSA - the Fair Labor Standards Act of 1938.

 

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

 

Foreign Subsidiary - a Subsidiary that is not a Domestic Subsidiary.

 

Forward Revaluation Amount - an amount equal to any positive difference between
the standard cost at which Borrowers purchase copper Inventory and the actual
cost paid for forward copper contracts.

 

Forward Revaluation Reserve – a reserve equal to the amount, if any, by which
the Value of Borrowers’ Inventory consisting of copper has been reduced by the
Forward Revaluation Amount.

 

Full Payment - with respect to any Obligations (other than any indemnification
not due and payable when all of the Obligations have been paid in full and the
Commitments have been terminated), (a) the full cash payment thereof, including
all interest, fees and other charges under any Loan Documents and including
those accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such Obligations are LC Obligations or inchoate or
contingent in nature, Cash Collateralization thereof; and (c) a release of any
Claims of Obligors against Agent, Lenders and Issuing Bank arising on or before
the payment date.  No Loans shall be deemed to have been paid in full until all
Commitments related to such Loans have expired or been terminated.

 

GAAP - generally accepted accounting principles in the United States of America
in effect from time to time.

 

GECC – General Electric Capital Corporation, a Delaware corporation.

 

General Intangibles - as defined in the UCC, including choses in action, causes
of action, company or other business records, inventions, blueprints, designs,
patents, patent applications, trademarks, trademark applications, trade names,
trade secrets, service marks, goodwill, brand names, copyrights, registrations,
licenses, franchises, customer lists, permits, tax refund claims, computer
programs, operational manuals, internet addresses and domain names, insurance
refunds and premium rebates, all rights to indemnification, and all other
intangible Property of any kind.

 

Goods - as defined in the UCC.

 

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

 

Governmental Authority - any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for or
pertaining to any government or court, in each case whether associated with the
United States, a state, district or territory thereof, or a foreign entity or
government.

 

Guarantor Payment - as defined in Section 5.10.3.

 

Guarantors – SEI, Parent, Essex International, Inc., a Delaware corporation and
each other Person who guarantees payment or performance of any Obligations.

 

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

 

Hedging Agreement - any transaction that provides for an interest rate, foreign
exchange, currency, commodity, credit or equity swap, cap, floor, collar,
option, forward, cross right or obligation, or combination thereof, or any
transaction of a similar nature, including Interest Rate Contracts.

 

Included Investment – Investments, loans, advances, guarantees, capital
contributions, sales or transfers of Property, made directly or indirectly,
during any fiscal period in any Person by one or more Borrowers in connection
with the development, construction, and operation of the Borrowers business in
compliance with Section 10.2.15 hereof (other than the JV Europe Investment and
China Investment to the extent that the China Investment is refinanced with the
proceeds of Indebtedness incurred by a subsidiary of SE Holding which is
non-recourse to the Obligors and the net proceeds of such refinancing is
remitted to Agent for application to the Obligations); provided that if the
Average Availability for an applicable period is greater than or equal to
$50,000,000, the amount of such investments shall be deemed to be $-0-.

 

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

 

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

 

Instrument - as defined in the UCC.

 

Insurance Assignment – each collateral assignment of insurance pursuant to which
an Obligor assigns to Agent, for the benefit of Secured Parties, such Obligor’s
rights under

 

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business interruption or other insurance policies as Agent deems appropriate, as
security for the Obligations.

 

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

 

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

 

Interest Period - as defined in Section 3.1.3.

 

Interest Rate Contract - any interest rate swap, collar or cap agreement, or
other agreement or arrangement by any Borrower or Subsidiary with a Lender that
is designed to protect against fluctuations in interest rates.

 

Inventory - as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in a Borrower’s business
(but excluding Equipment).

 

Inventory Formula Amount - the lesser of (a) $110,000,000; or (b) the lesser of
65% of the Value of Eligible Inventory or 85% of the NOLV Percentage of the
Value of Eligible Inventory.

 

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

 

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

 

Investment Property - as defined in the UCC, including all Securities (whether
certificated or uncertificated), security entitlements, securities accounts,
commodity contracts and commodity accounts.

 

IP Licensing – IP Licensing LLC, a Delaware limited liability company.

 

Issuing Bank - Bank of America or an Affiliate of Bank of America.

 

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

 

JV Europe – Essex Nexans Europe SAS, a société par actions simplifée organized
under the laws of France.

 

JV Europe Investment – Investments, loans, advances, guarantees, capital
contributions, sales or transfers of Property, made directly or indirectly,
without duplication, in JV Europe (including such investments through SE
Holding) in the aggregate amount of (a) investments made prior to the Closing
Date, plus (b) any purchase price true up or premium amount that may be due as a
result of the EBITDA performance of JV Europe in accordance with the terms of
the Contribution Agreement not to exceed $5,000,000 plus (c) any put and call
obligations required pursuant to the terms of the Contribution Agreement up to
$25,000,000 (excluding from such limits Investments made at a time when
Borrowers satisfied the Availability Condition and no Event of Default exists).

 

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

 

LC Conditions - the following conditions necessary for issuance of a Letter of
Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total LC Obligations do not exceed $35,000,000, no
Overadvance exists and, if no Revolver Loans are outstanding, the LC Obligations
do not exceed the Borrowing Base (without giving effect to the LC Reserve for
purposes of this calculation); (c) the expiration date of such Letter of Credit
is (i) no more than three hundred sixty-five (365) days from issuance, in the
case of standby Letters of Credit, (ii) no more than one hundred fifty (150)
days from issuance, in the case of documentary Letters of Credit, and (iii) at
least ten (10) Business Days prior to the Revolver Termination Date; (d) the
Letter of Credit and payments thereunder are denominated in Dollars; and (e) the
form of the proposed Letter of Credit is satisfactory to Agent and Issuing Bank
in their discretion.

 

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

 

LC Obligations - the sum (without duplication) of (a) all amounts owing by
Borrowers for any drawings under Letters of Credit; (b) the aggregate undrawn
amount of all outstanding Letters of Credit; and (c) all fees and other amounts
owing with respect to Letters of Credit.

 

LC Request - a Letter of Credit Request from Borrowers to Issuing Bank in the
form of Exhibit D.

 

LC Reserve - the aggregate of all LC Obligations, other than (a) those that have
been Cash Collateralized, and (b) if no Default or Event of Default exists,
those constituting charges owing solely to the Issuing Bank.

 

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

 

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

 

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

 

Letter-of-Credit Right - as defined in the UCC.

 

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

 

LIBOR Revolver Loan - a Revolver Loan that bears interest based on Adjusted
LIBOR.

 

License - any material license or agreement under which an Obligor is authorized
to use Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of any Eligible Inventory, any use of Property or
any other conduct of its business (excluding, in any event, any “off the shelf”
Intellectual Property generally available to the public).

 

Licensor - any Person from whom an Obligor obtains a License.

 

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

 

Lien Waiver - an agreement, in form and substance reasonably satisfactory to
Agent, by which (a) for any material Collateral located on leased premises, the
lessor waives or subordinates any Lien it may have on the Collateral, and agrees
to permit Agent to enter upon the premises and remove the Collateral or to use
the premises to store or dispose of the Collateral; (b) for any material
Collateral held by a warehouseman or processor, such Person waives or
subordinates any Lien it may have on the Collateral, and permits Agent to enter
upon such premises and remove such Inventory or to use the premises to store or
dispose of the Collateral; and (c) for any material Collateral held by a
repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or
subordinates any Lien it may have on the Collateral, and permit Agent to enter
upon such premises and remove such Collateral or to use the premises to store or
dispose of the Inventory.

 

Liquidity Condition – collectively, (i) the Availability Condition and (ii) if
Availability was less then $50,000,000 at any time during the ninety (90)
consecutive day period

 

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preceding any calculation date and after giving effect to any proposed
transaction in connection with which Availability of Borrowers is being tested,
a Consolidated Fixed Charge Coverage Ratio of the Borrowers for the most
recently completed twelve fiscal month period of not less than 1.10 to 1.00
after giving effect to any proposed transaction in connection with which
Availability of Borrowers is being tested.

 

Loan - a Revolver Loan (and each Base Rate loan or LIBOR loan comprising such
loan).

 

Loan Account - the loan account established by each Lender on its books pursuant
to Section 5.7.

 

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

 

Loan Year - each calendar year commencing on the Closing Date and each
anniversary of the Closing Date.

 

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

 

Material Adverse Effect - the effect of any event or circumstance that, taken
alone or in conjunction with other events or circumstances, (a) has or could be
reasonably expected to have a material adverse effect on the business,
operations, Properties or condition (financial or otherwise) of any Borrower,
individually or all of the Obligors, taken as a whole, on the value of the
Collateral taken as a whole, on the enforceability of any Loan Documents, or on
the validity or priority of Agent’s Liens on the Collateral taken as a whole;
(b) materially impairs the ability of any Borrower, individually or all of the
Obligors to perform any obligations under the Loan Documents, including
repayment of any Obligations; or (c) otherwise materially impairs the ability of
Agent or any Lender to enforce or collect any Obligations or to realize upon any
material Collateral.

 

Material Contract - any agreement or arrangement to which a Borrower or
Subsidiary is party (other than the Loan Documents) for which breach,
termination, nonperformance or failure to renew could reasonably be expected to
have a Material Adverse Effect.

 

Moody’s - Moody’s Investors Services, Inc.

 

Mortgage – those certain mortgages, deeds of trust or deeds to secure debt
delivered by a Borrower to Agent, for the benefit of Secured Parties, prior to
the Closing Date which granted Liens upon the Real Estate owned by such
Borrower, as security for the Obligations located in (i) Rockford, Illinois,
(ii) Ft. Wayne, Franklin, Kendallville and Vincennes, Indiana, (iii) Hoisington,
Kansas, (iv) Tarboro, North Carolina and (v) Chester, South Carolina.

 

Multiemployer Plan - as defined in Section 4001(a)(3) of ERISA.

 

Net Proceeds - with respect to an Asset Disposition, proceeds (including, when
received, any deferred or escrowed payments) received by a Borrower or
Subsidiary in cash from such disposition, net of (a) reasonable and customary
costs and expenses actually incurred in

 

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connection therewith, including legal fees and sales commissions; (b) amounts
applied to repayment of Debt secured by a Permitted Lien senior to Agent’s Liens
on Collateral sold; (c) all Taxes to the extent payable as a consequence of such
sale, including but not limited to, transfer or similar taxes; (d) reserves for
indemnities, until such reserves are no longer needed; and (e) in connection
with any sale of Collateral, a reasonable reserve (not to exceed 10% of the
total purchase price) for post-closing adjustments to the purchase price,
provided that upon the expiration of not more than one hundred twenty (120) days
after the sale any remaining reserve balance is remitted to Agent for
application to the Obligations.

 

NOLV Percentage - the net orderly liquidation value of Inventory, expressed as a
percentage, expected to be realized at an orderly, negotiated sale held within a
reasonable period of time, net of all related commissions, fees and expenses, as
determined from the most recent appraisal of Borrowers’ Inventory performed by
an appraiser and on terms reasonably satisfactory to Agent.

 

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

 

Notice of Borrowing - a Notice of Borrowing to be provided by Borrower Agent to
request the funding of a Borrowing of Revolver Loans, in form satisfactory to
Agent.

 

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

 

Obligations - all (a) principal of and premium, if any, on the Loans, (b) LC
Obligations and other obligations of Obligors with respect to Letters of Credit,
(c) interest, expenses, fees and other sums payable by Obligors under Loan
Documents, (d) obligations of Obligors under any indemnity for Claims, (e)
Extraordinary Expenses, (f) Bank Product Debt, and (g) other Debts, obligations
and liabilities of any kind owing by Obligors pursuant to the Loan Documents,
whether now existing or hereafter arising, whether evidenced by a note or other
writing, whether allowed in any Insolvency Proceeding, whether arising from an
extension of credit, issuance of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, or joint or several.

 

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

 

Ordinary Course of Business - the ordinary course of business of any Borrower or
Subsidiary, undertaken in good faith (and not for the purpose of evading any
provision of a Loan Document).

 

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

 

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OSHA - the Occupational Safety and Hazard Act of 1970.

 

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

 

Overadvance - as defined in Section 2.1.5.

 

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

 

Parent - Superior Essex Holding Corp., a Delaware corporation.

 

Parent Series A Preferred Stock – 5,000,003 shares of Series A Preferred Stock
of Parent having a par value of at least $1 per share and representing equity of
at least $5,000,000.

 

Participant - as defined in Section 13.2.

 

Patent Assignment - each patent collateral assignment agreement pursuant to
which an Obligor assigns to Agent, for the benefit of Secured Parties, such
Obligor’s interests in its patents, as security for the Obligations.

 

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

 

Payment Account - an account maintained by Agent, into which all monies from
time to time deposited to a Deposit Account may be swept.

 

Payment Intangible - as defined in the UCC.

 

Payment Item - each check, draft or other item of payment payable to a Borrower,
including those constituting proceeds of any Collateral.

 

Permitted Asset Disposition - an Asset Disposition that is (a) a sale of
Inventory in the Ordinary Course of Business; (b) a disposition of Equipment the
proceeds of which are re-invested in Equipment or similar assets or Capital
Expenditures within three hundred sixty-five (365) days of such Asset Deposition
or any other disposition of Equipment in an aggregate amount not to exceed
$5,000,000 (on a fair market basis) in any Fiscal Year; (c) a disposition of
Inventory that is obsolete, unmerchantable or otherwise unsalable in the
Ordinary Course of Business; (d) so long as no Event of Default then exists,
termination of a lease of real or personal Property that is not necessary for
the Ordinary Course of Business, could not reasonably be expected to have a
Material Adverse Effect and does not result from an Obligor’s default; (e) so
long as no Event of Default then exists, a sale or other disposition of an
Obligor’s Real Estate so long as the sale price of any such sale or other
disposition, when combined with all other permitted dispositions of Real Estate,
does not exceed $10,000,000 in the aggregate; (f) a

 

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transfer of Property to a Borrower or a Subsidiary Guarantor by a Subsidiary or
by a Borrower or a Subsidiary Guarantor to a Subsidiary Guarantor or by a
Borrower to another Borrower; (g) non-exclusive licenses of technology and other
Intellectual Property; (h) other dispositions expressly authorized by other
provisions of the Loan Documents; (i) Consigned Inventory; (j) transfers of
Equity Interests in non-Guarantor Subsidiaries; (k) so long as no Event of
Default then exists, Permitted Investments; (l) dispositions of Property
referred to on Schedule 9.2.10; or (m) approved in writing by Agent and Required
Lenders.

 

Permitted Consigned Inventory - Consigned Inventory, (i) the Value of which
shall not exceed $60,000,000 in the aggregate at any time, and (ii) which is the
subject of a properly filed financing statement under the UCC or the PPSA, as
applicable, in favor of a Borrower with respect to such Consigned Inventory;
provided that Borrowers may maintain Consigned Inventory, the Value of which
shall not exceed $30,000,000 in the aggregate at any time, which does not
satisfy the requirement specified in clause (ii) hereof.

 

Permitted Contingent Obligations - Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder; (c)
existing on the Closing Date, and any extension or renewal thereof that does not
increase the amount of such Contingent Obligation when extended or renewed; (d)
incurred in the Ordinary Course of Business with respect to surety, appeal or
performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder; (f) arising under the Loan
Documents; (g) incurred to support Debt permitted pursuant to Section 10.2.1;
(h) arising under indemnity agreements to title insurers to issue to Agent title
insurance policies; (i) arising in connection with guaranties of performance by
an Obligor on behalf of JV Europe or SE Holding or its subsidiaries which do not
constitute guaranties of Debt; or (j) in an aggregate amount of $25,000,000 or
less at any time.

 

Permitted Investments – means, collectively, (a) the China Investment, (b) the
JV Europe Investment and (b) Investments meeting the requirements of Included
Investments without regard to whether such investments are included in the
calculation of the Consolidated Fixed Charge Coverage Ratio.

 

Permitted Lien - as defined in Section 10.2.2.

 

Permitted Purchase Money Debt - Purchase Money Debt of Borrowers and
Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long
as the aggregate amount does not exceed $25,000,000 at any time and its
incurrence does not violate Section 10.2.3.

 

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

 

Plan - an employee pension benefit plan that is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and that is either (a) maintained by a Borrower or Subsidiary for
employees or (b) maintained pursuant to a collective bargaining agreement, or
other arrangement under which more than one employer makes contributions and to
which a Borrower or Subsidiary is making or accruing an

 

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obligation to make contributions or has within the preceding five years made or
accrued such contributions.

 

Plan of Reorganization – Debtors’ Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code dated October 22, 2003, filed by Debtors with
the Bankruptcy Court in the Chapter 11 Case on October 22, 2003.

 

PPSA - the Personal Property Security Act as in effect from time to time in any
Province of Canada (other than the Province of Quebec), as amended.

 

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

 

Properly Contested - with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued; (c)
appropriate reserves have been established in accordance with GAAP; (d)
non-payment could not have a Material Adverse Effect, nor result in forfeiture
or sale of any assets of the Obligor; (e) no Lien is imposed on assets of the
Obligor unless such Lien is at all times junior and subordinate in priority to
Liens in favor of Agent (except only with respect to property taxes that have
priority as a matter of applicable state law and enforcement of such Lien is
stayed during the period prior to the financial resolution or disposition of
such dispute); (f) if the obligation results from entry of a judgment or other
order, such judgment or order is stayed pending appeal or other judicial review;
and (g) if such contest is abandoned, settled or determined adversely (in whole
or in part) to such Obligor, such Obligor forthwith pays such Debt and all
penalties, interest and other amounts due in connection therewith.

 

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

 

Protective Advances - as defined in Section 2.1.6.

 

Purchase Money Debt - (a) Debt (other than the Obligations) for payment of any
of the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within twenty (20) days before or after acquisition of any fixed
assets, for the purpose of financing any of the purchase price thereof; and (c)
any renewals, extensions or refinancings (but not increases in principal
amounts) thereof.

 

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

 

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

 

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

 

Refinancing Conditions - the following conditions for Refinancing Debt:  (a) it
is in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced; (b) it has a final maturity not
sooner than and weighted average life not less than that of the Debt being
extended, renewed or refinanced; (c) it bears interest at a rate that does not
exceed the current market rate (as determined in good faith by a Senior Officer)
for Debt of a similar type and for a similar obligor; (d) it is subordinated to
the Obligations at least to the same extent as the Debt being extended, renewed
or refinanced; (e) the covenants applicable to it are no less favorable to
Borrowers than those applicable to the Debt being extended, renewed or
refinanced; and (f) upon giving effect to it, no Default or Event of Default
exists.

 

Refinancing Debt - Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1.

 

Regulation D - Regulation D of the Board of Governors.

 

Reimbursement Date - as defined in Section 2.3.2.

 

Rent Reserve - a reserve established from time to time in Agent’s reasonable
Credit Judgment in any amount equal to approximately three months rent and other
charges with respect to any Collateral in the possession of, or at a location
owned by, a Person other than a Borrower or an Affiliate of a Borrower, unless
such Person has executed a Lien Waiver; provided, however, that in no event
shall the Rent Reserve at any leased location exceed the value of the Collateral
maintained at such location.

 

Report - as defined in Section 12.2.3.

 

Reportable Event - any event set forth in Section 4043(b) of ERISA for which the
notice requirements of said section have not been waived.

 

Required Lenders - at any date of determination thereof, at least 2 Lenders
(each of which holds not less than 5% of the aggregate Commitments) having
Commitments representing at least 51% of the aggregate Commitments at such time;
provided, however, that if any Lender shall be in breach of any of its
obligations hereunder to Borrowers or Agent, including any breach resulting from
its failure to honor its Commitment in accordance with the terms of this
Agreement, then, for so long as such breach continues, the term
“Required Lenders” shall mean at least 2 Lenders (each of which holds not less
than 5% of the aggregate Commitments), but excluding each Lender that is in
breach of its obligations under the Agreement, having Commitments representing
at least 51% of the aggregate Commitments (excluding the Commitments of each
Lender that is in breach of its obligations under the Agreement) at such time;
provided further, however, that if the Commitments have been terminated, the
term “Required Lenders” shall mean at least 2 Lenders (each of which holds not
less than 5% of the aggregate Commitments), but excluding each Lender that is in
breach of its obligations hereunder holding Loans (including Swingline Loans)
representing at least 51% of the aggregate principal amount of Loans (including
Swingline Loans) outstanding at such time.

 

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Responsible Officer – any Senior Officer, treasurer, controller, or vice
president-finance of any Borrower.

 

Restricted Investment - any Investment by a Borrower or Subsidiary, other than
(a) Investments in Subsidiaries to the extent existing on the Closing Date; (b)
Cash Equivalents that are subject to Agent’s Lien and control, pursuant to
documentation in form and substance satisfactory to Agent; (c) loans and
advances permitted under Section 10.2.7; (d) acquisitions of fixed assets to be
used in the Ordinary Course of Business of such Borrower or any of its
Subsidiaries so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder; (e) acquisitions of goods held for
sale or lease or to be used in the manufacture of goods or the provision of
services by such Borrower or any of its Subsidiaries in the Ordinary Course of
Business (including inventory); (f) acquisitions of current assets arising from
the sale or lease of goods or the rendition of services in the Ordinary Course
of Business of such Borrower or any of its Subsidiaries; (g) Investments in any
Securities received in satisfaction or partial satisfaction thereof from
financially troubled Account Debtors; (h) Investments in SE Holding, JV Europe
and the China Investment to the extent existing on the Closing Date; and
(i) deposits, prepayments and other credits to suppliers, lessors and landlords
made in the Ordinary Course of Business.

 

Restrictive Agreement - an agreement (other than any of the Loan Documents, the
Borrowers’ 9% Senior Notes due 2012 and the Brownwood Lease) that, if and for so
long as an Obligor or any Subsidiary of such Obligor is a party thereto, would
prohibit, condition or restrict such Obligor’s or Subsidiary’s right to (i)
incur or repay Debt for money borrowed (including any of the Obligations); (ii)
grant Liens upon any of such Obligor’s or Subsidiary’s assets (including Liens
granted in favor of Agent pursuant to the Loan Documents); (iii) declare or make
Distributions; (iv) amend, modify, extend or renew any agreement evidencing Debt
for money borrowed (including any of the Loan Documents); or (v) repay any Debt
owed to another Obligor.

 

Revolver Commitment - for any Lender, its obligation to make Revolver Loans and
to participate in LC Obligations up to the maximum principal amount shown on
Schedule 1.1, or as specified hereafter in the most recent Assignment and
Acceptance to which it is a party.  “Revolver Commitments” means the aggregate
amount of such commitments of all Lenders.

 

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

 

Revolver Note - a promissory note to be executed by Borrowers in favor of a
Lender in the form of Exhibit A, which shall be in the amount of such Lender’s
Revolver Commitment and shall evidence the Revolver Loans made by such Lender.

 

Revolver Termination Date - April 13, 2011.

 

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

 

S&P - Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc.

 

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SEI - Superior Essex Inc., a Delaware corporation.

 

SE Holding – means S.E. Holding, C.V., a Dutch limited partnership.

 

Secured Parties - Agent, Issuing Bank, Lenders and providers of Bank Products.

 

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

 

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

 

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

 

Software - as defined in the UCC.

 

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

 

Statutory Reserves - the percentage (expressed as a decimal) established by the
Board of Governors as the then stated maximum rate for all reserves (including
those imposed by Regulation D, all basic, emergency, supplemental or other
marginal reserve requirements, and any transitional adjustments or other
scheduled changes in reserve requirements) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency Liabilities (or any successor
category of liabilities under Regulation D).

 

Subordinated Debt - Debt incurred by a Borrower or a Subsidiary Guarantor which
is subordinated to the Obligations pursuant to subordination terms and
conditions acceptable to the Agent and Required Lenders.

 

Subsidiary - any entity at least 50% of whose voting securities or Equity
Interests is owned by a Borrower or any combination of Borrowers (including
indirect ownership by a

 

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Borrower through other entities in which such Borrower directly or indirectly
owns 50% of the voting securities or Equity Interests); provided however, that
none of SE Holding, JV Europe, nor any of their subsidiaries shall be deemed a
Subsidiary.

 

Supporting Obligation - as defined in the UCC.

 

Swingline Loan – any Borrowing of Base Rate Revolver Loans funded with Agent’s
funds, until such Borrowing is settled among Lenders pursuant to Section 4.1.3.

 

Taxes - any taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature, including income, receipts,
excise, property, sales, use, transfer, license, payroll, withholding, social
security, franchise, intangibles, stamp or recording taxes imposed by any
Governmental Authority, and all interest, penalties and similar liabilities
relating thereto, but excluding, in the case of each Lender, taxes imposed on or
measured by the net income, overall gross receipts or franchise of such Lender.

 

Toll Copper Inventory - “toll copper” owned by another Person at any time in the
possession of any Borrower for processing or otherwise.

 

Toll/Price Adjustment Reserve - a reserve equal to Borrowers’ reserve for copper
billed for but not shipped or delivered to a customer plus Borrowers’ reserve
for purchase price adjustments.

 

Trademark Security Agreement - each trademark security agreement pursuant to
which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien on
such Obligor’s interests in trademarks, as security for the Obligations.

 

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

 

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

 

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

 

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

 

Value - with reference to the value of Eligible Inventory, value determined by
Agent in its reasonable credit judgment on the basis the lower of cost or market
of such Eligible Inventory, with the cost thereof calculated with respect to
Communications, on a first-in, first-out basis in accordance with GAAP and with
respect to all other businesses, on a last-in, first-out basis in accordance
with GAAP; provided that the Value of Eligible Inventory shall not include the
portion of the value of the Eligible Inventory equal to the profit earned by any
Affiliate on the sale thereof to a Borrower.

