Exhibit 10.27

EXECUTION VERSION

THIRD AMENDED AND RESTATED LOAN AGREEMENT

by and among

Q.E.P. CO., INC.

THE ENTITIES LISTED ON SCHEDULE 1 HERETO

(collectively, “Borrower”),

BANK OF AMERICA, N.A.,

HSBC BANK USA, NATIONAL ASSOCIATION, successor-by-merger to

HSBC BANK USA,

(collectively, “Lenders,” and individually a “Lender”)

and

BANK OF AMERICA, N.A.,

AS AGENT FOR THE LENDERS

(“Agent”)

Dated as of December 30, 2008

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TABLE OF CONTENTS

 

     Page

ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS

   2

Section 1.1 Defined Terms

   2

Section 1.2 Terms Generally

   19

Section 1.3 Currency Equivalents Generally

   19

ARTICLE 2 AMOUNTS AND TERMS OF THE LOANS

   20

A. THE LOANS

   20

Section 2.1 Revolving Loan

   20

Section 2.2 Mortgage Loan

   22

Section 2.3 Interest Provisions

   23

Section 2.4 Notice and Manner of Borrowing; Conversion or Continuation of
Interest Rate

   25

Section 2.5 Excess Advances

   26

Section 2.6 Settlements

   26

Section 2.7 Method of Payment

   26

Section 2.8 Collection of Funds

   27

B. CERTAIN GENERAL PROVISIONS

   27

Section 2.9 Taxes

   27

Section 2.10 Computations

   29

Section 2.11 Additional Payments

   29

Section 2.12 Capital Adequacy

   30

Section 2.13 Certificate; Protection

   30

Section 2.14 Obligations Absolute

   30

C. ADDITIONAL CLAUSES FOR LIBOR RATE ADVANCES

   31

Section 2.15 Notice

   31

Section 2.16 Invalidity; Enforceability

   31

Section 2.16A Currency Equivalents

   31

Section 2.16B Continuity of Contract

   32

Section 2.16C Euro Amendments

   32

Section 2.16D Euro Indemnity

   32

D. MISCELLANEOUS

   32

Section 2.17 Use of Proceeds

   32

Section 2.18 Termination

   33

Section 2.19 Indemnification

   33

Section 2.20 Cross-Termination

   33

Section 2.21 Change of Lending Office

   33

Section 2.22 Replacement of Lenders

   34

E. LETTERS OF CREDIT

   34

Section 2.23 Letters of Credit

   34

Section 2.24 Letter of Credit Participations

   37

ARTICLE 3 CONDITIONS PRECEDENT

   39

Section 3.1 Conditions Precedent to Effectiveness

   39

Section 3.2 Conditions Precedent to All Advances, Etc.

   42

 

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ARTICLE 4 REPRESENTATIONS AND WARRANTIES

   42

Section 4.1 Incorporation, Good Standing, and Due Qualification

   42

Section 4.2 Corporate Power and Authority

   42

Section 4.3 Legally Enforceable Agreement

   43

Section 4.4 Financial Statements and Condition; Full Disclosure

   43

Section 4.5 Other Agreements; No Default

   44

Section 4.6 Litigation

   44

Section 4.7 No Defaults on Outstanding Judgments or Orders

   44

Section 4.8 Ownership and Liens

   44

Section 4.9 Subsidiaries

   44

Section 4.10 Operation of Business

   44

Section 4.11 Taxes

   45

Section 4.12 Debt

   45

Section 4.13 Capital Stock

   45

Section 4.14 Margin Securities

   45

Section 4.15 Fiscal Year

   45

Section 4.16 No Broker’s Fees, etc.

   45

Section 4.17 Governmental Consents and Regulatory Approvals

   45

Section 4.18 Eligible Accounts Receivable

   46

Section 4.19 Eligible Inventory

   46

Section 4.20 Environmental Compliance

   46

Section 4.21 Compliance with Laws

   46

Section 4.22 Events of Default

   46

Section 4.23 Labor Disputes and Acts of God

   47

Section 4.24 ERISA

   47

Section 4.25 Canadian Plans

   47

ARTICLE 5 AFFIRMATIVE COVENANTS

   49

Section 5.1 Maintenance of Existence

   49

Section 5.2 Maintenance of Records

   49

Section 5.3 Maintenance of Properties

   49

Section 5.4 Conduct of Business

   49

Section 5.5 Maintenance of Insurance

   49

Section 5.6 Compliance With Laws

   50

Section 5.7 Right of Inspection

   50

Section 5.8 Reporting Requirements

   50

Section 5.9 Eligible Accounts Receivable; Eligible Inventory

   52

Section 5.10 Collateral

   52

Section 5.11 Defend Collateral

   52

Section 5.12 Environmental Covenants

   53

Section 5.13 Operating Accounts

   53

Section 5.14 Permitted Acquisitions

   53

Section 5.15 Canadian Plans

   55

 

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ARTICLE 6 NEGATIVE COVENANTS

   55

Section 6.1 Liens

   55

Section 6.2 Debt

   56

Section 6.3 Mergers, Etc.

   57

Section 6.4 Leases

   57

Section 6.5 Sale and Leaseback

   57

Section 6.6 Restricted Payments

   57

Section 6.7 Sale of Assets

   57

Section 6.8 Investments

   57

Section 6.9 Guaranties, Etc.

   58

Section 6.10 Transactions With Affiliates

   58

Section 6.11 Subsidiaries

   58

Section 6.12 Fiscal Year

   58

Section 6.13 Accounting Methods

   58

Section 6.14 Inventory Locations

   58

Section 6.15 Foreign Companies

   59

ARTICLE 7 FINANCIAL COVENANTS

   59

Section 7.1 Leverage Ratio

   59

Section 7.2 Senior Debt to Trailing EBITDA Ratio

   59

Section 7.3 Fixed Charge Coverage Ratio

   59

Section 7.4 Certain Financial Terms

   60

Section 7.5 Exclusion from Calculations

   61

ARTICLE 8 SECURITY

   61

ARTICLE 9 EVENTS OF DEFAULT

   61

Section 9.1 Events of Default

   61

ARTICLE 10 THE AGENT

   64

Section 10.1 Appointment

   64

Section 10.2 Nature of Duties

   64

Section 10.3 Lack of Reliance on the Agent

   65

Section 10.4 Certain Rights of the Agent

   65

Section 10.5 Reliance

   65

Section 10.6 Indemnification

   65

Section 10.7 The Agent in its Individual Capacity

   66

Section 10.8 Resignation

   66

ARTICLE 11 GENERAL PROVISIONS

   67

Section 11.1 Amendments, Etc.

   67

Section 11.2 Notices, Etc.

   68

Section 11.3 No Waiver; Remedies

   69

Section 11.4 Successors and Assigns

   70

Section 11.5 Costs, Expenses, and Taxes; Indemnification

   71

Section 11.6 Right of Setoff

   72

 

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Section 11.7 Governing Law; Jurisdiction

   73

Section 11.8 Entire Agreement; Severability of Provisions

   74

Section 11.9 Estoppel Certificates

   74

Section 11.10 Waiver of Jury Trial and Consequential Damages

   74

Section 11.11 Replacement of the Note

   75

Section 11.12 Survival of Representations and Warranties

   75

Section 11.13 Further Assurances

   76

Section 11.14 Construction

   76

Section 11.15 Captions

   76

Section 11.16 Opinion Letter

   76

Section 11.17 Examination of Records

   76

Section 11.18 Releases

   76

Section 11.19 Counterparts

   77

Section 11.20 Subsequent Bankruptcy

   77

Section 11.21 Judgment

   77

Section 11.22 Maximum Rate of Interest

   77

Section 11.23 Payments Pro Rata

   78

Section 11.24 Domicile of Loans

   78

Section 11.25 Register

   79

Section 11.26 Confidentiality

   79

Section 11.27 Superseding Second Amendment and Restated Loan Agreement

   80

Section 11.28 Reaffirmation

   80

Section 11.29 Amendment and Restatement

   80

Schedules

Schedule 1 – List of Borrowers

Schedule 2 – Commitments and Lender Addresses

Schedule 2.23 – Existing Letters of Credit

Schedule 4.4 – Debt

Schedule 4.6 – Litigation

Schedule 4.8 – Title to Assets

Schedule 4.9 – Subsidiaries

Schedule 4.13 – Capital Stock

Schedule 4.20 – Environmental Compliance

Schedule 4.25 – Canadian Pension Plan

Schedule 6.1 – Liens Foreign Companies

Schedule 6.4 – Leases

Schedule 6.6 – Permissible Restricted Payments

Schedule 6.9 – Guaranties

Schedule 6.11 – Subsidiaries with Net Worth Exception

 

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Exhibits

Exhibit A – Form of Revolving Credit Note

Exhibit B – Mortgage Note

Exhibit C – Roberts Guaranty

 

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EXECUTION VERSION

THIRD AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”), dated as of
December 30, 2008, by and between Q.E.P. CO., INC., a Delaware corporation with
its chief executive office and principal place of business at 1001 Broken Sound
Parkway, NW, Suite A, Boca Raton, Florida 33487 (“QEP”), ROBERTS CONSOLIDATED
INDUSTRIES, INC., a Delaware corporation with its chief executive office and
principal place of business at 1001 Broken Sound Parkway, NW, Suite A, Boca
Raton, Florida 33487, ROBERTS HOLDING INTERNATIONAL, INC., a Delaware
corporation with its chief executive office and principal place of business at
1001 Broken Sound Parkway, NW, Suite A, Boca Raton, Florida 33487, ROBERTS
COMPANY CANADA LIMITED, a corporation amalgamated under the laws of the province
of Ontario, Canada with its chief executive office and principal place of
business at 2070 Steeles Avenue, Bramalea, Ontario, Canada L6T1A7, Q.E.P.
ZOCALIS HOLDING L.L.C., a Delaware limited liability company with a place of
business at 1001 Broken Sound Parkway, NW, Suite A, Boca Raton, Florida 33487,
BOIARDI PRODUCTS CORPORATION, a Florida corporation, with its chief executive
office and principal place of business at 1001 Broken Sound Parkway, NW,
Suite A, Boca Raton, Florida 33487, ROBERTS CAPITOL, INC., a Florida corporation
with a chief executive office and principal place of business at 1001 Broken
Sound Parkway, NW, Suite A, Boca Raton, Florida 33487, QEP-CALIFORNIA, INC., a
California corporation with its chief executive office and principal place of
business at 1001 Broken Sound Parkway, NW, Suite A, Boca Raton, Florida 33487
and Q.E.P. STONE HOLDINGS, INC., a Florida corporation with its chief executive
office and principal place of business at 1001 Broken Sound Parkway, NW,
Suite A, Boca Raton, Florida 33487 (all of the foregoing are hereinafter
collectively referred to as, the “Borrower”), BANK OF AMERICA, N.A., (“BOA”) and
HSBC BANK USA, NATIONAL ASSOCIATION, successor-by-merger to HSBC BANK USA
(“HSBC” and together with BOA, the “Lenders” and each individually a “Lender”),
and BANK OF AMERICA, N.A., with an office at 2150 Black Rock Turnpike,
Fairfield, Connecticut 06825, as agent for the Lenders, (hereinafter referred to
as the “Agent”).

W I T N E S S E T H:

Borrower, Fleet Capital Corporation, and HSBC Bank USA entered into a Second
Amended and Restated Loan Agreement dated as of November 14, 2002 (as amended
from time to time, the “Second Amended and Restated Loan Agreement”). Borrower
has requested, among other things, that BOA and HSBC continue to extend certain
credit accommodations to Borrower. In furtherance thereof, Borrower, the
Lenders, and the Agent desire to amend and restate the Second Amended and
Restated Loan Agreement in its entirety as hereinafter set forth.

NOW, THEREFORE, in consideration of these premises and the covenants and
agreements herein contained, Borrower, the Lenders and the Agent agree as
follows:

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ARTICLE 1

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Defined Terms. The following capitalized terms are used in this
Agreement with the respective meanings set forth in this Section 1.1. Terms
defined in the singular shall have the same meaning when used in the plural, and
vice versa.

“Account Debtor” means any Person who is or may become obligated to Borrower on
or under a Receivable.

“Affiliate” means any Person: (1) that, directly or indirectly, controls, is
controlled by, or is under common control with, Borrower; (2) that is a
shareholder, officer, or director of Borrower or of any Person that, directly or
indirectly, controls, is controlled by, or is under common control with,
Borrower, together with, in each case, their respective relatives (whether by
blood or marriage), heirs, executors, administrators, personal representatives,
successors, and assigns; and (3) any trust of which any of the foregoing Persons
is a settlor, trustee, or beneficiary. For the purposes of this definition, the
term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise;
and “controlled” shall have the meaning correlative thereto.

“Agent” means BOA, in its representative capacity as agent for the Lenders.

“Agreement” means this Third Amended and Restated Loan Agreement, as amended,
supplemented, or modified and in effect from time to time.

“Alternative Currency” means Euros, Canadian Dollars or any lawful currency
other than dollars mutually agreed to by the Agent and Borrower which is freely
transferable and convertible into dollars.

“Available Amount” means the maximum aggregate amount from time to time that
beneficiaries may draw under outstanding Letters of Credit, as such aggregate
amount may be reduced from time to time pursuant to the terms of the Letters of
Credit.

“BOA” means that term as defined in the preamble herein.

“Borrower” means that term as defined in the preamble herein.

“Borrowing Base” means, at the relevant time of reference, the amount which is
equal to (i) 85% of Eligible Accounts Receivable, plus (ii) the lesser of
(a) the sum of (1) 44% of Eligible Raw Materials Inventory of Q.E.P. Co. Inc.,
Roberts Consolidated Industries, Inc., Roberts Holding International, Inc.,
Roberts Company Canada Limited and Roberts Capitol, Inc., plus (2) 65% of
Eligible Finished Goods Inventory of Q.E.P. Co. Inc., Roberts Consolidated
Industries, Inc., Roberts Holding International, Inc., Roberts Company Canada
Limited and Roberts Capitol, Inc.; plus (3) 26% of Eligible Raw Materials
Inventory of

 

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Boiardi Products Corporation, plus (4) 51% of Eligible Finished Goods Inventory
of Boiardi Products Corporation, or (b) $17,000,000, provided that the Required
Lenders may, in their sole discretion, at any time and from time to time upon
three (3) Business Days’ prior written notice (unless a Default or an Event of
Default shall have occurred and be continuing, in which event no such notice
shall be required), adjust the advance rates set forth within this definition of
“Borrowing Base”.

“Borrowing Base Certificate” means that term as defined in Section 5.8(d).

“Borrowing Request” means that term as defined in Section 2.4.

“Business Day” means a day other than a Saturday, Sunday, or other day on which
banks in the States of Connecticut, Florida or New York are required or
authorized by law to be closed provided, however, that when used in connection
with a LIBOR Rate Advance, the term shall also exclude any day on which banks
are not open for dealings in dollar deposits in the London interbank market.

“Canada Property” means that term as defined in Section 2.2(b).

“Canadian Plan” means any pension or other employee benefit plan in respect of
its employees and former employees in Canada and which is: (a) a plan maintained
by Borrower or any of its Subsidiaries or Affiliates; (b) a plan to which
Borrower or any of its Subsidiaries or Affiliates contributes or is required to
contribute; (c) a plan to which Borrower or any of its Subsidiaries or
Affiliates was required to make contributions at any time during the five
(5) calendar years preceding the date of this Agreement; or (d) any other plan
with respect to which Borrower or any of its Subsidiaries or Affiliates has
incurred or may incur liability, including contingent liability either to such
plan or to any Person, administration or Governmental Authority, including the
FSCO.

“Capital Assets” means that term as defined in Section 7.4(a).

“Capital Expenditures” means that term as defined in Section 7.4(b).

“Capital Lease” means all leases of property (whether real, personal, or mixed)
which have been or should be capitalized on the books of the lessee in
accordance with GAAP.

“Collateral” means all property of Borrower now or hereafter subject to the
Liens granted in the Security Documents.

“Collateral Assignment of Patents and Patent Applications” means those certain
(i) Amended and Restated Collateral Assignment of Patent and Patent Application
agreements by and between Bank of America, N.A. as agent and each of (x) Roberts
Consolidated Industries, Inc., (y) Roberts Holding International, Inc., and
(z) Roberts Company Canada Limited, and that certain Collateral Assignment of
Patent and Patent Application by and between Bank of America, N.A. as agent and
Boiardi Products Corporation, each dated as of the date hereto.

 

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“Collateral Assignment of Permits, Approvals and Licenses” means those certain
Amended and Restated Collateral Assignment of Permits, Approvals and Licenses
agreements by and between Bank of America, N.A. as agent and each of (i) Roberts
Consolidated Industries, Inc., (ii) Roberts Holding International, Inc., and
(iii) Roberts Company Canada Limited, each dated as of the date hereof.

“Collateral Assignment of Trademarks” means those certain (i) Amended and
Restated Collateral Assignment of Trademarks and Security Agreements by and
between Bank of America, N.A, as agent and each of (x) Roberts Consolidated
Industries, Inc., (y) Roberts Holding International, Inc., and (z) Roberts
Company Canada Limited; and (ii) Collateral Assignment of Trademarks and
Security Agreements by and between Bank of America, N.A, as agent and (y) Q.E.P.
Company, Inc., and (z) Boiardi Products Corporation, each dated as of the date
hereof.

“Commitment” shall mean any of the commitments of any Lender, i.e., either a
Mortgage Loan Commitment or a Revolving Loan Commitment.

“Contaminant” means any pollutants, hazardous or toxic substances or wastes or
contaminated materials including but not limited to oil and oil products,
asbestos, asbestos containing materials, urea formaldehyde foam insulation,
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls, flammables, explosives, radioactive materials,
laboratory wastes, biohazardous wastes, chemicals, elements, compounds or any
other materials and substances (including materials, substances or things which
are composed of or which have as constituents any of the foregoing substances),
which are or may be subject to regulation under, or the Release of which or
exposure to which is prohibited, limited or regulated under any Environmental
Law.

“Credit Availability” means, at the relevant time of reference, the dollar for
dollar equivalent amount equal to in the case of the Revolving Loan, the lesser
of (a) the Borrowing Base and (b) the Revolving Loan Commitment, less, in each
case, the sum of the aggregate outstanding principal amount of all Revolving
Advances plus the Available Amount plus any unpaid Reimbursement Obligations.

“Current Maturities of Long Term Debt” means that term as defined in
Section 7.4(c).

“Debt”, as applied to any Person, means: (1) indebtedness or liability of such
Person for borrowed money, or with respect to deposits or advances of any kind,
or for the deferred purchase price of property or services (including trade
obligations); (2) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (3) all obligations of such Person under
conditional sale or other title retention agreements relating to property or
assets purchased by such Person, (4) all obligations of such Person for the
deferred purchase price of property or services (including trade obligations);
(5) all obligations of such Person as lessee under Capital Leases; (6) current
liabilities of such Person in respect of the present value of unfunded vested
benefits under any Plan; (7) obligations of such Person under letters of credit,
bankers acceptances, or comparable arrangements; (8) obligations of such Person
arising under acceptance facilities; (9) guaranties, endorsements (other than
for collection or deposit in the ordinary course of

 

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business), and other contingent obligations of such Person to purchase, to
provide funds for payment, to supply funds to invest in any Persons, or
otherwise to assure a creditor against loss; (10) all obligations of such Person
secured by any Lien on any of such Person’s assets or property, whether or not
the obligations have been assumed, and (11) all obligations of such Person in
respect of interest rate protection agreements, foreign currency exchange
agreements or other interest or exchange rate hedging arrangements, provided
that any net positive amount owed to such Person shall not be deemed an
obligation. The Debt of any Person shall include the Debt of any partnership in
which such person is a general partner.

“Default” means an event or condition the occurrence or existence of which, with
the lapse of time or the giving of a required notice, or both, would become an
Event of Default.

“Default Rate” means that rate of interest that is equal to the sum of 2% plus
the rate of interest otherwise applicable to such Loan under the terms of this
Agreement.

“Defaulting Lender” shall mean any Lender with respect to which a Lender Default
is in effect.

“Drawdown Date” means the date on which any Revolving Advance or the Mortgage
Loan is made.

“Earnings Before Interest, Taxes, Depreciation and Amortization” means that term
as defined in Section 7.4(d).

“Eligible Accounts Receivable” means, at the time of calculation, bona fide
outstanding Receivables of Borrower, in which the Agent has a first priority
perfected security interest, which satisfy all of the following requirements:

(A) It is owing to Borrower and is subject to a validly perfected security
interest in favor of the Agent having priority over any and all other liens or
encumbrances thereon;

(B) It arises from the sale or lease of goods by Borrower or the rendering of
services by Borrower which have been shipped or delivered to an Account Debtor
(i) on an absolute sale basis and not on consignment, on approval, or on a sale
or return basis or subject to any other repurchase or return agreement, and
(ii) on an open receivable basis, which is not evidenced by chattel paper or an
instrument of any kind; provided that in any case, no material part of the
subject goods or services has been returned, rejected, lost or damaged, and the
Account Debtor is not insolvent or the subject of any bankruptcy or insolvency
proceeding of any kind;

(C) If the Account Debtor is located outside the United States or, subject to
subparagraph (K) of this definition, Canada, (i) the subject goods shall have
been shipped after receipt, by Borrower from the Account Debtor, of (a) an
irrevocable letter of credit, which letter of credit shall have been issued or
confirmed by a financial institution acceptable to the Agent and shall be in
form and substance acceptable to the Agent and shall be transferred, assigned or
otherwise made payable to the Agent in form and substance

 

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satisfactory to the Agent, or (b) credit insurance in form and substance and
issued by an insurer satisfactory to the Agent, and (ii) the Receivable shall be
payable in the full amount of the face value of the Receivable in United States
dollars and/or Canadian Dollars for Roberts Company Canada Limited;

(D) It is a valid, legally enforceable obligation of the Account Debtor
thereunder and is not and may not become subject to any offset, counterclaim or,
in the opinion of the Agent, contra or other defense on the part of such Account
Debtor or to any claim on the part of such Account Debtor denying liability
thereunder; provided, however, that if it is subject to any such offset,
defense, or claim, it shall be ineligible to the extent of such offset, defense
or claim;

(E) It is subject to no lien or security interest whatsoever (including purchase
money security interests), except for the security interest of the Agent
hereunder and under the other Loan Documents and liens or security interests
which have been expressly subordinated to the security interests of the Agent in
form and substance satisfactory to the Agent;

(F) It is evidenced by an invoice or other proof of delivery in form acceptable
to the Agent;

(G) Except as specifically approved in writing by the Agent, it has not remained
unpaid for a period exceeding the lesser of (i) ninety (90) days after the date
of invoice, or (ii) sixty (60) days after the due date thereof;

(H) It is not owing from an Account Debtor from whom 50% or more of the amounts
owing Borrower have remained unpaid for a period exceeding the lesser of
(i) ninety (90) days from the date of invoice, or (ii) sixty (60) days after the
due date thereof;

(I) It does not arise out of transactions with an employee, officer, director,
Affiliate, or Subsidiary of Borrower;

(J) It does not arise out of a transaction with, and is not owing from, the
United States of America, Canada or any other foreign country or sovereign
state, or of any state, province, territory, municipality or other political
subdivision thereof, or of any department, agency, public corporation or other
instrumentality thereof in an amount in excess of $1,000, unless Borrower has
complied with the Federal Assignment of Claims Act, the Financial Administration
Act (Canada), or other applicable law, when applicable;

(K) It is not owing from an Account Debtor located in any jurisdiction in which
Borrower has not complied with any laws which might restrict the ability of
Borrower to collect such Receivables;

(L) The Agent has determined in its sole discretion that it is an Eligible
Account Receivable; and

(M) It is not owed (i) by The Home Depot, Inc. and its affiliates or (ii) by
Lowe’s Companies, Inc. and its affiliates, in each

 

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case, representing any amount (after exclusion of any amounts that are otherwise
referred to and included in clauses (A) through (L) of this definition) in
excess of the percentage of the amount of all Eligible Accounts Receivable set
forth below (the “Concentration Percentage”) based on the investment ratings of
those Account Debtors by either Moody’s Investors Service or Standard & Poor’s:

Investment Rating of Account Debtor

 

Moody’s Investors Service

  

Standard & Poor’s

   Concentration
Percentage  

Baa2 or higher

  

BBB or higher

   70 %

Baa3 or higher but less than Baa2

  

BBB- or higher but less than BBB

   65 %

Less than Baa3

  

Less than BBB-

   55 %

Provided, however, that in the event of a change in the investment rating either
of The Home Depot, Inc. or of Lowe’s Companies, Inc. which would result in a
change to the Concentration Percentage applicable to such entity and its
affiliates, such change in the Concentration Percentage shall (i) if such change
would result in an increase to the Concentration Percentage, be effective on the
date of such change in investment rating, and (ii) if such change would result
in a decrease to the Concentration Percentage, not be effective until the date
that is sixty (60) calendar days after such change in investment rating.

