Exhibit 10.16

 

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$165,000,000 CREDIT FACILITY

CREDIT AGREEMENT

Dated as of December 29, 2006

by and among

INTERNATIONAL TEXTILE GROUP, INC.,

ITG HOLDINGS, INC.,

BURLINGTON INDUSTRIES LLC,

CARLISLE FINISHING LLC,

CONE DENIM LLC,

CONE JACQUARDS LLC,

AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL, INC.,

SAFETY COMPONENTS FABRIC TECHNOLOGIES, INC.,

AUTOMOTIVE SAFETY COMPONENTS INTERNATIONAL LIMITED,

as the Borrowers,

THE OTHER PERSONS PARTY HERETO THAT ARE

DESIGNATED AS CREDIT PARTIES

GENERAL ELECTRIC CAPITAL CORPORATION

for itself, as a Lender, as L/C Issuer, Swingline Lender and as the Agent for
all Lenders,

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

as Lenders,

UBS SECURITIES LLC,

as Lead Arranger and Bookrunner

GE CAPITAL MARKETS, INC.,

as Co-Lead Arranger and Co-Bookrunner

WACHOVIA BANK NATIONAL ASSOCIATION,

as Co-Documentation Agent

and

BANK OF AMERICA, N.A.,

as Co-Documentation Agent

 

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TABLE OF CONTENTS

 

ARTICLE I - THE CREDITS    2

1.1

  

Amounts and Terms of Commitments

   2

1.2

  

Notes

   10

1.3

  

Interest

   10

1.4

  

Loan Accounts

   11

1.5

  

Procedure for Revolving Credit Borrowing

   13

1.6

  

Conversion and Continuation Elections

   13

1.7

  

Optional Prepayments

   14

1.8

  

Mandatory Prepayments of Loans and Commitment Reductions

   15

1.9

  

Fees

   16

1.10

  

Payments by the Borrowers

   17

1.11

  

Payments by the Lenders to the Agent; Settlement

   20

1.12

  

Eligible Accounts.

   22

1.13

  

Eligible Inventory.

   24

1.14

  

Eligible Equipment and Real Property.

   26

1.15

  

Borrower Representative

   28 ARTICLE II - CONDITIONS PRECEDENT    28

2.1

  

Conditions of Initial Loans

   28

2.2

  

Conditions to All Borrowings

   29 ARTICLE III - REPRESENTATIONS AND WARRANTIES    29

3.1

  

Corporate Existence and Power

   29

3.2

  

Corporate Authorization; No Contravention

   30

3.3

  

Governmental Authorization

   31

3.4

  

Binding Effect

   31

3.5

  

Litigation

   31

3.6

  

No Default

   32

3.7

  

ERISA Compliance

   32

3.8

  

Use of Proceeds; Margin Regulations

   33

3.9

  

Title to Properties

   33

3.10

  

Taxes

   33

3.11

  

Financial Condition

   33

3.12

  

Environmental Matters

   34

3.13

  

Regulated Entities

   35

3.14

  

Solvency

   35

3.15

  

Labor Relations

   35

3.16

  

Intellectual Property

   36

3.17

  

Subsidiaries

   36

3.18

  

Brokers’ Fees; Transaction Fees

   36

3.19

  

Insurance

   36

3.20

  

Full Disclosure

   36

3.21

  

Foreign Assets Control Regulations and Anti-Money Laundering.

   37

3.22

  

UK Pensions/UK Employees

   37

 

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3.23

  

UK Financial Assistance

   37 ARTICLE IV - AFFIRMATIVE COVENANTS    37

4.1

  

Financial Statements

   37

4.2

  

Certificates; Other Information

   38

4.3

  

Notices

   41

4.4

  

Preservation of Corporate Existence, Etc

   42

4.5

  

Maintenance of Property

   43

4.6

  

Insurance

   43

4.7

  

Payment of Obligations

   44

4.8

  

Compliance with Laws

   45

4.9

  

Inspection of Property and Books and Records

   45

4.10

  

Use of Proceeds

   46

4.11

  

Cash Management Systems

   46

4.12

  

Landlord Agreements

   46

4.13

  

Further Assurances; Limitation on Guarantees and Liens

   46

4.14

  

Mandatory Investments

   48

4.15

  

Corporate Separateness

   48

4.16

  

Centre of Main Interest

   50

4.17

  

UK Data Protection

   50 ARTICLE V - NEGATIVE COVENANTS    50

5.1

  

Limitation on Liens

   50

5.2

  

Disposition of Assets

   52

5.3

  

Consolidations and Mergers

   53

5.4

  

Loans and Investments

   54

5.5

  

Limitation on Indebtedness

   55

5.6

  

Transactions with Affiliates

   56

5.7

  

Management Fees and Compensation

   57

5.8

  

Use of Proceeds

   57

5.9

  

Contingent Obligations

   57

5.10

  

Compliance with ERISA

   58

5.11

  

Restricted Payments

   58

5.12

  

Change in Business

   59

5.13

  

Amendment to Organization Documents

   59

5.14

  

Accounting Changes

   59

5.15

  

Amendments to Related Agreements and Subordinated Indebtedness

   59

5.16

  

No Negative Pledges

   60

5.17

  

OFAC

   61

5.18

  

Press Release and Related Matters

   61

5.19

  

Sale-Leasebacks; Synthetic Leases; Factoring; etc

   61

5.20

  

Hazardous Materials

   61

5.21

  

Food Security Act

   61

5.22

  

UK Employees

   62 ARTICLE VI - FINANCIAL COVENANTS    62

6.1

  

Fixed Charge Coverage Ratio.

   62

 

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6.2

  

Capital Expenditures.

   62 ARTICLE VII - EVENTS OF DEFAULT    62

7.1

  

Event of Default

   62

7.2

  

Remedies

   66

7.3

  

Rights Not Exclusive

   66

7.4

  

Cash Collateral for Letters of Credit

   66 ARTICLE VIII - THE AGENT    67

8.1

  

Appointment and Duties.

   67

8.2

  

Binding Effect

   68

8.3

  

Use of Discretion.

   69

8.4

  

Delegation of Rights and Duties

   69

8.5

  

Reliance and Liability.

   69

8.6

  

Agent Individually

   71

8.7

  

Lender Credit Decision

   71

8.8

  

Expenses; Indemnities.

   71

8.9

  

Resignation of Agent or L/C Issuer.

   72

8.10

  

Release of Collateral or Guarantors

   73

8.11

  

Additional Secured Parties

   73 ARTICLE IX - MISCELLANEOUS    74

9.1

  

Amendments and Waivers

   74

9.2

  

Notices

   75

9.3

  

Electronic Transmissions

   76

9.4

  

No Waiver; Cumulative Remedies

   77

9.5

  

Costs and Expenses

   77

9.6

  

Indemnity

   78

9.7

  

Marshaling; Payments Set Aside

   79

9.8

  

Successors and Assigns

   79

9.9

  

Assignments and Participations; Binding Effect

   80

9.10

  

Confidentiality.

   82

9.11

  

Set-off; Sharing of Payments

   83

9.12

  

Counterparts

   84

9.13

  

Severability; Facsimile Signature

   84

9.14

  

Captions

   84

9.15

  

Independence of Provisions

   84

9.16

  

Interpretation

   84

9.17

  

No Third Parties Benefited

   84

9.18

  

Governing Law and Jurisdiction

   84

9.19

  

Waiver of Jury Trial

   85

9.20

  

Entire Agreement; Release; Survival

   86

9.21

  

Patriot Act

   86

9.22

  

Replacement of Lender

   86

9.23

  

Joint and Several

   87

9.24

  

Lender-Creditor Relationship

   87

9.25

  

Judgment Currency

   87

 

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9.26

  

Non-Reliance

   88 ARTICLE X - TAXES, YIELD PROTECTION AND ILLEGALITY    88

10.1

  

Taxes

   88

10.2

  

Illegality

   91

10.3

  

Increased Costs and Reduction of Return

   92

10.4

  

Funding Losses

   93

10.5

  

Inability to Determine Rates

   93

10.6

  

Reserves on LIBOR Rate Loans

   94

10.7

  

Certificates of Lenders

   94

10.8

  

Survival

   94 ARTICLE XI - DEFINITIONS    94

11.1

  

Defined Terms

   94

11.2

  

Other Interpretive Provisions.

   122

11.3

  

Accounting Terms and Principles

   123

11.4

  

Payments

   123

 

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SCHEDULES

 

Schedule 1.1(a)    Revolving Loan Commitments Schedule 1.1(b)    Letters of
Credit Schedule 1.12    Eligible Accounts Schedule 1.14    Eligible Real
Property and Equipment Schedule 3.2    Capitalization Schedule 3.5    Litigation
Schedule 3.7    ERISA Schedule 3.10    Tax Matters Schedule 3.12   
Environmental Schedule 3.15    Labor Relations Schedule 5.1    Liens Schedule
5.2    Other Dispositions Schedule 5.4    Investments Schedule 5.5   
Indebtedness Schedule 5.6    Transactions with Affiliates Schedule 5.9   
Contingent Obligations Schedule 5.16    Negative Pledges Schedule 11.1(a)   
Prior Indebtedness

EXHIBITS

 

Exhibit 1.1(b)    Form of L/C Request Exhibit 1.1(d)    Form of Swing Loan
Request Exhibit 1.6    Form of Notice of Conversion/Continuation Exhibit 2.1   
Closing Checklist Exhibit 4.2(b)    Compliance Certificate Exhibit 11.1(a)   
Form of Assignment Exhibit 11.1(b)    Borrowing Base Certificate Exhibit 11.1(c)
   Notice of Borrowing Exhibit 11.1(d)    Revolving Note Exhibit 11.1(e)    Form
of Swing Line Note

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT (including all exhibits and schedules hereto, as the same
may be amended, modified and/or restated from time to time, this “Agreement”) is
entered into as of December 29, 2006, by and among International Textile Group,
Inc., a Delaware corporation (f/k/a Safety Components International, Inc.)
(“ITG”), ITG Holdings, Inc., a Delaware corporation (f/k/a International Textile
Group, Inc.) (“Holdings”), Burlington Industries LLC, a Delaware limited
liability company (“Burlington”), Carlisle Finishing LLC, a Delaware limited
liability company (“Carlisle”), Cone Denim LLC, a Delaware limited liability
company (“Denim”), Cone Jacquards LLC, a Delaware limited liability company
(“Jacquards”), Automotive Safety Components International, Inc., a Delaware
corporation (“ASCI”), Safety Components Fabric Technologies, Inc., a Delaware
corporation (“SCFTI”), Automotive Safety Components International Limited, a
limited liability company incorporated in England and Wales with registered
number 02640241 (the “UK Borrower”) (ITG, Holdings, Burlington, Carlisle, Denim,
Jacquards, ASCI, SCFTI and the UK Borrower are sometimes referred to herein
together as the “Borrowers” and individually as a “Borrower”), the other Persons
party hereto that are designated as a “Credit Party”, General Electric Capital
Corporation, a Delaware corporation (in its individual capacity, “GE Capital”),
as the Agent for the several financial institutions from time to time party to
this Agreement (collectively, the “Lenders” and individually each a “Lender”)
and for itself as a Lender (including as Swingline Lender) and L/C Issuer, and
such Lenders.

WITNESSETH:

WHEREAS, the Borrowers have requested, and the Lenders have agreed to make
available to the Borrowers, a revolving credit facility (including a letter of
credit subfacility) upon and subject to the terms and conditions set forth in
this Agreement to (a) refinance Prior Indebtedness, provide for working capital,
capital expenditures and other general corporate purposes of the Borrowers and
(b) fund certain fees and expenses associated with the funding of the Loans;

WHEREAS, each Borrower desires to secure all of its Obligations under the Loan
Documents by granting to the Agent, for the benefit of the Secured Parties, a
security interest in and lien upon substantially all of its personal and real
property in accordance with and subject to the limitations set forth in the Loan
Documents;

WHEREAS, subject to the terms hereof, each (a) US Credit Party is willing to
guarantee all of the Obligations of Borrowers and to grant to Agent, for the
benefit of Agent, Lenders and L/C Issuers, a security interest in and lien upon
substantially all of its personal and real property and (b) Foreign Credit Party
is willing to guarantee all of the UK Obligations and to grant to Agent, for the
benefit of Agent, Lenders and L/C Issuers, a security interest in and lien upon
substantially all of its personal and real property to support the UK
Obligations;

 

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NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:

ARTICLE I—THE CREDITS

1.1 Amounts and Terms of Commitments.

(a) The Revolving Credit.

(i) Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of the Credit Parties contained herein, each
Revolving Lender severally and not jointly agrees to make Loans to any of the
Borrowers (each such Loan, a “Revolving Loan”) from time to time on any Business
Day during the period from the Closing Date to the Revolving Termination Date,
in an aggregate amount not to exceed at any time outstanding the amount set
forth opposite such Lender’s name in Schedule 1.1(a) under the heading
“Revolving Loan Commitment” (such amount as the same may be reduced or increased
from time to time as a result of one or more assignments pursuant to Section 9.9
or as a result of a Commitment Increase in accordance with Section 1.1(a)(ii),
being referred to herein as such Lender’s “Revolving Loan Commitment”);
provided, however, that, after giving effect to any Borrowing of Revolving
Loans, the aggregate principal amount of all outstanding Revolving Loans shall
not exceed the Maximum Revolving Loan Balance. Subject to the other terms and
conditions hereof, amounts borrowed under this subsection 1.1(a) may be repaid
and reborrowed from time to time. The “Maximum Revolving Loan Balance” from time
to time will be the lesser of:

(A) the “Borrowing Base” (as calculated pursuant to the Borrowing Base
Certificate) in effect from time to time, or

(B) the Aggregate Revolving Loan Commitment then in effect;

less, in either case, the sum of (w) the Availability Block, plus (x) the
aggregate amount of Letter of Credit Obligations plus (y) outstanding Swing
Loans plus (z) such Reserves as may be imposed by the Agent in accordance with
the terms of this Agreement.

If at any time the then outstanding principal balance of (x) Revolving Loans
exceeds the Maximum Revolving Loan Balance or (y) the Revolving Loans advanced
to US Borrowers exceeds the US Borrowing Base Limit, then in each case the
Borrowers (or the US Borrowers, as applicable) shall immediately prepay
outstanding Revolving Loans in an amount sufficient to eliminate such excess;
provided that if such excess results from fluctuations in foreign currency
exchange rates relating to any outstanding Letter of Credit which is denominated
in a currency other than Dollars (a “Currency Overadvance”), such excess must be
prepaid within five (5) Business Days.

 

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If the Borrower Representative requests that Revolving Lenders make, or permit
to remain outstanding Revolving Loans in excess of the Borrowing Base (any such
excess Revolving Loan is herein referred to as an “Overadvance”), the Agent may,
in its sole discretion, elect to make, or permit to remain outstanding such
Overadvance; provided, however, that the Agent may not cause Revolving Lenders
to make, or permit to remain outstanding, (x) aggregate Revolving Loans in
excess of the Aggregate Revolving Loan Commitment less the sum of outstanding
Swing Loans plus the aggregate amount of Letter of Credit Obligations or (y) an
Overadvance in an aggregate amount in excess of 5% of the Aggregate Revolving
Loan Commitment. If an Overadvance is made, or permitted to remain outstanding,
pursuant to the preceding sentence, then all Revolving Lenders shall be bound to
make, or permit to remain outstanding, such Overadvance based upon their
Commitment Percentage of the Aggregate Revolving Loan Commitment in accordance
with the terms of this Agreement. If an Overadvance remains outstanding for more
than ninety (90) days during any three hundred sixty (360) day period, Revolving
Loans must be repaid immediately in an amount sufficient to eliminate all of
such Overadvance. Furthermore, the Required Lenders may prospectively revoke the
Agent’s ability to make or permit Overadvances by written notice to the Agent.
All Overadvances shall constitute Base Rate Loans and shall bear interest at the
Base Rate plus the Applicable Margin for Revolving Loans and shall bear interest
at the default rate under Section 1.3(c) only if not repaid within five
(5) Business Days. The funding or sufferance of any Overadvance shall not
constitute a waiver by the Agent or Lenders of any Event of Default caused
thereby.

(ii) Commitment Increase. From time to time after the Closing Date but on or
prior to ninety-one (91) days before the Revolving Termination Date, the
Revolving Loan Commitments may be increased (but in no event in excess of
$50,000,000 in the aggregate for all such increases) (the “Commitment Increase
Cap”) such that the Aggregate Revolving Loan Commitment shall at no time exceed
$215,000,000 (any such increase, a “Commitment Increase”) at the option of the
Borrowers pursuant to delivery of written notice from the Borrowers of a
proposed Commitment Increase (the “Increased Commitment Proposal”) to the Agent
if each of the following conditions have been met:

(A) no Default or Event of Default shall exist on the effective date of such
increase;

(B) no Commitment Increase may be in an amount less than $25,000,000 (or if
less, the remaining amount of the Commitment Increase Cap);

(C) the proposed Commitment Increase shall have been consented to in writing by
each existing Lender (if any) who is increasing its Revolving Commitment;

 

3

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(D) the proposed Commitment Increase, together with any prior Commitment
Increase, shall not exceed the Commitment Increase Cap; and

(E) the Agent shall have received amendments to this Agreement and the Loan
Documents, joinder agreements for any new Lenders, and all other promissory
notes, agreements, documents and instruments reasonably satisfactory to the
Agent in its reasonable discretion evidencing and setting forth the conditions
of the Commitment Increase.

The Increased Commitment Proposal shall be offered on a first priority basis to
existing Lenders, who may accept, but are not obligated to accept, based on
their respective Commitment Percentage of the Commitment Increase. If the
existing Lenders do not accept the total amount of the Commitment Increase on
such pro rata basis, then existing Lenders may accept, but are not obligated to
accept, the remaining portions on a non-pro rata basis. To the extent that
existing Lenders do not accept the Commitment Increase, the Increased Commitment
Proposal may be offered to Persons who would otherwise be assignees in
accordance with Section 9.9(b) (“Eligible Assignee”). The Agent shall have
discretion to adjust the allocation of the proposed additional commitments, as
the case may be, between and among Lenders that accept the Increased Commitment
Proposal and Eligible Assignees that accept the Increased Commitment Proposal.

Each of the Borrowers, Lenders and the Agent acknowledges and agrees that each
Commitment Increase meeting the conditions set forth in this Section 1.1(a)(ii)
shall not require the consent of any Lender other than those Lenders, if any,
which have agreed to increase their Revolving Loan Commitments in connection
with such proposed Commitment Increase. After giving effect to any Commitment
Increase, it may be the case that the outstanding Revolving Loans are not held
pro rata in accordance with the new Revolving Loan Commitments. In order to
remedy the foregoing, on the effective date of the applicable Commitment
Increase, the Revolving Lenders (including, without limitation, any new Lenders)
shall make advances among themselves so that after giving effect thereto the
Revolving Loans will be held by the Revolving Lenders (including, without
limitation, any new Lenders), pro rata in accordance with the Commitment
Percentage hereunder (after giving effect to the applicable Commitment
Increase).

(b) Letters of Credit. (i) Commitment and Conditions. On the terms and subject
to the conditions contained herein, each L/C Issuer agrees to Issue, at the
request of the Borrower Representative, in accordance with such L/C Issuer’s
usual and customary business practices, and for the account of the US Borrowers
(or, as long as the applicable US Borrowers remain responsible for the payment
in full of all amounts drawn thereunder and related fees, costs and expenses,
and subject to Section 5.4(a), for the account of any Subsidiary of a US
Borrower), Letters of Credit (denominated in Dollars

 

4

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or any other Available Currency) from time to time on any Business Day during
the period from the Closing Date through the earlier of the Revolving
Termination Date and 7 days prior to the date specified in clause (a) of the
definition of Revolving Termination Date; provided, however, that such L/C
Issuer shall not be under any obligation to Issue any Letter of Credit upon the
occurrence of any of the following, after giving effect to such Issuance:

(A) (i) the aggregate outstanding principal balance of Revolving Loans would
exceed the Maximum Revolving Loan Balance, (ii) the Letter of Credit Obligations
for all Letters of Credit would exceed the US Dollar Equivalent of $25,000,000
(the “L/C Sublimit”) or (iii) the aggregate outstanding principal balance of the
Revolving Loans would exceed the US Borrowing Base Limit;

(B) the expiration date of such Letter of Credit (i) is not a Business Day,
(ii) is more than one year after the date of issuance thereof or (iii) is later
than 7 days prior to the date specified in clause (a) of the definition of
Revolving Termination Date; provided, however, that any Letter of Credit with a
term not exceeding one year may provide for its renewal for additional periods
not exceeding one year as long as (x) the applicable Borrower and such L/C
Issuer have the option to prevent such renewal before the expiration of such
term or any such period and (y) neither such L/C Issuer nor any Borrower shall
permit any such renewal to extend such expiration date beyond the date set forth
in clause (iii) above; or

(C) (i) any fee due in connection with, and on or prior to, such Issuance has
not been paid, (ii) such Letter of Credit is requested to be issued in a form
that is not reasonably acceptable to such L/C Issuer or (iii) such L/C Issuer
shall not have received, each in form and substance reasonably acceptable to it
and duly executed by the applicable US Borrowers or the Borrower Representative
on their behalf (and, if such Letter of Credit is issued for the account of any
Subsidiary of a US Borrower, such Person), the documents that such L/C Issuer
generally uses in the ordinary course of its business for the Issuance of
letters of credit of the type of such Letter of Credit (collectively, the “L/C
Reimbursement Agreement”). Notwithstanding anything in this Agreement or any
other Loan Document to the contrary, in the event of any conflict between the
terms or provisions of this Agreement and the terms or provisions of any L/C
Reimbursement Agreement, the terms and provisions of this Agreement shall
control.

For each such Issuance, the applicable L/C Issuer may, but shall not be required
to, determine that, or take notice whether, the conditions precedent set forth
in Section 2.2 have been satisfied or waived in connection with the Issuance of
any Letter of Credit; provided, however, that no Letter of Credit shall be
Issued during the period starting on the first Business Day after the receipt by
such L/C Issuer of notice from the Agent or the Required Lenders that any
condition precedent contained in Section 2.2 is not satisfied and ending on the
date all such conditions are satisfied or duly waived.

 

5

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(ii) Notice of Issuance. The Borrower Representative shall give the relevant L/C
Issuer and the Agent a notice of any requested Issuance of any Letter of Credit,
which shall be effective only if received by such L/C Issuer and the Agent not
later than 12:00 noon (New York time) on the third Business Day prior to the
date of such requested Issuance, or such later time as is agreed by such L/C
Issuer. Such notice may be made in a writing substantially the form of Exhibit
1.1(b) duly completed or in a writing in any other form acceptable to such L/C
Issuer (an “L/C Request”) or by telephone if confirmed promptly, but in any
event within one Business Day and prior to such Issuance, with such an L/C
Request.

(iii) Reporting Obligations of L/C Issuers. Each L/C Issuer agrees to provide
the Agent (which, after receipt, the Agent shall provide to each Revolving
Lender), in form and substance satisfactory to the Agent, each of the following
on the following dates: (A) (i) on or prior to any Issuance of any Letter of
Credit by such L/C Issuer, (ii) immediately after any drawing under any such
Letter of Credit or (iii) immediately after any payment (or failure to pay when
due) by the applicable US Borrowers of any related L/C Reimbursement Obligation,
notice thereof, which shall contain a reasonably detailed description of such
Issuance, drawing or payment; (B) upon the request of the Agent (or any
Revolving Lender through the Agent), copies of any Letter of Credit Issued by
such L/C Issuer and any related L/C Reimbursement Agreement and such other
documents and information as may reasonably be requested by the Agent; and
(C) on the first Business Day of each calendar week, a schedule of the Letters
of Credit Issued by such L/C Issuer, in form and substance reasonably
satisfactory to the Agent, setting forth the Letter of Credit Obligations for
such Letters of Credit outstanding on the last Business Day of the previous
calendar week.

(iv) Acquisition of Participations. Upon any Issuance of a Letter of Credit in
accordance with the terms of this Agreement resulting in any increase in the
Letter of Credit Obligations, each Revolving Lender shall be deemed to have
acquired, without recourse or warranty, an undivided interest and participation
in such Letter of Credit and the related Letter of Credit Obligations in an
amount equal to its Commitment Percentage of such Letter of Credit Obligations.

(v) Reimbursement Obligations of the US Borrowers. The US Borrowers agree to pay
to the L/C Issuer of any Letter of Credit each L/C Reimbursement Obligation
owing with respect to such Letter of Credit no later than the first Business Day
after the applicable US Borrowers or the Borrower Representative receive notice
from such L/C Issuer that payment has been made under such Letter of Credit or
that such L/C Reimbursement Obligation is otherwise due (the “L/C Reimbursement
Date”) with interest thereon computed as set forth in clause (A) below. In the
event that any L/C Issuer incurs any L/C Reimbursement Obligation not repaid by
the US Borrowers as provided in this clause (v) (or any such payment by the US
Borrowers is rescinded or set aside for any reason), such L/C Issuer shall
promptly notify the Agent of such failure (and,

 

6

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upon receipt of such notice, the Agent shall forward a copy to each Revolving
Lender) and, irrespective of whether such notice is given, such L/C
Reimbursement Obligation shall be payable on demand (which shall be deemed paid
in full upon the making of the Revolving Loans described in subsection
(vi) below) by the US Borrowers with interest thereon computed (A) from the date
on which such L/C Reimbursement Obligation arose to the L/C Reimbursement Date,
at the interest rate applicable during such period to Revolving Loans that are
Base Rate Loans and (B) thereafter until payment in full, at the interest rate
applicable during such period to past due Revolving Loans that are Base Rate
Loans.

(vi) Reimbursement Obligations of the Revolving Credit Lenders. Upon receipt of
the notice described in clause (v) above from the Agent, each Revolving Lender
shall pay to the Agent for the account of such L/C Issuer its Commitment
Percentage of such L/C Reimbursement Obligation. By making such payment (other
than during the continuation of an Event of Default under subsection 7.1(f) or
7.1(g)), such Lender shall be deemed to have made a Revolving Loan to the US
Borrowers, which, upon receipt thereof by such L/C Issuer, the Borrowers shall
be deemed to have used in whole to repay such L/C Reimbursement Obligation. Any
such payment that is not deemed a Revolving Loan shall be deemed a funding by
such Lender of its participation in the applicable Letter of Credit and the
related L/C Obligations. Such participation shall not otherwise be required to
be funded. Upon receipt by any L/C Issuer of any payment from any Lender
pursuant to this clause (vi) with respect to any portion of any L/C
Reimbursement Obligation, such L/C Issuer shall promptly pay over to such Lender
all payments received by such L/C Issuer after such payment by such Lender with
respect to such portion.

(vii) Obligations Absolute. The obligations of the US Borrowers and the
Revolving Lenders pursuant to clauses (iv), (v) and (vi) above shall be
absolute, unconditional and irrevocable and performed strictly in accordance
with the terms of this Agreement irrespective of (A) (i) the invalidity or
unenforceability of any term or provision in any Letter of Credit, any document
transferring or purporting to transfer a Letter of Credit, any Loan Document
(including the sufficiency of any such instrument), or any modification to any
provision of any of the foregoing, (ii) any document presented under a Letter of
Credit being forged, fraudulent, invalid, insufficient or inaccurate in any
respect or failing to comply with the terms of such Letter of Credit or
(iii) any loss or delay, including in the transmission of any document, (B) the
existence of any setoff, claim, abatement, recoupment, defense or other right
that any Person (including any Credit Party) may have against the beneficiary of
any Letter of Credit or any other Person, whether in connection with any Loan
Document or any other Contractual Obligation or transaction, or the existence of
any other withholding, abatement or reduction, (C) in the case of the
obligations of any Revolving Lender, (i) the failure of any condition precedent
set forth in Section 2.2 to be satisfied (each of which conditions precedent the
Revolving Lenders hereby irrevocably waive) or (ii) any adverse change in the
condition (financial or

 

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otherwise) of any Credit Party and (D) any other act or omission to act or delay
of any kind of the Agent, any Lender or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this subsection 1.1(b)(vii), constitute a legal
or equitable discharge of any obligation of the Borrowers or any Revolving
Lender hereunder.

(viii) Outstanding Letters of Credit. The parties hereto agree that the letters
of credit issued by Bank of America, N.A. and set forth on Schedule 1.1(b) shall
constitute Letters of Credit hereunder.

(c) [Intentionally Omitted].

(d) Swing Loans. (i) Availability. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Credit
Parties contained herein, the Swingline Lender shall make Loans (each a “Swing
Loan”) available to the US Borrowers under the Revolving Loan Commitments from
time to time on any Business Day during the period from the Closing Date until
the Revolving Termination Date in an aggregate principal amount at any time
outstanding not to exceed the Swingline Commitment; provided, however, that the
Swingline Lender may not make any Swing Loan (x) to the extent that after giving
effect to such Swing Loan, the aggregate principal amount of all Loans would
exceed the Maximum Revolving Loan Balance and (y) during the period commencing
on the first Business Day after it receives notice from the Agent or the
Required Lenders that one or more of the conditions precedent contained in
Section 2.2 are not satisfied and ending when such conditions are satisfied or
duly waived. In connection with the making of any Swing Loan, the Swingline
Lender may but shall not be required to determine that, or take notice whether,
the conditions precedent set forth in Section 2.2 have been satisfied or waived.
Each Swing Loan shall be a Base Rate Loan and must be repaid in full on the
earliest of (A) the funding date of any Borrowing of Revolving Loans and (B) the
Revolving Termination Date. Within the limits set forth in the first sentence of
this clause (i), amounts of Swing Loans repaid may be reborrowed under this
clause (i).

(ii) Borrowing Procedures. In order to request a Swing Loan, the Borrower
Representative shall give to the Agent a notice to be received not later than
2:00 p.m. (New York time) on the day of the proposed Borrowing, which may be
made in a writing substantially in the form of Exhibit 1.1(d) duly completed (a
“Swingline Request”) or by telephone if confirmed promptly but, in any event,
prior to such Borrowing, with such a Swingline Request. In addition, if any
Notice of Borrowing of Revolving Loans requests a Borrowing of Base Rate Loans
(other than a Borrowing to refinance outstanding Swing Loans), the Swingline
Lender may, notwithstanding anything else to the contrary herein, make a Swing
Loan available to the US Borrowers in an aggregate amount not to exceed such
proposed Borrowing, and the aggregate amount of the corresponding proposed
Borrowing shall be reduced accordingly by the principal amount of such Swing
Loan. The Agent shall promptly notify the Swingline Lender of the details of any
requested Swing Loan. Upon receipt of such notice and subject to the

 

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terms of this Agreement, the Swingline Lender shall make a Swing Loan available
to the US Borrowers by making the proceeds thereof available to the Agent and,
in turn, the Agent shall make such proceeds available to the US Borrowers on the
date set forth in the relevant Swingline Request or Notice of Borrowing.

(iii) Refinancing Swing Loans. The Swingline Lender may (and shall no less
frequently than once each week) or, subject to subsection 1.5(a), the Borrower
Representative, may at any time forward a demand to the Agent (which the Agent
shall, upon receipt, forward to each Revolving Lender) that each Revolving
Lender pay to the Agent, for the account of the Swingline Lender, such Revolving
Lender’s Commitment Percentage of all or a portion of the outstanding Swing
Loans. Each Revolving Lender shall pay such Commitment Percentage to the Agent
for the account of the Swingline Lender (A) if the notice or demand therefor was
received by such Lender prior to 12:00 p.m. (New York time) on any Business Day,
on such Business Day and (B) otherwise, on the Business Day following such
receipt. Payments received by the Agent after 2:00 p.m. (New York time) shall be
deemed to be received on the next Business Day. Upon receipt by the Agent of
such payment (other than during the continuation of any Event of Default under
subsection 7.1(f) or 7.1(g)), such Revolving Lender shall be deemed to have made
a Revolving Loan to the US Borrowers, which, upon receipt of such payment by the
Swingline Lender from the Agent, the US Borrowers shall be deemed to have used
in whole to refinance such Swing Loan. In addition, regardless of whether any
such demand is made, upon the occurrence of any Event of Default under
subsection 7.1(f) or 7.1(g), each Revolving Lender shall be deemed to have
acquired, without recourse or warranty, an undivided interest and participation
in each Swing Loan in an amount equal to such Lender’s Commitment Percentage of
such Swing Loan. If any payment made by any Revolving Lender as a result of any
such demand is not deemed a Revolving Loan, such payment shall be deemed a
funding by such Lender of such participation. Such participation shall not be
otherwise required to be funded. Upon receipt by the Swingline Lender of any
payment from any Revolving Lender pursuant to this clause (iii) with respect to
any portion of any Swing Loan, the Swingline Lender shall promptly pay over to
such Revolving Lender all payments of principal (to the extent received after
such payment by such Lender) and interest (to the extent accrued with respect to
periods after such payment) received by the Swingline Lender from any Borrower
with respect to such portion.

(iv) Obligation to Fund Absolute. Each Revolving Lender’s obligations pursuant
to clause (iii) above shall be absolute, unconditional and irrevocable and shall
be performed strictly in accordance with the terms of this Agreement under any
and all circumstances whatsoever, including (A) the existence of any setoff,
claim, abatement, recoupment, defense or other right that such Lender, any
Affiliate thereof or any other Person may have against the Swingline Lender, the
Agent, any other Lender or L/C Issuer or any other Person, (B) the failure of
any condition precedent set forth in Section 2.2 to be satisfied or

 

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the failure of the Borrower Representative to deliver a Notice of Borrowing
(each of which requirements the Revolving Lenders hereby irrevocably waive) and
(C) any adverse change in the condition (financial or otherwise) of any Credit
Party.

(e) Interest and principal on all Loans shall be paid in Dollars. For purposes
of preparing Borrowing Base Certificates, financial statements, calculating
financial covenants and determining compliance with covenants expressed in
Dollars, Pounds Sterling, Canadian Dollars and Euros will be converted to
Dollars based on (i) GAAP, consistently applied, for the purposes of preparing
cash flow statements and income statements and (ii) as of the last day of the
relevant period or as of the date of Borrowing Base Certificates for the
purposes of preparing balance sheets, Borrowing Base Certificates, or covenants
determined as of a specified date. If the Agent receives any payment from or on
behalf of any Credit Party in a currency other than the currency in which the
relevant Obligation is denominated, the Agent may convert the payment (including
the monetary proceeds of realization upon any Collateral and any funds held in a
cash collateral account) into the currency in which the relevant Obligation is
payable at the exchange rate published in The Wall Street Journal on the
Business Day closest in time to the date on which such payment was due. The
relevant Obligations shall be satisfied only to the extent of the amount
actually received by the Agent upon such conversion. Unless otherwise specified
herein, all determinations of US Dollar Equivalents shall be determined by
reference to The Wall Street Journal published on the Business Day closest in
time to the relevant date of determination or for the relevant period of
determination.

1.2 Notes.

(a) The Revolving Loans made by each Revolving Lender shall be evidenced by this
Agreement and, if requested by such Lender, a Revolving Note payable to the
order of such Lender in an amount equal to such Lender’s Revolving Loan
Commitment.

(b) Swing Loans made by the Swingline Lender shall be evidenced by this
Agreement and, if requested by such Lender, a Swingline Note in an amount equal
to the Swingline Commitment.

1.3 Interest.

(a) Subject to subsections 1.3(c) and 1.3(d), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made at a rate per
annum equal to the LIBOR or the Base Rate, as the case may be, plus the
Applicable Margin plus in the case of Loans made to the UK Borrower, the
Mandatory Cost; provided Swing Loans may not be LIBOR Rate Loans. Commencing on
February 1, 2007, and continuing thereafter, the Applicable Margin for Loans
shall be adjusted as set forth in the definition of Applicable Margin. Each
determination of an interest rate by the Agent shall be conclusive and binding
on each Borrower and the Lenders in the absence of demonstrable error. All
computations of fees and interest payable under this

 

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Agreement shall be made on the basis of a 360-day year and actual days elapsed;
provided, that, computations with respect to interest on Base Rate Loans shall
be based on a 365/366 day year and actual days elapsed. Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.

(b) Interest on each Loan shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any payment or prepayment of
any Loan in full.

(c) At the election of the Required Lenders while any Event of Default exists
(or automatically while any Event of Default under subsection 7.1(f) or 7.1(g)
exists), the Borrowers shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the Obligations owing by
them under the Loan Documents from and after the date of occurrence of such
Event of Default, at a rate per annum which is determined by adding two percent
(2.0%) per annum to the Applicable Margin then in effect for such Loans (plus
the LIBOR or Base Rate, as the case may be) and, in the case of Obligations
under the Loan Documents not subject to an Applicable Margin (other than the
fees described in subsection 1.9(c)), at a rate per annum equal to the rate per
annum applicable to Revolving Loans which are Base Rate Loans (including the
Applicable Margin with respect thereto) plus two percent (2.0%). All such
interest shall be payable on demand of the Agent or the Required Lenders.