 

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1.2.         ACCOUNTING TERMS

 

Under the Loan Documents (except as otherwise specified herein), all accounting
terms shall be interpreted, all accounting determinations shall be made, and all
financial statements shall be prepared, in accordance with GAAP applied on a
basis consistent with the most recent audited financial statements of Borrowers
delivered to Agent before the Closing Date and using the same inventory
valuation method as used in such financial statements, except for any change
required or permitted by GAAP if Borrowers’ certified public accountants concur
in such change, the change is disclosed to Agent, and Section 10.3 is amended in
a manner satisfactory to Required Lenders to take into account the effects of
the change.

 

1.3.         CERTAIN MATTERS OF CONSTRUCTION

 

The terms “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision.  Any pronoun used shall be deemed to cover all genders.  In the
computation of periods of time from a specified date to a later specified date,
“from” means “from and including,” and “to” and “until” each mean “to but
excluding.”  The terms “including” and “include” shall mean “including, without
limitation” and, for purposes of each Loan Document, the parties agree that the
rule of ejusdem generis shall not be applicable to limit any provision.  Section
titles appear as a matter of convenience only and shall not affect the
interpretation of any Loan Document.  All references to (a) laws or statutes
include all related rules, regulations, interpretations, amendments and
successor provisions; (b) any document, instrument or agreement include any
amendments, waivers and other modifications, extensions or renewals (to the
extent permitted by the Loan Documents); (c) any section mean, unless the
context otherwise requires, a section of this Agreement; (d) any exhibits or
schedules mean, unless the context otherwise requires, exhibits and schedules
attached hereto, which are hereby incorporated by reference; (e) any Person
include successors and assigns; (f) time of day mean time of day at Agent’s
notice address under Section 14.4.1; or (g) discretion of Agent, Issuing Bank or
any Lender shall mean the sole and absolute discretion of such Person unless
otherwise indicated.  All calculations of Value, fundings of Loans, issuances of
Letters of Credit and payments of Obligations shall be in Dollars and, unless
the context otherwise requires, all determinations (including calculations of
Borrowing Base and financial covenants) made from time to time under the Loan
Documents shall be made in light of the circumstances existing at such time. 
Borrowing Base calculations shall be made in a manner consistent with historical
methods of valuation and calculation, and otherwise satisfactory to Agent (and
not necessarily in accordance with GAAP).  Borrowers shall have the burden of
establishing any alleged negligence, misconduct or lack of good faith by Agent,
Issuing Bank or any Lender under any Loan Documents.  No provision of any Loan
Documents shall be construed against any party by reason of such party having,
or being deemed to have, drafted the provision.  Whenever the phrase “to the
best of Borrowers’ knowledge” or words of similar import are used in any Loan
Documents, such phrase means actual knowledge of a Senior Officer, or knowledge
that a Senior Officer would have obtained if he or she had engaged in good faith
and diligent performance of his or her duties, including reasonably specific
inquiries of employees or agents and a good faith attempt to ascertain the
matter to which such phrase relates.  Whenever in the Agreement and the other
Loan Documents reference is made to attorneys’ fees and expenses that are
incurred by Agent or a Lender and that are to be reimbursed to Agent or a Lender
by Borrowers, such reference shall be understood to mean the reasonable
attorneys’ fees and expenses which are incurred by Agent or such Lender for
services actually rendered by attorneys selected by Agent or such Lender on
Agent’s or such Lender’s behalf.  Any Lien referred to in the Agreement or any
of the other Loan Documents as having been created in

 

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favor of Agent, any agreement entered into by Agent pursuant to the Agreement or
any of the other Loan Documents, any payment made by or to, or funds received
by, Agent pursuant to or as contemplated by any of the Loan Documents, or any
other act taken or omitted to be taken by Agent shall, unless otherwise
expressly provided, be created, entered into, made or received, or taken or
omitted for the benefit or account of the Agent and the Secured Parties.

 

SECTION 2.              CREDIT FACILITIES

 

2.1.         REVOLVER COMMITMENT

 

2.1.1.          REVOLVER LOANS

 

Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment,
on the terms set forth herein, to make Revolver Loans to Borrowers from time to
time through the Commitment Termination Date.  The Revolver Loans may be repaid
and reborrowed as provided herein.  In no event shall Lenders have any
obligation to honor a request for a Revolver Loan if the unpaid balance of
Revolver Loans outstanding at such time (including the requested Loan) would
exceed the Borrowing Base.

 

2.1.2.          REVOLVER NOTES

 

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

 

2.1.3.          USE OF PROCEEDS

 

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

 

2.1.4.          VOLUNTARY REDUCTION OR TERMINATION OF REVOLVER COMMITMENTS

 

(a)           Borrowers may permanently reduce the Revolver Commitments, on a
Pro Rata basis for each Lender, from time to time upon written notice to Agent,
which notice shall specify the amount of the reduction, shall be irrevocable
once given, shall be given at least five (5) Business Days prior to the end of a
month and shall be effective as of the first day of the next month.

 

(b)           The Revolver Commitments shall terminate on the Revolver
Termination Date, unless sooner terminated in accordance with this Agreement. 
Upon at least ninety (90) days prior written notice to Agent, Borrowers may, at
their option, terminate the Revolver Commitments and this credit facility.  Any
notice of termination given by Borrowers shall be irrevocable.  On the
termination date, Borrowers shall make Full Payment of all Obligations.

 

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2.1.5.          OVERADVANCES

 

If the aggregate Revolver Loans exceed the Borrowing Base (“Overadvance”) or the
aggregate Revolver Commitments at any time, the excess amount shall be payable
by Borrowers on demand by Agent, but all such Revolver Loans shall nevertheless
constitute Obligations secured by the Collateral and entitled to all benefits of
the Loan Documents.  Unless its authority is revoked in writing by Required
Lenders, Agent may require Lenders to honor requests for Overadvance Loans and
to forbear from requiring Borrowers to cure an Overadvance in accordance with
the provisions of Section 14.1.4.  In no event shall Overadvance Loans be
required that would cause the outstanding Revolver Loans and LC Obligations to
exceed the aggregate Revolver Commitments.  Any funding of an Overadvance Loan
or sufferance of an Overadvance shall not constitute a waiver by Agent or
Lenders of the Event of Default caused thereby.  In no event shall any Borrower
or other Obligor be deemed a beneficiary of this Section nor authorized to
enforce any of its terms.

 

2.1.6.          PROTECTIVE ADVANCES

 

Agent shall be authorized by Borrowers and Lenders, from time to time in Agent’s
sole and absolute discretion, at any time that a Default or Event of Default
exists or any of the conditions precedent set forth in Section 6 hereof have not
been satisfied, to make Base Rate Loans (“Protective Advances”) to Borrowers on
behalf of Lenders in an aggregate amount outstanding at any time not to exceed
5% of the Borrowing Base, but not in excess of the aggregate of the Commitments
minus the LC Obligations, but only to the extent that Agent deems the funding of
such Base Rate Loans to be necessary or desirable (i) to preserve or protect the
Collateral or any portion thereof, (ii) to enhance the likelihood of or the
amount of repayment of the Obligations or (iii) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement, including
costs, fees and expenses, all of which Base Rate Loans advanced by Agent
shall be deemed part of the Obligations and secured by the Collateral, shall be
treated as Settlement Loans and shall be settled and paid by Borrowers and
Lenders as provided herein for Settlement Loans; provided, however, that the
Required Lenders may at any time revoke Agent’s authorization to make any such
Base Rate Loans by written notice to Agent, which shall become effective upon
and after Agent’s receipt thereof.  The provisions of this Section 2.1.6 shall
be in addition to the provisions of Section 14.1.4 hereof.

 

2.2.         LETTER OF CREDIT FACILITY

 

2.2.1.          ISSUANCE OF LETTERS OF CREDIT

 

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

 

(a)           Each Borrower acknowledges that Issuing Bank’s willingness to
issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC
Application with respect to the requested Letter of Credit, as well as such
other instruments and agreements as Issuing Bank may customarily require for
issuance of a letter of credit of similar type and amount.  Issuing Bank shall
have no obligation to issue any Letter of Credit unless (i) Issuing Bank
receives a LC Request and LC Application at least three (3) Business Days prior
to the requested date of issuance; and (ii) each LC Condition is satisfied.  If
Issuing Bank receives written notice from a Lender at least one (1) Business Day
before issuance of a Letter of Credit that any LC Condition has not been
satisfied, Issuing Bank shall have no obligation to issue the requested Letter
of

 

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Credit (or any other) until such notice is withdrawn in writing by that Lender
or until Required Lenders have waived such condition in accordance with this
Agreement.  Prior to receipt of any such notice, Issuing Bank shall not be
deemed to have knowledge of any failure of LC Conditions.

 

(b)           Letters of Credit may be requested by a Borrower only (i) to
support obligations of such Borrower incurred in the Ordinary Course of
Business, on a standby basis; or (ii) for other purposes as Agent and Lenders
may approve from time to time in writing.  The renewal or extension of any
Letter of Credit shall be treated as the issuance of a new Letter of Credit,
except that delivery of a new LC Application shall be required at the discretion
of Issuing Bank.

 

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

 

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

 

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2.2.2.          REIMBURSEMENT; PARTICIPATIONS

 

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

 

(b)           Upon issuance of a Letter of Credit, each Lender shall be deemed
to have irrevocably and unconditionally purchased from Issuing Bank, without
recourse or warranty, an undivided Pro Rata interest and participation in all LC
Obligations relating to the Letter of Credit.  If Issuing Bank makes any payment
under a Letter of Credit and Borrowers do not reimburse such payment on the
Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall
promptly (within one (1) Business Day) and unconditionally pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment.  Upon
request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit
and LC Documents in its possession at such time.

 

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

 

(d)           No Issuing Bank Indemnitee shall be liable to any Lender or other
Person for any action taken or omitted to be taken in connection with any LC
Documents except as a result of its actual gross negligence or willful
misconduct.  Issuing Bank shall not have any liability to any Lender if Issuing
Bank refrains from any action under any Letter of Credit or LC Documents until
it receives written instructions from Required Lenders.

 

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2.2.3.          CASH COLLATERAL

 

If any LC Obligations, whether or not then due or payable, shall for any reason
be outstanding at any time (a) that an Event of Default exists, (b) that
Availability is less than zero, or (c) after the Commitment Termination Date,
then Borrowers shall, at Issuing Bank’s or Agent’s request, pay to Issuing Bank
the amount of all outstanding LC Obligations and Cash Collateralize all
outstanding Letters of Credit.  If Borrowers fail to Cash Collateralize
outstanding Letters of Credit as required herein, Lenders may (and shall upon
direction of Agent) advance, as Revolver Loans, the amount of the Cash
Collateral required (whether or not the Commitments have terminated, an
Overadvance exists, or the conditions in Section 6 are satisfied).

 

SECTION 3.              INTEREST, FEES AND CHARGES

 

3.1.         INTEREST

 

3.1.1.          RATES AND PAYMENT OF INTEREST

 

(a)           The Obligations shall bear interest (i) if a Base Rate Loan, at
the Base Rate in effect from time to time, plus the Applicable Margin; (ii) if a
LIBOR Loan, at the Adjusted LIBOR for the applicable Interest Period, plus the
Applicable Margin; and (iii) if any other Obligation (including, to the extent
permitted by law, interest not paid when due), at the Base Rate in effect from
time to time, plus the Applicable Margin for Base Rate Revolver Loans.  Interest
shall accrue from the date the Loan is advanced or the Obligation is incurred or
payable, until paid by Borrowers.  If a Loan is repaid on the same day made, one
(1) day’s interest shall accrue.  The Base Rate on the date hereof is 7.75% per
annum and, therefore, the rate of interest in effect on the date hereof,
expressed in simple interest terms, is 7.75% per annum for Base Rate Revolver
Loans.

 

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

 

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

 

3.1.2.          APPLICATION OF ADJUSTED LIBOR TO OUTSTANDING LOANS

 

(a)           Borrowers may on any Business Day, subject to delivery of a Notice
of Conversion/Continuation, elect to convert any portion of the Base Rate Loans
to, or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan.  During any Default or

 

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Event of Default, Agent may (and shall at the direction of Required Lenders)
declare that no Loan may be made, converted or continued as a LIBOR Loan.

 

(b)           Whenever Borrowers desire to convert or continue Loans as LIBOR
Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no
later than 11:00 a.m. at least three (3) Business Days before the requested
conversion or continuation date.  Promptly after receiving any such notice,
Agent shall notify each Lender thereof.  Each Notice of Conversion/Continuation
shall be irrevocable, and shall specify the aggregate principal amount of Loans
to be converted or continued, the conversion or continuation date (which shall
be a Business Day), and the duration of the Interest Period (which shall be
deemed to be one month if not specified).  If, upon the expiration of any
Interest Period in respect of any LIBOR Loans, Borrowers shall have failed to
deliver a Notice of Conversion/Continuation, they shall be deemed to have
elected to convert such Loans into Base Rate Loans.

 

3.1.3.          INTEREST PERIODS

 

In connection with the making, conversion or continuation of any LIBOR Loans,
Borrowers shall select an interest period (“Interest Period”) to apply, which
interest period shall be one, two, three or six months; provided, however, that:

 

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

 

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

 

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

 

3.1.4.          INTEREST RATE NOT ASCERTAINABLE

 

If Agent shall determine in good faith that on any date for determining the
Adjusted LIBOR, due to any circumstance affecting the London interbank market,
adequate and fair means do not exist for ascertaining such rate on the basis
provided herein, then Agent shall immediately notify Borrowers (by telephone
confirmed in writing) of such determination.  Until Agent notifies Borrowers
that such circumstance no longer exists (notice of which determination shall
promptly by delivered to Borrower Agent), the obligation of Lenders to make
LIBOR Loans shall be suspended, and no further Loans may be converted into or
continued as LIBOR Loans.

 

3.2.         FEES

 

3.2.1.          CLOSING FEE

 

Borrowers shall pay to Agent, for the Pro Rata benefit of the Lenders, a closing
fee of $337,500 which shall be paid on the Closing Date.

 

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3.2.2.          UNUSED LINE FEE

 

Borrowers shall pay to Agent, for the Pro Rata benefit of Lenders, a fee equal
to 0.25% per annum times the amount by which the Revolver Commitments exceed the
average daily balance of Revolver Loans and stated amount of Letters of Credit
during any month.  Such fee shall be payable in arrears, on the first Business
Day of each month and on the Commitment Termination Date.  During an Event of
Default, the fee under this Section (to the extent Revolver Commitments are
still outstanding) shall be increased by 2%.

 

3.2.3.          LC FACILITY FEES

 

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

 

3.2.4.          AGENT FEES

 

In consideration of Agent’s syndication of the Commitments and service as Agent
hereunder, Borrowers shall pay to Agent, for its own account, the fees described
in the Fee Letter.

 

3.3.         COMPUTATION OF INTEREST, FEES, YIELD PROTECTION

 

All interest, as well as fees and other charges calculated on a per annum basis,
shall be computed for the actual days elapsed, based on a year of three hundred
sixty (360) days.  Each determination by Agent of any interest, fees or interest
rate hereunder shall be final, conclusive and binding for all purposes, absent
manifest error.  All fees shall be fully earned when due and shall not be
subject to rebate or refund, nor subject to proration except as specifically
provided herein.  All fees payable under Section 3.2 are compensation for
services and are not, and shall not be deemed to be, interest or any other
charge for the use, forbearance or detention of money.  A certificate as to
amounts payable by Borrowers under Section 3.4, 3.6, 3.7, 3.9 or 5.8, submitted
to Borrowers by Agent or the affected Lender, as applicable, shall be final,
conclusive and binding for all purposes, absent manifest error.

 

3.4.         REIMBURSEMENT OBLIGATIONS

 

Borrowers shall reimburse Agent for all Extraordinary Expenses incurred by it. 
Borrowers shall also reimburse Agent for all reasonable legal, accounting,
appraisal, consulting, and other fees, costs and expenses incurred by it in
connection with (a) negotiation and preparation of any Loan Documents, including
any amendment or other modification thereof; (b) administration of and actions
relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Agent’s

 

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Liens on any Collateral, to maintain any insurance required hereunder or to
verify Collateral; and (c) subject to the limits of Section 10.1.1(b), each
inspection, audit or appraisal with respect to any Obligor or Collateral,
whether prepared by Agent’s personnel or a third party.  All amounts
reimbursable by Borrowers under this Section shall constitute Obligations
secured by the Collateral and shall be payable on demand.

 

3.5.         ILLEGALITY

 

Notwithstanding anything to the contrary herein, if (a) any change in any law or
interpretation thereof by any Governmental Authority after the Closing Date
makes it unlawful for a Lender to make or maintain a LIBOR Loan or to maintain
any Commitment with respect to LIBOR Loans or (b) a Lender determines that the
making or continuance of a LIBOR Loan has become impracticable as a result of a
circumstance that adversely affects the London interbank market or the position
of such Lender in such market, then such Lender shall give notice thereof to
Agent and Borrowers and may (i) declare that LIBOR Loans will not thereafter be
made by such Lender, whereupon any request for a LIBOR Loan from such Lender
shall be deemed to be a request for a Base Rate Loan unless such Lender’s
declaration has been withdrawn (and it shall be withdrawn promptly upon
cessation of the circumstances described in clause (a) or (b) above); and/or
(ii) require that all outstanding LIBOR Loans made by such Lender be converted
to Base Rate Loans immediately, in which event all outstanding LIBOR Loans of
such Lender shall be immediately converted to Base Rate Loans.

 

3.6.         INCREASED COSTS

 

If, by reason of (a) the introduction after the Closing Date of or any change
(including any change by way of imposition or increase of Statutory Reserves or
other reserve requirements) in any law or interpretation thereof, or (b) the
compliance with any guideline or request from any Governmental Authority or
other Person exercising control over banks or financial institutions generally
(whether or not having the force of law):

 

(i)            a Lender shall be subject to any Tax with respect to any LIBOR
Loan or Letter of Credit or its obligation to make LIBOR Loans, issue Letters of
Credit or participate in LC Obligations, or a change shall result in the basis
of taxation of any payment to a Lender with respect to its LIBOR Loans or its
obligation to make LIBOR Loans, issue Letters of Credit or participate in LC
Obligations (except for Excluded Taxes); or

 

(ii)           any reserve (including any imposed by the Board of Governors),
special deposits or similar requirement against assets of, deposits with or for
the account of, or credit extended by, a Lender shall be imposed or deemed
applicable, or any other condition affecting a Lender’s LIBOR Loans or
obligation to make LIBOR Loans, issue Letters of Credit or participate in LC
Obligations shall be imposed on such Lender or the London interbank market;

 

and as a result there shall be an increase in the cost to such Lender of
agreeing to make or making, funding or maintaining LIBOR Loans, Letters of
Credit or participations in LC Obligations (except to the extent already
included in determination of the Adjusted LIBOR), or there shall be a reduction
in the amount receivable by such Lender, then the Lender shall promptly notify
Borrowers and Agent of such event, and Borrowers shall, within five (5) days

 

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following demand therefor, pay such Lender the amount of such increased costs or
reduced amounts.

 

If a Lender determines that, because of circumstances described above or any
other circumstances arising hereafter affecting such Lender, the London
interbank market or the Lender’s position in such market, the Adjusted LIBOR or
its Applicable Margin, as applicable, will not adequately and fairly reflect the
cost to such Lender of funding LIBOR Loans, issuing Letters of Credit or
participating in LC Obligations, then (A) the Lender shall promptly notify
Borrowers and Agent of such event; (B) such Lender’s obligation to make LIBOR
Loans, issue Letters of Credit or participate in LC Obligations shall be
immediately suspended, until each condition giving rise to such suspension no
longer exists; and (C) such Lender shall make a Base Rate Loan as part of any
requested Borrowing of LIBOR Loans, which Base Rate Loan shall, for all
purposes, be considered part of such Borrowing.

 

Notwithstanding anything herein to the contrary, Borrowers shall only be
required to compensate any Lender in respect of any such increased costs or
reduction in the amount received or receivable by such Lender to the extent
Borrower has received a written request for such compensation within ninety (90)
days after such Lender has received actual notice of the occurrence of the
relevant circumstance giving rise to such increased costs or reduction in the
amount received or receivable by such Lender, as the case may be.

 

3.7.         CAPITAL ADEQUACY

 

If a Lender determines that after the Closing Date any introduction of or any
change in a Capital Adequacy Regulation, any change in the interpretation or
administration of a Capital Adequacy Regulation by a Governmental Authority
charged with interpretation or administration thereof, or any compliance by such
Lender or any Person controlling such Lender with a Capital Adequacy Regulation,
increases the amount of capital required or expected to be maintained by such
Lender or Person (taking into consideration its capital adequacy policies and
desired return on capital) as a consequence of such Lender’s Commitments, Loans,
participations in LC Obligations or other obligations under the Loan Documents,
then Borrowers shall, within five (5) days following demand therefor, pay such
Lender an amount sufficient to compensate for such increase.  A Lender’s demand
for payment shall set forth the nature of the occurrence giving rise to such
compensation and a calculation of the amount to be paid.  In determining such
amount, the Lender may use any reasonable averaging and attribution method.

 

Notwithstanding anything herein to the contrary, Borrowers shall only be
required to compensate any Lender in respect of any such reduction in the return
of capital of Lenders to the extent Borrower has received a written request for
such compensation within ninety (90) days after such Lender has received actual
notice of the occurrence of the relevant circumstance giving rise to such
reduction in the return of capital of such Lender.

 

3.8.         MITIGATION

 

Each Lender agrees that, upon becoming aware that it is subject to Section 3.5,
3.6, 3.7 or 5.8, it will (i) take reasonable measures to reduce Borrowers’
obligations under such Sections, including funding or maintaining its
Commitments or Loans through another office, as long as use of such measures
would not adversely affect the Lender’s Commitments, Loans, business or
interests, and would not be inconsistent with any internal policy or applicable
legal or regulatory

 

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restriction or (ii) take such other reasonable measures, if, as a result
thereof, the circumstances which would relieve Borrowers from their obligations
to pay such additional amounts (or reduce the amount of such payments), or such
withholding taxes would be reduced, and if the making, funding or maintaining of
such Commitment or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise adversely affect
such Commitment or Loans or the interests of such Lender.

 

3.9.         FUNDING LOSSES

 

If for any reason (other than default by a Lender) (a) any Borrowing of, or
conversion to or continuation of, a LIBOR Loan does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
(whether or not withdrawn), (b) any repayment or conversion of a LIBOR Loan
occurs on a day other than the end of its Interest Period, or (c) Borrowers fail
to repay a LIBOR Loan when required hereunder, then Borrowers shall pay to Agent
its customary administrative charge and to each Lender all losses and expenses
that it sustains as a consequence thereof, including any loss or expense arising
from liquidation or redeployment of funds or from fees payable to terminate
deposits of matching funds.  Lenders shall not be required to purchase Dollar
deposits in the London interbank market or any other offshore Dollar market to
fund any LIBOR Loan, but the provisions hereof shall be deemed to apply as if
each Lender had purchased such deposits to fund its LIBOR Loans.

 

3.10.       MAXIMUM INTEREST

 

In no event shall interest, charges or other amounts that are contracted for,
charged or received by Agent and Lenders pursuant to any Loan Documents and that
are deemed interest under Applicable Law (“interest”) exceed the highest rate
permissible under Applicable Law (“maximum rate”).  If, in any month, any
interest rate, absent the foregoing limitation, would have exceeded the maximum
rate, then the interest rate for that month shall be the maximum rate and, if in
a future month, that interest rate would otherwise be less than the maximum
rate, then the rate shall remain at the maximum rate until the amount of
interest actually paid equals the amount of interest which would have accrued if
it had not been limited by the maximum rate.  If, upon Full Payment of the
Obligations, the total amount of interest actually paid under the Loan Documents
is less than the total amount of interest that would, but for this Section, have
accrued under the Loan Documents, then Borrowers shall, to the extent permitted
by Applicable Law, pay to Agent, for the account of Lenders, (a) the lesser of
(i) the amount of interest that would have been charged if the maximum rate had
been in effect at all times, or (ii) the amount of interest that would have
accrued had the interest rate otherwise set forth in the Loan Documents been in
effect, minus (b) the amount of interest actually paid under the Loan
Documents.  If a court of competent jurisdiction determines that Agent or any
Lender has received interest in excess of the maximum amount allowed under
Applicable Law, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, Obligations other than interest (regardless
of any erroneous application thereof by Agent or any Lender), and upon Full
Payment of the Obligations, any balance shall be refunded to Borrowers.  In
determining whether any excess interest has been charged or received by Agent or
any Lender, all interest at any time charged or received from Borrowers in
connection with the Loan Documents shall, to the extent permitted by Applicable
Law, be amortized, prorated, allocated and spread in equal parts throughout the
full term of the Obligations.

 

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SECTION 4.              LOAN ADMINISTRATION

 

4.1.         MANNER OF BORROWING AND FUNDING REVOLVER LOANS

 

4.1.1.          NOTICE OF BORROWING

 

(a)           Whenever Borrowers desire funding of a Borrowing of Revolver
Loans, Borrower Agent shall give Agent a Notice of Borrowing.  Such notice must
be received by Agent no later than 12:00 noon (i) on the Business Day of the
requested funding date, in the case of Base Rate Loans, and (ii) at least two
(2) Business Days prior to the requested funding date, in the case of LIBOR
Loans.  Notices received after 12:00 noon shall be deemed received on the next
Business Day.  Each Notice of Borrowing shall be irrevocable and shall specify
(A) the principal amount of the Borrowing, (B) the requested funding date (which
must be a Business Day), (C) whether the Borrowing is to be made as Base Rate
Loans or LIBOR Loans, and (D) in the case of LIBOR Loans, the duration of the
applicable Interest Period (which shall be deemed to be one month if not
specified).