With respect to the Receivables, Borrower warrants and represents to the Agent
and Lenders that, unless otherwise indicated in writing by Borrower: (A) They
are genuine, are in all respects what they purport to be, are not evidenced by a
judgment and are only evidenced by one, if any, executed original instrument,
agreement, contract or document, which has been delivered to the Agent; (B) They
represent undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto; (C) The amounts
of the face value shown on any schedule of accounts or accounts receivable aging
report provided to the Agent, and all invoices and statements delivered to the
Agent with respect to any Receivable are actually and absolutely owing to
Borrower and are not contingent for any reason; (D) There are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Borrower
has not made any agreement with any Account Debtor thereunder for any deduction
therefrom, except a discount or allowance allowed by Borrower in the ordinary
course of its business for prompt payment; (E) There are no facts, events or
occurrences which in any way impair the validity or enforcement thereof or tend
to reduce the amount payable thereunder from the amount of the invoice face
value with respect to any Eligible Accounts Receivable, and on all contracts,
invoices and statements delivered to the Agent with respect thereto; (F) To the
best knowledge of Borrower’s officers, directors and key employees (including,
without limitation, any sales personnel dealing with any such Account Debtor),
all Account Debtors, under any Eligible Accounts Receivable, (i) had the
capacity to contract at the time any contract or other document giving rise to
the Receivable was executed, (ii) are solvent, and (iii) are not the subject of
a bankruptcy or insolvency proceeding of any kind; (G) The goods

 

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giving rise thereto are not, and were not at the time of the sale thereof,
subject to any lien, claim, encumbrance or security interest, except those of
the Agent, those terminated prior to the date hereof or those subordinate to the
Agent’s security interest and Lien; (H) Borrower has no knowledge of any fact or
circumstance which would materially impair the validity or collectability
thereof; (I) To the best of Borrower’s knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor thereunder
which might result in any material adverse change in the financial condition of
such Account Debtor; and (J) They have not been pledged, assigned or transferred
to any other Person.

In the event of any dispute as to whether a Receivable is or has ceased to be an
Eligible Account Receivable, the decision of the Agent shall control.

“Eligible Finished Goods Inventory” means that portion of Eligible Inventory
which consists of finished goods.

“Eligible Inventory” means that portion of the inventory of Borrower consisting
of raw materials normally and currently used in Borrower’s business,
work-in-process and finished goods held for sale by Borrower, normally and
currently saleable in the ordinary course of Borrower’s business, and which at
all times pertinent hereto is of good and merchantable quality, free from
defects, as to which the Agent has a perfected first priority Lien, and which is
located at the locations set forth in the Security Agreement, and as to which
Borrower has satisfied all terms, conditions, warranties and representations of
this Agreement and the other Loan Documents; but Eligible Inventory does not
include any of the following: (a) catalogs and other promotional materials of
any kind; (b) used items; (c) any returned items (unless returned in a saleable
form and any account receivable arising from the sale of such returned item has
been reversed); (d) any damaged, defective or recalled items; (e) any obsolete
items; (f) any items used as demonstrators, prototypes or salesmen’s samples;
(g) any items of inventory which have been consigned to Borrower or as to which
a Person claims a Lien; (h) any items of inventory which have been consigned by
Borrower to a consignee; (i) packing and shipping materials; (j) inventory
located on premises leased by Borrower from a landlord with whom Agent has not
entered into a landlord’s waiver on terms satisfactory to Agent in its
reasonable judgment; (k) inventory in transit; (l) spare parts; and
(m) inventory which in the reasonable judgment of Agent is considered to be
slow-moving or otherwise not merchantable. Eligible Inventory shall be valued at
the lower of (a) cost, (b) market value, or (c) the valuation consistent with
that employed in the preparation of the financial statements of Borrower
referred to in Section 4.4 hereof.

“Eligible Raw Materials Inventory” means that portion of Eligible Inventory
which consists of raw materials.

“Eligible Transferee” shall mean and include a commercial bank, an insurance
company, a finance company, a financial institution, any fund that invests in
loans or any other “accredited investor” (as defined in Regulation D of the
Securities Act).

 

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“Enforcement Action” means any action, proceeding or investigation
(administrative or judicial, civil or criminal) instituted or threatened by U.S.
Environmental Protection Agency, or any other federal, state, provincial,
territorial, municipal, local or foreign governmental agency related to any
alleged or actual violation of any Environmental Law with respect to any
property owned or leased by Borrower and/or any business conducted thereon,
including, but not limited to, actions seeking Remediation, the imposition or
enforcement of liability pursuant to any Environmental Law and compliance with
any Environmental Law. Enforcement Action shall also include any similar actual
or threatened action by any private party pursuant to any Environmental Law.

“Environmental Laws” means any and all present and future: United States and
Canadian federal, state, provincial, territorial, municipal, local and laws,
statutes, ordinances, rules, and regulations, relating to protection of human
health and the environment from Contaminants including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, (CERCLA), 42 USC §9601 et seq.; the Resource Conservation and Recovery
Act, as amended, (RCRA), 42 USC §6901 et seq. the Clean Air Act, as amended, 42
USC §7401 et seq.; the Federal Water Pollution Control Act, as amended
(including but not limited to as amended by the Clean Water Act), 33 USC §1251
et seq.; The Toxic Substances Control Act, as amended (TSCA), 15 USC §2601 et
seq.; the Emergency Planning and Community Right-to-Know Act (also known as SARA
Title III), as amended, (EPCRA), 42 USC §11001 et seq.; the Safe Drinking Water
Act, as amended, 42 USC §300(f) et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, as amended (FIFRA), 7 USC §136 et seq.; the Occupational Safety
and Health Act, as amended, (OSHA), 29 USC §651 et seq.; the Endangered Species
Act, as amended, 16 USC §1531 et seq.; the National Environmental Policy Act, as
amended, (NEPA), 42 USC §4321 et seq.; the Rivers and Harbors Act of 1899 33 USC
§401 et seq.; state provincial, territorial, municipal, local or foreign laws,
rules and regulations similar to or addressing similar matters as the foregoing
laws; laws, rules and regulations governing underground or above-ground storage
tanks; laws, rules and regulations imposing liens for response costs or costs of
other Remediation, whether or not those liens have a higher priority than
existing liens; laws, rules and regulations conditioning transfer of property
upon a form of negative declaration or other approval of a Governmental
Authority of the environmental condition of a property; laws, rules and
regulations requiring the disclosure of conditions relating to Contaminants in
connection with transfer of title to or interest in property law; laws, rules
and regulations requiring notifying of any government entity with regard to a
Release of any Contaminant; conditions or requirements imposed in connection
with any permits; government orders and demands and judicial orders pursuant to
any of the foregoing; laws, rules and regulations relating to the Release, use,
treatment, storage, disposal, transportation, transfer, generation, processing,
production, refining, control, management, or handling of Contaminants; any and
all other laws, rules, regulations, guidance, guidelines and common law of any
governmental entity relating to the protection of human health or the
environment from Contaminants. The reference in this paragraph to state laws
specifically includes, but is not limited to, the applicable laws of the States
of Connecticut, Florida, California, Missouri and Georgia.

 

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“Equipment” means all “Equipment” as that term is defined in the UCC, of
Borrower, whether presently owned or hereafter acquired, and including, without
limitation, machinery, furniture, furnishings, and fixtures, and any and all
goods used or bought for use in or being used for use in the conduct of
Borrower’s business and all goods used or bought for use in business which are
not included within the definition of Inventory, and all accessions and
additions thereto, replacements therefor.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations and published interpretations thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
which, together with Borrower, would be treated as a single employer under
Section 4001 of ERISA.

“Event of Default” means any of the events specified in Section 9.1 of this
Agreement.

“Excess Cash Flow” shall mean, for any period, the difference arrived at by
subtracting (i) the sum of Current Maturities of Long Term Debt plus Interest
Expense from (ii) Earnings Before Interest, Taxes, Depreciation and Amortization
minus the sum of unfinanced capital expenditures, taxes and dividends.

“Existing Letter of Credit” means each letter of credit previously issued for
the account of Borrower or any Subsidiary that (i) is outstanding on the date
hereof and (b) is listed on Schedule 2.23.

“Foreign Companies” shall mean Roberts Japan KK, Roberts U.K. Limited, Roberts
Deutschland GmbH, Roberts S.A.R.L., Roberts Holland B.V., Q.E.P. Holding B.V.,
Q.E.P. Aust. Pty. Limited, Q.E.P. Chile Limitada, Q.E.P. Co., New Zealand
Limited, Zocalis S.R.L., Q.E.P. Co. U.K. Limited, Vitrex Limited, Q.E.P. Roberts
Mexicana, S.A. de C.V. P.R.C.I. SA, Q.E.P. HK Limited, Q.E.P. Co. Aust. Pty.
Limited, Roberts Distribution S.A.R.L., Q.E.P. Roberts Ireland Limited, Harmony
Depot Shanghai Trading Company Limited, Q.E.P. Holdings Chile Limitada and
Q.E.P. Peru S.A.C.

“FSCO” means the Financial Services Commission of Ontario and any Person
succeeding to the functions thereof and includes the Superintendent under such
statute and any other Governmental Authority empowered or created by the
Supplemental Pension Plans Act (Québec) or the Pension Benefits Act (Ontario) or
any Governmental Authority of any other Canadian jurisdiction exercising similar
functions in respect of any Canadian Plan and any Governmental Authority
succeeding to the functions thereof.

“GAAP” means (i) when used in general, other than as provided below, generally
accepted accounting principles in the United States as in effect from time to
time, applied on a consistent basis and, (ii) when used in Article 7, whether
directly or indirectly through reference to a capitalized term used or defined
therein, principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on February 28, 2008.

 

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“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.

“Guaranty” means any obligation, contingent or otherwise, of any Person
guaranteeing or having the economic effect of guaranteeing any Debt of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Debt, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Debt of the payment of
such Debt, or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt; provided, however, that the term
Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business.

“Head Office” means the principal office of the Agent at 200 Glastonbury
Boulevard, Glastonbury, Connecticut.

“Interest Expense” means that term as defined in Section 7.4(e) of this
Agreement.

“Interest Period” means in the case of any Revolving Advance or the Mortgage
Loan, other than a Prime Rate Advance, the one, two, three, or six month period
selected by Borrower pursuant to this Agreement. Each Interest Period shall
commence on the date such advance is made or the date of a subsequent interest
rate election, as the case may be, and shall end on the date as Borrower may
select in accordance with the above, provided, that:

 

  (i) any Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next or succeeding Business Day unless, in the
case of a LIBOR Rate Advance only, such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day;

 

  (ii) each Interest Period which commences before and would otherwise end after
the Maturity Date, shall end on the Maturity Date;

 

  (iii) any Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end, shall (subject to clause (i) above) end on the last day of
such calendar month;

 

  (iv) each Interest Period which commences during an Interest Period in effect
for outstanding LIBOR Rate Advances shall end on the last day of such Interest
Period then in effect for LIBOR Rate Advances; and

 

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  (v) all Interest Periods which commence on the same date shall end on the same
date.

“Inventory” means all “Inventory” as that term is defined in the UCC, including,
without limitation, any and all goods, merchandise or other personal property,
wheresoever located and whether or not in transit, now owned or hereafter
acquired by Borrower in the normal course of business, which is or may at any
time be held for sale or lease, or furnished or to be furnished under any
contract or service or held as raw materials, work in process, supplies or
materials used or consumed in Borrower’s business, and all such property the
sale or other disposition of which has given rise to accounts, chattel paper,
documents, or instruments (as such terms are defined in the Uniform Commercial
Code) and which has been returned to or repossessed or stopped in transit by
Borrower.

“Issuing Lender” means BOA. BOA may, in its discretion, arrange for one or more
Letters of Credit to be issued by one or more of its Affiliates or branches,
provided in each case that Borrower does not reasonably object based on such
Affiliate’s or branch’s creditworthiness, and the term Issuing Lender shall
include any such Affiliate or branch with respect to any Letters of Credit
issued by it.

“Lender Default” shall mean (i) the refusal (which has not been retracted) or
the failure of a Lender to make available its portion of any Borrowing in
violation of the requirements of this Agreement or to fund its portion of any
unreimbursed payment under Sections 2.23 or 2.24 or (ii) a Lender having
notified in writing the Agent that such Lender does not intend to comply with
its obligations under Section 2.1 or 2.2.

“Lender Parties” means that term as defined in Section 11.5(b).

“Lenders” means BOA and HSBC, or any successors, assigns or holders of all or
any part of the obligations of Borrower.

“Letter of Credit Application” means that term as defined in Section 2.23(b) of
this Agreement.

“Letters of Credit” means, collectively, any letters of credit issued, extended
or renewed by the Issuing Lender for the account of Borrower pursuant to this
Agreement, including existing Letters of Credit.

“LIBOR” shall mean, as applicable to any LIBOR Rate Advance, the rate per annum
(rounded upward, if necessary, to the nearest  1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such LIBOR Rate Advance which appears on the
Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two
(2) London Banking Days preceding the first day of such LIBOR Rate Advance;
provided, however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, the LIBOR rate shall be
the rate (rounded upwards as described above, if necessary) for deposits in U.S.
dollars for a period substantially equal to the interest period on the Reuters
Page

 

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“LIBO” (or such other page as may replace the LIBO Page on that service for the
purpose of displaying such rates), as of 11:00 a.m. (London Time), on the day
that is two (2) London Banking Days prior to the beginning of such interest
period. If both the Telerate and Reuters systems are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Rate Advance which
are offered by four (4) major banks in the London interbank market at
approximately 11:00 a.m. (London time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Rate Advance as selected by
the Agent. The principal London office of each of the major London Banks so
selected will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such LIBOR Rate Advance offered by
major banks in New York City at approximately 11:00 a.m. (New York City time),
on the day that is two (2) London Banking Days preceding the first day of such
LIBOR Rate Advance. In the event that the Agent is unable to obtain any such
quotation as provided above, it will be determined that LIBOR pursuant to a
LIBOR Rate Advance cannot be determined. In the event that the Board of
Governors of the Federal Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of the Agent, any Lender or any Affiliate thereof then
for any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage.

“LIBOR Rate Advance” means any Revolving Advance or principal portion of any
other Loan that bears interest with reference to LIBOR.

“LIBOR Spread” means that term as defined in Section 2.3(a).

“Lien” means any interest in property securing an obligation owed to, or a claim
by, a Person other than the owner of the property, whether such interest is
based on common law, statute, or contract, and including but not limited to the
security interest lien arising from a security agreement, mortgage,
hypothecation, encumbrance, pledge, collateral assignment, conditional sale or
trust receipt, or a lease, consignment, or bailment for security purposes.

“Loans” means the Revolving Advances and the Mortgage Loan made or to be made
pursuant to this Agreement.

“Loan Documents” means this Agreement, the Notes, the Security Documents and all
other promissory notes, guaranties, mortgages, security documents, deeds to
secure debt, deeds of trust, pledges, assignments, contracts, negative pledges,
powers of attorney, landlord waivers, environmental indemnity agreements, trust
account agreements, and written matters, whenever executed and delivered to
Lender, with respect to the transactions contemplated by this Agreement.

“Lockbox Account” means that term as defined in Section 2.8.

 

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“Lockbox Agreement” means the lockbox agreement from time to time in effect
among Borrower and the Agent.

“London Banking Day” shall mean any date on which commercial banks are open for
business in London, England.

“Make-Whole Premium” means the present value of the interest expense incurred by
a Lender in funding the portion of indebtedness evidenced by the applicable Note
which bears interest at the per annum rate of interest for the Interest Period
then in effect, less the present value of the interest on the reinvested
principal prepaid for the remainder of the Interest Period then in effect, at
the Reinvestment Rate, plus any other expenses that Lender may sustain or incur
by reason of the prepayment; provided that any negative value resulting from the
foregoing calculation will be disregarded.

“Material Adverse Effect” means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, results in a
material adverse change in, or a material adverse effect upon, any of (i) the
condition (financial or otherwise), operations, business, properties or
prospects of Borrower and its Subsidiaries taken as a whole; (ii) the rights and
remedies of the Agent hereunder or under any of the other Loan Documents, or the
ability of Borrower to perform its respective Obligations; or (iii) the
legality, validity or enforceability of this Agreement or any of the other Loan
Documents.

“Maturity Date” means May 20, 2011, or earlier as set forth in this Agreement.

“Mortgage Loan” means the term as defined in Section 2.2(a).

“Mortgage Loan Commitment” means, for each Lender, the amount set forth opposite
such Lender’s name in Schedule 2 directly below the column entitled “Mortgage
Loan Commitment,” and in the aggregate, as set forth in Schedule 2 below such
column in the row entitled “Total”, as same may be adjusted from time to time as
a result of assignments to or from such Lender pursuant to Section 11.4.

“Mortgage Note” means the term as defined in Section 2.2(c).

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA and that is covered by Title IV of ERISA to which
Borrower or any ERISA Affiliate is making or accruing an obligation to make
contributions or has within any of the preceding five plan years made or accrued
an obligation to make contributions.

“Negative Pledge Agreement” means that certain Negative Pledge Agreement by and
among BOA, as agent for itself and HSBC, and Roberts Japan KK, Roberts
Deutschland GmbH, Q.E.P. Holdings B.V., Q.E.P. Chile Limitada, Zocalis S.R.L.,
Q.E.P. Roberts Mexicana, S.A. de C.V., Harmony Depot Shanghai Trading Company
Limited, Roberts Holland B.V., and Q.E.P. Co., HK Limited dated May 21, 2008.

 

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“Non-Defaulting Lender” shall mean and include each Lender, as the case may be,
other than a Defaulting Lender.

“Notes” means collectively the Revolving Credit Notes and the Mortgage Notes.

“Obligations” means all present and future indebtedness and other liabilities of
Borrower owing to the Agent or any Lender or any of their respective successors,
transferees or assigns, of every type and description, whether or not evidenced
by any note, guaranty or other instrument, arising under or in connection with
this Agreement, the Notes or any other Loan Document, whether or not for the
payment of money, 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. The term includes, without limitation,
all principal, interest, charges, expenses, fees, attorneys’ fees and
disbursements and any other sum chargeable to Borrower under this Agreement or
any other Loan Document.

“Overadvance” means that term as defined in Section 2.1(b).

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

“Permitted Acquisition” shall mean the acquisition by Borrower or any of its
Subsidiaries of assets constituting a business, division or product line of any
Person not already a Subsidiary of Borrower or any of its Subsidiaries or of not
less than 80% (or a lesser percentage to the extent that the laws of any
jurisdiction require a minimum percentage ownership by a resident of such
jurisdiction, such minimum, the “Local Owned Stock”) of the capital stock or
other equity interests of any such Person, provided, that (A) the consideration
paid by Borrower or any Subsidiary consists solely of cash, the issuance of
common stock of Borrower, the issuance of Debt otherwise permitted in
Section 5.14 and the assumption/acquisition of any Permitted Acquired Debt
(calculated in accordance with GAAP) relating to such business, division,
product line or Person which is permitted to be assumed/acquired and to remain
outstanding in accordance with the requirements of Section 5.14, (B) those
acquisitions that are structured as stock acquisitions shall be effected through
a purchase of not less than 80% (minus, if applicable, the Local Owned Stock) of
the capital stock or other equity interests of such Person by Borrower or such
Subsidiary or through a merger between such Person and a Subsidiary of Borrower,
so that after giving effect to such purchase or merger not less than 80% (minus,
if applicable, the Local Owned Stock) of the capital stock of the surviving
corporation of such purchase or merger is owned by Borrower or any Subsidiary of
Borrower, (C) in the case of the acquisition of not less than 80% (minus, if
applicable, the Local Owned Stock) of the capital stock or other equity
interests of any Person, such Person (the “Acquired Person”) shall own no
capital stock or other equity interests in any other Person unless the Acquired
Person owns 100% (minus, if applicable, the Local Owned Stock) of the capital
stock or other equity interests of such other Person, (D) substantially all of
the business, division or product line acquired pursuant to the respective

 

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Permitted Acquisition, or the business of the Person acquired pursuant to the
respective Permitted Acquisition and its Subsidiaries, is in same line of
business as Borrower or such Subsidiary (E) after giving effect to such
acquisition, Borrower or such Subsidiary has the power to elect at least a
majority of the directors or managers of such Person and (F) all applicable
requirements of Section 5.14 applicable to the Permitted Acquisitions are
satisfied. Notwithstanding anything to the contrary contained in the immediately
preceding sentence, an acquisition which does not otherwise meet the
requirements set forth in the above definition of “Permitted Acquisition” shall
constitute a Permitted Acquisition if, and to the extent, the Required Lenders
agree in writing that such acquisition shall constitute a Permitted Acquisition
for purposes of this Agreement.

“Person” means a human being, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
organization, joint venture, institution, Governmental Authority, or other
entity of any nature whatsoever.

“Plan” means any plan established, maintained, or to which contributions have
been made by Borrower or any ERISA Affiliate for the benefit of any of their
employees.

“Pledge Agreement” means the following agreements: (i) Amended and Restated
Stock Pledge Agreement dated May 1, 2008 by and among Q.E.P. Co., Inc., Roberts
Consolidated Industries, Inc., Marion Tool Corporation, Q.E.P. Zocalis Holding
L.L.C., Q.E.P Aust. Pty. Limited, Q.E.P. Co. U.K. Limited, Vitrex Limited,
Q.E.P. Holding B.V., Roberts Holland B.V., and Roberts S.A.R.L., (ii) Share
Charge between Roberts Holland B.V and Fleet Capital Corporation dated March 5,
2002; and (iii) Debenture between FCC and Vitrex Limited dated March 31, 2005,
each as amended, restated or in effect from time to time.

“Prime Rate” means the Agent’s annual rate of interest designated by the Agent
from time to time as a standard for setting loan rates, which rate shall not be
construed as the Agent’s lowest or most favorable rate on loans.

“Prime Rate Advance” means any Revolving Advance or portion of any other Loan
which bears interest with reference to the Prime Rate.

“Prohibited Transaction” means any transaction set forth in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1954, as amended from time to
time.

“Property” means all real property with improvements thereon owned or leased by
Borrower in the United States or Canada.

“Q.E.P.” means Q.E.P. Co., Inc.

“Receivable” means the right to payment for goods sold or leased or for services
rendered by Borrower.

“Reimbursement Obligations” means that term as defined in Section 2.23(e).

 

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“Reinvestment Rate” means the rate available to Lender as determined by Lender
in its sole discretion for the investment of principal amounts prepaid pursuant
to Sections 2.1(d) and/or 2.2(e) in U.S. Treasury obligations or domestic or
eurodollar options as offered by Lender in its sole discretion for the
approximate remaining term of the Interest Period then in effect as of the date
of such prepayment.

“Release” means any spilling, leaking, migrating, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment of any Contaminant.

“Reportable Event” means any of the events set forth in Section 4043 of ERISA.

“Required Lenders” means BOA and HSBC.

“Reserve Percentage” means for any day with respect to a LIBOR Rate Advance, the
maximum rate (expressed as a decimal) at which any lender subject thereto is
required to maintain reserves (including all basic, supplemental, marginal or
other reserves) under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor or similar regulations relating to such reserve
requirements) against “Eurocurrency Liabilities” (as that term is used in
Regulation D), if such liabilities were outstanding.