(d) Anything herein to the contrary notwithstanding, the obligations of the
Borrowers hereunder shall be subject to the limitation that payments of interest
shall not be required, for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for, charging or
receiving such payment by the respective Lender would be contrary to the
provisions of any law applicable to such Lender limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrowers shall pay such Lender interest at the
highest rate permitted by applicable law (“Maximum Lawful Rate”); provided,
however, that if at any time thereafter the rate of interest payable hereunder
is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by the Agent, on behalf of Lenders, is equal to the total interest that
would have been received since the Closing Date had the interest payable
hereunder been (but for the operation of this paragraph) permitted at the
interest rate payable as provided in this Agreement.

1.4 Loan Accounts.

(a) The Agent, on behalf of the Lenders, shall record on its books and records
the amount of each Loan made, the interest rate applicable, all payments of
principal and interest thereon and the principal balance thereof from time to
time outstanding. The Agent shall deliver to the Borrower Representative on a
monthly basis a loan statement setting forth such record for the immediately
preceding month. Such record shall, absent manifest error, be conclusive
evidence of the amount of the Loans made by the Lenders to the Borrowers and the
interest and payments thereon. Any

 

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failure to so record or any error in doing so, or any failure to deliver such
loan statement shall not, however, limit or otherwise affect the obligation of
the Borrowers hereunder (and under any Note) to pay any amount owing with
respect to the Loans or provide the basis for any claim against the Agent.

(b) The Agent, acting as agent of the Borrowers solely for tax purposes to the
extent provided for in this Agreement and solely with respect to the actions
described in this subsection 1.4(b), shall establish and maintain at its address
referred to in Section 9.2 (or at such other address as the Agent may notify the
Borrower Representative) (A) a record of ownership (the “Register”) in which the
Agent agrees to register by book entry the interests (including any rights to
receive payment hereunder) of the Agent, each Lender and each L/C Issuer in the
Revolving Loans, Swing Loans and Letter of Credit Obligations, each of their
obligations under this Agreement to participate in each Loan, Letter of Credit
and L/C Reimbursement Obligations, and any assignment of any such interest,
obligation or right and (B) accounts in the Register in accordance with its
usual practice in which it shall record (1) the names and addresses of the
Lenders and the L/C Issuers (and each change thereto pursuant to Sections 9.9
and 9.22), (2) the Commitments of each Lender, (3) the amount of each Loan and
each funding of any participation described in clause (A) above, for LIBOR Rate
Loans, the Interest Period applicable thereto, (4) the amount of any principal
or interest due and payable or paid, (5) the amount of the L/C Reimbursement
Obligations due and payable or paid in respect of Letters of Credit and (6) any
other payment received by the Agent from a Borrower and its application to the
Obligations.

(c) Notwithstanding anything to the contrary contained in this Agreement, the
Loans (including any Notes evidencing such Loans and, in the case of Revolving
Loans, the corresponding obligations to participate in Letter of Credit
Obligations and Swing Loans) and the L/C Reimbursement Obligations are
registered obligations, the right, title and interest of the Lenders and the L/C
Issuers and their assignees in and to such Loans or L/C Reimbursement
Obligations, as the case may be, shall be transferable only upon notation of
such transfer in the Register and no assignment thereof shall be effective until
recorded therein. This Section 1.4 and Section 9.9 shall be construed so that
the Loans and L/C Reimbursement Obligations are at all times maintained in
“registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2)
of the Code.

(d) The Credit Parties, the Agent, the Lenders and the L/C Issuers shall treat
each Person whose name is recorded in the Register as a Lender or L/C Issuer, as
applicable, for all purposes of this Agreement. Information contained in the
Register with respect to any Lender or any L/C Issuer shall be available for
access by the Borrowers, the Borrower Representative, the Agent, such Lender or
such L/C Issuer at any reasonable time and from time to time upon reasonable
prior notice. No Lender or L/C Issuer shall, in such capacity, have access to or
be otherwise permitted to review any information in the Register other than
information with respect to such Lender or L/C Issuer unless otherwise agreed by
the Agent.

 

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1.5 Procedure for Revolving Credit Borrowing.

(a) Each Borrowing of a Revolving Loan shall be made upon the Borrower
Representative’s irrevocable (subject to Section 10.5 hereof) written notice
delivered to the Agent in the form of a Notice of Borrowing, which notice must
be received by the Agent prior to 2:00 p.m. (New York time) on the requested
Borrowing date in the case of each Base Rate Loan and (ii) on the day which is
three (3) Business Days prior to the requested Borrowing date in the case of
each LIBOR Rate Loan and, notwithstanding anything herein to the contrary, each
Revolving Loan to be advanced to the UK Borrower. Such Notice of Borrowing shall
specify:

(i) the amount of the Borrowing (which shall be in an aggregate minimum
principal amount of $100,000 and multiples of $50,000 in excess thereof);

(ii) the requested Borrowing date, which shall be a Business Day;

(iii) whether the Borrowing is to be comprised of LIBOR Rate Loans or Base Rate
Loans; and

(iv) if the Borrowing is to be LIBOR Rate Loans, the Interest Period applicable
to such Loans.

(b) Upon receipt of a Notice of Borrowing, the Agent will promptly notify each
Revolving Lender of such Notice of Borrowing and of the amount of such Lender’s
Commitment Percentage of the Borrowing.

(c) Unless the Agent is otherwise directed in writing by the Borrower
Representative, the proceeds of each requested Borrowing after the Closing Date
will be made available to the Borrowers by the Agent by wire transfer of such
amount to the Borrowers pursuant to the wire transfer instructions specified on
the signature page hereto.

1.6 Conversion and Continuation Elections.

(a) Borrowers shall have the option to (i) request that any Revolving Loan be
made as a LIBOR Rate Loan, (ii) convert at any time all or any part of
outstanding Loans (other than Swing Loans) from Base Rate Loans to LIBOR Rate
Loans, (iii) convert any LIBOR Rate Loan to a Base Rate Loan, subject to
Section 10.4 if such conversion is made prior to the expiration of the Interest
Period applicable thereto, or (iv) continue all or any portion of any Loan as a
LIBOR Rate Loan upon the expiration of the applicable Interest Period. Any Loan
or group of Loans having the same proposed Interest Period to be made or
continued as, or converted into, a LIBOR Rate Loan must be in a minimum amount
of $1,000,000 and integral multiples of $100,000 in excess of such amount. Any
such election must be made by the Borrower Representative by 2:00 p.m. (New York
time) on the 3rd Business Day prior to (1) the date of any proposed Revolving
Loan which is to bear interest at LIBOR, (2) the end of each Interest Period

 

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with respect to any LIBOR Rate Loans to be continued as such, or (3) the date on
which Borrowers wish to convert any Base Rate Loan to a LIBOR Rate Loan for a
Interest Period designated by the Borrower Representative in such election. If
no election is received with respect to a LIBOR Rate Loan by 2:00 p.m. (New York
time) on the 3rd Business Day prior to the end of the Interest Period with
respect thereto, that LIBOR Rate Loan shall be converted to a Base Rate Loan at
the end of its Interest Period. The Borrower Representative must make such
election by notice to the Agent in writing, by fax or overnight courier (or by
telephone, to be confirmed in writing on such day) or Electronic Transmission.
In the case of any conversion or continuation, such election must be made
pursuant to a written notice (a “Notice of Conversion/Continuation”) in the form
of Exhibit 1.6. No Loan shall be made, converted into or continued as a LIBOR
Rate Loan, if an Event of Default has occurred and is continuing and the Agent
or the Required Lenders have determined not to make or continue any Loan as a
LIBOR Rate Loan as a result thereof. No Loan may be made as or converted into a
LIBOR Rate Loan until 15 days after the Closing Date.

(b) Upon receipt of a Notice of Conversion/Continuation, the Agent will promptly
notify each Lender thereof. In addition, the Agent will, with reasonable
promptness, notify the Borrower Representative and the Lenders of each
determination of LIBOR; provided that any failure to do so shall not relieve any
Borrower of any liability hereunder or provide the basis for any claim against
the Agent. All conversions and continuations shall be made pro rata according to
the respective outstanding principal amounts of the Loans held by each Lender
with respect to which the notice was given.

(c) Notwithstanding any other provision contained in this Agreement, after
giving effect to any Borrowing, or to any continuation or conversion of any
Loans, there shall not be more than ten (10) different Interest Periods in
effect.

1.7 Optional Prepayments.

(a) The Borrowers may at any time prepay the Loans in whole or in part (other
than prepayments which have the effect of permanently reducing the Commitments)
in an amount greater than or equal to $100,000 (other than Swing Loans for which
no minimum shall apply), in each instance, without penalty or premium but
subject to payment of LIBOR breakage costs as provided in Section 10.4.

(b) The Borrowers may at any time upon at least two (2) Business Days’ prior
written notice by the Borrower Representative to the Agent, prepay the Loans in
whole or in part, which has the effect of permanently reducing the Commitments,
in an amount greater than or equal to $1,000,000 (other than Swing Loans for
which prior written notice is not required and for which no minimum shall
apply), in each instance, without penalty or premium but subject to payment of
LIBOR breakage costs as provided in Section 10.4.

(c) The notice of any prepayment shall not thereafter be revocable by the
Borrowers or the Borrower Representative and the Agent will promptly notify each
Lender thereof and of such Lender’s Commitment Percentage of such prepayment.
The

 

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payment amount specified in such notice shall be due and payable on the date
specified therein. Together with each prepayment under this Section 1.7, the
Borrowers shall pay any amounts required pursuant to Section 10.4.

1.8 Mandatory Prepayments of Loans and Commitment Reductions.

(a) Revolving Loan. The Borrowers shall repay to the Lenders in full on the date
specified in clause (a) of the definition of “Revolving Termination Date” the
aggregate principal amount of the Revolving Loans and Swing Loans owing by such
Borrowers outstanding on the Revolving Termination Date.

(b) Asset Dispositions. If a Borrower or any Guarantor shall at any time or from
time to time:

(i) make a Disposition; or

(ii) suffer an Event of Loss;

and, in each case, the aggregate amount of the Net Proceeds received by such
Borrower or Guarantor in connection with such Disposition or Event of Loss and
all other Dispositions and Events of Loss occurring during the fiscal year
exceeds the US Dollar Equivalent of $2,500,000, then (A) the Borrower
Representative shall promptly notify the Agent of such Disposition or Event of
Loss (including the amount of the estimated Net Proceeds to be received by such
Borrower or Guarantor in respect thereof) and (B) promptly upon receipt by such
Borrower or Guarantor of the Net Proceeds of such Disposition or Event of Loss,
the Borrowers shall deliver, or cause to be delivered, such Net Proceeds to the
Agent for distribution to the Lenders as a prepayment of the Loans owing, in the
case of a Disposition or Event of Loss by a US Credit Party, by the US
Borrowers, or, in the case of a Disposition or Event of Loss by a Foreign Credit
Party, by the UK Borrower, which prepayment in either case shall be applied in
accordance with subsection 1.8(d) hereof. Notwithstanding the foregoing and
provided no Event of Default has occurred and is continuing, such prepayment
shall not be required to the extent a Borrower or a Subsidiary reinvests or
enters into any binding commitment that would effect such a reinvestment of the
Net Proceeds of such Disposition or Event of Loss in productive assets (other
than Inventory) of a kind then used or usable in the business of a Borrower or
such Guarantor, within one hundred eighty (180) days after the date of such
Disposition or Event of Loss and in the case of a binding commitment, such funds
are reinvested within ninety (90) days after the date such binding commitment is
entered into. Pending such reinvestment, the Net Proceeds shall be delivered to
the Agent, for distribution first, to the Swingline Lender as a prepayment of
Swing Loans (to the extent of Swing Loans outstanding), but not as a permanent
reduction of the Swingline Commitment) and thereafter to the Revolving Lenders,
as a prepayment of the Revolving Loans (to the extent of Revolving Loans then
outstanding), but not as a permanent reduction of the Revolving Loan Commitment.

(c) Issuance of Securities/Indebtedness. Immediately upon the receipt by ITG, or
any Holding Company of ITG or BST, of the Net Issuance Proceeds of (i) the

 

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issuance of Stock or Stock Equivalents (including any capital contribution but
excluding any Net Issuance Proceeds from Excluded Equity Issuances) or
(ii) Holdco Debt, the Borrowers shall deliver, or cause to be delivered, to the
Agent an amount equal to the Relative Commitment Factor as of such date
multiplied by such Net Issuance Proceeds in each case for application to the
Loans in accordance with subsection 1.8(d); provided, however, that to the
extent that there are Net Issuance Proceeds remaining as described in this
clause (c) after application to the Loans in accordance with subsection 1.8(d),
such amounts shall be applied first to outstanding Indebtedness existing under
the Mexican Facility and second to outstanding Indebtedness existing under the
BST Facility.

(d) Application of Prepayments. Subject to subsection 1.10(c), any prepayments
pursuant to subsection 1.8(b) (other than prepayments of Swing Loans and
Revolving Loans as set forth therein) or subsection 1.8(c) shall be applied
first to prepay outstanding Swing Loans, and second to prepay outstanding
Revolving Loans owing, in the case of prepayment by a US Credit Party, by the US
Borrower or UK Borrower, or in the case of prepayment by a Foreign Credit Party,
by the UK Borrower. Prepayments pursuant to subsection 1.8(c) shall result in a
permanent reduction of the Commitments by a corresponding amount. Amounts
prepaid shall be applied first to any Base Rate Loans then outstanding and then
to outstanding LIBOR Rate Loans with the shortest Interest Periods remaining.
Together with each prepayment under this Section 1.8, the Borrowers shall pay
any amounts required pursuant to Section 10.4 hereof. Notwithstanding anything
to the contrary contained in this Section 1.8(d), the UK Borrower shall not be
required to make any prepayment of any US Obligation.

(e) No Implied Consent. Provisions contained in this Section 1.8 for the
application of proceeds of certain transactions shall not be deemed to
constitute consent of the Lenders to transactions that are not otherwise
permitted by the term hereof.

1.9 Fees.

(a) Agent’s Fees. The US Borrowers shall pay to the Agent, for the Agent’s own
account, fees in the amounts and at the times set forth in a letter agreement
between the Borrowers and the Agent dated November 10, 2006 (as amended from
time to time, the “Fee Letter”).

(b) Unused Commitment Fee. The US Borrowers shall pay to the Agent, for the
ratable benefit of the Revolving Lenders, a fee (the “Unused Commitment Fee”) in
an amount equal to

(i) the Aggregate Revolving Loan Commitment, less

(ii) the sum of (x) the average daily principal balance of all Revolving Loans
outstanding plus (y) the average daily amount of Letter of Credit Obligations
plus (z) the average daily principal balance of Swing Loans, in each case,
during the preceding month (the sum of (x), (y) and (z), the “Average Daily
Revolving Amount”),

 

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multiplied by (A) 0.375%, so long as the Average Daily Revolving Amount during
the immediately preceding month is less than or equal to $40,000,000 or
(B) 0.25%, so long as the Average Daily Revolving Amount for the immediately
preceding month is greater than $40,000,000. Such fee shall be payable monthly
in arrears on the first day of the month following the date hereof and the first
day of each month thereafter. The Unused Commitment Fee provided in this
subsection 1.9(b) shall accrue at all times from and after mutual execution and
delivery of this Agreement.

(c) Letter of Credit Fee. The applicable Borrower agrees to pay to the Agent for
the ratable benefit of the Revolving Lenders, as compensation to such Lenders
for Letter of Credit Obligations incurred hereunder, (i) without duplication of
costs and expenses otherwise payable to the Agent or Revolving Lenders hereunder
or fees otherwise paid by the Borrowers, all reasonable costs and expenses
incurred by the Agent or any Lender on account of such Letter of Credit
Obligations, and (ii) for each month during which any Letter of Credit
Obligation shall remain outstanding, a fee (the “Letter of Credit Fee”) in an
amount equal to the product of the average daily undrawn face amount of all
Letters of Credit issued, guaranteed or supported by risk participation
agreements multiplied by a per annum rate equal to the Applicable Margin with
respect to Revolving Loans which are LIBOR Rate Loans; provided, however, at the
Required Lenders’ option, while an Event of Default exists (or automatically
while an Event of Default under subsection 7.1(f) or 7.1(g) exists), such rate
shall be increased by two percent (2.00%) per annum. Such fee shall be paid to
the Agent for the benefit of the Revolving Lenders in arrears, on the first day
of each calendar month and on the Revolving Termination Date. In addition, the
Borrowers shall pay to any L/C Issuer, on demand, such reasonable fees, without
duplication of fees otherwise payable hereunder (including all per annum fees),
charges and expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued.

1.10 Payments by the Borrowers.

(a) All payments (including prepayments) to be made by each Credit Party on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off, recoupment, counterclaim, withholding or deduction of
any kind, shall, except as otherwise expressly provided herein, be made to the
Agent (for the ratable account of the Persons entitled thereto) at the address
for payment specified in the signature page hereof in relation to the Agent (or
such other address as the Agent may from time to time specify in accordance with
Section 9.2), and shall be made in Dollars and in immediately available funds,
no later than 2:00 p.m. (New York time) on the date due. Any payment which is
received by the Agent later than 2:00 p.m. (New York time) shall be deemed to
have been received on the immediately succeeding Business Day and any applicable
interest or fee shall continue to accrue. Each Borrower and each other Credit
Party hereby irrevocably waives the right to direct the application during the
continuance of an Event of Default of any and all payments in respect of any
Obligation and any proceeds of Collateral, provided, however, that all payments
in respect of any Obligation of any Foreign Credit Party and any proceeds of
Collateral of a Foreign Credit

 

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Party shall be applied in accordance with Section 1.10(d). Each Borrower hereby
authorizes the Agent and each Lender to make a Revolving Loan (which shall be a
Base Rate Loan and which may be a Swing Loan) to pay (i) interest, principal
(including Swing Loans), Unused Commitment Fees, Letter of Credit Fees and fees
payable to Agent pursuant to the Fee Letter owing, in the case of a US Borrower,
by the US Borrowers and the UK Borrower, and in the case of the UK Borrower, by
the UK Borrower in each instance, on the date due, or (ii) after ten (10) days
prior notice to the Borrower Representative, other fees, costs or expenses
payable by such Borrower or any of its Subsidiaries hereunder or under the other
Loan Documents.

(b) Subject to the provisions set forth in the definition of “Interest Period”
herein, if any payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.

(c) During the continuance of an Event of Default, the Agent may, and shall upon
the direction of the Required Lenders apply any and all payments in respect of
any US Obligation in accordance with clauses first through eleventh below.
Notwithstanding any provision herein to the contrary, all amounts collected or
received by the Agent from US Borrowers or their Domestic Subsidiaries after any
or all of the Obligations have been accelerated (so long as such acceleration
has not been rescinded) and all proceeds of Collateral of any US Borrower and
its Domestic Subsidiaries received by the Agent from any US Borrowers or its
Domestic Subsidiaries as a result of the exercise of its remedies under the
Collateral Documents after the occurrence and during the continuance of an Event
of Default shall be applied as follows:

first, to payment of costs and expenses, including Attorney Costs, of the Agent
payable or reimbursable by the US Credit Parties under the Loan Documents;

second, to payment of Attorney Costs of Lenders payable or reimbursable by the
US Borrowers under this Agreement;

third, to payment of all accrued unpaid interest on the US Obligations and fees
owed to the Agent, Lenders and US L/C Issuers;

fourth, to payment of principal of the Revolving Loan constituting part of the
US Obligations (including, without limitation, L/C Reimbursement Obligations
then due and payable) and cash collateralization of L/C Reimbursement
Obligations to the extent not then due and payable);

fifth, to payment of any other amounts owing constituting US Obligations;

sixth, to payment of costs and expenses, including Attorney Costs, of the Agent
payable or reimbursable by the Foreign Credit Parties under the Loan Documents;

seventh, to payment of Attorney Costs of Lenders payable or reimbursable by the
UK Borrower under this Agreement;

 

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eighth, to payment of all accrued unpaid interest on the UK Obligations and fees
owed to the Agent and the Lenders;

ninth, to payment of principal of the UK Obligations;

tenth, to payment of any other amounts owing constituting UK Obligations;

eleventh, to payment of Obligations with respect to Bank Products; and

twelfth, any remainder shall be for the account of and paid to whoever may be
lawfully entitled thereto.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (ii) each of the Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth and fifth above.

(d) During the continuance of an Event of Default, the Agent may, and shall upon
the direction of the Required Lenders apply any and all payments in respect of
any UK Obligation in accordance with clauses first through sixth below.
Notwithstanding any provision herein to the contrary, all amounts collected or
received by the Agent, other than from US Borrowers and their Domestic
Subsidiaries, after any or all of the Obligations have been accelerated (so long
as such acceleration has not been rescinded) and all proceeds of Collateral of
the UK Borrower and Foreign Subsidiaries of US Borrowers received by the Agent
as a result of the exercise of its remedies under the Collateral Documents after
the occurrence and during the continuance of an Event of Default shall be
applied as follows:

first, to payment of costs and expenses, including Attorney Costs, of the Agent
payable or reimbursable by the Foreign Credit Parties under the Loan Documents;

second, to payment of Attorney Costs of Lenders payable or reimbursable by the
UK Borrower under this Agreement;

third, to payment of all accrued unpaid interest on the UK Obligations and fees
owed to the Agent and the Lenders;

fourth, to payment of principal of the Revolving Loan constituting part of the
UK Obligations;

fifth, to payment of any other amounts owing constituting UK Obligations;

sixth, to payment of Obligations with respect to Bank Products; and

 

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seventh, any remainder shall be for the account of and paid to whoever may be
lawfully entitled thereto, as directed by Borrowers or by a court of competent
jurisdiction.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (ii) each of the Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth and fifth above.

Notwithstanding anything in clause (c) and (d) above to the contrary, to the
extent the Agent receives proceeds of voting equity interests in any Foreign
Subsidiary of a US Credit Party, such proceeds shall be applied (i) until
proceeds from the sale of 35% of such voting equity interest have been received
by the Agent, such proceeds shall be applied to the payments described in (and
in the order of) clauses first through fifth of clause (d) above (and then in
accordance with (and in the order of) clauses first through eleventh of clause
(c) above) and (ii) thereafter (1) 50% of such remaining proceeds shall be
applied to the payments described in (and in the order of) clauses first through
fifth of clause (d) above (and then in accordance with (and in order of) clauses
first through eleventh of clauses (c) above) and (2) the remaining 50% of such
proceeds shall be applied to the payments described in (and in the order of)
clauses first through eleventh of clause (c) above; provided, however, that in
no case shall proceeds from the sale of more than 65% of such voting equity
interests be applied to the payments described in clauses first through fifth of
clause (c) above.

1.11 Payments by the Lenders to the Agent; Settlement.

(a) The Agent may, on behalf of Lenders, disburse funds to the Borrowers for
Loans requested. Each Lender shall reimburse the Agent on demand for all funds
disbursed on its behalf by the Agent, or if the Agent so requests, each Lender
will remit to the Agent its Commitment Percentage of any Loan before the Agent
disburses same to the Borrowers. If the Agent elects to require that each Lender
make funds available to the Agent prior to disbursement by the Agent to the
Borrowers, the Agent shall advise each Lender by telephone, fax or email of the
amount of such Lender’s Commitment Percentage of the Loan requested by the
Borrower Representative no later than 2:00 p.m. (New York time) on the scheduled
Borrowing date applicable thereto, and each such Lender shall pay the Agent such
Lender’s Commitment Percentage of such requested Loan, in same day funds, by
wire transfer to the Agent’s account on such scheduled Borrowing date. If any
Lender fails to pay its Commitment Percentage within one (1) Business Day after
the Agent’s demand, the Agent shall promptly notify the Borrower Representative,
and the Borrowers shall immediately repay such amount to the Agent. Any
repayment required pursuant to this subsection 1.11(a) shall be without premium
or penalty. Nothing in this subsection 1.11(a) or elsewhere in this Agreement or
the other Loan Documents, including the remaining provisions of Section 1.11,
shall be deemed to require the Agent to advance funds on behalf of any Lender or
to relieve any Lender from its obligation to fulfill its Commitments hereunder
or to prejudice any rights that the Agent, Swingline Lender or Borrowers may
have against any Lender as a result of any default by such Lender hereunder.

 

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(b) At least once each calendar week or more frequently at the Agent’s election
(each, a “Settlement Date”), the Agent shall advise each Lender by telephone,
fax or email of the amount of such Lender’s Commitment Percentage of principal,
interest and fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that each Lender has funded all payments required to
be made by it and funded all purchases of participations required to be funded
by it under this Agreement and the other Loan Documents as of such Settlement
Date, the Agent shall pay to each Lender such Lender’s Commitment Percentage of
principal, interest and fees paid by the Borrowers since the previous Settlement
Date for the benefit of such Lender with respect to the Loans held by it. Such
payments shall be made by wire transfer to such Lender not later than 2:00 p.m.
(New York time) on the next Business Day following each Settlement Date. To the
extent that any Lender (a “Non-Funding Lender”) has failed to fund all such
payments or failed to fund the purchase of all such participations required to
be funded by such Lender pursuant to this Agreement, the Agent shall be entitled
to set off the funding shortfall against that Non-Funding Lender’s Commitment
Percentage of all payments received from the Borrowers.

(c) Availability of Lender’s Commitment Percentage. The Agent may assume that
each Revolving Lender will make its Commitment Percentage of each Revolving Loan
available to the Agent on each Borrowing date. If such Commitment Percentage is
not, in fact, paid to the Agent by such Revolving Lender when due, the Agent
will be entitled to recover such amount on demand from such Revolving Lender
without setoff, counterclaim, withholding or deduction of any kind. If any
Revolving Lender fails to pay the amount of its Commitment Percentage forthwith
upon the Agent’s demand, the Agent shall promptly notify the Borrower
Representative and the applicable Borrowers shall immediately repay such amount
to the Agent. Nothing in this subsection 1.11(c) or elsewhere in this Agreement
or the other Loan Documents shall be deemed to require the Agent to advance
funds on behalf of any Revolving Lender or to relieve any Revolving Lender from
its obligation to fulfill its Commitments hereunder or to prejudice any rights
that the Borrowers may have against any Revolving Lender as a result of any
default by such Revolving Lender hereunder. To the extent that the Agent
advances funds to the Borrowers on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such advance is made, the Agent
shall be entitled to retain for its account all interest accrued on such advance
until reimbursed by the applicable Revolving Lender.

(d) Return of Payments.

(i) If the Agent pays an amount to a Lender under this Agreement in the belief
or expectation that a related payment has been or will be received by the Agent
from the Borrowers and such related payment is not received by the Agent, then
the Agent will be entitled to recover such amount from such Lender on demand
without setoff, counterclaim, withholding or deduction of any kind.

 

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(ii) If the Agent determines at any time that any amount received by the Agent
under this Agreement must be returned to any Credit Party or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, the Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to the Agent on demand any portion of such
amount that the Agent has distributed to such Lender, together with interest at
such rate, if any, as the Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim, withholding or deduction of any kind.

(e) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Loan or any payment required by it hereunder, or to fund any purchase
of any participation to be made or funded by it on the date specified therefor
shall not relieve any other Lender (each such other Revolving Lender, an “Other
Lender”) of its obligations to make such loan or fund the purchase of any such
participation on such date, but neither any Other Lender nor the Agent shall be
responsible for the failure of any Non-Funding Lender to make a loan, fund the
purchase of a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a “Lender” or a “Revolving Lender” (or be included in the
calculation of “Required Lenders” hereunder) for any voting or consent rights
under or with respect to any Loan Document.

1.12 Eligible Accounts.

(a) All of the Accounts owned by the Borrowers and properly reflected as
“Eligible Accounts” (as defined below in clause (b) below) in the most recent
Borrowing Base Certificate delivered by the Borrower Representative to the Agent
shall be “Eligible Accounts” for purposes of this Agreement. The Agent shall
have the right to establish, modify or eliminate Reserves against Eligible
Accounts from time to time in its reasonable credit judgment. In addition, the
Agent reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the applicable criteria or to establish new criteria for
the determination of Eligible Accounts in its reasonable credit judgment,
subject to the approval of the Super-Majority Lenders in the case of adjustments
or new criteria for the determination of Eligible Accounts that would have the
effect of making more credit available under the new determination criteria than
what was available under the determination criteria in place as of the Closing
Date.

(b) “Eligible Accounts” means on any date of determination, all Accounts, but
excluding Accounts:

(i) that are unpaid more than 120 days after the invoice date (or 150 days in
the case of Extended Terms Accounts) or more than 60 days past due;

(ii) that are owed by an Account Debtor who is obligated on Accounts owed to
Borrowers more than fifty percent (50%) of the aggregate unpaid balance of which
have been unpaid for longer than the relevant period specified in clause
(a) above, unless the Agent has approved the continued eligibility thereof;

 

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(iii) that do not arise out of the sale by a Borrower or by any German
Subsidiary of Inventory and/or the rendition by a Borrower or by German
Subsidiaries of services in the ordinary course of business to an Account
Debtor;

(iv) owing by Account Debtors located outside of the United States or Canada,
except: (A) aggregate Accounts of up to the US Dollar Equivalent of $30,000,000
(x) owing by Account Debtors set forth on Schedule 1.12 (as amended from time to
time with the consent of Agent) and subject to the sub-limits set forth on
Schedule 1.12 and (y) such other Account Debtors set forth in the Borrowing Base
Certificate which are approved by the Agent; (B) Accounts owing by subsidiaries
of Autoliv located in Mexico not to exceed the US Dollar Equivalent of
$1,000,000 in the aggregate; and (C) without duplication of clause (A) and
(B) above, Accounts which are insured through credit insurance issued by
insurers and with coverage reasonably satisfactory to the Agent pursuant to
documents in form and substance reasonably satisfactory to the Agent and which
are otherwise Eligible Accounts (“Insured Accounts”);

(v) with respect to which the Account Debtor is (A) an Affiliate of a Borrower,
(B) a director, officer or employee of a Borrower or an Affiliate of a Borrower,
(C) the United States of America or any department, agency or instrumentality
thereof, unless the applicable Borrower shall have complied with the Federal
Assignment of Claims Act of 1940, as amended, to the satisfaction of the Agent
or proceeds of the Accounts arising under the applicable contract are deposited
in a depository account subject to a Control Agreement, (D) any government other
than the United States of America, including any department, agency or
instrumentality thereof, (E) a debtor under any proceeding under the Bankruptcy
Code or any other comparable bankruptcy or insolvency law applicable under the
law of any other country or political subdivision thereof unless otherwise
agreed by the Agent, or (F) an assignor for the benefit of creditors;

(vi) that are not subject to a first priority perfected Lien in favor of the
Agent for the benefit of the Secured Parties, or Accounts which are subject to
any Lien, in each case, other than Permitted Liens;

(vii) of any US Borrower which are not subject to a valid and binding sales
contract (or if there is no sales contract, purchase order or order
confirmation) governed by the laws of the United States or if disputes arising
thereunder are not subject to the jurisdiction of the United States or any state
of the United States;

(viii) of the UK Borrower which are not subject to a sales contract (or if there
is no sales contract, purchase order) governed by the laws of a Member State of
the European Union or if disputes arising thereunder are not subject to the
jurisdiction of any Member State of the European Union;

 

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(ix) with respect to which there is an unresolved dispute (or in respect of
which any setoff, counterclaim or defense is asserted) (but only to the extent
of the disputed amount or asserted claim);

(x) otherwise Eligible Accounts, only to the extent that including such Accounts
as Eligible Accounts would cause the total Eligible Accounts owing from the
Account Debtor obligated thereon or its Affiliates to exceed twenty percent
(20%) of all Eligible Accounts;

(xi) that arise from a sale to an Account Debtor on a bill-and-hold guaranteed
sale, sale-or-return, sale-on-approval, consignment, trial approval, evaluation
or any other repurchase or return basis or with respect to which the obligations
of the applicable Account Debtor thereon are contingent upon any further
performance or delivery to be made by a Borrower or one of its Subsidiaries;

(xii) that are not payable in Dollars, Canadian Dollars, Euros or Pounds
Sterling;

(xiii) in the case of the UK Borrower, (A) Accounts owing by an Account Debtor
which has not purchased the relevant inventory for its business, and
(B) Accounts regulated by the UK Consumer Credit Act 1974 or other local
consumer protection legislation;

(xiv) originated by Parras Cone, unless (A) such Accounts have been sold to
Denim pursuant to the Mexican Sale Agreement, (B) such Accounts are owing by
Account Debtors located in the United States, and (C) the contracts giving rise
to such Accounts are governed by the laws of a jurisdiction within the United
States; and

(xv) originated by a German Subsidiary, unless (A) such Accounts have been sold
and assigned to UK Borrower pursuant to the German Factoring Agreement from and
after the effective date thereof, (B) such Accounts are owing by Account Debtors
located in a Member State of the European Union, (C) the contracts giving rise
to such Accounts are, pursuant to the conflicts of laws provisions applied by
the courts having jurisdiction for such Accounts, governed by the laws of a
jurisdiction within a Member State of the European Union and (D) the Accounts
are subject to the jurisdiction of the courts of a Member State of the European
Union.

1.13 Eligible Inventory.

(a) All of the Inventory owned by a US Borrower and properly reflected as
“Eligible Inventory” (as defined in clause (b) below) in the most recent
Borrowing Base Certificate delivered by the Borrower Representative to the Agent
shall be “Eligible Inventory” for purposes of this Agreement. The Agent shall
have the right to establish, modify, or eliminate Reserves against Eligible
Inventory from time to time in its reasonable credit judgment. In addition, the
Agent reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the applicable criteria or to establish new criteria, in
its reasonable credit judgment, subject to the approval of the

 

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Super-Majority Lenders in the case of adjustments or new criteria for the
determination of Eligible Inventory that would have the effect of making more
credit available under the new determination criteria than what was available
under the determination criteria in place as of the Closing Date.

(b) “Eligible Inventory” means all Inventory in the possession of a US Borrower
and located within the United States of America or Canada, including, but not
limited to all raw material inventory, Greige Goods and finished goods
inventory, and as to which such US Borrower has title, valued at the lower of
cost (on a FIFO basis) or market, excluding Inventory:

(i) which is not subject to a perfected first priority Lien in favor of the
Agent for the benefit of the Agent and the Lenders, or Inventory which is
subject to any Lien, in each case, other than Permitted Liens;

(ii) which has been acquired by a US Borrower on consignment or has been placed
out on consignment by a US Borrower, unless such Inventory is subject to a first
priority perfected security interest in favor of the Agent for the benefit of
the Secured Parties;

(iii) which is obsolete, non-first quality, without sales activity (or with
minimal sales activity) in the past twelve months, or which consists of
Inventory returned by a buyer, or which is not free from any defects which might
adversely affect the market value thereof;

(iv) produced in violation of the Fair Labor Standards Act and subject to the
so-called “hot goods” provision contained in Title § 29 U.S.C. 215(a)(1);

(v) subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent of
any third party for the sale or disposition of such Inventory (which consent has
not been obtained) or the payment of any monies to any third party upon such
sale or other disposition (to the extent of such monies);

(vi) which is located at any site in the United States or Canada where the
aggregate value of all Inventory at that site is less than $100,000;

(vii) which is work-in-process (other than Greige Goods), or which consists of
packing or shipping materials, replacement parts, dyes, chemicals, fuel and
supplies;

(viii) which consists of costs associated with “freight-in” charges;

(ix) consists of Hazardous Materials or goods that can be transported or sold
only with licenses that are not readily available; and

(x) which is not covered by insurance in accordance herewith.

 

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Notwithstanding anything to the contrary herein, Agent may include Inventory
located in Mexico in the Borrowing Base with the consent of, and subject to any
requested terms required by, Super-Majority Lenders.

1.14 Eligible Equipment and Real Property.

(a) All of the Equipment and real Property owned by a US Borrower properly
reflected on Schedule 1.14 as in effect from time to time as “Eligible
Equipment” (as defined in clause (b) below) or “Eligible Real Property” (as
defined in clause (c) below), shall be “Eligible Equipment” and “Eligible Real
Property”, respectively, for purposes of this Agreement. The Net Forced
Liquidation Value of Eligible Equipment and the appraised fair market value of
Eligible Real Property as of the date of the Appraisal delivered prior to the
Closing Date, are set forth on Schedule 1.14. For convenience of reference, the
Fixed Asset Loan Value of US Borrowers as of the Closing Date is $22,300,000. If
any Eligible Equipment or Eligible Real Property listed on Schedule 1.14 is
sold, liquidated, destroyed or otherwise ceases to be Eligible Equipment or
Eligible Real Property, the calculation of the Fixed Asset Loan Value of the
Person who owns such Eligible Equipment or Eligible Real Property shall be
reduced, in the case of Eligible Equipment, by the Net Forced Liquidation Value,
and, in the case of Eligible Real Property, by the appraised fair market value
and such Eligible Equipment or Eligible Real Property shall be deleted from
Schedule 1.14 and the Agent shall correspondingly amend Schedule 1.14 without
any further action of any party hereto. At the request of the Borrower
Representative, the Agent shall in its reasonable credit judgment add newly
purchased Equipment that replaces Equipment that has been sold or disposed of to
Schedule 1.14 upon completion of appraisals satisfactory to the Agent, and
conducted at US Borrowers’ expense, to the extent such Equipment is Eligible
Equipment. The Net Forced Liquidation Value of any additional Eligible Equipment
or the appraised fair market value of any additional Eligible Real Property
shall be included in the calculation of the Fixed Asset Loan Value of the US
Borrower that owns such Eligible Equipment or Eligible Real Property and the
Agent shall correspondingly amend Schedule 1.14 without any further action of
any party hereto. The Agent shall have the right to establish, modify or
eliminate Reserves against Eligible Equipment and/or Eligible Real Property from
time to time in its reasonable credit judgment. In addition, the Agent reserves
the right, at any time and from time to time after the Closing Date, to adjust
any of the applicable criteria or to establish new criteria in its reasonable
credit judgment for Eligible Equipment and/or Eligible Real Property, subject to
the approval of the Super-Majority Lenders in the case of adjustments or new
criteria for the determination of Eligible Equipment and/or Eligible Real
Property that would have the effect of making more credit available under the
new determination criteria than what was available under the determination
criteria in place as of the Closing Date.