 

(b)           Unless payment is otherwise timely made by Borrowers, the becoming
due of any Obligations (whether principal, interest, fees or other charges,
including Extraordinary Expenses, LC Obligations, Cash Collateral and Bank
Product Debt) shall be deemed irrevocably to be a request (without any
requirement for a Notice of Borrowing) for Base Rate Revolver Loans on the due
date, in the amount of such Obligations.  The proceeds of such Revolver Loans
shall be disbursed as direct payment of the relevant Obligation.

 

(c)           If Borrowers establish a controlled disbursement account with
Agent or any Affiliate of Agent, then the presentation for payment of any check
or other item of payment drawn on such account at a time when there are
insufficient funds to cover it shall be deemed to be a request (without any
requirement for a Notice of Borrowing) for Base Rate Revolver Loans on the date
of such presentation, in the amount of the check and items presented for
payment.  The proceeds of such Revolver Loans may be disbursed directly to the
controlled disbursement account.

 

(d)           Neither Agent nor any Lender shall have any obligation to
Borrowers to honor any deemed request for a Revolver Loan on or after the
Commitment Termination Date, when an Overadvance exists or would result
therefrom, or when any condition in Section 6 is not satisfied, but may do so in
their discretion, without being deemed to have waived any Default or Event of
Default.

 

4.1.2.          FUNDINGS BY LENDERS

 

Each Lender shall timely honor its Revolver Commitment by funding its Pro Rata
share of each Borrowing of Revolver Loans that is properly requested hereunder. 
Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed
request for a Borrowing) by 1:30 p.m. on the proposed funding date for Base Rate
Loans or by 3:00 p.m. at least two (2) Business Days before any proposed funding
of LIBOR Loans.  Each Lender shall fund to Agent such Lender’s Pro Rata share of
the Borrowing to the account specified by Agent in immediately available funds
not later than 3:00 p.m. on the requested funding date, unless Agent’s notice is
received after the times provided above, in which event Lender shall fund its
Pro Rata share by 1:30 p.m. on the next Business Day.  Subject to its receipt of
such amounts

 

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from Lenders, Agent shall disburse the proceeds of the Revolver Loans as
directed by Borrower Agent.  Unless Agent shall have received (in sufficient
time to act) written notice from a Lender that it does not intend to fund its
Pro Rata share of a Borrowing, Agent may assume that such Lender has deposited
or promptly will deposit its share with Agent, and Agent may disburse a
corresponding amount to Borrowers.  If a Lender’s share of any Borrowing is not
in fact received by Agent, then Borrowers agree to repay to Agent on demand the
amount of such share, together with interest thereon from the date disbursed
until repaid, at the rate applicable to such Borrowing.

 

4.1.3.          SETTLEMENT

 

To facilitate administration of the Revolver Loans, Lenders and Agent agree
(which agreement is solely among them, and not for the benefit of or enforceable
by any Borrower) that settlement among them with respect to Revolver Loans may
take place periodically on a date determined from time to time by Agent, which
shall occur at least once every five (5) Business Days.  On each settlement
date, settlement shall be made with each Lender in accordance with the
Settlement Report delivered by Agent to Lenders.  Between settlement dates,
Agent may in its discretion apply payments on Revolver Loans to Swingline Loans,
regardless of any designation by Borrower or any provision herein to the
contrary.  Each Lender’s obligation to make settlements with Agent is absolute
and unconditional, without offset, counterclaim or other defense, and whether or
not the Commitments have terminated, an Overadvance exists, or the conditions in
Section 6 are satisfied.  If, due to an Insolvency Proceeding with respect to a
Borrower or otherwise, any Swingline Loan may not be settled among Lenders
hereunder, then each Lender shall be deemed to have purchased from Agent a Pro
Rata participation in each unpaid Swingline Loan and shall transfer the amount
of such participation to Agent, in immediately available funds, within one (1)
Business Day after Agent’s request therefor.

 

4.1.4.          NOTICES

 

Each Borrower authorizes Agent and Lenders to extend, convert or continue Loans,
effect selections of interest rates, and transfer funds to or on behalf of
Borrowers based on telephonic or e-mailed instructions.  Borrowers shall confirm
each such request by prompt delivery to Agent of a Notice of Borrowing or Notice
of Conversion/Continuation, if applicable, but if it differs in any material
respect from the action taken by Agent or Lenders, the records of Agent and
Lenders shall govern.  Neither Agent nor any Lender shall have any liability for
any loss suffered by a Borrower as a result of Agent or any Lender acting upon
its understanding of telephonic or e-mailed instructions from a person believed
in good faith by Agent or any Lender to be a person authorized to give such
instructions on a Borrower’s behalf.

 

4.2.         DEFAULTING LENDER

 

If a Lender fails to make any payment to Agent that is required hereunder, Agent
may (but shall not be required to), in its discretion, retain payments that
would otherwise be made to such defaulting Lender hereunder, apply the payments
to such Lender’s defaulted obligations or readvance the funds to Borrowers in
accordance with this Agreement.  The failure of any Lender to fund a Loan or to
make a payment in respect of a LC Obligation shall not relieve any other Lender
of its obligations hereunder, and no Lender shall be responsible for default by
another Lender.  Lenders and Agent agree (which agreement is solely among them,
and not for the

 

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benefit of or enforceable by any Borrower) that, solely for purposes of
determining a defaulting Lender’s right to vote on matters relating to the Loan
Documents and to share in payments, fees and Collateral proceeds thereunder, a
defaulting Lender shall not be deemed to be a “Lender” until all its defaulted
obligations have been cured.

 

4.3.         Number and Amount of LIBOR Loans; Determination of Rate

 

For ease of administration, all LIBOR Revolver Loans having the same length and
beginning date of their Interest Periods shall be aggregated together, and such
Loans shall be allocated among Lenders on a Pro Rata basis.  No more than 8
aggregated LIBOR Loans may be outstanding at any time, and each aggregate LIBOR
Loan when made, continued or converted shall be in a minimum amount of
$1,000,000, or a multiple of $100,000 in excess thereof.

 

Upon determining Adjusted LIBOR for any Interest Period requested by Borrowers,
Agent shall promptly notify Borrowers thereof by telephone or electronically
and, if requested by Borrowers, shall confirm any telephonic notice in writing.

 

4.4.         Borrower Agent

 

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

 

4.5.         One Obligation

 

The Loans, LC Obligations and other Obligations shall constitute one general
obligation of Borrowers and (unless otherwise expressly provided in any Loan
Document) shall be secured by Agent’s Lien upon all Collateral; provided,
however, that Agent and each Lender shall be deemed to be a creditor of, and the
holder of a separate claim against, each Borrower to the extent of any
Obligations jointly or severally owed by such Borrower.

 

4.6.         Effect of Termination

 

On the effective date of any termination of the Commitments, all Obligations
shall be immediately due and payable, and any Lender may terminate its Bank
Products (including, with the consent of Agent, any Cash Management Services). 
All undertakings of Borrowers contained in the Loan Documents shall survive any
termination, and Agent shall retain its Liens

 

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in the Collateral and all of its rights and remedies under the Loan Documents
until Full Payment of the Obligations.  Notwithstanding Full Payment of the
Obligations, Agent shall not be required to terminate its Liens in any
Collateral unless, with respect to any damages Agent may incur as a result of
the dishonor or return of Payment Items applied to Obligations, Agent receives
(a) a written agreement, executed by Borrowers and any Person whose advances are
used in whole or in part to satisfy the Obligations, indemnifying Agent and
Lenders from any such damages; or (b) such Cash Collateral as Agent, in its
discretion, deems necessary to protect against any such damages.  The provisions
of Sections 2.2, 3.4, 3.6, 3.7, 3.9, 5.4, 5.8, 12, 14.2, 14.3 and this Section
and the obligation of each Obligor and Lender with respect to each indemnity
given by it in any Loan Document, shall survive Full Payment of the Obligations
and (unless expressly provided) any release relating to this credit facility.

 

SECTION 5.              PAYMENTS

 

5.1.         General Payment Provisions

 

All payments of Obligations shall be made in Dollars, without offset,
counterclaim or defense of any kind, free of (and without deduction for) any
Taxes, and in immediately available funds, not later than 1:00 p.m. on the due
date.  Any payment after such time shall be deemed made on the next Business
Day.  Borrowers may, at the time of payment, specify to Agent the Obligations to
which such payment is to be applied, but Agent shall in all events retain the
right to apply such payment in such manner as Agent, subject to the provisions
hereof, may determine to be appropriate.  If any payment under the Loan
Documents shall be stated to be due on a day other than a Business Day, the due
date shall be extended to the next Business Day and such extension of time shall
be included in any computation of interest and fees.  Any payment of a LIBOR
Loan prior to the end of its Interest Period shall be accompanied by all amounts
due under Section 3.9.  Any prepayment of Loans shall be applied first to Base
Rate Loans and then to LIBOR Loans.

 

5.2.         Repayment of Revolver Loans

 

Revolver Loans shall be due and payable in full on the Revolver Termination
Date, unless payment is sooner required hereunder.  Revolver Loans may be
prepaid from time to time, without penalty or premium.  Notwithstanding anything
herein to the contrary, if an Overadvance exists, Borrowers shall, on the sooner
of Agent’s demand or the first Business Day after any Borrower has knowledge
thereof, repay the outstanding Revolver Loans in an amount sufficient to reduce
the principal balance of Revolver Loans to the Borrowing Base.

 

5.3.         Payment of Other Obligations

 

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

 

5.4.         Marshaling; Payments Set Aside

 

None of Agent or Lenders shall be under any obligation to marshal any assets in
favor of any Obligor or against any Obligations.  If any Obligor makes a payment
to Agent or Lenders, or if Agent or any Lender receives payment from the
proceeds of Collateral, exercise of setoff or

 

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otherwise, and such payment is subsequently invalidated or required to be repaid
to a trustee, receiver or any other Person, then the Obligations originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
received and any enforcement or setoff had not occurred.

 

5.5.         Post-Default Allocation of Payments

 

5.5.1.          ALLOCATION

 

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

 

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

 

(b)           second, to all amounts owing to Agent on Protective Advances;

 

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

 

(d)           fourth, to all Obligations constituting fees (excluding amounts
relating to Bank Products);

 

(e)           fifth, to all Obligations constituting interest (excluding amounts
relating to Bank Products);

 

(f)            sixth, to provide Cash Collateral for outstanding Letters of
Credit;

 

(g)           seventh, to all other Obligations, other than Bank Product Debt;
and

 

(h)           last, to Bank Product Debt.

 

Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category.  If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category.  Amounts distributed with respect to any Bank
Product Debt shall be the lesser of the applicable Bank Product Amount last
reported to Agent or the actual Bank Product Debt as calculated by the
methodology reported to Agent for determining the amount due.  Agent shall have
no obligation to calculate the amount to be distributed with respect to any Bank
Product Debt, but may rely upon written notice of the amount (setting forth a
reasonably detailed calculation) from the holder of the Bank Product Debt.  In
the absence of such notice, Agent may assume the amount to be distributed is the
Bank Product Amount last reported to it.  The allocations set forth in this
Section are solely to determine the rights and priorities of Agent and Lenders
as among themselves, and may be changed by agreement among them without the
consent of any Obligor.  This Section is not for the benefit of or enforceable
by any Borrower.

 

5.5.2.          ERRONEOUS APPLICATION

 

Agent shall not be liable for any application of amounts made by it in good
faith and, if any such application is subsequently determined to have been made
in error, the sole

 

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recourse of any Lender or other Person to which such amount should have been
made shall be to recover the amount from the Person that actually received it
(and, if such amount was received by any Lender, such Lender hereby agrees to
return it).

 

5.6.         Application of Payments

 

The ledger balance in the main Payment Account as of the end of a Business Day
shall be applied to the Obligations at the beginning of the next Business Day. 
Each Borrower irrevocably waives the right to direct the application of any
payments or Collateral proceeds, and agrees that Agent shall have the
continuing, exclusive right to apply and reapply same against the Obligations,
in such manner as Agent deems advisable, notwithstanding any entry by Agent in
its records.  If, as a result of Agent’s receipt of Payment Items or proceeds of
Collateral, a credit balance exists, the balance shall not accrue interest in
favor of Borrowers and shall be made available to Borrowers as long as no
Default or Event of Default exists.

 

5.7.         Loan Account; Account Stated

 

5.7.1.          LOAN ACCOUNT

 

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

 

5.7.2.          ENTRIES BINDING

 

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

 

5.8.         Gross Up for Taxes

 

If Borrowers shall be required by Applicable Law to withhold or deduct any Taxes
(except Excluded Taxes) from or in respect of any sum payable under any Loan
Documents, (a) the sum payable to Agent or such Lender shall be increased as may
be necessary so that, after making all required withholding or deductions, Agent
or such Lender (as the case may be) receives an amount equal to the sum it would
have received had no such withholding or deductions been made; (b) Borrowers
shall make such withholding or deductions; and (c) Borrowers shall pay the full
amount withheld or deducted to the relevant taxing or other authority in
accordance with Applicable Law.  If Agent or any Lender determines that it has
received a refund, credit or other reduction of taxes in respect of any Taxes
paid by Borrowers pursuant to this Section, such Person shall, within thirty
(30) days from the date of receipt of

 

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such refund or filing of the tax return giving rise to such credit or other
reduction, pay over the amount of the refund, credit or tax reduction to
Borrowers (but only to the extent of Taxes paid by Borrowers pursuant to this
Section), net of all reasonable out-of-pocket expenses of such Person and
without interest (other than interest paid by the relevant taxing authority with
respect to a refund).

 

5.9.         Withholding Tax Exemption

 

At least five Business Days prior to the first date for payment of interest or
fees hereunder to a Foreign Lender, the Foreign Lender shall deliver to
Borrowers and Agent two duly completed copies of IRS Form W-8BEN or W-8ECI (or
any subsequent replacement or substitute form therefor), certifying that such
Lender can receive payment of Obligations without deduction or withholding of
any United States federal income taxes.  Each Foreign Lender shall deliver to
Borrowers and Agent two additional copies of such form before the preceding form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the form, as well as any amendments, extensions or renewals thereof as
may be reasonably requested by Borrowers or Agent, in each case, certifying that
the Foreign Lender can receive payment of Obligations without deduction or
withholding of any such taxes, unless an event (including any change in treaty
or law) has occurred that renders such forms inapplicable or prevents the
Foreign Lender from certifying that it can receive payments without deduction or
withholding of such taxes.  During any period that a Foreign Lender does not or
is unable to establish that it can receive payments without deduction or
withholding of such taxes, other than by reason of an event (including any
change in treaty or law) that occurs after it becomes a Lender, Agent may
withhold taxes from payments to such Foreign Lender at the applicable statutory
and treaty rates, and Borrowers shall not be required to pay any additional
amounts under this Section as a result of such withholding.

 

5.10.       Nature and Extent of Each Borrower’s Liability

 

5.10.1.        JOINT AND SEVERAL LIABILITY

 

Each Borrower agrees that it is jointly and severally liable for, and absolutely
and unconditionally guarantees to Agent and Lenders the prompt payment and
performance of, all Obligations and all agreements under the Loan Documents. 
Each Borrower agrees that its guaranty obligations hereunder constitute a
continuing guaranty of payment and performance and not of collection, that such
obligations shall not be discharged until Full Payment of the Obligations, and
that such obligations are absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future
modification of, or change in, any Obligations or Loan Document, or any other
document, instrument or agreement to which any Obligor is or may become a party
or liable; (b) the absence of any action to enforce this Agreement (including
this Section) or any other Loan Document, or any waiver, consent or indulgence
of any kind by Agent or any Lender with respect thereto; (c) the existence,
value or condition of, or failure to perfect a Lien or to preserve rights
against, any security or guaranty for the Obligations or any action, or the
absence of any action, by Agent or any Lender in respect thereof (including the
release of any security or guaranty); (d) the insolvency of any Obligor; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a
Lien by any other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code or otherwise; (g) the

 

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disallowance of any claims of Agent or any Lender against any Obligor for the
repayment of any Obligations under Section 502 of the Bankruptcy Code or
otherwise; or (h) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
except Full Payment of all Obligations.

 

5.10.2.        WAIVERS

 

(a)           Each Borrower expressly waives all rights that it may have now or
in the future under any statute, at common law, in equity or otherwise, to
compel Agent or Lenders to marshal assets or to proceed against any Obligor,
other Person or security for the payment or performance of any Obligations
before, or as a condition to, proceeding against such Borrower.  It is agreed
among each Borrower, Agent and Lenders that the provisions of this Section are
of the essence of the transaction contemplated by the Loan Documents and that,
but for such provisions, Agent and Lenders would decline to make Loans and issue
Letters of Credit.  Notwithstanding anything to the contrary in any Loan
Document, and except as set forth in Section 5.10.3, each Borrower expressly
waives all rights at law or in equity to subrogation, reimbursement,
exoneration, contribution, indemnification or set off, as well as all defenses
available to a surety, guarantor or accommodation co-obligor.  Each Borrower
acknowledges that its guaranty pursuant to this Section is necessary to the
conduct and promotion of its business, and can be expected to benefit such
business.

 

(b)           Agent and Lenders may, in their discretion, pursue such rights and
remedies as they deem appropriate, including realization upon Collateral or any
Real Estate by judicial foreclosure or non-judicial sale or enforcement, without
affecting any rights and remedies under this Section 5.10.  If, in the exercise
of any rights or remedies, Agent or any Lender shall forfeit any of its rights
or remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or otherwise, each Borrower consents to such action by
Agent or such Lender and waives any claim based upon such action, even if the
action may result in loss of any rights of subrogation that any Borrower might
otherwise have had but for such action.  Any election of remedies that results
in denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Borrower shall not impair any other Borrower’s obligation
to pay the full amount of the Obligations.  Each Borrower waives all rights and
defenses arising out of an election of remedies, such as nonjudicial foreclosure
with respect to any security for the Obligations, even though that election of
remedies destroys such Borrower’s rights of subrogation against any other
Person.  If Agent bids at any foreclosure or trustee’s sale or at any private
sale, Agent may bid all or a portion of the Obligations and the amount of such
bid need not be paid by Agent but shall be credited against the Obligations. 
The amount of the successful bid at any such sale, whether Agent or any other
Person is the successful bidder, shall be conclusively deemed to be the fair
market value of the Collateral, and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 5.10, notwithstanding
that any present or future law or court decision may have the effect of reducing
the amount of any deficiency claim to which Agent or any Lender might otherwise
be entitled but for such bidding at any such sale.

 

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5.10.3.        EXTENT OF LIABILITY; CONTRIBUTION

 

(a)           Notwithstanding anything herein to the contrary, each Borrower’s
liability under this Section 5.10 shall be limited to the greater of (i) all
amounts for which such Borrower is primarily liable, as described below, and
(ii) such Borrower’s Allocable Amount.

 

(b)           If any Borrower makes a payment under this Section 5.10 of any
Obligations (other than amounts for which such Borrower is primarily liable) (a
“Guarantor Payment”) that, taking into account all other Guarantor Payments
previously or concurrently made by any other Borrower, exceeds the amount that
such Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payments in the same proportion that
such Borrower’s Allocable Amount bore to the total Allocable Amounts of all
Borrowers, then such Borrower shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.  The “Allocable
Amount” for any Borrower shall be the maximum amount that could then be
recovered from such Borrower under this Section 5.10 without rendering such
payment voidable or avoidable under Section 548 of the Bankruptcy Code or under
any applicable state fraudulent transfer or conveyance act, or similar statute
or common law.

 

(c)           Nothing contained in this Section 5.10 shall limit the liability
of any Borrower to pay Loans made directly or indirectly to that Borrower
(including Loans advanced to any other Borrower and then re-loaned or otherwise
transferred to, or for the benefit of, such Borrower), LC Obligations relating
to Letters of Credit issued to support such Borrower’s business, and all accrued
interest, fees, expenses and other related Obligations with respect thereto, for
which such Borrower shall be primarily liable for all purposes hereunder.  Agent
and Lenders shall have the right, at any time in their discretion, to condition
Loans and Letters of Credit upon a separate calculation of borrowing
availability for each Borrower and to restrict the disbursement and use of such
Loans and Letters of Credit to such Borrower.

 

5.10.4.        JOINT ENTERPRISE

 

Each Borrower has requested that Agent and Lenders make the credit facility
established hereunder available to Borrowers on a combined basis, in order to
finance Borrowers’ business most efficiently and economically.  Borrowers’
business is a mutual and collective enterprise, and Borrowers believe that
consolidation of their credit facility will enhance the borrowing power of each
Borrower and ease the administration of their relationship with Lenders, all to
the mutual advantage of Borrowers.  Borrowers acknowledge and agree that Agent’s
and Lenders’ willingness to extend credit to Borrowers and to administer the
Collateral on a combined basis, as set forth herein, is done solely as an
accommodation to Borrowers and at Borrowers’ request.

 

5.10.5.        SUBORDINATION

 

Each Borrower hereby subordinates any claims, including any right of payment,
subrogation, contribution and indemnity, that it may have at any time against
any other Obligor, howsoever arising, to the Full Payment of all Obligations.

 

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SECTION 6.              CONDITIONS PRECEDENT

 

6.1.         Conditions Precedent to Initial Loans

 

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

 

(a)           Appropriate Notes shall have been executed by Borrowers and
delivered to each Lender that requests issuance of a Note.  Each other Loan
Document shall have been duly executed and delivered to Agent by each of the
signatories thereto, and each Obligor shall be in compliance with all terms
thereof.

 

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

 

(c)           Agent shall have received duly executed Deposit Account Control
Agreements for each Deposit Account of Borrowers and any related lockbox, in
form and substance, and with financial institutions, satisfactory to Agent to
the extent required pursuant to Section 8.2.3.

 

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

 

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

 

(f)            Agent shall have received a written opinion of Kilpatrick
Stockton LLP, counsel to Borrowers, in form and substance satisfactory to Agent.

 

(g)           Agent shall have received copies of the charter documents of each
Obligor, certified as appropriate by the Secretary of State or another official
of such Obligor’s jurisdiction of organization.  Agent shall have received good
standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor’s

 

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jurisdiction of organization and each jurisdiction where such Obligor’s conduct
of business or ownership of Property necessitates qualification.

 

(h)           No material adverse change in the financial condition of either
Borrower, individually or all the Obligors, taken as a whole or in the quality,
quantity or value of the Eligible Accounts and Eligible Inventory taken as a
whole shall have occurred since December 31, 2005.

 

(i)            Borrowers shall have executed and delivered to Agent a pledge of
65% of the Equity Interests of Borrowers in SE Holding.

 

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

 

6.2.         Conditions Precedent to All Credit Extensions

 

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

 

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

 

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

 

(c)           All conditions precedent set forth in any other Loan Document
shall have been satisfied;

 

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

 

(e)           With respect to issuance of a Letter of Credit, the LC Conditions
shall have been satisfied.

 

Each request (or deemed request) by Borrowers for funding of a Loan, issuance of
a Letter of Credit or grant of an accommodation shall constitute a
representation by Borrowers that the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant.  As an
additional condition to any funding, issuance or grant, Agent shall have
received such other information, documents, instruments and agreements as it
deems appropriate in connection therewith.

 

6.3.         Limited Waiver of Conditions Precedent

 

If Agent, Issuing Bank or Lenders fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation when any conditions precedent
are not satisfied (regardless of whether the lack of satisfaction was known or
unknown at the time), it shall not

 

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operate as a waiver of (a) the right of Agent, Issuing Bank and Lenders to
insist upon satisfaction of all conditions precedent with respect to any
subsequent funding, issuance or grant; nor (b) any Default or Event of Default
due to such failure of conditions or otherwise.

 

SECTION 7.              COLLATERAL

 

7.1.         Grant of Security Interest

 

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

 

(a)           all Accounts;

 

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

 

(c)           all Commercial Tort Claims described on Schedule 9.1.17(a) hereto;

 

(d)           all Deposit Accounts;

 

(e)           all Documents;

 

(f)            all General Intangibles, including Payment Intangibles, Software
and Intellectual Property;

 

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

 

(h)           all Instruments;

 

(i)            all Investment Property;

 

(j)            all Letter-of-Credit Rights;

 

(k)           all Supporting Obligations;

 

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

 

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

 

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

 

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7.2.         Lien on Deposit Accounts; Cash Collateral

 

7.2.1.          DEPOSIT ACCOUNTS

 

To further secure the prompt payment and performance of all Obligations, each
Borrower hereby grants to Agent, for the benefit of Secured Parties, a
continuing security interest in and Lien upon all of such Borrower’s right,
title and interest in and to each Deposit Account of such Borrower and any
deposits or other sums at any time credited to any such Deposit Account,
including any sums in any blocked or lockbox accounts or in any accounts into
which such sums are swept.  Each Borrower authorizes and directs each bank or
other depository to deliver to Agent upon its written demand therefore, made at
any time that an Event of Default exists or the Availability is less than
$25,000,000 and without notice to such Borrower (such notice being hereby
waived), all balances in each Deposit Account maintained by such Borrower with
such depository for application to the Obligations then outstanding.  Each
Borrower irrevocably appoints Agent as such Borrower’s attorney in fact to
collect such balances to the extent any such delivery is not so made.