“Restricted Payment” means (i) any cash or property dividend, distribution or
payment of any kind, direct or indirect, by Borrower or any of its Subsidiaries
to any Person who now or in the future may hold an equity interest in Borrower
or any of its Subsidiaries, whether evidenced by a security or not, other than
stock options or regular compensation or bonuses paid to employees or directors
of Borrower and its Subsidiaries in the ordinary course of business and
consistent with past practices, (ii) any payment on account of the purchase,
redemption, retirement or other acquisition for value of any capital stock of
Borrower or its Subsidiaries, or any other payment or distribution made in
respect thereof, either directly or indirectly, and (ii) any management or
similar fees paid or payable by Borrower or any of its Subsidiaries to any
Person who now or in the future may, directly or indirectly, hold an equity
interest in Borrower or any of its Subsidiaries.

“Revolving Advance” or “Revolving Advances” means the term as defined in
Section 2.1(a).

“Revolving Credit Note” means that term as defined in Section 2.1(c).

“Revolving Loan” means the Revolving Advance or Revolving Advances made pursuant
to Section 2.1(a).

“Revolving Loan Commitment” means, for each Lender, the amount set forth
opposite such Lender’s name in Schedule 2 directly below the column entitled
“Revolving Loan Commitment” and in the aggregate, as set forth in Schedule 2
below such column in the row entitled “Total”, as same may be (x) reduced from
time to time or (y) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 11.4.

 

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“Roberts Guarantee” means the term as defined in Section 2.2(f).

“SEC” means the United States Securities and Exchange Commission.

“Security Agreement” means the respective Security Agreement or Amended and
Restated Security Agreement as applicable between the Agent and each Borrower,
as amended, restated and in effect from time to time.

“Security Documents” means the Security Agreement, the Roberts Guarantee, the
Pledge Agreements, the Negative Pledge Agreement, the Collateral Assignment of
Patents and Patent Applications, the Collateral Assignment of Trademarks and
Security Agreements, the Collateral Assignment of Permits, Approvals and
Licenses, the Hazardous Substances Indemnity Agreement, all assignments of
contracts, documents or instruments in favor of the Agent, all hazardous waste
indemnity letters in favor of Lender and all other documents, guaranties,
contracts, assignments, instruments and the like now or hereafter guaranteeing
or securing the Loans.

“Seller Notes” mean (i) that certain promissory note in the outstanding
principal amount of Two Hundred and Fifty Thousand and  00/100 Dollars
($250,000.00) dated as of September 10, 1999, executed by QEP in favor of John
J. Mezzone and (ii) that certain promissory note in the outstanding principal
amount of Two Hundred and Ten Thousand Euros (€210,000.00) dated September 22,
2004 and executed by Q.E.P. in favor of Valfin, S.A.

“Senior Debt” means that term as defined in Section 7.4(f).

“Solvent” means, as to any Person, that such Person (a) has capital sufficient
to carry on its business and transactions and all business and transactions in
which it is about to engage; (b) is able to pay its debts as they mature; and
(c) owns property whose fair salable value is greater than the amount required
to pay its debts.

“Standby Letter of Credit” shall mean each irrevocable letter of credit issued
pursuant to Section 2.23(a) under which the Issuing Lender agrees to make
payments for the account of Borrower, on behalf of Borrower, in respect of
obligations of Borrower incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to which
Borrower is or proposes to become a party in the ordinary course of Borrower’s
business.

“Subordinated Debt” means that term as defined in Section 7.4(g).

“Subsidiary” means any Person of which Borrower directly or indirectly through
one or more intermediaries (i) owns shares of stock having ordinary voting power
to elect a majority of the Board of Directors (or equivalent managing body) of
such Person (irrespective of whether at the time stock of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency), or (ii) owns more than 50% of any other equity or ownership
interest in such Person.

 

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“Tangible Net Worth” means that term as defined in Section 7.4(h).

“Total Liabilities” means that term as defined in Section 7.4(i).

“Trade Letter of Credit” shall mean each commercial documentary Letter of Credit
issued by the Issuing Lender for the account of Borrower pursuant to
Section 2.23(a) for the purchase of goods in the ordinary course of business.

“Type” refers to whether a Revolving Advance or principal portion of any other
Loan is a Prime Rate Advance or LIBOR Rate Advance.

“UCC” shall mean the Uniform Commercial Code as in effect in the State of
Connecticut, as amended or otherwise modified and in effect from time to time
or, when the laws of any other jurisdiction govern the perfection, validity or
enforcement of any Lien, the Uniform Commercial Code or other applicable law of
such jurisdiction (including the Personal Property Security Act (Ontario)).

Section 1.2 Terms Generally. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, (a) any reference in
this Agreement to any Loan Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time, and (b) all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time.

Section 1.3 Currency Equivalents Generally. For all purposes of this Agreement
other than Article 2, the equivalent in any Alternative Currency of an amount in
dollars shall be determined at the rate of exchange quoted by the Agent in
Boston, Massachusetts, at 9:00 A.M. (Boston time) on the date of determination,
to prime banks in New York City for the spot purchase in the New York foreign
exchange market of such amount of dollars with such Alternative Currency.
Whenever the word “dollars” is used in this Agreement, it shall mean U.S.
Dollars, unless the context denotes otherwise.

 

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ARTICLE 2

AMOUNTS AND TERMS OF THE LOANS

A. THE LOANS

Section 2.1 Revolving Loan.

(a) In Lenders’ sole discretion and subject to the terms and conditions set
forth in this Agreement, Lenders severally, but not jointly, agree to make
advances (each a “Revolving Advance” and collectively “Revolving Advances”) to
Borrower from time to time during the period from the date of this Agreement up
to, but not including, the Maturity Date; provided, however, that at no time
shall the aggregate outstanding principal balance of all Revolving Advances plus
the Available Amount plus any unpaid Reimbursement Obligations exceed the Credit
Availability. Subject to the limits of this Agreement, Borrower may borrow, pay,
prepay (pursuant to Section 2.1(d) below), and re-borrow under this Section 2.1.
Nothing herein shall be construed to require any Lender to make Revolving
Advances, it being agreed that such Revolving Advances and any formulas or
advance rates contained within or comprising the Borrowing Base shall be at the
Agent’s sole discretion, may be increased or decreased in accordance with the
definition of Borrowing Base and from time to time by the Agent in its sole
discretion and shall not establish a pattern or custom binding upon the Agent or
any Lender.

(b) Notwithstanding the provisions of Section 2.1(a), the Required Lenders may,
in their sole discretion and subject to the terms and conditions set forth in
this Agreement or any other conditions which the Lenders may impose in their
sole discretion, including without limitation the payment of fees, an increased
interest rate, or posting of additional collateral, make temporary advances in
excess of the Borrowing Base to Borrower from time to time (each such temporary
Revolving Advance is referred to herein as an “Overadvance”), provided that in
no event shall the aggregate principal amount of outstanding Overadvances, when
combined with the outstanding principal amount of all other Revolving Advances
plus the Available Amount plus any unpaid Reimbursement Obligations, exceed the
Revolving Loan Commitment. To the extent that the Borrowing Base increases at
any time during which an Overadvance is outstanding, the portion of the
Overadvance which, as a result of such increase, would be available for
borrowing under Section 2.1(a) shall be deemed to be prepaid as of the date of
such increase and reborrowed as a Revolving Advance under Section 2.1(a) as of
such date. To the extent that the Borrowing Base decreases at any time, the
portion of the outstanding Revolving Advances which exceeds the Borrowing Base
as a result of such decrease shall be deemed, subject to the provisions of this
Agreement, to be prepaid as of the date of such decrease and reborrowed as an
Overadvance under this Section 2.1(b) as of such date. Nothing contained in this
Section 2.1(b) or elsewhere in this Agreement shall constitute or be deemed to
constitute a commitment or agreement by the Lenders to make any Overadvances,
nor shall the making of an Overadvance at any time or from time to time
constitute or be deemed to constitute a course of dealing by the Agent or any
Lender with respect to Overadvances.

 

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(c) All Revolving Advances shall be evidenced by, and repaid with interest in
accordance with one or more promissory notes of Borrower, each substantially in
the form of Exhibit A hereto (each such promissory note is referred to herein as
a “Revolving Credit Note”, and all such notes are collectively referred to as
“Revolving Credit Notes”). The Revolving Credit Note issued to each Lender shall
(i) be executed by Borrower, (ii) be payable to such Lender or its registered
assigns and be dated the date of this Agreement, (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Lender and be payable in
the outstanding principal amount of the Revolving Loans evidenced thereby,
(iv) mature on the Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 2.3 in respect of the Prime Rate Advances and
LIBOR Rate Advances, as the case may be, evidenced thereby, and (vi) be entitled
to the benefits of this Agreement and the other Loan Documents. Borrower hereby
authorizes each Lender to record on its Revolving Credit Note or in its internal
computerized records the amount of each Revolving Advance and of each payment of
principal received by such Lender on account of the Revolving Loan, which
recordation shall, in the absence of manifest error, be conclusive as to the
outstanding principal balance of the Revolving Loan and shall be considered
correct and binding on Borrower provided, however, that the failure to make such
recordation with respect to any Revolving Advance or payment shall not limit or
otherwise affect the obligations of Borrower under this Agreement or the
Revolving Credit Note. With respect to the Revolving Loan, Borrower shall pay to
the Agent, for the ratable benefit of the Lenders, a fee on the first day of
each month and on the Maturity Date, in an amount equal to one-quarter of one
percent (.25%) per annum of the difference between the Revolving Loan Commitment
and the average daily outstanding principal balance of the Revolving Loan for
the prior one month period.

(d) Borrower may prepay the Revolving Loan, in whole or in part, together with
accrued interest to the date of prepayment on the amount prepaid (i) with
respect to any principal portion that bears interest with reference to the Prime
Rate, on any Business Day, without the Make-Whole Premium, and (ii) with respect
to any principal portion that bears interest with reference to LIBOR either (1),
on the last Business Day of the Interest Period applicable to the portion being
prepaid, without the Make-Whole Premium or (2) on any other Business Day,
together with the Make-Whole Premium.

(e) Until the Agent exercises its rights to collect the Receivables as provided
for in this Agreement, Borrower may continue its present policies for returned
merchandise and adjustments, but shall promptly notify the Agent of any credits,
adjustments or disputes arising about the goods or services represented by
Receivables. In any event, Borrower will immediately pay the Agent from its own
funds (and not from the proceeds of Receivables), for application to the
Revolving Loans, an amount equal to any credit or adjustment made to any
Eligible Receivables; provided, however, that so long as Borrower is not in
default hereunder, such payment need not be made if Borrower shall have, after
making such credit or adjustment, sufficient Eligible Receivables to maintain
the aggregate outstanding balance of the Revolving Loans under the Borrowing
Base.

 

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Section 2.2 Mortgage Loan.

(a) Lenders have previously made a loan to Q.E.P. such that the outstanding
principal balance as of June 10, 2008 of such loan was Two Million Two Hundred
and Ninety Eight Thousand One Hundred and Eighty Seven Dollars and Ten Cents
($2,298,187.10) (CAD) (the “Mortgage Loan”).

(b) The Mortgage Loan was used to repay all indebtedness owed to the existing
mortgagee on the real property owned by Roberts Company Canada Limited at 2070
Steeles Avenue East, Brampton, Ontario, Canada (the “Canada Property”), to
discharge such mortgagee’s security from the Canada Property, and to fund
expenditures related to the repair of the Canada Property.

(c) The Mortgage Loan shall be evidenced by, and repaid in accordance with one
or more promissory notes of Q.E.P., substantially in the form attached as
Exhibit A hereto (the “Amended and Restated Mortgage Note” or “Mortgage Note”).
The Amended and Restated Mortgage Note issued to each Lender shall (i) be
executed by Q.E.P., (ii) be payable to such Lender or its registered assign and
be dated as of June 10, 2008, (iii) be in a stated principal amount equal to the
maximum amount of the Mortgage Loans to be made by such Lender and be payable in
the outstanding principal amount of the Mortgage Loans evidenced thereby,
(iv) mature on the Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 2.3 in respect of Prime Rate Advances and LIBOR
Rate Advances, as the case may be, evidenced thereby, (vi) be entitled to the
benefits of this Agreement and the other Loan Documents.

(d) Commencing with July of 2008, payments shall be made (i) on the first
business day of each month in arrears with respect to Prime Rate Advances, and
(ii) on the last business day of each applicable Interest Period with respect to
Libor Rate Advances. Q.E.P. shall make mandatory scheduled principal payments
under the Amended and Restated Mortgage Note monthly in equal monthly
installments of $19,268.63 (CAD) plus interest on the outstanding principal
balance of the Mortgage Loan as stated in the Amended and Restated Mortgage
Note, until the outstanding principal amount of the Amended and Restated
Mortgage Note, together with all interest accrued thereon, has been fully paid,
except that if not sooner paid, the principal amount, together with all accrued
but unpaid interest thereon, shall be due and payable on the Maturity Date for
the Mortgage Loan.

(e) Q.E.P. may prepay any portion of the outstanding principal of the Mortgage
Loan, in whole or in part, together with accrued interest to the date of such
prepayment on the amount prepaid and all amounts required under Section 2.19
hereof, (i) with respect to any principal portion that bears interest with
reference to the Prime Rate, on any Business Day, without Make-Whole Premium,
and (ii) with respect to any principal portion that bears interest with
reference to LIBOR either (1) on the last Business Day of the Interest Period
applicable to that portion of the Mortgage Loan being prepaid, without
Make-Whole Premium or (2) on any other Business Day, together with Make-Whole
Premium.

 

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(f) The Obligations, including the obligations of Q.E.P. under the Mortgage Loan
are unconditionally guaranteed by Roberts Company Canada Limited pursuant to
that certain (i) Amended and Restated Guarantee dated as of the date hereof by
and between the Agent and Roberts Company Canada Limited amending and restating
in its entirety the Guarantee by Roberts Company Canada Limited dated July 30,
2003, and (ii) Guarantee dated as of the date hereof by and between the Agent
and Roberts Company Canada Limited, (each as amended, restated, and in effect
from time to time, collectively, the “Roberts Guarantee”).

(g) The Lenders acknowledge and agree that (i) Q.E.P. may prepay, without
penalty or fee, the entire outstanding principal of the Mortgage Loan,
(ii) Roberts Company Canada Limited may obtain a mortgage loan (“Third Party
Mortgage Loan”), in an amount not to exceed Six Million Dollars (CAD), with a
third party lender, which loan may be secured solely by the Canada Property,
provided, however, that the lender of the Third Party Mortgage Loan shall enter
into an intercreditor agreement with the Lenders and the Agent in form and
substance satisfactory to the Agent; (iii) in connection with the closing of the
Third Party Mortgage Loan, the Lenders shall waive the requirements of
(a) Section 6.1 to permit the incurrence of a mortgage over the Canada Property
by Roberts Company Canada Limited in favor of the lender of the Third Party
Mortgage Loan and (b) Section 6.2 to permit the incurrence by Roberts Company
Canada Limited of the Third Party Mortgage Loan; and (iv) to the extent that the
Roberts Guarantee only secures the obligation of Q.E.P. under the Mortgage Loan,
Lenders shall release Roberts Company Canada Limited from the Roberts Guarantee
in the event that the outstanding principal amount of the Mortgage Loan is paid
in full.

Section 2.3 Interest Provisions.

(a) Commencing with the first such date following the date of this Agreement,
Borrower promises to pay interest to the Agent, on the outstanding and unpaid
principal balances of the Revolving Loan, at a rate per annum equal to, at the
option of Borrower, (i) the Prime Rate or (ii) the LIBOR Rate plus the LIBOR
Spread (the “LIBOR Spread”) as set forth in the following table:

 

    

Fixed Charge
Coverage Ratio

  

LIBOR SPREAD (Revolving Loan)

      

< 1.00

   250 basis points     

³ 1.00 - < 1.30

   225 basis points     

³ 1.30 - < 1.75

   200 basis points     

³ 1.75 x

   175 basis points   

 

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Changes in the LIBOR Spread resulting from a change in the above ratios shall
become effective on the due date of delivery by Borrower of a compliance
certificate evidencing such change. If Borrower shall fail to timely deliver a
compliance certificate within five days of such certificate’s due date in
accordance with Section 5.8(c) of this Agreement, the LIBOR Spread shall be 250
basis points from the day such certificate was due until the day a certificate
evidencing a lower LIBOR Spread is actually delivered to the Lender. Each
Revolving Advance shall be comprised entirely of a Prime Rate Advance or a LIBOR
Rate Advance as Borrower may request pursuant to Section 2.4. Borrower shall not
be entitled to request any Revolving Advance which, if made, would result in
more than six (6) LIBOR Rate Advances outstanding hereunder at any time. For
purposes of the foregoing, LIBOR Rate Advances having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate LIBOR Rate Advances. Each LIBOR Rate Advance shall be in a
principal amount of $500,000 (or the equivalent in an Alternative Currency) or
in $50,000 (or the equivalent in an Alternative Currency) increments in excess
thereof.

Interest payments shall be made (i) in the case of Prime Rate Advances, on the
first day of each month in arrears, and (ii) in the case of LIBOR Rate Advances,
on the last day of each applicable Interest Period, or in the case of Interest
Periods having a duration of more than three (3) months, on each three-month
anniversary date of the commencement of such Interest Period.

Q.E.P. promises to pay interest to the Lenders, on the outstanding and unpaid
principal balance of the Mortgage Loan, at a rate per annum equal to, at the
election of Q.E.P. (i) the Prime Rate or (ii) the Libor Rate plus 200 basis
points.

(b) For purposes of the computation of interest, and notwithstanding anything to
the contrary contained in this Agreement, items shall not be deemed to be
collected until one (1) day after their actual receipt by Lender.

(c) The interest rate on each Prime Rate Advance shall change when and as the
Agent’s Prime Rate changes. Any change in the interest rate resulting from a
change in the Prime Rate shall become effective as of the opening of business on
the day on which such change in the Prime Rate shall become effective.

(d) Overdue principal and interest and, upon the occurrence and during the
continuance of an Event of Default, all principal and accrued but unpaid
interest shall bear interest until paid in full, payable on demand, at the
Default Rate, provided that with respect to the Mortgage Loan, the Default Rate
shall be charged to the extent permitted by applicable law.

(e) The Agent may collect for the ratable benefit of the Lenders a “late charge”
equal to two percent (2%) of any installment of interest or principal or any
other amount due hereunder which is not paid or reimbursed by Borrower within
fifteen (15) days of the due date thereof to cover the extra expense involved in
handling such delinquent payment.

(f) For the purpose of complying with the Interest Act (Canada), it is expressly
stated that where interest is calculated pursuant hereto at a rate based upon a
360-day period (for the purposes of this subsection, the “first rate”), the
yearly rate or percentage of

 

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interest to which the first rate is equivalent is the first rate multiplied by
the actual number of days in the calendar year in which the same is to be
ascertained and divided by 360, and the parties hereto acknowledge that there is
a material distinction between the nominal and effective rates of interest and
that they are capable of making the calculations necessary to compare such rates
and that the calculations herein are to be made using the nominal rate method
and not on any basis that gives effect to the principle of deemed reinvestment
of interest.

Section 2.4 Notice and Manner of Borrowing; Conversion or Continuation of
Interest Rate.

(a) Borrower shall give the Agent irrevocable notice by telecopy or otherwise in
writing of its request that the Lenders make a Revolving Advance (each a
“Borrowing Request”) not later than 11:00 a.m. Connecticut time (i) in the case
of Prime Rate Advances, on the proposed Drawdown Date thereof, and (ii) in the
case of LIBOR Rate Advances, two (2) Business Days prior to the proposed
Drawdown Date thereof. Notice received by the Agent after 11:00 a.m. Connecticut
time shall be loaned against by the Agent on the next Business Day after the
proposed Drawdown Date. Each such notice shall, in the case of a LIBOR Rate
Advance, specify the duration of the Interest Period therefor. If no election is
made in a Borrowing Request as to the Type applicable to any Revolving Advance,
then the requested Revolving Advance shall be a Prime Rate Advance. If no
election is made in a Borrowing Request as to the Interest Period applicable to
any requested LIBOR Rate Advance, then the Interest Period applicable to such
requested LIBOR Rate Advance shall (subject to the provisions contained in the
definition of “Interest Period” in Section 1.1) be one month in duration.
Subject to the fulfillment of the applicable conditions set forth in Article 3
hereof, the Agent will make the Revolving Advance in immediately available funds
by crediting the amount thereof to Borrower’s account with the Agent.

(b) Provided that no Event of Default shall have occurred and be continuing,
Borrower may, on any Business Day, convert any outstanding Prime Rate Advance to
a LIBOR Rate Advance in the same aggregate principal amount and convert a LIBOR
Rate Advance to a Prime Rate Advance only on the last Business Day of the then
current Interest Period applicable to such Revolving Advance. If Borrower
desires to convert a Prime Rate Advance or a LIBOR Rate Advance pursuant to this
Section, it shall give the Lender not less than three (3) Business Days’ prior
written notice, specifying the date of such conversion, the amount to be
converted and if conversion is from a Prime Rate Advance to a LIBOR Rate
Advance, the duration of the first Interest Period therefor. If, not less than
three (3) Business Days prior to the end of the Interest Period then in effect
for any LIBOR Rate Advance, Borrower shall not have delivered to Lender (i) a
notice requesting conversion of a LIBOR Rate Advance to a Prime Rate Advance in
accordance with this Section or (ii) a Borrowing Request requesting that such
Revolving Advance be reborrowed as a Revolving Advance of the same Type having
an Interest Period of the same or a different duration then the Interest Period
in effect, in accordance with Section 2.4(a), or (iii) a notice that such
Revolving Advance is to be paid at the end of such Interest Period, then, in
each such case, Borrower shall be deemed to have delivered a notice that such
Revolving Advance is to be converted to a Prime Rate Advance pursuant to this
Section 2.4.

 

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Section 2.5 Excess Advances. Except to the extent that any excess constitutes an
Overadvance permitted by Section 2.1(b) if at any time the aggregate outstanding
principal amount of the Revolving Loan plus the Available Amount plus any unpaid
Reimbursement Obligations exceeds the Credit Availability, Borrower shall
immediately pay the amount of such excess to the Agent for application to the
applicable Loan.

Section 2.6 Settlements. On Friday of each week, the Agent shall notify HSBC of
its pro rata share, based upon its percentage of Revolving Loans, of all such
Loans outstanding as of such date. HSBC shall make available such pro rata
portion to the Agent not later than 1:00 P.M. (Hartford, Connecticut time) that
day. All such amounts will be made available in lawful money of the United
States in immediately available funds at the Head Office of the Agent. Unless
the Agent shall have been notified by any Lender prior to such day that such
Lender does not intend to make available to the Agent such Lender’s portion of
such loans, the Agent may assume that such Lender has made such amount available
to the Agent on such day and the Agent may (but shall not be obligated to), in
reliance upon such assumption, make available to Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Lender, the Agent shall be entitled to recover such corresponding amount
on demand from such Lender. If such Lender does not pay such corresponding
amount forthwith upon the Agent’s demand therefor, the Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding amount to
the Agent. The Agent also shall be entitled to recover on demand from such
Lender or Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Agent to Borrower until the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (i) if recovered from such Lender,
the overnight Federal Funds Rate for the first three days and at the interest
rate otherwise applicable to such Loans for each day thereafter and (ii) if
recovered from Borrower, the rate of interest applicable to the respective
Borrowing, as determined pursuant to Section 2.3. Nothing in this Section 2.6
shall be deemed to relieve any Lender from its obligation to make Loans
hereunder or to prejudice any rights which Borrower may have against any Lender
as a result of any failure by such Lender to make Loans hereunder.