(b) “Eligible Equipment” means, on any date of determination, all of the
Equipment of US Borrowers that is in the possession of a US Borrower, excluding
Equipment that:

(i) is not located at one of the business locations in the United States of such
Persons set forth on Schedule 1.14, as amended from time to time with the
consent of Agent;

 

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(ii) is not subject to a perfected first priority Lien in favor of the Agent for
the benefit of the Agent and the Lenders, or which is subject to any Lien, in
each case, other than Permitted Liens (except for Permitted Liens under
Section 5.1(h));

(iii) breaches any of the representations or warranties pertaining to such
Equipment set forth in this Agreement or the other Loan Documents;

(iv) is not covered by property or casualty insurance required by this
Agreement;

(v) has not been appraised by an independent appraisal or audit firm designated
by the Agent and reasonably acceptable to the Borrower Representative;

(vi) a US Borrower does not have good, valid, and marketable title thereto;

(vii) is located on real property leased by a US Borrower, unless such Equipment
is subject to a landlord access agreement, in form and substance reasonably
acceptable to Agent, executed by the lessor, or other third party, as the case
may be, and unless it is segregated or otherwise separately identifiable from
goods of other Persons, if any, stored on the premises;

(viii) is damaged, defective or obsolete, or constitutes furnishings, parts,
fixtures or is affixed to real Property, unless such Equipment is affixed to the
Eligible Real Property listed on Schedule 1.14;

(ix) is subject to a lease with any Person (other than a US Borrower unless a
Lien on and security interest in the related lease shall be granted to the Agent
and the Agent shall have received all control agreements and instruments and all
actions shall be taken as reasonably requested by the Agent to perfect the
Agent’s security interest in and other rights with respect to such lease); or

(x) is located at an owned location subject to a mortgage or other financing
arrangement in favor of a lender other than the Agent (unless a reasonably
satisfactory mortgagee waiver or similar waiver and/or consent has been
delivered to the Agent).

(c) “Eligible Real Property” shall mean real Property which:

(i) is designated as “Eligible Real Property” on Schedule 1.14, as amended from
time to time with the consent of Agent; and

(ii) is owned by a US Borrower and continues to meet, the following
requirements: (A) it is subject to a valid, perfected first priority mortgage or
leasehold mortgage and Lien in favor of the Agent for the benefit of

 

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the Secured Parties, (B) it is owned by a US Borrower free and clear of all
Liens and rights of any other Person, except the mortgage or leasehold mortgage
and Lien in favor of the Agent for the benefit of the Agent and Lenders and
Permitted Liens which are subordinate to such mortgage Liens of the Agent and
Lenders, (C) it does not breach any of the representations or warranties
pertaining to such property set forth in this Agreement or the other Loan
Documents, (D) it is covered by title insurance with respect to the Lien of the
Agent and casualty and property insurance reasonably acceptable to the Agent,
(E) it has been appraised by an independent appraisal or audit firm designated
by the Agent and reasonably acceptable to the Borrower Representative and (F) it
is the subject of an environmental report reasonably acceptable to the Agent.

1.15 Borrower Representative. Each Borrower hereby designates and appoints ITG
as its representative and agent on its behalf (the “Borrower Representative”)
for the purposes of issuing Notices of Borrowings, Notices of
Conversion/Continuation, L/C Requests and Swingline Requests, delivering
certificates including Compliance Certificates and Borrowing Base Certificates,
giving instructions with respect to the disbursement of the proceeds of the
Loans, selecting interest rate options, giving and receiving all other notices
and consents hereunder or under any of the other Loan Documents and taking all
other actions (including in respect of compliance with covenants) on behalf of
any Borrower or Borrowers under the Loan Documents. The Borrower Representative
hereby accepts such appointment. The Agent and each Lender may regard any notice
or other communication pursuant to any Loan Document from the Borrower
Representative as a notice or communication from all Borrowers. Each warranty,
covenant, agreement and undertaking made on behalf of a Borrower by the Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.

ARTICLE II—CONDITIONS PRECEDENT

2.1 Conditions of Initial Loans. The obligation of each Lender to make its
initial Loans and of each L/C Issuer to Issue, or cause to be Issued, the
initial Letters of Credit hereunder is subject to satisfaction of the following
conditions:

(a) Loan Documents. The Agent shall have received on or before the Closing Date
all of the agreements, documents, instruments and other items set forth on the
Closing Checklist attached hereto as Exhibit 2.1, each in form and substance
reasonably satisfactory to the Agent;

(b) Pro Forma Balance Sheet; Sources and Uses. The Agent shall have received a
pro forma balance sheet of ITG and its Subsidiaries giving effect to the Related
Transactions and including the sources and uses of the Loans advanced on the
Closing Date, each in form and substance reasonably satisfactory to the Agent;

 

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(c) Availability. Not more than $65,000,000 in Revolving Loans shall be advanced
on the Closing Date, and after giving effect to the consummation of the Related
Transactions, payment of all costs and expenses due as of the Closing Date in
connection therewith, funding of the initial Loans and issuance of the initial
Letters of Credit, Availability shall be not less than $37,000,000; and

(d) Related Transactions. The Related Transactions shall have closed in the
manner contemplated by the Related Agreements and shall otherwise be in form and
substance reasonably satisfactory to the Agent.

2.2 Conditions to All Borrowings. Except as otherwise expressly provided herein,
no Lender or L/C Issuer shall be obligated to fund any Loan or incur any Letter
of Credit Obligation, if, as of the date thereof:

(a) any representation or warranty by any Credit Party contained herein or in
any other Loan Document is untrue or incorrect in any material respect (without
duplication of any materiality qualifier contained therein) as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date (in which event such representations and warranties were untrue
or incorrect as of such earlier date);

(b) any Default or Event of Default has occurred and is continuing or would
result after giving effect to any Loan (or the incurrence of any Letter of
Credit Obligation); and

(c) after giving effect to any Loan (or the incurrence of any Letter of Credit
Obligations), the aggregate outstanding amount of the Revolving Loans would
exceed the Maximum Revolving Loan Balance (except as provided in Section 1.1(a).

The request by the Borrower Representative and acceptance by Borrowers of the
proceeds of any Loan or the incurrence of any Letter of Credit Obligations shall
be deemed to constitute, as of the date thereof, (i) a representation and
warranty by Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by each Credit Party of the granting and
continuance of the Agent’s Liens, on behalf of itself and Lenders, pursuant to
the Collateral Documents.

ARTICLE III—REPRESENTATIONS AND WARRANTIES

The Credit Parties, jointly and severally, represent and warrant to the Agent
and each Lender that the following are, and after giving effect to the Related
Transactions will be, true, correct and complete:

3.1 Corporate Existence and Power. Each Credit Party:

(a) is a corporation, limited liability company or limited partnership, as
applicable, duly organized, validly existing and in good standing (or equivalent
status

 

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to the extent such concept is relevant with respect to any of ITG’s Foreign
Subsidiaries) under the laws of the jurisdiction of its incorporation,
organization or formation, as applicable;

(b) has (i) the corporate or limited liability company power and authority and
(ii) all governmental licenses, authorizations, Permits, consents and approvals
to own its assets, carry on its business and execute, deliver, and perform its
obligations under, the Loan Documents and the Related Agreements to which it is
a party;

(c) is duly qualified as a foreign corporation, limited liability company or
limited partnership, as applicable, and licensed and in good standing (or
equivalent status to the extent such concept is relevant with respect to any of
ITG’s Foreign Subsidiaries), under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification or license; and

(d) is in compliance with all Requirements of Law;

except, in the case of clauses (b)(ii), (c) or (d), to the extent that the
failure to do so would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

3.2 Corporate Authorization; No Contravention.

(a) The execution, delivery and performance of this Agreement by each of the
Credit Parties and of any other Loan Document and Related Agreement to which
such Person is party, have been duly authorized by all necessary corporate or
other applicable action, and do not and will not:

(i) contravene the terms of any of that Person’s Organization Documents;

(ii) conflict with or result in any breach or contravention of, or result of the
creation of any Lien under, any document evidencing any material Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Property is
subject; or

(iii) violate any Requirement of Law;

except in each case referred to in clauses (i), (ii) and (iii) above, as would
not reasonably be expected to result in a Material Adverse Effect.

(b) Schedule 3.2 sets forth as of the Closing Date the authorized Stock and
Stock Equivalents of each of the Credit Parties other than ITG and each of their
respective Subsidiaries. All issued and outstanding Stock and Stock Equivalents
of each of the Credit Parties (other than ITG) are duly authorized and validly
issued, fully paid, non-assessable, and free and clear of all Liens other than,
with respect to the Stock and

 

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Stock Equivalents of the Credit Parties (other than ITG), those in favor of the
Agent, for the benefit of the Secured Parties. All such securities were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. As of the Closing Date, all of the issued and outstanding Stock
and Stock Equivalents of each of the Credit Parties other than ITG is owned by
the Persons and in the amounts set forth on Schedule 3.2. Except as set forth on
Schedule 3.2, as of the Closing Date there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Stock and
Stock Equivalents of any Credit Party other than ITG.

3.3 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Credit Party or any Subsidiary of any Credit
Party of this Agreement, any other Loan Document or Related Agreement except
(a) for recordings and filings in connection with the Liens granted to the Agent
under the Collateral Documents, (b) those obtained or made on or prior to the
Closing Date and (c) other non-material approvals, consents, exemptions,
authorizations, other actions, notices or filings which, if not obtained or
made, would not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.

3.4 Binding Effect. This Agreement and each other Loan Document and Related
Agreement to which any Credit Party or any Subsidiary of any Credit Party is a
party constitute the legal, valid and binding obligations of each such Person
which is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.

3.5 Litigation. Except as specifically disclosed in Schedule 3.5, as of the
Closing Date there are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of each Credit Party, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against any Credit Party, any Subsidiary of any Credit Party or any
of their respective Properties which:

(a) purport to challenge the validity or enforceability of this Agreement, any
other Loan Document or Related Agreement, or any of the transactions
contemplated hereby or thereby; or

(b) would reasonably be expected to result in equitable relief that would result
in a Material Adverse Effect or monetary judgment(s), individually or in the
aggregate, in excess of the US Dollar Equivalent of $2,000,000.

No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain any Credit Party from the execution, delivery or performance of this
Agreement, any other Loan Document or any Related Agreement, or directing that
the transactions provided for

 

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herein or therein not be consummated as herein or therein provided. As of the
Closing Date, no Credit Party or any Subsidiary of any Credit Party is the
subject of an audit by the IRS or other Governmental Authority or, to each
Credit Party’s knowledge, any review or investigation by the IRS or other
Governmental Authority concerning the violation or possible violation of any
Requirement of Law.

3.6 No Default. No Default or Event of Default exists or would result from the
incurring of any Obligations by any Credit Party or the grant or perfection of
the Agent’s Liens on the Collateral or the consummation of the Related
Transactions. No Credit Party and no Subsidiary of any Credit Party is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, would reasonably be
expected to have a Material Adverse Effect.

3.7 ERISA Compliance.

(a) Schedule 3.7 sets forth, as of the Closing Date, a complete and correct list
of, and that separately identifies, (i) all Title IV Plans, (ii) all
Multiemployer Plans and (iii) all material Benefit Plans. The relevant Credit
Party has received from the IRS, with respect to each Benefit Plan and each
trust thereunder, intended to qualify for tax exempt status under Section 401 or
Section 501 of the Code or other Requirements of Law, a determination letter
stating that such Benefit Plan is a qualified plan under Section 401(a) of the
Code and is exempt from United States federal income tax under Section 501(a) of
the Code, and there has been no occurrence since the date of such determination
letter which has adversely affected such qualification. Except for those that
would not, in the aggregate, have a Material Adverse Effect, (x) each Benefit
Plan is in compliance with applicable provisions of ERISA, the Code and other
Requirements of Law, (y) there are no existing or pending (or to the knowledge
of any Credit Party, threatened) claims (other than routine claims for benefits
in the normal course), sanctions, actions, lawsuits or other proceedings or
investigation involving any Benefit Plan to which any Credit Party incurs or
otherwise has or could have an obligation or any Liability and (z) no ERISA
Event is reasonably expected to occur. On the Closing Date, no ERISA Event has
occurred in connection with which obligations and liabilities (contingent or
otherwise) remain outstanding. No ERISA Affiliate would have any Withdrawal
Liability as a result of a complete withdrawal from any Multiemployer Plan on
the date this representation is made.

(b) There are no liabilities associated with or arising from the UK Borrower or
any Foreign Subsidiary participating in, providing, or contributing to, either
currently or in the past, or ceasing to provide or contribute to, or in respect
of, any scheme or arrangement for the provision of any pension, superannuation,
retirement (including on early retirement) or death benefits (including in the
form of a lump sum) (the benefits together referred to as “Pension Benefits”) or
providing, or being obligated to provide or failing to provide any Pension
Benefits, which are not funded, insured or provided for in compliance with
applicable laws and on a generally accepted basis either through a separate
trust, insurance policy or as an accrual or provision in the accounts of the
relevant Foreign Subsidiary.

 

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3.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are intended
to be and shall be used solely for the purposes set forth in and permitted by
Section 4.10, and are intended to be and shall be used in compliance with
Section 5.8. No Credit Party and no Subsidiary of any Credit Party is engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock. Proceeds of the Loans shall not
be used for the purpose of purchasing or carrying Margin Stock.

3.9 Title to Properties. Each of the Credit Parties and each of their respective
Subsidiaries has good record and marketable title in fee simple to, or valid
leasehold interests in, all real Property, and good and valid title to all owned
personal Property and valid leasehold interests in all leased personal Property,
in each instance, necessary to the ordinary conduct of their respective
businesses. The Property of the Credit Parties and its Subsidiaries is subject
to no Liens, other than Permitted Liens.

3.10 Taxes. Except as set forth on Schedule 3.10, all material federal, state,
local and foreign income and franchise and other material tax returns, reports
and statements (collectively, the “Tax Returns”) required to be filed by any Tax
Affiliate have been filed with the appropriate Governmental Authorities in all
jurisdictions in which such Tax Returns are required to be filed and all taxes,
charges and other impositions reflected therein or otherwise due and payable
have been paid in all material respects prior to the date on which any Liability
may be added thereto for non-payment thereof except for those contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves are maintained on the books of the appropriate Tax Affiliate in
accordance with GAAP. Except as set forth on Schedule 3.10, as of the Closing
Date, to the knowledge of the Borrowers, no Tax Return is under audit or
examination by any Governmental Authority and no notice of such an audit or
examination or any assertion of any claim for Taxes has been given or made by
any Governmental Authority. All required amounts have been withheld by each Tax
Affiliate from their respective employees for all periods in compliance with the
tax, social security, employment and unemployment withholding provisions of
applicable Requirements of Law and such withholdings have been timely paid to
the appropriate Governmental Authorities. No Tax Affiliate has participated in a
“reportable transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary
group other than the group of which a Tax Affiliate is the common parent. As of
the Closing Date, if payments of interest were to be made by the UK Borrower to
the Lenders with respect to the Loans, none of such payments would be considered
US source income for the purposes of section 881 of the Code.

3.11 Financial Condition.

(a) Each of (i) the audited consolidated balance sheet of Pre-Merger ITG and its
Subsidiaries dated September 30, 2005 and the related audited consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal year ended on that date and (ii) the unaudited interim consolidated
balance sheet of Pre-Merger ITG and its Subsidiaries dated September 30, 2006
and the related unaudited consolidated statements of income, shareholders’
equity and cash flows for the twelve (12) months then ended:

(x) were prepared in accordance with GAAP consistently applied throughout the
respective periods covered thereby, except as otherwise expressly noted therein,
subject to, in the case of the unaudited interim financial statements, normal
year-end adjustments and the lack of footnote disclosures; and

 

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(y) present fairly in all material respects the consolidated financial condition
of Pre-Merger ITG and its Subsidiaries as of the dates thereof and results of
operations for the periods covered thereby.

(b) Each of (i) the audited consolidated balance sheet of Pre-Merger SCI and its
Subsidiaries dated December 31, 2005 and the related audited consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal year ended on that date and (ii) the unaudited interim consolidated
balance sheet of Pre-Merger SCI and its Subsidiaries dated September 30, 2006
and the related unaudited consolidated statements of income, shareholders’
equity and cash flows for the nine (9) months then ended:

(x) were prepared in accordance with GAAP consistently applied throughout the
respective periods covered thereby, except as otherwise expressly noted therein,
subject to, in the case of the unaudited interim financial statements, normal
year-end adjustments and the lack of footnote disclosures; and

(y) present fairly in all material respects the consolidated financial condition
of Pre-Merger SCI and its Subsidiaries as of the dates thereof and results of
operations for the periods covered thereby.

(c) Since December 31, 2005, there has been no Material Adverse Effect.

(d) The Credit Parties and their Subsidiaries have no Indebtedness other than
Indebtedness permitted pursuant to Section 5.5 and have no Contingent
Obligations other than Contingent Obligations permitted pursuant to Section 5.9.

(e) The Projections were prepared in good faith and based on assumptions
believed by the Borrowers to be fair and reasonable at the time delivered in
light of current market conditions, it being acknowledged and agreed by the
Agent and Lenders that projections as to future events are not to be viewed as
facts and that the actual results during the period or periods covered by such
projections may differ materially from the projected results.

3.12 Environmental Matters. As of the Closing Date, except as set forth on
Schedule 3.12: (a) the operations of each Credit Party and each Subsidiary of
such Credit Party are and have been in compliance with all applicable
Environmental Laws, including obtaining, maintaining and complying with all
Permits required by any applicable Environmental Law, other than non-compliances
that, in the aggregate, would not have a

 

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reasonable likelihood of resulting in Material Environmental Liabilities to any
Credit Party or any Subsidiary of any Credit Party, (b) no Credit Party and no
Subsidiary of any Credit Party is party to, and no Credit Party and no
Subsidiary of any Credit Party and no real property currently (or to the
knowledge of any Credit Party previously) owned, leased, subleased, operated or
otherwise occupied by or for any such Person that is subject to or the subject
of, any material Contractual Obligation or any pending (or, to the knowledge of
any Credit Party, threatened) order, action, investigation, suit, proceeding,
audit, claim, demand, dispute or notice of violation or of potential liability
or similar notice relating in any manner to any Environmental Law other than
those that, in the aggregate, are not reasonably likely to result in Material
Environmental Liabilities to any Credit Party or any Subsidiary of any Credit
Party, (c) no Lien in favor of any Governmental Authority securing, in whole or
in part, Environmental Liabilities has attached to any property of any Credit
Party or any Subsidiary of any Credit Party and, to the knowledge of any Credit
Party, no facts, circumstances or conditions exist that could reasonably be
expected to result in any such Lien attaching to any such property, (d) no
Credit Party and no Subsidiary of any Credit Party has caused or suffered to
occur a Release of Hazardous Materials at, to or from any real property of any
such Person and each such real property is free of contamination by any
Hazardous Materials except for such Release or contamination that would not
reasonably be expected to result, in the aggregate, in Material Environmental
Liabilities to any Credit Party or any Subsidiary of any Credit Party, (e) no
Credit Party and no Subsidiary of any Credit Party (i) is or has been engaged
in, or has permitted any current or former tenant to engage in, operations or
(ii) knows of any facts, circumstances or conditions, including receipt of any
information request or notice of potential responsibility under the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§§ 9601 et seq.) or similar Environmental Laws, that, in the aggregate, would
have a reasonable likelihood of resulting in Material Environmental Liabilities
to any Credit Party or any Subsidiary of any Credit Party and (f) as of the
Closing Date, each Credit Party has made available to the Agent copies of all
existing environmental reports, reviews and audits and all documents pertaining
to actual or potential Environmental Liabilities, in each case to the extent
such reports, reviews, audits and documents are in its possession, custody or
control.

3.13 Regulated Entities. None of any Credit Party, any Person controlling any
Credit Party, or any Subsidiary of any Credit Party, is an “investment company”
within the meaning of the Investment Company Act of 1940.

3.14 Solvency. Both before and after giving effect to (a) the Loans made and
Letters of Credit Issued on or prior to the date this representation and
warranty is made or remade, (b) the disbursement of the proceeds of such Loans,
(c) the consummation of the Related Transactions and (d) the payment and accrual
of all transaction costs in connection with the foregoing, both the Credit
Parties taken as a whole and each Borrower individually are Solvent.

3.15 Labor Relations. There are no strikes, work stoppages, slowdowns or
lockouts existing, pending (or, to the knowledge of any Credit Party,
threatened) against or involving any Credit Party or any Subsidiary of any
Credit Party, except for those that

 

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would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 3.15, as of the Closing Date, (a) there
is no collective bargaining or similar agreement with any union, labor
organization, works council or similar representative covering any employee of
any Credit Party or any Subsidiary of any Credit Party, (b) no petition for
certification or election of any such representative is existing or pending with
respect to any employee of any Credit Party or any Subsidiary of any Credit
Party and (c) no such representative has sought certification or recognition
with respect to any employee of any Credit Party or any Subsidiary of any Credit
Party.

3.16 Intellectual Property. Each Credit Party and each Subsidiary of each Credit
Party owns, or is licensed to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such Intellectual
Property the failure of which to own or license would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect. To
the knowledge of each Credit Party, (a) the conduct and operations of the
businesses of each Credit Party and each Subsidiary of each Credit Party does
not infringe, misappropriate, dilute, violate or otherwise impair any
Intellectual Property owned by any other Person and (b) no other Person has
contested any right, title or interest of any Credit Party or any Subsidiary of
any Credit Party in, or relating to, any Intellectual Property, other than, in
each case, as would not reasonably be expected to materially and adversely
affect the Loan Documents and the transactions contemplated therein and would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.17 Subsidiaries. As of the Closing Date, no Credit Party has any Subsidiaries
or equity investments in any other corporation or entity other than those
disclosed in Schedule 3.2.

3.18 Brokers’ Fees; Transaction Fees. Except for fees payable to the Agent and
the Lenders, none of the Credit Parties or any of their respective Subsidiaries
has any obligation to any Person in respect of any finder’s, broker’s or
investment banker’s fee in connection with this Agreement.

3.19 Insurance. Each of the Credit Parties and each of their respective
Subsidiaries and their respective Properties are insured with financially sound
and reputable insurance companies which are not Affiliates of the Borrowers, in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar Properties
in localities where such Person operates (subject to deductibles and
self-insurance provisions). A true and complete listing of such insurance,
including issuers, coverages and deductibles, has been provided to the Agent.

3.20 Full Disclosure. None of the representations or warranties made by any
Credit Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Credit Party or any of its Subsidiaries in connection
with the Loan Documents, contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.

 

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3.21 Foreign Assets Control Regulations and Anti-Money Laundering.

(a) OFAC. Neither any Credit Party nor any Subsidiary of any Credit Party (i) is
a person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any
dealings or transactions prohibited by Section 2 of such executive order, or is
otherwise associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other US
Department of Treasury’s Office of Foreign Assets Control regulation or
executive order.

(b) Patriot Act. Each of the Credit Parties and each of their respective
Subsidiaries are in compliance, in all material respects, with the Patriot Act.
No part of the proceeds of the Loans will be used, directly or indirectly, for
any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

3.22 UK Pensions/UK Employees. Neither the UK Borrower nor any other Foreign
Subsidiary incorporated in England and Wales has ever participated in a UK
defined benefit pension plan or been associated or connected with the employer
in relation to a UK defined benefit pension plan. As of the Closing, UK Borrower
does not employee more than (10) people.

3.23 UK Financial Assistance. Neither the execution, delivery and the
performance of any of the Loan Documents nor the incurrence of any obligations
or liabilities thereunder by the UK Borrower constitutes or will constitute
unlawful financial assistance for the purposes of sections 151 to 158
(inclusive) of the United Kingdom Companies Act of 1985 (as amended or otherwise
re-enacted from time to time).

ARTICLE IV—AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) shall remain unpaid or unsatisfied:

4.1 Financial Statements. Such Credit Party shall maintain, and shall cause each
of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
monthly financial statements shall

 

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not be required to have footnote disclosures and are subject to normal year-end
adjustments). The Borrower Representative, on behalf of the Borrowers shall
deliver to the Agent in electronic form:

(a) as soon as available, but not later than ninety (90) days after the end of
each fiscal year, a copy of the audited consolidated balance sheets of ITG and
each of its Subsidiaries (including the Excluded Subsidiaries) as at the end of
such year and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, and
accompanied by the unqualified opinion (as to going concern and scope of audit)
of any “Big Four” or other nationally-recognized independent public accounting
firm reasonably acceptable to the Agent which report shall state that such
consolidated financial statements present fairly in all material respects the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years; and

(b) as soon as available, but not later than (i) forty-five (45) days, with
respect to any month ending on the last day of any fiscal quarter, or
(ii) thirty (30) days after the end of each other fiscal month of each year, a
copy of the unaudited consolidated sheets of ITG and each of its Subsidiaries
(including the Excluded Subsidiaries), and the related consolidated statements
of income, shareholders’ equity and cash flows as of the end of such month and
for the portion of the fiscal year then ended, all certified on behalf of the
Borrowers by an appropriate Responsible Officer of the Borrower Representative
as being complete and correct and fairly presenting, in all material respects,
in accordance with GAAP, the financial position and the results of operations of
ITG and its Subsidiaries, subject to normal year-end adjustments and absence of
footnote disclosures; provided, however, that the timely filing with the
Securities and Exchange Commission and electronic delivery to Agent from time to
time by ITG of (x) its annual reports on Form 10-K shall be deemed to satisfy
the deliveries required pursuant to Section 4.1(a) above and (y) its quarterly
reports on Form 10-Q shall be deemed to satisfy the deliveries required pursuant
to Section 4.1(b)(i) above.

4.2 Certificates; Other Information. The Borrower Representative, on behalf of
the Borrowers shall furnish in electronic form, to the Agent:

(a) together with each delivery of financial statements pursuant to subsections
4.1(a) and (b)(i) above, (i) a management report, in reasonable detail, signed
by the chief financial officer of the Borrower Representative, describing the
operations and financial condition of the Credit Parties and their Subsidiaries
for the month and the portion of the fiscal year then ended (or for the fiscal
year then ended in the case of annual financial statements), and (ii) a report
setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding figures
from the most recent projections for the current fiscal year delivered pursuant
to subsection 4.2(l) and discussing the reasons for any significant variations;

 

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(b) concurrently with the delivery of the financial statements referred to in
subsections 4.1(a) and 4.1(b) above, a fully and properly completed Compliance
Certificate in the form of Exhibit 4.2(b), certified on behalf of the Borrowers
by a Responsible Officer of the Borrower Representative;

(c) (i) promptly after the same are sent, copies of all annual and quarterly
reports that ITG generally sends to its shareholders, and (ii) promptly after
the same are filed, copies of all financial statements and regular, periodic or
special reports which such Person may make to, or file with, the Securities and
Exchange Commission or any successor or similar Governmental Authority;

(d) as soon as available and in any event within twenty (20) days after the end
of each calendar month, and during the continuance of a Default or an Event of
Default, at such other times as the Agent may reasonably require, a Borrowing
Base Certificate, certified on behalf of the Borrowers by a Responsible Officer
of the Borrower Representative, setting forth the Borrowing Base as at the end
of the most-recently ended fiscal month or as at such other date as the Agent
may reasonably require;

(e) concurrently with the delivery of the Borrowing Base Certificate, with
respect to Borrowers, a summary of Inventory by location and type, in each case
accompanied by such supporting detail and documentation as shall be requested by
the Agent in its reasonable discretion;

(f) concurrently with the delivery of the Borrowing Base Certificate, with
respect to Borrowers, a monthly trial balance showing Accounts outstanding aged
from due date as follows: current, 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, accompanied by such supporting detail and documentation as
shall be requested by the Agent in its reasonable discretion;

(g) concurrently with the delivery of the financial statements referred to in
subsection 4.1(a) and 4.1(b)(i) (or together with the Borrowing Base Certificate
or at such more frequent intervals as the Agent may request from time to time
during the continuance of a Default or an Event of Default, or with respect to
any fiscal month in which Average Adjusted Availability is less than
(x) $20,000,000 at any time on or prior to February 15, 2007 and (y) $30,000,000
at any time after February 15, 2007, (i) an officers’ certificate signed by a
Responsible Officer summarizing Capital Expenditures to be paid for in the next
three months or for the next succeeding one month when reporting occurs on a
monthly basis, (ii) certifying that such Capital Expenditure payments will be
funded from contributions to capital, working capital or third party financing,
and (iii) certifying that after giving effect to those Capital Expenditure
payments, at all times during such three month period or one month period, as
applicable, Availability shall not be less than $12,500,000 as of any date and
Average Adjusted Availability will not be less than $22,500,000 as of any date;

(h) on a monthly basis, within twenty (20) days after the end of each month (or
on a weekly basis or at such more frequent intervals as the Agent may request
from time to time during the continuance of a Default or an Event of Default, or
during

 

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any fiscal month in which Average Adjusted Availability is less than
(x) $20,000,000 at any time on or prior to February 15, 2007 and (y) $30,000,000
at any time after February 15, 2007) (together with a copy of all or any part of
such delivery requested by any Lender in writing after the Closing Date),
collateral reports with respect to Borrowers, including all additions and
reductions (cash and non-cash) with respect to Accounts of Borrowers, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared
by the Borrowers as of the last day of the immediately preceding week or the
date two (2) days prior to the date of any request;

(i) [Intentionally Omitted];

(j) at the time of delivery of each of the quarterly financial statements
delivered pursuant to Section 4.1, (i) a listing of government contracts of
Borrowers subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Material Intellectual
Property (as defined in the Guaranty and Security Agreement) which are filed by
any Credit Party with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in the prior Fiscal
Quarter;

(k) upon the reasonable request of the Agent, at any time if an Event of Default
shall have occurred and be continuing but otherwise not more often than twice a
year (with one such appraisal being a “desktop” appraisal and the other being a
full appraisal), the Borrowers will obtain and deliver to the Agent a report of
an independent collateral auditor satisfactory to the Agent with respect to the
Accounts, Inventory, Equipment and real Property of the Credit Parties
including, without limitation, Appraisals reports in form and substance and from
appraisers reasonably satisfactory to the Agent, stating the then Net Orderly
Liquidation Values of all or any portion of the Inventory, Net Forced
Liquidation Values of Equipment and fair market value of real Property;

(l) no later than thirty (30) days after the last day of each fiscal year, the
annual business plan, with annual forecasts (to include forecasted consolidated
balance sheet, income statement and cash flow statements and a forecasted
product line summary) for the Borrowers and their consolidated Subsidiaries as
at the end of and for each fiscal quarter of the forthcoming fiscal year and as
at the end of the subsequent two years.

(m) promptly upon receipt thereof, copies of any reports submitted by the
certified public accountants of the Credit Parties in connection with each
annual, interim or special audit or review of any type of the financial
statements or internal control systems of any Credit Party made by such
accountants, including any comment letters submitted by such accountants to
management of any Credit Party in connection with their services;

(n) at any time if an Event of Default shall have occurred and be continuing,
the Agent may, or may require the Borrowers to, in either case at the

 

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Borrowers’ expense, obtain appraisals in form and substance and from appraisers
reasonably satisfactory to the Agent stating the then current fair market value
of all or any portion of the real or personal Property of any Credit Party or
any Subsidiary of any Credit Party;

(o) at any time if an Event of Default shall have occurred and be continuing but
otherwise not more often than four (4) times in any calendar year, details and
value of all or any part of the UK Priority Claims as shall be requested by the
Agent; and

(p) promptly, such additional business, financial, corporate affairs, perfection
certificates and other information as the Agent may from time to time reasonably
request.

4.3 Notices. The Borrower Representative, on behalf of the Borrowers shall
notify promptly the Agent of each of the following (and in no event later than
three (3) Business Days after a Responsible Officer becomes aware thereof):

(a) the occurrence or existence of any Default or Event of Default;

(b) the occurrence of any event or condition that has caused or would reasonably
be expected to result in a Material Adverse Effect;

(c) the commencement of, or any material development in, any litigation or
proceeding affecting any Credit Party or any Subsidiary of any Credit Party
(i) in which the amount of damages claimed is the US Dollar Equivalent of
$2,000,000 (or its equivalent in another currency or currencies) or more,
(ii) in which injunctive or similar relief is sought and which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect, or
(iii) in which the relief sought is an injunction or other stay of the
performance of this Agreement, any Loan Document or any Related Agreement;

(d) (i) the receipt by any Credit Party of any notice of violation of or
potential liability or similar notice under Environmental Law, (ii)(A)
unpermitted Releases, (B) the existence of any condition that could reasonably
be expected to result in violations of or liabilities under, any Environmental
Law or (C) the commencement of, or any material change to, any action,
investigation, suit, proceeding, audit, claim, demand, dispute alleging a
violation of or liability under any Environmental Law, that, for each of clauses
(A), (B) and (C) above (and, in the case of clause (C), if adversely
determined), in the aggregate for each such clause, could reasonably be expected
to result in Material Environmental Liabilities, (iii) the receipt by any Credit
Party of notification that any property of any Credit Party is subject to any
Lien in favor of any Governmental Authority securing, in whole or in part,
Material Environmental Liabilities and (iv) any proposed acquisition or lease of
real property, if such acquisition or lease would have a reasonable likelihood
of resulting in aggregate Material Environmental Liabilities;

(e) (i) on or prior to any filing by any ERISA Affiliate of any notice of intent
to terminate any Title IV Plan, a copy of such notice and (ii) promptly, and in
any

 

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event within 10 days, after any officer of any ERISA Affiliate knows that a
request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a notice (which
may be made by telephone if promptly confirmed in writing) describing such
waiver request and any action that any ERISA Affiliate proposes to take with
respect thereto, together with a copy of any notice filed with the PBGC or the
IRS pertaining thereto;

(f) any material change in accounting policies or financial reporting practices
by any Credit Party or any Subsidiary of any Credit Party;

(g) the creation, establishment or acquisition of any Domestic Subsidiary;

(h) (i) the execution of a contract with a Governmental Authority tolling the
statute of limitations with respect to the assessment of income or franchise
taxes and (ii) the creation of any Contractual Obligation of any Tax Affiliate,
or the receipt of any request directed to any Tax Affiliate, to make any
adjustment under Section 481(a) of the Code, by reason of a change in accounting
method or otherwise, which would have a Material Adverse Effect; and

(i) if the Accounts owing by any Account Debtor and its Affiliates to Borrowers
and their Subsidiaries exceed twenty percent (20%) of all Accounts owing by all
Account Debtors as of any date.

Each notice pursuant to this Section 4.3 shall be in electronic form accompanied
by a statement by a Responsible Officer of the Borrower Representative, on
behalf of the Borrowers, setting forth details of the occurrence referred to
therein, and stating what action the Borrowers or other Person proposes to take
with respect thereto and at what time. Each notice under subsection 4.3(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been breached or violated.

4.4 Preservation of Corporate Existence, Etc. Such Credit Party shall, and shall
cause each of its Subsidiaries to:

(a) preserve and maintain in full force and effect its organizational existence
and (except for the UK Borrower and any Credit Party incorporated in England or
Wales) good standing under the laws of its jurisdiction of incorporation,
organization or formation, as applicable, except, with respect to the Borrowers’
Subsidiaries, in connection with transactions permitted by Section 5.3;

(b) preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary in the normal conduct
of its business except in connection with transactions permitted by Section 5.2
or Section 5.3 or as would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;

 

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(c) use its reasonable efforts, in the Ordinary Course of Business, to preserve
its business organization and preserve the goodwill and business of the
customers, suppliers and others having material business relations with it; and

(d) preserve or renew all of its registered trademarks, trade names and service
marks, the non-preservation of which would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.

4.5 Maintenance of Property. Such Credit Party shall maintain, and shall cause
each of its Subsidiaries to maintain, and preserve all its Property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and shall make all necessary repairs thereto and renewals
and replacements thereof except where the failure to do so would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect, or as otherwise permitted under this Agreement.