 

7.2.2.          CASH COLLATERAL

 

Any Cash Collateral may be invested, in Agent’s discretion, in Cash Equivalents,
but Agent shall have no duty to do so, regardless of any agreement,
understanding or course of dealing with any Borrower, and shall have no
responsibility for any investment or loss.  Each Borrower hereby grants to
Agent, for the benefit of Secured Parties, a security interest in all Cash
Collateral held from time to time and all proceeds thereof, as security for the
Obligations, whether such Cash Collateral is held in the Cash Collateral Account
or elsewhere.  Agent may apply Cash Collateral to the payment of any
Obligations, in accordance with Section 5 hereof as they become due and
payable.  The Cash Collateral Account and all Cash Collateral shall be under the
sole dominion and control of Agent.  No Borrower or other Person claiming
through or on behalf of any Borrower shall have any right to any Cash
Collateral, until Full Payment of all Obligations.

 

7.3.         Real Estate Collateral

 

7.3.1.          LIEN ON REAL ESTATE

 

The Obligations shall also be secured by Mortgages upon all Real Estate owned by
Borrowers which is subject to a Mortgage on the Closing Date.

 

7.3.2.          COLLATERAL ASSIGNMENT OF LEASES

 

To further secure the prompt payment and performance of all Obligations, each
Borrower hereby transfers and assigns to Agent, for the benefit of Secured
Parties, all of such Borrower’s right, title and interest in, to and under all
now or hereafter existing leases of real Property to which such Borrower is a
party, whether as lessor or lessee, and all extensions, renewals and
modifications thereof.

 

7.4.         Other Collateral

 

7.4.1.          COMMERCIAL TORT CLAIMS

 

Borrowers shall promptly notify Agent in writing if any Borrower has a
Commercial Tort Claim (other than, as long as no Default or Event of Default
exists, a Commercial Tort Claim for less than $2,000,000) and, upon Agent’s
request, shall promptly execute such documents and

 

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take such actions as Agent deems appropriate to confer upon Agent (for the
benefit of Secured Parties) a duly perfected, first priority Lien upon such
claim.

 

7.4.2.          CERTAIN AFTER-ACQUIRED COLLATERAL

 

Borrowers shall promptly notify Agent in writing if, after the Closing Date, any
Borrower obtains any interest in any material Collateral consisting of Deposit
Accounts, Chattel Paper, Documents, Instruments, Intellectual Property,
Investment Property or Letter-of-Credit Rights and, upon Agent’s request, shall
promptly execute such documents and take such actions as Agent deems necessary
to effect Agent’s duly perfected, first priority Lien upon such Collateral, and
use its reasonable best efforts to obtain appropriate possession, control
agreements or Lien Waivers.  If any such after-acquired Collateral is in the
possession of a third party, at Agent’s request, Borrowers shall obtain an
acknowledgment that such third party holds the Collateral for the benefit of
Agent.

 

7.5.         No Assumption of Liability

 

The Lien on Collateral granted hereunder is given as security only and shall not
subject Agent or any Lender to, or in any way modify, any obligation or
liability of Borrowers relating to any Collateral.

 

7.6.         Further Assurances

 

Promptly upon request, Borrowers shall deliver such instruments, assignments,
title certificates, or other documents or agreements, and shall take such
actions, as Agent deems appropriate under Applicable Law to evidence or perfect
its Lien on any Collateral, or otherwise to give effect to the intent of this
Agreement.  Each Borrower authorizes Agent to file any financing statement that
indicates the Collateral as “all assets” or “all personal property” of such
Borrower, or words to similar effect, and ratifies any action taken by Agent
before the Closing Date to effect or perfect its Lien on any Collateral.

 

7.7.         Foreign Subsidiary Stock

 

Notwithstanding anything to the contrary in Section 7.1, Collateral shall
include only 65% of the voting stock of any Foreign Subsidiary, to the extent
that such voting stock is included in the Collateral.

 

SECTION 8.              COLLATERAL ADMINISTRATION

 

8.1.         Borrowing Base Certificates

 

On or prior to the twentieth (20th) day of each calendar month, Borrowers shall
deliver to Agent (and Agent shall promptly deliver same to Lenders) a Borrowing
Base Certificate prepared as of the close of business of the previous calendar
month; provided, however, that if Availability of Borrowers is less than
$30,000,000 or if an Event of Default then exists and is continuing, Borrowers
shall deliver to Agent (and Agent shall upon request from a Lender, promptly
deliver to such Lender) a Borrowing Base Certificate on or before the fourth
(4th) Business Day of each week, prepared as of the close of business in the
last Business Day of the preceding week, until such time as Availability of
Borrowers is equal to or exceeds $30,000,000

 

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or such Event of Default is cured or waived.  All calculations of Availability
in any Borrowing Base Certificate shall originally be made by Borrowers and
certified by a Responsible Officer; provided that Agent may from time to time
review and adjust any such calculation (a) to reflect its reasonable estimate of
declines in value of any Collateral, due to collections received in the Deposit
Accounts or otherwise; and (b) to the extent the calculation is not made in
accordance with this Agreement or does not accurately reflect the Availability
Reserve.

 

8.2.         Administration of Eligible Accounts

 

8.2.1.          RECORDS AND SCHEDULES OF ACCOUNTS

 

Each Borrower shall keep accurate and complete records of its Accounts,
including all payments and collections thereon, and shall submit to Agent, on
such periodic basis as Agent may request, a sales and collections report solely
with respect to Accounts, in form satisfactory to Agent (which form shall be
substantially consistent with forms required by Agent from its other customers
in the same or similar business as Borrowers (other than changes necessary due
to Borrowers’ specific business operations).  Each Borrower shall also provide
to Agent, together with the Borrowing Base Certificate delivered in accordance
with Section 8.1, a detailed aged trial balance of all Accounts as of the end of
the preceding period, specifying each Account’s Account Debtor name and address,
amount, invoice date and due date, and, to the extent that a Borrower grants any
discount, allowance, credit, authorized return or dispute that is not shown on
the face of the invoice for the Account involved, showing any such discount,
allowance, credit, authorized return or dispute and including such proof of
delivery, copies of invoices and invoice registers, copies of related documents,
repayment histories, status reports and other information as Agent may
reasonably request.  If Accounts in an aggregate face amount of $2,000,000 or
more cease to be Eligible Accounts, Borrowers shall notify Agent of such
occurrence promptly (and in any event within two (2) Business Days) after any
Borrower has knowledge thereof.

 

8.2.2.          TAXES

 

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

 

8.2.3.          ACCOUNT VERIFICATION

 

Whether or not an Event of Default exists, Agent shall have the right at any
time, in the name of Agent, any designee of Agent or any Borrower to verify the
validity, amount or any other matter relating to any Eligible Accounts of
Borrowers by mail, telephone or otherwise; provided, however, that Agent shall
provide prior written notice to Borrowers of its intent to seek such
verification.  Borrowers shall cooperate fully with Agent in an effort to
facilitate and promptly conclude any such verification process.

 

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8.2.4.          MAINTENANCE OF DEPOSIT ACCOUNT

 

Borrowers shall maintain Deposit Accounts pursuant to lockbox or other
arrangements acceptable to Agent.  Borrowers shall obtain a Deposit Account
Control Agreement (in form and substance satisfactory to Agent) from each
lockbox servicer and Deposit Account bank, establishing Agent’s control over and
Lien in the lockbox or Deposit Account, requiring immediate deposit of all
remittances received in the lockbox to a Deposit Account or upon the delivery of
a notice by Agent to the applicable Deposit Account bank after the occurrence
and during the continuation of an Event of Default or at any time that
Availability of the Borrowers is less than $25,000,000 immediate transfer of all
funds in the Deposit Account to the Payment Account, as applicable, until such
Event of Default is cured or waived or Availability of the Borrowers is equal to
or greater than $25,000,000 for ninety (90) consecutive days (whereupon which
Agent shall deliver a notice to the applicable Deposit Account bank canceling
such transfer instructions) and waiving offset rights of such servicer or bank
against any funds in the lockbox or Deposit Account, except offset rights for
customary administrative charges.  Neither Agent nor Lenders assume any
responsibility to Borrowers for any lockbox arrangement or Deposit Account,
including any claim of accord and satisfaction or release with respect to any
Payment Items accepted by any bank.  Notwithstanding anything to the contrary in
this Section 8.2.4, for so long as no Event of Default exists and the
Availability of Borrowers is equal to or greater than $25,000,000, the Deposit
Accounts of Borrowers maintained in Canada and Mexico shall not be subject to
this Section 8.2.4.

 

8.2.5.          PROCEEDS OF COLLATERAL

 

Borrowers shall request in writing and otherwise take all reasonable steps to
ensure that all payments on Accounts or otherwise relating to Collateral are
made directly to a Deposit Account (or a lockbox relating to a Deposit
Account).  If any Borrower or Subsidiary receives cash or Payment Items with
respect to any Collateral, it shall promptly (not later than the next Business
Day) deposit same into a Deposit Account subject to a Deposit Account Control
Agreement.

 

8.3.         Administration of Inventory

 

8.3.1.          RECORDS AND REPORTS OF INVENTORY

 

Each Borrower shall keep accurate and complete records of its Inventory,
including costs and daily withdrawals and additions, and shall submit to Agent
inventory reports with respect to Inventory in form satisfactory to Agent (which
reports shall be substantially consistent with reports required by Agent from
its other customers in the same or similar business as Borrowers (other than
changes necessary due to Borrowers’ specific business operations), on such
periodic basis as Agent may request but in no event more frequently than once
per calendar month if no Default or Event of Default exists.  Each Borrower
shall conduct a physical inventory of Inventory at least once per calendar year
(and on a more frequent basis if requested by Agent when an Event of Default
exists) and periodic cycle counts consistent with historical practices, and
shall provide to Agent a report based on each such inventory and count promptly
upon completion thereof, together with such supporting information as Agent may
reasonably request.  Agent may participate in and observe each inventory or
physical count of Inventory, at Borrowers’ expense.

 

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8.3.2.          RETURNS OF INVENTORY

 

No Borrower shall return any Inventory to a supplier, vendor or other Person,
whether for cash, credit or otherwise, unless (a) such return is in the Ordinary
Course of Business; (b) no Default, Event of Default or Overadvance exists or
would result therefrom; and (c) any payment received by a Borrower for a return
is promptly remitted to Agent for application to the Obligations to the extent
required under Section 8.2.4.

 

8.3.3.          ACQUISITION, SALE AND MAINTENANCE

 

No Borrower shall acquire or accept Eligible Inventory on consignment or
approval unless the Consigned Inventory Conditions are met, and shall use its
best efforts to assure that all Eligible Inventory is produced in accordance
with all material aspects of Applicable Law, including the FLSA (with respect to
Eligible Inventory that is produced in the United States of America).  No
Borrower shall sell any Eligible Inventory on approval or any other basis under
which the customer may return or require a Borrower to repurchase such Eligible
Inventory (except Consigned Inventory for which the Consigned Inventory
Conditions are met) (it being acknowledged that the foregoing does not include
the discretionary decisions on the part of a Borrower to repurchase Eligible
Inventory and Eligible Inventory sold on consignment).  Borrowers shall use,
store and maintain all Eligible Inventory with reasonable care and caution, in
accordance with applicable standards of any insurance and in conformity with all
material respects of all Applicable Law, and shall make current rent payments
(within applicable grace periods provided for in leases) at all locations where
any Eligible Inventory is located.

 

8.4.         Administration of Equipment

 

8.4.1.          RECORDS AND SCHEDULES OF EQUIPMENT

 

Each Borrower shall keep accurate and complete records of its Equipment which
has a fair market value in excess of $500,000, including kind, quality,
quantity, cost, acquisitions and dispositions thereof.  Promptly upon request,
Borrowers shall deliver to Agent evidence of their ownership or interests in any
Equipment which has a fair market value in excess of $500,000.

 

8.4.2.          DISPOSITIONS OF EQUIPMENT

 

No Borrower shall sell, lease or otherwise dispose of any Equipment, without the
prior written consent of Agent, other than (a) a Permitted Asset Disposition;
(b) replacement of Equipment that is worn, damaged or obsolete with Equipment of
like function and value, if the replacement Equipment is acquired substantially
contemporaneously with such disposition and is free of Liens other than
Permitted Liens; (c) dispositions of Equipment by a Borrower to another Borrower
or any Subsidiary Guarantor; and (d) as permitted pursuant to Section 10.2.6.

 

8.4.3.          CONDITION OF EQUIPMENT

 

Each Borrower shall use its best efforts to ensure that material Equipment is in
good operating condition and repair, and all necessary replacements and repairs
have been made, reasonable wear and tear excepted.  No Borrower shall permit any
material Equipment to

 

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become affixed to real Property unless any landlord or mortgagee delivers a Lien
Waiver or similar instrument, except with respect to the Belden Equipment
Locations.

 

8.5.         Administration of Deposit Accounts

 

Schedule 8.5 sets forth all Deposit Accounts maintained by Borrowers.  Subject
to Section 8.2.4, Borrowers shall take all actions necessary to establish
Agent’s control of each such Deposit Account (other than an account exclusively
used for payroll, payroll taxes, employee benefits, workers’ compensation
claims, prepaid insurance, or an account containing not more than $50,000 at any
time).  Each Borrower shall be the sole account holder of each Deposit Account
and shall not allow any other Person (other than Agent) to have control over a
Deposit Account or any Property deposited therein.  Each Borrower shall promptly
notify Agent of any opening or closing of a Deposit Account and, with the
consent of Agent, will amend Schedule 8.5 to reflect same.

 

8.6.         General Provisions

 

8.6.1.          LOCATION OF COLLATERAL

 

All tangible items of Collateral, other than Inventory in transit and Consigned
Inventory, shall at all times be kept by Borrowers at the business locations set
forth in Schedule 8.6.1, except that Borrowers may (a) make sales or other
dispositions of Collateral in accordance with Section 10.2.6; and (b) move
Collateral to another location in the United States, upon ten (10) Business Days
prior written notice to Agent.

 

8.6.2.          INSURANCE OF COLLATERAL; CONDEMNATION PROCEEDS

 

(a)           Each Borrower shall maintain insurance with respect to the
Collateral, covering casualty, hazard, public liability, theft, malicious
mischief, and such other risks, in such amounts as are usually insured against
by companies of a similar size engaged in similar businesses in the same
geographic area, and with such insurance companies of standing and reputation no
less favorable than those companies reflected on Schedule 8.6.2 or such other
insurer as is reasonably satisfactory to Agent.  From time to time upon request,
Borrowers shall deliver the originals or certified copies of its insurance
policies to Agent.  Unless Agent shall agree otherwise, each policy shall
include satisfactory endorsements (i) showing Agent as lender loss payee or
additional insured, as appropriate; (ii) requiring thirty (30) days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever other than non-payment of premiums (in which case ten (10)
days prior written notice shall be required); and (iii) specifying that the
interest of Agent shall not be impaired or invalidated by any act or neglect of
any Borrower or the owner of the Property, nor by the occupation of the premises
for purposes more hazardous than are permitted by the policy.  If any Borrower
fails to provide and pay for such insurance, Agent may, at its option, but shall
not be required to, procure the insurance and charge Borrowers therefor.  Each
Borrower agrees to deliver to Agent, promptly as rendered, copies of all
material reports made in any reporting forms to insurance companies.  While no
Event of Default exists, Borrowers may settle, adjust or compromise any
insurance claim, as long as the proceeds are delivered to Agent or otherwise
reinvested pursuant to this Agreement.  If an Event of Default exists, only
Agent shall be authorized to settle, adjust and compromise such claims.

 

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(b)           Any proceeds of property or casualty insurance and any awards
arising from condemnation of any Collateral shall be paid to Agent or otherwise
reinvested pursuant to this Agreement.  Any such proceeds or awards that relate
to Inventory shall be applied to payment of the Revolver Loans, and then to any
other Obligations outstanding.  Proceeds from any business interruption
insurance may be used by Borrowers in the Ordinary Course of Business.

 

(c)           Borrowers may use insurance proceeds or condemnation awards
relating to any loss or destruction of Equipment or Real Estate to repair or
replace such Equipment or Real Estate as long as (i) no Default or Event of
Default exists; (ii) such repair or replacement is promptly undertaken and
concluded, in accordance with plans satisfactory to Agent; (iii) replacement
buildings are of comparable size, quality and utility to the destroyed
buildings; (iv) the repaired or replaced Property is free of Liens, other than
Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with
disbursement procedures for such repair or replacement as Agent may reasonably
require; and (vi) the aggregate amount of such proceeds or awards from any
single casualty or condemnation does not exceed $5,000,000.

 

8.6.3.          PROTECTION OF COLLATERAL

 

All expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping any Collateral, all Taxes payable with respect to any
Collateral (including upon any sale thereof), and all other payments required to
be made by Agent to any Person to realize upon any Collateral, shall be borne
and paid by Borrowers.  Agent shall not be liable or responsible in any way for
the safekeeping of any Collateral, for any loss or damage thereto (except for
reasonable care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any act or default
of any warehouseman, carrier, forwarding agency or other Person whatsoever, but
the same shall be at Borrowers’ sole risk.

 

8.6.4.          DEFENSE OF TITLE TO COLLATERAL

 

Each Borrower shall at all times use commercially reasonable efforts to defend
its title to Collateral and Agent’s Liens therein against all Persons, claims
and demands whatsoever, except Permitted Liens.

 

8.7.         Power of Attorney

 

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

 

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

 

(b)           During the existence of an Event of Default, (i) notify any
Account Debtors of the assignment of their Accounts, demand and enforce payment
of Accounts, by legal proceedings or otherwise, and generally exercise any
rights and remedies with respect to Accounts; (ii) settle, adjust, modify,
compromise, discharge or release any Accounts or other Collateral, or any legal
proceedings brought to collect Accounts or Collateral; (iii) sell or assign

 

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any Accounts and other Collateral upon such terms, for such amounts and at such
times as Agent deems advisable; (iv) take control, in any manner, of any
proceeds of Collateral; (v) prepare, file and sign a Borrower’s name to a proof
of claim or other document in a bankruptcy of an Account Debtor, or to any
notice, assignment or satisfaction of Lien or similar document; (vi) receive,
open and dispose of mail addressed to a Borrower, and notify postal authorities
to change the address for delivery thereof to such address as Agent may
designate; (vii) endorse any Chattel Paper, Document, Instrument, invoice,
freight bill, bill of lading, or similar document or agreement relating to any
Accounts, Inventory or other Collateral; (viii) use a Borrower’s stationery and
sign its name to verifications of Accounts and notices to Account Debtors; (ix)
use the information recorded on or contained in any data processing equipment
and computer hardware and software relating to any Collateral; (x) make and
adjust claims under policies of insurance; (xi) take any action as may be
necessary or appropriate to obtain payment under any letter of credit or
banker’s acceptance for which a Borrower is a beneficiary; and (xii) take all
other actions as Agent deems appropriate to fulfill any Borrower’s obligations
under the Loan Documents.

 

SECTION 9.              REPRESENTATIONS AND WARRANTIES

 

9.1.         General Representations and Warranties

 

To induce Agent and Lenders to enter into this Agreement and to make available
the Commitments, Loans and Letters of Credit, each Borrower represents and
warrants that:

 

9.1.1.          ORGANIZATION AND QUALIFICATION

 

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

 

9.1.2.          POWER AND AUTHORITY

 

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

 

9.1.3.          ENFORCEABILITY

 

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

 

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9.1.4.          CAPITAL STRUCTURE

 

Schedule 9.1.4 shows, for each Borrower and Subsidiary, its name, its
jurisdiction of organization, its authorized and issued Equity Interests, the
holders of its Equity Interests, and all agreements binding on such holders with
respect to their Equity Interests.  Each Borrower has good title to its Equity
Interests in its Subsidiaries, free of any Lien (other than Permitted Liens),
and all such Equity Interests are duly issued, fully paid and non-assessable. 
There are no outstanding options to purchase, warrants, subscription rights,
agreements to issue or sell, convertible interests, phantom rights or powers of
attorney relating to any Equity Interests of any Borrower or Subsidiary.

 

9.1.5.          CORPORATE NAMES; LOCATIONS

 

During the five years preceding the Closing Date, except as shown on
Schedule 9.1.5, no Borrower or Subsidiary has been known as or used any
corporate, fictitious or trade names, has been the surviving corporation of a
merger or combination, or has acquired any substantial part of the assets of any
Person.  The chief executive offices and other places of business of Borrowers
and Subsidiaries are shown on Schedule 8.6.1.  During the five years preceding
the Closing Date, no Borrower or Subsidiary has had any other office or place of
business.

 

9.1.6.          TITLE TO PROPERTIES; PRIORITY OF LIENS

 

Each Borrower and Subsidiary has good and marketable title to (or valid
leasehold interests in) all of its material Real Estate, and good title to all
of its material personal Property, including all material Property reflected in
any financial statements delivered to Agent or Lenders, in each case free of
Liens except Permitted Liens.  Each Borrower and Subsidiary has paid and
discharged all lawful claims that, if unpaid, could become a Lien on its
Properties, other than Permitted Liens.  All Liens of Agent in the Collateral
are duly perfected, first priority Liens, subject only to Permitted Liens that
are not required to be junior to Agent’s Liens pursuant to Section 10.2.2.

 

9.1.7.          ACCOUNTS

 

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

 

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

 

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

 

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

 

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

 

(e)           no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC, the
restriction is ineffective);

 

(f)            no extension, compromise, settlement, modification, credit,
deduction or return has been authorized with respect to the Account, except
discounts or allowances granted in the Ordinary Course of Business that are
reflected on the face of the invoice related thereto and in the reports
submitted to Agent hereunder; and

 

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

 

9.1.8.          FINANCIAL STATEMENTS

 

The consolidated and consolidating balance sheets, and related statements of
income, cash flow and shareholder’s equity, of SEI (including its direct and
indirect Subsidiaries and SE Holding and its subsidiaries) that have been and
are from time to time hereafter delivered to Agent and Lenders, are prepared in
accordance with GAAP, and fairly present the financial positions and results of
operations of SEI, Borrowers and Subsidiaries at the dates and for the periods
indicated.  All projections delivered from time to time to Agent and Lenders
based upon estimates and assumptions stated therein, all of which Borrowers
believe to be reasonable and fair in light of current conditions and current
facts known to Borrowers and, as of the date of such projections, reflect the
Borrowers’ good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein, it being recognized by Agent and Lenders that
projections as to future events are not to be viewed as facts or factual
information and that actual results during the period or periods covered thereby
may differ materially from projected results.  As of the Closing Date, since
December 31, 2005, there has been no change in the condition, financial or
otherwise, of any Borrower or Subsidiary that could reasonably be expected to
have a Material Adverse Effect.  No financial statement delivered to Agent or
Lenders at any time contains any untrue statement of a material fact, nor fails
to disclose any material fact necessary to make such statement not materially
misleading.  Each Borrower is Solvent.

 

9.1.9.          SURETY OBLIGATIONS

 

No Borrower or Subsidiary is obligated as surety or indemnitor under any bond or
other contract that assures payment or performance of any obligation of any
Person, except as permitted hereunder.

 

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9.1.10.        TAXES

 

Each Borrower and Subsidiary has filed all federal, state and material local tax
returns and other material reports that it is required by law to file, and has
paid, or made provision for the payment of, all Taxes upon it, its income and
its Properties that are due and payable, except to the extent being Properly
Contested.  The provision for Taxes on the books of each Borrower and Subsidiary
is adequate for all years not closed by applicable statutes, and for its current
Fiscal Year.

 

9.1.11.        BROKERS

 

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

 

9.1.12.        INTELLECTUAL PROPERTY

 

Each Borrower and Subsidiary owns or has the lawful right to use all material
Intellectual Property necessary for the conduct of its business, without
conflict with any rights of others.  There is no pending or, to any Borrower’s
knowledge, threatened Intellectual Property Claim with respect to any Borrower,
any Subsidiary or any of their Property (including any material Intellectual
Property).  Except as disclosed on Schedule 9.1.12, no Borrower or Subsidiary
pays or owes any Royalty or other compensation to any Person with respect to any
material registered Intellectual Property.  All material registered Intellectual
Property owned, used or licensed by, or otherwise subject to any interests of,
any Borrower or Subsidiary is shown on Schedule 9.1.12.

 

9.1.13.        GOVERNMENTAL APPROVALS

 

Each Borrower and Subsidiary has, is in compliance with, and is in good standing
with respect to, all Governmental Approvals necessary to conduct its business
and to own, lease and operate its Properties except where the failure to obtain
or maintain such Governmental Approval could not reasonably be expected to have
a Material Adverse Effect.  All necessary import, export or other licenses,
permits or certificates for the import or handling of any goods or other
Collateral have been procured and are in effect, and Borrowers and Subsidiaries
have complied with all foreign and domestic laws with respect to the shipment
and importation of any goods or Collateral, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.

 

9.1.14.        COMPLIANCE WITH LAWS

 

Each Borrower and Subsidiary has duly complied, and its Properties and business
operations are in compliance, in all material respects with all Applicable Law,
except where noncompliance could not reasonably be expected to have a Material
Adverse Effect.  There have been no citations, notices or orders of
noncompliance issued to any Borrower or Subsidiary under any Applicable Law
which could reasonably be expected to have a Material Adverse Effect.  To the
best knowledge of the Borrowers, no Eligible Inventory has been produced in
violation of the FLSA.

 

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9.1.15.        COMPLIANCE WITH ENVIRONMENTAL LAWS

 

Except as disclosed on Schedule 9.1.15, no Borrower or Subsidiary has received
any Environmental Notice.  No Borrower or Subsidiary has any material contingent
liability with respect to any Environmental Release, environmental pollution or
hazardous material on any Real Estate now or previously owned, leased or
operated by it.