Section 2.7 Method of Payment. Borrower shall make each payment due under this
Agreement and under the Notes to the Agent at its Head Office not later than
11:00 A.M., Connecticut time, on the date when due in lawful money of the United
States or Canada, as appropriate in immediately available funds. Borrower hereby
authorizes the Agent to charge from time to time (including without limitation
any time at which any amount is due under this Agreement) any amount due under
this Agreement or the Notes, including without limitation principal, interest,
fees and charges, against any account of Borrower with the Agent. Subject to the
provisions contained in the definition of Interest Period in Section 1.1,
whenever any payment to be made under this Agreement or under a Note shall be
stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall be
included in the computation of the payment of interest.

 

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Section 2.8 Collection of Funds. All proceeds of notes, instruments, Inventory
and Receivables of Borrower shall be collected into a lockbox account
established by Borrower with the Agent pursuant to the Lockbox Agreement (the
“Lockbox Account”). Promptly after the execution of this Agreement, Borrower
shall direct each of its Account Debtors to make all payments to Borrower
directly into the Lockbox Account. Borrower shall hold in trust for the Agent
and immediately remit to the Agent by depositing the same into the Lockbox
Account all checks, notes, cash and other proceeds of its Receivables as well as
all proceeds from the sale of inventory, securities (other than securities
issued by Borrower) and other Collateral and other cash receipts of every kind
and nature (other than the proceeds of other borrowings expressly permitted by
this Agreement). Borrower agrees that all payments received in the Lockbox
Account will be the sole and exclusive property of the Agent. The Agent shall on
the Business Day on which any payment is received into the Lockbox Account, and
on a provisional basis until the final receipt of good funds, credit such
payments to the principal amount of the outstanding Revolving Advances as a
prepayment of such Revolving Advances. Any such provisional credit is subject to
reversal if the final collection of a payment is not received by the Agent
within five (5) Business Days following the initial receipt of such payment and
will thereafter be credited when such payment is actually received in good
funds. If at the time of any such credit there are no outstanding Revolving
Advances such credit shall (i) if a Default or an Event of Default shall exist,
be credited to a cash collateral account under the sole dominion and control of
the Agent until such Default or Event of Default is cured by Borrower or waived
by Agent or (ii) subject to the provisions of Section 2.2(d), to amounts due on
the Mortgage Loan, in each case in the inverse order of maturity, (iii) be
applied to cash collateralize any outstanding Letters of Credit, or
(iv) otherwise be made to Borrower’s regular account with Lender.

B. CERTAIN GENERAL PROVISIONS

Section 2.9 Taxes.

(a) All payments by Borrower under the Loan Documents to or for the account of
the Agent or any Lender shall be made without setoff or counterclaim and free
and clear of, and without any deduction or withholding for or on account of, any
and all present or future income, stamp or other taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings, or other charges of whatever
nature, now or hereafter imposed, levied, collected, withheld, or assessed by
any jurisdiction, or by any department, agency, state or other political
subdivision thereof or therein (collectively, “Taxes”), excluding as to (i) a
Tax on the Income imposed on the Agent or any Lender, and (ii) any interest,
fees, additions to tax or penalties for late payment thereof (each such
non-excluded Tax, an “Indemnified Tax”). For purposes hereof, “Tax on the
Income” shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof:
(i) the United States, (ii) the jurisdiction in which such Person is organized,
or (iii) the jurisdiction in which such Person’s principal office is located,
which Tax is an income tax or franchise tax imposed on all or part of the net
income or net profits of such Person or which Tax represents interest, fees, or
penalties for late payment of such any income tax or franchise tax. If any such
obligation is imposed upon Borrower with respect to any amount payable by it
hereunder or under an of the other Loan Documents, Borrower will pay to the
Agent on the date on which such amount

 

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is due and payable hereunder or under such other Loan Document, such additional
amount in dollars as shall be necessary to enable a Lender to receive the same
net amount which such Lender would have received on such due date had no such
obligation been imposed upon Borrower. Borrower will deliver promptly to the
Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by Borrower hereunder or
under such other Loan Document.

(b) If Borrower, the Agent, any Lender or any other Person is required by any
law, rule, regulation, order, directive, treaty or guideline to make any
deduction or withholding (which deduction or withholding would constitute an
Indemnified Tax) from any amount required to be paid by any Borrower to or on
behalf of the Agent or any Lender under any Loan Document, (i) such Borrower
shall pay such Indemnified Tax before the date on which penalties attach
thereto, such payment to be made for its own account (if the liability to pay is
imposed on such Borrower) or on behalf of and in the name of the Agent or any
Lender (if the liability is imposed on Lender), and (ii) the sum payable to the
Agent or such Lender shall be increased as may be necessary so that after making
all required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) the Agent or such
Lender receives an amount equal to the sum it would have received had no such
deductions or withholdings been made.

(c) Each Borrower agrees to pay any current or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise from
any payment made hereunder or from the execution, delivery or registration of,
or any amendment, supplement or modification of, or any waiver or consent under
or in respect of, the Loan Documents or otherwise with respect to, the Loan
Documents (collectively, the “Other Taxes”).

(d) Within 30 days after the request therefor by the Agent or any Lender in
connection with any payment of Indemnified Taxes or Other Taxes, each Borrower
will furnish to the Agent or such Lender the original or certified copy of an
official receipt from the jurisdiction to which payment is made evidencing
payment thereof or, if unavailable, a certificate from its chief financial
officer or president that states that such payment has been made and that sets
forth the date and amount of such payment.

(e) Each Lender agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in is reasonable judgment, be otherwise disadvantageous to
such Lender.

(f) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this
Section 2.9 shall survive the payment in full of principal and interest
hereunder.

(g) If requested by Borrower, the Agent shall use its best efforts to provide
Borrower with such IRS forms as are reasonably necessary for Borrower to fulfill
its obligations hereunder, but the failure of the Agent to provide such forms
shall not in any way relieve or postpone Borrower’s obligations hereunder.

 

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Section 2.10 Computations. Subject to Section 2.3(f), all computations of
interest on the Loans and of fees or other charges shall be based on a 360-day
year and paid for the actual number of days elapsed.

Section 2.11 Additional Payments. If any present or future applicable law,
statute, rule or regulation thereunder or any interpretation thereof by any
competent court or by any Governmental Authority charged with the administration
or the interpretation thereof, or any request, directive, instruction or notice
at any time or from time to time hereafter made upon or otherwise issued to the
Agent or any Lender by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:

(a) subject the Agent or any Lender to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Agreement, the other
Loan Documents, any Letters of Credit, the Commitment or the Loans (other than
taxes based upon or measured by the income or profits of the Agent or such
Lender), or

(b) materially change the basis of taxation (except for changes in taxes on
income or profits) of payments to the Agent or any Lender of the principal of or
the interest on any Loans or any other amounts payable to the Agent or such
Lender under this Agreement or any of the other Loan Documents, or

(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held by, or deposits in
or for the account of, or loans by, or letters of credit issued by, or
commitments of an office of the Agent or any Lender, or

(d) impose on the Agent or any Lender any other conditions or requirements with
respect to this Agreement, the other Loan Documents, the Loans, any Letters of
Credit, the Commitment or any class of loans, letters of credit or commitments
of which any of the Loans, any Letters of Credit or the Commitment forms a part,
and the result of any of the foregoing is

(i) to increase the cost to the Agent or such Lender of making, funding,
issuing, renewing, extending or maintaining the Loans, any Letters of Credit or
the Commitment; or

(ii) to reduce the amount of principal, interest, or other amount payable to the
Agent or such Lender hereunder on account of the Loans, any Letters of Credit or
the Commitment; or

 

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(iii) to require the Agent or such Lender to make any payment or to forego any
interest or fee or other sum payable hereunder, the amount of which payment of
foregone interest or other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by the Agent or such Lender from Borrower
hereunder,

then, and in each such case, Borrower will, upon demand made by the Agent or
such Lender at any time and from time to time and as often as the occasion
therefor may arise, pay to the Agent or such Lender such additional amounts as
will be sufficient to compensate the Agent or such Lender for such additional
cost, reduction, payment, foregone interest or other sum.

Section 2.12 Capital Adequacy. If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by the Agent or any Lender or any corporation controlling the
Agent or such Lender and the Agent or such Lender determines that the amount of
capital required to be maintained by it is increased by or based upon the
existence of the Agent or such Lender’s commitment with respect to the Loans,
then the Agent or such Lender may notify Borrower of such fact. To the extent
that the costs of such increased capital requirements are not reflected in the
Prime Rate or LIBOR, Borrower and the Agent or such Lender shall thereafter
attempt to negotiate in good faith, within thirty (30) days of the day on which
Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate the Agent or such Lender in light of these circumstances.
If Borrower and the Agent or such Lender are unable to agree to such adjustment
within thirty (30) days of the date on which Borrower receives such notice, then
commencing on the date of such notice (but not earlier than the effective date
of any such increased capital requirement), the amounts payable hereunder shall
increase by an amount that will, in the Agent or such Lender’s reasonable
determination, provide adequate compensation. The Agent or such Lender shall
allocate such cost increases among its customers in good faith and on an
equitable basis.

Section 2.13 Certificate; Protection. A certificate setting forth any additional
amounts payable pursuant to Sections 2.11 or 2.12 and a brief explanation of
such amounts which are due, submitted by the Agent to Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing. The
protection of Sections 2.11 or 2.12 shall be available to the Agent and each
Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition which shall have been imposed or shall have occurred.

Section 2.14 Obligations Absolute. The obligations of Borrower under this
Agreement shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other agreement or
instrument under all circumstances, and irrespective of, the following
circumstances:

(a) any lack of validity or enforceability of all or any portion of this
Agreement or any other agreement or any instrument relating hereto;

 

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(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the obligations of Borrower;

(c) the existence of any claim, setoff, defense or other right that Borrower may
have; or

(d) any amendment or waiver of or consent to departure from any of the Loan
Documents, or all or any of the obligations of Borrower in respect of the Loans
or this Agreement.

C. ADDITIONAL CLAUSES FOR LIBOR RATE ADVANCES

Section 2.15 Notice. In the event the Agent determines that by reason of
circumstances affecting the inter-bank Eurodollar market, adequate and
reasonable means do not exist for determining LIBOR or that the eurodollar
deposits in the relevant amount and for the relevant maturity are not available
to the Agent in the inter-bank eurodollar market, with respect to a proposed
LIBOR Rate Advance, the Agent shall give Borrower prompt notice to such
determination. If such notice is given, then (a) any requested LIBOR Rate
Advance shall be made as a Prime Rate Advance, unless Borrower gives the Agent
one (1) Business Day’s prior written notice that its request for such borrowing
is canceled; (b) any Prime Rate Advance which was to have been converted to a
LIBOR Rate Advance shall be continued as a Prime Rate Advance; and (c) any
outstanding LIBOR Rate Advance shall be converted to a Prime Rate Advance on the
last Business Day of the then current Interest Period for such LIBOR Rate
Advance. Until such notice has been withdrawn, the Agent shall have no
obligation to make LIBOR Rate Advances or maintain outstanding LIBOR Rate
Advances and Borrower shall not have the right to convert Prime Rate Advances to
LIBOR Rate Advances.

Section 2.16 Invalidity; Enforceability. Notwithstanding any other provision of
this Agreement, if, after the date of this Agreement, any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender to make or
maintain any LIBOR Rate Advance in dollars or in an Alternative Currency, the
obligation of such Lender hereunder to make or maintain such LIBOR Rate Advance
shall forthwith be suspended for the duration of such illegality and Borrower
shall, if any such Advance is outstanding promptly, upon request from such
Lender, convert such advance to another Type of Advance. If any such payment is
made on a day that is not the last Business Day of the then current Interest
Period applicable to such Advance, Borrower shall pay such Lender, upon such
Lender’s request, such amount or amounts as may be necessary to compensate such
Lender for any loss or expense sustained or incurred by such Lender in respect
of such advance as a result of any such payment, in accordance with
Section 2.19.

Section 2.16A Currency Equivalents. For purposes of the provisions of this
Article 2, (i) the equivalent in dollars of any Alternative Currency shall be
determined by using the quoted spot rate at which the Agent’s Head Office offers
to exchange dollars for such Alternative Currency in London at 11:00 a.m.
(London time) two Business Days prior to the date on which such equivalent is to
be determined, (ii) the equivalent in any Alternative Currency of any other
Alternative Currency shall be determined by using the

 

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quoted spot rate at which the Agent’s Head Office offers to exchange such
Alternative Currency for the equivalent in dollars of such other Alternative
Currency in London at 11:00 a.m. (London time) two Business Days prior to the
date on which such equivalent is to be determined, and (iii) the equivalent in
any Alternative Currency of dollars shall be determined by using the quoted spot
rate at which the Agent’s Head Office offers to exchange such Alternative
Currency for dollars in London at 11:00 a.m. (London time) two Business Days
prior to the date on which such equivalent is to be determined.”

Section 2.16B. Continuity of Contract. Neither the introduction of the Euro, nor
the substitution of the national currencies of the member states participating
in the European Monetary Union nor the fixing of the official conversion rate,
nor any economic consequences that arise in connection the European Monetary
Union or from any of the aforementioned events shall cause this Loan Agreement
to terminate or give rise to any right to terminate prematurely, contest,
cancel, rescind, modify or otherwise negotiate or alter this Loan Agreement or
any of its provisions, or to raise any other objections and/or exceptions or to
assert any claims for compensation under or in connection with this Loan
Agreement.

Section 2.16C. Euro Amendments. Upon the implementation of a change in any
currency in which Borrower is permitted to request loans under this Loan
Agreement, this Loan Agreement, including without limitation, the definition of
LIBOR contained herein, will be amended to the extent determined by the Agent,
acting reasonably and in consultation with Borrower, to be necessary to reflect
the change in currency and to put the Agent, each Lender and Borrower in the
same position, so far as possible, that they would have been in if no change in
currency had occurred. Borrower hereby agrees to execute and deliver to the
Agent such amendments to this Loan Agreement as the Lender may reasonably
request in order to carry out the intent of this Section 2.16C.

Section 2.16D. Euro Indemnity. Borrower agrees, at the request of the Agent, to
compensate the Agent and each Lender for any reasonable loss, cost, expense or
reduction in return that shall be incurred or sustained by the Agent or any
Lender as a result of the implementation of a single currency under the European
Monetary Union, that would not have been incurred or sustained but for the
transactions provided for herein and that, to the extent that such loss, cost,
expense or reduction is of a type generally applicable to extensions of credit
similar to the extensions of credit hereunder, is generally being requested from
borrowers subject to similar provisions. A certificate of any Lender (x) setting
forth the amount or amounts necessary to compensate such Lender, (y) describing
the nature of the loss or expense sustained or incurred by such Lender as a
consequence thereof and (z) setting forth a reasonably detailed explanation of
the calculation thereof shall be delivered to Borrower and shall be conclusive
absent manifest error. Borrower shall pay to such Lender the amount shown as due
on any such certificate within 10 days after receipt thereof.

D. MISCELLANEOUS

Section 2.17 Use of Proceeds. The proceeds of the Revolving Loans made hereunder
shall be used by Borrower for Borrower’s short term working capital
requirements. The proceeds of the Mortgage Loan have been used as described in
2.2(b). Borrower will

 

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not, directly or indirectly, use any part of the proceeds of any of the Loans
for the purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or to
extend credit to any Person for the purpose of purchasing or carrying any such
margin stock.

Section 2.18 Termination. The Commitment shall be automatically terminated on
the applicable Maturity Date.

Section 2.19 Indemnification. Borrower agrees to indemnify the Agent and each
Lender and to hold the Agent and each Lender harmless from any loss or expense
which the Agent and each Lender may sustain or incur as a consequence of
(a) default by Borrower in payment when due of the principal amount of, or
interest on, any LIBOR Rate Advance, (b) default by Borrower in making a
borrowing of, conversion into or continuation of LIBOR Rate Advance after
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (c) default by Borrower by making any prepayment
of LIBOR Rate Advances other than in accordance with the provisions of
Section 2.1(d) or 2.2(e) hereof, or (d) the making of a payment, prepayment or
conversion of LIBOR Rate Advances on a day which is not the last Business Day of
an Interest Period with respect thereto, including, without limitation, in each
case, any such loss or expense arising from the reemployment or repayment of
funds obtained by the Agent or any Lender or from fees payable to terminate the
deposits from which funds were obtained. The provisions of this Section shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

Section 2.20 Cross-Termination. In the event that Borrower pays or prepays any
Revolving Loan in full on or prior to its respective Maturity Date and
terminates the Commitment with respect thereto, Borrower shall
(i) simultaneously prepay all of the Loans in full together with all accrued but
unpaid interest thereon to the date of such prepayment, together with any
applicable Make-Whole Premium and other amounts including, without limitation,
unpaid Reimbursement Obligations, due hereunder or under the Notes, and (ii) if
on the date of such payment any Letter of Credit is outstanding, Borrower shall
pay an amount to the Agent for the ratable benefit of the Lenders equal to the
Available Amount under such Letter of Credit on such date as cash collateral for
such Letter of Credit.

Section 2.21 Change of Lending Office. Each Lender agrees that on the occurrence
of any event giving rise to the operation of Section 2.15 or 2.16 with respect
to such Lender, it will, if requested by Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans or Letters of Credit affected by such event,
provided that such designation is made on such terms that such Lender and its
lending office suffer no economic legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation of
such Section. Nothing in this Section 2.21 shall affect or postpone any of the
obligations of Borrower or the right of any Lender provided in Sections 2.15 or
2.16.

 

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Section 2.22 Replacement of Lenders. (x) If any Lender becomes a Defaulting
Lender or otherwise defaults in its obligations to make Loans, (y) upon the
occurrence of an event giving rise to the operation of Section 2.11, 2.12, 2.15
or 2.16 with respect to any Lender which results in such Lender charging to
Borrower increased costs materially in excess of those being generally charged
by the other Lenders or (z) in the case of a refusal by a Lender to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Lenders as (and to the
extent) provided in Section 11.1, Borrower shall have the right, if no Default
or Event of Default then exists (or, in the case of preceding clause (z), will
exist immediately after giving effect to such replacement), to replace such
Lender (the “Replaced Lender”) with one or more other Eligible Transferees, none
of whom shall constitute a Defaulting Lender at the time of such replacement
(collectively, the “Replacement Lender”) and each of whom shall be required to
be reasonably acceptable to the Agent, provided that (i) at the time of any
replacement pursuant to this Section 2.22, the Replacement Lender shall enter
into one or more Assignment and Assumption Agreements pursuant to Section 11.4
(and with all fees payable pursuant to said Section 11.4 to be paid by Borrower
and/or the Replacement Lender (as may be agreed to at such time by and between
Borrower and the Replacement Lender)) pursuant to which the Replacement Lender
shall acquire all of the Commitments and outstanding Loans of, and in each case
participations in Letters of Credit by, the Replaced Lender and, in connection
therewith, shall pay to (x) the Replaced Lender in respect thereof an amount
equal to the sum of (I) an amount equal to the principal of, and all accrued
interest on, all outstanding Loans of the Replaced Lender, (II) an amount equal
to all Unpaid Reimbursement Obligations that have been funded by (and not
reimbursed to) such Replaced Lender, together with all then unpaid interest with
respect thereto at such time, and (III) an amount equal to all accrued, but
theretofore unpaid, fees owing to the Replaced Lender, and (y) if the Replaced
Lender has a Revolving Loan Commitment which is being replaced, the Issuing
Lender an amount equal to such Replaced Lender’s percentage of any Unpaid
Reimbursement Obligations (which at such time remains an Unpaid Reimbursement
Obligation) to the extent such amount was not theretofore funded by such
Replaced Lender to the Issuing Lender at such time (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Lender concurrently with such replacement. Upon the execution
of the respective Assignment and Assumption Agreement, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by Borrower, the Replacement Lender shall become a Lender
hereunder and, unless the Replaced Lender is being replaced with respect to less
than all of the tranches in which it participates, the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions under this Agreement, which shall survive as to such Replaced Lender.

E. LETTERS OF CREDIT

Section 2.23 Letters of Credit.

(a) General. Subject to the terms and conditions contained in this Agreement and
in the other Loan Documents, Borrower may from time to time while the Commitment
remains in effect, request the issuance, amendment, renewal or extension by the
Issuing Lender of one or more Letters of Credit for the account of Borrower up
to an aggregate maximum Available Amount at any time

 

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outstanding of $3,000,000.00. A Letter of Credit shall be issued, amended,
renewed or extended only if, after giving effect to such issuance, amendment,
renewal or extensions, the sum of (1) the aggregate outstanding principal amount
of all Revolving Advances plus (2) the Available Amount, plus (3) any unpaid
Reimbursement Obligations does not exceed the Credit Availability.

(b) Request. In order to request the issuance, amendment, renewal or extension
of a Letter of Credit, Borrower shall deliver to the Issuing Lender, with a copy
to the Agent, a letter of credit application on the Issuing Lender’s then
customary form (the “Letter of Credit Application”), completed by Borrower, the
terms of which are hereby incorporated by reference.

(c) Form. Each Letter of Credit shall, among other things, (1) be on the Issuing
Lender’s then customary form, (2) provide for the payment of sight drafts for
honor thereunder when presented in accordance with the terms thereof and when
accompanied by the documents described therein, and (3) be subject to, in the
case of Standby Letters of Credit, the International Standby Practices (ISP98,
ICC Publication No. 590) and, in the case of all other Letters of Credit, the
Uniform Customs and Practice for Documentary Credits (ICC Publication No. 600)
and, to the extent not inconsistent therewith, the laws of the State of
Connecticut.

(d) Expiry Dates. Each Letter of Credit shall have an expiry date of the earlier
of the date which is one (1) year after the issuance of such Standby Letter of
Credit and the date that is fourteen (14) Business Days prior to the Maturity
Date, unless such Letter of Credit expires by its terms on an earlier date.

(e) Reimbursement Obligation. In order to induce the Issuing Lender to issue,
extend or renew the Letters of Credit, Borrower hereby agrees and promises to
reimburse or pay to the Issuing Bank, with respect to each Letter of Credit
issued, extended or renewed hereunder, on each date that any draft or demand
presented or made under such Letter of Credit is honored by the Issuing Bank, or
on which the Issuing Lender otherwise makes a payment with respect thereto,
(i) the amount paid by the Issuing Lender under or with respect to such Letter
of Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Issuing Lender in connection with any
payment made by the Issuing Lender under, or with respect to, such Letter of
Credit (collectively, the “Reimbursement Obligations”). Unpaid Reimbursement
Obligations shall bear interest at a per annum rate equal to the Default Rate.

(f) Letter of Credit Fees. In the event that the Lender issues, extends or
renews any Letters of Credit for the account of Borrower (whether collectively
or individually), Borrower shall pay to the Issuing Lender on the date of such
issuance, extension of renewal and on each anniversary date thereof, a fee of
one and one-half percent (1.5%) per annum on the face amount of such letter of
credit. Borrower shall also pay the Issuing Lender’s usual and customary
administration and negotiation fees with respect to such letter of credit.

(g) Obligations Unconditional. The obligations of Borrower under Section 2.23(e)
and Section 2.23(f) shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with this Agreement, under any and all
circumstances

 

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and irrespective of: (1) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein; (2) any amendment
or waiver of or any consent to departure from all or any of the provisions of
any Letter of Credit or any Loan Document; (3) the existence of any dispute,
claim, setoff, defense or other right that Borrower, any other party
guaranteeing, or otherwise obligated with, Borrower, any Subsidiary or other
Affiliate thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, against the Issuing Lender, the Agent or
any Lender or against any other person whatsoever, whether in connection with
this Agreement, any other Loan Document or any other related or unrelated
agreement or transaction; (4) any draft or other document presented under a
Letter of Credit or any endorsement thereon proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (5) payment by the Issuing Lender under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; (6) any error, omission, interruption
or delay in any transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit; and (7) any other
act or omission to act or delay of any kind of the Issuing Lender, the Agent, or
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, constitute a legal or equitable discharge of
Borrower’s obligations hereunder.