4.6 Insurance.

(a) Such Credit Party shall, and shall cause each of its Subsidiaries to,
(i) maintain or cause to be maintained in full force and effect all policies of
insurance of any kind with respect to the property and businesses of such Credit
Party and such Subsidiaries (including policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity,
workers’ compensation, business interruption and employee health and welfare
insurance) with financially sound and reputable insurance companies or
associations (in each case that are not Affiliates of Borrowers) of a nature and
providing such coverage as is sufficient and as is customarily carried by
Persons with businesses of the size and character of the business of the Credit
Parties in localities where such Persons operate and (ii) cause all such
insurance relating to any Collateral of such Credit Party to name the Agent as
additional insured or loss payee, as appropriate. All policies of insurance on
real and personal Property of the Credit Parties will contain an endorsement, in
form and substance reasonably acceptable to the Agent, showing loss payable to
the Agent (Form 438 BFU or equivalent) and extra expense and business
interruption endorsements. Unless otherwise agreed by the Agent, such Credit
Party will use commercially reasonable efforts to ensure that such endorsement,
or an independent instrument furnished to the Agent, will provide that the
insurance companies will give the Agent at least 30 days’ prior written notice
before any such policy or policies of insurance shall be altered or canceled and
that no act or default of Borrowers or any other Person shall affect the right
of the Agent to recover under such policy or policies of insurance in case of
loss or damage. Such Credit Party shall direct all present and future insurers
under its “All Risk” policies of insurance to pay all proceeds payable
thereunder directly to the Agent. If any insurance proceeds are paid by check,
draft or other instrument payable to any Credit Party and the Agent jointly, the
Agent may endorse such Credit Party’s name thereon and do such other things as
the Agent may deem advisable to reduce the same to cash. The Agent reserves the
right at any time, upon review of each Credit Party’s risk profile, to require
additional forms and limits of insurance.

 

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(b) Unless the Borrowers provide the Agent with evidence of the insurance
coverage required by this Agreement from time to time upon the reasonable
request of the Agent, the Agent may purchase insurance at the Credit Parties’
expense to protect the Agent’s and Lenders’ interests in the Credit Parties’ and
their Subsidiaries’ properties. This insurance may, but need not, protect the
Credit Parties’ and their Subsidiaries’ interests. The coverage that the Agent
purchases may provide that such coverage will not pay any claim that any Credit
Party or any Subsidiary of any Credit Party makes or any claim that is made
against such Credit Party or any Subsidiary in connection with such coverage.
The Borrowers may later cancel any insurance purchased by the Agent, but only
after providing the Agent with evidence that there has been obtained insurance
as required by this Agreement. If the Agent purchases any such insurance, the
Credit Parties will be responsible for the costs of that insurance, including
interest and any other charges the Agent may impose in connection with the
placement of such insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of any such insurance shall be added to
the Obligations. The costs of any such insurance may be more than the cost of
insurance the Borrowers may be able to obtain on their own.

4.7 Payment of Obligations. Such Credit Party shall, and shall cause each of its
Subsidiaries to, pay, discharge and perform as the same shall become due and
payable or required to be performed, all their respective obligations and
liabilities, including:

(a) all tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets, unless the same are being contested in good faith
by appropriate proceedings diligently prosecuted which stay the enforcement of
any Lien and for which adequate reserves in accordance with GAAP are being
maintained by such Person;

(b) all lawful claims which, if unpaid, would by law become a Lien (other than a
Permitted Lien) upon its Property unless the same are being contested in good
faith by appropriate proceedings diligently prosecuted which stay the imposition
or enforcement of the Lien and for which adequate reserves in accordance with
GAAP are being maintained by such Person;

(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained herein and/or in any instrument or agreement
evidencing such Indebtedness, except to the extent the failure to so pay any
such Indebtedness would not constitute an Event of Default under Section 7.1(e);
and

(d) the performance of all obligations under any Contractual Obligation to which
such Credit Party or any of its Subsidiaries is bound, or to which it or any of
its properties is subject, including the Related Agreements, except where the
failure to perform would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

 

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(e) payments to the extent necessary to avoid the imposition of a Lien with
respect to, or the involuntary termination of any underfunded Benefit Plan,
including without limitation, payments to Burlington’s Benefit Plan on or prior
to July 31, 2007.

4.8 Compliance with Laws.

(a) Such Credit Party shall, and shall cause each of its Subsidiaries to, comply
with all Requirements of Law of any Governmental Authority having jurisdiction
over it or its business, except where the failure to comply would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.

(b) Without limiting the generality of the foregoing, such Credit Party shall,
and shall cause each of its Subsidiaries to, comply with, and maintain its real
Property, whether owned, leased, subleased or otherwise operated or occupied, in
compliance with, all applicable Environmental Laws (including by implementing
any Remedial Action necessary to achieve such compliance or that is required by
orders and directives of any Governmental Authority) except for failures to
comply that would not, in the aggregate, have a Material Adverse Effect. Without
limiting the foregoing, if an Event of Default is continuing and the Agent has a
reasonable basis to believe that (i) there exist violations of Environmental
Laws by any Credit Party or any Subsidiary of any Credit Party or (ii) there
exist any Material Environmental Liabilities, in each case, that would have, in
the aggregate, a Material Adverse Effect, then such Credit Party shall, promptly
upon receipt of request from the Agent, allow the Agent and its Related Persons
access to such real property for the purpose of conducting, such environmental
audits and assessments, including subsurface sampling of soil and groundwater,
and cause the preparation of such reports, in each case as the Agent may from
time to time reasonably request. Such audits, assessments and reports, to the
extent not conducted by the Agent or any of its Related Persons, shall be
conducted and prepared by reputable environmental consulting firms reasonably
acceptable to the Agent and shall be in form and detail reasonably acceptable to
the Agent.

4.9 Inspection of Property and Books and Records. Each Credit Party shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP (or in the case of Foreign Subsidiaries, standard acceptable accounting
practices as in effect in the country where such Person is organized)
consistently applied shall be made of all financial transactions and matters
involving the assets and business of such Person. Such Credit Party shall, and
shall cause each of its Subsidiaries to, with respect to each owned, leased, or
controlled property, during normal business hours and upon reasonable advance
notice (unless an Event of Default shall have occurred and be continuing, in
which event no notice shall be required and the Agent shall have access at any
and all times during the continuance thereof): (a) provide access to such
property to the Agent and any of its Related Persons, as frequently as the Agent
reasonably determines to be appropriate; (b) permit the Agent and any of its
Related Persons to inspect, audit and make extracts and copies (or take
originals if reasonably necessary) from all of such Credit Party’s books and
records; and (c) permit the Agent to inspect, review, evaluate and make physical
verifications and appraisals of the inventory and other Collateral in

 

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any manner and through any medium that the Agent considers advisable, in each
instance, at the Credit Parties’ expense provided the Credit Parties shall not
be responsible for costs and expenses more than two (2) times per year unless an
Event of Default has occurred and is continuing. Any Lender may accompany the
Agent in connection with any inspection at such Lender’s expense.

4.10 Use of Proceeds. The Borrowers shall use the proceeds of the Loans solely
as follows: (a) to refinance Prior Indebtedness on the Closing Date, (b) to pay
costs and expenses of the Related Transactions and costs and expenses required
to be paid pursuant to Section 2.1, and (c) for working capital and other
general corporate purposes not in contravention of any Requirement of Law and
not in violation of this Agreement. In addition, the UK Borrower may use
proceeds of the Loans to purchase Accounts of Safety Components KG in accordance
with the German Factoring Agreement and Denim may use the proceeds of the Loans
to purchase Accounts of Parras Cone.

4.11 Cash Management Systems.

(a) Each US Credit Party shall, and shall cause each Domestic Subsidiary of each
US Credit Party to, enter into, and cause each depository, securities
intermediary or commodities intermediary to enter into, Control Agreements with
respect to any deposit, securities, commodity or similar account maintained by
such Person (other than any payroll account, so long as such payroll account is
a zero balance account, and withholding tax and fiduciary accounts) as of or
after the Closing Date.

(b) The UK Borrower and each other Credit Party (other than the US Credit
Parties) shall maintain a cash management system in form and substance
reasonably satisfactory to the Agent, including, in the case of the UK Borrower
as prescribed in Clauses 4.1 and 10.1 of the UK Debenture.

4.12 Landlord Agreements. Each US Credit Party shall, and shall cause each of
its Domestic Subsidiaries to, use commercially reasonable efforts to obtain a
landlord agreement or bailee or mortgagee waivers, as applicable, from the
lessor of each leased property, bailee in possession of any Collateral or
mortgagee of any owned property with respect to each location where any
Collateral is stored or located, which agreement shall be reasonably
satisfactory in form and substance to the Agent. The Agent may, in its
discretion, exclude from the Borrowing Base, or impose Reserves with respect to,
Inventory or Equipment at each such location where a landlord agreement or
bailee or mortgagee waiver is not obtained.

4.13 Further Assurances; Limitation on Guarantees and Liens.

(a) Such Credit Party shall ensure that all written information, exhibits and
reports furnished to the Agent or the Lenders do not and will not contain any
untrue statement of a material fact when made and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Lenders and correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgement or recordation thereof.

 

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(b) Promptly upon request by the Agent, such Credit Party shall (and, subject to
the limitations hereinafter set forth and set forth in the Collateral Documents,
shall cause each of its Subsidiaries to) take such additional actions as the
Agent may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any other Loan Document, (ii) to
subject to the Liens created by any of the Collateral Documents any of the
Properties, rights or interests in which any Lien is granted pursuant to any of
the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agent, Lenders and L/C
Issuers the rights granted or now or hereafter intended to be granted to the
Agent, Lenders and L/C Issuers under any Loan Document or under any other
document executed in connection therewith.

(c) Without limiting the generality of the foregoing, upon the reasonable
request of the Required Lenders, such US Credit Party shall cause each of its
Domestic Subsidiaries to guaranty the Obligations and to cause each such
Domestic Subsidiary to grant to the Agent, for the benefit of the Secured
Parties, a security interest in, subject to the limitations hereinafter set
forth, all of such Subsidiary’s Property to secure such guaranty. Furthermore,
upon the reasonable request of the Required Lenders, such US Credit Party shall,
and shall cause each of its Domestic Subsidiaries to pledge all of the Stock and
Stock Equivalents of each of its Domestic Subsidiaries and First Tier Foreign
Subsidiaries (provided that with respect to any First Tier Foreign Subsidiary,
such pledge shall be limited to sixty-five percent (65%) of such Foreign
Subsidiary’s outstanding voting Stock and Stock Equivalents and one hundred
percent (100%) of such Foreign Subsidiary’s outstanding non-voting Stock and
Stock Equivalents) to the Agent for the benefit of the Secured Parties, to
secure the Obligations. In connection with each pledge of Stock and Stock
Equivalents, the Credit Parties shall deliver, or cause to be delivered, to the
Agent, irrevocable proxies and stock powers and/or assignments, as applicable,
duly executed in blank. In the event any US Credit Party acquires any real
Property with a fair market value in excess of the US Dollar Equivalent of
$500,000 that is not otherwise subject to a Mortgage, promptly after such
acquisition, such Person shall execute and/or deliver, or cause to be executed
and/or delivered, to the Agent, (x) a fully executed Mortgage, in form and
substance reasonably satisfactory to the Agent together with an A.L.T.A.
lender’s title insurance policy issued by a title insurer reasonably
satisfactory to the Agent, in form and substance and in an amount reasonably
satisfactory to the Agent insuring that the Mortgage is a valid and enforceable
first priority Lien on the respective property, free and clear of all defects,
encumbrances and Liens, other than Permitted Liens and other encumbrances agreed
to by the Agent, (y) then current A.L.T.A. surveys, certified to the Agent by a
licensed surveyor sufficient to allow the issuer of the lender’s title insurance
policy to issue such policy without a survey exception and (z) an environmental
site assessment prepared by a qualified firm reasonably acceptable to the Agent,
in form and substance satisfactory to the Agent.

 

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(d) Notwithstanding anything to the contrary contained herein or in the other
Loan Documents, neither the UK Borrower nor any Foreign Credit Party shall
(i) guarantee, directly or indirectly, any of the US Obligations, (ii) grant a
Lien on any of its assets to secure, directly or indirectly, payment of the US
Obligations nor (iii) have over sixty-five percent (65%) of its outstanding
voting Stock and Stock Equivalents pledged to the Agent for the benefit of the
Secured Parties to secure the US Obligations.

4.14 Mandatory Investments. On or prior to the dates indicated in the table
below, ITG shall obtain, and shall contribute the same to US Borrowers to be
used for purposes permitted by this Agreement, not less than the following
amounts in gross cash proceeds from the issuance of Stock and Stock Equivalents
to WLR and other Persons:

 

Date

   Equity Contribution

February 1, 2007

   $ 50,000,000

May 1, 2007

   $ 50,000,000

4.15 Corporate Separateness. Notwithstanding anything to the contrary in this
Agreement, if the Permitted BST Transaction occurs, on and after the date of
such Acquisition, each Credit Party shall, and shall cause of each its
Subsidiaries to:

(a) maintain its own books and records separate from any Person that is a member
of the BST Group;

(b) maintain its bank accounts separate from any Person that is a member of the
BST Group;

(c) not commingle its assets with those of any Person that is a member of the
BST Group and to hold all of its assets in its own name;

(d) conduct its own business in its own name or in the name of ITG or any
Subsidiary of ITG other than any member of the BST Group, consistent with past
practice;

(e) maintain separate financial statements, showing its assets and liabilities
separate and apart from those of any Person that is a member of the BST Group
and shall not have its assets listed on the financial statement of any member of
the BST Group; provided, however, that the assets of any Credit Party may be
included in consolidated financial statements of any member of the BST Group if
(i) appropriate notation shall be made on such consolidated financial statements
to indicate the separateness of the relevant Credit Party from the BST Group and
to indicate that the relevant Credit Party’s assets or credit of such Credit
Party are not available to satisfy the debts and other obligation of the any
member of the BST Group and (ii) such assets shall also be listed on such Credit
Party’s own separate balance sheet or on the balance sheet of ITG or any
Subsidiary of ITG other than any member of the BST Group, consistent with past
practice;

 

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(f) other than strictly in accordance with the terms of the Tax Sharing
Agreement, file its tax returns separate from those of any Person that is a
member of the BST Group and not to file a consolidated federal income tax return
with any Person that is a member of the BST Group;

(g) pay its own liabilities and expenses only out of its own funds or out of the
funds of ITG or any Subsidiary of ITG other than any member of the BST Group,
consistent with past practice;

(h) observe all corporate and other organizational formalities;

(i) enter into transactions with Persons that are members of the BST Group
(including, without limitation, lease agreements) only on a commercially
reasonable basis and on terms no less favorable to a Credit Party than those in
an arms-length transaction;

(j) pay the salaries of its own employees from its own funds or out of the funds
of ITG or any Subsidiary of ITG other than any member of the BST Group,
consistent with past practice;

(k) maintain a sufficient number of employees in light of its contemplated
business operations;

(l) not guarantee or become obligated for the debts of any member of the BST
Group;

(m) not hold out its credit as being available to satisfy the obligations of any
member of the BST Group;

(n) not acquire the obligations or securities of any member of the BST Group;

(o) not make loans to any member of the BST Group or to buy or hold evidence of
indebtedness issued by any member of the BST Group;

(p) use stationery, invoices, and cheques bearing a name separate from any
member of the BST Group;

(q) not pledge its assets for the benefit of any member of the BST Group; and

(r) not identify itself as a division of any member of the BST Group.

4.16 Centre of Main Interest. The UK Borrower shall use commercially reasonable
efforts to maintain its centre of main interest for purposes of Recital 13 of EC
Regulation No. 1346/2000 on Insolvency Proceedings within the United Kingdom.

4.17 UK Data Protection. The UK Borrower will comply with the UK Data Protection
Act 1998 and/or any analogous law.

 

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ARTICLE V—NEGATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) shall remain unpaid or unsatisfied:

5.1 Limitation on Liens. Such Credit Party shall not, and shall not suffer or
permit any of its Subsidiaries to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
Property, whether now owned or hereafter acquired, other than the following
(“Permitted Liens”):

(a) any Lien existing on the Property of a Credit Party or a Subsidiary of a
Credit Party on the Closing Date and set forth on Schedule 5.1, and in the case
of any such Liens securing Indebtedness outstanding on such date which
Indebtedness is permitted by subsection 5.5(c), in each case, including
replacement Liens on the Property currently subject to such Liens securing
Indebtedness permitted by Section 5.5(c);

(b) any Lien created under any Loan Document;

(c) Liens for taxes, fees, assessments or other governmental charges (i) which
are not delinquent or remain payable without penalty, or (ii) the non-payment of
which is permitted by Section 4.7;

(d) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the Ordinary Course of Business
which are not delinquent for more than ninety (90) days or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings diligently prosecuted, which proceedings have the effect of
preventing the forfeiture or sale of the Property subject thereto and for which
adequate reserves in accordance with GAAP are being maintained;

(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the Ordinary Course of Business in connection with workers’
compensation, unemployment insurance and other social security legislation or to
secure the performance of tenders, statutory obligations, surety, stay, customs
and appeals bonds, bids, leases, governmental contract, trade contracts,
indemnity, performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or to secure
liability to insurance carriers;

(f) judgment or judicial attachment Liens, provided that either the enforcement
of any such Lien is effectively stayed or all such Liens that are not stayed
secure claims in the aggregate at any time outstanding for the Credit Parties
and their Subsidiaries not exceeding the US Dollar Equivalent of the limit set
forth in Section 7.1(h);

 

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(g) easements, rights-of-way, zoning and other restrictions, minor defects or
other irregularities in title, and other similar encumbrances which do not in
any case materially detract from the value of the Property subject thereto or
interfere in any material respect with the ordinary conduct of the businesses of
any Credit Party or any Subsidiary of any Credit Party;

(h) Liens securing Indebtedness (including Capital Lease Obligations) permitted
under subsection 5.5(d);

(i) any interest or title of a lessor or sublessor under any lease permitted by
this Agreement;

(j) Liens arising from precautionary uniform commercial code financing
statements filed under any lease permitted by this Agreement;

(k) licenses, sublicenses, leases or subleases granted to third parties in the
Ordinary Course of Business not materially interfering with the business of the
Credit Parties or any of their Subsidiaries;

(l) Liens in favor of collecting banks arising under Section 4-210 of the UCC;

(m) Liens (including the right of set-off) in favor of a bank or other
depository institution arising as a matter of law encumbering deposits;

(n) Liens arising out of consignment, bailment or similar arrangements for the
sale of goods entered into by a Borrower or any Subsidiary of a Borrower in the
Ordinary Course of Business;

(o) Liens in favor of customs and revenue authorities arising as a matter of law
which secure payment of customs duties in connection with the importation of
goods in the Ordinary Course of Business or which secure partial, progress,
advance or other payments pursuant to any contract with respect to purchases of
software or Equipment to the extent that such payments or duties are paid when
due and payable by the Borrowers;

(p) Liens on commodity hedging accounts and amounts held therein to secure
performance under cotton futures contracts in connection with transactions or
positions in a contract for future delivery of cotton entered into in the
Ordinary Course of Business; provided that reserves in accordance with GAAP have
been provided on the books of the Credit Party who incurred such Liens;

(q) Environmental Liens not to exceed the US Dollar Equivalent of $1,000,000;

(r) any right of first refusal or first offer, redemption right, or option or
similar right in respect of any Stock or Stock Equivalent owned by any Credit
Party or any Subsidiary with respect to any Joint Venture or other Investment,
in favor of any co-venturer or other holder of Stock of Stock Equivalent of such
Investment;

 

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(s) Liens on proceeds (including dividends, distributions, interest and like
payments on or with respect to, and insurance and condemnation proceeds and
rental, lease, licensing and similar proceeds) of Property that is otherwise
subject to Liens permitted by this Section 5.1;

(t) subordinated Liens securing payment of the Indebtedness under the Mexican
Facility; and

(u) other Liens on assets not securing Indebtedness in an aggregate amount not
to exceed $1,500,000 at any time outstanding.

5.2 Disposition of Assets. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) except:

(a) dispositions of inventory, or used, worn-out assets or surplus fixed or
capital assets no longer useful in its business, all in the Ordinary Course of
Business;

(b) dispositions not otherwise permitted hereunder which are made for fair
market value determined in good faith by the Borrowers and the mandatory
prepayment in the amount of the Net Proceeds of such disposition is made if and
to the extent required by Section 1.8; provided, that (i) at the time of any
disposition, no Event of Default shall exist or shall result from such
disposition, (ii) not less than 80% of the aggregate sales price from such
disposition shall be paid in cash except as otherwise consented to by Agent in
its reasonable discretion, (iii) the aggregate fair market value of all assets
so sold by the Credit Parties and their Subsidiaries, together, shall not exceed
in any fiscal year the US Dollar Equivalent of $10,000,000 and (iv) after giving
effect to such disposition Availability shall not be less than $12,500,000 and
Average Adjusted Availability shall not be less than $22,500,000;

(c) dispositions of Cash Equivalents;

(d) exchanges of equipment for other equipment or trade credit, consistent with
past practice;

(e) licenses, sublicenses, leases or subleases granted to third parties in the
Ordinary Course of Business not materially interfering with the business of the
Credit Parties or any of their Subsidiaries;

(f) (i) any US Credit Party may sell, lease, transfer or otherwise dispose of
any of its Property to any other US Credit Party, (ii) any Foreign Credit Party
or Foreign Subsidiary may sell, lease, transfer or otherwise dispose of any of
its Property to any Credit Party on an arms’ length basis, (iii) any US Credit
Party may sell, lease, transfer or dispose of any of its Property to any Foreign
Credit Party or Foreign

 

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Subsidiary and (iv) any Credit Party or Foreign Subsidiary may sell, lease,
transfer or otherwise dispose of any of its Property to any Excluded Subsidiary
(in each case, other than any member of the BST Group) so long as, in the case
of clauses (iii) and (iv), before and after giving effect thereto (A) no Default
or Event of Default occurs or is continuing, (B) Average Adjusted Availability
is greater than (x) $20,000,000 with respect to dispositions on or prior to
February 15, 2007 and (y) $30,000,000 with respect to dispositions after
February 15, 2007, and (C) no default exists under any credit facility to which
such Excluded Subsidiary (other than any member of the BST Group) is a party or
to which its assets or property are subject;

(g) any Subsidiary (which is not a Credit Party) of any Borrower may be
liquidated, wound up or dissolved (upon voluntary liquidation or otherwise) if
such Borrower deems it beneficial to the business of such Borrower and such
liquidation, winding up or dissolution shall not result in a Material Adverse
Effect or impair the Collateral of the Lenders;

(h) any issuances of Stock or Stock Equivalents by any Subsidiary to Holdings or
any Wholly-Owned Subsidiary;

(i) the sale or other transfer of any Stock or Stock Equivalent owned by any
Credit Party or any Subsidiary of any Credit Party in any Joint Venture pursuant
to the Organization Documents or other documents governing such Joint Venture;
and

(j) other dispositions described on Schedule 5.2.

5.3 Consolidations and Mergers. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except upon not less
than two (2) Business Days prior written notice to the Agent, (a) any Subsidiary
of a Borrower may merge with, or dissolve or liquidate into, a Borrower or a
Wholly-Owned Subsidiary of a Borrower, provided that Domestic Subsidiaries shall
only be merged with and into US Borrowers or another Domestic Subsidiary;
(b) any Foreign Subsidiary may merge with or dissolve or liquidate into the UK
Borrower or Foreign Subsidiary; provided, that, if the UK Borrower is a
constituent entity in such merger, dissolution or liquidation, the UK Borrower
shall be the continuing or surviving entity; (c) any merger or consolidation
that constitutes a Permitted Acquisition; (d) Holdings may merge with and into
ITG; and (e) any Credit Party may be converted (including by way of merger) from
a corporation to a limited liability company or from a limited liability company
to a corporation.

5.4 Loans and Investments. No Credit Party shall and no Credit Party shall
suffer or permit any of its Subsidiaries to (i) purchase or acquire, or make any
commitment to purchase or acquire any Stock or Stock Equivalents, or any
obligations or other securities of, or any equity or debt interest in, any
Person, including the establishment or creation of a Subsidiary, or (ii) make or
commit to make any Acquisitions, including without limitation, by way of merger
or consolidation or (iii)

 

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make or commit to make or provide any advance, loan, extension of credit,
letters of credit to secure the obligations of, or capital contribution to or
any other investment in, any Person including any Affiliate of a Borrower or any
Subsidiary of a Borrower (the items described in clauses (i), (ii) and (iii) are
referred to as “Investments”), except for:

(a) Investments by (i) any US Credit Party in, to or for any other US Credit
Party (other than ITG), (ii) Foreign Credit Parties or Foreign Subsidiaries in,
to or for to one or more Foreign Credit Parties or Foreign Subsidiaries,
(iii) any US Credit Party in, to or for one or more Foreign Credit Parties or
Foreign Subsidiaries and (iv) any Credit Party or any Subsidiary of any Credit
Party in, to or for any Excluded Subsidiary organized in an Eligible Country (in
each case, other than any member of the BST Group) so long as, in the case of
clauses (iii) and (iv), before and after giving effect thereto (A) no Default or
Event of Default has occurred and is continuing, (B) Availability is greater
than $12,500,000 and Average Adjusted Availability is greater than
(x) $20,000,000 with respect to Investments completed on or prior to
February 15, 2007 and (y) $30,000,000 with respect to Investments after
February 15, 2007 and, in the case of clause (iv), no default exists under any
credit facility to which such Excluded Subsidiary is a party or to which its
assets or property are subject, and if any of the foregoing extensions of credit
described in clause (i), (ii), (iii) or (iv) above are evidenced by notes, such
notes shall be pledged and delivered to the Agent, for the benefit of the
Secured Parties, and have such terms as the Agent may reasonably require;

(b) loans and advances to employees in the Ordinary Course of Business;

(c) Investments received as the non-cash portion of consideration received in
connection with transactions permitted pursuant to Section 5.2(b);

(d) Investments acquired in connection with the settlement of delinquent
Accounts in the Ordinary Course of Business or in connection with the bankruptcy
or reorganization of suppliers or customers; and

(e) Investments existing on the Closing Date and set forth on Schedule 5.4 and
any renewal or replacement thereof;

(f) the Romanian Acquisition;

(g) the Permitted BST Acquisition;

(h) Permitted Acquisitions;

(i) Investments (i) in the form of deposits, prepayments and other credits to
suppliers made in the Ordinary Course of Business consistent with the past
practices of ITG and its Subsidiaries, (ii) in the form of extensions of trade
credit in the Ordinary Course of Business and (iii) in the form of prepaid
expenses and deposits to other Persons in the Ordinary Course of Business;

(j) Contingent Obligations permitted to Section 5.9;

 

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(k) (i) the endorsement of negotiable instruments held for collection in the
ordinary course of business or (ii) the making of lease, utility and other
similar deposits or prepayments, or deposits or prepayments to suppliers, in
each case in the Ordinary Course of Business;

(l) to the extent constituting Investments, Rate Contracts permitted pursuant to
Section 5.9;

(m) mergers and consolidations in compliance with Section 5.3;

(n) Investments in the BST Group from the proceeds of any issuance of Stock by
ITG not required to be prepaid hereunder; and

(o) Investments pursuant to the Mexican Sale Agreement and German Factoring
Agreement.

5.5 Limitation on Indebtedness. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, create, incur, assume, permit to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness, except:

(a) Indebtedness incurred pursuant to this Agreement;

(b) Indebtedness consisting of Contingent Obligations and permitted pursuant to
Section 5.9;

(c) Indebtedness existing on the Closing Date and set forth in Schedule 5.5
including extensions, replacements and refinancings thereof so long as the
principal amount of such Indebtedness as of the date of such extension,
replacement or refinancing is not increased, other than by the addition of any
accrued but unpaid interest, any applicable premium and/or fees relating to such
extension, replacement or refinancing;

(d) Indebtedness (including Capital Leases) incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including any
Indebtedness assumed in connection with the acquisition of any such Property or
secured by a Lien on such Property before the acquisition thereof; provided,
that (i) such Indebtedness is incurred before or within 30 days after such
acquisition or the completion of such construction or improvement, (ii) any such
Indebtedness shall be secured only by the assets acquired, constructed or
improved in connection with the incurrence of such Indebtedness and (iii) with
respect to Indebtedness incurred to finance the acquisition of any fixed or
capital assets, such Indebtedness shall not exceed 100% of the cost of such
Property, and, in each case, any refinancing of any of the foregoing
Indebtedness; provided, further, that in the case of each of the foregoing, the
aggregate outstanding principal amount of all such Indebtedness shall not exceed
at any time $20,000,000;

(e) unsecured intercompany Indebtedness permitted pursuant to subsection 5.4(a);

 

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(f) Indebtedness incurred in connection with the financing of insurance premiums
in the ordinary course of business;

(g) Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;

(h) (i) Subordinated Indebtedness in an aggregate amount not to exceed the US
Dollar Equivalent of $25,000,000 and (ii) WLR Subordinated Indebtedness;

(i) Indebtedness deemed to exist in connection with Rate Contracts permitted
under Section 5.9; and

(j) other unsecured Indebtedness not exceeding in the aggregate at any time
outstanding the US Dollar Equivalent of $5,000,000.

5.6 Transactions with Affiliates. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, enter into any transaction
with any Affiliate of a Borrower or of any such Subsidiary or a WLR Affiliate,
except:

(a) as expressly permitted by this Agreement;

(b) (i) any transaction between a US Credit Party and another US Credit Party,
(ii) any transaction between a Foreign Credit Party and another Foreign Credit
Party and (iii) any transaction between a Foreign Subsidiary that is not a
Credit Party and another Foreign Subsidiary that is not a Credit Party;

(c) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of such Credit Party or such Subsidiary upon fair
and reasonable terms no less favorable to such Credit Party or such Subsidiary
than would be obtained in a comparable arm’s length transaction with a Person
not an Affiliate of a Borrower or such Subsidiary and not a WLR Affiliate;

(d) any transaction permitted pursuant to Sections 5.2, 5.3, 5.4, 5.5, 5.7 or
5.9; and

(e) transactions set forth on Schedule 5.6.

5.7 Management Fees and Compensation. No Credit Party shall, and no Credit Party
shall permit any of its Subsidiaries to, pay any management, consulting or
similar fees to any Affiliate of any Credit Party or to any officer, director or
employee of any Credit Party or any Affiliate of any Credit Party except:

(a) payment of reasonable compensation to officers and employees for actual
services rendered to the Credit Parties and their Subsidiaries in the Ordinary
Course of Business and consistent with past practices;

 

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(b) payment of reasonable directors’ fees and reimbursement of actual
out-of-pocket expenses incurred in connection with duties performed and other
reasonable actions taken in such director’s capacity as a member of any such
board of directors or any committee thereof;

(c) payment of a management fee to WLR pursuant to the Management Agreement from
and after the effective date thereof not to exceed $4,000,000 per annum payable
in equal quarterly installments unless deferred voluntarily or as a result of a
Default or an Event of Default; provided, however, that the fees described in
this clause (c) shall not be paid during any period while a Default or Event of
Default has occurred and is continuing or would arise as a result of such
payment; provided, further any fees not paid due to the existence of a Default
or Event of Default shall be deferred and may be paid when no Default or Event
of Default exists; and

(d) reimbursement of reasonable out-of-pocket costs and expenses required to be
paid pursuant to the Management Agreement.

5.8 Use of Proceeds. No Credit Party shall, and no Credit Party shall suffer or
permit any of its Subsidiaries to, use any portion of the Loan proceeds,
directly or indirectly, to purchase or carry Margin Stock or repay or otherwise
refinance Indebtedness of any Credit Party or others incurred to purchase or
carry Margin Stock, or otherwise in any manner which is in contravention of any
Requirement of Law or in violation of this Agreement.

5.9 Contingent Obligations. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Contingent Obligations except in respect of the Obligations and
except:

(a) endorsements for collection or deposit in the Ordinary Course of Business;

(b) commodities hedging agreements and unsecured Rate Contracts entered into in
the Ordinary Course of Business for bona fide hedging purposes and not for
speculation;

(c) Contingent Obligations of the Credit Parties and their Subsidiaries existing
as of the Closing Date and listed in Schedule 5.9, including extensions,
replacements and renewals thereof which do not increase the amount of such
Contingent Obligations as of the date of such extension or renewal;

(d) Contingent Obligations incurred in the Ordinary Course of Business with
respect to surety and appeal bonds, performance bonds and other similar
obligations;

(e) Contingent Obligations arising under indemnity agreements to title insurers
to cause such title insurers to issue to the Agent title insurance policies;

 

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(f) Contingent Obligations arising with respect to customary indemnification
obligations in favor of (i) sellers in connection with Acquisitions permitted
hereunder and (ii) purchasers in connection with dispositions permitted under
subsection 5.2(b);

(g) Contingent Obligations arising under Letters of Credit (provided, however,
that any Letter of Credit supporting any obligation of an Excluded Subsidiary
(other than any member of the BST Group) shall be subject to the limitations set
forth in Section 5.4(a));

(h) Contingent Obligations arising under guarantees made in the Ordinary Course
of Business of obligations of any Credit Party (other than ITG), which
obligations are otherwise permitted hereunder; provided that if such obligation
is subordinated to the Obligations, such guarantee shall be subordinated to the
same extent;

(i) Contingent Obligations arising under a secured guaranty by the Credit
Parties of the Indebtedness under the Mexican Facility subject to the terms of
the Intercreditor Agreement;

(j) Contingent Obligations of any Credit Party in respect of Indebtedness
otherwise permitted under Section 5.5(a), (h), (i) and (j);

(k) unsecured guaranties by a US Credit Party of a Foreign Subsidiary’s
obligations under extended term cotton purchase agreements; provided, that the
Accounts generated from sales by such Foreign Subsidiary are owned by the
applicable US Credit Party; and

(l) other Contingent Obligations not exceeding the US Dollar Equivalent of
$2,500,000 in the aggregate at any time outstanding.

5.10 Compliance with ERISA. No ERISA Affiliate shall cause or suffer to exist
(a) any event that could result in the imposition of a Lien in excess of the US
Dollar Equivalent of $500,000 on any asset of a Credit Party or a Subsidiary of
a Credit Party with respect to any Title IV Plan or Multiemployer Plan or
(b) any other ERISA Event, that would, in the aggregate, have a Material Adverse
Effect. No Credit Party shall cause or suffer to exist any event that could
result in the imposition of a Lien with respect to any Benefit Plan.

5.11 Restricted Payments. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, (i) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any Stock or Stock Equivalent, (ii) purchase, redeem
or otherwise acquire for value any Stock or Stock Equivalent now or hereafter
outstanding or (iii) make any payment or prepayment of principal of, premium, if
any, interest, fees, redemption, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to, Subordinated Indebtedness (the
items described in clauses (i), (ii) and (iii) above are referred to as
“Restricted Payments”); except that any Wholly-Owned Subsidiary of a Borrower
may declare and pay dividends to a Borrower or any Wholly-Owned Subsidiary of a
Borrower, and except that:

(a) ITG may declare and make dividend payments or other distributions payable
solely in its Stock or Stock Equivalents; and

 

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(b) in the event a US Credit Party or Domestic Subsidiary of a US Credit Party
files a consolidated income tax return with ITG, Borrowers may make
distributions to ITG to permit ITG to pay federal and state income taxes then
due and owing, franchise taxes and other similar licensing expenses incurred in
the Ordinary Course of Business.

(c) in the event a Foreign Credit Party or Subsidiary of a Foreign Credit Party
files a consolidated income tax return with any direct or indirect Subsidiary of
ITG, such Foreign Credit Party or Subsidiary may make distributions to that
direct or indirect Subsidiary of ITG to permit that Subsidiary to pay income
taxes then due and owing, franchise taxes and other similar licensing expenses
incurred in the Ordinary Course of Business; and

(d) the Credit Parties may pay, as and when due and payable, regularly scheduled
payments of interest only at the non-default rate on Subordinated Indebtedness,
subject to the terms of the subordination provisions applicable thereto.

5.12 Change in Business. No Credit Party shall, and no Credit Party shall permit
any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it as of the
Closing Date, other than any line of business that is related or complimentary
to any existing line of business.

5.13 Amendment to Organization Documents. No Credit Party shall, and no Credit
Party shall permit any of its Subsidiaries to amend any of its Organization
Documents in any respect that is materially adverse to the Lenders.

5.14 Accounting Changes. No Credit Party shall, and no Credit Party shall suffer
or permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year or method for determining fiscal quarters of any Credit Party or of
any consolidated Subsidiary of any Credit Party.

5.15 Amendments to Related Agreements and Subordinated Indebtedness.

(a) No Credit Party shall and no Credit Party shall permit any of its
Subsidiaries, to (i) amend, supplement, waive or otherwise modify any provision
of, any Related Agreement in a manner materially adverse to the Lenders or which
would reasonably be expected to have a Material Adverse Effect, or (ii) take or
fail to take any action under any Related Agreement that would reasonably be
expected to have a Material Adverse Effect.

 

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(b) No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries directly or indirectly to, change or amend the terms of any
(i) Subordinated Indebtedness Documents except to the extent permitted by the
applicable Subordination Agreement.