 

9.1.16.        BURDENSOME CONTRACTS

 

No Borrower or Subsidiary is a party or subject to any contract, agreement or
charter restriction that could reasonably be expected to have a Material Adverse
Effect.  No Borrower or Subsidiary is party or subject to any Restrictive
Agreement, except as shown on Schedule 9.1.16, none of which prohibit the
execution or delivery of any Loan Documents by an Obligor nor the performance by
an Obligor of any obligations thereunder.

 

9.1.17.        LITIGATION

 

Except as shown on Schedule 9.1.17, there are no proceedings or investigations
pending or, to any Borrower’s knowledge, threatened against any Borrower or
Subsidiary, or any of their businesses, operations, Properties or conditions,
that (a) relate to any Loan Documents or transactions contemplated thereby; or
(b) could reasonably be expected to have a Material Adverse Effect if determined
adversely to any Borrower or Obligor (after giving effect to any insurance
coverage applicable thereto).  No Borrower or Subsidiary is in default in any
material respect with respect to any order, injunction or judgment of any
Governmental Authority.

 

9.1.18.        NO DEFAULTS

 

No event or circumstance has occurred or exists that constitutes a Default or
Event of Default.  No Borrower or Subsidiary is in default, and no event or
circumstance has occurred or exists that with the passage of time or giving of
notice would constitute a default, under any Material Contract or in the payment
of any Borrowed Money with a principal aggregate amount of $5,000,000.  There is
no basis upon which any party (other than a Borrower or Subsidiary) could
terminate a Material Contract prior to its scheduled termination date.

 

9.1.19.        ERISA

 

Except as disclosed on Schedule 9.1.19, no Borrower or Subsidiary has any
Multiemployer Plan.  Each Borrower and Subsidiary is in material compliance with
the requirements of all Applicable Law, including ERISA, relating to each
Multiemployer Plan.  No fact or situation exists that could reasonably be
expected to result in a Material Adverse Effect in connection with any
Multiemployer Plan.  No Borrower or Subsidiary is liable for any withdrawal
liability in connection with a Multiemployer Plan.

 

9.1.20.        TRADE RELATIONS

 

As of the Closing Date, there exists no actual or, to the knowledge of
Borrowers, threatened termination, limitation or modification of any business
relationship between any Borrower or Subsidiary and any customer or supplier, or
any group of customers or suppliers, who individually or in the aggregate are
material to the business of such Borrower or Subsidiary.

 

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As of the Closing Date, there exists no condition or circumstance that could
reasonably be expected to materially impair the ability of any Borrower or
Subsidiary to conduct its business at any time hereafter in substantially the
same manner as conducted on the Closing Date.

 

9.1.21.        LABOR RELATIONS

 

Except as described on Schedule 9.1.21, no Borrower or Subsidiary is on the
Closing Date party to or bound by any collective bargaining agreement.  On the
Closing Date, there are no material grievances, disputes or controversies with
any union or other organization of any Borrower’s or Subsidiary’s employees, or,
to any Borrower’s knowledge, any asserted or threatened strikes, work stoppages
or demands for collective bargaining.

 

9.1.22.        PAYABLE PRACTICES

 

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

 

9.1.23.        NOT A REGULATED ENTITY

 

No Obligor is (a) an “investment company” or a “person directly or indirectly
controlled by or acting on behalf of an investment company” within the meaning
of the Investment Company Act of 1940; (b) a “holding company,” a “subsidiary
company” of a “holding company,” or an “affiliate” of either, within the meaning
of the Public Utility Holding Company Act of 1935; or (c) subject to regulation
under the Federal Power Act, the Interstate Commerce Act, any public utilities
code or any other Applicable Law regarding its authority to incur Debt.

 

9.1.24.        MARGIN STOCK

 

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

 

9.1.25.        PLAN ASSETS

 

No Borrower is an entity deemed to hold “plan assets” within the meaning of 29
C.F.R. §2510.3-101 of any “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA or any “plan” (within the meaning of
Section 4975 of the Internal Revenue Code), and neither the execution of this
Agreement nor the funding of any Loans gives rise to a prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code.

 

9.2.         Complete Disclosure

 

No Loan Document contains any untrue statement of a material fact, nor fails to
disclose any material fact necessary to make the statements contained therein
not materially misleading in each case, in light of the facts and circumstances
existing at the time any such statement was

 

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made.  There is no fact or circumstance in existence on the Closing Date that
any Obligor has failed to disclose to Agent in writing that could reasonably be
expected to have a Material Adverse Effect.

 

SECTION 10.            COVENANTS AND CONTINUING AGREEMENTS

 

10.1.       Affirmative Covenants

 

For so long as any Commitments or Obligations are outstanding, each Borrower
shall, and shall cause each Subsidiary to:

 

10.1.1.        INSPECTIONS; APPRAISALS

 

(a)           Permit Agent from time to time, subject to (except when a Default
or Event of Default exists) reasonable notice and normal business hours, to
visit and inspect the Properties of any Borrower or Subsidiary, inspect, audit
and make extracts from any Borrower’s or Subsidiary’s books and records, and
discuss with its officers, employees, agents, advisors and independent
accountants such Borrower’s or Subsidiary’s business, financial condition,
assets, prospects and results of operations.  Lenders may participate in any
such visit or inspection, at their own expense.  Neither Agent nor any Lender
shall have any duty to any Borrower to make any inspection, nor to share any
results of any inspection, appraisal or report with any Borrower.  To the extent
any appraisal or other information is shared by Agent or a Lender with any
Borrower, such Borrower acknowledges that it was prepared by Agent and Lenders
for their purposes and Borrowers shall not be entitled to rely upon it.

 

(b)           Reimburse Agent for all charges, costs and expenses of Agent in
connection with (i) examinations of any Obligor’s books and records or any other
financial or Collateral matters as Agent deems appropriate, up to two (2) times
per Loan Year; and (ii) appraisals of Inventory up to one time per Loan Year;
provided, however, that if an examination or appraisal is initiated during an
Event of Default, all charges, costs and expenses therefor shall be reimbursed
by Borrowers without regard to such limits; provided further, that so long as no
Event of Default exists, with respect to environmental inspections of the Real
Property of Borrowers, representatives of Agent shall only have the right to
inspect once every 12 months, unless Agent has a reasonable basis to believe a
condition exists or an event has occurred which reasonably could give rise to
material liabilities under applicable Environmental Laws.  Subject to the
foregoing, Borrowers shall pay Agent’s standard charges ($850 per day as of the
Closing Date or standard charges as in effect thereafter) for each day that an
employee of Agent or its Affiliates is engaged in any examination activities,
and shall pay the standard charges of Agent’s internal appraisal group.  This
Section shall not be construed to limit Agent’s right to conduct examinations or
to obtain appraisals at any time in its discretion, nor to use third parties for
such purposes.

 

10.1.2.        FINANCIAL AND OTHER INFORMATION

 

Keep adequate records and books of account with respect to its business
activities, in which proper entries are made in accordance with GAAP reflecting
all financial transactions; and furnish to Agent and Lenders:

 

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(a)           as soon as available, and in any event within ninety (90) days
after the close of each Fiscal Year, audited balance sheets of SEI (including
its Subsidiaries and SE Holding and its subsidiaries) as of the end of such
Fiscal Year and the related statements of income, shareholders’ equity and cash
flow, on a Consolidated and consolidating basis, such consolidated statements to
be audited and accompanied by a report and opinion of an independent certified
public accountant of nationally recognized standing reasonably acceptable to the
Agent, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit, and, with respect to SEI and its Subsidiaries, setting
forth in each case in comparative form the corresponding Consolidated figures
for the preceding Fiscal Year;

 

(b)           as soon as available, and in any event within forty-five (45) days
after the end of each Fiscal Quarter hereafter (other than the fourth Fiscal
Quarter of any Fiscal Year), unaudited balance sheets of SEI (including
Borrowers, its Subsidiaries and SE Holding and its Subsidiaries) as of the end
of such Fiscal Quarter and the related unaudited statements of income and cash
flow for such Fiscal Quarter, on a Consolidated and consolidating basis, setting
forth in each case in comparative form the corresponding figures for the
preceding Fiscal Year and certified by the principal financial officer of
Borrowers as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of SEI and its
Subsidiaries and SE Holding and its subsidiaries for such Fiscal Quarter and
period subject only to changes from audit and year end adjustments and except
that such statements need not contain notes;

 

(c)           as soon as available, and in any event within thirty-five (35)
days after the end of each month (other than the month which is the last month
of any Fiscal Quarter), unaudited balance sheets of SEI, Borrowers and its
Subsidiaries as of the end of such month and the related unaudited statements of
income and cash flow for such month and for the portion of the Fiscal Year then
elapsed, on a Consolidated basis, setting forth in each case in comparative form
the corresponding figures for the preceding Fiscal Year and certified by the
principal financial officer of Borrowers as prepared in accordance with GAAP and
fairly presenting the Consolidated financial position and results of operations
of SEI, Borrowers and their Subsidiaries for such month and period subject only
to changes from audit and year-end adjustments and except that such statements
need not contain notes;

 

(d)           concurrently with delivery of financial statements under clauses
(a) and (b) above, or more frequently if requested by Agent while an Event of
Default exists, a Compliance Certificate executed by the chief financial officer
of Borrower Agent;

 

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

 

(f)            not later than January 31 of each Fiscal Year, the budget of
Borrowers for the upcoming Fiscal Year;

 

(g)           while an Event of Default exists, at Agent’s request, a listing of
each Borrower’s trade payables, specifying the trade creditor and balance due,
and a detailed trade payable aging, all in form satisfactory to Agent;

 

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(h)           promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or material reports that any Borrower has made
generally available to its shareholders; copies of any regular, periodic and
special reports or registration statements or prospectuses that any Borrower
files with the Securities and Exchange Commission or any other Governmental
Authority, or any securities exchange;

 

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

 

(j)            such other reports and information (financial or otherwise) as
Agent may request from time to time in connection with any Collateral or any
Borrower’s, Subsidiary’s or other Obligor’s financial condition or business
which, so long as no Event of Default then exists, shall not be requested by
Agent more frequently than once a year.

 

Documents required to be delivered pursuant to Section 10.1.2(a), (b) or (h) (to
the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date on which SEI posts such documents, or provides a
link thereto on SEI’s website on the internet at the website address listed on
Schedule 10.1.2.

 

10.1.3.        NOTICES

 

Notify Agent and Lenders in writing, promptly after a Borrower’s obtaining
knowledge thereof, of any of the following that affects a Borrower or all
Obligors:  (a) the threat or commencement of any proceeding or investigation,
whether or not covered by insurance, if an adverse determination could have a
Material Adverse Effect; (b) any pending or threatened labor dispute, strike or
walkout, or the expiration of any material labor contract which could reasonably
be expected to have a Material Adverse Effect; (c) any default under or
termination of a Material Contract; (d) the existence of any Default or Event of
Default; (e) any judgment in an amount exceeding $1,000,000 (after giving effect
to any insurance coverage applicable thereto); (f) the assertion of any
Intellectual Property Claim with respect to any material Intellectual Property
if an adverse resolution could have a Material Adverse Effect; (g) any violation
or asserted violation of any Applicable Law (including ERISA, OSHA, FLSA, or any
Environmental Laws), if an adverse resolution could have a Material Adverse
Effect; (h) any material Environmental Release by an Obligor or on any Property
owned, leased or occupied by an Obligor; or receipt of any Environmental Notice;
or (i) the discharge of or any withdrawal or resignation by Borrowers’
independent accountants.

 

10.1.4.        Landlord and Storage Agreements

 

Upon reasonable request, provide Agent with copies of all agreements between an
Obligor and any landlord, warehouseman or processor that owns any premises at
which any material Collateral may be kept or that otherwise may possess or
handle any material Collateral.

 

10.1.5.        COMPLIANCE WITH LAWS

 

Comply with all Applicable Laws, including ERISA, Environmental Laws, FLSA,
OSHA, Anti-Terrorism Laws, and laws regarding collection and payment of Taxes,
and maintain all Governmental Approvals necessary to the ownership of its
Properties or conduct of

 

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its business, unless failure to comply (other than failure to comply with
Anti-Terrorism Laws) or maintain could not reasonably be expected to have a
Material Adverse Effect.  Without limiting the generality of the foregoing, if
any Environmental Release occurs at or on any Properties of any Borrower or
Subsidiary, it shall act promptly and diligently to investigate and to the
extent required by any Environmental Law, report to all appropriate Governmental
Authorities the extent of, and to take appropriate remedial action to respond to
such Environmental Release, whether or not directed to do so by any Governmental
Authority.

 

10.1.6.        TAXES

 

Pay and discharge all Taxes prior to the date on which they become delinquent or
penalties attach, unless such Taxes are being Properly Contested.

 

10.1.7.        INSURANCE

 

In addition to the insurance required hereunder with respect to Collateral,
maintain with its insurers as of the Closing Date or with other financially
sound and reputable insurers having a rating no less favorable than the rating
in effect on the Closing Date applicable to its insurers as of the Closing Date,
(a) with respect to the Properties and business of Borrowers and Subsidiaries of
such type (including product liability, workers’ compensation, larceny,
embezzlement, or other criminal misappropriation insurance), in such amounts,
and with such coverages and deductibles as are customary for companies similarly
situated, and (b) business interruption insurance in an amount not less than the
amounts reflected in Schedule 8.6.2.

 

10.1.8.        LICENSES

 

Keep each material License affecting any Eligible Inventory (including the
manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries in full force and effect unless the
Obligor determines that such License or the underlying Intellectual Property is
no longer useful or necessary or that the licensee has defaulted thereunder;
promptly notify Agent of any proposed modification to any such License, or entry
into any new material License, pay all Royalties when due with respect to any
material Licenses unless Properly Contested; and notify Agent of any material
default or breach asserted by any Person to have occurred under any material
License.

 

10.1.9.        FUTURE SUBSIDIARIES

 

Promptly notify Agent upon any Person becoming a Subsidiary and, if such Person
is not a Foreign Subsidiary, cause it to guaranty the Obligations in a manner
satisfactory to Agent, and to execute and deliver such documents, instruments
and agreements and to take such other actions as Agent shall require to evidence
and perfect a Lien in favor of Agent (for the benefit of Secured Parties) on all
assets of such Person, including delivery of such legal opinions, in form and
substance satisfactory to Agent, as it shall deem appropriate.

 

10.2.       Negative Covenants

 

For so long as any Commitments or Obligations are outstanding, each Borrower
shall not, and shall cause each Subsidiary not to:

 

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10.2.1.        PERMITTED DEBT

 

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

 

(a)           the Obligations;

 

(b)           Debt existing as of the Closing Date and Borrowers’ 9.0% Senior
Notes due 2012;

 

(c)           Bank Product Debt and Debt arising in connection with Cash
Management Services provided by financial institutions other than a Lender or
its Affiliates;

 

(d)           Subordinated Debt in an amount not to exceed $25,000,000;

 

(e)           accounts payable owing to trade creditors, in each case incurred
and paid in the Ordinary Course of Business, unless the same are being Properly
Contested;

 

(f)            Purchase Money Debt and Capitalized Lease Obligations (excluding
the Brownwood Lease) which do not exceed in the aggregate $25,000,000 at any
time outstanding;

 

(g)           Refinancing Debt which has a stated maturity no sooner than 6
months after the Term or any extension of the Term so long as each of the
Refinancing Conditions is met;

 

(h)           Debt for accrued payroll, Taxes and other operating expenses
(other than Borrowed Money) incurred in the Ordinary Course of Business, as long
as payment thereof is not past due or, in the case of Taxes, is being Properly
Contested;

 

(i)            Permitted Contingent Obligations;

 

(j)            Debt in respect of netting services, overdraft protections and
otherwise in connection with Deposit Accounts;

 

(k)           Debt in respect of the Brownwood Lease;

 

(l)            Debt incurred in the Ordinary Course of Business solely to
support any Borrower or any Subsidiary’s insurance or self-insurance obligations
in the Ordinary Course of Business (including to secure worker’s compensation
and other similar insurance coverages);

 

(m)          Debt of a Borrower or a Subsidiary to a Borrower or of a Borrower
or a Subsidiary to a Subsidiary of a Borrower, including Loans permitted
pursuant to Section 10.2.7;

 

(n)           Debt incurred by a Borrower or Subsidiary in connection with an
acquisition constituting an Investment permitted pursuant to Section 10.2.5 or
otherwise hereunder (or Debt assumed at the time of an Investment permitted
pursuant to Section 10.2.5), other than Obligations hereunder, in an amount not
to exceed $25,000,000;

 

(o)           other Debt, provided that (a) no Event of Default exists as of the
date of the incurrence thereof or would exist by reason of the incurrence of
such Debt and (b) if such Debt (other than Debt secured by a Permitted Lien) is
secured, the Liens of the holder thereof are

 

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junior and subordinate to the Liens of Agent pursuant to terms and conditions
reasonably acceptable to Agent and Lenders under a written intercreditor
agreement entered into with any such holder and any such secured Debt has a
stated maturity no sooner than 6 months after the Term or any extension of the
Term.

 

10.2.2.        PERMITTED LIENS

 

Create any Lien upon any of its Property, income or profits or enter into any
agreement to do same, at any time that Borrowers do not satisfy the Liquidity
Condition, except the following (collectively, “Permitted Liens”):

 

(a)           Liens in favor of Agent;

 

(b)           Liens for Taxes (excluding any Lien imposed pursuant to any
provisions of ERISA) not yet due or being Properly Contested;

 

(c)           statutory Liens (excluding any Lien for Taxes, but including any
Lien imposed pursuant to any of the provisions of ERISA and landlords’,
carriers’ warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens) arising in the Ordinary Course of Business of a Borrower or a Subsidiary,
but only if and for so long as (x) payment in respect of any such Lien is not at
the time required or such Lien is being Properly Contested and (y) such Liens do
not materially impair the conduct of the Ordinary Course of Business;

 

(d)           Purchase Money Liens securing Purchase Money Debt;

 

(e)           Liens securing Debt of a Borrower or a Subsidiary to a Borrower or
of a Borrower or a Subsidiary to a Subsidiary of a Borrower;

 

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

 

(g)           Liens incurred or deposits made in the Ordinary Course of Business
to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Money Borrowed), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; provided that, to the extent any such Liens attach to any of the
Collateral, such Liens are at all times subordinate and junior to the Liens upon
the Collateral in favor of Agent;

 

(h)           easements, rights-of-way, restrictions, covenants or other
agreements of record and other similar charges or encumbrances on real Property
of such Borrower or any of its Subsidiaries that do not secure any monetary
obligation and do not interfere with the Ordinary Course of Business of such
Borrower or such Subsidiary;

 

(i)            normal and customary rights of setoff upon deposits of cash in
favor of banks and other depository institutions and Liens of a collecting bank
arising under the UCC on Payment Items in the course of collection;

 

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(J)            [RESERVED];

 

(K)           SUCH OTHER LIENS AS APPEAR ON SCHEDULE 10.2.2 HERETO, TO THE
EXTENT PROVIDED THEREIN;

 

(L)            LIENS SOLELY ON ANY CASH EARNEST MONEY DEPOSITS MADE BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES IN CONNECTION WITH ANY LETTER OF INTENT OR
PURCHASE AGREEMENT PERMITTED HEREUNDER;

 

(M)          LIENS SECURING CAPITALIZED LEASE OBLIGATIONS PERMITTED TO BE
INCURRED UNDER SECTION 10.2.1 TO THE EXTENT SUCH LIENS DO NOT EXTEND TO ANY
PROPERTY OTHER THAN THE PROPERTY THAT IS THE SUBJECT OF THE UNDERLYING LEASE;

 

(N)           LICENSES, SUBLICENSES, LEASES OR SUBLEASES GRANTED TO OTHER
PERSONS IN THE ORDINARY COURSE OF BUSINESS AND NOT INTERFERING IN ANY MATERIAL
RESPECT WITH THE BUSINESS OF ANY OBLIGOR;

 

(O)           LIENS ON PROPERTY OF A SUBSIDIARY OF A BORROWER (OTHER THAN AN
OBLIGOR) SECURING DEBT OF SUCH SUBSIDIARY;

 

(P)           LIENS SECURING REFINANCING DEBT TO THE EXTENT OF THE LIENS
SECURING THE DEBT REFINANCED; PROVIDED THAT IF THE LIENS SECURING THE DEBT
REFINANCED ARE SUBORDINATE TO THE LIENS OF AGENT, THEN THE LIENS SECURING THE
REFINANCING DEBT SHALL BE SUBORDINATE ON THE SAME TERMS AND TO THE SAME EXTENT;

 

(Q)           PURPORTED LIENS EVIDENCED BY THE FILING OF PRECAUTIONARY UCC
FINANCING STATEMENTS RELATING SOLELY TO OPERATING LEASES OF PERSONAL PROPERTY
ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS;

 

(R)            LIENS IN FAVOR OF CUSTOMS AND REVENUE AUTHORITIES ARISING AS A
MATTER OF LAW TO SECURE PAYMENT OF CUSTOMS DUTIES IN CONNECTION WITH THE
IMPORTATION OF GOODS;

 

(S)           LIENS ON PROPERTY ACQUIRED BY A BORROWER OR SUBSIDIARY IN
CONNECTION WITH AN INVESTMENT PERMITTED PURSUANT TO SECTION 10.2.5 TO THE EXTENT
THAT THE DEBT SECURED BY SUCH LIENS IS PERMITTED UNDER SECTION 10.2.1(M) HEREOF;
PROVIDED THAT (I) SUCH LIENS ARE NOT INCURRED IN CONNECTION WITH, OR IN
ANTICIPATION OR CONTEMPLATION OF, SUCH INVESTMENT PERMITTED PURSUANT TO SECTION
10.2.5 AND (II) SUCH LIENS ATTACH SOLELY TO SUCH PROPERTY ACQUIRED;

 

(T)            LIENS ON PROPERTY OF BORROWERS NOT CONSTITUTING COLLATERAL FOR SO
LONG AS THE AGGREGATE FAIR MARKET VALUE OF SUCH PROPERTY, AND ANY DEBT SECURED
THEREBY, DOES NOT EXCEED $2,500,000;

 

(U)           LIENS SECURING SUBORDINATED DEBT INCURRED PURSUANT TO SECTION
10.2.1(C); AND

 

(V)           SUCH OTHER LIENS AS AGENT AND REQUIRED LENDERS IN THEIR SOLE
DISCRETION MAY HEREAFTER APPROVE IN WRITING.

 

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The foregoing negative pledge shall not apply to any Margin Stock to the extent
such application would violate or require filings or other actions by any Lender
under Regulation U or any similar law.

 

10.2.3.        CAPITAL EXPENDITURES

 

Make Capital Expenditures (excluding any assets acquired pursuant to Section
10.2.5 hereof) in excess of $30,000,000 in the aggregate during any Fiscal Year
at any time that Borrowers do not satisfy the Availability Condition or an Event
of Default exists; provided, however, that if the amount of Capital Expenditures
(excluding any assets acquired pursuant by to Section 10.2.5 hereof) permitted
to be made in any Fiscal Year exceeds the amount actually made, up to
$30,000,000 of such excess may be carried forward to the next Fiscal Year.

 

10.2.4.        DISTRIBUTIONS; UPSTREAM PAYMENTS

 

For so long as any Commitments or Obligations are outstanding, neither SEI nor
Borrowers shall, and shall not permit any of their Subsidiaries to, declare or
make any Distributions, at any time that Borrowers do not satisfy the Liquidity
Condition or an Event of Default exists, except (a) Upstream Payments and (b) a
Distribution that is a dividend or other Distribution by a Borrower directly or
indirectly to Parent, the proceeds of which are used by Parent to make payment
of dividends with respect to the Parent Preferred Series A Stock.

 

10.2.5.        RESTRICTED INVESTMENTS

 

Make any Restricted Investment at any time that Borrowers do not satisfy the
Liquidity Condition or an Event of Default exists; provided that if the
Liquidity Condition is satisfied and no Event of Default exists, Borrowers may
make (a) any acquisition by a Borrower or any of its Subsidiaries of the assets
or Equity Interests of a Person in which each of the following conditions is
satisfied: (i) the business of the Person that is the subject of such
acquisition is related or substantially similar to the business of Borrowers on
the Closing Date; (ii) in connection with such acquisition there will be no
Liens on any of such Borrower’s or such Subsidiary’s assets after the
acquisition other than Permitted Liens; (iii) the aggregate amount of
consideration for such acquisition, when added to the consideration for all
other such acquisitions after the Closing Date under this clause (a) shall not
exceed $50,000,000; (iv) any purchase price amounts payable with respect to
earn-outs, notes payable to the sellers, covenants not to compete, consulting
contracts or other affiliated contracts are and will remain subordinate to the
Full Payment of the Obligations on terms satisfactory to Agent; (v) Agent shall
have received, by a date sufficiently in advance of the closing date of such
acquisition to allow Agent to review the same, executed copies of the final
purchase documents, including all exhibits and schedules thereto, among the
parties to such acquisition, and Agent shall have found the terms thereof
reasonably acceptable; and (vi) Borrowers shall have delivered to Agent, not
less than three (3) Business Days prior to the proposed closing date of any such
acquisition, written evidence of the pro forma satisfaction of the other
conditions set forth above after giving effect to such acquisition; and (b)
Permitted Investments.

 

10.2.6.        DISPOSITION OF ASSETS

 

Make any Asset Disposition at any time that Borrowers do not satisfy the
Availability Condition or an Event of Default exists, except (a) a Permitted
Asset Disposition,

 

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(b) a disposition of Equipment under Section 8.4.2 or (c) transfer of Property
by a Subsidiary or Obligor to a Borrower; provided that unless the Availability
Conditions are satisfied and no Event of Default exists as of the date of any
such disposition, the Net Proceeds of any such disposition shall be remitted to
Agent for application to the Obligations.