Borrower agrees that any action taken or omitted by the Issuing Lender, the
Agent or any Lender under or in connection with any Letter of Credit and the
related drafts and documents, if done in good faith, shall be binding upon
Borrower and shall not result in any liability on the part of the Issuing
Lender, the Agent or any Lender to Borrower. It is understood that the Issuing
Lender may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Lender’s exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute willful misconduct, gross negligence or
bad faith of or by the Issuing Lender.

(h) Reliance by the Issuing Lender. The Issuing Lender shall be entitled to rely
and shall be fully protected in relying upon (without responsibility for further
investigation), any Letter of Credit, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document reasonably believed by it
to be genuine and correct and to have been signed, sent or made by the proper
person or persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Issuing Lender.

 

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(i) Cash Collateralization. If any Event of Default shall occur and be
continuing, Borrower shall, on the Business Day it receives notice from the
Agent thereof and of the amount to be deposited, deposit in an account with the
Agent an amount in cash equal to the Available Amount as of such date. Such
deposit shall be held by the Agent as collateral for the payment and performance
of all Reimbursement Obligations then arising or which in the future arise for
any and all outstanding Letters of Credit. The Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Such deposits shall not bear interest. Moneys in such account shall
automatically be applied by the Agent from time to time to any Reimbursement
Obligations for which the Issuing Lender has not otherwise been reimbursed, or,
at the Agent’s sole discretion, if the maturity of the Loans has been
accelerated, to satisfy any other Obligations. If Borrower is required to
provide an amount of cash collateral under this subsection as a result of the
occurrence of an Event of Default, such amount shall be returned to Borrower
within three Business Days after all Events of Default have been cured or
waived.

Section 2.24 Letter of Credit Participations.

(a) Immediately upon the issuance by the Issuing Lender of any Letter of Credit,
the Issuing Bank shall be deemed to have sold and transferred to each Lender,
and each such Lender (in its capacity under this Section 2.02, a “Participant”)
shall be deemed irrevocably and unconditionally to have purchased and received
from such Issuing Lender, without recourse or warranty, an undivided interest
and participation, to the extent of such Participant’s Revolving Loan Commitment
percentage, in such Letter of Credit, each drawing or payment made thereunder
and the obligations of Borrower under this Agreement with respect thereto, and
any security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments of the Lenders, it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Reimbursement
Obligations relating thereto, there shall be an automatic adjustment to the
participations pursuant to this Section 2.24 to reflect the new Revolving Loan
Commitment percentages of the assignor and assignee Lender, as the case may be.

(b) In determining whether to pay under any Letter of Credit, the Issuing Lender
shall not have any obligation relative to the other Lenders other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to substantially comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Lender under or in connection with any Letter
of Credit issued by it shall not create for such Issuing Lender any resulting
liability to Borrower, any Affiliate of Borrower, any Lender or any other Person
unless such action is taken or omitted to be taken with gross negligence or
willful misconduct on the part of the Issuing Lender (as determined by a court
of competent jurisdiction in a final and non-appealable decision).

(c) In the event that Issuing Lender makes any payment under any Letter of
Credit issued by it and Borrower shall not have reimbursed such amount in full
to such Issuing Lender pursuant to Section 2.23, the Issuing Lender shall
promptly notify the Agent, which shall promptly notify each Participant of such
failure, and each Participant shall promptly and unconditionally pay to such
Issuing Lender the amount of such Participant’s Revolving Loan Commitment
Percentage of such unreimbursed payment in lawful

 

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money of the United States in immediately available funds. If the Agent so
notifies, prior to 12:00 Noon (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to such Issuing Lender in lawful money of the
United States in immediately available funds such Participant’s Revolving Loan
Commitment percentage of the amount of such payment on such Business Day. If and
to the extent such Participant shall not have so made its Revolving Loan
commitment percentage of the amount of such payment available to such Issuing
Lender, such Participant agrees to pay to such Issuing Lender, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to such Issuing Lender at the overnight
Federal Funds Rate for the first three (3) days and at the interest rate
applicable to Revolving Loans that are maintained Prime Rate Advances for each
day thereafter. The failure of any Participant to make available to the Issuing
Lender its Revolving Loan Commitment percentage of any payment under any Letter
of Credit shall not relieve any other Participant of its obligation hereunder to
make available to the Issuing Lender its Revolving Loan Commitment percentage of
any payment under any Letter of Credit on the date required, as specified above,
but no Participant shall be responsible for the failure of any other Participant
to make available to the Issuing Lender such other Participant’s Revolving Loan
Commitment percentage of any such payment.

(d) Whenever the Issuing Lender receives a payment of a Reimbursement Obligation
as to which it has received any payments from the Participants pursuant to
clause (c) above, the Issuing Lender shall pay to each such Participant which
has paid its Revolving Loan Commitment percentage thereof, in lawful money of
the United States in immediately available funds, an amount equal to such
Participant’s share (based upon the proportionate aggregate amount originally
funded by such Participant to the aggregate amount funded by all Participants)
of the principal amount of such reimbursement obligation and interest thereon
accruing after the purchase of the respective participations.

(e) Upon the request of any Participant, the Agent shall furnish to such
Participant copies of any standby Letter of Credit issued by it and such other
documentation as may reasonably be requested by such Participant.

(f) The obligations of the Participants to make payments to the Issuing Lender
with respect to Letters of Credit shall be irrevocable and not be subject to any
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other
Loan Documents;

(ii) the existence of any claim, setoff, defense or other right which Borrowers
or any of its Subsidiaries may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, any Participant, or any other
Person, whether in connection with this Agreement, any

 

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Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between Borrower or any
Subsidiary of Borrower and the beneficiary named in any such Letter of Credit);

(iii) any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; or

(v) the occurrence of any Default or Event of Default.

ARTICLE 3

CONDITIONS PRECEDENT

Section 3.1 Conditions Precedent to Effectiveness. The effectiveness of this
Agreement and the obligations of the Lenders to make the Loans shall be subject
to the prior satisfaction of each of the following conditions:

(a) Agent shall have received each of the following, in form and substance
satisfactory to Lender and its counsel:

(1) This Agreement and the Notes, duly executed and delivered by Borrower;

(2) (i) Copies of the existing UCC-1 or similar financing statements duly filed
under the Uniform Commercial Code of all jurisdictions necessary or, in the
opinion of the Agent, desirable to perfect the security interest created by the
Security Agreement; (ii) copies of all jurisdictions referred to in clause
(i) above, including the Financing Statements filed by the Agent against
Borrower, indicating that, no Person other than the Lender has a Lien on any of
the Collateral; and (iii) copies of all of the UCC-1 or similar financing
statements (and, where applicable, related Form UCC-3s or other discharges) on
file with respect to Borrower, as of dates acceptable to Agent, in all
jurisdictions in which Collateral is or may be located, indicating that no
Person other than the Lender has a Lien on any of the Collateral, or with
respect to any Liens other than those of Lender, Form UCC-3s or other discharges
in form and substance satisfactory to Agent, duly executed by the holders of
such Liens, terminating all such Liens;

(3) The following documents, duly executed and delivered by Borrower:

(i) Second Amended and Restated Security Agreement for Q.E.P. Co, Inc.;

 

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(ii) Amended and Restated Security Agreements for Roberts Consolidated
Industries, Inc.; Roberts Holding International, Inc., Roberts Capitol, Inc.;

(iii) Security Agreements for Q.E.P. Zocalis Holding L.L.C., Boiardi Products
Corporation, QEP-California, Inc.

(iv) Security Agreement for Roberts Company Canada Limited

(v) Amended and Restated Guarantee for Roberts Company Canada Limited

(vi) Guarantee for Roberts Company Canada Limited

(vii) Landlord Waivers

(viii) Amended and Restated Collateral Assignments of Patent and Patent
Applications for Roberts Consolidated Industries, Inc., Roberts Holding
International, Inc. and Roberts Company Canada Limited;

(ix) Collateral Assignments of Patent and Patent Applications for Boiardi
Products Corporation;

(x) Amended and Restated Collateral Assignments Trademarks and Security
Agreement for Roberts Consolidated Industries, Inc. Roberts Holding
International, Inc. and Roberts Company Canada Limited;

(xi) Collateral Assignments Trademarks and Security Agreement for Q.E.P. and
Boiardi Products Corporation;

(xii) Amended and Restated Collateral Assignment of Permits, Approvals and
Licenses Agreement Roberts Consolidated Industries, Inc., Roberts Holding
International, Inc. and Roberts Company Canada Limited;

(xiii) Amended and Restated Hazardous Substances Indemnity Agreement by all
Borrowers; and

(xv) Accounts Receivable Letters.

(4) Copies of all corporate action taken by each Borrower, including resolutions
of their respective Boards of Directors, authorizing the execution, delivery,
and performance of the Loan Documents to which it is a party and each other
document to be delivered pursuant to this Agreement, certified as of the date of
this Agreement by the Secretary of such Borrower;

 

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(5) A certificate, dated as of the date of this Agreement, of the Secretary of
each Borrower certifying the names and true signatures of the officers of such
Borrower authorized to sign the Loan Documents to which such Borrower is a party
and the other documents to be delivered by such Borrower under this Agreement;

(6) A favorable opinion or opinions of counsel for Borrower, satisfactory to
Agent, dated the date of this Agreement;

(7) Such Lockbox Agreements and other agreements and instruments as the Agent
may deem necessary in connection with the grant by Borrower to the Agent of a
Lien on, and the collateral assignment of, the deposit accounts of Borrower
pursuant to the Security Agreement and otherwise required to allow Borrower to
comply with Section 2.8;

(8) Certificates of insurance and copies of insurance policies evidencing
compliance with the insurance requirements of this Agreement;

(9) The certificate of incorporation (certified by the Secretary of the State or
equivalent official of such Borrower’s jurisdiction of organization) and bylaws
of each Borrower;

(10) A Certificate of Good Standing issued by the Secretary of the State or
equivalent official of its jurisdiction of organization and each jurisdiction in
which it is qualified to do business evidencing that each Borrower is a domestic
or, as applicable, foreign corporation in good standing in such jurisdiction;

(11) Due diligence from Borrower in form and substance satisfactory to the
Agent;

(12) A Certificate by Officers of each Borrower or such other due diligence
evidence for each Borrower in form and substance satisfactory to the Agent;

(13) A Borrowing Base Certificate of Borrower dated the date of this Agreement;

(14) Satisfactory completion of the Agent’s customary due diligence, including
but not limited to an independent audit of Borrower’s Eligible Accounts
Receivable and Eligible Inventory;

(15) Receipt of the February 28, 2008 year end financial statements for
Borrower;

(16) All other documents, instruments and agreements that the Agent shall
reasonably require in connection with this Agreement.

(b) All representations and warranties contained in this Agreement shall be true
and correct in all material respects.

 

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Section 3.2 Conditions Precedent to All Advances, Etc. The obligation of the
Lenders to make each Revolving Advance and to issue, extend or renew any Letter
of Credit, shall be at the Agent’s discretion and, in addition, shall be subject
to the prior satisfaction of each of the following additional conditions:

(a) On the Drawdown Date of each Revolving Advance or the date on which a Letter
of Credit is issued, extended or renewed, the following statements shall be
true, and each request by Borrower for a Revolving Advance, and each Letter of
Credit Application shall be deemed to be a representation and warranty by
Borrower that:

(1) The representations and warranties contained in Article 4 of this Agreement
and contained in each of the other Loan Documents containing representations and
warranties are correct on and as of the date of each Revolving Advance or such
issuance, extension or renewal as though made on and as of such date (except
representations and warranties which specifically state a reference date
therein); and

(2) No Default or Event of Default has occurred and is continuing, or would
result from or after giving effect to such Revolving Advance or such issuance,
extension or renewal; and

(b) At the time of each Advance or such issuance, extension or renewal, the sum
of in the case of Revolving Advances (1) the aggregate outstanding principal
amount of all Revolving Advances plus (2) the Available Amount plus (3) all
unpaid Reimbursement Obligations, does not exceed the Credit Availability.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

To induce the Agent and each Lender to enter into this Agreement, each Borrower
represents and warrants to the Agent and each Lender that:

Section 4.1 Incorporation, Good Standing, and Due Qualification. Borrower and
each of its Subsidiaries: (a) is a corporation duly organized, validly existing,
and in good standing under the jurisdiction of its organization; (b) has all
power and authority necessary to own its properties and to carry on the business
in which it is now engaged or proposed to be engaged; and (c) is duly qualified
and in good standing as a foreign corporation under the laws of each other
jurisdiction in which such qualification is required except where the failure to
so qualify shall not have a Material Adverse Effect.

Section 4.2 Corporate Power and Authority. The execution and delivery by
Borrower of the Loan Documents and the performance by Borrower of the Loan
Documents, and the borrowings hereunder, are within the powers of Borrower and
have been duly authorized by all necessary corporate and, if required,
shareholder action, and do not and will not (a) violate (i) the certificate of

 

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incorporation or other constitutive documents or bylaws of Borrower or any of
its Subsidiaries, or (ii) any provision of any law, rule, regulation (including,
without limitation, Regulation U of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination, or
award presently in effect having applicability to Borrower, or (b) be in
conflict with, result in a breach of or constitute (along or with notice or
lapse of time or both) a default under any indenture or loan or credit agreement
or any other agreement, lease, or instrument to which Borrower is a party or by
which Borrower or its properties may be bound or affected, or (c) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Borrower or any of its Subsidiaries.

Section 4.3 Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when executed and delivered will be, legal, valid, and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws affecting
creditors’ rights generally.

Section 4.4 Financial Statements and Condition; Full Disclosure.

(a) Borrower has submitted to Agent various financial statements and
information, including, without limitation, its annual audited financial
statements for the fiscal year ended February 28, 2008 and its Forms 10-Q for
the fiscal quarters ended August 31, 2008 and Borrower represents that all of
said financial information is true and correct in all material respects; such
financial information fairly presents the financial condition and the results of
operations of Borrower as of the dates thereof and for the periods indicated
therein; that such financial statements disclose all material liabilities,
direct or contingent of Borrower as of the dates hereof and the periods
indicated; that such financial statements have been prepared in accordance with
generally accepted accounting principles and practices consistently maintained
throughout the periods involved; and that, as of the date of said financial
information submitted, there were no material unrealized or anticipated losses
from any unfavorable commitments of Borrower; and that there has been no
material adverse change in the business, assets, operations, prospects or
condition, financial or otherwise of Borrower from that set forth in said
financial statements.

(b) Borrower is, and on the Drawdown Date of each Revolving Advance and the date
of issuance, extension or renewal of each Letter of Credit will be, Solvent.

(c) Except as set forth in Schedule 4.4, upon consummation of the transactions
contemplated under the Loan Documents, Borrower will not have any outstanding
Debt other than the obligations and indebtedness under this Agreement and trade
debt incurred in the ordinary course of business.

(d) Neither this Agreement nor any written information, exhibit, report,
document, or certificate furnished to Agent by or on behalf of Borrower in
connection with this Agreement contained or contains any material misstatement
of fact or omitted or omits to state a material fact or any fact necessary to
make the statements contained herein or therein not misleading. There is no fact
known to

 

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Borrower that materially adversely affects or that, insofar as Borrower can now
reasonably foresee, may materially adversely affect, the condition, financial or
otherwise, operations, properties, or prospects of Borrower or the ability of
Borrower to carry out their obligations under any of the Loan Documents to which
it is or will be a party.

Section 4.5 Other Agreements; No Default. Borrower has no material contracts,
agreements, leases or commitments which have not been previously disclosed to
Lender. Borrower is not in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any contract, agreement, lease or instrument to which Borrower is a
party to the extent that such default would have a Material Adverse Effect.
Borrower enjoys peaceful and undisturbed possession under all leases to which it
is a party.

Section 4.6 Litigation. Except as set forth in Schedule 4.6, there is no pending
or, to Borrower’s officers’, directors’, or key employees’ knowledge, threatened
action, suit or proceeding before any court, Governmental Authority, board of
arbitration, or arbitrator against Borrower or for or on behalf of Borrower or
in which Borrower or any of its properties or assets is or may otherwise become
involved which may, in any one case or in the aggregate have a Material Adverse
Effect nor is there any basis therefor. Except as set forth in Schedule 4.6,
Borrower has not received any summons, citation, directive, letter, or other
communication from any Governmental Authority concerning any intentional or
unintentional violation or alleged violation of any Environmental Laws.

Section 4.7 No Defaults on Outstanding Judgments or Orders. Borrower is not in
default with respect to any judgment, writ, injunction, decree, rule, or
regulation of any Governmental Authority which may, in any one case or in the
aggregate have a Material Adverse Effect.

Section 4.8 Ownership and Liens. Except as set forth on Schedule 4.8, Borrower
has good and marketable title to all of its assets and none of its assets is
subject to any security interest or lien except in favor of Lender.

Section 4.9 Subsidiaries. Borrower has no Subsidiaries other than as set forth
in Schedule 4.9. None of Borrower’s non-domestic Subsidiaries (excluding those
set forth in Schedule 4.9) have a net worth of greater than $10,000.00.

Section 4.10 Operation of Business. Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
to conduct its business substantially as now conducted and as presently proposed
to be conducted, and Borrower is not in violation of any rights of others with
respect to any of the foregoing except where the failure to possess such
licenses or any such violation would not cause a Material Adverse Effect.
Nothing has come to the attention of Borrower’s officers, directors or key
employees to the effect that (i) any product, process, method, substance, part
or other material presently contemplated to be sold by or employed by it in
connection with such business may infringe any patent, trademark, service marks,
trade name, copyright, license or other right owned by any other Person or
(ii) there is pending or threatened any claim or litigation against or

 

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affecting it contesting its right to sell or use any such product, process,
method, substance, part or other material where such claim or litigation, if
decided adversely to Borrower, would have a Material Adverse Effect.

Section 4.11 Taxes. Borrower has filed all tax returns (federal, state,
provincial, local and foreign) required to be filed and has paid and remitted
all taxes, assessments, and governmental charges and levies thereon to be due,
including interest and penalties.

Section 4.12 Debt. Set forth in Schedule 4.4 hereto is a complete and correct
list of all Debt of Borrower. The maximum principal or face amounts of the
obligations set forth, which are outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.

Section 4.13 Capital Stock. All of the outstanding shares of stock of Borrower
and its Subsidiaries have been duly authorized and are validly issued, fully
paid, and non-assessable, are not subject to any right or claim of rescission,
and have been offered, sold and issued by Borrower and its Subsidiaries in
compliance with all applicable federal and state securities laws and are owned
as more particularly set forth in Schedule 4.13, in each case free and clear of
all liens, pledges, charges or other encumbrances except in favor of the Agent.

Section 4.14 Margin Securities. None of the advances of any Loans will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security, as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve system (the “Federal Reserve Board”), or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security, or for any other purpose
which might cause any of such advances and other financial accommodations under
this Agreement to be considered a “purpose credit” within the meaning of
Regulation G, T, U, or X of the Federal Reserve Board. None of Borrower’s assets
and none of the Collateral constitute margin securities. Borrower will neither
take, nor permit any agent acting on its behalf to take, any action which might
cause any transaction or obligation, or right created by this Agreement, or any
document or instrument delivered pursuant hereto, to violate any regulation of
the Federal Reserve Board.

Section 4.15 Fiscal Year. The fiscal year of Borrower for financial accounting
purposes ends on February 28 of each calendar year.

Section 4.16 No Broker’s Fees, etc. Borrower is not obligated to pay any
brokerage commissions, finder’s fees, appraisal fees, or investment banking fees
in connection with the transactions contemplated by this Agreement.

Section 4.17 Governmental Consents and Regulatory Approvals. Borrower has
obtained all consents, licenses, and other approvals from all governmental
authorities required in connection with the execution, delivery, and performance
by Borrower of the Loan Documents and the transactions contemplated thereby.

 

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Section 4.18 Eligible Accounts Receivable. Each Receivable that Borrower
represents or warrants the Agent to be an Eligible Account Receivable in each
Borrowing Base Certificate or other certification delivered by Borrower to the
Agent pursuant to this Agreement will be, as of the date so certified, an
Eligible Account Receivable unless the Agent shall in its sole discretion
determine such Receivable to be ineligible.

Section 4.19 Eligible Inventory. All Inventory that Borrower represents or
warrants to the Agent to be Eligible Inventory in each Borrowing Base
Certificate or other certification delivered by Borrower to the Agent pursuant
to this Agreement will be, as of the date so certified, Eligible Inventory
unless the Agent shall in its sole discretion determine such Inventory to be
ineligible.

Section 4.20 Environmental Compliance. Except as set forth in (i) a certain
Environmental Site Assessment Update, Roberts Consolidated Industries, 2501 Lake
View Drive, Mexico, Missouri 65265 dated September, 1997; (ii) a certain
Environmental Site Assessment Update, Roberts Consolidated Industries, 600 North
Baldwin Park Boulevard, City of Industry, California 91749 dated September,
1997; (iii) a certain Environmental Compliance Review, Roberts Consolidated
Industries, 2501 Lake View Drive, Mexico, Missouri 65265 dated September, 1997;
(iv) a certain Environmental Compliance Review, Roberts Company Canada Limited,
2070 Steeles Avenue, Brampton, Ontario dated September, 1997; (v) a certain
Environmental Site Assessment Update, Roberts Company Canada Limited, 2070
Steeles Avenue, Brampton, Ontario dated September, 1997, and (vi) Phase I
Environmental Site Assessment, Para-Chem, 9486 Holly Road, Adelanto, California,
dated July 11, 2007 and (ii) Schedule 4.20:

(a) the Property and the current and anticipated use thereof materially comply
with all Environmental Laws and all other laws, ordinances or regulations
pertaining to the use and operation of such premises;

(b) to the best of Borrower’s knowledge, no Release of any Contaminants has
occurred or is now occurring upon the Property; and

(c) neither Borrower nor the Property has been, are now or are threatened to be
the subject of any Enforcement Action.

Section 4.21 Compliance with Laws. Borrower is not in violation of any laws,
ordinances, rules or regulations applicable to it, of all federal, state,
provincial, territorial, municipal or foreign governmental authorities,
instrumentalities or agencies including, without limitation, ERISA, the United
States Occupational Safety and Health Act of 1970, as amended, all federal,
state, provincial, territorial, county, municipal and foreign laws, ordinances,
rules and regulations relating to the environment, as such may be amended, where
such violation would have a Material Adverse Effect.

Section 4.22 Events of Default. No Default or Event of Default has occurred and
is continuing.

 

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Section 4.23 Labor Disputes and Acts of God. The business and properties of
Borrower have not been affected by any fire, explosion, accident, strike,
lockout, or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy, or other casualty (whether or not covered by
insurance) which may, in any one case or in the aggregate have a Material
Adverse Effect.

Section 4.24 ERISA. Borrower is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no notice
of intent to terminate a Plan has been filed, nor has any plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither Borrower nor any ERISA Affiliate has completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of its Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA and the regulations thereunder for calculating the
potential liability of Borrower or any ERISA Affiliate to the PBGC or the Plan
under Title IV of ERISA; and neither Borrower, nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.

4.25 Canadian Plans.

 

  (a) Neither Borrower nor any of its Subsidiaries or Affiliates has any
Canadian Plan other than those listed on Schedule 4.25 hereto, and all monthly
and other payments in respect of such Canadian Plans which are pension plans (on
account of contributions, special contributions or unfunded liability or
solvency deficiencies) or otherwise are accurately set forth in Schedule 4.25.

 

  (b) No Canadian Plan has been terminated or partially terminated or is
insolvent or in reorganization, nor have any proceedings been instituted to
terminate, in whole or in part, or reorganize any Canadian Plan.

 

  (c) Neither Borrower nor any of its Subsidiaries or Affiliates has ceased to
participate (in whole or in part) as a participating employer in any Canadian
Plan which is a pension plan or has withdrawn from any Canadian Plan which is a
pension plan in a complete or partial withdrawal, nor has a condition occurred
which if continued would result in a complete or partial withdrawal.

 

  (d) Neither Borrower nor any of its Subsidiaries or Affiliates has any
unfunded liability on windup or withdrawal liability, including contingent
withdrawal or windup liability, to any Canadian Plan or any solvency deficiency
in respect of any Canadian Plan.