5.16 No Negative Pledges.

(a) No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries to, directly or indirectly, to create or otherwise cause or suffer
to exist or become effective any consensual prohibition or limitation on the
ability of any such Subsidiary to pay dividends or make any other distribution
on any of such Subsidiary’s Stock or Stock Equivalents or to pay fees, including
management fees, or make other payments and distributions to a Borrower or any
of its Subsidiaries. No Credit Party shall, and no Credit Party shall permit any
of its Subsidiaries to, directly or indirectly, enter into, assume or become
subject to any Contractual Obligation prohibiting the existence of any Lien upon
any of its assets in favor of the Agent, whether now owned or hereafter
acquired. Notwithstanding the foregoing two sentences, the following
encumbrances or restrictions shall be permitted: (i) encumbrances or
restrictions existing under or by reason of (A) this Agreement and the other
Loan Documents; (B) Indebtedness permitted by Section 5.5(d); (C) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest; (D) customary provisions restricting assignment of any
agreement entered into by a Subsidiary of a Borrower in the Ordinary Course of
Business; (E) any holder of a Permitted Lien restricting the transfer of the
property subject thereto; (F) customary restrictions and conditions contained in
any agreement relating to the sale of any property permitted under Section 5.2
pending the consummation of such sale; (G) in the case of a Joint Venture,
restrictions in such person’s Organization Documents or pursuant to any joint
venture agreement or stockholders agreements solely to the extent of the Stock
or Stock Equivalents of or property held in the subject Joint Venture and
(H) any agreement in effect on the Closing Date as set forth on Schedule 5.16;
or (ii) any encumbrances or restrictions imposed by any amendments or
refinancings that are otherwise permitted by the Loan Documents of the
agreements referred to in clause (i) above; provided that such amendments or
refinancings are no more restrictive with respect to such encumbrances and
restrictions than those prior to such amendment or refinancing.

(b) No Borrower (other than ITG) shall issue any Stock or Stock Equivalents
(i) if such issuance would result in an Event of Default under subsection 7.1(m)
and (ii) unless such Stock and Stock Equivalents are pledged to the Agent, for
the benefit of the Secured Parties, as security for the Obligations, on
substantially the same terms and conditions as the Stock and Stock Equivalents
of the Borrowers pledged to the Agent as of the Closing Date.

5.17 OFAC. No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries to (i) become a person whose property or interests in property are
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001),
(ii) engage in any

 

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dealings or transactions prohibited by Section 2 of such executive order, or be
otherwise associated with any such person in any manner violative of Section 2,
or (iii) otherwise become a person on the list of Specially Designated Nationals
and Blocked Persons or subject to the limitations or prohibitions under any
other OFAC regulation or executive order.

5.18 Press Release and Related Matters. No Credit Party shall, and no Credit
Party shall permit any of its Affiliates to, issue any press release or other
public disclosure using the name, logo or otherwise referring to UBS or GE
Capital except (i)_ for filings required to be made with any Governmental
Authority, including, without limitation, the Securities and Exchange
Commission, in respect of which no consent or consultation with UBS or GE
Capital shall be required, or (ii) to the extent any Credit Party is otherwise
required to issue any such release or make any such disclosure under applicable
Requirements of Law, only after using commercially reasonable efforts to consult
with UBS or GE Capital prior thereto.

5.19 Sale-Leasebacks; Synthetic Leases; Factoring; etc. No Credit Party shall,
and no Credit Party shall permit any of its Subsidiaries to, engage in a sale
leaseback, synthetic lease, factoring, declaring in trust, discounting or
similar transaction involving any of its assets, other than the transactions
contemplated by the German Factoring Agreement and the Mexican Sale Agreement.

5.20 Hazardous Materials. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, cause or suffer to exist any Release at, to
or from any real Property owned, leased, subleased or otherwise operated or
occupied by any Credit Party or any Subsidiary of any Credit Party that would
violate any Environmental Law, form the basis for any Material Environmental
Liabilities or otherwise adversely affect the value or marketability of any real
property (whether or not owned by any Credit Party or any Subsidiary of any
Credit Party), other than such violations, Environmental Liabilities and effects
that would not, in the aggregate, have a Material Adverse Effect.

5.21 Food Security Act.

(a) No Borrower shall purchase any cotton or other goods that would constitute
farm products if the seller were a Person engaged in farming operations, unless
such Borrower acquires good title to such goods free and clear of all Liens
(except Permitted Liens) and, in particular, free from any statutory or other
grower’s or producer’s Liens in favor of any secured party who has taken steps
under the Food Security Act or any other federal or state statute to preserve
its Lien rights upon such goods notwithstanding the passage of title directly or
indirectly to such Borrower.

(b) Each Borrower shall in all respects comply with all applicable Food Security
Act Notices during their periods of effectiveness under the Food Security Act,
including directions to make payments to the sellers by issuing payment
instruments directly to the sellers’ secured party or jointly payable to the
seller and the sellers’ secured party, as specified in the Food Security Act
Notice, so as to terminate or release the security interest in cotton or other
farmed products maintained under the Food

 

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Security Act. Each Borrower shall notify the Agent in writing within five
(5) Business Days after receipt by such Borrower any notice received pursuant to
the applicable provisions of the Food Security Act or pursuant to the UCC or any
applicable local laws of any Lien filed with respect to cotton or any other farm
products that may be purchased by such Borrower or intended for resale to such
Borrower (a “Food Security Act Notice”).

(c) If at any time a Borrower purchases cotton or other farm products from a
Person engaged in farming operations or an agent for such Person in a
jurisdiction which has implemented the provisions of the Food Security Act with
respect to the creation of a “central filing system,” such Borrower shall
promptly register with the Secretary of State (or equivalent official) of each
such jurisdiction, pursuant to the registration requirements of the Food
Security Act and notify the Agent in writing of such registration with the
central filing system and, if requested by the Agent, provide the Agent with
copies of any Food Security Act Notices, master list, supplements thereto or
otherwise materials then or thereafter received from the Secretary of State (or
other official) of the central filing system by such Borrower.

5.22 UK Employees. Unless consented to by Agent, the UK Borrower shall at no
time employee more than ten (10) people.

ARTICLE VI—FINANCIAL COVENANTS

6.1 Fixed Charge Coverage Ratio. Each Credit Party covenants and agrees that if
Availability is less than $12,500,000 or Average Adjusted Availability is less
than $22,500,000 at any time during any fiscal month, the Fixed Charge Coverage
Ratio for the twelve month period ending as of the last day of the immediately
preceding fiscal month (or with respect to the any fiscal month ending on or
before October 31, 2007, the period commencing on December 1, 2006 and ending on
the last day of the preceding fiscal month) shall in no event be less than 1.05
to 1.00. The Fixed Charge Coverage Ratio shall be calculated in the manner set
forth in Exhibit 4.2(b).

6.2 Capital Expenditures. The Credit Parties shall not make Unfinanced Capital
Expenditures in excess of $20,000,000 in Fiscal Year 2007.

ARTICLE VII—EVENTS OF DEFAULT

7.1 Event of Default. Any of the following shall constitute an “Event of
Default”:

(a) Non-Payment. Any Credit Party fails (i) to pay when and as required to be
paid herein, any amount of principal of any Loan, including after maturity of
the Loans, or to pay any L/C Reimbursement Obligation or (ii) to pay within
three (3) Business Days after the same shall become due, interest on any Loan,
any fee or any other amount payable hereunder or pursuant to any other Loan
Document; or

 

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(b) Representation or Warranty. Any representation, warranty or certification by
or on behalf of any Credit Party or any of its Subsidiaries made or deemed made
herein, in any other Loan Document, or which is contained in any certificate,
document or financial or other statement by any such Person, or their respective
Responsible Officers, furnished at any time under this Agreement, or in or under
any other Loan Document, shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or

(c) Specific Defaults. Any Credit Party fails to perform or observe any term,
covenant or agreement contained in any of Sections 4.1, 4.2(b), 4.2(d), 4.2(g),
4.3(a), 4.6, 4.9, 4.14, Article V or Article VI hereof, or the UK Borrower fails
to comply with clauses 4.2 or 10.1 of the UK Debenture;

(d) Other Defaults. Any Credit Party or Subsidiary of any Credit Party fails to
perform or observe any other term, covenant or agreement contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of thirty (30) days after the earlier to occur of (i) the date upon
which a Responsible Officer of any Credit Party becomes aware of such default
and (ii) the date upon which written notice thereof is given to the Borrower
Representative by the Agent or the Required Lenders; or

(e) Cross-Default. Any Credit Party or any Subsidiary of any Credit Party
(i) fails to make any payment in respect of the Mexican Facility or any
Indebtedness (other than the Obligations) having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
the US Dollar Equivalent of $3,500,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
document relating thereto on the date of such failure; or (ii) fails to perform
or observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness, in either case of clause (i) or clause (ii) above, if the effect
of such failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity (without regard to any
subordination terms with respect thereto); or

(f) Insolvency; Voluntary Proceedings. A Borrower, individually, ceases or
fails, or the Credit Parties and their Subsidiaries on a consolidated basis,
cease or fail, to be Solvent, or any Credit Party or any Subsidiary of any
Credit Party, in either case, with assets in excess of the US Dollars Equivalent
of $1,000,000: (i) generally fails to pay, or admits in writing its inability to
pay, its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its
business in the ordinary course; (iii) commences any Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or authorize any of
the foregoing; or

 

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(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against any Credit Party or any Subsidiary of any Credit
Party, in either case, with assets in excess of the US Dollar Equivalent of
$1,000,000, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of any such Person’s
Properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded, in any case, within sixty (60) days after
such commencement, filing or levy; (ii) any Credit Party or any Subsidiary of
any Credit Party, in either case, with assets in excess of the US Dollar
Equivalent of $1,000,000 admits the material allegations of a petition against
it in any such Insolvency Proceeding, or an order for relief (or similar order
under non-US law) is ordered in any Insolvency Proceeding; or (iii) any Credit
Party or any Subsidiary of any Credit Party, in either case, with assets in
excess of the US Dollar Equivalent $1,000,000 acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its Property or business; or

(h) Monetary Judgments. One or more judgments, non-interlocutory orders, decrees
or arbitration awards shall be entered against any one or more of the Credit
Parties or any of their respective Subsidiaries involving in the aggregate a
liability (to the extent not covered by independent third-party insurance) as to
any single or related series of transactions, incidents or conditions, of the US
Dollar Equivalent of $3,500,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty (30) days after the
entry thereof; or

(i) UK Borrower Insolvency. Any of the following occurs in respect of the UK
Borrower or other Credit Party with assets in excess of the US Dollar Equivalent
of $1,000,000 incorporated in England and Wales: (i) it is, or is deemed for the
purposes of any applicable law to be, unable to pay its debts as they fall due
or not Solvent; (ii) it admits its insolvency or its inability to pay its debts
as they fall due; (iii) it suspends making payments on any of its debts or
announces an intention to do so; (iv) by reason of actual or anticipated
financial difficulties, it begins negotiations with any creditor for the
rescheduling or restructuring of any its Indebtedness; or (v) a moratorium is
declared or instituted in respect of any of its Indebtedness; provided if a
moratorium occurs in respect of such Person, the ending of the moratorium will
not remedy any Event of Default caused by the moratorium; or

(j) UK Insolvency Proceedings. Any of the following occurs in respect of the UK
Borrower or other Credit Party with assets in excess of the US Dollar Equivalent
of $1,000,000 incorporated in England and Wales: (i) any step is taken with a
view to a moratorium or a composition, assignment or similar arrangement with
any of its creditors; (ii) a meeting of its shareholders, directors or other
officers is convened for the purpose of considering any resolution for, to
petition for or to file documents with a court or any registrar for its
winding-up, administration or dissolution or for the seeking of relief under any
applicable bankruptcy, insolvency, company or similar law or any such resolution
is passed; (iii) any person presents a petition or files documents with a court
or any registrar for its winding-up, administration or dissolution or seeking
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applicable bankruptcy, insolvency, company or similar law; (iv) an order for its
winding-up, administration or dissolution is made or other relief is granted
under any applicable bankruptcy, insolvency, company or similar law; (v) any
liquidator, trustee in bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or similar officer is appointed
in respect of it or any of its assets; (vi) its shareholders, directors or other
officers request the appointment of, or give notice of their intention to
appoint, a liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or similar officer in
respect of it or any of its assets; or (vii) enforcement of any Lien over any of
its assets; provided, however, that clause (iii) above does not apply to a
petition for winding-up presented by a creditor which is being contested in good
faith and with due diligence and is discharged or struck out within 21 days; or

(k) Non-Monetary Judgments. One or more non-monetary judgments, orders or
decrees shall be rendered against any one or more of the Credit Parties or any
of their respective Subsidiaries which has or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect, and
there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

(l) Collateral. Any material provision of any Loan Document shall for any reason
cease to be valid and binding on or enforceable against any Credit Party or any
Subsidiary of any Credit Party party thereto or any Credit Party or any
Subsidiary of any Credit Party shall so state in writing or bring an action to
limit its obligations or liabilities thereunder; or any Collateral Document
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid security interest in the Collateral purported to be covered thereby or
such security interest shall for any reason (other than the failure of the Agent
to take any action within its control) cease to be a perfected and first
priority security interest subject only to Permitted Liens; or

(m) Ownership. If (i) at any time after the Closing Date, any Person other than
a Permitted Investor, owns beneficially, directly or indirectly, more than 51%
of the issued and outstanding voting Stock of ITG or, in any event, Stock
representing voting control of the Borrowers; or (ii) ITG ceases to own either
directly or indirectly one hundred percent (100%) of the issued and outstanding
Stock and Stock Equivalents of the Borrowers, in each instance in clauses
(i) and (ii), free and clear of all Liens, rights, options, warrants or other
similar agreements or understandings, other than Liens in favor of the Agent,
for the benefit of the Secured Parties.

7.2 Remedies. Upon the occurrence and during the continuance of any Event of
Default, the Agent may, and shall at the request of the Required Lenders:

(a) declare all or any portion of the Commitment of each Lender to make Loans or
of the L/C Issuer to issue Letters of Credit to be terminated, whereupon such
Commitments shall forthwith be terminated;

 

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(b) declare all or any portion of the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable; without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by each Credit Party; and/or

(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of any event specified in
subsections 7.1(f) or 7.1(g) above (in the case of clause (i) of subsection
7.1(g) upon the expiration of the sixty (60) day period mentioned therein (other
than in the case of the UK Borrower or any other Credit Party incorporated in
England or Wales), the obligation of each Lender to make Loans and the
obligation of the L/C Issuer to issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Agent, any Lender or the L/C Issuer.
Notwithstanding anything to the contrary contained herein, the Agent may (and at
the request of Required Lenders, shall) send Activation Notices at any time when
an Event of Default is continuing or after Availability is less than $12,500,000
(unless Agent otherwise consents) or Average Adjusted Availability is equal to
or less than $22,500,000; provided, that if, at any time more than ninety
(90) days after an Activation Notice is sent, Average Adjusted Availability is
more than $22,500,000 and Availability on any single day is not less than
$12,500,000 during the measuring period with respect to Average Adjusted
Availability and no Event of Default is continuing, then Agent shall rescind
such Activation Notices.

7.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.

7.4 Cash Collateral for Letters of Credit. If an Event of Default has occurred
and is continuing, the Agent may (and at the request of Required Lenders,
shall), or if this Agreement (or the Revolving Loan Commitment) is terminated
for any reason, the Agent shall, demand (which demand shall be deemed to have
been delivered automatically upon any acceleration of the Loans and other
obligations hereunder pursuant to Section 7.2 hereof), and the Borrowers shall
thereupon deliver to the Agent, to be held for the benefit of the L/C Issuer,
the Agent and the Lenders entitled thereto, an amount of cash equal to 105% of
the amount of Letter of Credit Obligations as additional collateral security for
Obligations in respect of any outstanding Letter of Credit. The Agent may at any
time apply any or all of such cash and cash collateral to the payment of any or
all of the Credit Parties’ Obligations in respect of any Letters of Credit.
Pending such application, the Agent may (but shall not be obligated to) invest
the same in an interest bearing account in the Agent’s name, for the benefit of
the L/C Issuers, the Agent and the Lenders entitled thereto, under which
deposits are available for immediate withdrawal, at such bank or financial
institution as the L/C Issuer and the Agent may, in their discretion, select.

 

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ARTICLE VIII—THE AGENT

8.1 Appointment and Duties.

(a) Appointment of Agent. Each Lender and each L/C Issuer hereby appoints GE
Capital (together with any successor Agent pursuant to Section 8.9) as the Agent
hereunder and authorizes the Agent to (i) execute and deliver the Loan Documents
and accept delivery thereof on its behalf from any Credit Party, (ii) take such
action on its behalf and to exercise all rights, powers and remedies and perform
the duties as are expressly delegated to the Agent under such Loan Documents and
(iii) exercise such powers as are reasonably incidental thereto.

(b) Duties as Collateral and Disbursing Agent. Without limiting the generality
of clause (a) above, the Agent shall have the sole and exclusive right and
authority (to the exclusion of the Lenders and L/C Issuers), and is hereby
authorized, to (i) act as the disbursing and collecting agent for the Lenders
and the L/C Issuers with respect to all payments and collections arising in
connection with the Loan Documents (including in any proceeding described in
subsection 7.1(g) or any other bankruptcy, insolvency or similar proceeding),
and each Person making any payment in connection with any Loan Document to any
Secured Party is hereby authorized to make such payment to the Agent, (ii) file
and prove claims and file other documents necessary or desirable to allow the
claims of the Secured Parties with respect to any Obligation in any proceeding
described in subsection 7.1(g) or any other bankruptcy, insolvency or similar
proceeding (but not to vote, consent or otherwise act on behalf of such Person),
(iii) act as collateral agent for each Secured Party for purposes of the
perfection of all Liens created by such agreements and all other purposes stated
therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take
such other action as is necessary or desirable to maintain the perfection and
priority of the Liens created or purported to be created by the Loan Documents,
(vi) except as may be otherwise specified in any Loan Document, exercise all
remedies given to the Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of Law or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided, however, that the Agent hereby appoints,
authorizes and directs each Lender and L/C Issuer to act as collateral sub-agent
for the Agent, the Lenders and the L/C Issuers for purposes of the perfection of
all Liens with respect to the Collateral, including any deposit account
maintained by a Credit Party with, and cash and Cash Equivalents held by, such
Lender or L/C Issuer, and may further authorize and direct the Lenders and the
L/C Issuers to take further actions as collateral sub-agents for purposes of
enforcing such Liens or otherwise to transfer the Collateral subject thereto to
the Agent, and each Lender and L/C Issuer hereby agrees to take such further
actions to the extent, and only to the extent, so authorized and directed.

(c) Limited Duties. Under the Loan Documents, the Agent (i) is acting solely on
behalf of the Lenders and the L/C Issuers (except to the limited extent provided
in subsection 1.4(b) with respect to the Register), with duties that are
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administrative in nature, notwithstanding the use of the defined term “Agent”,
the terms “agent”, “Agent” and “collateral agent” and similar terms in any Loan
Document to refer to the Agent, which terms are used for title purposes only,
(ii) is not assuming any obligation under any Loan Document other than as
expressly set forth therein or any role as agent, fiduciary or trustee of or for
any Lender, L/C Issuer or any other Person and (iii) shall have no implied
functions, responsibilities, duties, obligations or other liabilities under any
Loan Document, and each Lender and L/C Issuer hereby waives and agrees not to
assert any claim against the Agent based on the roles, duties and legal
relationships expressly disclaimed in clauses (i) through (iii) above. The title
of Documentation Agent is purely administrative in nature. The Co-Documentation
Agents named on the cover of this Agreement shall have no duties or liabilities
hereunder other than those duties and liabilities applicable to any Lender.

(d) UK Security Documents. Without prejudice to the foregoing, each of the
Agent, the Lenders and each L/C Issuer hereby acknowledges, agrees and accepts
that the Agent holds Collateral which is the subject of the UK Security
Documents as trustee for and on behalf of the Secured Parties in accordance with
the terms of the declaration of trust set out in the UK Security Documents and
that the terms of its appointment, and such trust, shall be as set out (or
referred to) in the relevant UK Security Documents and this Agreement.

(e) INTERCREDITOR AGREEMENT AND POST-CLOSING AGREEMENT. EACH LENDER AND EACH
OTHER PERSON PARTY HERETO FROM TIME TO TIME (OTHER THAN THE CREDIT PARTIES)
HEREBY (A) ACKNOWLEDGES THAT IT HAS RECEIVED A COPY OF THE INTERCREDITOR
AGREEMENT, (B) CONSENTS TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT,
(C) AGREES THAT IT WILL BE BOUND BY AND WILL TAKE NO ACTIONS CONTRARY TO THE
PROVISIONS OF THE INTERCREDITOR AGREEMENT AND (D) AUTHORIZES AND INSTRUCTS THE
AGENT ON ITS BEHALF TO ENTER INTO THE INTERCREDITOR AGREEMENT AS FIRST LIEN
AGENT (AS DEFINED THEREIN) AND ON BEHALF OF SUCH LENDER. AGENT IS AUTHORIZED TO
EXECUTE AND DELIVER THAT CERTAIN POST-CLOSING MATTERS AGREEMENT DATED AS OF THE
DATE HEREOF AMONG THE CREDIT PARTIES AND AGENT, AND EACH LENDER BY MAKING OR
PURCHASING AN INTEREST IN LOANS AT ANY TIME SHALL BE DEEMED TO HAVE AGREED TO BE
BOUND BY SUCH AGREEMENT.

8.2 Binding Effect. Each Lender and each L/C Issuer agrees that (i) any action
taken by the Agent or the Required Lenders (or, if expressly required hereby, a
greater proportion of the Lenders) in accordance with the provisions of the Loan
Documents, (ii) any action taken by the Agent in reliance upon the instructions
of the Required Lenders (or, where so required, such greater proportion) and
(iii) the exercise by the Agent or the Required Lenders (or, where so required,
such greater proportion) of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all of the Secured Parties.

 

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8.3 Use of Discretion.

(a) No Action without Instructions. The Agent shall not be required to exercise
any discretion or take, or to omit to take, any action, including with respect
to enforcement or collection, except any action it is required to take or omit
to take (i) under any Loan Document or (ii) pursuant to instructions from the
Required Lenders (or, where expressly required by the terms of this Agreement, a
greater proportion of the Lenders).

(b) Right Not to Follow Certain Instructions. Notwithstanding clause (a) above,
the Agent shall not be required to take, or to omit to take, any action
(i) unless, upon demand, the Agent receives an indemnification satisfactory to
it from the Lenders (or, to the extent applicable and acceptable to the Agent,
any other Person) against all Liabilities that, by reason of such action or
omission, may be imposed on, incurred by or asserted against the Agent or any
Related Person thereof or (ii) that is, in the opinion of the Agent or its
counsel, contrary to any Loan Document or applicable Requirement of Law.

8.4 Delegation of Rights and Duties. The Agent may, upon any term or condition
it specifies, delegate or exercise any of its rights, powers and remedies under,
and delegate or perform any of its duties or any other action with respect to,
any Loan Document by or through any trustee, co-agent, employee,
attorney-in-fact and any other Person (including any Secured Party). Any such
Person shall benefit from this Article VIII to the extent provided by the Agent.

8.5 Reliance and Liability.

(a) The Agent may, without incurring any liability hereunder, (i) treat the
payee of any Note as its holder until such Note has been assigned in accordance
with Section 9.9, (ii) rely on the Register to the extent set forth in
Section 1.4, (iii) consult with any of its Related Persons and, whether or not
selected by it, any other advisors, accountants and other experts (including
advisors to, and accountants and experts engaged by, any Credit Party) and
(iv) rely and act upon any document and information (including those transmitted
by Electronic Transmission) and any telephone message or conversation, in each
case believed by it to be genuine and transmitted, signed or otherwise
authenticated by the appropriate parties.

(b) None of the Agent and its Related Persons shall be liable for any action
taken or omitted to be taken by any of them under or in connection with any Loan
Document, and each Lender, L/C Issuer, ITG, each Borrower and each other Credit
Party hereby waive and shall not assert (and each of ITG and the Borrowers shall
cause each other Credit Party to waive and agree not to assert) any right, claim
or cause of action based thereon, except to the extent of liabilities resulting
from the gross negligence or willful misconduct of the Agent or, as the case may
be, such Related Person (each as determined in a final, non-appealable judgment
by a court of competent jurisdiction) in connection with the duties expressly
set forth herein. Without limiting the foregoing, the Agent:

(i) shall not be responsible or otherwise incur liability for any action or
omission taken in reliance upon the instructions of the Required Lenders or for
the actions or omissions of any of its Related Persons selected with reasonable
care (other than employees, officers and directors of the Agent, when acting on
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(ii) shall not be responsible to any Lender, L/C Issuer or other Person for the
due execution, legality, validity, enforceability, effectiveness, genuineness,
sufficiency or value of, or the attachment, perfection or priority of any Lien
created or purported to be created under or in connection with, any Loan
Document;

(iii) makes no warranty or representation, and shall not be responsible, to any
Lender, L/C Issuer or other Person for any statement, document, information,
representation or warranty made or furnished by or on behalf of any Credit Party
or any Related Person of any Credit Party in connection with any Loan Document
or any transaction contemplated therein or any other document or information
with respect to any Credit Party, whether or not transmitted or (except for
documents expressly required under any Loan Document to be transmitted to the
Lenders) omitted to be transmitted by the Agent, including as to completeness,
accuracy, scope or adequacy thereof, or for the scope, nature or results of any
due diligence performed by the Agent in connection with the Loan Documents; and

(iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any provision of any Loan Document, whether any condition set
forth in any Loan Document is satisfied or waived, as to the financial condition
of any Credit Party or as to the existence or continuation or possible
occurrence or continuation of any Default or Event of Default and shall not be
deemed to have notice or knowledge of such occurrence or continuation unless it
has received a notice from the Borrower Representative, any Lender or L/C Issuer
describing such Default or Event of Default clearly labeled “notice of default”
(in which case the Agent shall promptly give notice of such receipt to all
Lenders);

and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, L/C Issuer, ITG and each Borrower hereby waives and agrees not to assert
(and each of ITG and each Borrower shall cause each other Credit Party to waive
and agree not to assert) any right, claim or cause of action it might have
against the Agent based thereon.

8.6 Agent Individually. The Agent and its Affiliates may make loans and other
extensions of credit to, acquire Stock and Stock Equivalents of, engage in any
kind of business with, any Credit Party or Affiliate thereof as though it were
not acting as the Agent and may receive separate fees and other payments
therefor. To the extent the Agent or any of its Affiliates makes any Loan or
otherwise becomes a Lender hereunder, it shall have and may exercise the same
rights and powers hereunder and shall be subject to the same obligations and
liabilities as any other Lender and the terms “Lender”,

 

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“Revolving Lender”, “Required Lender”, “Required Revolving Lender” and any
similar terms shall, except where otherwise expressly provided in any Loan
Document, include, without limitation, the Agent or such Affiliate, as the case
may be, in its individual capacity as Lender, Revolving Lender or as one of the
Required Lenders.

8.7 Lender Credit Decision. Each Lender and each L/C Issuer acknowledges that it
shall, independently and without reliance upon the Agent, any Lender or L/C
Issuer or any of their Related Persons or upon any document (including any
offering and disclosure materials in connection with the syndication of the
Loans) solely or in part because such document was transmitted by the Agent or
any of its Related Persons, conduct its own independent investigation of the
financial condition and affairs of each Credit Party and make and continue to
make its own credit decisions in connection with entering into, and taking or
not taking any action under, any Loan Document or with respect to any
transaction contemplated in any Loan Document, in each case based on such
documents and information as it shall deem appropriate. Except for documents
expressly required by any Loan Document to be transmitted by the Agent to the
Lenders or L/C Issuers, the Agent shall not have any duty or responsibility to
provide any Lender or L/C Issuer with any credit or other information concerning
the business, prospects, operations, property, financial and other condition or
creditworthiness of any Credit Party or any Affiliate of any Credit Party that
may come in to the possession of the Agent or any of its Related Persons.

8.8 Expenses; Indemnities.

(a) Each Lender agrees to reimburse the Agent and each of its Related Persons
(to the extent not reimbursed by any Credit Party) promptly upon demand,
severably and ratably, of any costs and expenses (including fees, charges and
disbursements of financial, legal and other advisors and Other Taxes (as defined
in Section 10.1(c)) paid in the name of, or on behalf of, any Credit Party) that
may be incurred by the Agent or any of its Related Persons in connection with
the preparation, execution, delivery, administration, modification, consent,
waiver or enforcement (whether through negotiations, through any work-out,
bankruptcy, restructuring or other legal or other proceeding or otherwise) of,
or legal advice in respect of its rights or responsibilities under, any Loan
Document.

(b) Each Lender further agrees to indemnify the Agent and each of its Related
Persons (to the extent not reimbursed by any Credit Party), severably and
ratably, from and against Liabilities (including taxes, interests and penalties
imposed for not properly withholding or backup withholding on payments made to
or for the account of any Lender) that may be imposed on, incurred by or
asserted against, the Agent or any of its Related Persons in any matter relating
to or arising out of, in connection with or as a result of, any Loan Document,
any Related Document or any other act, event or transaction related,
contemplated in or attendant to any such document, or, in each case, any action
taken or omitted to be taken by the Agent or any of its Related Persons under or
with respect to any of the foregoing; provided, however, that no Lender shall be
liable to the Agent or any of its Related Persons to the extent such liability
has resulted primarily from the gross negligence or willful misconduct of the
Agent or, as the case

 

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may be, such Related Person, as determined by a court of competent jurisdiction
in a final non-appealable judgment or order; and provided further, a Related
Person shall be indemnified only to the extent any of the foregoing relates to
or arises from the Related Person acting for Agent (in its capacity as Agent).

8.9 Resignation of Agent or L/C Issuer.

(a) The Agent may resign at any time by delivering notice of such resignation to
the Lenders and the Borrower Representative, effective on the date set forth in
such notice or, if no such date is set forth therein, upon the date such notice
shall be effective. If the Agent delivers any such notice, the Required Lenders
shall have the right to appoint a successor Agent. If, within 30 days after the
retiring Agent having given notice of resignation, no successor Agent has been
appointed by the Required Lenders that has accepted such appointment, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent from
among the Lenders. Each appointment under this clause (a) shall be subject to
the prior consent of the Borrowers, which may not be unreasonably withheld but
shall not be required during the continuance of an Event of Default.

(b) Effective immediately upon its resignation, (i) the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents, (ii) the
Lenders shall assume and perform all of the duties of the Agent until a
successor Agent shall have accepted a valid appointment hereunder, (iii) the
retiring Agent and its Related Persons shall no longer have the benefit of any
provision of any Loan Document other than with respect to any actions taken or
omitted to be taken while such retiring Agent was, or because such Agent had
been, validly acting as the Agent under the Loan Documents and (iv) subject to
its rights under Section 8.3, the retiring Agent shall take such action as may
be reasonably necessary to assign to the successor Agent its rights as the Agent
under the Loan Documents. Effective immediately upon its acceptance of a valid
appointment as the Agent, a successor Agent shall succeed to, and become vested
with, all the rights, powers, privileges and duties of the retiring Agent under
the Loan Documents.

(c) So long as at least one L/C Issuer remains, any L/C Issuer may resign at any
time by delivering notice of such resignation to the Agent, effective on the
date set forth in such notice or, if no such date is set forth therein, on the
date such notice shall be effective. Upon such resignation, the L/C Issuer shall
remain an L/C Issuer and shall retain its rights and obligations in its capacity
as such (other than any obligation to Issue Letters of Credit but including the
right to receive fees or to have Lenders participate in any L/C Reimbursement
Obligation thereof) with respect to Letters of Credit issued by such L/C Issuer
prior to the date of such resignation and shall otherwise be discharged from all
other duties and obligations under the Loan Documents.

8.10 Release of Collateral or Guarantors. Each Lender and L/C Issuer hereby
consents to the release and hereby directs the Agent to release (or, in the case
of clause (b)(ii) below, release or subordinate) the following:

(a) any Subsidiary of a Borrower from its guaranty of any Obligation if all of
the Stock and Stock Equivalents of such Subsidiary owned by any Credit Party are
sold or transferred in a transaction permitted under the Loan Documents
(including pursuant to a waiver or consent), to the extent that, after giving
effect to such transaction, such Subsidiary would not be required to guaranty
any Obligations pursuant to Section 4.13; and

 

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(b) any Lien held by the Agent for the benefit of the Secured Parties against
(i) any Collateral that is sold, transferred, conveyed or otherwise disposed of
by a Credit Party in a transaction permitted by the Loan Documents (including
pursuant to a valid waiver or consent), to the extent all Liens required to be
granted in such Collateral pursuant to Section 4.13 after giving effect to such
transaction have been granted, (ii) any property subject to a Lien permitted
hereunder in reliance upon subsection 5.1(h) or (i) and (iii) all of the
Collateral and all Credit Parties, upon (A) termination of the Revolving Loan
Commitments, (B) payment and satisfaction in full of all Loans, all L/C
Reimbursement Obligations and all other Obligations under the Loan Documents
that the Agent has been notified in writing are then due and payable,
(C) deposit of cash collateral with respect to all contingent Obligations (or,
in the case of any Letter of Credit Obligation, receipt by the Agent of a
back-up letter of credit) in amounts and on terms and conditions and with
parties satisfactory to the Agent and each Indemnitee that is, or may be, owed
such Obligations and (D) to the extent requested by the Agent, receipt by the
Agent and the Secured Parties of liability releases from the Credit Parties each
in form and substance acceptable to the Agent.

Each Lender and L/C Issuer hereby directs the Agent, and the Agent hereby
agrees, upon five days advance notice from the Borrower Representative (or such
shorter period as the Agent shall agree), to execute and deliver or file such
documents and to perform other actions reasonably necessary to release the
guaranties and Liens when and as directed in this Section 8.10.

8.11 Additional Secured Parties. The benefit of the provisions of the Loan
Documents directly relating to the Collateral or any Lien granted thereunder
shall extend to and be available to any Secured Party that is not a Lender or
L/C Issuer party hereto as long as, by accepting such benefits, such Secured
Party agrees, as among the Agent and all other Secured Parties, that such
Secured Party is bound by (and, if requested by the Agent, shall confirm such
agreement in a writing in form and substance acceptable to the Agent) this
Article VIII, Section 9.3, Section 9.9, Section 9.10, Section 9.11,
Section 9.17, Section 9.24 and Section 10.1 and the decisions and actions of the
Agent and the Required Lenders (or, where expressly required by the terms of
this Agreement, a greater proportion of the Lenders or other parties hereto as
required herein) to the same extent a Lender is bound; provided, however, that,
notwithstanding the foregoing, (a) such Secured Party shall be bound by
Section 8.8 only to the extent of Liabilities, costs and expenses with respect
to or otherwise relating to the Collateral held for the benefit of such Secured
Party, in which case the obligations of such Secured Party thereunder shall not
be limited by any concept of pro rata share or similar concept, (b) each of the
Agent, the Lenders and the L/C Issuers party hereto shall be entitled to act at
its sole discretion, without regard to the interest of such Secured Party,
regardless of whether any Obligation

 

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to such Secured Party thereafter remains outstanding, is deprived of the benefit
of the Collateral, becomes unsecured or is otherwise affected or put in jeopardy
thereby, and without any duty or liability to such Secured Party or any such
Obligation and (c) except as otherwise set forth herein, such Secured Party
shall not have any right to be notified of, consent to, direct, require or be
heard with respect to, any action taken or omitted in respect of the Collateral
or under any Loan Document.

ARTICLE IX—MISCELLANEOUS

9.1 Amendments and Waivers.

(a) Except as provided in Section 1.1(a)(ii) with respect to a Commitment
Increase, amendments to Schedule 1.12 and in Section 1.14 regarding amendments
to Schedule 1.14, no amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by any
Credit Party therefrom, shall be effective unless the same shall be in writing
and signed by the Required Lenders (or by the Agent with the consent of the
Required Lenders), the Borrowers and acknowledged by the Agent, and then such
waiver shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders directly affected
thereby (or by the Agent with the consent of all the Lenders directly affected
thereby, or in the case of clauses (vi), (vii) or (viii) below, the
Super-Majority Lenders) (in addition to the Required Lenders or the Agent with
the consent of the Required Lenders), the Borrowers and acknowledged by the
Agent, do any of the following:

(i) increase or extend the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to subsection 7.2(a));

(ii) postpone or delay any date fixed for, or waive, any scheduled installment
of principal or any payment of interest, fees or other amounts due to the
Lenders (or any of them) or L/C Issuer hereunder or under any other Loan
Document;

(iii) reduce the principal of, or the rate of interest specified herein or the
amount of interest payable in cash specified herein on any Loan, or of any fees
or other amounts payable hereunder or under any other Loan Document, including
L/C Reimbursement Obligations;

(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for the Lenders or any of
them to take any action hereunder;

(v) amend this Section 9.1 or the definition of “Required Lenders” or
“Super-Majority Lenders” or any provision providing for consent or other action
by all Lenders or “Super-Majority Lenders”;

 

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(vi) amend the definition of “Availability Block” which reduces the amount
specified therein;

(vii) increase the $30,000,000 limitation in Section 1.12(b)(iv), the percentage
advance rates set forth in the definition of Borrowing Base, or the $22,300,000
limitation set forth in clause (d) of such definition;

(viii) amend or waive Section 1.10(c) or (d) or Section 4.14; or

(ix) discharge any Credit Party from its respective payment Obligations under
the Loan Documents, or release all or substantially all of the Collateral,
except as otherwise may be provided in this Agreement or the other Loan
Documents;

it being agreed that all Lenders shall be deemed to be directly affected by an
amendment or waiver of the type described in the preceding clauses (iv), (v) and
(ix).