 

10.2.7.        LOANS

 

MAKE ANY LOANS OR OTHER ADVANCES OF MONEY TO ANY PERSON AT ANY TIME THAT THE
BORROWERS DO NOT SATISFY THE LIQUIDITY CONDITION, EXCEPT (A) ADVANCES TO AN
OFFICER OR EMPLOYEE OF A BORROWER, A SUBSIDIARY, JV EUROPE OR SE HOLDING (OR ANY
SUBSIDIARY THEREOF) FOR SALARY, BONUS, TRAVEL EXPENSES, MOVING AND OTHER
RELOCATION EXPENSES, COMMISSIONS AND SIMILAR ITEMS IN THE ORDINARY COURSE OF
BUSINESS; (B) PREPAID EXPENSES AND EXTENSIONS OF TRADE CREDIT MADE IN THE
ORDINARY COURSE OF BUSINESS; (C) DEPOSITS WITH FINANCIAL INSTITUTIONS PERMITTED
HEREUNDER; (D) AS LONG AS NO DEFAULT OR EVENT OF DEFAULT EXISTS, INTERCOMPANY
LOANS BY A BORROWER TO ANOTHER BORROWER OR A SUBSIDIARY GUARANTOR, OR BY A
SUBSIDIARY GUARANTOR TO A BORROWER OR ANOTHER SUBSIDIARY GUARANTOR; (E) DEBT
PERMITTED UNDER SECTION 10.1.1; AND (F) INVESTMENTS PERMITTED UNDER SECTION
10.2.5.

 

10.2.8.        RESTRICTIONS ON PAYMENT OF BORROWERS’ 9.0% SENIOR NOTES DUE 2012;
MODIFICATIONS

 

(A)           MAKE ANY PAYMENTS (WHETHER VOLUNTARY OR MANDATORY, OR A
PREPAYMENT, REDEMPTION, RETIREMENT, DEFEASANCE OR ACQUISITION) WITH RESPECT TO
THE BORROWERS’ 9% SENIOR NOTES DUE 2012 AT ANY TIME THAT THE BORROWERS DO NOT
SATISFY THE LIQUIDITY CONDITION EXCEPT (A) A REDEMPTION OR PURCHASE OF SUCH
NOTES SO LONG AS (I) SUCH REDEMPTION OR PURCHASE IS MADE PURSUANT TO THE TERMS
OF, AND IN AN AMOUNT NO GREATER THAN THAT AMOUNT REQUIRED TO BE REDEEMED BY,
SECTION 4.10 OF THE INDENTURE GOVERNING SUCH NOTES AS IN EFFECT ON THE CLOSING
DATE,  (III) NO EVENT OF DEFAULT SHALL EXIST ON THE DATE OF AND AFTER GIVING
EFFECT TO SUCH REDEMPTION OR PURCHASE, AND (IV) BORROWERS SHALL HAVE DELIVERED
TO EACH OF AGENT AND THE BANK OF NEW YORK, AS TRUSTEE FOR THE HOLDERS OF THE
BORROWERS 9.% SENIOR NOTES DUE 2012 A CERTIFICATE CERTIFYING THAT THE ABOVE
CONDITIONS HAVE BEEN SATISFIED AND THAT THE REDEMPTION OR PURCHASE IS OTHERWISE
PERMITTED BY THE TERMS OF THE AGREEMENT.

 

(B)           ENTER INTO OR CONSENT TO ANY AMENDMENT, SUPPLEMENT, WAIVER OR
OTHER MODIFICATION OF THE TERMS OR PROVISIONS CONTAINED IN, OR APPLICABLE TO THE
INDENTURE FOR THE BORROWERS’ 9% SENIOR NOTES DUE 2012 OR THE BORROWERS’ 9%
SENIOR NOTES DUE 2012, TO THE EXTENT THAT ANY SUCH AMENDMENT, SUPPLEMENT, WAIVER
OR MODIFICATION:  (I) ACCELERATES THE DATES OR INCREASES THE AMOUNT OF ANY
REQUIRED REPAYMENT, PREPAYMENT OR REDEMPTION OF THE PRINCIPAL OF THE BORROWERS’
9% SENIOR NOTES DUE 2012, (II) INCREASES THE RATE OR ACCELERATES THE DATE FOR
PAYMENT OF THE INTEREST, PREMIUM (IF ANY) OR FEES PAYABLE IN RESPECT OF
BORROWERS’ 9% SENIOR NOTES DUE 2012, (III) MAKES THE COVENANTS, EVENTS OF
DEFAULT OR REMEDIES IN BORROWERS’ 9% SENIOR NOTES DUE 2012 OR THE INDENTURE FOR
THE BORROWERS’ 9% SENIOR NOTES DUE 2012 MORE RESTRICTIVE ON BORROWERS, OR (IV)
COULD REASONABLY BE EXPECTED TO HAVE A MATERIALLY ADVERSE EFFECT ON  THE
BORROWERS, OTHER OBLIGORS, AGENT OR LENDERS.

 

10.2.9.        FUNDAMENTAL CHANGES

 

Merge, combine or consolidate with any Person, or liquidate, wind up its affairs
or dissolve itself, in each case whether in a single transaction or in a series
of related

 

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transactions, except for (a) mergers or consolidations of a Subsidiary with
another Subsidiary or a Subsidiary or a Borrower into a Borrower and (b)
transactions otherwise permitted under this Agreement (including but not limited
to transactions permitted pursuant to Sections 10.2.5 and 10.2.6 hereof); change
its name or conduct business under any fictitious name; or change its tax,
charter or other organizational identification number, or form or state of
organization.

 

10.2.10.      SUBSIDIARIES

 

Form or acquire any Subsidiary after the Closing Date, except in accordance with
Sections 10.1.8 and 10.2.5; or permit any existing Subsidiary to issue any
additional Equity Interests except director’s qualifying shares.

 

10.2.11.      ORGANIC DOCUMENTS

 

Amend, modify or otherwise change any of its Organic Documents as in effect on
the Closing Date, except for changes that do not affect in any adverse way such
Borrower’s or any of its Subsidiaries’ rights and obligations to enter into and
perform the Loan Documents to which it is a party and to pay all of the
Obligations and that do not otherwise have a Material Adverse Effect.

 

10.2.12.      TAX CONSOLIDATION

 

File or consent to the filing of any consolidated income tax return with any
Person other than SEI, Parent, Borrowers, Subsidiaries, SE Holding and its
Subsidiaries.

 

10.2.13.      ACCOUNTING CHANGES

 

Make any material change in accounting treatment or reporting practices, except
in compliance with GAAP; or change its Fiscal Year.

 

10.2.14.      HEDGING AGREEMENTS

 

Enter into any Hedging Agreement, except to hedge risks arising in the Ordinary
Course of Business to hedge or mitigate risks to which any Borrower or any
Subsidiary is exposed in the conduct of its business or the management of its
liabilities and not for any speculative purpose.

 

10.2.15.      CONDUCT OF BUSINESS

 

Engage in any business, other than its business as conducted on the Closing Date
and any business or activities which are substantially similar, related or
incidental thereto.

 

10.2.16.      AFFILIATE TRANSACTIONS

 

Enter into or be party to any transaction with an Affiliate, at any time that
Borrowers do not satisfy the Liquidity Condition, except (a) the transactions
contemplated by the Loan Documents; (b) payment of reasonable compensation to
officers and employees for services actually rendered to Borrowers or their
respective Subsidiaries; (c) payment of customary directors’ fees and
indemnities (including payments in respect of directors’ and officers’ liability
insurance); (d) transactions with Affiliates that were consummated on or prior

 

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to the Closing Date and have been disclosed to Agent prior to the Closing Date;
(e) transactions with Affiliates pursuant to the reasonable requirements of such
Borrower’s or such Subsidiary’s business and upon fair and reasonable terms that
are fully disclosed to Agent; (f) transactions pursuant to which a Borrower or a
Subsidiary licenses intellectual property to or from SE Holding or JV Europe or
any of their respective Affiliates; (g) guarantees, to the extent constituting
Permitted Contingent Obligations, or Investments, to the extent constituting
Permitted Investments, in respect of the China Investment or the JV Europe
Investments; and (h) transactions pursuant to which a Borrower or a Subsidiary
(A) sells, assigns or otherwise transfers Equipment for its fair market value
(1) to SE Holding or any of its subsidiaries in connection with the China
Investment, which has a book value, together with other China Investments which
does not exceed $30,000,000 in the aggregate (excluding from such $30,000,000
limit Investments made at a time when Borrowers satisfied the Liquidity
Condition and no Event of Default existed), or (2) to SE Holding or any of its
subsidiaries in connection with the JV Europe Investment, which has a book
value, together with other JV Europe Investment which does not exceed
$50,000,000 in the aggregate (excluding from such $50,000,000 limit Investments
made at a time when Borrowers satisfied the Liquidity Condition and no Event of
Default existed), or (B) sells Inventory in the Ordinary Course of Business to
SE Holding or any of its subsidiaries.  Nothing herein shall be deemed to
override, modify or waive any requirement for Borrowers to comply at all times
with the provisions of the Sarbanes-Oxley Act.

 

10.2.17.      PLANS

 

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

 

10.2.18                    Restrictions on Upstream Payments

 

Create or suffer to exist any encumbrance or restriction on the ability of a
Subsidiary to make any Upstream Payment, except for encumbrances or restrictions
(i) pursuant to the Loan Documents, (ii) existing under Applicable Law, (iii)
pursuant to the Indenture for the Borrowers’ 9% Senior Notes due 2012, (iv)
pursuant to the Brownwood Lease and (v) identified and fully disclosed in
Schedule 9.1.16.

 

10.3.       CONSOLIDATED FIXED CHARGE COVERAGE RATIO.

 

At any time that, and only for so long as, Availability of Borrowers is less
than $25,000,000, maintain a Consolidated Fixed Charge Coverage Ratio of not
less than 1.10 to 1.00 as of the immediately preceding Fiscal Quarter end for
which financial statements have been (or were required to be) delivered
hereunder and as of each subsequent Fiscal Quarter until such time as
Availability of Borrowers is equal to or greater than $25,000,000 for ninety
(90) consecutive days.

 

SECTION 11.            EVENTS OF DEFAULT; REMEDIES ON DEFAULT

 

11.1.       EVENTS OF DEFAULT

 

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

 

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(A)           ANY BORROWER FAILS TO PAY (I) ANY PAYMENT OF PRINCIPAL WHEN DUE;
(II) ANY INTEREST OR FEES WITHIN THREE (3) BUSINESS DAYS WHEN DUE; OR (III) ANY
OTHER OBLIGATIONS WITHIN TEN (10) BUSINESS DAYS WHEN DUE (IN EACH CASE, WHETHER
AT STATED MATURITY, ON DEMAND, UPON ACCELERATION OR OTHERWISE);

 

(B)           ANY REPRESENTATION, WARRANTY OR OTHER WRITTEN STATEMENT OF ANY
OBLIGOR MADE IN CONNECTION WITH ANY LOAN DOCUMENTS OR TRANSACTIONS CONTEMPLATED
THEREBY IS INCORRECT OR MISLEADING IN ANY MATERIAL RESPECT WHEN GIVEN;

 

(C)           ANY BORROWER SHALL BREACH OR FAIL TO PERFORM ANY COVENANT
CONTAINED IN SECTION 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.1.6, 10.1.7,
10.2 OR 10.3;

 

(D)           ANY OBLIGOR BREACHES OR FAILS TO PERFORM ANY OTHER COVENANT
CONTAINED IN ANY LOAN DOCUMENTS, AND SUCH BREACH OR FAILURE IS NOT CURED WITHIN
FORTY-FIVE (45) DAYS AFTER A SENIOR OFFICER OF SUCH OBLIGOR HAS KNOWLEDGE
THEREOF OR RECEIVES NOTICE THEREOF FROM AGENT, WHICHEVER IS SOONER; PROVIDED,
HOWEVER, THAT SUCH NOTICE AND OPPORTUNITY TO CURE SHALL NOT APPLY IF THE BREACH
OR FAILURE TO PERFORM IS NOT CAPABLE OF BEING CURED WITHIN SUCH PERIOD.

 

(E)           ANY GUARANTOR REPUDIATES, REVOKES OR ATTEMPTS TO REVOKE ITS
GUARANTY; ANY OBLIGOR DENIES OR CONTESTS THE VALIDITY OR ENFORCEABILITY OF ANY
LOAN DOCUMENTS OR OBLIGATIONS, OR THE PERFECTION OR PRIORITY OF ANY LIEN GRANTED
TO AGENT; OR ANY LOAN DOCUMENT CEASES TO BE IN FULL FORCE OR EFFECT FOR ANY
REASON (OTHER THAN A WAIVER OR RELEASE BY AGENT AND LENDERS);

 

(F)            ANY BREACH OR DEFAULT OF AN OBLIGOR OCCURS UNDER ANY DOCUMENT,
INSTRUMENT OR AGREEMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS
PROPERTIES IS BOUND, RELATING TO ANY DEBT (OTHER THAN THE OBLIGATIONS) IN EXCESS
OF $10,000,000, IF THE MATURITY OF OR ANY PAYMENT WITH RESPECT TO SUCH DEBT MAY
BE ACCELERATED OR DEMANDED DUE TO SUCH BREACH;

 

(G)           ANY JUDGMENT OR ORDER FOR THE PAYMENT OF MONEY IS ENTERED AGAINST
AN OBLIGOR IN AN AMOUNT THAT EXCEEDS, INDIVIDUALLY OR CUMULATIVELY WITH ALL
UNSATISFIED JUDGMENTS OR ORDERS AGAINST ALL OBLIGORS, $10,000,000 (NET OF ANY
INSURANCE COVERAGE THEREFOR ACKNOWLEDGED IN WRITING BY THE INSURER), UNLESS A
STAY OF ENFORCEMENT OF SUCH JUDGMENT OR ORDER IS IN EFFECT, BY REASON OF A
PENDING APPEAL OR OTHERWISE;

 

(H)           ANY LOSS, THEFT, DAMAGE OR DESTRUCTION OCCURS WITH RESPECT TO ANY
COLLATERAL IF THE AMOUNT NOT COVERED BY INSURANCE EXCEEDS $10,000,000;

 

(I)            ANY OBLIGOR IS ENJOINED, RESTRAINED OR IN ANY WAY PREVENTED BY
ANY GOVERNMENTAL AUTHORITY FROM CONDUCTING ANY MATERIAL PART OF ITS BUSINESS;
ANY OBLIGOR SUFFERS THE LOSS, REVOCATION OR TERMINATION OF ANY MATERIAL LICENSE,
PERMIT, LEASE OR AGREEMENT NECESSARY TO ITS BUSINESS; THERE IS A CESSATION OF
ANY MATERIAL PART OF AN OBLIGOR’S BUSINESS FOR A MATERIAL PERIOD OF TIME; ANY
MATERIAL COLLATERAL OR PROPERTY OF AN OBLIGOR IS TAKEN OR IMPAIRED THROUGH
CONDEMNATION; ANY OBLIGOR AGREES TO OR COMMENCES ANY LIQUIDATION, DISSOLUTION OR
WINDING UP OF ITS AFFAIRS; OR ANY OBLIGOR CEASES TO BE SOLVENT;

 

(J)            ANY INSOLVENCY PROCEEDING IS COMMENCED BY ANY OBLIGOR; AN
INSOLVENCY PROCEEDING IS COMMENCED AGAINST ANY OBLIGOR AND:  SUCH OBLIGOR
CONSENTS TO THE INSTITUTION OF THE PROCEEDING AGAINST IT, THE PETITION
COMMENCING THE PROCEEDING IS NOT TIMELY CONTROVERTED BY SUCH OBLIGOR, SUCH
PETITION IS NOT DISMISSED WITHIN THIRTY (30) DAYS AFTER ITS FILING, OR AN ORDER
FOR

 

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RELIEF IS ENTERED IN THE PROCEEDING; A TRUSTEE (INCLUDING AN INTERIM TRUSTEE) IS
APPOINTED TO TAKE POSSESSION OF ANY SUBSTANTIAL PROPERTY OF OR TO OPERATE ANY OF
THE BUSINESS OF ANY OBLIGOR; OR ANY OBLIGOR MAKES AN OFFER OF SETTLEMENT,
EXTENSION OR COMPOSITION TO ITS UNSECURED CREDITORS GENERALLY;

 

(K)           A REPORTABLE EVENT OCCURS THAT AGENT, IN ITS REASONABLE
DISCRETION, DETERMINES CONSTITUTES GROUNDS FOR TERMINATION BY THE PENSION
BENEFIT GUARANTY CORPORATION OF ANY MULTIEMPLOYER PLAN OR APPOINTMENT OF A
TRUSTEE FOR ANY MULTIEMPLOYER PLAN; ANY MULTIEMPLOYER PLAN IS TERMINATED OR ANY
SUCH TRUSTEE IS REQUESTED OR APPOINTED AND THE RESULTING WITHDRAWAL LIABILITY,
IF ANY, HAS A MATERIAL ADVERSE EFFECT; ANY OBLIGOR IS IN “DEFAULT” (AS DEFINED
IN SECTION 4219(C)(5) OF ERISA) WITH RESPECT TO PAYMENTS TO A MULTIEMPLOYER PLAN
RESULTING FROM ANY WITHDRAWAL THEREFROM;

 

(L)            ANY OBLIGOR OR ANY OF ITS SENIOR OFFICERS IS CRIMINALLY INDICTED
OR CONVICTED FOR (I) A FELONY COMMITTED IN THE CONDUCT OF SUCH OBLIGOR’S
BUSINESS, OR (II) ANY STATE OR FEDERAL LAW (INCLUDING THE CONTROLLED SUBSTANCES
ACT, MONEY LAUNDERING CONTROL ACT OF 1986 AND ILLEGAL EXPORTATION OF WAR
MATERIALS ACT) THAT COULD REASONABLY BE EXPECTED TO LEAD TO FORFEITURE OF ANY
MATERIAL PROPERTY OR ANY COLLATERAL;

 

(M)          A CHANGE OF CONTROL OCCURS; OR

 

(N)           ANY EVENT OF DEFAULT SHALL OCCUR AND CONTINUE TO EXIST BEYOND ANY
APPLICABLE GRACE OR ANY CURE PERIOD UNDER BORROWERS’ 9.0% SENIOR NOTES DUE 2012
OR THE INDENTURE RELATING THERETO.

 

11.2.       REMEDIES UPON DEFAULT

 

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

 

(A)           DECLARE ANY OBLIGATIONS IMMEDIATELY DUE AND PAYABLE, WHEREUPON
THEY SHALL BE DUE AND PAYABLE WITHOUT DILIGENCE, PRESENTMENT, DEMAND, PROTEST OR
NOTICE OF ANY KIND, ALL OF WHICH ARE HEREBY WAIVED BY BORROWERS TO THE FULLEST
EXTENT PERMITTED BY LAW;

 

(B)           TERMINATE, REDUCE OR CONDITION ANY COMMITMENT, OR MAKE ANY
ADJUSTMENT TO THE BORROWING BASE;

 

(C)           REQUIRE OBLIGORS TO CASH COLLATERALIZE LC OBLIGATIONS, AND, IF
OBLIGORS FAIL PROMPTLY TO DEPOSIT SUCH CASH COLLATERAL, LENDERS MAY (AND SHALL
UPON THE DIRECTION OF REQUIRED LENDERS) ADVANCE THE REQUIRED CASH COLLATERAL AS
REVOLVER LOANS (WHETHER OR NOT AN OVERADVANCE EXISTS OR IS CREATED THEREBY, OR
THE CONDITIONS IN SECTION 6 ARE SATISFIED); AND

 

(D)           EXERCISE ANY OTHER RIGHTS OR REMEDIES AFFORDED UNDER ANY
AGREEMENT, BY LAW, AT EQUITY OR OTHERWISE, INCLUDING THE RIGHTS AND REMEDIES OF
A SECURED PARTY UNDER THE UCC.  SUCH RIGHTS AND REMEDIES INCLUDE THE RIGHTS TO
(I) TAKE POSSESSION OF ANY COLLATERAL; (II) REQUIRE

 

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BORROWERS TO ASSEMBLE COLLATERAL, AT BORROWERS’ EXPENSE, AND MAKE IT AVAILABLE
TO AGENT AT A PLACE DESIGNATED BY AGENT; (III) ENTER ANY PREMISES WHERE
COLLATERAL IS LOCATED AND STORE COLLATERAL ON SUCH PREMISES UNTIL SOLD (AND IF
THE PREMISES ARE OWNED OR LEASED BY A BORROWER, BORROWERS AGREE NOT TO CHARGE
FOR SUCH STORAGE); AND (IV) SELL OR OTHERWISE DISPOSE OF ANY COLLATERAL IN ITS
THEN CONDITION, OR AFTER ANY FURTHER MANUFACTURING OR PROCESSING THEREOF, AT
PUBLIC OR PRIVATE SALE, WITH SUCH NOTICE AS MAY BE REQUIRED BY APPLICABLE LAW,
IN LOTS OR IN BULK, AT SUCH LOCATIONS, ALL AS AGENT, IN ITS DISCRETION, DEEMS
ADVISABLE.  EACH BORROWER AGREES THAT TEN (10) DAYS NOTICE OF ANY PROPOSED SALE
OR OTHER DISPOSITION OF COLLATERAL BY AGENT SHALL BE REASONABLE.  AGENT SHALL
HAVE THE RIGHT TO CONDUCT SUCH SALES ON ANY OBLIGOR’S PREMISES, WITHOUT CHARGE,
AND SUCH SALES MAY BE ADJOURNED FROM TIME TO TIME IN ACCORDANCE WITH APPLICABLE
LAW.  AGENT SHALL HAVE THE RIGHT TO SELL, LEASE OR OTHERWISE DISPOSE OF ANY
COLLATERAL FOR CASH, CREDIT OR ANY COMBINATION THEREOF, AND AGENT MAY PURCHASE
ANY COLLATERAL AT PUBLIC OR, IF PERMITTED BY LAW, PRIVATE SALE AND, IN LIEU OF
ACTUAL PAYMENT OF THE PURCHASE PRICE, MAY SET OFF THE AMOUNT OF SUCH PRICE
AGAINST THE OBLIGATIONS.

 

11.3.       LICENSE

 

Agent is hereby granted an irrevocable, non-exclusive license or other right to
use, license or sub-license (without additional payment of royalty or other
compensation to any Person) any or all Intellectual Property of Borrowers,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral.  Each Borrower’s rights and interests under Intellectual
Property shall inure to Agent’s benefit.

 

11.4.       SETOFF

 

Agent, Lenders and their Affiliates are each authorized by Borrowers at any time
during an Event of Default, without notice to Borrowers or any other Person, to
set off and to appropriate and apply any deposits (general or special), funds,
claims, obligations, liabilities or other Debt at any time held or owing by
Agent, any Lender or any such Affiliate to or for the account of any Obligor
against any Obligations, whether or not demand for payment of such Obligation
has been made, any Obligations have been declared due and payable, are then due,
or are contingent or unmatured, or the Collateral or any guaranty or other
security for the Obligations is adequate.

 

11.5.       REMEDIES CUMULATIVE; NO WAIVER

 

11.5.1.        CUMULATIVE RIGHTS

 

All covenants, conditions, provisions, warranties, guaranties, indemnities and
other undertakings of Borrowers contained in the Loan Documents are cumulative
and not in derogation or substitution of each other.  In particular, the rights
and remedies of Agent and Lenders are cumulative, may be exercised at any time
and from time to time, concurrently or in any order, and shall not be exclusive
of any other rights or remedies that Agent and Lenders may have, whether under
any agreement, by law, at equity or otherwise.

 

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11.5.2.        WAIVERS

 

The failure or delay of Agent or any Lender to require strict performance by
Borrowers with any terms of the Loan Documents, or to exercise any rights or
remedies with respect to Collateral or otherwise, shall not operate as a waiver
thereof nor as establishment of a course of dealing.  All rights and remedies
shall continue in full force and effect until Full Payment of all Obligations. 
No modification of any terms of any Loan Documents (including any waiver
thereof) shall be effective, unless such modification is specifically provided
in a writing directed to Borrowers and executed by Agent or the requisite
Lenders, and such modification shall be applicable only to the matter
specified.  No waiver of any Default or Event of Default shall constitute a
waiver of any other Default or Event of Default that may exist at such time,
unless expressly stated.  If Agent or any Lender accepts performance by any
Obligor under any Loan Documents in a manner other than that specified therein,
or during any Default or Event of Default, or if Agent or any Lender shall delay
or exercise any right or remedy under any Loan Documents, such acceptance, delay
or exercise shall not operate to waive any Default or Event of Default nor to
preclude exercise of any other right or remedy.  It is expressly acknowledged by
Borrowers that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.

 

SECTION 12.            AGENT

 

12.1.       APPOINTMENT, AUTHORITY AND DUTIES OF AGENT

 

12.1.1.        APPOINTMENT AND AUTHORITY

 

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

 

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12.1.2.        DUTIES

 

Agent shall not have any duties except those expressly set forth in the Loan
Documents, nor be required to initiate or conduct any Enforcement Action except
to the extent directed to do so by Required Lenders while an Event of Default
exists.  The conferral upon Agent of any right shall not imply a duty on Agent’s
part to exercise such right, unless instructed to do so by Required Lenders in
accordance with this Agreement.