 

  (e) Neither Borrower nor any of its Subsidiaries or Affiliates has any
unfunded liability on windup or any liability in respect of any Canadian Plan
(including to the FSCO) other than for required insurance premiums or
contributions or remittances which have been paid, contributed and remitted when
due.

 

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  (f) Borrower and each of its Subsidiaries and Affiliates has made all
contributions to its Canadian Plans required by law or the terms thereof to be
made by it when due, and it is not in arrears in the payment of any
contribution, payment, remittance or assessment or in default in filing any
reports, returns, statements, and similar documents in respect of the Canadian
Plans required to be made or paid by it pursuant to any Canadian Plan, any law,
act, regulation, directive or order or any employment, union, pension, deferred
profit sharing, benefit, bonus or other similar agreement or arrangement.

 

  (g) Neither Borrower nor any of its Subsidiaries or Affiliates is liable or,
to the best of its knowledge, alleged to be liable, to any employee or former
employee, director or former director, officer or former officer or other Person
resulting from any violation or alleged violation of any Canadian Plan, any
fiduciary duty, any law or agreement in relation to any Canadian Plan or has any
unfunded pension or like obligations or solvency deficiency (including any past
service or experience deficiency funding liabilities), other than accrued
obligations not yet due, for which it has made full provision in its books and
records.

 

  (h) All vacation pay, bonuses, salaries and wages, to the extent accruing due,
are properly reflected in Borrower’s and its Subsidiaries’ books and records.

 

  (i) Without limiting the foregoing, all of Borrower’s and its Subsidiaries’
Canadian Plans are duly registered where required by, and are in compliance and
good standing in all material respects under, all applicable laws, acts,
statutes, regulations, orders, directives and agreements, including, without
limitation, the Income Tax Act (Canada), the Supplemental Pension Plans Act
(Quebec) and the Pension Benefits Act (Ontario), any successor legislation
thereto, and other applicable laws of any jurisdiction.

 

  (j) Neither Borrower nor any of its Subsidiaries or Affiliates has made any
application for a funding waiver or extension of any amortization period in
respect of any Canadian Plan.

 

  (k) There has been no prohibited transaction or violation of any fiduciary
responsibilities with respect to any Canadian Plan.

 

  (l) There are no outstanding or pending or threatened investigations, claims,
suits or proceedings in respect of any Canadian Plans (including to assert
rights or claims to benefits) that could give rise to a Material Adverse Effect.

 

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ARTICLE 5

AFFIRMATIVE COVENANTS

Borrower covenants and agrees that until the Commitment is irrevocably
terminated and payment is made in full of the Loans and all of its other
obligations hereunder are fully performed, Borrower shall, and shall cause its
Subsidiaries to:

Section 5.1 Maintenance of Existence. Preserve and maintain its existence in its
current form of organization and good standing in the jurisdiction of its
organization, and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required except where the failure to
so qualify shall not have a Material Adverse Effect and except that a Subsidiary
may merge or consolidate with any other Subsidiary or with its parent company
provided the surviving entity of such merger or consolidation is obligated as a
Borrower under this Agreement and the Loan Documents, as applicable.

Section 5.2 Maintenance of Records. Keep adequate records and books of account,
in which complete entries will be made in accordance with GAAP consistently
applied, reflecting all of its financial transactions.

Section 5.3 Maintenance of Properties. Maintain, keep, and preserve all of its
properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted except where the
failure to so keep and preserve shall not have a Material Adverse Effect.

Section 5.4 Conduct of Business. Continue to engage in a business of the same
general type as conducted and proposed to be conducted by it on the date of this
Agreement.

Section 5.5 Maintenance of Insurance.

(a) Keep its properties, including without limitation its Inventory, and the
Property insured against fire, theft and other hazards (so-called “All Risk”
coverage) in amounts and with companies satisfactory to the Agent to the same
extent in covering such risks as is customary in the same or a similar business,
but in no event in an amount less than the lesser of (i) the total indebtedness
or (ii) the amount necessary to avoid any co-insurance penalty, which policy
shall name the Agent as loss payee as its interest may appear, (b) maintain
public liability coverage against claims for personal injuries, death or
property damage in an amount deemed reasonable by the Agent, which policy shall
name the Agent as an additional insured, and (c) maintain all workers
compensation, employment or similar insurance as may be required by applicable
law. Such All Risk property insurance coverage shall provide for a minimum of
thirty (30) days’ written cancellation notice to the Agent. Borrower agrees to
deliver copies of all of the aforesaid insurance policies to the Agent. In the
event of any loss or damage to the Collateral, Borrower shall give prompt
written notice to the Agent and to its insurers of such loss or damage and shall
properly file its proofs of loss with said insurers.

 

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Section 5.6 Compliance With Laws. Comply in all material respects with all
applicable laws, rules, regulations, and orders of Governmental Authorities,
such compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property, provided that Borrower may contest any such compliance in
good faith upon making adequate reserves in accordance with GAAP for the
consequences of any noncompliance.

Section 5.7 Right of Inspection. At any reasonable time and from time to time,
permit the Agent and each Lender or any agent or representative of Lender to
examine and make copies of any abstracts from the records, including without
limitation computer records, and books of account of, and visit the properties
of, Borrower and to discuss the affairs, finances, and accounts of Borrower with
any of its or their officers and directors and its independent accountants (who,
by this reference, are authorized by Borrower to discuss such matters with the
Agent and each Lender or any agent or representative of the Agent and each
Lender).

Section 5.8 Reporting Requirements. Furnish or cause to be furnished to the
Agent and each Lender:

(a) As soon as available and in any event within one hundred and five (105) days
after the end of each fiscal year, a consolidated and consolidating balance
sheet of Borrower and its consolidated subsidiaries as of the end of such year
and the related statements of income, operations, retained earnings and cash
flows with accompanying footnotes of Borrower and its consolidated subsidiaries
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and accompanied by an
unqualified audited report thereon by an independent certified public accountant
of national standing acceptable to Lender, which shall state that such financial
statement presents fairly the financial condition as at the end of such fiscal
year, and the combined results of operations and changes in financial position
for such fiscal year, of Borrower and its consolidated subsidiaries in
accordance with GAAP.

(b) Within thirty (30) days after the end of each month, consolidated and
consolidating financial statements of Borrower and its consolidated subsidiaries
for the period in question and the fiscal year to date and comparing the results
of such period and fiscal year to the comparable periods of the immediately
preceding fiscal year, prepared and certified as being true, complete and
correct by the chief financial officer of Borrower.

(c) Within forty-five (45) days after the end of each fiscal quarter and each
fiscal year, a financial covenant compliance certificate in form and substance
satisfactory to Lender, sufficient to verify Borrower’s compliance with the
financial covenants contained in Section 7 of this Agreement, prepared and
certified as being true, complete and correct by the chief financial officer of
Borrower.

(d) On each Drawdown Date or date of issuance, extension or renewal of a Letter
of Credit, a collateral update certificate on Agent’s then current form and, on
a bi-weekly basis as of the 15th and last day of each month, a Borrowing Base
Certificate in the Agent’s current form (a “Borrowing Base Certificate”), with
supporting verification, provided that at any time at which Borrower’s

 

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average monthly Credit Availability (uncapped by line limits) is less than
$1,000,000, Borrower shall deliver a Borrowing Base Certificate on a weekly
basis as of Monday of each week.

(e) On a monthly basis, within thirty (30) days following the end of each month,
(i) a detailed aging of Receivables for each of Borrowers, and (ii) a detailed
accounts payable aging and (iii) a listing of all inventory held by each of
Borrowers, each in form and substance satisfactory to Lender provided that the
items required to be delivered under this subsection (e) shall be furnished to
the Agent only.

(f) Promptly upon receipt thereof, and in any event simultaneously with the
delivery of the financial statements required by subparagraph 5.8(a) hereof,
copies of any reports and management letters submitted to Borrower by
independent certified public accountants in connection with the examination of
financial statements.

(g) Within (i) five (5) days subsequent to filing with the Internal Revenue
Service or any other applicable Governmental Authority, and applicable state and
foreign (including Canadian federal and provincial authorities) taxing
authorities, copies of federal, state and foreign income tax returns, of
Borrower, and (ii) five (5) days subsequent to filing with the SEC, or any other
applicable Governmental Authority copies of all Forms 8-K, 10-K and 10-Q filed
with the SEC or any other applicable Governmental Authority.

(h) Promptly after the commencement thereof, notice of all actions, suits, and
proceedings before any Governmental Authority affecting Borrower, which, if
determined adversely to Borrower, could have a Material Adverse Effect, and such
additional information regarding such actions, suits, and proceedings as Lender
may request from time to time.

(i) Immediately upon the occurrence of each Default or Event of Default, a
written notice setting forth the details of such Default or Event of Default and
the action which is being taken or proposed to be taken by Borrower with respect
thereto.

(j) Upon request of the Agent, copies of all reports (including annual reports)
and notices which Borrower files with or receives from the PBGC or the U.S.
Department of Labor under ERISA or with the PBA or any other Governmental
Authority in respect of all Canadian Plans; and as soon as possible but not
later than ten (10) days after Borrower knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect to any
Plan, or any similar occurrence in respect of any Canadian Plan or that the
PBGC, PBA, or any other Governmental Authority or Borrower has instituted or
will institute proceedings under Title IV of ERISA or other applicable law to
terminate any Plan or Canadian Plan, Borrower will deliver to the Agent and each
Lender a certificate of the chief financial officer of Borrower setting forth
details as to such Reportable Event or Prohibited Transaction or similar
occurrence or Plan or Canadian Plan termination and the action Borrower proposes
to take with respect thereto.

 

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(k) Promptly after the furnishing thereof, copies of any material statement or
report furnished to any other party pursuant to the terms of any indenture,
loan, credit, or similar agreement and not otherwise required to be furnished to
the Agent and each Lender pursuant to any other clause of this Section.

(l) Not more than thirty (30) days following the end of each fiscal year,
financial projections for the next fiscal year, including consolidated balance
sheets, income statements, sources and uses of funds and other supporting
schedules.

(m) Such other information respecting the condition or operations, financial or
otherwise, of Borrower as the Agent may from time to time reasonably request.

The reports described above shall be in form and detail as shall be satisfactory
to the Agent and shall be certified by Borrower’s chief financial officer as
being true, complete and correct.

Section 5.9 Eligible Accounts Receivable; Eligible Inventory. Promptly after
receiving notice or otherwise becoming aware thereof, notify the Agent in
writing that (i) a Receivable that Borrower has represented or warranted to the
Agent to be an Eligible Account Receivable has ceased to be an Eligible Account
Receivable for any reason other than payment thereof in the ordinary course of
business or (ii) any Inventory that Borrower has represented or warranted to the
Agent to be Eligible Inventory has ceased to be Eligible Inventory for any
reason.

Section 5.10 Collateral. (a) Preserve the Collateral in good condition and order
and not permit it to be abused or misused, (b) not allow any of the Collateral
to be affixed to real estate unless such real estate is subject to a Lien in
favor of the Agent, (c) upon request of Agent, prepare to deliver all proceeds
of the Collateral to the Agent immediately upon receipt in the identical form
received without commingling with other property, (d) if an Event of Default has
occurred and is continuing, if required by the Agent, notify Account Debtors and
obligors that their accounts, instruments, documents, contracts and all of
Borrower’s rights to receive payments have been assigned to the Agent and shall
be paid directly to the Agent, (e) take necessary steps to preserve the
liability of Account Debtors, obligors, and secondary parties whose liabilities
are part of the Collateral, (f) take any action required by the Agent with
reference to the Federal Assignment of Claims Act or other applicable law,
(g) allow the Agent to inspect the Collateral and to inspect and copy all
records relating to the Collateral, (h) upon the occurrence and continuance of
an Event of Default, immediately upon request by the Agent: (A) transfer
possession or permit the Agent to take possession of all Collateral; and
(B) assign and/or allow the Agent to immediately take possession of all
instruments, and documents which are part of the Collateral, or as to those
hereafter acquired, immediately following acquisition, and (i) notify the Agent
of any change of location or material adverse change in the condition of any of
the Collateral, or of any material adverse change in any fact or circumstance
warranted or represented by Borrower herein or furnished to the Agent, or if any
Event of Default occurs.

Section 5.11 Defend Collateral. Defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest therein
and, in the event Agent’s security interest in the Collateral, or any part
thereof, would be impaired by an adverse decision, allow the Agent to contest or
defend any such claim or demand in Borrower’s name and pay, upon demand, the

Agent ’s reasonable costs, charges and expenses, including, without limitation
reasonable attorneys’ fees in connection therewith.

 

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Section 5.12 Environmental Covenants. Provide at the expense of Borrower a Phase
I environmental site assessment of the Property if an Event of Default shall
have occurred and be continuing or the Agent shall have reasonable cause to
believe that an actual or threatened violation of an Environmental Law has
occurred, is occurring or is about to occur, in each case prepared by an
independent environmental consulting or engineering firm acceptable to the Agent
in its sole discretion and in each case stating conclusions satisfactory to the
Agent in its sole discretion, together with such additional environmental
studies, audits, site assessments or remedial or corrective actions as shall be
reasonably required by the Agent or recommended by any such Phase I site
assessment. Should Borrower fail to commence any such environmental site
assessment, study, audit or remedial or corrective action within thirty
(30) days of the Agent ’s written request, the Agent shall have the right but
not the obligation to retain an environmental consultant to perform the same, at
Borrower’s expense, and all costs and expenses incurred by the Agent in
connection therewith shall be payable by Borrower upon demand.

Section 5.13 Operating Accounts. Maintain at all times all of its operating
accounts, including without limitation its checking accounts, with the Agent or
a banking subsidiary, branch or Affiliate of BOA.

Section 5.14 Permitted Acquisitions.

(a) Subject to the provisions of this Section 5.14 and the requirements
contained in the definition of Permitted Acquisition, Borrower and any of its
Subsidiaries may from time to time during the term of this Agreement, effect
Permitted Acquisitions, so long as (in each case except to the extent the
Required Lenders otherwise specifically agree in writing in the case of a
specific Permitted Acquisition): (i) no Default or Event of Default shall be in
existence at the time of the consummation of the proposed Permitted Acquisition
or immediately after giving effect thereto; (ii) Borrower shall have given the
Agent and the Lenders at least ten (10) Business Days’ prior written notice of
any Permitted Acquisition; (iii Borrower shall have provided the Agent with
calculations evidencing (x) a proforma Fixed Charge Coverage Ratio (based on
trailing 12 month Earnings Before Interest, Taxes, Depreciation and
Amortization) of not less than 1.5:1 and (y) average Credit Availability for the
immediately preceding 90 days of not less than $2,500,000 (iv) all
representations and warranties contained herein and in the other Loan Documents
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of such Permitted Acquisition (both before and after giving effect thereto),
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; (v) Borrower shall have delivered to the Agent
an officer’s certificate executed by a senior officer of Borrower, certifying to
the best of his knowledge, that the proposed Permitted Acquisition could not
reasonably be expected to result in materially increased tax, ERISA, or other
liabilities of Borrower or any of its Subsidiaries (except such liabilities in
amounts reasonable in relation to the size of the Permitted Acquisition and
which are not likely, individually or in the aggregate, to (x) cause a
subsequent breach of any covenants (financial or

 

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otherwise) contained herein or (y) give rise to a Material Adverse Effect),
(vi) Borrower provides to the Agent and the Lenders as soon as available but not
later than five (5) Business Days after the execution thereof, a copy of any
executed purchase agreement or similar agreement with respect to such Permitted
Acquisition; (vii) Borrower shall have delivered to the Agent an officer’s
certificate executed by the Chairman or Chief Financial Officer of Borrower,
certifying, to the best of his knowledge, compliance with the requirements of
preceding clauses (i) through (viii) and containing the calculations
(A) required by the preceding clause (iii), (ix) the aggregate consideration
(including, without limitation, cash, assumed debt, Permitted Acquired Debt,
capitalized lease obligations and the principal amount of all issued promissory
notes including, without limitation, Seller Notes) payable in connection with
proposed Permitted Acquisitions does not exceed $2,000,000 in any fiscal year of
Borrower (excluding any cash of the target company and any contingent payouts in
connection with such Permitted Acquisition, provided the contingent payout is
subject to a subordination agreement satisfactory in form and substance to
Lender) and (y) the aggregate consideration paid in connection with the proposed
Permitted Acquisition, when combined with the aggregate consideration paid in
connection with all other Permitted Acquisitions consummated pursuant to this
proviso, does not exceed $3,000,000 (excluding any cash of the target company
and any contingent payouts in connection with such Permitted Acquisition,
provided the contingent payout is subject to a subordination agreement
satisfactory in form and substance to Lender); (x) if any portion of the Debt
incurred in connection with such Permitted Acquisition consists of seller notes,
the Agent shall have reviewed and approved, prior to the closing of such
Permitted Acquisition, the payment terms, structure, and security (if any) for
such seller notes and such seller notes shall have been subordinated to the
Obligations on terms and conditions and pursuant to subordination agreements
satisfactory to the Agent.

(b) At the time of each Permitted Acquisition involving the creation or
acquisition of a Subsidiary, or the acquisition of capital stock or other equity
interests of any Person, the capital stock or other Equity Interests thereof
created or acquired in connection with such Permitted Acquisition shall be
pledged for the benefit of the Lenders pursuant to the pledge agreement in form
and substance satisfactory to the Agent, provided that in the event the
Subsidiary is a foreign corporation, any such pledge will be limited to no more
than 66- 2/3% of the capital stock of such Subsidiary.

(c) Borrower shall cause each Subsidiary which is formed to effect, or is
acquired pursuant to, a Permitted Acquisition to comply with, and to execute and
deliver, all of the documentation required by the Agent.

(d) The consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by Borrower that the certifications by Borrower (or
by one or more of its officers) pursuant to Section 5.14(a) are true and correct
and that all conditions thereto have been satisfied and that same is permitted
in accordance with the terms of this Agreement, which representation and
warranty shall be deemed to be a representation and warranty for all purposes
hereunder.

 

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(e) Any assets acquired pursuant to a Permitted Acquisition which Borrower
proposes to include within the Borrowing Base shall, prior to such inclusion,
have been audited by the Agent’s field examination unit and approved by such
unit for inclusion in the Borrowing Base

5.15 Canadian Plans. Borrower shall cause each of its and its Subsidiaries’
Canadian Plans to be duly qualified and administered in all respects in
compliance with, as applicable, the Supplemental Pension Plans Act (Québec) and
the Pension Benefits Act (Ontario) and all other applicable laws (including
regulations, orders and directives), and the terms of the Canadian Plans and any
agreements relating thereto. Borrower shall ensure that it and its Subsidiaries:

 

  (a) have no unfunded, solvency, or deficiency on windup liability and no
accumulated funding deficiency (whether or not waived), or any amount of
unfunded benefit liabilities in respect of any Canadian Plan, including any
Canadian Plan to be established and administered by it or them;

 

  (b) all amounts required to be paid by it or them are paid when due;

 

  (c) no liability upon it or them or Lien on any of its or their Property
arises or exists in respect of any Canadian Plan;

 

  (d) make all required contributions to any Canadian Plan when due;

 

  (e) not engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Canadian Plan that could reasonably be
expected to result in liability; and

 

  (f) has no Lien on any of its or their property that arises or exists in
respect of any Canadian Plan.

ARTICLE 6

NEGATIVE COVENANTS

Borrower covenants and agrees that, without the prior written consent of the
Agent, until the Commitment is irrevocably terminated and payment is made in
full of the Loans and all its obligations hereunder are fully performed,
Borrower shall not, and shall cause its Subsidiaries not to:

Section 6.1 Liens. Create, incur, assume, or suffer to exist any Lien upon or
with respect to any of its properties, now owned or hereafter acquired, except:

(a) Liens in favor of the Agent;

 

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(b) Liens for taxes or assessments or other government charges or levies not yet
due and payable or, if due and payable, Liens for taxes being contested in good
faith by appropriate proceedings and for which appropriate reserves in
accordance with GAAP are maintained;

(c) Liens imposed by law, such as mechanics, materialmen’s, landlords’,
warehousemen’s, and carriers’ Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which do not exceed in
the aggregate $50,000.00 and which are not past due for more than thirty
(30) days, unless such Liens are being contested in good faith by appropriate
proceedings and appropriate cash reserves have been established therefor; and

(d) Liens securing Debt permitted under Section 6.2(d) hereof; and

(e) Personal property leases and similar liens and purchase money liens securing
the cost of acquisition of assets subject to such liens or security interests
not to exceed an aggregate dollar amount of $750,000 during the initial term of
the Revolving Loan.

(f) Liens on the assets of Roberts U.K. Limited, Q.E.P. Aust. Pty. Limited,
Q.E.P. Co. New Zealand Limited, Q.E.P. Co. U.K. Limited, Vitrex Limited, and
P.R.C.I. SA;

(g) Liens on the assets of Foreign Companies listed on Schedule 6.1; and

(h) Liens securing capitalized leases of Foreign Companies not to exceed an
aggregate dollar amount of $500,000 at any time.

Provided that with respect to items (f) through (h) above such liens permitted
hereunder shall be liens which currently secure or will secure indebtedness to
the Agent or any Lender other than the Loans.

Section 6.2 Debt. Create, incur, assume, or suffer to exist any recourse or
nonrecourse Debt, except:

(a) Debt of Borrower under this Agreement;

(b) Debt (if any) described in Schedule 4.4, but no renewals, extensions, or
refinancings thereof;

(c) Accounts payable to trade creditors for goods or services and current
operating liabilities (other than for borrowed money), in each case incurred in
the ordinary course of business and paid within the required time, unless
contested by Borrower in good faith and by appropriate proceedings;

(d) Indebtedness of any Subsidiary of Borrower acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed by Borrower or any Subsidiary of Borrower
pursuant to a Permitted Acquisition as a result of a merger or consolidation or
the acquisition of an asset securing such Indebtedness) (the “Permitted Acquired
Debt”), so long as (i) such Indebtedness was not

 

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incurred in connection with, or in anticipation or contemplation of, such
Permitted Acquisition, (ii) such Indebtedness does not constitute debt for
borrowed money (except to the extent such Indebtedness cannot be repaid in
accordance with its terms at the time of its assumption pursuant to such
Permitted Acquisition, it being understood and agreed that capitalized lease
obligations shall not constitute debt for borrowed money for purposes of this
clause (ii) and (iii) at the time of such Permitted Acquisition, such
Indebtedness does not exceed 25% of the total value of the assets of the
Subsidiary so acquired, or of the assets so acquired, as the case may be;

(e) Interest rate protection agreements required or permitted under this
Agreement; and

(f) Unsecured Debt in an amount not to exceed an aggregate dollar amount of
$500,000 during the initial term of the Revolving Loan, such Debt to be on terms
and conditions satisfactory to the Agent.

Section 6.3 Mergers, Etc. Merge, amalgamate or consolidate with, or sell,
assign, 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 any Person, or acquire all or substantially all
of the assets or the business of any Person, except that a Subsidiary may merge
or consolidate with any other Subsidiary or with its parent company provided the
surviving or continuing entity of such merger, amalgamation or consolidation is
obligated as a Borrower under this Agreement and the Loan Documents, as
applicable.

Section 6.4 Leases. Create, incur, assume, or suffer to exist any obligation as
lessee for the rental or hire of any real or personal property, except
(a) leases existing on the date of this Agreement as set forth in Schedule 6.4
and any extensions or renewals thereof and (b) operating leases in an aggregate
amount not to exceed $500,000.00 at any time.

Section 6.5 Sale and Leaseback. Sell, transfer, or otherwise dispose of any real
or personal property to any Person and thereafter directly or indirectly lease
back the same or similar property.

Section 6.6 Restricted Payments. Except as set forth on Schedule 6.6, pay, make
or declare any Restricted Payment, unless an Event of Default shall have
occurred and be continuing, or would occur after giving effect to any such
payment, payments to Susan Gould in connection with the repurchase of shares of
Borrower’s common stock which she holds, as approved by Borrower’s Board of
Directors in May 1998.