(b) No amendment, waiver or consent shall, unless in writing and signed by the
Agent, the Swingline Lender or the L/C Issuer, as the case may be, in addition
to the Required Lenders or all the Lenders directly affected thereby, as the
case may be (or by the Agent with the consent of the Required Lenders or all the
Lenders directly affected thereby, as the case may be), affect the rights or
duties of the Agent, the Swingline Lender or the L/C Issuer, as the case may be,
under this Agreement or any other Loan Document.

(c) Notwithstanding anything to the contrary contained in this Section 9.1, the
Agent may amend Schedule 1.1(a) to reflect assignments entered into pursuant to
Section 9.9 and any Commitment Increase pursuant to Section 1.1(a)(ii).

9.2 Notices.

(a) Addresses. All notices, demands, requests, directions and other
communications required or expressly authorized to be made by this Agreement
shall, whether or not specified to be in writing but unless otherwise expressly
specified in this Agreement to be given by any other means (including by way of
facsimile), be given in writing and (i) addressed to the address set forth on
the applicable signature page hereto, (ii) posted to Intralinks® (to the extent
such system is available and set up by or at the direction of the Agent prior to
posting) in an appropriate location by uploading such notice, demand, request,
direction or other communication to www.intralinks.com, faxing it to
866-545-6600 with an appropriate bar-code fax coversheet or using such other
means of posting to Intralinks® as may be available and reasonably acceptable to
the Agent prior to such posting, (iii) posted to any other E-System set up by or
at the direction of the Agent or (iv) addressed to such other address as shall
be notified in writing (A) in the case of the Borrowers, the Agent and the
Swingline Lender, to the other parties hereto and (B) in the case of all other
parties, to the Borrower Representative and the Agent. Transmission by
electronic mail (including E-Fax, even if transmitted to the fax numbers set
forth above) shall not be sufficient or effective to transmit any such notice
under this clause (a) unless such transmission is an available means to post to
any E-System.

 

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(b) Effectiveness. All communications described in clause (a) above and all
other notices, demands, requests and other communications made in connection
with this Agreement shall be effective and be deemed to have been received
(i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight
courier service, 1 Business Day after delivery to such courier service, (iii) if
delivered by mail, when deposited in the mails, (iv) if delivered by facsimile
(other than to post to an E-System pursuant to clause (a)(ii) or (a)(iii)
above), upon sender’s receipt of confirmation of proper transmission, and (v) if
delivered by posting to any E-System, on the later of the date of such posting
and the date access to such posting is given to the recipient thereof in
accordance with the standard procedures applicable to such E-System; provided,
however, that no communications to the Agent pursuant to Article I shall be
effective until received by the Agent.

(c) Each Lender shall notify the Agent in writing of any changes in the address
to which notices to such Lender should be directed, of addresses of its Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.

9.3 Electronic Transmissions.

(a) Authorization. Subject to the provisions of Section 9.2(a), each of the
Agent, Lenders, each Credit Party and each of their Related Persons, is
authorized (but not required) to transmit, post or otherwise make or
communicate, in its sole discretion, Electronic Transmissions in connection with
any Loan Document and the transactions contemplated therein. Each Credit Party
and each Secured Party hereto acknowledges and agrees that the use of Electronic
Transmissions is not necessarily secure and that there are risks associated with
such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.

(b) Signatures. Subject to the provisions of Section 9.2(a), (i)(A) no posting
to any E-System shall be denied legal effect merely because it is made
electronically, (B) each E-Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature” and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a “writing”,
in each case including pursuant to any Loan Document, any applicable provision
of any UCC, the federal Uniform Electronic Transactions Act, the Electronic
Signatures in Global and National Commerce Act and any substantive or procedural
Requirement of Law governing such subject matter, (ii) each such posting that is
not readily capable of bearing either a signature or a reproduction of a
signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such posting, an E-Signature, upon which the Agent,
each Secured Party and each Credit Party may rely and assume the authenticity
thereof, (iii) each such posting containing a signature, a reproduction of a
signature or an E-Signature shall, for all intents and purposes, have the same
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original and (iv) each party hereto or beneficiary hereto agrees not to contest
the validity or enforceability of any posting on any E-System or E-Signature on
any such posting under the provisions of any applicable Requirement of Law
requiring certain documents to be in writing or signed; provided, however, that
nothing herein shall limit such party’s or beneficiary’s right to contest
whether any posting to any E-System or E-Signature has been altered after
transmission.

(c) Separate Agreements. All uses of an E-System shall be governed by and
subject to, in addition to Section 9.2 and this Section 9.3, separate terms and
conditions posted or referenced in such E-System and related Contractual
Obligations executed by the Agent and Credit Parties in connection with the use
of such E-System.

(d) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE
PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF AGENT, ANY LENDER OR ANY OF THEIR
RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS
OR ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS
THEREIN. NO WARRANTY OF ANY KIND IS MADE BY AGENT, ANY LENDER OR ANY OF THEIR
RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS OR ELECTRONIC COMMUNICATION,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS. Each of each Borrower, each other Credit Party executing this Agreement
and each Secured Party agrees that the Agent has no responsibility for
maintaining or providing any equipment, software, services or any testing
required in connection with any Electronic Transmission or otherwise required
for any E-System.

9.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. No course of dealing between any Credit Party, any Affiliate
of any Credit Party, the Agent or any Lender shall be effective to amend, modify
or discharge any provision of this Agreement or any of the other Loan Documents.

9.5 Costs and Expenses. Any action taken by any Credit Party under or with
respect to any Loan Document, even if required under any Loan Document or at the
request of the Agent or the Required Lenders, shall be at the expense of such
Credit Party, and neither the Agent nor any other Secured Party shall be
required under any Loan Document to reimburse any Credit Party or any Subsidiary
of any Credit Party therefor except as expressly provided therein. In addition,
the Borrowers agree to pay or reimburse upon demand (a) the Agent for all
reasonable out-of-pocket costs and expenses incurred by it or any of its Related
Persons, in connection with the investigation, development, preparation,
negotiation, syndication, execution, interpretation or administration of, any
modification of any term of or termination of, any Loan

 

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Document, any commitment or proposal letter therefor, any other document
prepared in connection therewith or the consummation and administration of any
transaction contemplated therein, in each case including Attorney Costs to the
Agent, (b) the Agent for all reasonable costs and expenses incurred by it or any
of its Related Persons in connection with internal audit reviews, field
examinations and Collateral examinations (which shall be reimbursed, in addition
to the out-of-pocket costs and expenses of such examiners, at the per diem rate
per individual charged by the Agent for its examiners) in each case performed or
conducted as required or permitted by this Agreement, (c) each of the Agent, its
Related Persons, and L/C Issuer for all costs and expenses incurred in
connection with (i) any refinancing or restructuring of the credit arrangements
provided hereunder in the nature of a “work-out”, (ii) the enforcement or
preservation of any right or remedy under any Loan Document, any Obligation,
with respect to the Collateral or any other related right or remedy or (iii) the
commencement, defense, conduct of, intervention in, or the taking of any other
action with respect to, any proceeding (including any bankruptcy or insolvency
proceeding) related to any Credit Party, any Subsidiary of any Credit Party,
Loan Document, Obligation or Related Transaction (or the response to and
preparation for any subpoena or request for document production relating
thereto), including Attorney Costs and (d) fees and disbursements of Attorney
Costs of one law firm on behalf of all Lenders (other than the Agent) incurred
in connection with any of the matters referred to in clause (c) above.

9.6 Indemnity.

(a) Each Credit Party agrees to indemnify, hold harmless and defend the Agent,
each Lender, each L/C Issuer and each of their respective Related Persons (each
such Person being an “Indemnitee”) from and against all Liabilities (including
brokerage commissions, fees and other compensation) that may be imposed on,
incurred by or asserted against any such Indemnitee in any matter relating to or
arising out of, in connection with or as a result of (i) any Loan Document, any
Related Agreement, any Obligation (or the repayment thereof), any Letter of
Credit, the use or intended use of the proceeds of any Loan or the use of any
Letter of Credit or any securities filing of, or with respect to, any Credit
Party, (ii) any Contractual Obligation entered into in connection with any
E-Systems or other Electronic Transmissions, (iii) any actual or prospective
investigation, litigation or other proceeding, whether or not brought by any
such Indemnitee or any of its Related Persons, any holders of securities or
creditors (and including attorneys’ fees in any case), whether or not any such
Indemnitee, Related Person, holder or creditor is a party thereto, and whether
or not based on any securities or commercial law or regulation or any other
Requirement of Law or theory thereof, including common law, equity, contract,
tort or otherwise or (iv) any other act, event or transaction related,
contemplated in or attendant to any of the foregoing (collectively, the
“Indemnified Matters”); provided, however, that no Credit Party shall have any
liability under this Section 9.6 to any Indemnitee with respect to any
Indemnified Matter, and no Indemnitee shall have any liability with respect to
any Indemnified Matter other than (to the extent otherwise liable), to the
extent such liability has resulted from the gross negligence or willful
misconduct of such Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order. Furthermore, each of
each Borrower and each other Credit Party executing this Agreement waives and
agrees

 

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not to assert against any Indemnitee, and shall cause each other Credit Party to
waive and not assert against any Indemnitee, any right of contribution with
respect to any Liabilities that may be imposed on, incurred by or asserted
against any Related Person.

(b) Without limiting the foregoing, “Indemnified Matters” includes all
Environmental Liabilities, including those arising from, or otherwise involving,
any property of any Credit Party or any Related Person of any Credit Party or
any actual, alleged or prospective damage to property or natural resources or
harm or injury alleged to have resulted from any Release of Hazardous Materials
on, upon or into such property or natural resource or any property on or
contiguous to any real property of any Credit Party or any Related Person or any
Credit Party, whether or not, with respect to any such Environmental
Liabilities, any Indemnitee is a mortgagee pursuant to any leasehold mortgage, a
mortgagee in possession, the successor-in-interest to any Credit Party or any
Related Person of any Credit Party or the owner, lessee or operator of any
property of any Related Person through any foreclosure action, in each case
except to the extent such Environmental Liabilities (i) are incurred solely
following foreclosure by the Agent or following the Agent or any Lender having
become the successor-in-interest to any Credit Party or any Related Person of
any Credit Party and (ii) are attributable solely to acts of such Indemnitee.

9.7 Marshaling; Payments Set Aside. No Secured Party shall be under any
obligation to marshal any property in favor of any Credit Party or any other
Person or against or in payment of any Obligation. To the extent that the
Secured Party receives a payment from a Borrower, from any other Credit Party,
from the proceeds of the Collateral, from the exercise of its rights of setoff,
any enforcement action or otherwise, and such payment is subsequently, in whole
or in part, invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof 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 occurred.

9.8 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that any assignment by any Lender shall be
subject to the provisions of Section 9.9 hereof, and provided further that no
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Agent and each Lender.

9.9 Assignments and Participations; Binding Effect.

(a) This Agreement shall become effective when it shall have been executed by
ITG, the Borrowers, the other Credit Parties signatory hereto and the Agent and
when the Agent shall have been notified by each Lender and the initial L/C
Issuer that such Lender or L/C Issuer has executed it. Thereafter, it shall be
binding upon and inure to the benefit of, but only to the benefit of, ITG, the
Borrowers, the other Credit Parties hereto (in each case except for
Article VIII), the Agent, each Lender and L/C Issuer party hereto and, to the
extent provided in Section 8.11, each other Secured Party

 

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and, in each case, their respective successors and permitted assigns. Except as
expressly provided in any Loan Document (including in Section 8.9), none of ITG,
any Borrower, any other Credit Party, any L/C Issuer or the Agent shall have the
right to assign any rights or obligations hereunder or any interest herein.

(b) Each Lender may sell, transfer, negotiate or assign (a “Sale”) all or a
portion of its rights and obligations hereunder (including all or a portion of
its Commitments and its rights and obligations with respect to Loans and Letters
of Credit) to (i) any existing Lender, (ii) any Affiliate or Approved Fund of
any existing Lender or (iii) any other Person acceptable (which acceptance shall
not be unreasonably withheld or delayed) to the Agent and, as long as no Event
of Default is continuing, the Borrower Representative; provided, however, that
for each Loan, the aggregate outstanding principal amount (determined as of the
effective date of the applicable Assignment) of the Loans, Commitments and
Letter of Credit Obligations subject to any such Sale shall be in a minimum
amount of $10,000,000, unless such Sale is made to an existing Lender or an
Affiliate or Approved Fund of any existing Lender, is of the assignor’s
(together with its Affiliates and Approved Funds) entire interest in such Loans,
Commitments and Letter of Credit Obligations, or is made with the prior consent
of the Borrower Representative and the Agent.

(c) The parties to each Sale made in reliance on clause (b) above (other than
those described in clause (e) or (f) below) shall execute and deliver to the
Agent (which shall keep a copy thereof) an Assignment, together with any
existing Note subject to such Sale (or any affidavit of loss therefor acceptable
to the Agent), any tax forms required to be delivered pursuant to Section 10.1
and payment by the assignee of an assignment fee in the amount of $3,500 (unless
waived by the Agent in its sole discretion). Upon receipt of all the foregoing,
and conditioned upon such receipt and upon the Agent consenting to such
Assignment (if required), from and after the effective date specified in such
Assignment, the Agent shall record or cause to be recorded in the Register the
information contained in such Assignment.

(d) Effective upon the entry of such record in the Register, (i) such assignee
shall become a party hereto and, to the extent that rights and obligations under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment, shall have the rights and obligations of a Lender, (ii) any
applicable Note shall be transferred to such assignee through such entry and
(iii) the assignor thereunder shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment,
relinquish its rights (except for those surviving the termination of the
Commitments and the payment in full of the Obligations) and be released from its
obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment covering all or the remaining portion of an assigning Lender’s rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto).

(e) In addition to the other rights provided in this Section 9.9, each Lender
may grant a security interest in, or otherwise assign as collateral, any of its
rights under this Agreement, whether now owned or hereafter acquired (including
rights to

 

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payments of principal or interest on the Loans), to (A) any federal reserve bank
(pursuant to Regulation A of the Federal Reserve Board), without notice to the
Agent or (B) any holder of, or trustee for the benefit of the holders of, such
Lender’s Indebtedness or equity securities, by notice to the Agent; provided,
however, that no such holder or trustee, whether because of such grant or
assignment or any foreclosure thereon (unless such foreclosure is made through
an assignment in accordance with clause (b) above), shall be entitled to any
rights of such Lender hereunder and no such Lender shall be relieved of any of
its obligations hereunder.

(f) In addition to the other rights provided in this Section 9.9, each Lender
may, (x) with notice to the Agent, grant to an SPV the option to make all or any
part of any Loan that such Lender would otherwise be required to make hereunder
(and the exercise of such option by such SPV and the making of Loans pursuant
thereto shall satisfy the obligation of such Lender to make such Loans
hereunder) and such SPV may assign to such Lender the right to receive payment
with respect to any Obligation and (y) without notice to or consent from the
Agent or the Borrowers, sell participations to one or more Persons in or to all
or a portion of its rights and obligations under the Loan Documents (including
all its rights and obligations with respect to the Revolving Loans and Letters
of Credit); provided, however, that, whether as a result of any term of any Loan
Document or of such grant or participation, (i) no such SPV or participant shall
have a commitment, or be deemed to have made an offer to commit, to make Loans
hereunder, and, except as provided in the applicable option agreement, none
shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s
rights and obligations, and the rights and obligations of the Credit Parties and
the Secured Parties towards such Lender, under any Loan Document shall remain
unchanged and each other party hereto shall continue to deal solely with such
Lender, which shall remain the holder of the Obligations in the Register, except
that (A) each such participant and SPV shall be entitled to the benefit of
Article X, but, with respect to Section 10.1, only to the extent such
participant or SPV delivers the tax forms such Lender is required to collect
pursuant to subsection 10.1(f) and then only to the extent of any amount to
which such Lender would be entitled in the absence of any such grant or
participation and (B) each such SPV may receive other payments that would
otherwise be made to such Lender with respect to Loans funded by such SPV to the
extent provided in the applicable option agreement and set forth in a notice
provided to the Agent by such SPV and such Lender, provided, however, that in no
case (including pursuant to clause (A) or (B) above) shall an SPV or participant
have the right to enforce any of the terms of any Loan Document, and (iii) the
consent of such SPV or participant shall not be required (either directly, as a
restraint on such Lender’s ability to consent hereunder or otherwise) for any
amendments, waivers or consents with respect to any Loan Document or to exercise
or refrain from exercising any powers or rights such Lender may have under or in
respect of the Loan Documents (including the right to enforce or direct
enforcement of the Obligations), except for those described in clauses (ii) and
(iii) of subsection 9.1(a) with respect to amounts, or dates fixed for payment
of amounts, to which such participant or SPV would otherwise be entitled and, in
the case of participants, except for those described in clause (vi) of
subsection 9.1(a). No party hereto shall institute (and each Borrower and ITG
shall cause each other Credit Party not to institute) against any SPV grantee of
an option pursuant to this clause (f) any bankruptcy, reorganization,
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proceeding, prior to the date that is one year and one day after the payment in
full of all outstanding commercial paper of such SPV; provided, however, that
each Lender having designated an SPV as such agrees to indemnify each Indemnitee
against any Liability that may be incurred by, or asserted against, such
Indemnitee as a result of failing to institute such proceeding (including a
failure to get reimbursed by such SPV for any such Liability). The agreement in
the preceding sentence shall survive the termination of the Commitments and the
payment in full of the Obligations.

9.10 Confidentiality. Each Lender, L/C Issuer and the Agent shall maintain the
confidentiality of information obtained by it pursuant to any Loan Document and
designated in writing by any Credit Party as confidential for a period ending on
the date two (2) years following the date on which this Agreement terminates in
accordance with the terms hereof, except that such information may be disclosed
(i) with the Borrower Representative’s consent, (ii) to Related Persons of such
Lender, L/C Issuer or the Agent, as the case may be, or to any Person that any
L/C Issuer causes to issue Letters of Credit hereunder, that are advised of the
confidential nature of such information and are instructed to keep such
information confidential, (iii) to the extent such information presently is or
hereafter becomes available to such Lender, L/C Issuer or the Agent, as the case
may be, on a non-confidential basis from a source other than any Credit Party,
(iv) to the extent disclosure is required by applicable Requirements of Law or
other legal process or requested or demanded by any Governmental Authority,
(v) to the extent necessary or customary for inclusion in league table
measurements or in any tombstone or other advertising materials (and the Loan
Parties consent to the publication of such tombstone or other advertising
materials by the Agent, any Lender, any L/C Issuer or any of their Related
Persons), (vi) (A) to the National Association of Insurance Commissioners or any
similar organization, any examiner or any nationally recognized rating agency or
(B) otherwise to the extent consisting of general portfolio information that
does not identify borrowers, (vii) to current or prospective assignees, SPVs
(including the investors therein) or participants and to their respective
Related Persons, in each case to the extent such assignees, investors,
participants or Related Persons agree to be bound by provisions substantially
similar to the provisions of this Section 9.10 and (viii) in connection with the
exercise of any remedy under any Loan Document. In the event of any conflict
between the terms of this Section 9.10 and those of any other Contractual
Obligation entered into with any Credit Party (whether or not a Loan Document),
the terms of this Section 9.10 shall govern.

(b) Each Credit Party consents to the publication by the Agent or any Lender of
advertising material relating to the financing transactions contemplated by this
Agreement using a Borrower’s or any other Credit Party’s name, product
photographs, logo or trademark. The Agent or such Lender shall provide a draft
of any advertising material to the Borrower Representative for review and
comment prior to the publication thereof.

9.11 Set-off; Sharing of Payments.

(a) Right of Setoff. Each of the Agent, each Lender, each L/C Issuer and each
Affiliate (including each branch office thereof) of any of them is hereby

 

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authorized, without notice or demand (each of which is hereby waived by each
Credit Party), at any time and from time to time during the continuance of any
Event of Default and to the fullest extent permitted by applicable Requirements
of Law, to set off and apply any and all deposits (whether general or special,
time or demand, provisional or final) at any time held and other Indebtedness,
claims or other obligations at any time owing by the Agent, such Lender, such
L/C Issuer or any of their respective Affiliates to or for the credit or the
account of the US Borrowers or any other US Credit Party against any Obligation
of any US Credit Party now or hereafter existing, or of the UK Borrower or any
other Foreign Credit Party against any Obligation of any Foreign Credit Party
now or hereafter existing, in either case whether or not any demand was made
under any Loan Document with respect to such Obligation and even though such
Obligation may be unmatured. Each of the Agent, each Lender and each L/C Issuer
agrees promptly to notify the Borrower Representative and the Agent after any
such setoff and application made by such Lender or its Affiliates; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights under this Section 9.11 are in addition
to any other rights and remedies (including other rights of setoff) that the
Agent, the Lenders, the L/C Issuer, their Affiliates and the other Secured
Parties, may have.

(b) Sharing of Payments, Etc. If any Lender, directly or through an Affiliate or
branch office thereof, obtains any payment of any Obligation of any Credit Party
(whether voluntary, involuntary or through the exercise of any right of setoff
or the receipt of any Collateral or “proceeds” (as defined under the applicable
UCC) of Collateral) other than pursuant to Article X and such payment exceeds
the amount such Lender would have been entitled to receive if all payments had
gone to, and been distributed by, the Agent in accordance with the provisions of
the Loan Documents, such Lender shall purchase for cash from other Lenders such
participations in their Obligations as necessary for such Lender to share such
excess payment with such Lenders to ensure such payment is applied as though it
had been received by the Agent and applied in accordance with this Agreement
(or, if such application would then be at the discretion of the Borrowers,
applied to repay the Obligations in accordance herewith); provided, however,
that (a) if such payment is rescinded or otherwise recovered from such Lender or
L/C Issuer in whole or in part, such purchase shall be rescinded and the
purchase price therefor shall be returned to such Lender or L/C Issuer without
interest and (b) such Lender shall, to the fullest extent permitted by
applicable Requirements of Law, be able to exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of the applicable Credit Party in the
amount of such participation.

9.12 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart. Delivery of
an executed signature page of this Agreement by facsimile transmission or
Electronic Transmission shall be as effective as delivery of a manually executed
counterpart hereof.

 

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9.13 Severability; Facsimile Signature. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder. Any Loan Document, or other agreement, document or
instrument, delivered by facsimile transmission shall have the same force and
effect as if the original thereof had been delivered.

9.14 Captions. The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.

9.15 Independence of Provisions. The parties hereto acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.

9.16 Interpretation. This Agreement is the result of negotiations among and has
been reviewed by counsel to the Agent, each Lender and other parties hereto, and
is the product of all parties hereto. Accordingly, this Agreement and the other
Loan Documents shall not be construed against the Lenders or the Agent merely
because of the Agent’s or Lenders’ involvement in the preparation of such
documents and agreements.

9.17 No Third Parties Benefited. This Agreement is made and entered into for the
sole protection and legal benefit of the Borrowers, the Lenders, the L/C Issuer,
the Agent and, subject to the provisions of Section 8.11 hereof, each other
Secured Party, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. Neither the Agent nor any Lender shall have any
obligation to any Person not a party to this Agreement or the other Loan
Documents.

9.18 Governing Law and Jurisdiction.

(a) Governing Law. The laws of the State of New York shall govern all matters
arising out of, in connection with or relating to this Agreement, including,
without limitation, its validity, interpretation, construction, performance and
enforcement.

(b) Submission to Jurisdiction. Any legal action or proceeding with respect to
any Loan Document may be brought in the courts of the State of New York located
in the City of New York, Borough of Manhattan, or of the United States of
America sitting in New York, New York for the Southern District of New York and,
by execution and delivery of this Agreement, each Borrower and each other Credit
Party executing this Agreement hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereto (and, to the extent set forth in any other Loan
Document, each other Credit Party) hereby

 

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irrevocably waive any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, that any of them may now or
hereafter have to the bringing of any such action or proceeding in such
jurisdictions.

(c) Service of Process. Each Foreign Credit Party hereby agrees that service of
process in any such action or proceeding brought in any New York State court or
in such federal court mentioned above may be made upon CT Corporation System at
its offices at 111 8th Avenue, New York, New York 10011 (the “Process Agent) and
each Foreign Credit Party hereby irrevocably appoints the Process Agent its
authorized agent to accept such service of process, and agrees that the failure
of the Process Agent to give any notice of any such service shall not impair or
affect the validity of such service or of any judgment rendered in any action or
proceeding based thereon. Each Foreign Credit Party hereby irrevocably waives
personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document
by any means permitted by applicable Requirements of Law, including by the
mailing thereof (by registered or certified mail, postage prepaid) to the
address of Borrowers specified herein (and shall be effective when such mailing
shall be effective, as provided therein). Each Foreign Credit Party agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

(d) Non-Exclusive Jurisdiction. Nothing contained in this Section 9.18 shall
affect the right of the Agent or any Lender to serve process in any other manner
permitted by applicable Requirements of Law or commence legal proceedings or
otherwise proceed against any Credit Party in any other jurisdiction.

9.19 Waiver of Jury Trial. THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW,
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT
OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS
AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS WAIVER APPLIES
TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE.

9.20 Entire Agreement; Release; Survival.

(a) THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT OF THE PARTIES AND SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER THEREOF
AND ANY PRIOR LETTER OF INTEREST, COMMITMENT LETTER, CONFIDENTIALITY AND SIMILAR
AGREEMENTS INVOLVING ANY CREDIT PARTY AND ANY OF LENDER OR ANY L/C ISSUER OR ANY
OF THEIR RESPECTIVE AFFILIATES RELATING TO A FINANCING OF SUBSTANTIALLY SIMILAR
FORM, PURPOSE OR EFFECT OTHER THAN THE FEE LETTER. IN THE EVENT OF ANY CONFLICT
BETWEEN THE TERMS OF THIS AGREEMENT

 

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AND ANY OTHER LOAN DOCUMENT, THE TERMS OF THIS AGREEMENT SHALL GOVERN (UNLESS
SUCH TERMS OF SUCH OTHER LOAN DOCUMENTS ARE NECESSARY TO COMPLY WITH APPLICABLE
REQUIREMENTS OF LAW, IN WHICH CASE SUCH TERMS SHALL GOVERN TO THE EXTENT
NECESSARY TO COMPLY THEREWITH).

(b) In no event shall any Indemnitee be liable on any theory of liability for
any special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings). Each of each Borrower and each other
Credit Party signatory hereto hereby waives, releases and agrees (and shall
cause each other Credit Party to waive, release and agree) not to sue upon any
such claim for any special, indirect, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

9.21 Patriot Act. Each Lender that is subject to the Patriot Act hereby notifies
the Borrowers that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies each Borrower,
which information includes the name and address of each Borrower and other
information that will allow such Lender to identify each Borrower in accordance
with the Patriot Act.

9.22 Replacement of Lender. Within forty-five days after: (i) receipt by the
Borrower Representative of written notice and demand from any Lender (an
“Affected Lender”) for payment of additional costs as provided in Sections 10.1,
10.3 and/or 10.6; (ii) any default by a Lender in its obligation to make Loans
hereunder after all conditions thereto have been satisfied or waived in
accordance with the terms hereof, provided such default shall not have been
cured; or (iii) any failure by any Lender to consent to a requested amendment,
waiver or modification to any Loan Document in which the Required Lenders have
already consented to such amendment, waiver or modification but the consent of
each Lender (or each Lender directly affected thereby, as applicable) is
required with respect thereto, the Borrowers may, at their option, notify the
Agent and such Affected Lender (or such defaulting or non-consenting Lender, as
the case may be) of the Borrowers’ intention to obtain, at the Borrowers’
expense, a replacement Lender (“Replacement Lender”) for such Affected Lender
(or such defaulting or non-consenting Lender, as the case may be), which
Replacement Lender shall be a Lender or otherwise be reasonably satisfactory to
the Agent. In the event the Borrowers obtain a Replacement Lender within
forty-five (45) days following notice of its intention to do so, the Affected
Lender (or defaulting or non-consenting Lender, as the case may be) shall sell
and assign its Loans and Commitments to such Replacement Lender, at par,
provided that the Borrowers have reimbursed such Affected Lender for its
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such sale and assignment. In the event that a replaced
Lender does not execute an Assignment pursuant to Section 9.9 within five
(5) Business Days after receipt by such replaced Lender of notice of replacement
pursuant to this Section 9.22 and presentation to such replaced Lender of an
Assignment evidencing an assignment pursuant to this Section 9.22, the Borrowers
shall be entitled (but not obligated) to execute such an Assignment on behalf of
such replaced Lender, and any such Assignment so executed by the Borrowers, the
Replacement Lender and the Agent, shall be effective for purposes of this
Section 9.22

 

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and Section 9.9. Upon any such assignment and payment and compliance with the
other provisions of Section 9.9, such replaced Lender shall no longer constitute
a “Lender” for purposes hereof; provided, any rights of such replaced Lender to
indemnification hereunder shall survive as to such replaced Lender.

9.23 Joint and Several. The US Borrower and US Credit Parties are jointly and
severally liable for all of the Obligations. Notwithstanding anything to the
contrary contained herein, the UK Borrower and Foreign Credit Parties are
jointly and severally liable only for the repayment of Revolving Loans advanced
to the UK Borrower and other UK Obligations and shall not have any liability for
the repayment of any US Obligations. Without limiting the generality of the
foregoing, reference is hereby made to Article II of the Guaranty and Security
Agreement, to which the obligations of the US Borrowers and Credit Parties are
subject.

9.24 Lender-Creditor Relationship. The relationship between the Agent, each
Lender and the L/C Issuer, on the one hand, and the Credit Parties, on the other
hand, is solely that of lender and creditor. No Secured Party has any fiduciary
relationship or duty to any Credit Party arising out of or in connection with,
and there is no agency, tenancy or joint venture relationship between the
Secured Parties and the Credit Parties by virtue of, any Loan Document or any
transaction contemplated therein.

9.25 Judgment Currency.

(a) If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due hereunder or under the Notes in any currency (the “Original
Currency”) into another currency (the “Other Currency”) the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the Original Currency with the Other
Currency at noon (New York time), on the second Business Day preceding that on
which final judgment is given.

(b) The obligation of a Borrower in respect of any sum due in the Original
Currency from it to any Secured Party hereunder or under the Notes held by such
Secured Party shall, notwithstanding any judgment in any Other Currency, be
discharged only to the extent that on the Business Day following receipt by such
Secured Party of any sum adjudged to be so due in such Other Currency such
Secured Party may in accordance with normal banking procedures purchase the
Original Currency with such Other Currency; if the amount of the Original
Currency so purchased is less than the sum originally due to such Secured Party
in the Original Currency, such Borrowers agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Secured Party against such
loss, and if the amount of the Original Currency so purchased exceeds the sum
originally due to any Secured Party in the Original Currency, such Secured Party
agrees to remit to such Borrowers such excess.

9.26 Non-Reliance. The Lenders represent and acknowledge that, in connection
with their execution of this Agreement, they are aware of, and are relying on,
the separateness of the Borrowers and Guarantors from the BST Group.
Furthermore, the Lenders represent and acknowledge that they are relying
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Borrowers and Guarantors, and are not relying on the assets and/or
credit-worthiness of the BST Group. The Lenders shall take no enforcement
actions inconsistent with the foregoing representation and acknowledgment.

ARTICLE X—TAXES, YIELD PROTECTION AND ILLEGALITY

10.1 Taxes.

(a) Except as otherwise provided in this Section 10.1, each payment by any
Credit Party under any Loan Document shall be made free and clear of all present
or future taxes, levies, imposts, deductions, stamp and other duties, value
added taxes, charges or withholdings and all liabilities with respect thereto
(and without deduction or withholding for or on account of any of them) in any
jurisdiction (collectively, but excluding the taxes set forth in clauses (i) and
(ii) below, the “Taxes”) other than for (i) taxes measured by net income
(including branch profits taxes) and franchise taxes imposed in lieu of net
income taxes, in each case imposed on any Secured Party as a result of a present
or former connection between such Person and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than such connection arising solely from any
Secured Party having executed, delivered or performed its obligations or
received a payment under, or enforced, any Loan Document) or (ii) taxes that are
directly attributable to the failure (other than as a result of a change in any
Requirement of Law) by the Agent or any Lender to deliver the documentation
required to be delivered pursuant to clause (f) below.

(b) If any accounts for or on account of Taxes shall be required by law to be
deducted or withheld from or in respect of any amount payable under any Loan
Document to any Secured Party or if Taxes are payable by any Secured Party on
such amounts (i) such amount shall be increased as necessary to ensure that,
after all required deductions, withholdings or payment of Taxes are made
(including deductions, withholdings or Taxes applicable to any increases to any
amount under this Section 10.1), such Secured Party receives the amount it would
have received had no such deductions or withholdings been made or such Taxes
been payable, (ii) the relevant Credit Party shall make such deductions or
withholdings, (iii) the relevant Credit Party shall timely pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable Requirements of Law and (iv) within 30 days after
such payment is made, the relevant Credit Party shall deliver to the Agent an
original or certified copy of a receipt evidencing such payment; provided,
however, that no such increase shall be made with respect to, and no Credit
Party shall be required to indemnify any Secured Party pursuant to clause
(d) below for, withholding taxes to the extent that the obligation to withhold
amounts existed on the date that such Person became a “Secured Party” under this
Agreement in the capacity under which such Person makes a claim under this
clause (b), except in each case to the extent such Person is a direct or
indirect assignee (other than pursuant to Section 9.22) of any other Secured
Party that was entitled, at the time the assignment to such Person became
effective, to receive additional amounts under this clause (b).

 

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(c) In addition, the Borrowers agree to pay, and authorize the Agent to pay in
their name, any stamp, documentary, excise or property tax, charges or similar
levies imposed by any applicable Requirement of Law or Governmental Authority
and all Liabilities with respect thereto (including by reason of any delay in
payment thereof), in each case arising from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document or any
transaction contemplated therein (collectively, “Other Taxes”). The Swingline
Lender may, without any need for notice, demand or consent from the Borrowers or
the Borrower Representative, by making funds available to the Agent in the
amount equal to any such payment, make a Swing Loan to the US Borrowers in such
amount, the proceeds of which shall be used by the Agent in whole to make such
payment on behalf of the Borrower. Within 30 days after the date of any payment
of any amounts under this Section 10.1 by any Credit Party, the Borrowers shall
furnish to the Agent, at its address referred to in Section 9.2, the original or
a certified copy of a receipt evidencing payment thereof to the extent that
payment was not made to a Secured Party.

(d) The Borrowers shall reimburse and indemnify, within 30 days after receipt of
demand therefor (with copy to the Agent), each Secured Party for all Taxes and
Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 10.1) paid by such Secured Party and any
Liabilities arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. A certificate of the Secured
Party (or of the Agent on behalf of such Secured Party) claiming any
compensation under this clause (d), setting forth the amounts to be paid
thereunder and delivered to the Borrower Representative with a copy to the
Agent, shall be conclusive, binding and final for all purposes, absent manifest
error. In determining such amount, the Agent and such Secured Party may use any
just and reasonable averaging and attribution methods.

(e) Any Lender claiming any additional amounts payable pursuant to this
Section 10.1 shall use its reasonable efforts (consistent with its internal
policies and Requirements of Law) to change the jurisdiction of its lending
office if such a change would reduce any such additional amounts (or any similar
amount that may thereafter accrue) and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender.

(f) (i) Each Non-US Lender Party that, at any of the following times, is
entitled to an exemption from United States withholding tax or, after a change
in any Requirement of Law, is subject to such withholding tax at a reduced rate
under an applicable tax treaty, shall (w) on or prior to the date such Non-US
Lender Party becomes a “Non-US Lender Party” hereunder, (x) on or prior to the
date on which any such form or certification expires or becomes obsolete,
(y) after the occurrence of any event requiring a change in the most recent form
or certification previously delivered by it pursuant to this clause (i) and
(z) from time to time if requested by the Borrower Representative or the Agent
(or, in the case of a participant or SPV, the relevant Lender), provide the
Agent and the Borrower Representative (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of each of the following, as
applicable: (A) Forms W-8ECI (claiming exemption from US withholding tax because

 

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the income is effectively connected with a US trade or business), W-8BEN
(claiming exemption from, or a reduction of, US withholding tax under an income
tax treaty) and/or W-8IMY or any successor forms, (B) in the case of a Non-US
Lender Party claiming exemption under Sections 871(h) or 881(c) of the Code,
Form W-8BEN (claiming exemption from US withholding tax under the portfolio
interest exemption) or any successor form and a certificate in form and
substance acceptable to the Agent that such Non-US Lender Party is not (1) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) a “10 percent
shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the
Code or (3) a “controlled foreign corporation” described in Section 881(c)(3)(C)
of the Code or (C) any other applicable document prescribed by the IRS
certifying as to the entitlement of such Non-US Lender Party to such exemption
from United States withholding tax or reduced rate with respect to all payments
to be made to such Non-US Lender Party under the Loan Documents. Unless the
Borrower Representative and the Agent have received forms or other documents
satisfactory to them indicating that payments under any Loan Document to or for
a Non-US Lender Party are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Credit
Parties and the Agent shall withhold amounts required to be withheld by
applicable Requirements of Law from such payments at the applicable statutory
rate.