 

12.1.3.        AGENT PROFESSIONALS

 

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

 

12.1.4.        INSTRUCTIONS OF REQUIRED LENDERS

 

The rights and remedies conferred upon Agent under the Loan Documents may be
exercised without the necessity of joinder of any other party, unless required
by Applicable Law.  Agent may request instructions from Required Lenders with
respect to any act (including the failure to act) in connection with any Loan
Documents, and may seek assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.6 against all Claims that could be
incurred by Agent in connection with any act.  Agent shall be entitled to
refrain from any act until it has received such instructions or assurances, and
Agent shall not incur liability to any Person by reason of so refraining. 
Instructions of Required Lenders shall be binding upon all Lenders, and no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting in accordance with the instructions of
Required Lenders.  Notwithstanding the foregoing, instructions by and consent of
all Lenders shall be required in the circumstances described in Section 14.1.1,
and in no event shall Required Lenders, without the prior written consent of
each Lender, direct Agent to accelerate and demand payment of Loans held by one
Lender without accelerating and demanding payment of all other Loans, nor to
terminate the Commitments of one Lender without terminating the Commitments of
all Lenders.  In no event shall Agent be required to take any action that, in
its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.

 

12.2.       AGREEMENTS REGARDING COLLATERAL AND FIELD EXAMINATION REPORTS

 

12.2.1.        LIEN RELEASES; CARE OF COLLATERAL

 

Lenders authorize Agent to release any Lien with respect to any Collateral (a)
upon Full Payment of the Obligations, (b) that is the subject of an Asset
Disposition which Borrowers certify in writing to Agent is a Permitted Asset
Disposition or a Lien which Borrowers certify is a Permitted Lien entitled to
priority over Agent’s Liens (and Agent may rely conclusively on any such
certificate without further inquiry), (c) that does not constitute a material
part of the Collateral, or (d) with the written consent of all Lenders.  Agent
shall have no obligation whatsoever to any Lenders to assure that any Collateral
exists or is owned by a Borrower, or is cared for, protected, insured or
encumbered, nor to assure that Agent’s Liens have been properly created,
perfected or enforced, or are entitled to any particular priority, nor to
exercise any duty of care with respect to any Collateral.

 

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12.2.2.        POSSESSION OF COLLATERAL

 

Agent and Lenders appoint each other Lender as agent for the purpose of
perfecting Liens (for the benefit of Secured Parties) in any Collateral that,
under the UCC or other Applicable Law, can be perfected by possession.  If any
Lender obtains possession of any such Collateral, it shall notify Agent thereof
and, promptly upon Agent’s request, deliver such Collateral to Agent or
otherwise deal with such Collateral in accordance with Agent’s instructions.

 

12.2.3.        REPORTS

 

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

 

12.3.       RELIANCE BY AGENT

 

Agent shall be entitled to rely, and shall be fully protected in relying, upon
any certification, notice or other communication (including those by telephone,
telex, telegram, telecopy or e-mail) believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person, and upon the advice
and statements of Agent Professionals.

 

12.4.       ACTION UPON DEFAULT

 

Agent shall not be deemed to have knowledge of any Default or Event of Default
unless it has received written notice from a Lender or Borrower specifying the
occurrence and nature thereof.  If any Lender acquires knowledge of a Default or
Event of Default, it shall promptly notify Agent and the other Lenders thereof
in writing.  Each Lender agrees that, except as otherwise provided in any Loan
Documents or with the written consent of Agent and Required Lenders, it will not
take any Enforcement Action, accelerate its Obligations, or exercise any right
that it might otherwise have under Applicable Law to credit bid at foreclosure
sales, UCC sales or other similar dispositions of Collateral.  Notwithstanding
the foregoing, however, a Lender may take action to preserve or enforce its
rights against an Obligor where a deadline or limitation period is applicable
that would, absent such action, bar enforcement of Obligations held by such
Lender, including the filing of proofs of claim in an Insolvency Proceeding.
Agent shall not be

 

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authorized to take any action to foreclose on any of the Real Estate without the
prior written consent of GECC (which consent shall not be unreasonably withheld
or delayed), and which consent shall be provided by GECC at such time as GECC
reasonably determines that no material environmental matters affect such Real
Estate (which determination may be made, in GECC’s reasonable credit judgment,
with or without the requirement of an environmental audit or assessment with
respect to such Real Estate.)

 

12.5.       RATABLE SHARING

 

If any Lender shall obtain any payment or reduction of any Obligation.  Whether
through set-off or otherwise, in excess of its share of such Obligation,
determined on a Pro Rata basis or in accordance with Section 5.6.1. as
applicable, such Lender shall forthwith purchase from Agent, Issuing Bank and
the other Lenders such participations in the affected Obligation as are
necessary to cause the purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, on a Pro Rata basis or
in accordance with Section 5.6.1. as applicable.  If any of such payment or
reduction is thereafter recovered from the purchasing Lender, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery or
additional costs, but without interest.

 

12.6.       INDEMNIFICATION OF AGENT INDEMNITEES

 

12.6.1.        INDEMNIFICATION

 

EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE EXTENT
NOT REIMBURSED BY OBLIGORS (BUT WITHOUT LIMITING THE INDEMNIFICATION OBLIGATIONS
OF OBLIGORS UNDER ANY LOAN DOCUMENTS), ON A PRO RATA BASIS, AGAINST ALL CLAIMS
THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY AGENT INDEMNITEE.  If Agent is
sued by any receiver, trustee in bankruptcy, debtor-in-possession or other
Person for any alleged preference from an Obligor or fraudulent transfer, then
any monies paid by Agent in settlement or satisfaction of such proceeding,
together with all interest, costs and expenses (including attorneys’ fees)
incurred in the defense of same, shall be promptly reimbursed to Agent by
Lenders to the extent of each Lender’s Pro Rata share.

 

12.6.2.        PROCEEDINGS

 

Without limiting the generality of the foregoing, if at any time (whether prior
to or after the Commitment Termination Date) any proceeding is brought against
any Agent Indemnitees by an Obligor, or any Person claiming through an Obligor,
to recover damages for any act taken or omitted by Agent in connection with any
Obligations, Collateral, Loan Documents or matters relating thereto, or
otherwise to obtain any other relief of any kind on account of any transaction
relating to any Loan Documents, each Lender agrees to indemnify and hold
harmless Agent Indemnitees with respect thereto and to pay to Agent Indemnitees
such Lender’s Pro Rata share of any amount that any Agent Indemnitee is required
to pay under any judgment or other order entered in such proceeding or by reason
of any settlement, including all interest, costs and expenses (including
attorneys’ fees) incurred in defending same.  In Agent’s discretion, Agent may
reserve for any such proceeding, and may satisfy any judgment, order or
settlement, from proceeds of Collateral prior to making any distributions of
Collateral proceeds to Lenders.

 

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12.7.       LIMITATION ON RESPONSIBILITIES OF AGENT

 

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

 

12.8.       SUCCESSOR AGENT AND CO-AGENTS

 

12.8.1.        RESIGNATION; SUCCESSOR AGENT

 

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

 

12.8.2.        SEPARATE COLLATERAL AGENT

 

It is the intent of the parties that there shall be no violation of any
Applicable Law denying or restricting the right of financial institutions to
transact business in any jurisdiction.  If Agent believes that it may be limited
in the exercise of any rights or remedies under the Loan

 

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Documents due to any Applicable Law, Agent may appoint an additional Person who
is not so limited, as a separate collateral agent or co-collateral agent.  If
Agent so appoints a collateral agent or co-collateral agent, each right and
remedy intended to be available to Agent under the Loan Documents shall also be
vested in such separate agent.  Every covenant and obligation necessary to the
exercise thereof by such agent shall run to and be enforceable by it as well as
Agent.  Lenders shall execute and deliver such documents as Agent deems
appropriate to vest any rights or remedies in such agent.  If any collateral
agent or co-collateral agent shall die or dissolve, become incapable of acting,
resign or be removed, then all the rights and remedies of such agent, to the
extent permitted by Applicable Law, shall vest in and be exercised by Agent
until appointment of a new agent.

 

12.9.       DUE DILIGENCE AND NON-RELIANCE

 

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

 

12.10.     REPLACEMENT OF CERTAIN LENDERS

 

If any Lender (a) fails to fund its Pro Rata share of any Loan or LC Obligation
hereunder, and such failure is not cured within two (2) Business Days, (b)
defaults in performing any of its obligations under the Loan Documents, or (c)
fails to give its consent to any amendment, waiver or action for which consent
of all Lenders was required and Required Lenders consented, then, in addition to
any other rights and remedies that any Person may have, Agent may, by notice to
such Lender within one hundred twenty (120) days, require such Lender to assign
all of its rights and obligations under the Loan Documents to Eligible
Assignee(s) specified by Agent, pursuant to appropriate Assignment and
Acceptance(s) and within twenty (20) days after Agent’s notice.  Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment and
Acceptance if the Lender fails to execute same.  Such Lender shall be entitled
to receive, in cash, concurrently with such assignment, all amounts owed to it
under the Loan Documents, including all principal, interest and fees through the
date of assignment (but excluding any prepayment charge).

 

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12.11.     REMITTANCE OF PAYMENTS AND COLLECTIONS

 

12.11.1.      REMITTANCES GENERALLY

 

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

 

12.11.2.      FAILURE TO PAY

 

If any Lender fails to pay any amount when due by it to Agent pursuant to the
terms hereof, such amount shall bear interest from the due date until paid at
the rate determined by Agent as customary in the banking industry for interbank
compensation.  In no event shall Borrowers be entitled to receive credit for any
interest paid by a Lender to Agent.

 

12.11.3.      RECOVERY OF PAYMENTS

 

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

 

12.12.     AGENT IN ITS INDIVIDUAL CAPACITY

 

As a Lender, Bank of America shall have the same rights and remedies under the
other Loan Documents as any other Lender, and the terms “Lenders,” “Required
Lenders” or any similar term shall include Bank of America in its capacity as a
Lender.  Each of Bank of America and its Affiliates may accept deposits from,
maintain deposits or credit balances for, invest in, lend money to, provide Bank
Products to, act as trustee under indentures of, serve as financial or other
advisor to, and generally engage in any kind of business with, Obligors and
their Affiliates, as if Bank of America were any other bank, without any duty to
account therefor (including any fees or other consideration received in
connection therewith) to the other Lenders.  In their individual capacity, Bank
of America and its Affiliates may receive information regarding Obligors, their
Affiliates and their Account Debtors (including information subject to
confidentiality obligations), and each Lender agrees that Bank of America and
its Affiliates shall be under no obligation to provide such information to
Lenders, if acquired in such individual capacity and not as Agent hereunder.

 

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12.13.     SYNDICATION AGENT

 

The Lender designated on the cover page of this Agreement as the “Syndication
Agent” shall not have any right, power, responsibility or duty under any Loan
Documents other than those applicable to all Lenders, and shall in no event be
deemed to have any fiduciary relationship with any other Lender.

 

12.14.     NO THIRD PARTY BENEFICIARIES

 

This Section 12 is an agreement solely among Lenders and Agent, and does not
confer any rights or benefits upon Borrowers or any other Person.  As between
Borrowers and Agent, any action that Agent may take under any Loan Documents
shall be conclusively presumed to have been authorized and directed by Lenders
as herein provided.

 

SECTION 13.            BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS

 

13.1.       SUCCESSORS AND ASSIGNS

 

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

 

13.2.       PARTICIPATIONS

 

13.2.1.        PERMITTED PARTICIPANTS; EFFECT

 

Any Lender may, in the ordinary course of its business and in accordance with
Applicable Law, at any time sell to a financial institution (“Participant”) a
participating interest in the rights and obligations of such Lender under any
Loan Documents.  Despite any sale by a Lender of participating interests to a
Participant, such Lender’s obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for performance of such obligations, such Lender shall remain the holder
of its Loans and Commitments for all purposes, all amounts payable by Borrowers
shall be determined as if such Lender had not sold such participating interests,
and Borrowers and Agent shall continue to deal solely and directly with such
Lender in connection with the Loan Documents.  Each Lender shall be solely
responsible for notifying its Participants of any matters under the Loan
Documents, and Agent and the other Lenders shall not have any obligation or
liability to any such Participant.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 5.8 unless
Borrowers agree otherwise in writing.

 

13.2.2.        VOTING RIGHTS

 

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

 

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principal, interest or fees on such Loan or Commitment, or releases any
Borrower, Guarantor or substantial portion of the Collateral.

 

13.2.3.        BENEFIT OF SET-OFF

 

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

 

13.3.       ASSIGNMENTS

 

13.3.1.        PERMITTED ASSIGNMENTS

 

A Lender may assign to any Eligible Assignee any of its rights and obligations
under the Loan Documents, as long as (a) each assignment is of a constant, and
not a varying, percentage of the transferor Lender’s rights and obligations
under the Loan Documents and, in the case of a partial assignment, is in a
minimum principal amount of $5,000,000 (unless otherwise agreed by Agent in its
discretion) and integral multiples of $5,000,000 in excess of that amount; (b)
except in the case of an assignment in whole of a Lender’s rights and
obligations, the aggregate amount of the Commitments retained by the transferor
Lender be at least $15,000,000 (unless otherwise agreed by Agent in its
discretion); and (c) the parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording, an Assignment and
Acceptance.  Nothing herein shall limit the right of a Lender to pledge or
assign any rights under the Loan Documents to (i) any Federal Reserve Bank or
the United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors and any Operating Circular issued by such Federal Reserve
Bank, or (ii) counterparties to swap agreements relating to any Loans; provided,
however, that any payment by Borrowers to the assigning Lender in respect of any
Obligations assigned as described in this sentence shall satisfy Borrowers’
obligations hereunder to the extent of such payment, and no such assignment
shall release the assigning Lender from its obligations hereunder.

 

13.3.2.        EFFECT; EFFECTIVE DATE

 

Upon delivery to Agent of an assignment notice in the form of Exhibit G, such
assignment shall become effective as specified in the notice, if it complies
with this Section 13.3.  From the effective date of such assignment, the
Eligible Assignee shall for all purposes be a Lender under the Loan Documents,
and shall have all rights and obligations of a Lender thereunder.  Upon
consummation of an assignment, the transferor Lender, Agent and Borrowers shall
make appropriate arrangements for issuance of replacement and/or new Notes, as
appropriate.

 

13.4.       TAX TREATMENT

 

If any interest in a Loan Document is transferred to a Transferee that is
organized under the laws of any jurisdiction other than the United States or any
state or district thereof, the

 

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transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 5.9.

 

13.5.       REPRESENTATION OF LENDERS

 

Each Lender represents and warrants to each Borrower, Agent and other Lenders
that none of the consideration used by it to fund its Loans or to participate in
any other transactions under this Agreement constitutes for any purpose of ERISA
or Section 4975 of the Internal Revenue Code assets of any “plan” as defined in
Section 3(3) of ERISA or Section 4975 of the Internal Revenue Code and the
interests of such Lender in and under the Loan Documents shall not constitute
plan assets under ERISA.

 

SECTION 14.            MISCELLANEOUS

 

14.1.       CONSENTS, AMENDMENTS AND WAIVERS

 

14.1.1.        AMENDMENT

 

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

 

(A)           WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT, NO MODIFICATION SHALL
BE EFFECTIVE WITH RESPECT TO ANY PROVISION IN A LOAN DOCUMENT THAT RELATES TO
ANY RIGHTS, DUTIES OR DISCRETION OF AGENT;

 

(B)           WITHOUT THE PRIOR WRITTEN CONSENT OF ISSUING BANK, NO MODIFICATION
SHALL BE EFFECTIVE WITH RESPECT TO ANY LC OBLIGATIONS OR SECTION 2.2;

 

(C)           WITHOUT THE PRIOR WRITTEN CONSENT OF EACH AFFECTED LENDER, NO
MODIFICATION SHALL BE EFFECTIVE THAT WOULD (I) INCREASE ANY COMMITMENT OF SUCH
LENDER; OR (II) REDUCE THE AMOUNT OF, OR WAIVE OR DELAY PAYMENT OF, ANY
PRINCIPAL, INTEREST OR FEES PAYABLE TO SUCH LENDER; AND

 

(D)           WITHOUT THE PRIOR WRITTEN CONSENT OF ALL LENDERS (EXCEPT A
DEFAULTING LENDER AS PROVIDED IN SECTION 4.2), NO MODIFICATION SHALL BE
EFFECTIVE THAT WOULD (I) EXTEND THE REVOLVER TERMINATION DATE; (II) ALTER
SECTION 5.5, 7.1 (EXCEPT TO ADD COLLATERAL) OR 14.1.1; (III) AMEND THE
DEFINITIONS OF BORROWING BASE (AND THE DEFINED TERMS USED IN SUCH DEFINITION),
PRO RATA OR REQUIRED LENDERS; (IV) INCREASE ANY ADVANCE RATE; (V) RELEASE A
MATERIAL PORTION OF COLLATERAL, EXCEPT AS CURRENTLY CONTEMPLATED BY THE LOAN
DOCUMENTS; (VI) ALTER THE TIME OR AMOUNT OF REPAYMENT OF ANY OF THE LOANS
(EXCEPT A MORATORIUM OR DEFERRAL OF PAYMENT PURSUANT TO A FORBEARANCE AGREEMENT
ENTERED INTO BY AGENT AND THE REQUIRED LENDERS WITH BORROWERS AT ANY TIME AN
EVENT OF DEFAULT EXISTS) OR WAIVE ANY EVENT OF DEFAULT RESULTING FROM NONPAYMENT
OF THE LOANS ON THE DUE DATE THEREOF (OR WITHIN ANY APPLICABLE PERIOD OF GRACE),
(VII) FORGIVE ANY OF THE OBLIGATIONS, EXCEPT ANY PORTION OF THE OBLIGATIONS HELD
BY A LENDER WHO CONSENTS IN WRITING TO SUCH FORGIVENESS, OR (VIII) RELEASE ANY
OBLIGOR FROM LIABILITY FOR ANY OBLIGATIONS, IF SUCH OBLIGOR IS SOLVENT AT THE
TIME OF THE RELEASE.

 

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14.1.2.        LIMITATIONS

 

The agreement of Borrowers shall not be necessary to the effectiveness of any
modification of a Loan Document that deals solely with the rights and duties of
Lenders, Agent and/or Issuing Bank as among themselves.  Only the consent of the
parties to the Fee Letter or any agreement relating to a Bank Product shall be
required for any modification of such agreement, and no Affiliate of a Lender
that is party to a Bank Product agreement shall have any other right to consent
to or participate in any manner in modification of any other Loan Document.  The
making of any Loans during the existence of a Default or Event of Default shall
not be deemed to constitute a waiver of such Default or Event of Default, nor to
establish a course of dealing.  Any waiver or consent granted by Lenders
hereunder shall be effective only if in writing, and then only in the specific
instance and for the specific purpose for which it is given.

 

14.1.3.        PAYMENT FOR CONSENTS

 

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

 

14.1.4        OVERADVANCES

 

Unless otherwise directed in writing by the Required Lenders, Agent may require
Lenders to honor requests by Borrowers for Overadvance Loans (in which event,
and notwithstanding anything to the contrary set forth in Section 2.1 or
elsewhere in this Agreement, Lenders shall continue to make Revolver Loans up to
their Pro Rata share of the Commitments) and to forbear from requiring Borrowers
to cure an Overadvance, (1) when no Event of Default exists (or if an Event of
Default exists, when the existence of such Event of Default is not known by
Agent), if and for so long as (i) such Overadvance does not continue for a
period of more than thirty (30) consecutive days, following which no Overadvance
exists for at least thirty (30) consecutive days before another Overadvance
exists, (ii) the amount of the Revolver Loans outstanding at any time does not
exceed the aggregate of the Commitments at such time, and (iii) the Overadvance
is not known by Agent at the time in question to exceed $11,000,000; and (2)
regardless of whether or not an Event of Default exists, if Agent discovers the
existence of an Overadvance not previously known by it to exist, Lenders shall
be obligated to continue making such Revolver Loans as directed by Agent only
(A) if the amount of the Overadvance is not increased by more than $7,000,000
above the amount determined by Agent to exist on the date of discovery thereof
and (B) for a period not to exceed fifteen (15) Business Days; provided,
however, that without the consent of all Lenders, the aggregate amount of the
Overadvance permitted under this Section 14.1.4 may not exceed $15,000,000 at
any time.  If any Overadvance shall continue to exist at any time after the
expiration of the periods set forth in clauses (1) or (2) above, Agent may (and
shall at the request of the Required Lenders) demand payment thereof.  In no
event shall any Borrower or any other Obligor be deemed to be a beneficiary of
this Section 14.1.4 or authorized to enforce any of the provisions of this
Section 14.1.4.  The provisions of this Section 14.1.4 shall be in addition to
the provisions of Section 2.1.6 hereof.

 

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14.2.       GENERAL INDEMNITY

 

EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINST ANY
CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEES, INCLUDING
CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE.  If any Taxes (other than
Excluded Taxes) shall be payable by any party due to the execution, delivery,
issuance or recording of any Loan Documents, or the creation or repayment of any
Obligations, Borrowers shall pay (and shall promptly reimburse Agent and Lenders
for their payment of) all such Taxes, including any interest and penalties
thereon, and will indemnify and hold harmless Indemnitees against all liability
in connection therewith.

 

14.3.       LIMITATIONS OF INDEMNITIES

 

IN NO EVENT SHALL ANY PARTY TO A LOAN DOCUMENT HAVE ANY OBLIGATION THEREUNDER TO
INDEMNIFY AN INDEMNITEE WITH RESPECT TO A CLAIM THAT IS DETERMINED IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO RESULT FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.  The obligation of
each Obligor and Lender with respect to each indemnity given by it in any Loan
Documents shall survive Full Payment of the Obligations.

 

14.4.       NOTICES AND COMMUNICATIONS

 

14.4.1.        NOTICE ADDRESS

 

Subject to Section 4.1.4, all notices, requests and other communications by or
to a party hereto shall be in writing and shall be given to any Borrower, at
Borrower Agent’s address shown on the signature pages hereof, and to any other
Person at its address shown on the signature pages hereof (or, in the case of a
Person who becomes a Lender after the Closing Date, at the address shown on its
Assignment and Acceptance), or at such other address as a party may hereafter
specify by notice in accordance with this Section 14.4.  Each such notice,
request or other communication shall be effective only (a) if given by facsimile
transmission, when transmitted to the applicable facsimile number, if
confirmation of receipt is received; (b) if given by mail, three (3) Business
Days after deposit in the U.S. mail, with first-class postage pre-paid,
addressed to the applicable address; or (c) if given by personal delivery, when
duly delivered to the notice address with receipt acknowledged.  Notwithstanding
the foregoing, no notice to Agent pursuant to Section 2.1.4, 2.2, 3.1.2 or 4.1.1
shall be effective until actually received by the individual to whose attention
at Agent such notice is required to be sent.  Any written notice, request or
other communication that is not sent in conformity with the foregoing provisions
shall nevertheless be effective on the date actually received by the noticed
party.  Any notice received by Borrower Agent shall be deemed received by all
Borrowers.

 

14.4.2.        ELECTRONIC COMMUNICATIONS; VOICE MAIL

 

Electronic mail and internet websites may be used only for routine
communications, such as financial statements, Borrowing Base Certificates and
other information required by Section 10.1.2, administrative matters, and
distribution of Loan Documents for execution and matters permitted under Section
4.1.4.  Agent and Lenders make

 

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no assurances as to the privacy and security of electronic communications. 
Electronic and voice mail may not be used as effective notice under the Loan
Documents.

 

14.4.3.        NON-CONFORMING COMMUNICATIONS

 

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

 

14.5.       PERFORMANCE OF BORROWERS’ OBLIGATIONS

 

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

 

14.6.       CREDIT INQUIRIES

 

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

 

14.7.       SEVERABILITY

 

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

 

14.8.       CUMULATIVE EFFECT; CONFLICT OF TERMS

 

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

 

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14.9.       COUNTERPARTS; FACSIMILE SIGNATURES

 

Any Loan Document may be executed in counterparts, each of which taken together
shall constitute one instrument.  Loan Documents may be executed and delivered
by facsimile, and they shall have the same force and effect as manually signed
originals.  Agent may require confirmation by a manually-signed original, but
failure to request or deliver same shall not limit the effectiveness of any
facsimile signature.

 

14.10.     ENTIRE AGREEMENT

 

Time is of the essence of the Loan Documents.  The Loan Documents embody the
entire understanding of the parties with respect to the subject matter thereof
and supersede all prior understandings regarding the same subject matter.

 

14.11.     OBLIGATIONS OF LENDERS

 

The obligations of each Lender hereunder are several, and no Lender shall be
responsible for the obligations or Commitments of any other Lender.  Amounts
payable hereunder to each Lender shall be a separate and independent debt, and
each Lender shall be entitled, to the extent not otherwise restricted hereunder,
to protect and enforce its rights arising out of the Loan Documents.  It shall
not be necessary for Agent or any other Lender to be joined as an additional
party in any proceeding for such purposes.  Nothing in this Agreement and no
action of Agent or Lenders pursuant to the Loan Documents shall be deemed to
constitute Agent and Lenders to be a partnership, association, joint venture or
any other kind of entity, nor to constitute control of any Borrower.  Each
Borrower acknowledges and agrees that in connection with all aspects of any
transaction contemplated by the Loan Documents, Borrowers, Agent, Issuing Bank
and Lenders have an arms-length business relationship that creates no fiduciary
duty on the part of Agent, Issuing Bank or any Lender, and each Borrower, Agent,
Issuing Bank and Lender expressly disclaims any fiduciary relationship.