Section 6.7 Sale of Assets. Sell, lease, assign, transfer, or otherwise dispose
of any of its now owned or hereafter acquired assets except: (a) for Inventory
disposed of in the ordinary course of business; and (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business.

Section 6.8 Investments. Make any loan or advance to any Person, or purchase or
otherwise acquire any capital stock, assets, obligations, or other securities
of, make any capital contribution to, or otherwise invest in or acquire any
interest in any Person except: (a) direct obligations of the United States or
any agency thereof with maturities of one year or less from the date of
acquisition;

 

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(b) commercial paper of a domestic issuer rated at least “A-1” by Standard &
Poor’s Corporation or “P-1” by Moody’s Investors Service, Inc.; (c) certificates
of deposit with maturities of one year or less from the date of acquisition
issued by Lender; (d) for stock, obligations, or securities received in
settlement of debts (created in the ordinary course of business) owing to
Borrower; (e) investments in money market funds of which substantially all the
assets are comprised of securities of the types described in clauses (a) through
(c) above; (f) fully collateralized repurchase agreements with a term of not
more than twelve months for securities described in clause (a) above and entered
into with any federally insured lender or primary dealers in U.S. Government
securities; and (g) investments in Subsidiaries which are or thereupon become
obligated as Borrowers under this Agreement and the other Loan Documents, as
applicable.

Section 6.9 Guaranties, Etc. Except as set forth in Schedule 6.9, assume,
guaranty, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods, or services, or to maintain or cause such Person to
maintain a minimum working capital or net worth, or otherwise to assure the
creditors of any Person against loss) for obligations of any Person in an
aggregate amount not to exceed $500,000.00, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.

Section 6.10 Transactions With Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of Borrower’s business and upon
fair and reasonable terms no less favorable to Borrower than Borrower would
obtain in a comparable arm’s-length transaction with a Person not an Affiliate.

Section 6.11 Subsidiaries. Create or otherwise acquire an interest in any
Subsidiary or permit any non-domestic Subsidiary (excluding such Subsidiaries
listed on Schedule 6.11) to have a net worth of greater than $50,000 other than
funds permitted to be transferred pursuant to Section 6.15.

Section 6.12 Fiscal Year. Change its fiscal year.

Section 6.13 Accounting Methods. Make or consent to a material change (a) in the
stock ownership or structure of Borrower or in the manner in which business of
Borrower is conducted or (b) in its method of accounting unless such change is
within the permissible standards of GAAP.

Section 6.14 Inventory Locations. Move Inventory to or otherwise maintain
Inventory at a location with respect to which Borrower has not delivered to the
Agent (i) a lessor’s consent and agreement from the lessor thereof (ii) a
subordination, nondisturbance and attornment agreement from each mortgagee
thereof and (iii) such other documents or instruments as the Agent shall deem
necessary in its sole discretion in order to create or maintain a first priority
perfected security interest in such Inventory in favor of the Agent, in each
case in form and substance satisfactory to the Agent in its sole discretion.

 

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Section 6.15 Foreign Companies. Send or otherwise transfer funds to the Foreign
Companies in an aggregate amount in excess of $500,000 in any calendar year,
other than (i) intercompany trade transactions in the ordinary course of
business and consistent with past practice, (ii) up to $300,000 to Harmony
Trading; and (iii) to Roberts Mexicana S.A. de C.V. in amounts not to exceed
(a) $350,000 for operations in any calendar year and (b) $150,000 for inventory
purchasing in any calendar year.

ARTICLE 7

FINANCIAL COVENANTS

Borrower covenants and agrees that until payment is made of all the Loans and
the performance of all its obligations hereunder, Borrower shall (as to Borrower
and any of its Subsidiaries) on a consolidated basis:

Section 7.1 Leverage Ratio. Maintain as of the end of each fiscal quarter of the
Borrower, a ratio of (i) Total Liabilities minus Subordinated Debt to
(ii) Tangible Net Worth of not more than as set forth in the following table:

 

Fiscal Quarter Ending

 

Ratio Not More Than

   

8/31/08

  4.25:1.0  

11/30/08

  4.00:1.0  

2-28-09 – Maturity

  3.75:1.0  

Section 7.2 Senior Debt to Trailing EBITDA Ratio. The Borrower shall maintain as
of the end of each fiscal quarter of the Borrower, on a rolling four quarter
basis, a ratio of (i) Senior Debt to (ii) trailing twelve-month Earnings Before
Interest, Taxes, Depreciation and Amortization of not more than as set forth in
the following table:

 

Fiscal Quarter Ending

 

Ratio Not More Than

   

8/31/08

  4.25:1.0  

11-30-08 – Maturity

  4.00:1.0  

Section 7.3 Fixed Charge Coverage Ratio. Maintain as of the end of each fiscal
quarter of the Borrower, on a rolling four quarter basis, a ratio of
(i) Earnings Before Interest, Taxes, Depreciation and Amortization minus
unfinanced Capital Expenditures minus all taxes paid during such period minus
all dividends paid during such period, to (ii) Current Maturities of Long-Term
Debt plus Interest Expense of not less than 1.20:1.00

 

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Section 7.4 Certain Financial Terms. For purposes of this Article 7, the
following terms shall have the following meanings:

(a) “Capital Assets” means fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that capital assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.

(b) “Capital Expenditures” means amounts paid or indebtedness incurred by
Borrower or any of its Subsidiaries in connection with the purchase or lease by
Borrower or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
GAAP.

(c) “Current Maturities of Long-Term Debt” means, with respect to all Debt
which, in accordance with GAAP, may be properly classified as long-term debt,
the portion of such Debt which is due within one (1) year from the date of
determination thereof.

(d) “Earnings Before Interest, Taxes, Depreciation and Amortization” means
earnings (or losses) from operations for any period, after all expenses and
other proper charges but before payment or provision for any depreciation,
amortization, income taxes and increased by interest expense (including non-cash
interest expense) and pension expense and option or warrant related expenses for
such period.

(e) “Interest Expense” means, for any period, the aggregate amount of interest
required to be paid or accrued during such period on all Debt outstanding during
all or any part of such period, whether such interest was or is required to be
reflected as an item of expense or capitalized, including payments consisting of
interest in respect of Capital Leases and including commitment fees, agency
fees, facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.

(f) “Senior Debt” means Debt of Borrower to the Agent or any Lender of any kind
or nature.

(g) “Subordinated Debt” means any Debt of Borrower which is subordinated in
right of payment to the Loans upon terms and conditions and pursuant to
subordination agreements satisfactory to the Lender in its sole discretion.

(h) “Tangible Net Worth” means as at any date of determination thereof, (a) the
amount at which common stockholders’ equity and preferred stock would be shown
on a balance sheet at such date, minus (b) amounts at which good will and any
other intangibles and amounts owed by and/or invested in Affiliates would be
shown on such balance sheet, plus (c) Subordinated Debt. Tangible Net Worth
shall not include accumulated other comprehensive loss as set forth in the
equity section of Borrower’s balance sheet.

 

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(i) “Total Liabilities” means all Debt and other liabilities which in accordance
with GAAP may be properly classified as liabilities and all other liabilities,
indebtedness or obligation whether or not so classified.

Section 7.5 Exclusion from Calculations. All calculations made pursuant to
Article 7 shall exclude any proceeds from gain or EBITDA loss arising from the
sale of any Subsidiary which sale has been consented to in writing by the Agent
and the Lenders and has actually closed. For all covenant calculation and
pricing grid purposes, the amount of goodwill impairment write-off charge for
fiscal year 2007 (approximately $7,520,000) shall be added back to EBITDA.

ARTICLE 8

SECURITY

The Loans are guaranteed and secured by and pursuant to the Security Documents.

ARTICLE 9

EVENTS OF DEFAULT

Section 9.1 Events of Default.

(a) Any one or more of the following events (whether voluntary or involuntary or
effected by operation of law or otherwise) shall be an Event of Default:

(1) Borrower shall fail to pay the principal of, premium, if any, or interest on
the Notes, or any amount of any fee, or any other liability or indebtedness
owing by Borrower to the Agent or any Lender within three (3) days of the due
date thereof;

(2) Any representation or warranty made or deemed made by Borrower in any of the
Loan Documents, or which is contained in any certificate, document, opinion,
report, or financial or other statement furnished at any time under or in
connection with any Loan Document, shall have been incorrect in any material
respect on or as of the date made or deemed made;

(3) Borrower shall fail to comply with any of the covenants contained in
Articles 5, 6 and 7 provided however Borrower shall have a ten (10) day grace
period to comply with the reporting requirements contained in Section 5.8;

(4) Borrower shall fail to perform or observe any term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified elsewhere in this Section 9.1) for thirty (30) days after written
notice of such failure shall have been given to Borrower by the Agent;

 

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(5) Borrower shall (A) fail to pay any indebtedness for borrowed money in excess
of $250,000 (other than the Notes), including any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise), (B) fail to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to any such indebtedness, when required to be performed or
observed (including any applicable grace periods), if the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration after the
giving of notice or passage of time, or both, of the maturity of such
indebtedness, whether or not such failure to perform or observe shall be waived
by the holder of such indebtedness; or any such indebtedness shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof, or (C) be
in default under any other indebtedness of Borrower to the Agent or any Lender;

(6) Borrower (A) shall generally not, or shall be unable to, or shall admit in
writing its inability to pay its debts as such debts become due; or (B) shall
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver, interim receiver,
receiver-manager, monitor, trustee or similar custodian for it or a substantial
part of its assets; or (C) shall commence any proceeding under any bankruptcy,
reorganization, arrangements, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or
(D) shall have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or adjudication or
appointment is made and which remains undismissed for a period of sixty
(60) days or more; or (E) by any act or omission shall indicate its consent to,
approval of, or acquiescence in any such petition, application, or proceeding,
or order for relief, or the appointment of a custodian, receiver, interim
receiver, receiver-manager, monitor, or trustee or similar custodian for all or
any substantial part of its properties; or (F) shall suffer any such
custodianship, receivership, or trusteeship to continue undischarged for a
period of sixty (60) days or more;

(7) One or more judgments, decrees, or orders for the payment of money which in
the aggregate exceeds $250,000.00 shall be rendered against Borrower and such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied, or stayed or bonded pending appeal;

(8) Any Security Document shall at any time after its execution and delivery and
for any reason other than an act or omission by the Agent cease to create a
valid and perfected first priority security interest (or such lesser priority
security interest as may be specifically set forth therein) in and to the
property purported to be subject to such Security Document or otherwise to be in
full force and effect, or any Security Document shall be declared null and void,
or the validity or enforceability thereof shall be contested by Borrower, or
Borrower shall deny it has any further liability or obligation under any
Security Document, or Borrower shall fail to perform any of its obligations
under any Security Document subject to any notice and cure provisions contained
in any Security Document;

 

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(9) Any event shall occur or exist with respect to Borrower which could in the
opinion of the Agent subject Borrower to any tax, penalty, or other liability
under or in connection with ERISA in excess of $250,000 or any event or
condition shall occur or exist with respect to a Canadian Plan that could, in
the Agent’s good faith judgment, subject Borrower or its Subsidiaries to any
tax, penalty or other liabilities under the Supplemental Pension Plans Act
(Québec) and the Pension Benefits Act (Ontario) or any other applicable laws and
which could reasonably be expected to give rise to a Material Adverse Effect, or
if Borrower or any of its Subsidiaries is in default with respect to required
payments to a Canadian Plan or any Lien arises (save for contribution amounts
not yet due) in connection with any Canadian Plan.

(10) There shall occur any material uninsured damage to or loss, theft, or
destruction of any of the Collateral;

(11) Borrower ceases to conduct its business as currently conducted or is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs;

(12) There shall occur any material adverse change in the condition (financial
or otherwise), operations, properties or business of (a) QEP, Roberts
Consolidated Industries, Inc. or Roberts Company Canada Limited or (b) Borrower,
any Affiliate, and any Subsidiary taken as a whole;

(13) The occurrence of any of the following: (i) the sale or other transfer of
all or substantially all of the assets of Borrower, (ii) any transaction
(including a merger, amalgamation or consolidation) the result of which is that
any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the
“beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of
more than thirty-five percent (35%) (calculated on a fully diluted basis) of the
voting power of all classes of voting stock of Borrower and/or warrants or
options to acquire such voting stock, (iii) the adoption of a plan relating to
the liquidation or dissolution of Borrower, or (iv) the first day on which a
majority of the members of the Board of Directors of Borrower cease to be
Continuing Directors (meaning the directors of Borrower on the date hereof and
each other director, if such director’s nomination for election to the Board of
Directors of Borrower is recommended by a majority of the Continuing Directors
at the time of such nomination or election); or

(14) Any other failure of Borrower to perform under this Agreement subject to
applicable notice and cure periods.

 

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(b) Upon and after the occurrence of an Event of Default, the Agent may, and
upon the request of the Required Lenders, shall (1) declare the Commitment to be
terminated, whereupon the same shall forthwith terminate and/or (2) declare all
the outstanding indebtedness evidenced by the Notes and all other amounts
payable under this Agreement (including, without limitation, any Make-Whole
Premium or termination fee that Borrower would have been obligated to pay had it
then elected to prepay the Notes and terminate the Commitment), to be forthwith
due and payable, whereupon the Commitment shall be terminated and the Notes, all
such interest, and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower; provided, however, that
upon the occurrence of any event described in Section 9.1(a)(6), the Commitment
shall terminate and the outstanding Notes, all interest thereon, and all such
other amounts payable under this Agreement shall become automatically due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower.

(c) The occurrence of an Event of Default under any or all of the documents
evidencing, securing or relating to the Loans shall be an Event of Default under
this Agreement.

ARTICLE 10

THE AGENT

Section 10.1 Appointment. Each of the Lenders and the Issuing Lenders hereby
designates BOA as Agent to act as specified herein and in the other Loan
Documents, including without limitation as collateral agent for the benefit of
the Lenders and Issuing Lender with regard to all collateral securing the Loans.
Each Lender and Issuing Lender hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement, the other Loan
Documents and any other instruments and agreements referred to herein or therein
and to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Agent by the terms hereof
and thereof and such other powers as are reasonably incidental thereto. The
Agent may perform any of its duties hereunder by or through its respective
officers, directors, agents, employees or affiliates.

Section 10.2 Nature of Duties. The Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Loan Documents. Neither the Agent, nor any of its officers, directors,
agents, employees, branches or Affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Loan Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct (as determined in a final and non-appealable decision by a
court of competent jurisdiction). The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Lender or Issuing Lender; and nothing in this Agreement or any other Loan
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any other
Loan Document except as expressly set forth herein or therein.

 

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Section 10.3 Lack of Reliance on the Agent. Independently and without reliance
upon the Agent, each Lender and Issuing Lender, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of Borrower and each of its
Subsidiaries in connection with the making and the continuance of the Loans and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of Borrower and each of its Subsidiaries and,
except as expressly provided in this Agreement, the Agent shall not have any
duty or responsibility, either initially or on a continuing basis, to provide
any Lender or Issuing Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. The Agent shall not be responsible to any Lender
or Issuing Lender for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectability, priority or sufficiency of this
Agreement or any other Loan Document (or with respect to the validity, priority
or perfection of any security interests purported to be created thereunder) or
the financial condition of Borrower or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any other Loan Document, or
the financial condition of Borrower or any of its Subsidiaries or the existence
or possible existence of any Default or Event of Default.

Section 10.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until the Agent shall have received instructions from the
Required Lenders; and the Agent shall incur no liability to any Person by reason
of so refraining. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against the Agent as a result of such Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of the Required Lenders.

Section 10.5 Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying upon, any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by any Person that
the Agent believed to be the proper Person, and, with respect to all legal
matters pertaining to this Agreement and any other Loan Document and its duties
hereunder and thereunder, upon advice of counsel selected by the Agent.

Section 10.6 Indemnification. To the extent that the Agent is not reimbursed and
indemnified by Borrower, the Lenders will reimburse and indemnify the Agent, in
proportion to their respective aggregate Commitments (determined as if there
were no Defaulting Lenders and, if all Loans have been repaid in full, as
determined immediately before giving effect to such repayment) for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by the Agent in
performing its duties hereunder or under any other Loan Document, or in any way
relating to or arising out of this Agreement or any other Loan

 

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Document; provided that to the extent that the Agent is reimbursed by Borrower
for amounts paid by the Lenders pursuant to this Section 10.6, the Agent shall
reimburse the Lenders for such amounts; provided further, that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent’s gross negligence or willful misconduct (as determined in a
final and non-appealable decision by a court of competent jurisdiction).

Section 10.7 The Agent in its Individual Capacity. With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Agent shall have the rights and powers specified herein for
a “Lender” and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term “Lenders,” “Required
Lenders,” or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to,
Borrower or any Affiliate of Borrower (or any Person engaged in a similar
business with Borrower or any Affiliate thereof) as if they were not performing
the duties specified herein, and may accept fees and other consideration from
Borrower or any Affiliate of Borrower for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.

Section 10.8 Resignation.

(a) The Agent may resign from the performance of all its functions and duties
hereunder and/or under the other Loan Documents at any time by giving 15
Business Days’ prior written notice to the Lenders and Borrower (provided that
no such notice shall be required to be given to Borrower if a Default or Event
of Default of the type described in Section 9.1(a)(6) exists with respect to
Borrower). Any such resignation by the Agent hereunder shall also constitute its
resignation as an Issuing Lender, in which case the resigning Agent (x) shall
not be required to issue any further Letters of Credit hereunder and (y) shall
maintain all of its rights as Issuing Lender with respect to any Letters of
Credit issued by it prior to the date of such resignation. Such resignation
shall take effect upon the appointment of a successor Agent pursuant to clauses
(b) and (c) below or as otherwise provided below.

(b) Upon any such notice of resignation by the Agent, the Required Lenders shall
appoint a successor Agent hereunder or thereunder who shall be a commercial bank
or trust company reasonably acceptable to Borrower (it being understood and
agreed that (i) Borrower’s acceptance of a successor Agent pursuant to this
paragraph (b) shall not be unreasonably withheld, (ii) so long as a Default or
Event of Default exists at such time such successor Agent shall not be required
to be reasonably satisfactory to Borrower and (iii) any Lender is deemed to be
acceptable to Borrower).

(c) If a successor Agent shall not have been so appointed within such 15
Business Day period, the Agent, with the consent of Borrower (which consent
shall not be unreasonably withheld or delayed but shall not be required at any
time when a Default or Event of Default exists and is continuing), shall then
appoint a successor Agent who shall serve as Agent hereunder or thereunder until
such time, if any, as the Required Lenders appoint a successor Agent as provided
above.

 

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(d) If no successor Agent has been appointed pursuant to clause (b) or (c) above
by the 30th Business Day after the date such notice of resignation was given by
the Agent, the Agent’s resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Agent hereunder and/or
under any other Loan Document until such time, if any, as the Required Lenders
appoint a successor Agent as provided above.

(e) Upon a resignation of the Agent pursuant to this Section 10.8, the Agent
shall remain indemnified to the extent provided in this Agreement and the other
Loan Documents and the provisions of this Article 10 shall continue in effect
for the benefit of the Agent for all of its actions and inactions while serving
as Agent.

ARTICLE 11

GENERAL PROVISIONS

Section 11.1 Amendments, Etc.

(a) Neither this Agreement nor any other Loan Document nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by Borrower and Agent,
provided, that no such change, waiver, discharge or termination shall, without
the consent of the Required Lenders (other than a Defaulting Lender) (with
Obligations being directly modified in the case of following clause (i)),
(i) extend the final scheduled maturity of any Loan or Note or extend the stated
expiration date of any Letter of Credit beyond the Maturity Date, or reduce the
rate or extend the time of payment of interest or fees thereon (except in
connection with the waiver of applicability of any post-default increase in
interest rates), or reduce the principal amount thereof (it being understood
that any amendment or modification to the financial definitions in this
Agreement shall not constitute a reduction in the rate of interest or Fees for
the purposes of this clause (i)), (ii) release all or substantially all of the
Collateral (except as expressly provided in the Loan Documents) under the
Security Documents, (iii) amend, modify or waive any provision of this
Section 11.1 (except for technical amendments with respect to additional
extensions of credit pursuant to this Agreement which afford the protections to
such additional extensions of credit of the type provided to the Mortgage Loan
and the Revolving Loan Commitments on the date of this Agreement), (iv) change
the definition of Required Lenders or (v) consent to the assignment or transfer
by either Borrower, or its Subsidiaries, of any of its rights and obligations
under this Agreement; provided, further, that no such change, waiver, discharge
or termination shall (1) increase the Commitments of any Lender over the amount
thereof then in effect without the consent of such Lender (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Commitment shall not
constitute an increase of the Commitment of any Lender, and that an increase in
the available portion of any Commitment of any Lender shall

 

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not constitute an increase of the Commitment of such Lender), (2) without the
consent of the Issuing Lender, amend, modify or waive any provision of
Section 2.23 or 2.24 or alter its rights or obligations with respect to Letters
of Credit, and (3) without the consent of the Agent, amend, modify or waive any
provision of Article 10 or any other provision as same relates to the rights or
obligations of the Agent.

(b) If, in connection with any proposed change, waiver, discharge or termination
of any of the provisions of this Agreement as contemplated by clauses
(i) through (v), inclusive, of the first proviso to Section 11.1 (a) the consent
of the Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then Borrower shall have the
right, so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clauses (A) or (B) below, to either
(A) replace each such non-consenting Lender or Lenders with one or more
Replacement Lenders so long as at the time of such replacement, each such
Replacement Lender consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Lender’s Commitments and/or
repay outstanding Loans of such Lender, provided that, unless the Commitments
that are terminated, and Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Lenders or
the increase of the Commitments and/or outstanding Loans of existing Lenders
(who in each case must specifically consent thereto), then in the case of any
action pursuant to preceding clause (B) the Required Lenders (determined after
giving effect to the proposed action) shall specifically consent thereto,
provided further, that in any event Borrower shall not have the right to replace
a Lender, terminate its Commitments or repay its Loans solely as a result of the
exercise of such Lender’s rights (and the withholding of any required consent by
such Lender) pursuant to the second proviso to Section 11.1(a).

Section 11.2 Notices, Etc. All notices, demands, requests, and other
communications given under this Agreement shall only be effective if they are
(i) in writing, (ii) actually received by the addressee, and (iii) sent by hand
delivery, by facsimile transmission, by reputable express delivery service, or
by first-class mail, postage prepaid:

 

  (a) If to the Agent, to it at:

Bank of America Business Capital

2150 Black Rock Turnpike

CT2-201-01-01

Fairfield, CT 06825-3293

Attn: Deirdre Z. Sikora, Vice President

Telephone No.: 203/373-7400

Telecopier No.: 203/373-7486

And to it at:

200 Glastonbury Boulevard

Glastonbury, CT 06033-4056

Attn: Loan Administrator; QEP Account Officer

Telecopier No.: 860/368 6029

 

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With a copy to:

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, CT 06103-1919

Attn: James C. Schulwolf, Esq.

Telephone No.: 860/251-5949

Telecopier No.: 860/251-5311

 

  (b) If to a Lender, to its address as set forth in Schedule 2

 

  (c) If to Borrower, to it at:

Q.E.P. Co., Inc.

1001 Broken Sound Parkway, NW, Suite A

Boca Raton, FL 33487-3532

Attn: President or Chief Financial Officer

Telephone No.: 561/994-5550

Telecopier No.: 561/994-1530

With a copy to:

Holland & Knight LLP

701 Brickell Avenue, Suite 3000

Miami, FL 33131-2847

Attn: Rodney Bell, Esq.

Telephone No.: 305/789-7794

Telecopier No.: 305/789-7799

or to such other address (and/or facsimile transmission number) as Borrower or
the Agent, or such Lender, as the case may be, shall have specified in a notice
sent to the other in accordance with this Section.

Section 11.3 No Waiver; Remedies. No failure on the part of the Agent or any
Lender to exercise, and no delay in exercising, any right, power, or remedy
under any of the Loan Documents shall operate as a waiver of such right, power,
or remedy, nor shall any single or partial exercise of any right, power, or
remedy under any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.