(ii) Each US Lender Party shall (A) on or prior to the date such US Lender Party
becomes a “US Lender Party” hereunder, (B) on or prior to the date on which any
such form or certification expires or becomes obsolete, (C) after the occurrence
of any event requiring a change in the most recent form or certification
previously delivered by it pursuant to this clause (f) and (D) from time to time
if requested by the Borrower Representative or the Agent (or, in the case of a
participant or SPV, the relevant Lender), provide the Agent and the Borrower
Representative (or, in the case of a participant or SPV, the relevant Lender)
with two completed originals of Form W-9 (certifying that such US Lender Party
is entitled to an exemption from US backup withholding tax) or any successor
form.

(iii) Each Lender having sold a participation in any of its Obligations or
identified an SPV as such to the Agent shall collect from such participant or
SPV the documents described in this clause (f) and provide them to the Agent.

(g) All amounts set out in, or expressed to be payable under, a Loan Document by
a Credit Party which (in whole or in part) constitute consideration for a supply
for value added tax purposes shall be deemed to be exclusive of any value added
tax which is chargeable on such a supply and, accordingly, if value added tax is
chargeable on any supply made to a Credit Party under a Loan Document, that
Credit Party shall pay to the relevant Person an amount equal to the amount of
such value added tax in addition to the underlying amount upon the relevant
Person providing a valid value added tax invoice to that Credit Party. Where a
Loan Document requires the Credit Party to reimburse any Person for any costs or
expenses or similar amounts, the Credit Party shall also at the same time pay
and indemnify the relevant Person against all value added tax incurred by the
relevant Person in respect of the costs or expenses or similar amounts to the
extent that the relevant Person reasonably determines that neither it nor any
other member of any group of which it is a member for value added tax purposes
is entitled to credit or repayment from the relevant tax authority in respect of
the value added tax.

 

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10.2 Illegality. If after the date hereof any Lender shall determine that the
introduction of any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its Lending Office to make LIBOR Rate Loans, then,
on notice thereof by such Lender to the Borrowers through the Agent, the
obligation of that Lender to make LIBOR Rate Loans shall be suspended until such
Lender shall have notified the Agent and the Borrower Representative that the
circumstances giving rise to such determination no longer exists.

(a) Subject to clause (c) below, if any Lender shall determine that it is
unlawful to maintain any LIBOR Rate Loan, the Borrowers shall prepay in full all
LIBOR Rate Loans of such Lender then outstanding, together with interest accrued
thereon, either on the last day of the Interest Period thereof if such Lender
may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.

(b) If the obligation of any Lender to make or maintain LIBOR Rate Loans has
been terminated, the Borrower Representative may elect, by giving notice to such
Lender through the Agent that all Loans which would otherwise be made by any
such Lender as LIBOR Rate Loans shall be instead Base Rate Loans.

(c) Before giving any notice to the Agent pursuant to this Section 10.2, the
affected Lender shall designate a different Lending Office with respect to its
LIBOR Rate Loans if such designation will avoid the need for giving such notice
or making such demand and will not, in the judgment of the Lender, be illegal or
otherwise disadvantageous to the Lender.

10.3 Increased Costs and Reduction of Return.

(a) If any Lender or L/C Issuer shall determine that, due to either (i) the
introduction of, or any change in, or in the interpretation of, any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
in the case of either clause (i) or (ii) subsequent to the date hereof, there
shall be any increase in the cost to such Lender or L/C Issuer of agreeing to
make or making, funding or maintaining any LIBOR Rate Loans or of issuing or
maintain any Letter of Credit, then the Borrowers shall be liable for, and shall
from time to time, within thirty (30) days of demand therefor by such Lender or
L/C Issuer (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender or L/C Issuer, additional amounts as are sufficient to
compensate such Lender or L/C Issuer for such increased costs; provided, that
the Borrowers shall not be required to compensate any Lender or L/C Issuer
pursuant to this Section 10.3 for any increased costs incurred more than 180
days prior to the date that

 

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such Lender or L/C Issuer notifies the Borrower Representative, in writing of
the increased costs and of such Lender’s or L/C Issuer’s intention to claim
compensation thereof; provided, further, that if the circumstance giving rise to
such increased costs is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.

(b) If any Lender or L/C Issuer shall have determined that:

(i) the introduction of any Capital Adequacy Regulation;

(ii) any change in any Capital Adequacy Regulation;

(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof; or

(iv) compliance by such Lender or L/C Issuer (or its Lending Office) or any
entity controlling the Lender or L/C Issuer, with any Capital Adequacy
Regulation;

affects the amount of capital required or expected to be maintained by such
Lender or L/C Issuer or any entity controlling such Lender or L/C Issuer and
(taking into consideration such Lender’s or such entities’ policies with respect
to capital adequacy and such Lender’s or L/C Issuer’s desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment(s), loans, credits or obligations under this Agreement, then, within
thirty (30) days of demand of such Lender or L/C Issuer (with a copy to the
Agent), the Borrowers shall pay to such Lender or L/C Issuer, from time to time
as specified by such Lender or L/C Issuer, additional amounts sufficient to
compensate such Lender or L/C Issuer (or the entity controlling the Lender or
L/C Issuer) for such increase; provided, that the Borrowers shall not be
required to compensate any Lender or L/C Issuer pursuant to this Section 10.3
for any amounts incurred more than 180 days prior to the date that such Lender
or L/C Issuer notifies the Borrower Representative, in writing of the amounts
and of such Lender’s or L/C Issuer’s intention to claim compensation thereof;
provided, further, that if the event giving rise to such increase is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

10.4 Funding Losses. The Borrowers agree to reimburse each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:

(a) the failure of the Borrowers to make any payment or mandatory prepayment of
principal of any LIBOR Rate Loan (including payments made after any acceleration
thereof);

(b) the failure of the Borrowers to borrow, continue or convert a Loan after the
Borrower Representative has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;

 

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(c) the failure of the Borrowers to make any prepayment after the Borrowers have
given a notice in accordance with Section 1.7;

(d) the prepayment (including pursuant to Section 1.8) of a LIBOR Rate Loan on a
day which is not the last day of the Interest Period with respect thereto; or

(e) the conversion pursuant to Section 1.6 of any LIBOR Rate Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans hereunder or from fees
payable to terminate the deposits from which such funds were obtained. Solely
for purposes of calculating amounts payable by the Borrowers to the Lenders
under this Section 10.4 and under subsection 10.3(a): each LIBOR Rate Loan made
by a Lender (and each related reserve, special deposit or similar requirement)
shall be conclusively deemed to have been funded at the LIBOR used in
determining the interest rate for such LIBOR Rate Loan by a matching deposit or
other borrowing in the interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such LIBOR Rate Loan is in fact so
funded.

10.5 Inability to Determine Rates. If the Agent shall have determined in good
faith that for any reason adequate and reasonable means do not exist for
ascertaining the LIBOR for any requested Interest Period with respect to a
proposed LIBOR Rate Loan or that the LIBOR applicable pursuant to subsection
1.3(a) for any requested Interest Period with respect to a proposed LIBOR Rate
Loan does not adequately and fairly reflect the cost to the Lenders of funding
such Loan, the Agent will forthwith give notice of such determination to the
Borrower Representative and each Lender. Thereafter, the obligation of the
Lenders to make or maintain LIBOR Rate Loans hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such notice, the
Borrower Representative may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower Representative
does not revoke such notice, the Lenders shall make, convert or continue the
Loans, as proposed by the Borrower Representative, in the amount specified in
the applicable notice submitted by the Borrower Representative, but such Loans
shall be made, converted or continued as Base Rate Loans.

10.6 Reserves on LIBOR Rate Loans. The Borrowers shall pay to each Lender, as
long as such Lender shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional costs on the unpaid principal amount of each LIBOR
Rate Loan equal to actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall be
conclusive absent demonstrable error), payable on each date on which interest is
payable on such Loan provided the Borrower Representative shall have received at
least fifteen (15) days’ prior written notice (with a copy to the Agent) of such
additional interest from the Lender. If a Lender fails to give notice fifteen
(15) days prior to the relevant Interest Payment Date, such

 

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additional interest shall be payable fifteen (15) days from receipt of such
notice; provided that no Lender shall make a claim for any such additional
insurance more than 180 days after such Lender has knowledge of such additional
interest.

10.7 Certificates of Lenders. Any Lender claiming reimbursement or compensation
pursuant to this Article X shall deliver to the Borrower Representative (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to such Lender hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.

10.8 Survival. The agreements and obligations of the Borrowers in this Article X
shall survive the payment of all other Obligations.

ARTICLE XI—DEFINITIONS

11.1 Defined Terms. The following terms are defined in the Sections or
subsections referenced opposite such terms:

 

“Affected Lender”    9.22 “Average Daily Revolving Amount”    1.9(b) “Borrower”
and “Borrowers”    Preamble “Borrower Representative”    1.15 “Commitment
Increase”    1.1(a) “Commitment Increase Cap”    1.1(a) “Currency Overadvance”
   1.1(a) “EBITDA”    Exhibit 4.2(b) “Eligible Accounts”    1.12(b) “Eligible
Assignee”    1.1(a) “Eligible Equipment”    1.14(b) “Eligible Inventory”   
1.13(b) “Eligible Real Property”    1.14(b) “Event of Default”    7.1 “Fee
Letter”    1.9(a) “Fixed Charge Coverage Ratio”    Exhibit 4.2(b) “Food Security
Act Notice”    5.21(b) “Increased Commitment Proposal”    1.1(a) “Indemnified
Matters”    9.6 “Indemnitee”    9.6 “Insured Accounts”    1.12 “Investments”   
5.4 “ITG”    Preamble “L/C Reimbursement Agreement”    1.1(b) “L/C Reimbursement
Date”    1.1(b) “L/C Request”    1.1(b) “L/C Sublimit”    1.1(b) “Lender”   
Preamble

 

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“Letter of Credit Fee”    1.9(c) “Maximum Lawful Rate”    1.3(d) “Maximum
Revolving Loan Balance”    1.1(a) “Non-Funding Lender”    1.11(b) “Notice of
Conversion/Continuation”    1.6(a) “Original Currency”    9.25(a) “Other
Currency”    9.25(a) “Other Lender”    1.11(d) “Other Taxes”    10.1(c)
“Overadvance”    1.1(a) “Pension Benefits”    3.7(b) “Permitted Liens”    5.1
“Register”    1.4(b) “Restricted Payments”    5.11 “Replacement Lender”    9.22
“Revolving Loan Commitment”    1.1(a) “Revolving Loan”    1.1(a) “Sale”   
9.9(a) “Settlement Date”    1.11(b) “Swing Loan”    1.1(d)(i) “Swingline
Request”    1.1(d)(ii) “Tax Returns”    3.10 “Taxes”    10.1(a) “Unfinanced
Capital Expenditures”    Exhibit 4.2(b) “Unused Commitment Fee”    1.9(b) “UK
Borrower”    Preamble

In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:

“Account” means, as at any date of determination, all “accounts” (as such term
is defined in the UCC) owned by any Borrower, including, without limitation, the
unpaid portion of the obligation of a customer of a Borrower in respect of
Inventory purchased by and shipped to such customer and/or the rendition of
services by a Borrower in the Ordinary Course of Business, as stated on the
respective invoice of a Borrower, net of any credits, rebates or offsets owed to
such customer.

“Account Debtor” means the customer of a Borrower who is obligated on or under
an Account.

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of fifty percent (50%) of the
Stock and Stock Equivalents of any Person or otherwise causing any Person to
become a Subsidiary of a Borrower, or (c) a merger or consolidation or any other
combination with another Person.

 

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“Activation Notice” means a notice delivered by the Agent to a depository,
securities intermediary or commodities intermediary to forward immediately all
amounts in the applicable account as directed by the Agent.

“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of ten percent
(10%) or more of the Stock (either directly or through ownership of Stock
Equivalents) of a Person shall for the purposes of this Agreement, be deemed to
control the other Person. Notwithstanding the foregoing, (i) neither the Agent
nor any Lender and (ii) no WLR Affiliate, in either case, shall be deemed an
“Affiliate” of any Credit Party or of any Subsidiary of any Credit Party.

“Agent” means GE Capital in its capacity as administrative agent for the Lenders
hereunder, and any successor administrative agent appointed pursuant to
Section 8.9.

“Aggregate Revolving Loan Commitment” means the combined Revolving Loan
Commitments of the Lenders, which shall initially be in the amount of
$165,000,000, as such amount may be increased or reduced from time to time
pursuant to this Agreement.

“Applicable Margin” means:

(a) for the period commencing on the Closing Date through January 31, 2007,
2.00% for LIBOR Loans and 1.00% for Base Rate Loans; and

(b) thereafter, the Applicable Margin shall equal the applicable LIBOR margin or
Base Rate margin in effect from time to time as set forth below, determined on
the first Business Day of each Fiscal Month based upon the Average Daily
Revolving Amount during the immediately preceding fiscal month:

 

Average Daily Revolving Amount

   LIBOR Margin     Base Rate Margin  

£ $80,000,000

   1.75 %   0.75 %

>$80,000,000 but £ $120,000,000

   2.00 %   1.00 %

>$120,000,000

   2.25 %   1.25 %

Notwithstanding anything herein to the contrary, Swing Loans may not be LIBOR
Rate Loans.

“Appraisal” means, as applicable, (i) the appraisal delivered to the Agent prior
to the Closing Date setting forth the Net Orderly Liquidation Value of
Inventory, Net Forced Liquidation Value of Equipment and fair market value of
real Property, and (ii) any appraisal in form and substance reasonably
satisfactory to the Agent delivered to the Agent pursuant to Sections 4.2(k) or
(n).

 

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“Approved Fund” means, with respect to any Lender, any Person (other than a
natural Person) that (a) (i) is or will be engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business or (ii) temporarily warehouses
loans for any Lender or any Person described in clause (i) above and (b) is
advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or
(iii) any Person (other than an individual) or any Affiliate of any Person
(other than an individual) that administers or manages such Lender.

“Assignment” means an assignment agreement entered into by a Lender, as
assignor, and any prospective assignee thereof and accepted by the Agent, in
substantially the form of Exhibit 11.1(a).

“Attorney Costs” means and includes all reasonable fees and disbursements of any
law firm or other external counsel.

“Available Currency” means Euros, Canadian Dollars, Pounds Sterling and any
other readily available currencies as agreed by the Agent and applicable L/C
Issuers.

“Availability” means, as of any date of determination, the amount by which
(a) the Maximum Revolving Loan Balance, exceeds (b) the aggregate outstanding
principal balance of Revolving Loans.

“Availability Block” means $12,500,000.

“Average Adjusted Availability” means on any date of determination (such date,
the “Determination Date”), average Availability for the thirty (30) calendar
days preceding the Determination Date, or in the case of an Investment,
Permitted Acquisition, Capital Expenditure or asset disposition, pro forma
average Availability for the thirty (30) calendar days preceding the closing
date of such Investment, Permitted Acquisition, Capital Expenditure or asset
disposition, determined as if such Investment, Permitted Acquisition, Capital
Expenditure or asset disposition had occurred immediately prior to that thirty
(30) calendar day period.

“Bank Product” means any of the following products or services extended to any
Credit Party by any Lender or any Lender’s Affiliate: (a) cash management
services, including automatic clearinghouse, controlled disbursement,
depository, electronic fund transfer, information reporting, lockbox, overdraft,
stop payment and/or wire transfer services and (b) commercial credit card and
merchant card services.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended and in effect from time to time and the regulations
issued from time to time thereunder.

“Base Rate” means, at any time, a rate per annum equal to the higher of (a) the
rate last quoted by The Wall Street Journal as the “base rate on corporate loans
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at least 75% of the nation’s largest banks” in the United States (the “base
rate”)or, if The Wall Street Journal ceases to quote such rate, the highest per
annum interest rate published by the Federal Reserve Board in Federal Reserve
Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime
loan” rate or, if such rate is no longer quoted therein, any similar rate quoted
therein (as determined by the Agent) or any similar release by the Federal
Reserve Board (as determined by the Agent) and (b) the sum of 0.5% per annum and
the Federal Funds Rate. Any change in the Base Rate due to a change in any of
the foregoing shall be effective on the effective date of such change in the
“base rate”, the “bank prime loan” rate or the Federal Funds Rate.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of
ERISA (whether governed by the laws of the United States or otherwise) to which
any Credit Party incurs or otherwise has any obligation or liability, contingent
or otherwise.

“Borrowing” means a borrowing hereunder consisting of Loans made to or for the
benefit of the Borrowers on the same day by the Lenders pursuant to Article I.

“Borrowing Base” means, as of any date of determination by the Agent, from to
time to time, an amount equal to the sum of:

(a) 85% of the book value of Eligible Accounts (other than Insured Accounts);

(b) the lesser of (i) 75% of the book value of Insured Accounts and
(ii) $5,000,000;

(c) the least of (i) 65% of the book value (valued at the lower of cost or
market) of Eligible Inventory, (ii) 85% of the book value (valued at the lower
of cost or market) of Eligible Inventory multiplied by the then current NOLV
Factor and (iii) an amount equal to 50% of the Borrowing Base, excluding amounts
reflected in clauses (d) and (e) below;

(d) at all times on or prior to May 31, 2008 the lesser of (i) $22,300,000 and
(ii) the Fixed Asset Loan Value; and

(e) at all times after May 31, 2008, the lesser of (i) the Maximum Fixed Asset
Loan Value and (ii) the Fixed Asset Loan Value.

“Borrowing Base Certificate” means a certificate of the Borrower Representative,
on behalf of the Borrowers, in substantially the form of Exhibit 11.1(b) hereto,
duly completed by a Responsible Officer of the Borrower Representative.

“BST” means BST US Holdings, Inc., a Delaware corporation.

“BST Facility” means that certain Term and Revolving Facilities Agreement dated
as of December 8, 2006, by and among BST Safety Textiles Acquisition GmbH,
Goldman Sachs Credit Partners L.P. and UBS Securities LLC, and the other Persons
signatory thereto.

 

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“BST Group” means BST and each of its Subsidiaries.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in Chicago, Illinois or New York, New York are authorized or
required by law to close and, if the applicable Business Day relates to any
LIBOR Rate Loan or Loan to the UK Borrower, a day on which dealings are carried
on in the London interbank market.

“Canadian Dollars” and “C$” each means lawful currency of Canada.

“Capital Adequacy Regulation” means any guideline, request or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling a Lender.

“Capital Expenditures” means all expenditures during any measuring period for
any fixed asset or improvements or replacements, substitutions, or additions
thereto that have a useful life of more than one year and are required to be
capitalized under GAAP.

“Capital Lease” means any leasing or similar arrangement which, in accordance
with GAAP, is classified as a capital lease.

“Capital Lease Obligations” means all monetary obligations of any Credit Party
or any Subsidiary of any Credit Party under any Capital Leases.

“Cash Equivalents” means any of the following:

(i) securities issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in support
thereof) and securities that are the direct obligations of any Member State of
the European Union, which at the time of acquisition thereof, was not targeted
for sanctions by the Office of Foreign Assets Control of the United States
Department of the Treasury so long as the full faith of and credit of such
nation is pledged in support thereof, in each case having maturities of not more
than one year from the date of acquisition;

(ii) US Dollar denominated time deposits, certificates of deposit and bankers’
acceptances of (x) any Lender, (y) any domestic or foreign commercial bank of
recognized standing having capital and surplus in excess of $500,000,000 or
(z) any bank (or the parent company of such bank) whose short-term commercial
paper rating from S&P is at least A-1, A-2 or the equivalent thereof or from
Moody’s is at least P-1, P-2 or the equivalent thereof or an equivalent rating
from a comparable foreign rating agency (any such bank, an “Approved Bank”), in
each case with maturities of not more than 180 days from the date of
acquisition;

 

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(iii) commercial paper issued by any Lender or Approved Bank or by the parent
company of any Lender or Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody’s or an equivalent rating from a comparable
foreign rating agency, or guaranteed by any industrial company with a long-term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody’s, as the case may be, and in each case maturing within 180
days after the date of acquisition or an equivalent rating from a comparable
foreign rating agency;

(iv) fully collateralized repurchase agreements entered into with any Lender or
Approved Bank having a term of not more than 30 days and covering securities
described in clause (i) above;

(v) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through
(iv) above;

(vi) investments in money market funds access to which is provided as part of
“sweep” accounts maintained with a Lender or an Approved Bank;

(vii) investments in industrial development revenue bonds that (A) “re-set”
interest rates not less frequently than quarterly, (B) are entitled to the
benefit of a remarketing arrangement with an established broker dealer, and
(C) are supported by a direct pay letter of credit covering principal and
accrued interest that is issued by an Approved Bank; and

(viii) investments in pooled funds or investment accounts consisting of
investments of the nature described in the foregoing clause (vii).

“Closing Date” means the date on which all conditions precedent set forth in
Section 2.1 are satisfied or waived by the Agent and all Lenders.

“Code” means the Internal Revenue Code of 1986, and regulations promulgated
thereunder.

“Collateral” means all Property and interests in Property and proceeds thereof
now owned or hereafter acquired by any Credit Party who has granted a Lien to
the Agent, in or upon which a Lien now or hereafter exists in favor of any
Lender or the Agent for the benefit of the Agent, Lenders and other Secured
Parties, whether under this Agreement or under any other Collateral Documents.

“Collateral Documents” means, collectively, the Guaranty and Security Agreement,
the Mortgages, the UK Security Documents, each Control Agreement and all other
security agreements, pledge agreements, patent and trademark security
agreements, lease assignments, guarantees and other similar agreements, and all
amendments,

 

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restatements, modifications or supplements thereof or thereto, by or between any
one or more of any Credit Party, any of their respective Subsidiaries or any
other Person pledging or granting a lien on Collateral or guaranteeing the
payment and performance of the Obligations, and any Lender or the Agent for the
benefit of the Agent, the Lenders and other Secured Parties now or hereafter
delivered to the Lenders or the Agent pursuant to or in connection with the
transactions contemplated hereby, and all financing statements (or comparable
documents now or hereafter filed in accordance with the UCC or comparable law)
against any such Person as debtor in favor of any Lender or the Agent for the
benefit of the Agent, the Lenders and the other Secured Parties, as secured
party, as any of the foregoing may be amended, restated and/or modified from
time to time.

“Commitment” means, for each Lender, its Revolving Loan Commitment.

“Commitment Percentage” means, as to any Lender, the percentage equivalent of
such Lender’s Revolving Loan Commitment divided by the Aggregate Revolving Loan
Commitment.

“Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person: (i) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that the holders of such liability
will be protected (in whole or in part) against monetary loss with respect
thereto; (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (iii) under any Rate Contracts; (iv) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement; or (v) for the obligations of another Person through any
agreement to purchase, repurchase or otherwise acquire such obligation or any
Property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency, financial condition or
any balance sheet item or level of income of another Person. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if not a fixed and determined amount, the
maximum amount so guaranteed or supported.

“Contractual Obligations” means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its Property is bound.

“Control Agreement” means a tri-party deposit account, securities account or
commodities account control agreement by and among the applicable Credit Party,
the Agent and the depository, securities intermediary or commodities
intermediary, and each in form and substance reasonably satisfactory in all
respects to the Agent and in any event providing to the Agent “control” of such
deposit account, securities or commodities account within the meaning of
Articles 8 and 9 of the UCC.

 

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“Conversion Date” means any date on which the Borrowers convert a Base Rate Loan
to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan.

“Copyrights” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to copyrights and
all mask work, database and design rights, whether or not registered or
published, all registrations and recordations thereof and all applications in
connection therewith.

“Credit Parties” means ITG, each Borrower, each German Subsidiary and each other
Person (i) which executes this Agreement as a “Credit Party,” (ii) which
executes a guaranty of the Obligations (or, in the case of a Foreign Credit
Party, which executes a guaranty of the UK Obligations), (iii) which grants a
Lien on all or substantially all of its assets to secure payment of the
Obligations (or, in the case of a Foreign Credit Party, which grants a Lien on
all or substantially all of its assets to secure payment of the UK Obligations)
and (iv) all of the Stock of which is pledged to the Agent for the benefit of
itself and Lenders (or, in the case of a Foreign Credit Party, all of the Stock
of which is pledged to the Agent to secure the UK Obligations for the benefit of
the Agent and Lenders).

“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured or otherwise remedied during such
time) constitute an Event of Default.

“Disposition” means (a) the sale, lease, conveyance or other disposition of
Property pursuant to Sections 5.2(b) or 5.2(j) or otherwise with the consent of
Required Lenders, and (b) the sale or transfer by a Borrower or any Subsidiary
of a Borrower of any Stock or Stock Equivalent issued by any Subsidiary of a
Borrower and held by such transferor Person.

“Dollars”, “dollars” and “$” each mean lawful money of the United States of
America.

“Domestic” means, with respect to any Borrower, Credit Party or Subsidiary of a
Borrower or Credit Party, that such Borrower, Credit Party or Subsidiary is
incorporated or otherwise organized under the laws of a state of the United
States of America.

“Electronic Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made or
communicated by e-mail or E-Fax, or otherwise to or from an E-System or other
equivalent service.

“Eligible Countries” means the United States, Canada, any Member State of the
European Union, any state which is a signatory to the North American Free Trade
Agreement or Central America Free Trade Agreement, Colombia, Brazil, Jordan,
Turkey, Egypt, Bangladesh, India, Israel, People’s Republic of China, South
Korea, Vietnam, Nicaragua, Sri Lanka, South Africa and such other countries as
may be requested by the Borrower Representative and approved by the Agent, such
approval not to be unreasonably withheld (unless the Agent notifies the Borrower
Representative that any of the aforementioned countries cannot be an “Eligible
Country” due to any Lender’s lending restrictions (as determined by Agent in
good faith)).

 

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“Environmental Laws” means all present and future Requirements of Law and
Permits imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources, and including public notification requirements and environmental
transfer of ownership, notification or approval statutes in any jurisdiction, in
each case, that are applicable to the Credit Parties or their Subsidiaries.

“Environmental Liabilities” means all Liabilities (including costs of Remedial
Actions, natural resource damages and required costs and expenses of
investigation and feasibility studies) that may be imposed on, incurred by or
asserted against any Credit Party or any Subsidiary of any Credit Party as a
result of, or related to, any claim, suit, action, investigation, proceeding or
demand by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common law or
otherwise, arising under any Environmental Law or in connection with any
environmental, health or safety condition or with any Release and resulting from
the ownership, lease, sublease or other operation or occupation of property by
any Credit Party or any Subsidiary of any Credit Party, whether on, prior or
after the date hereof.

“Equipment” means “equipment” as such term is defined in the UCC.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means, collectively, any Credit Party and any Person under
common control or treated as a single employer with, any Credit Party, within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means any of the following: (a) a reportable event described in
Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been duly
waived under the applicable regulations, Section 4043(c) of ERISA) with respect
to a Title IV Plan; (b) the withdrawal of any ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA; (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due;
(h) the imposition of a lien under Section 412 of the Code or Section 302 or
4068 of ERISA on any property (or rights to property, whether real or personal)
of any ERISA Affiliate; (i) the failure of a Benefit Plan or any trust
thereunder intended to qualify for tax exempt status under Section 401 or 501 of
the Code or other Requirements of Law to qualify thereunder; and (j) any other
event or condition that might reasonably be expected to constitute grounds

 

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under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of any liability upon any ERISA Affiliate under Title IV of ERISA
other than for PBGC premiums due but not delinquent.

“Euros” or “€” means European Euros.

“Event of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property; or (b) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.

“Excluded Equity Issuance” means the private issuance of any of (a) Stock or
Stock Equivalents by ITG to management or employees of a Credit Party under any
employee stock option or stock purchase plan or other employee benefits plan in
existence from time to time, (b) Stock or Stock Equivalents by a Wholly-Owned
Subsidiary of a Borrower to a Borrower or another Wholly-Owned subsidiary of a
Borrower constituting an Investment permitted hereunder, (c) Stock or Stock
Equivalents by a Wholly-Owned Subsidiary of ITG to ITG or another Wholly-Owned
Subsidiary of ITG constituting an Investment permitted hereunder, (d) Stock or
Stock Equivalents by ITG excluding the Preferred Stock Issuance, the Net
Proceeds of which are invested in Capital Expenditures, Permitted Acquisitions
or Investments in Excluded Subsidiaries within ninety (90) days after receipt
thereof, (e) Stock or Stock Equivalents by a Foreign Subsidiary of such Foreign
Subsidiary to qualify directors where required pursuant to a Requirement of Law
or to satisfy other requirements of applicable law, in each instance, with
respect to the ownership of Stock of Foreign Subsidiaries and (f) Stock or Stock
Equivalents issued in connection with the Permitted BST Acquisition.

“Excluded Subsidiary” means any Person referred to in the last sentence of the
definition of “Subsidiary”.

“Extended Terms Accounts” means Accounts owing by the Account Debtors listed on
Part B of Schedule 1.12 and designated therein as Extended Terms Account
Debtors.

“E-Fax” means any system used to receive or transmit faxes electronically.

“E-Signature” means the process of attaching to or logically associating with an
Electronic Transmission an electronic symbol, encryption, digital signature or
process (including the name or an abbreviation of the name of the party
transmitting the Electronic Transmission) with the intent to sign, authenticate
or accept such Electronic Transmission.

“E-System” means any electronic system, including Intralinks® and any other
Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by the Agent, any of its Related Persons or any other Person,
providing for access to data protected by passcodes or other security system.

 

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“Federal Funds Rate” means, for any day, the rate per annum (rounded upward to
the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent on
such day on such transactions as determined by the Agent in a commercially
reasonable manner.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.

“First Tier Foreign Subsidiary” means a Foreign Subsidiary more than fifty
percent (50%) of the voting Stock (directly or through ownership of Stock
Equivalents) of which are held directly by a US Borrower or indirectly by a US
Borrower through one or more Domestic Subsidiaries.

“Fixed Asset Loan Value” means the sum of (a) 75% of the Net Forced Liquidation
Value of Eligible Equipment plus (b) 50% of the appraised fair market value of
Eligible Real Property based upon the most recent Appraisal.

“Food Security Act” means the Food Security Act, 7 U.S.C. §1631.

“Foreign” means, with respect to any Credit Party or a Subsidiary of a Credit
Party, that such Credit Party or Subsidiary is not a US Credit Party or
Subsidiary.

“Foreign Credit Party” means the UK Borrower or any Foreign Guarantor.

“Foreign Guarantor” means any Guarantor that is not organized under the laws of
any State of the United States.

“GAAP” means generally accepted accounting principles in the United States set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
accounting profession), which are applicable to the circumstances as of the date
of determination.

“German Factoring Agreement” means, collectively, those certain Factoring
Agreements and related documents and opinions to be entered into and delivered
to Agent between Safety Components KG, as Originator, and the UK Borrower, as
Factor, in form and substance reasonably acceptable to Agent.

“German Subsidiaries” means, collectively, Safety Components KG and Automotive
Safety Vertwaltungs.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

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“Greige Goods” means woven fabric that requires only finishing steps such as
dyeing.

“Guarantor” means any Subsidiary of ITG that is a party to the Guaranty and
Security Agreement.

“Guaranty and Security Agreement” means that certain Guaranty and Security
Agreement, dated as of even date herewith, in form and substance reasonably
acceptable to the Agent and US Borrowers, made by the US Credit Parties in favor
of the Agent, for the benefit of the Secured Parties, as the same may be
amended, restated and/or modified from time to time.

“Hazardous Materials” means any substance, material or waste that is classified,
regulated or otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar meaning or
regulatory effect, including petroleum or any fraction thereof, asbestos,
polychlorinated biphenyls and radioactive substances.

“Holdco Debt” means unsecured Indebtedness incurred by ITG, any Holding Company
of ITG or any Holding Company of BST that is not secured by the assets of, or
guaranteed by, any Credit Party.

“Holding Company” means in relation to ITG or BST any limited liability company
or corporation in respect of which it is a Subsidiary and that owns no material
assets other than the Stock or Stock Equivalents of ITG or BST.

“Indebtedness” of any Person means, without duplication: (a) all indebtedness
for borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (other than trade payables
entered into in the Ordinary Course of Business); (c) the face amount of all
letters of credit issued for the account of such Person and without duplication,
all drafts drawn thereunder and all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments issued
by such Person; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of Property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to Property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such Property); (f) all Capital Lease Obligations; (g) the principal
balance outstanding under any synthetic lease, off-balance sheet loan or similar
off balance sheet financing product; (h) all obligations, whether or not
contingent, to purchase, redeem, retire, defease or otherwise acquire for value
any of its own Stock or Stock Equivalents (or any Stock or Stock Equivalent of a
direct or indirect parent entity thereof) prior to the date that is 180 days
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Termination Date, valued at, in the case of redeemable preferred Stock, the
greater of the voluntary liquidation preference and the involuntary liquidation
preference of such Stock plus accrued and unpaid dividends; (i) all indebtedness
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in Property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness; and (j) all Contingent Obligations
described in clause (i) of the definition thereof in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (i) above.

“Insolvency Proceeding” means (a) any case, action, application or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, voluntary arrangement, scheme of arrangement,
moratorium administration, liquidation, receivership, dissolution, winding-up or
relief of debtors and/or the appointment of any Person or officer in connection
therewith, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case in (a) and (b) above, undertaken under US Federal, state
or foreign law, including the Bankruptcy Code.

“Intellectual Property” means all rights, title and interests in or relating to
intellectual property and industrial property arising under any Requirement of
Law and all IP Ancillary Rights relating thereto, including all Copyrights,
Patents, Trademarks, Internet domain names, Trade Secrets and IP Licenses in any
jurisdiction.

“Intercreditor Agreement” means that certain Subordination and Intercreditor
Agreement, dated as of the Closing Date, by and among Agent, as Senior Agent, GE
Capital, as Subordinated Agent and the US Borrowers.

“Interest Payment Date” means, (a) with respect to any LIBOR Rate Loan (other
than a LIBOR Rate Loan having an Interest Period of six (6) months) the last day
of each Interest Period applicable to such Loan, (b) with respect to any LIBOR
Rate Loan having an Interest Period of six (6) months, the last day of each
three (3) month interval and, without duplication, the last day of such Interest
Period, and (c) with respect to Base Rate Loans (including Swing Loans) the
first day of each calendar month (starting with February 1, 2007).

“Interest Period” means, with respect to any LIBOR Rate Loan, the period
commencing on the Business Day such Loan is disbursed or continued or on the
Conversion Date on which a Base Rate Loan is converted to the LIBOR Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower Representative in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:

(a) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end
on a day which is not a Business Day, that Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;

 

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(b) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period; and

(c) no Interest Period for any Revolving Loan shall extend beyond the Revolving
Termination Date.

“Inventory” means all of the “inventory” (as such term is defined in the UCC) of
the US Borrowers, including, but not limited to, all merchandise, raw materials,
parts, supplies, work-in-process and finished goods intended for sale, together
with all the containers, packing, packaging, shipping and similar materials
related thereto, and including such inventory as is temporarily out of a US
Borrower’s custody or possession, including inventory on the premises of others
and items in transit.

“IP Ancillary Rights” means, with respect to any other Intellectual Property, as
applicable, all foreign counterparts to, and all divisionals, reversions,
continuations, continuations-in-part, reissues, reexaminations, renewals and
extensions of, such Intellectual Property and all income, royalties, proceeds
and Liabilities at any time due or payable or asserted under or with respect to
any of the foregoing or otherwise with respect to such Intellectual Property,
including all rights to sue or recover at law or in equity for any past, present
or future infringement, misappropriation, dilution, violation or other
impairment thereof, and, in each case, all rights to obtain any other IP
Ancillary Right.

“IP License” means all Contractual Obligations (and all related IP Ancillary
Rights), granting any right, title and interest in or relating to any
Intellectual Property.

“IRS” means the Internal Revenue Service of the United States and any successor
thereto.

“Issue” means, with respect to any Letter of Credit, to issue, extend the
expiration date of, renew (including by failure to object to any automatic
renewal on the last day such objection is permitted), increase the face amount
of, or reduce or eliminate any scheduled decrease in the face amount of, such
Letter of Credit, or to cause any Person to do any of the foregoing. The terms
“Issued” and “Issuance” have correlative meanings.

“Joint Ventures” means, collectively, Summit Yarn Holding I, Inc., a Delaware
corporation, Summit Yarn Holding II, Inc., a Delaware corporation, Summit Yarn
LLC, a North Carolina limited liability company, Cone Denim Jiaxing Limited, a
corporation organized under the laws of China, ITG – Phoung Phu Joint Venture
Company, a joint venture organized under the laws of Vietnam, SCI – Huamao China
Investment Limited, a corporation organized under the laws of Hong Kong,
Automotive Safety Components International GT (Proprietary) Limited, a
corporation organized under the laws of South Africa, and any other Person that
is not a Wholly-Owned Subsidiary and in which a

 

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Credit Party or a Subsidiary of a Credit Party owns any Stock or Stock
Equivalent and that Borrower Representative notifies Agent as being a “Joint
Venture” and Agent consents thereto (such consent not to be unreasonably
withheld).

“L/C Issuer” means GE Capital or a Subsidiary thereof or a Lender or other bank
or other legally authorized Person selected by or acceptable to the Agent and
ITG, in such Person’s capacity as an issuer of Letters of Credit hereunder.