 

14.12.     CONFIDENTIALITY

 

During the term of this Agreement and for 24 months thereafter, Agent and
Lenders agree to take reasonable precautions to maintain the confidentiality of
any information that Borrowers deliver to Agent and Lenders and identify as
confidential at the time of delivery, except that Agent and any Lender may
disclose such information (a) to their respective officers, directors,
employees, Affiliates and agents, including legal counsel, auditors and other
professional advisors; (b) to any party to the Loan Documents from time to time;
(c) pursuant to the order of any court or administrative agency; (d) upon the
request of any Governmental Authority exercising regulatory authority over Agent
or such Lender; (e) which ceases to be confidential, other than by an act or
omission of Agent or any Lender, or which becomes available to Agent or any
Lender on a non-confidential basis; (f) to the extent reasonably required in
connection with any litigation relating to any Loan Documents or transactions
contemplated thereby, or otherwise as required by Applicable Law; (g) to the
extent reasonably required for the exercise of any rights or remedies under the
Loan Documents; (h) to any actual or proposed party to a Bank Product or to any
Transferee, as long as such Person agrees to be bound by the provisions of this
Section; (i) to the National Association of Insurance Commissioners or any
similar organization, or to any nationally recognized rating agency that
requires access to information about a Lender’s portfolio in connection with
ratings issued with

 

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respect to such Lender; (j) to any investor or potential investor in an Approved
Fund that is a Lender or Transferee, but solely for use by such investor to
evaluate an investment in such Approved Fund, or to any manager, servicer or
other Person in connection with its administration of any such Approved Fund; or
(k) with the consent of Borrowers.  Notwithstanding the foregoing, Agent and
Lenders may with the prior written consent of Borrowers, issue and disseminate
to the public general information describing this credit facility, including the
names and addresses of Borrowers and a general description of Borrowers’
businesses, and may use Borrowers’ names in advertising and other promotional
materials.

 

14.13.     Certifications Regarding IndenturesBorrowers certify to Agent and
Lenders that neither the execution or performance of the Loan Documents nor the
incurrence of any Obligations by Borrowers violates the Indenture, including
Section 4.9 thereof.  Borrowers further certify that the Commitments and
Obligations constitute a “Permitted Indebtedness” under the Indenture.  Agent
may condition Borrowings, Letters of Credit and other credit accommodations
under the Loan Documents from time to time upon Agent’s receipt of evidence that
the Commitments and Obligations continue to constitute a “Permitted
Indebtedness” at such time.

 

14.14.     GOVERNING LAW

 

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

 

14.15.     CONSENT TO FORUM

 

14.15.1.      FORUM

 

EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL
OR STATE COURT SITTING IN OR WITH JURISDICTION OVER THE NORTHERN DISTRICT OF
GEORGIA, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN DOCUMENTS,
AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH
COURT.  EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES
THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION,
VENUE OR INCONVENIENT FORUM.  Nothing herein shall limit the right of Agent or
any Lender to bring proceedings against any Obligor in any other court.  Nothing
in this Agreement shall be deemed to preclude enforcement by Agent of any
judgment or order obtained in any forum or jurisdiction.

 

14.16.     WAIVERS BY BORROWERS

 

To the fullest extent permitted by Applicable Law, each Borrower waives (a) the
right to trial by jury (which Agent and each Lender hereby also waives) in any
proceeding, claim or counterclaim of any kind relating in any way to any Loan
Documents, Obligations or Collateral; (b) presentment, demand, protest, notice
of presentment, default, non-payment, maturity, release, compromise, settlement,
extension or renewal of any commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which

 

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a Borrower may in any way be liable, and hereby ratifies anything Agent may do
in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent or any
Lender, on any theory of liability, for special, indirect, consequential,
exemplary or punitive damages (as opposed to direct or actual damages) in any
way relating to any Enforcement Action, Obligations, Loan Documents or
transactions relating thereto; and (g) notice of acceptance hereof.  Each
Borrower acknowledges that the foregoing waivers are a material inducement to
Agent and Lenders entering into this Agreement and that Agent and Lenders are
relying upon the foregoing in their dealings with Borrowers.  Each Borrower has
reviewed the foregoing waivers with its legal counsel and has knowingly and
voluntarily waived its jury trial and other rights following consultation with
legal counsel.  In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

 

14.17.     PATRIOT ACT NOTICE

 

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

 

14.18.     JV EUROPE

 

Nothing in this Agreement shall be deemed to cause JV Europe or its subsidiaries
to become a guarantor of or pledge its assets to secure the Obligations, nor
shall this Agreement prohibit JV Europe or its subsidiaries from paying
dividends, making payments under its indebtedness to Nexans or its secured
lending arrangements or to prohibit SEI from issuing new shares of its common
stock in payment of the put price which may be payable to Nexans with respect to
JV Europe.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES BEGIN ON FOLLOWING PAGE]

 

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

 

 

BORROWERS:

 

 

 

SUPERIOR ESSEX COMMUNICATIONS LP

 

 

 

 

 

By:

 

 

 

David S. Aldridge, Chief Financial Officer,

Vice President and Treasurer

 

 

 

Address:

 

 

 

150 Interstate North Parkway, Suite 300

Atlanta, Georgia 30339

Attention: Chief Financial Officer

Telecopier No.: (770) 303-8892

 

 

 

ESSEX GROUP, INC.

 

 

 

 

 

By:

 

 

 

David S. Aldridge, Vice President and Treasurer

 

 

 

Address:

 

 

 

c/o Superior Essex Communications LP

150 Interstate North Parkway, Suite 300

Atlanta, Georgia 30339

Attention: Chief Financial Officer

Telecopier No.: (770) 303-8892

 

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AGENT:

 

 

 

BANK OF AMERICA, N.A.

 

As Agent

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

Address:

300 Galleria Parkway, Suite 800

Atlanta, Georgia 30339

Attention: Loan Administration Manager

Telecopier No.: (770) 839-2483

 

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

 

 

LENDERS:

 

 

 

BANK OF AMERICA, N.A.

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

Address:

 

 

 

300 Galleria Parkway, Suite 800

 

Atlanta, Georgia 30339

 

 

 

LIBOR Lending Office:

 

 

 

300 Galleria Parkway, Suite 800

Atlanta, Georgia 30339

Attention: Loan Administration Manager

Telecopier No.: (770) 839-2483

 

 

 

GENERAL ELECTRIC CAPITAL

CORPORATION

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

 

 

Address:

 

 

 

GE Corporate Financial Services

 

201 Merritt 7, PO Box 5201

 

Norwalk, Connecticut 06856

 

 

 

LIBOR Lending Office:

 

 

 

GE Corporate Financial Services

 

201 Merritt 7, PO Box 5201

 

Norwalk, Connecticut 06856

 

Attention: Jessica Hutson, Superior Essex contact

 

Telecopier No.: (203) 229-5791

 

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

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

 

 

 

Address:

 

 

 

171 17th Street, NW

 

Atlanta, Georgia 30363

 

 

 

LIBOR Lending Office:

 

 

 

171 17th Street, NW

 

Atlanta, Georgia 30363

 

Attention: Dan Denton

 

Telecopier No.: (404) 214-3964

 

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EXHIBIT A

 

FORM OF

SECOND AMENDED AND RESTATED REVOLVER NOTE

 

 

 

April      , 2006

U.S. $                              

 

Atlanta, Georgia

 

FOR VALUE RECEIVED, the undersigned, SUPERIOR ESSEX COMMUNICATIONS LP
(hereinafter referred to as “Superior” and “Borrower Agent”), a Delaware limited
partnership, with its chief executive office and principal place of business at
150 Interstate North Parkway, Suite 300, Atlanta, Georgia 30339, and ESSEX
GROUP, INC., a Michigan corporation (“Essex”), with its chief executive office
and principal place of business at 1601 Wall Street, Fort Wayne, Indiana  46802
(Superior and Essex collectively referred to herein as “Borrowers” and
individually as a “Borrower”), hereby unconditionally, and jointly and
severally, promise to pay to the order of
                                          (herein, together with any permitted
subsequent holder hereof, called the “Holder”) the principal sum of
                               MILLION AND NO/100 DOLLARS ($
                           ) or such lesser sum as may constitute Holder’s Pro
Rata share of the outstanding principal amount of all Revolver Loans pursuant to
the terms of the Loan Agreement (as defined below) on the date on which such
outstanding principal amounts become due and payable pursuant to Section 5.2 of
the Loan Agreement, in strict accordance with the terms thereof.  Borrowers
likewise unconditionally, and jointly and severally, promise to pay to Holder
interest from and after the date hereof on Holder’s Pro Rata share of the
outstanding principal amount of Revolver Loans at such interest rates, payable
at such times, and computed in such manner as are specified in Section 3.1 of
the Loan Agreement, in strict accordance with the terms thereof.

 

This Second Amended and Restated Revolver Note (“Note”) is issued pursuant to,
and is one of the “Revolver Notes” referred to in, the Amended and Restated Loan
and Security Agreement dated the date hereof (as the same may be amended,
restated or otherwise modified from time to time, the “Loan Agreement”), among
Borrowers, Bank of America, N.A., as collateral and administrative agent
(together with its successors and assigns in such capacity, “Administrative
Agent”) for itself and the financial institutions from time to time parties
thereto as lenders (“Lenders”), such Lenders and the other parties named
therein, and Holder is and shall be entitled to all benefits thereof and of all
Loan Documents executed and delivered in connection therewith.  This Note is
subject to certain restrictions on transfer or assignment as provided in the
Loan Agreement.  All capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed to such terms in the Loan Agreement.

 

The repayment of the principal balance of this Note is subject to the provisions
of Section 5.2 of the Loan Agreement.  The entire unpaid principal balance and
all accrued interest on this Note shall be due and payable immediately upon the
termination of the Commitments as set forth in Section 4.6 of the Loan
Agreement.

 

All payments of principal and interest shall be made in Dollars in immediately
available funds as specified in the Loan Agreement.

 

Upon or after the occurrence of an Event of Default and for so long as such
Event of Default exists, the principal balance and all accrued interest of this
Note may be declared (or shall become) due and payable in the manner and with
the effect provided in the Loan Agreement, and the unpaid principal balance
hereof shall bear interest at the Default Rate as and when provided in Section
3.1.1 of the Loan Agreement.  Borrowers jointly and severally agree to pay, and
save Holder harmless against, any liability for the payment of, all costs and
expenses, including, but not limited to, reasonable attorneys’ fees, if this
Note is collected by or through an attorney-at-law.

 

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

 

All principal amounts of Revolver Loans made by Holder to Borrowers pursuant to
the Loan Agreement, and all accrued and unpaid interest thereon, shall be deemed
outstanding under this Note and shall continue to be owing by Borrowers until
paid in accordance with the terms of this Note and the Loan Agreement.

 

In no contingency or event whatsoever, whether by reason of advancement of the
proceeds hereof or otherwise, shall the amount paid or agreed to be paid to
Holder for the use, forbearance  or detention of money advanced hereunder exceed
the highest lawful rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto; and, in the event of any such payment
inadvertently paid by Borrowers or inadvertently received by Holder, such excess
sum shall be, at Borrowers’ option, returned to Borrowers forthwith or credited
as a payment of principal, but shall not be applied to the payment of interest. 
It is the intent hereof that Borrowers not pay or contract to pay, and that
Holder not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Borrowers under
Applicable Law.

 

Time is of the essence of this Note.  To the fullest extent permitted by
Applicable Law, each Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.

 

Wherever possible each provision of this Note shall be interpreted in such a
manner as to be effective and valid under Applicable Law, but if any provision
of this Note shall be prohibited or invalid under Applicable Law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note.  No delay or failure on the part of Holder in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Holder of any right or
remedy preclude any other right or remedy.  Holder, at its option, may enforce
its rights against any Collateral securing this Note without Administrative
Agent or Holder enforcing its rights against any Borrower, any Guarantor of the
indebtedness evidenced hereby or any other property or indebtedness due or to
become due to any Borrower.  Each Borrower agrees that, without releasing or
impairing any Borrower’s liability hereunder, Holder or Administrative Agent may
at any time release, surrender, substitute or exchange any Collateral securing
this Note and may at any time release any party primarily or secondarily liable
for the indebtedness evidenced by this Note.

 

This Note amends and restates that certain Amended and Restated Revolver Note
dated                          , 2004, from Borrowers to Holder in the original
principal amount of $                       (the “Prior Note”).  Nothing
contained herein or in the Prior Note shall constitute a novation or an accord
and satisfaction.

 

The rights of Holder and obligations of Borrowers hereunder shall be construed
in accordance with and governed by the laws (without giving effect to the
conflict of law principles thereof) of the State of Georgia.  This Note is
intended to take effect as an instrument under seal under Georgia law.

 

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

 

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IN WITNESS WHEREOF, each Borrower has caused this Note to be executed under seal
and delivered by its duly authorized officers on the date first above written.

 

 

 

BORROWERS:

 

 

 

SUPERIOR ESSEX COMMUNICATIONS LP

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

ESSEX GROUP, INC. 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Title:

 

 

 

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

 

EXHIBIT B

 

[Reserved]

 

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

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

[Letterhead of Borrower Agent]

 

                       , 20     

 

 

Bank of America, N.A., as Agent

300 Galleria Parkway, N.W.

Suite 800

Atlanta, Georgia  30339

 

The undersigned, the chief financial officer of Superior Essex Communications
LP, a Delaware limited partnership (“Borrower Agent”), as Borrower Agent, on
behalf of itself and the other Borrowers, gives this certificate to Bank of
America, N.A. (“Agent”) in accordance with the requirements of Section 10.1.2 of
that certain Amended and Restated Loan and Security Agreement dated April 14,
2006, among Borrowers, Agent, as collateral and administrative agent (in such
for itself and the financial institutions from time to time parties thereto as
lenders (“Lenders”), such Lenders and the other parties named therein (as at any
time amended, the “Loan Agreement”).  Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.

 

1.             Based upon my review of the balance sheets and statements of
income of Borrowers and their Subsidiaries for the [Fiscal Year] [quarterly
period] ending                                       , 20    , copies of which
are attached hereto, I hereby certify that:

 

(a)       Consolidated Fixed Charge Coverage Ratio was         to 1.0; provided
that Borrowers’ obligation to maintain a minimum Consolidated Fixed Charge
Coverage Ratio at any time or times shall be governed by the Loan Agreement;

 

(b)      Average Availability during the period was $               ;

 

(c)      Capital Expenditures for Borrowers during the period was
$                 ; and

 

(d)      JV Europe Investments during the period was $                       and
China Investments during the period was $                   .

 

2.             No Default exists on the date hereof, other than:
                                      
                                                                                         
[if none, so state]; and

 

3.             No Event of Default exists on the date hereof, other than
                                                           
                                                                                                  
[if none, so state].

 

4.             As of the date hereof, each Borrower is current in its payment of
all accrued rent and other charges to Persons who own or lease any premises
where any of the Collateral is located, and there are no pending disputes or
claims regarding any Borrower’s failure to pay or delay in payment of any such
rent or other charges.

 

 

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

 

5.             Attached hereto is a schedule showing the calculations that
support Borrowers’ compliance [non-compliance] with the financial covenants, as
shown above.

 

 

Very truly yours,

 

 

 

SUPERIOR ESSEX COMMUNICATIONS LP,

 

as Borrower Agent

 

 

 

 

 

 

 

 

Chief Financial Officer

 

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EXHIBIT D

 

LETTER OF CREDIT PROCUREMENT REQUEST

 

 

Bank of America, N.A., as Agent

Suite 800

300 Galleria Parkway

Atlanta, Georgia 30339

Attention:

 

 

This Letter of Credit Procurement Request is delivered to you pursuant to the
Amended and Restated Loan and Security Agreement, dated April 14, 2006, among
SUPERIOR ESSEX COMMUNICATIONS LP (hereinafter referred to as “Superior” or
“Borrower Agent”), a Delaware limited partnership, ESSEX GROUP, INC., a Michigan
corporation (hereinafter referred to as “Essex”; Superior and Essex being
referred to collectively as “Borrowers,” and individually as a “Borrower”), BANK
OF AMERICA, N.A. (“Bank”), as collateral and administrative agent (in such
capacity, “Agent”) for itself and the financial institutions from time to time
parties thereto as lenders (“Lenders”), such Lenders and the other parties named
therein (as the same may be amended, supplemented, restated or otherwise
modified from time to time, the “Amended and Restated Loan and Security
Agreement”).  Unless otherwise defined herein, terms used herein have the
meanings assigned to them in the Amended and Restated Loan and Security
Agreement.

 

Borrowers hereby request Bank to issue a Letter of Credit, as follows:

 

(1)

 

Borrower’s/Account Party’s Name

 

 

(2)

 

Amount of Letter of Credit:

 

$

(3)

 

Issuance Date:

 

 

(4)

 

Beneficiary’s Name:

 

 

(5)

 

Beneficiary’s Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6)

 

Expiry Date:

 

 

(7)

 

Draw Conditions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

Single draw : or Multiple draw :

 

 

 

 

 

 

 

(9)

 

Purpose of Letter of Credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attached hereto is the Bank’s form of LC Application, completed with the details
of the Letter of Credit requested herein.

 

 

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

 

Borrower Agent hereby certifies that each of the LC Conditions is now, and will
on the date of issuance of the Letter of Credit, be  satisfied in all respects
and that no Default or Event of Default exists.  Borrower Agent hereby ratifies
and reaffirms all of the Loan Documents and Obligations arising thereunder.

 

IN WITNESS WHEREOF, Borrower Agent has caused this Letter of Credit Procurement
Request to be executed and delivered by its duly authorized officer, this     
day of                                   , 20    .

 

 

SUPERIOR ESSEX COMMUNICATIONS LP

 

(“Borrower Agent”)

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

 Title:

 

 

 

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

 

EXHIBIT E

 

[RESERVED]

 

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

 

EXHIBIT F

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

Dated as of       , 20    

 

 

Reference is made to the Amended and Restated Loan and Security Agreement dated
April 14, 2006 (at any time amended, the “Amended and Restated Loan and Security
Agreement”), among SUPERIOR ESSEX COMMUNICATIONS LP, a Delaware limited
partnership (hereinafter referred to as “Superior” and “Borrower Agent”), ESSEX
GROUP, INC., a Michigan corporation (hereinafter referred to as “Essex”;
Superior and Essex being referred to collectively as “Borrowers,” and
individually as a “Borrower”), BANK OF AMERICA, N.A., as collateral and
administrative agent (together with its successors in such capacity, “Agent”)
for itself and the financial institutions from time to time parties thereto as
lenders (“Lenders”), and such Lenders.  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Amended
and Restated Loan and Security Agreement.

 

                                                                          (the
“Assignor”) and                                                               
(the “Assignee”) agree as follows:

 

1.             Assignor hereby assigns to Assignee and Assignee hereby purchases
and assumes from Assignor (i) a principal amount of $               of the
outstanding Revolver Loans held by Assignor [and $                            of
participations of Assignor in LC Outstandings] (which amount[s], according to
the records of Agent, represent[s]                 % of the total principal
amount of outstanding Revolver Loans [and LC Outstandings]) and (ii) a principal
amount of $                      of Assignor’s Revolver Commitment (which amount
includes Assignor’s outstanding Revolver Loans being assigned to Assignee
pursuant to clause (i) above and which, according to the records of Agent,
represents (          %) of the total Revolver Commitments of Lenders under the
Amended and Restated Loan and Security Agreement (]the “Assigned Interest”),
together with an interest in the Loan Documents corresponding to the Assigned
Interest.  This Agreement shall be effective from the date (the “Assignment
Effective Date”) on which Assignor receives both (x) the principal amount of the
Assigned Interest in the Loans on the Assignment Effective Date, if any, and (y)
a copy of this Agreement duly executed by Assignee.  From and after the
Assignment Effective Date, Assignee hereby expressly assumes, and undertakes to
perform, all of Assignor’s obligations in respect of Assignor’s Commitments to
the extent, and only to the extent, of Assignee’s Assigned Interest, and all
principal, interest, fees and other amounts which would otherwise be payable to
or for Assignor’s account in respect of the Assigned Interest shall be payable
to or for Assignee’s account, to the extent such amounts have accrued subsequent
to the Assignment Effective Date.

 

2.                             Assignor (i) represents that as of the date
hereof, the aggregate of its Commitments under the Amended and Restated Loan and
Security Agreement (without giving effect to assignments thereof, which have not
yet become effective) is $                   , and the outstanding balance of
its Loans [and participations in LC Outstandings] (unreduced by any assignments
thereof, which have not yet become effective) is $                      ; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Amended and Restated Loan and Security Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Amended and
Restated Loan and Security Agreement or any other instrument or document
furnished pursuant thereto, other than that Assignor is

 

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

 

the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; [and] (iii) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers, the performance or observance by Borrowers of
any of their obligations under the Amended and Restated Loan and Security
Agreement or any of the Loan Documents[; and (iv) attaches the Notes held by it
and requests that Agent exchange such Notes for new Notes payable to Assignee
and the Assignor in the principal amounts set forth on Schedule A hereto].

 

3.                             Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Amended and Restated Loan and Security
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 10.1.2 thereof, and copies of such other Loan
Documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it shall, independently and without reliance upon the Assignor and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Amended and Restated Loan and Security Agreement; (iv) confirms that it is
eligible to become an Assignee; (v)  appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers under the Amended and
Restated Loan and Security Agreement as are delegated to Agent by the terms
thereof, together with such powers as are incidental thereto; (vi) agrees that
it will strictly observe and perform all the obligations that are required to be
performed by it as a “Lender” under the terms of the Amended and Restated Loan
and Security Agreement and the other Loan Documents; and (vii) agrees that it
will keep confidential all information with respect to Borrowers furnished to it
by Borrowers or the Assignor to the extent provided in the Amended and Restated
Loan and Security Agreement.

 

4.             Assignor acknowledges and agrees that it will not sell or
otherwise dispose of the Assigned Interest or any portion thereof, or grant any
participation therein, in a manner which, or take any action in connection
therewith which, would violate the terms of any of the Loan Documents.

 

5.             This Agreement and all rights and obligations shall be
interpreted in accordance with and governed by the laws of the State of
Georgia.  If any provision hereof would be invalid under Applicable Law, then
such provision shall be deemed to be modified to the extent necessary to render
it valid while most nearly preserving its original intent; no provision hereof
shall be affected by another provision’s being held invalid.

 

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

 

(a)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

(b)

 

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

 

 

 

 

 

 

 

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

 

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

 

 

ABA No.

 

Account No.

Reference:

 

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

 

 

 

ABA No.

For Account of:

Reference:

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed and delivered by their respective duly authorized
officers, as of the date first above written.

 

 

 

 

 

(“Assignor”)

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

(“Assignee”)

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

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SCHEDULE A TO ASSIGNMENT AND ACCEPTANCE

 

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EXHIBIT G

 

FORM OF NOTICE

 

Reference is made to (i) the Amended and Restated Loan and Security Agreement
dated April 14, 2006 (as at any time amended, the “Amended and Restated Loan and
Security Agreement”) among SUPERIOR ESSEX COMMUNICATIONS LP, a Delaware limited
partnership (hereinafter referred to as “Superior” and “Borrower Agent”), ESSEX
GROUP, INC., a Michigan corporation (hereinafter referred to as “Essex”;
Superior and Essex being referred to collectively as “Borrowers,” and
individually as a “Borrower”), BANK OF AMERICA, N.A., as collateral and
administrative agent (together with its successors in such capacity, “Agent”)
for itself and the financial institutions from time to time parties thereto as
lenders (“Lenders”), such Lenders and the other parties named therein, and (ii)
the Assignment and Acceptance dated as of                       , 20    
(the ”Assignment Agreement”) between                                      (the
“Assignor”) and                                         (the “Assignee”). 
Except as otherwise defined herein, capitalized terms used herein which are
defined in the Amended and Restated Loan and Security Agreement are used herein
with the respective meanings specified therein.

 

The Assignor hereby notifies Borrowers and Agent of Assignor’s intent to assign
to Assignee pursuant to the Assignment Agreement a principal amount of (i)
$                   of the outstanding Revolver Loans and participations in LC
Outstandings held by Assignor, and (ii) $                          of Assignor’s
Revolver Commitment (which amount includes the Assignor’s outstanding Revolver
Loans being assigned to Assignee pursuant to clause (i) above), together with an
interest in the Loan Documents corresponding to the interest in the Loans and
Commitment so assigned.  Pursuant to the Assignment Agreement, Assignee has
expressly assumed all of Assignor’s obligations under the Amended and Restated
Loan and Security Agreement to the extent of the Assigned Interest (as defined
in the Assignment Agreement).

 

For purposes of the Amended and Restated Loan and Security Agreement, Agent
shall deem Assignor’s share of the Revolver Commitment to be reduced by
$                      [and $                         , respectively], and
Assignee’s share of the Revolver Commitment to be increased by
$                      [and $                        , respectively].

 

The address of the Assignee to which notices, information and payments are to be
sent under the terms of the Amended and Restated Loan and Security Agreement is:

 

 

 

 

Assignee’s LIBOR Lending Office address is as follows:

 

 

 

 

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

 

IN WITNESS WHEREOF, the undersigned have caused the execution of this Notice, as
of                                    , 20    .

 

 

 

 

 

(“Assignor”)

 

 

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

(“Assignee”)

 

 

 

By:

 

 

 

 

 

Title:

 

 

 

 

ACKNOWLEDGED AND AGREED TO

AS OF THE DATE SET FORTH ABOVE:

 

BORROWER AGENT:

 

SUPERIOR ESSEX COMMUNICATIONS LP,

as Borrower Agent

 

 

By:

 

 

Title:

 

 

 

 

* No signature required by Borrower Agent when an Event of Default exists.

 

 

BANK OF AMERICA, N.A.,

as Agent

 

 

By:

 

 

Title:

 

 

 

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