“L/C Reimbursement Obligation” means, for any Letter of Credit, the obligation
of the US Borrowers to the L/C Issuer thereof, as and when matured, to pay all
amounts drawn under such Letter of Credit.

“Lending Office” means, with respect to any Lender, the office or offices of
such Lender specified as its “Lending Office” beneath its name on the applicable
signature page hereto, or such other office or offices of such Lender as it may
from time to time notify the Borrower Representative and the Agent.

“Letter of Credit” means documentary or standby letters of credit issued for the
account of the US Borrowers by L/C Issuers, and bankers’ acceptances issued by a
US Borrower, for which the Agent and Lenders have incurred Letter of Credit
Obligations.

“Letter of Credit Obligations” means all outstanding obligations incurred by the
Agent and Lenders at the request of the US Borrowers or the Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by L/C Issuers or the
purchase of a participation as set forth in Section 1.1(b) with respect to any
Letters of Credit. The amount of such Letter of Credit Obligations shall equal
the maximum amount that may be payable by the Agent and Lenders thereupon or
pursuant thereto.

“Liabilities” means all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and expenses, in each case of
any kind or nature (including interest and penalties accrued thereon or as a
result thereof), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.

“LIBOR” means, for each Interest Period, the offered rate per annum for deposits
of Dollars for the applicable Interest Period that appears on Telerate Page 3750
as of 11:00 A.M. (London, England time) two (2) Business Days prior to the first
day in such Interest Period. If no such offered rate exists, such rate will be
the rate of interest per annum, as determined by the Agent (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which deposits of Dollars in
immediately available funds are offered at 11:00 A.M. (London, England time) two
(2) Business Days prior to the first day in such Interest Period by major
financial institutions reasonably satisfactory to the Agent in the London
interbank market for such Interest Period for the applicable principal amount on
such date of determination.

“LIBOR Rate Loan” means a Loan that bears interest based on LIBOR.

 

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“Lien” means any mortgage, deed of trust, pledge, hypothecation, charge,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
otherwise) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease, any financing lease
having substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which such
lien relates as debtor, under the UCC or any comparable law), but not including
the interest of a lessor under a lease which is not a Capital Lease.

“Loan” means a Revolving Loan which is a Base Rate Loan or a LIBOR Rate Loan.

“Loan Documents” means this Agreement, the Notes, the Fee Letter, the Collateral
Documents, the German Factoring Agreement, the Mexican Sale Agreement, the
Intercreditor Agreement, and all documents delivered to the Agent and/or any
Lender in connection with any of the foregoing.

“Management Agreement” means that certain Management Agreement to be entered
into and delivered to Agent between WLR and ITG, in form and substance
reasonably acceptable to Agent.

“Mandatory Cost” means the rate of interest calculated by the Agent to
compensate the Lenders for the cost (if any) of compliance with the requirements
of the Bank of England, the Financial Services Authority or the European Central
Bank.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.

“Material Adverse Effect” means: (a) a material adverse change in, or a material
adverse effect upon, the operations, business, Properties or condition
(financial or otherwise) of the Credit Parties and the Subsidiaries taken as a
whole; (b) a material impairment of the ability of any Credit Party to perform
in any material respect its obligations under any Loan Document; or (c) a
material adverse effect upon (i) the legality, validity, binding effect or
enforceability of any Loan Document, or (ii) the perfection or priority of any
Lien relating to a material portion of the Collateral granted to the Lenders or
to the Agent for the benefit of the Secured Parties under any of the Collateral
Documents.

“Material Environmental Liabilities” means Environmental Liabilities exceeding
the US Dollar Equivalent of $1,000,000 in the aggregate.

“Maximum Fixed Asset Loan Value” means $22,300,000 reduced by $800,000 on the
last day of each fiscal quarter beginning with the fiscal quarter ended June 30,
2008.

“Member States of the European Union” means (a) for purposes of Section 1.12,
those states which were members of the European Union prior to May 1, 2004 and
Romania and (b) for all other purposes means those states which are as of the
date hereof, and other states which shall from time to time become, member
states of the European Union and in any event shall include Romania.

 

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“Merger Agreement” means that certain Agreement and Plan of Merger dated as of
August 29, 2006 by and among Safety Components International, Inc. (n/k/a
International Textile Group, Inc.), SCI Merger Sub, Inc. and International
Textile Group, Inc. (n/k/a ITG Holdings, Inc.).

“Mexican Facility” means that certain Term Loan Agreement dated as of the
Closing Date by and among Burlington Morelos, S.A. de C.V., UBS AG, Stamford
Branch, General Electric Capital Corporation and the other Persons signatory
thereto.

“Mexican Sale Agreement” means the Receivables Sale Agreement dated as of the
date hereof between Parras Cone de Mexico, S.A. de C.V. and Cone Denim LLC, a
Delaware limited liability company;

“Mortgage” means any deed of trust, leasehold deed of trust, mortgage, leasehold
mortgage, deed to secure debt, leasehold deed to secure debt or other document
creating a Lien on real Property or any interest in real Property.

“Multiemployer Plan” means any multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, as to which any ERISA Affiliate incurs or otherwise
has any obligation or liability, contingent or otherwise.

“Net Issuance Proceeds” means, in respect of any issuance of debt or equity,
cash proceeds (including cash proceeds as and when received in respect of
non-cash proceeds received or receivable in connection with such issuance), net
of underwriting discounts and reasonable out-of-pocket costs and expenses paid
or incurred in connection therewith in favor of any Person.

“Net Forced Liquidation Value” means the cash proceeds of Equipment which could
be obtained in a forced liquidation (net of all liquidation expenses, costs of
sale, operating expenses and retrieval and related costs), as determined
pursuant to the most recent Appraisal delivered to the Agent.

“Net Orderly Liquidation Value” means the cash proceeds of Inventory which could
be obtained in an orderly liquidation (net of all liquidation expenses, costs of
sale, operating expenses and retrieval and related costs), as determined
pursuant to the most recent Appraisal delivered to the Agent.

“Net Proceeds” means proceeds in cash, checks or other cash equivalent financial
instruments (including Cash Equivalents) as and when received by the Person
making a Disposition and insurance proceeds received on account of an Event of
Loss, net of: (a) in the event of a Disposition (i) the direct costs, fees and
expenses relating to such Disposition, (ii) sale, use or other transaction taxes
or income or gain taxes paid or payable as a result thereof, and (iii) amounts
required to be applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Lien on the asset which is the subject of
such Disposition and (b) in the event of an Event of Loss, (i) all money
actually applied to repair or reconstruct the damaged Property or Property

 

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affected by the condemnation or taking, (ii) all of the costs and expenses
reasonably incurred in connection with the collection of such proceeds, award or
other payments, and (iii) any amounts retained by or paid to parties having
superior rights to such proceeds, awards or other payments.

“Non-US Lender Party” means each of the Agent, each Lender, each L/C Issuer,
each SPV and each participant, in each case that is not a United States person
under and as defined in Section 7701(a)(30) of the Code.

“NOLV Factor” means, as of the date of the Appraisal most recently received by
the Agent, the quotient of the Net Orderly Liquidation Value divided by the net
book value (valued at the lower of cost or market) of Inventory, expressed as a
percentage. The NOLV Factor will be increased or reduced promptly upon receipt
by the Agent of each updated Appraisal.

“Note” means any Revolving Note or Swing Line Note and “Notes” means all such
Notes.

“Notice of Borrowing” means a notice given by the Borrower Representative to the
Agent pursuant to Section 1.5, in substantially the form of Exhibit 11.1(c)
hereto.

“Obligations” means all Loans and other Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by any Credit Party to any
Lender, the Agent, any L/C Issuer or any other Person required to be
indemnified, that arises under any Loan Document or with respect to Bank
Products, whether or not for the payment of money, whether arising by reason of
an extension of credit, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.

“Ordinary Course of Business” means, in respect of any transaction involving any
Credit Party or any Subsidiary of any Credit Party, the ordinary course of such
Person’s business, as conducted by any such Person consistent with past practice
and undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in any Loan Document.

“Organization Documents” means, any of the following, as applicable, (a) for any
corporation, the certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the rights of preferred
shareholders of such corporation, and any shareholder rights agreement, (b) for
any partnership, the partnership agreement and, if applicable, certificate of
limited partnership, (c) for any limited liability company, the operating
agreement and articles or certificate of formation, (d) for any UK limited
liability company, the articles of association and memorandum of association and
certificate of incorporation and (e) any other document setting forth the manner
of election or duties of the officers, directors, managers or other similar
persons, or the designation, amount or relative rights, limitations and
preference of the Stock of a Person.

 

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“Parras Cone” means Parras Cone de Mexico, S.A. de C.V, a Mexican stock limited
liability company.

“Patents” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to letters patent
and applications therefor.

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.

“PBGC” means the United States Pension Benefit Guaranty Corporation and any
successor thereto.

“Permits” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other Contractual Obligations with, any
Governmental Authority, in each case whether or not having the force of law and
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

“Permitted Acquisition” means the Acquisition (other than the Permitted BST
Acquisition and the Romanian Acquisition) by a Borrower or any Wholly-Owned
Subsidiary of a Borrower of (i) substantially all of the assets of a Target,
which assets are located in an Eligible Country or such other countries with
Agent’s consent (which shall not be unreasonably withheld) or (ii) 100% of the
Stock and Stock Equivalents of a Target to the extent that each of the following
conditions shall have been satisfied:

(a) to the extent the Acquisition will be financed in whole or in part with the
proceeds of any Loan, the conditions set forth in Section 2.2 shall have been
satisfied at the time of the funding of any such Loan;

(b) the Borrowers shall have furnished to the Agent and Lenders at least ten
(10) Business Days (or such shorter period of time as the Agent may consent
(such consent not to be unreasonably withheld)) prior to the consummation of
such Acquisition (1) a description of the terms and conditions of such
Acquisition and, at the request of the Agent, such other information and
documents that the Agent may request, including, without limitation, executed
counterparts of the respective agreements, documents or instruments pursuant to
which such Acquisition is to be consummated, any schedules to such agreements,
documents or instruments and all other material ancillary agreements,
instruments and documents to be executed or delivered in connection therewith,
(2) copies of such other agreements, instruments and other documents relating to
such Acquisition as the Agent reasonably shall request and (3) in the case of
any Acquisition in which the cash consideration paid is in excess of the US
Dollar Equivalent of $5,000,000 in the aggregate, pro forma financial statements
of ITG and its Subsidiaries after giving effect to the consummation of such
Acquisition;

 

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(c) the Borrowers and their Subsidiaries (including any new Subsidiary) shall
execute and deliver the agreements, instruments and other documents required by
Section 4.13;

(d) such Acquisition shall have been approved by the board of directors (or
other similar body) and/or the stockholders or other equityholders of the
Target;

(e) no Default or Event of Default shall then exist or would exist after giving
effect thereto; and

(f) after giving effect to such Acquisition, Average Adjusted Availability shall
not be less than $30,000,000.

“Permitted BST Acquisition” means the acquisition by ITG, or a Subsidiary of ITG
which is not otherwise a Credit Party, of all of the outstanding capital stock
or assets of BST where the sole consideration received is Stock of ITG and to
the extent that each of the following conditions shall have been satisfied:

(a) after giving effect thereto no violation of Section 4.15 shall have occurred
or would result after giving effect thereto;

(b) receipt by the Agent of a certified copy of an executed tax sharing
agreement (the “Tax Sharing Agreement”), the terms of which shall not put the
Lenders in a materially worse position than they would otherwise have been in
had the “Permitted BST Acquisition” not occurred and/or the Tax Sharing
Agreement had not been entered into; and

(c) evidence satisfactory to the Agent (i) that one independent director (such
independent director’s votes shall be limited to matters relating to the
insolvency, winding-up or liquidation of such member of the BST Group and
changes to the corporate document governing such matters) has been appointed to
the board of each member of the BST Group and (ii) that the constitutional
documents of each member of the BST Group have been amended to provide for such
independent director and his/her related voting rights.

“Permitted Investor” means any of WLR, WLR Recovery Fund II, LP, WLR Recovery
Fund III, LP and WLR-GS MasterCo-Investments, L.P.

“Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.

“Pledged Collateral” has the meaning specified in the Guaranty and Security
Agreement and shall include any other Collateral required to be delivered to the
Agent pursuant to the terms of any Collateral Document.

“Pounds Sterling” and “£” each means lawful currency of the United Kingdom.

 

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“Preferred Stock” means the convertible preferred stock referenced in the
Preferred Stock Commitment Letter.

“Preferred Stock Commitment Letter” means the Equity Commitment Letter dated as
of the date hereof among WLR Recovery Fund II, L.P., WLR Recovery Fund III, L.P.
and ITG.

“Preferred Stock Issuance” means the issuance of the Preferred Stock in
accordance with the Preferred Stock Commitment Letter.

“Pre-Merger ITG” means International Textile Group, Inc. (n/k/a ITG Holdings,
Inc.), a Delaware corporation, in existence prior to the merger contemplated by
the Merger Agreement.

“Pre-Merger SCI” means Safety Components International, Inc. (n/k/a
International Textile Group, Inc.), a Delaware corporation, in existence prior
to the merger contemplated by the Merger Agreement.

“Prior Indebtedness” means the Indebtedness and obligations specified on
Schedule 11.1(a) hereto.

“Pro Forma EBITDA” means, with respect to any Target, EBITDA for such Target for
the most recent twelve (12) month period for which financial statements are
available at the time of determination thereof, adjusted by verifiable expense
reductions, including excess owner compensation, if any, which are expected to
be realized, in each case calculated by the Borrowers reasonably acceptable to
the Agent.

“Projections” means the annual business plan of ITG for fiscal year 2007, which
includes a projected balance sheet, income statement and statement of cash
flows.

“Property” means any interest in any kind of property, asset or undertaking,
whether real, personal or mixed, and whether tangible or intangible.

“Rate Contracts” means swap agreements (as such term is defined in Section 101
of the Bankruptcy Code) and any other agreements or arrangements relating to
interest or currency exchange rates.

“Related Agreements” means the Mexican Facility, the German Factoring Agreement
and the Mexican Sale Agreement.

“Relative Commitment Factor” means, at any date of determination, a fraction
where the numerator is the principal amount of all commitments outstanding under
this Agreement and the denominator is the sum of the principal amounts of all
commitments outstanding under this Agreement, the Mexican Facility and the BST
Facility.

“Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor

 

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(including those retained in connection with the satisfaction or attempted
satisfaction of any condition set forth in Article II) and other consultants and
agents of or to such Person or any of its Affiliates.

“Related Transactions” means the transactions contemplated by the Related
Agreements.

“Releases” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material into
or through the environment.

“Remedial Action” means all actions required to (a) clean up, remove, treat or
in any other way address any Hazardous Material in the indoor or outdoor
environment, (b) prevent or minimize any Release so that a Hazardous Material
does not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment or (c) perform pre remedial studies and
investigations and post-remedial monitoring and care with respect to any
Hazardous Material.

“Required Lenders” means Lenders having (a) at least sixty six and two-thirds
percent (66- 2/3%) of the Aggregate Revolving Loan Commitments of all Lenders,
or (b) if the Aggregate Revolving Loan Commitments have been terminated, at
least sixty six and two-thirds percent (66- 2/3%) of the aggregate outstanding
amount of Revolving Loans and Letter of Credit Obligations.

“Requirement of Law” means, as to any Person, any law (statutory or common),
ordinance, treaty, rule, regulation, order, policy, other legal requirement or
determination of an arbitrator or of a Governmental Authority in any
jurisdiction, in each case applicable to or binding upon such Person or any of
its Property or to which such Person or any of its Property is subject.

“Reserves” means, with respect to the Borrowing Base (a) reserves established by
the Agent from time to time against Eligible Accounts, Eligible Inventory,
Eligible Equipment and Eligible Real Property pursuant to Exhibit 11.1(b),
(b) in the case of the UK Borrower, to reflect the prior ranking nature or
dilutive effect of the UK Priority Claims and (c) such other reserves against
Eligible Accounts, Eligible Inventory or Availability that the Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established to ensure the payment of
accrued interest expenses or Indebtedness shall be deemed to be a reasonable
exercise of the Agent’s credit judgment.

“Responsible Officer” means the chief executive officer or the president of a
Borrower or the Borrower Representative, as applicable, or any other officer
having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants or delivery of financial information, the
chief financial officer, the treasurer or the controller of a Borrower or the
Borrower Representative, as applicable, or any other officer having
substantially the same authority and responsibility.

 

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“Revolving Lender” means each Lender with a Revolving Loan Commitment (or if the
Revolving Loan Commitments have terminated, who hold Revolving Loans and, if
applicable, participations in Swing Loans.)

“Revolving Note” means a promissory note of the US Borrowers or the UK Borrower
payable to the order of a Lender in substantially the form of Exhibit 11.1(d)
hereto, evidencing Indebtedness of such Borrowers under the Revolving Loan
Commitment of such Lender.

“Revolving Termination Date” means the earlier to occur of: (a) December 29,
2009; and (b) the date on which the Aggregate Revolving Loan Commitment shall
terminate in accordance with the provisions of this Agreement.

“Romanian Acquisition” means the purchase by Automotive Safety Components
International RO SRL of all or substantially all of the assets of the automotive
air bag manufacturing business of Parat SO s.r.l., a Romanian corporation for a
cash purchase price not to exceed 5,600,000 Euros.

“Safety Components KG” means Automotive Safety Components International GmbH &
Co. KG, limited partnership organized under the laws of Germany.

“Safety Components Vertwaltungs” means Automotive Safety Components
International Vertwaltungs GmbH, a limited liability company organized under the
laws of Germany.

“Secured Party” means the Agent, each Lender, each L/C Issuer, each other
Indemnitee and each other holder of any Obligation of a Credit Party.

“Solvent” means, with respect to any Person as of any date of determination,
that, as of such date: (a) the value of the assets of such Person (both at fair
value and present fair saleable value) is greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person;
(b) such Person is generally able to pay all liabilities of such Person as such
liabilities mature, (c) such Person does not have unreasonably small capital;
and (d) in the case of any person incorporated in England and Wales only, a
Person that is not “unable to pay its debts”. In this context, “unable to pay
its debts” means that there are no grounds on which such Person would be deemed
unable to pay its debts (as defined in Section 123(1) of the Insolvency Act 1986
of England Wales (as amended by the Enterprise Act 2002 of England and Wales) on
the basis that the words “proved to the satisfaction of the court” are deemed
omitted from sections 123(1)(e) and 123(2) of that Act) or on which a court
would be satisfied that the value of such Person’s assets is less than the
amount of its liabilities, taking into account its contingent and prospective
liabilities (as such term would be construed for the purposes of Section 123(2)
of the Insolvency Act 1986 of England and Wales (as amended by the Enterprise
Act 2002 of England and Wales)). The amount of contingent or unliquidated
liabilities (such as litigation, guaranties and pension plan liabilities) at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can be reasonably
be expected to become an actual or matured liability.

 

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“SPV” means any special purpose funding vehicle identified as such in a writing
by any Lender to the Agent.

“Stock” means all shares of capital stock (whether denominated as common stock
or preferred stock), equity interests, shares, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting.

“Stock Equivalents” means all securities convertible into or exchangeable for
Stock or any other Stock Equivalent and all warrants, options or other rights to
purchase, subscribe for or otherwise acquire any Stock or any other Stock
Equivalent, whether or not presently convertible, exchangeable or exercisable.

“Subordinated Indebtedness” means unsecured Indebtedness held by Persons that
are not Affiliates of the Credit Parties subordinated in right of payment to the
Obligations, which may provide for a cap on the principal amount of the
Obligations equal to $165,000,000 plus ten percent (10%) of such amount (or
$215,000,000 plus 10% of such amount if the Revolving Loan Commitments are
increased in accordance herewith) and such Indebtedness is subject to the
following terms: (a) no cross-default to the Obligations but may be subject to
cross-acceleration; (b) the sole financial covenant, if any, is at least ten
percent (10%) less restrictive than the financial covenant set forth herein;
(c) basket amount qualifications in negative covenants and events of default are
at least ten percent (10%) larger than those contained herein; (d) the maturity
date is no earlier than twelve months after the Revolving Termination Date;
(e) interest payable in cash does not exceed twelve percent (12%) per annum,
payable quarterly or semi-annually; (f) no principal amortization until the
maturity thereof; (g) permanent payment blockage in the event of a payment
default with respect to the Obligations; (h) one hundred and eighty (180) day
payment blockage with respect to a covenant default under this Agreement;
(i) not more than one payment blockage period with respect to a covenant default
during any period of 360 days; (j) one hundred and twenty (120) day standstill
period for enforcement of remedies, subject to termination upon a bankruptcy
filing by a Credit Party or enforcement actions by Agent; (k) holders of such
Indebtedness may have the right to file and vote their claims in bankruptcy,
subject to the right of Agent to file proofs of claim if the holders of such
Indebtedness fail to do so in a timely manner; and (l) any limitations on
amendments to this Agreement are limited to (i) caps on increases in the
principal amount as set forth above, (ii) 200 basis point increases in per annum
interest margins (excluding any applicable default rate) (iii) extensions of
Revolving Termination Date not to exceed three (3) years and (iv) no amendment
that directly prohibits payment of such Indebtedness.

“Subordinated Indebtedness Document” means all agreements and documents relating
to any Subordinated Indebtedness.

 

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“Subordination Agreement” means a subordination agreement between Agent, the
Person providing the Subordinated Indebtedness, the applicable Credit Party or
Subsidiary of any Credit Party, on terms reasonably acceptable to Agent.

“Subsidiary” of a Person means any corporation, association, limited liability
company, partnership, joint venture or other business entity of which more than
fifty percent (50%) of the voting Stock (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by such Person, or
one or more of the Subsidiaries of such Person, or a combination thereof.
Notwithstanding anything to the contrary contained herein, a “Subsidiary” of ITG
or a Credit Party shall in no event include BST or any of its Subsidiaries, any
Subsidiary of Denim which is a company organized under the laws of Mexico, the
Joint Ventures, or Subsidiaries of a Credit Party that are not themselves Credit
Parties and that have been designated as Excluded Subsidiaries in a notice from
Borrower Representative to Agent.

“Super-Majority Lenders” means Lenders having (a) at least seventy five percent
(75%) of the Aggregate Revolving Loan Commitments of all Lenders, or (b) if the
Aggregate Revolving Loan Commitments have been terminated, at least seventy five
percent (75%) of the aggregate outstanding amount of Revolving Loans and Letter
of Credit Obligations.

“Swingline Commitment” means $15,000,000.

“Swingline Lender” means, each in its capacity as Swingline Lender hereunder, GE
Capital or, upon the resignation of GE Capital as the Agent hereunder, any
Lender (or Affiliate or Approved Fund of any Lender) that agrees, with the
approval of the Agent (or, if there is no such successor Agent, the Required
Lenders) and the Borrowers, to act as the Swingline Lender hereunder.

“Swingline Note” means a promissory note of the US Borrowers or the UK Borrower
payable to the order of a Lender in substantially the form of Exhibit 11.1(e)
hereto, evidencing Indebtedness of such Borrowers under the Swingline Commitment
of such Lender.

“Target” means any Person or business unit or asset group of any other Person
acquired or proposed to be acquired in an Acquisition.

“Tax Affiliate” means, (a) each Credit Party and their Subsidiaries and (b) any
Affiliate of a Credit Party with which such Credit Party files or is eligible to
file consolidated, combined or unitary tax returns.

“Tax Sharing Agreement” has the meaning specified in the definition of
“Permitted BST Acquisition”.

“Title IV Plan” means a pension plan subject to Title IV of ERISA, other than a
Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any
obligation or liability, contingent or otherwise.

 

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“Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to trade
secrets.

“Trademark” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers and, in each case, all goodwill associated therewith, all
registrations and recordations thereof and all applications in connection
therewith.

“UBS” means UBS Securities LLC.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

“UK Debenture” means the English law debenture entered into by the UK Borrower
in favor of the Agent.

“UK Obligations” means principal, interest, fees and expenses and any other
Obligations advanced to or incurred by the UK Borrower hereunder.

“UK Priority Claims” means with respect to the UK Borrower only, (a) sums which
are due by way of contributions to occupational pension schemes and state scheme
premiums; (b) unpaid remuneration of employees in respect of the 4-month period
prior to insolvency, subject to a maximum cap (currently £800 per employee)
together with any amount owed in respect of accrued holiday; (c) an amount equal
to the aggregate of (i) 50% of the first £10,000 in value of Eligible Accounts
of the UK Borrower and (ii) 20% of the value of Eligible Accounts of the UK
Borrower above £10,000, subject to a cap for this sub-clause (d) of £600,000 and
(e) the expenses of any administration or winding-up.

“UK Security Documents” means the UK Debenture and the UK Share Charge.

“UK Share Charge” means the English law share charge entered into by ASCI
Holdings UK (DE), Inc., a Delaware corporation, over the shares it holds in UK
Borrower in favor of the Agent.

“United States” and “US” each means the United States of America.

“US Borrower” means a Borrower that is incorporated or otherwise organized under
the laws of the United States of America.

“US Borrowing Base” means the Borrowing Base less 85% of Eligible Accounts
attributable to the UK Borrower.

“US Borrowing Base Limit” means the US Borrowing Base minus the sum of (a) 70%
(or such greater percentage determined by Agent in its reasonable credit
judgment) multiplied by the Availability Block, (b) outstanding Letter of Credit
Obligations issued for US Borrowers, as applicants, (c) outstanding Swing Loans
and (d) Reserves applicable to the US Borrowing Base.

 

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“US Credit Party” means a US Borrower or a US Guarantor.

“US Dollar Equivalent” means, with respect to any amount denominated in Dollars,
such amount of Dollars, and with respect to any amount denominated in a currency
other than Dollars, the amount of Dollars, as of any date of determination, into
which such other currency (as the context may require) can be converted in
accordance with prevailing exchange rates, as determined in accordance herewith.

“US Guarantor” means a Guarantor that is incorporated or otherwise organized
under the laws of the United States of America.

“US Lender Party” means each of the Agent, each Lender, each L/C Issuer, each
SPV and each participant, in each case that is a United States person under and
as defined in Section 7701(a)(30) of the Code.

“US Obligations” means all Obligations which are not UK Obligations.

“Wholly-Owned Subsidiary” means any Subsidiary in which (other than directors’
qualifying shares required by law) one hundred percent (100%) of the Stock and
Stock Equivalents, at the time as of which any determination is being made, is
owned, beneficially and of record, by any Credit Party, or by one or more of the
other Wholly-Owned Subsidiaries, or both.

“Withdrawal Liabilities” means, at any time, any liability incurred (whether or
not assessed) by any ERISA Affiliate and not yet satisfied or paid in full at
such time with respect to any Multiemployer Plan pursuant to Section 4201 of
ERISA.

“WLR” means WL Ross & Co., LLC, a Delaware limited liability company.

“WLR Affiliate” means any Person, other than ITG and any of ITG’s Subsidiaries
or any Person in which ITG directly or indirectly owns ten percent (10%) or more
of the outstanding equity interests, that would constitute an Affiliate
hereunder solely because such Person is controlled by WLR or any fund managed by
WLR, or because WLR or any fund managed by WLR directly or indirectly owns ten
percent (10%) or more of the outstanding equity interests of such Person.

“WLR Subordinated Indebtedness” means unsecured Indebtedness provided by one or
more Permitted Investors, subordinated in right of payment to the Obligations
providing no limitation on the amount of the Obligations and such Indebtedness
is subject to the following terms: (a) no cross-default to the Obligations but
may be subject to cross-acceleration; (b) no financial covenants; (c) negative
covenants will be limited to those set forth in this Agreement and will be
automatically amended or waived in lock-step with any amendment or waiver of
corresponding covenants in this Agreement; (d) the maturity date is no less than
twelve months after the Revolving Termination Date; provided, that if the
Revolving Termination Date is extended, such maturity date will also

 

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be extended for a corresponding period; (e) interest on any such Indebtedness is
only paid by the issuance of payment-in-kind notes payable at maturity; (f) no
principal amortization until maturity; (g) permanent standstill until the
Obligations (including successive refinancings thereof) are paid in full;
(h) holders of such Indebtedness retain the right to file and vote their claims
in bankruptcy, subject to the right of Agent to file proofs of claims if the
holders of such Indebtedness fail to do so in a timely manner; and (i) the
holders of such Indebtedness have no rights to consent to amendments or waivers
to this Agreement of the other Loan Documents.

11.2 Other Interpretive Provisions.

(a) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement or in any other Loan Document shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto. The meanings of defined terms shall be equally applicable to
the singular and plural forms of the defined terms. Terms (including
uncapitalized terms) not otherwise defined herein and that are defined in the
UCC shall have the meanings therein described.

(b) The Agreement. The words “hereof”, “herein”, “hereunder” and words of
similar import when used in this Agreement or any other Loan Document shall
refer to this Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document; and
subsection, section, schedule and exhibit references are to this Agreement or
such other Loan Documents unless otherwise specified.

(c) Certain Common Terms. The term “documents” includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced. The term “including” is not limiting and means “including
without limitation.”

(d) Performance; Time. Whenever any performance obligation hereunder or under
any other Loan Document (other than a payment obligation) shall be stated to be
due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including.”
If any provision of this Agreement or any other Loan Document refers to any
action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all means,
direct or indirect, of taking, or not taking, such action.

(e) Contracts. Unless otherwise expressly provided herein or in any other Loan
Document, references to agreements and other contractual instruments, including
this Agreement and the other Loan Documents, shall be deemed to include all
subsequent amendments, thereto, restatements and substitutions thereof and other
modifications and supplements thereto which are in effect from time to time, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document.

 

122

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(f) Laws. References to any Requirement of Law are to be construed as including
all statutory and regulatory provisions related thereto or consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.

11.3 Accounting Terms and Principles. All accounting determinations required to
be made pursuant hereto shall, unless expressly otherwise provided herein, be
made in accordance with GAAP. No change in the accounting principles used in the
preparation of any financial statement hereafter adopted by ITG shall be given
effect for purposes of measuring compliance with any provision of Article V or
VI unless the Borrowers, the Agent and the Required Lenders agree to modify such
provisions to reflect such changes in GAAP and, unless such provisions are
modified, all financial statements, Compliance Certificates and similar
documents provided hereunder shall be provided together with a reconciliation
between the calculations and amounts set forth therein before and after giving
effect to such change in GAAP.

11.4 Payments. The Agent may set up standards and procedures to determine or
redetermine the equivalent in Dollars of any amount expressed in any currency
other than Dollars and otherwise may, but shall not be obligated to, rely on any
determination made by any Credit Party or any L/C Issuer. Any such determination
or redetermination by the Agent shall be conclusive and binding for all
purposes, absent manifest error. No determination or redetermination by any
Secured Party or any Credit Party and no other currency conversion shall change
or release any obligation of any Credit Party or of any Secured Party (other
than the Agent and its Related Persons) under any Loan Document, each of which
agrees to pay separately for any shortfall remaining after any conversion and
payment of the amount as converted. The Agent may round up or down, and may set
up appropriate mechanisms to round up or down, any amount hereunder to nearest
higher or lower amounts and may determine reasonable de minimis payment
thresholds.

[Balance of page intentionally left blank; signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

BORROWERS:

INTERNATIONAL TEXTILE GROUP, INC. FEIN:   33-0596831 ITG HOLDINGS, INC. FEIN:  
20-0269226 BURLINGTON INDUSTRIES LLC FEIN:   20-0285091 CONE JACQUARDS LLC FEIN:
  20-0817123 CONE DENIM LLC FEIN:   20-0816375 CARLISLE FINISHING LLC FEIN:  
20-0816990 By:  

/s/ Karyl P. McClusky

Name:   Karyl P. McClusky Title:   Vice President and Treasurer of each of the
entities listed above Address for notices: c/o International Textile Group, Inc.
804 Green Valley Road, Suite 300 Greensboro, North Carolina 27408 Attn:  
General Counsel Facsimile:   336-379-6972 Address for Wire Transfers: Wachovia
Bank National Association Winston-Salem North Carolina

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AUTOMOTIVE SAFETY COMPONENTS

INTERNATIONAL, INC.

FEIN:   33-0611750

SAFETY COMPONENTS FABRIC

TECHNOLOGIES, INC.

FEIN:   58-2328795

AUTOMOTIVE SAFETY COMPONENTS

INTERNATIONAL LIMITED

FEIN:   n/a By:  

/s/ Stephen B. Duerk

Name:     Stephen B. Duerk Title:     President of each of the entities listed
above

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IN WITNESS WHEREOF, the following parties hereto have caused this Agreement in
their capacity as Credit Parties and not as Borrowers to be duly executed and
delivered by their duly authorized officers as of the day and year first above
written.

 

APPAREL FABRICS PROPERTIES, INC.

BURLINGTON APPAREL SERVICES COMPANY

BURLINGTON INDUSTRIES V, LLC

BWW CT, INC.

CLIFFSIDE DENIM LLC

CONE ADMINISTRATIVE AND SALES LLC

CONE INTERNATIONAL HOLDINGS II, INC.

INTERNATIONAL TEXTILE GROUP ACQUISITION GROUP LLC

BI PROPERTIES I, INC.

BURLINGTON INTERNATIONAL SERVICES COMPANY

BURLINGTON INDUSTRIES IV, LLC

BURLINGTON WORLDWIDE INC.

BILLC ACQUISITION LLC

CONE DENIM WHITE OAK LLC

CONE INTERNATIONAL HOLDINGS, INC.

CONE ACQUISITION LLC

WLR CONE MILLS IP, INC.

 

By:  

/s/ Karyl P. McClusky

Name:   Karyl P. McClusky Title:   Vice President and Treasurer of each of the
entities listed above

 

VALENTEC WELLS, LLC ASCI HOLDINGS GERMANY (DE), INC. ASCI HOLDINGS ASIA PACIFIC
(DE), LLC ASCI HOLDINGS CZECH (DE), INC. ASCI HOLDINGS U.K. (DE), INC. ASCI
HOLDINGS MEXICO (DE), INC.

 

By:  

/s/ Stephen B. Duerk

Name:  

Stephen B. Duerk

Title:   President of each of the entities listed above

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

AUTOMOTIVE SAFETY COMPONENTS

INTERNATIONAL GMBH & CO. KG

By:  

/s/ Stephen B. Duerk

Name:  

Title:  

AUTOMOTIVE SAFETY COMPONENTS

INTERNATIONAL VERWALTUNGS GMBH

  By:  

/s/ Stephen B. Duerk

Name:  

Title:  

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as the Agent, L/C Issuer, Swingline Lender and as a

Lender

By:

  /s/ Donald J. Cavanagh

Title:

  Its Duly Authorized Signatory Address for Notices:

General Electric Capital Corporation

201 Merritt 7

P.O. Box 5201

Norwalk, Connecticut 06851

Attn: International Textiles Group, Account Officer

Facsimile: (203) 956-4238 With a copy to:

General Electric Capital Corporation

401 Merritt 7

P.O. Box 5401

Norwalk, Connecticut 06851

Attn: General Counsel-Corporate Lending

Facsimile: (203) 956-4001 Address for payments:
Payment To: Deutsche Bank Trust Company Americas Account Name: GECC CFS CIF
Collection A/C ABA Number: 021-001-033 Account Number: 50-279-513 Reference: CFN
# 8683/ITG-SCI

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

UBS LOAN FINANCE LLC

By:

 

/s/ Richard L. Tavrow

 

Richard L. Tavrow

Title:

 

Director

By:

 

/s/ Irja R. Otsa

 

Irja R. Otsa

 

Associate Director

Address for notices:

677 Washington Boulevard

Stamford, CT 06901

Attn: Shaneequa Thomas

Phone: (203) 719-3385

Fax: (203) 719-3888

Lending office:

UBS Loan Finance LLC

677 Washington Boulevard

Stamford, CT 06901

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

WACHOVIA BANK, NATIONAL ASSOCIATION

By:

 

/s/ Todd Plosker

 

Todd Plosker

Title:

 

Director

 

Signed in Atlanta, GA

Address for notices: 110 E. Broward Blvd., Suite 2050

Ft. Lauderdale, FL 33301

Attn: Josephine Norris

Phone: (954) 467-2262

Fax: (954) 467-5520

Lending office:

Wachovia Bank, National Association

1133 6th Avenue

New York, NY 10036

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

THE CIT GROUP/COMMERCIAL SERVICES, INC.

By:

 

/s/ M. Kim Carpenter

 

M. Kim Carpenter

Title:

 

Vice President

Address for notices:

301 South Tryon Street

Two Wachovia Center, 25th Floor

Charlotte, NC 28202

Attn: Kim Carpenter

Phone: (704) 339-2957

Fax: (704) 339-2910

Lending office:

The CIT Group/Commercial Services, Inc.

134 Wooding Avenue

Danville, VA 24541

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

BANK OF AMERICA, NA

By:

 

/s/

Title:

 

Senior Vice President

Address for notices:

300 Galleria Parkway

Atlanta, GA 30339

Attn: John Yankauskas

Phone: (770) 857-2925

Fax: (770) 857-2947

Lending office:

Bank of America, NA

6100 Fairview Road

Charlotte, NC 28210