 

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Section 11.4 Successors and Assigns.

(a) This Agreement shall be binding upon and inure to the benefit of Borrower,
the Agent and each Lender and their respective successors and assigns; provided,
however, that Borrower shall not (by agreement, operation of law, or otherwise)
assign any of their respective rights, or delegate any of their respective
obligations, under any of the Loan Documents to which Borrower is a party
without the prior written consent of the Agent, and any such assignment or
delegation made without such consent shall be null and void. Each Lender may
sell participations in, or may, subject to Section 11.4(b) hereof, assign, all
or any part of any of the Loans to another lender, in which event (a) in the
case of an assignment, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
as it would have if it were a Lender hereunder; and (b) in the case of a
participation, the participant shall have no rights under the Loan Documents.
The agreement executed by such Lender in favor of the participant shall not give
the participant the right to require such Lender to take or omit to take any
action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to a
rate or amount or any amount of fees payable hereunder to a rate or amount, as
the case may be, below that which the participant is entitled to receive under
its agreement with such Lender. A Lender may furnish any information concerning
Borrower in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall, if requested by Borrower, require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information, except as required by
applicable laws or regulatory or governmental authorities. Any Lender may at any
time pledge all or any portion of its rights under the Loan Documents including
any portion of the Notes to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or enforcement thereof shall release such Lender from its
obligations under any of the Loan Documents.

(b) Notwithstanding the foregoing, any Lender (or any Lender together with one
or more other Lenders) may (x) assign all or a portion of its Commitments and
related outstanding Obligations (or, if the Commitments have terminated, its
outstanding Obligations) hereunder to (i)(A) its parent company and/or any
Affiliate of such Lender which is at least 50% owned by such Lender or its
parent company or (B) one or more other Lenders or (ii) in the case of any
Lender that is a fund that invests in bank loans, any other fund that invests in
bank loans and is managed by the same investment advisor of any Lender or by an
Affiliate of such investment advisor or (y) assign all, or if less than all, a
portion equal to at least $1,000,000 in the aggregate for the assigning Lender
or assigning Lenders of such Commitments and related outstanding Obligations
hereunder (or, if the Commitments have terminated, its outstanding Obligations)
to an Eligible Transferee (treating any fund that invests in bank loans and any
other fund that invests in bank loans and is managed or advised by the same
investment advisor of such fund or by an Affiliate of such investment advisor as
a single Eligible Transferee), each of which assignees shall become a party to
this Agreement as a Lender by execution of an Assignment and Assumption
Agreement (it being understood that any assignment pursuant to clause (y) above
by any Lender described in preceding

 

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clause (x)(ii) must meet the $1,000,000 minimum described above unless the
respective assignment is of all the Commitments and related outstanding
Obligations held by such Lender and any other fund that invests in bank loans
and is managed by the same investment advisor of any Lender or by an Affiliate
of such investment advisor), provided that (i) at such time, Schedule 2 shall be
deemed modified to reflect the Commitments and/or outstanding Loans, as the case
may be, of such new Lender and of the existing Lenders, (ii) upon the surrender
of the relevant Notes (if any) by the assigning Lender (or, upon such assigning
Lender’s indemnifying Borrower for any lost Note pursuant to a customary
indemnification agreement) new Notes will be issued, at Borrower’s expense, to
such new Lender and to the assigning Lender upon the request of such new Lender
or assigning Lender, such new Notes to be in conformity with the requirements of
this Agreement (with appropriate modifications) to the extent needed to reflect
the revised Commitments and/or outstanding Loans, as the case may be, (iii) the
consent of the Agent shall be required in connection with any such assignment
pursuant to clause (y) above or any such assignment of Revolving Loan
Commitments pursuant to clause (x) above (which consents shall not be
unreasonably withheld or delayed), (iv) the consent of the Issuing Lender shall
be required in connection with any such assignment of Revolving Loan Commitments
(which consents shall not be unreasonably withheld or delayed), (v) the Agent
shall receive at the time of each such assignment, from the assigning or
assignee Lender, the payment of a non-refundable assignment fee of $3,500, and
(vi) no such transfer or assignment will be effective until recorded by the
Agent on the Register pursuant to Section 11.25. To the extent of any assignment
pursuant to this Section 11.4(b), the assigning Lender shall be relieved of its
obligations hereunder with respect to its assigned Commitments and outstanding
Loans. At the time of each assignment pursuant to this Section 11.4(b) to a
Person which is not already a Lender hereunder and which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Lender shall, to the extent legally
entitled to do so, provide to Borrower the appropriate Internal Revenue Service
Forms. To the extent that an assignment of all or any portion of a Lender’s
Commitments and related outstanding Obligations would, at the time of such
assignment, result in increased costs under from those being charged by the
respective assigning Lender prior to such assignment, then Borrower shall not be
obligated to pay such increased costs (although Borrower, in accordance with and
pursuant to the other provisions of this Agreement, shall be obligated to pay
any other increased costs of the type described above resulting from changes
after the date of the respective assignment).

Section 11.5 Costs, Expenses, and Taxes; Indemnification.

(a) Borrower agrees to pay on demand all reasonable costs and expenses in
connection with the preparation, execution, delivery, filing, recording, and
administration of any of the Loan Documents, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under any of the Loan Documents including without limitation,
ongoing advice following the effectiveness of this Agreement and all costs and
expenses, if any, in connection with the protection, collection and/or other
enforcement of this Agreement or any of the Loan Documents. In addition,
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other

 

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documents to be delivered under any of the Loan Documents, and agrees to hold
and save the Agent and each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or failure to
pay such taxes and fees.

(b) To the fullest extent permitted by applicable law, if a Default or an Event
of Default shall have occurred and be continuing, Borrower agrees to defend,
indemnify and hold harmless the Agent, each Lender, any other holder of the
Notes and each of the present and future shareholders, partners, directors,
officers, employees, agents, counsel and successors and assigns of each of them
(collectively with the Agent and each Lender the “Lender Parties”) from and
against any and all loss, cost, expense, claim, liability (including strict
liability) or asserted liability incurred from or out of the Loans, the
execution, delivery or performance of this Agreement, or any of the documents or
instruments to be executed and delivered hereunder, or otherwise arising out of
the debtor/creditor relationship between them, the Agent and each Lender or the
Lender Parties relating to the Loans, the exercise of any of the Agent and each
Lender’s rights under the Loans, any litigation or proceeding instituted or
conducted by any Governmental Authority, any act or omission of Borrower or
otherwise, except to the extent (and only to the extent) that the same arises
from the gross negligence or willful misconduct of the Agent or any Lender.

(c) Without limiting the generality of the preceding subparagraph (b), Borrower
agrees to defend, protect, indemnify and hold harmless the Lender Parties from
and against, and to reimburse the Lender Parties on demand with respect to, any
and all matters of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lender Parties at any time and from
time to time by reason of or arising out of any violation of any Environmental
Laws, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Contaminant or any action, suit,
proceeding or investigation brought or threatened with respect to any
Contaminant (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case, including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of internal counsel incurred in connection with any such investigation,
litigation or other proceeding.

(d) The obligations of Borrower described in this Section 11.5 shall survive the
closing of the transactions described in this Agreement, including the making of
any and all Loans and the payment and satisfaction of the Notes.

Section 11.6 Right of Setoff. The Agent and each Lender is hereby authorized at
any time and from time to time without notice to Borrower (any such notice being
expressly waived by Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent or such Lender to or for the
credit or the account of Borrower against any and all of the obligations of
Borrower now or hereafter existing under this Agreement or the Notes or any of
the other Loan Documents, irrespective of whether or not Lender shall have made
any demand under this Agreement or the Notes or such other Loan Document and
although such obligations may be unmatured. The Agent or such Lender

 

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agrees promptly to notify Borrower after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Agent and each Lender under this
Section 11.6 are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Agent or such Lender may have. ANY
AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

Section 11.7 Governing Law; Jurisdiction.

(a) This Agreement, the Notes and the other Loan Documents shall be construed in
accordance with and governed by the laws of the State of Connecticut without
regard to its conflict of laws rules.

(b) Borrower hereby irrevocably submits to the jurisdiction of any Connecticut
State or United States Federal court sitting in Connecticut over any action or
proceeding arising out of or relating to this Agreement, the Notes or the other
Loan Documents, and Borrower hereby irrevocably agrees that all claims in
respect to such action or proceeding may be heard and determined in such
Connecticut State or Federal court. Borrower irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to Borrower at its address specified in Section 11.2. Borrower
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. Borrower further waives any objection to
venue in such state and any objection to an action or proceeding in such State
on the basis of forum non conveniens. Borrower further agrees that any action or
proceeding brought against the Agent or any Lender shall be brought only in
Connecticut State or United States Federal courts sitting in Connecticut.

(c) Nothing in this Section 11.7 shall affect the right of the Agent or any
Lender to serve legal process in any other manner permitted by law or affect the
right of the Agent or any Lender to bring any action or proceeding against
Borrower or their property in the courts of any other jurisdiction.

(d) To the extent that Borrower has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether from service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to themselves or their property, such Person hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement, the Notes and the other Loan Documents.

(e) BORROWER ACKNOWLEDGES AND AGREES THAT THE TRANSACTION OF WHICH THIS
AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION
AND WAIVES ANY RIGHT TO A NOTICE AND HEARING UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED, OR

 

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OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZE THE
AGENT’S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER,
PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. FURTHER, TO THE
EXTENT ALLOWED UNDER APPLICABLE LAW, BORROWER HEREBY WAIVES DEMAND, PRESENTMENT
FOR PAYMENT, PROTEST, NOTICE OF PROTEST, NOTICE OF DISHONOR, DILIGENCE IN
COLLECTION, NOTICE OF NONPAYMENT OF THE NOTE AND ANY AND ALL NOTICES OF A LIKE
NATURE.

Section 11.8 Entire Agreement; Severability of Provisions.

(a) This Agreement and the other Loan Documents collectively constitute the
entire agreement and understanding between the parties hereto relating to the
transactions contemplated by this Agreement and supersede any and all
contemporaneous and prior agreements, representations, arrangements and
understandings (written or oral, express or implied) relating to the subject
matter hereof.

(b) If any term or provision of any of the Loan Documents or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction only to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
thereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.

Section 11.9 Estoppel Certificates. Within fifteen (15) days after the Agent
requests Borrower to do so, Borrower shall cause its chief financial officer to
duly execute and deliver to the Agent a statement certifying (a) that this
Agreement, the Notes, and the other Loan Documents to which Borrower is a party
are in full force and effect and have not been modified except as described in
said statement, (b) the date to which interest on the Notes has been paid,
(c) the unpaid principal balance of the Notes, (d) whether to Borrower’s
knowledge an Event of Default has occurred and is continuing, and if so,
describing in reasonable detail each such Event of Default of which it has
knowledge, (e) whether to its knowledge Borrower has any defense, setoff, or
counterclaim to the payment or performance of any of its obligations in
accordance with the respective terms of this Agreement, the Notes, and the other
Loan Documents, as the case may be, and, if so, describing each defense, setoff,
or counterclaim of which it has knowledge in reasonable detail (including where
applicable the amount thereof), and (f) as to any other matter reasonably
requested by the Agent.

Section 11.10 Waiver of Jury Trial and Consequential Damages.

(a) BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (2) IN

 

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ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THE AGENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH OF THEM TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.

(b) NONE OF THE AGENT, ANY LENDER, ANY ISSUING LENDER, BORROWER, OR ANY AGENT OR
ATTORNEY OF EITHER OF THEM SHALL BE LIABLE TO ANY OF THE OTHERS FOR
CONSEQUENTIAL DAMAGES ARISING FROM ANY BREACH OF CONTRACT, TORT, OR OTHER WRONG
RELATING TO THE ESTABLISHMENT, ADMINISTRATION, OR COLLECTION OF THE OBLIGATIONS
RELATING IN ANY WAY TO THIS AGREEMENT, THE NOTES, OR ANY OF THE OTHER LOAN
DOCUMENTS, OR THE ACTION OR INACTION OF ANY OF SUCH PERSONS UNDER ANY ONE OR
MORE HEREOF OR THEREOF.

(c) IN THE EVENT THE AGENT SEEKS TO TAKE POSSESSION OF ANY OR ALL OF THE
COLLATERAL BY COURT PROCESS OR OTHER METHOD AVAILABLE UNDER THE LAW, BORROWER
IRREVOCABLY WAIVES ANY BOND AND ANY SURETY OR SECURITY RELATING THERETO REQUIRED
BY ANY STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO SUCH POSSESSION, AND
WAIVES ANY DEMAND FOR POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION
TO RECOVER WITH RESPECT THERETO. BORROWER FURTHER WAIVES THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS.

Section 11.11 Replacement of the Note. Upon receipt by Borrower of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction, or mutilation of the Notes, and (a) in the case of loss, theft, or
destruction, of indemnity reasonably satisfactory and furnished without cost to
Borrower (provided, if the holder of such Note is a Lender or a bank, insurance
company, or other institutional lender, its own unsecured agreement of indemnity
shall be satisfactory), or (b) in the case of mutilation, upon surrender and
cancellation thereof, Borrower will execute and deliver in lieu thereof a
replacement Note of like tenor.

Section 11.12 Survival of Representations and Warranties. All representations,
warranties, and covenants made by Borrower in this Agreement or any of the other
Loan Documents or in any certificate or other writing delivered by it or on its
behalf thereunder shall be considered to have been relied upon by the Agent and
each Lender and shall survive the delivery of this Agreement and the other Loan
Documents. All statements in any such certificate or other writing shall
constitute representations and warranties of Borrower hereunder.

 

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Section 11.13 Further Assurances. Borrower from time to time shall execute and
deliver to Lender such additional documents and will provide such additional
information as the Agent may reasonably require to carry out the terms of this
Agreement and to keep the Agent and each Lender informed of the status and
affairs of Borrower.

Section 11.14 Construction. Each covenant contained in this Agreement shall be
construed (absent an express contrary provision therein) as being independent of
each other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse compliance
with any other covenant.

Section 11.15 Captions. Article and Section titles in the Loan Documents are
included for convenience only and do not define, limit, or describe the scope of
the provisions thereof.

Section 11.16 Opinion Letter. The obligation of the Agent and the Lenders to
make the Loans is subject to receipt by it of an opinion of counsel to Borrower
dated as of the closing date as to certain matters specified in this Agreement.
Borrower having consulted with their legal counsel acknowledges that the
delivery of the opinion may create an attorney/client relationship between
counsel to Borrower and the Agent or any Lender and Borrower knowingly waives
any resulting conflict of interest, present or future, arising out of the
delivery of the opinion.

Section 11.17 Examination of Records. Not more than two (2) times per year
(unless an Event of Default shall have occurred and be continuing, in which
event such right shall be unlimited), the Agent will have the right to conduct
field audits or otherwise make periodic examinations of the books, records and
operations of Borrower and review and verify the Receivables of Borrower. All
costs arising in connection with any exercise of the Agent’s rights under this
Section 11.17 shall be at the rate of $850 per person day plus out-of-pocket
expenses and shall be for the account of Borrower. Notwithstanding the
foregoing, the Agent may conduct additional field audits and periodic
examinations at the expense of the Lenders, unless an Event of Default shall
have occurred and be continuing, in which event the costs thereof shall be borne
by Borrower.

Section 11.18 Releases. Borrower hereby acknowledges that it has been
represented by competent counsel in connection with this transaction and has
been fully advised by such counsel of the full range of rights and obligations
possessed by them and undertaken or received pursuant to the terms of this
Agreement and, specifically, the provisions of this section of the Agreement.
Borrower hereby knowingly and, after consultation with counsel, freely
acknowledges and agrees that it does not now have nor know of any basis for any
claim in tort, contract or otherwise against the Lender Parties for breach of
any of the terms of the documents evidencing or securing the Loans or which may
have arisen out of the relationship between them and any of Lender Parties
relating to the Loans up to and through the date of this Agreement. Borrower
acknowledges and agrees that this Agreement was negotiated, executed and
delivered freely and with full and informed knowledge of the consequences of
this Agreement and that it has executed this Agreement without duress and that
the Agent and each Lender has proceeded in a commercially reasonable manner in
light of all the facts and circumstances surrounding the transaction which are
the subject of this Agreement.

 

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Section 11.19 Counterparts. This Agreement may be executed and delivered in any
number of counterparts. Each counterpart shall constitute an original, but all
counterparts together shall constitute but one and the same agreement.

Section 11.20 Subsequent Bankruptcy. In the event of Borrower’s subsequent
default hereunder, Borrower hereby covenants not to impede the Agent and each
Lender’s rightful exercise of its rights under the Loan Documents by seeking
protection under Title 11 of the United States Bankruptcy Code or other
applicable law, of similar application. Borrower hereby agrees that in
consideration of the mutual covenants and promises contained herein and the
other Loan Documents, Borrower will not seek protection under Title 11 of the
United States Bankruptcy Code or other applicable law, of similar application,
including without limitation Canadian bankruptcy laws. In the event that an
order for relief pursuant to Title 11 of the United States Bankruptcy Code or
other applicable law, of similar application is entered against Borrower,
Borrower hereby consents to relief from the automatic stay pursuant to 11 U.S.C.
§ 362 or otherwise to ensure that the Agent and Lenders shall be “unaffected
creditors” and not subject to any stay of proceedings and hereby irrevocably
waives all defenses or objections thereto, in order to permit the Agent and each
Lender to pursue its respective rights under general law.

Section 11.21 Judgment.

(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 is in accordance with normal banking
procedures the Lender could purchase the Original Currency with the Other
Currency on the first Business Day preceding that on which final judgment is
given.

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

Section 11.22 Maximum Rate of Interest. All agreements between Borrower, the
Agent and each Lender are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration or maturity of the
indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to
be paid to the Agent and each Lender for the use or the forbearance of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term “applicable law” shall mean the law in effect as
of the date hereof provided, however that in the event there is a change in the
law which results in a

 

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higher permissible rate of interest, then this Agreement and the Notes shall be
governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of Borrower, the Agent and each Lender in
the execution, delivery and acceptance of this Agreement and the Notes to
contract in strict compliance with the laws of the State of Connecticut from
time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or of any of the Loan Documents at the time
of performance of such provision shall be due, shall involve transcending the
limit of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever the Agent or any Lender should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. This
provision shall control every other provision of all agreements between
Borrower, the Agent and each Lender.

Section 11.23 Payments Pro Rata. Each of the Lenders agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker’s lien, by
counterclaim or cross action, by the enforcement of any right under the Loan
Documents, or otherwise), which is applicable to the payment of the principal
of, or interest on, the Loans, Unpaid Reimbursement Obligations or Letter of
Credit fees, of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the respective
Borrower to such Lenders in such amount as shall result in a proportional
participation by all the Lenders in such amount; provided, that if all or any
portion of such excess amount is thereafter recovered from such Lenders, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. Without limiting the generality of the
foregoing, BOA agrees that in the event that it receives proceeds from (i) its
first priority pledge of collateral located in the Netherlands with respect to
which the Agent has a second priority pledge or (ii) its first priority charge
on collateral located in the United Kingdom with respect to which the Agent has
a second priority charge, it shall share such proceeds with HSBC in accordance
with their respective aggregate Commitments. Notwithstanding anything to the
contrary contained herein, this paragraph shall be subject to the express
provisions of this Agreement which require, or permit, differing payments to be
made to Non-Defaulting Lenders as opposed to Defaulting Lenders.

Section 11.24 Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Lender.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 11.24 would, at the time of such
transfer, result in increased costs under Section 2.11 or 2.12 from those being
charged by the respective Lender prior to such transfer, then Borrower shall not
be obligated to pay such increased costs (although Borrower shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective transfer).

 

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Section 11.25 Register. Borrower hereby designates the Agent to serve as its
agent, solely for purposes of this Section 11.25, to maintain a register (the
“Register”) on which it will record the Commitments from time to time of each of
the Lenders, the Loans made by each of the Lenders and each repayment in respect
of the principal amount of the Loans of each Lender. Failure to make any such
recordation, or any error in such recordation, shall not affect Borrower’s
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitments of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitments shall not be effective
until such transfer is recorded on the Register maintained by the Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments and Loans
shall remain owing to the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be recorded by the Agent on
the Register only upon the acceptance by the Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to Section 11.4(b).
Coincident with the delivery of such an Assignment and Assumption Agreement to
the Agent for acceptance and registration of assignment or transfer of all or
part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note (if any) evidencing such Loan, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Lender and/or the new Lender at the
request of any such Lender. Borrower agrees to indemnify the Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Agent in performing
its duties under this Section 11.25.

Section 11.26 Confidentiality.

(a) Subject to the provisions of clause (b) of this Section 11.26, each Lender
agrees that it will use its reasonable efforts not to disclose without the prior
consent of Borrower (other than to its affiliates, employees, auditors, advisors
or counsel or to another Lender if such Lender or such Lender’s holding or
parent company in its sole discretion determines that any such party should have
access to such information, provided such Persons shall be subject to the
provisions of this Section 11.26 to the same extent as such Lender) any
information with respect to Borrower or any of its Subsidiaries which is now or
in the future furnished by or on behalf of Borrower or any of its Subsidiaries
pursuant to this Agreement or any other Loan Document which information is, at
the time of its disclosure, confidential and/or proprietary and clearly
identified as such in writing, provided, that any Lender may disclose any such
information (i) as has become generally available to the public other than by
virtue of a breach of this Section 11.26(a) by the respective Lender, (ii) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (iii) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (iv) in order to comply with any law, order, regulation or ruling
applicable to such Lender, (v) to the Agent, (vi) to any direct or indirect
contractual counterparty in

 

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any swap, hedge or similar agreement (or to any such contractual counterparty’s
professional advisor), so long as such contractual counterparty (or such
professional advisor) agrees to be bound by the provisions of this Section 11.26
and (vii) to any prospective or actual transferee or participant in connection
with any contemplated transfer or participation of any of the Notes or
Commitments or any interest therein by such Lender, provided that such
prospective transferee agrees to be bound by the confidentiality provisions
contained in this Section 11.26.

(b) Borrower hereby acknowledges and agrees that each Lender may share with any
of its affiliates, and such affiliates may share with such Lender, any
information related to Holdings or any of its Subsidiaries (including, without
limitation, any non-public customer information regarding the creditworthiness
of Borrower and its Subsidiaries), provided, such Persons shall be subject to
the provisions of this Section 11.26 to the same extent as such Lender.

Section 11.27 Superseding Second Amended and Restated Loan Agreement. This
Agreement shall supersede the Second Amended and Restated Loan Agreement. On the
date hereof, the rights and obligations of the parties under the Second Amended
and Restated Loan Agreement shall be subsumed within and governed by this
Agreement; provided that the provisions of the Second Amended and Restated Loan
Agreement shall remain in full force and effect prior to the date hereof.

Section 11.28 Reaffirmation. Borrower hereby reaffirms the continuing validity
of all liens against Borrower in favor of Lender as previously granted to Lender
and hereby reaffirms all Security Documents.

Section 11.29 Amendment and Restatement.

(a) This Agreement amends and restates the Second Amended and Restated Loan
Agreement. All rights, benefits, indebtedness, interest, liabilities and
obligations of the parties pursuant to the Second Amended and Restated Loan are
hereby renewed, amended, restated and superseded in their entirety according to
the terms and provisions set forth herein. This Agreement does not constitute,
nor shall or result in, a waiver of or release, discharge or forgiveness of any
amount payable pursuant to the Second Amended and Restated Loan or any
indebtedness, liabilities or obligations of the Borrower thereunder, all of
which are renewed and continued and are hereafter payable and to be performed in
accordance with this Agreement and the other Loan Documents. Neither this
Agreement nor any other Loan Document extinguishes the indebtedness or
liabilities outstanding in connection with the Second Amended and Restated Loan
or any of the Loan Documents, nor do they constitute a novation with respect
thereto.

(b) All guarantees, security interests, pledges, assignment, hypothecs and other
Liens previously granted by an Obligor pursuant to the Second Amended and
Restated Loan or any of the Loan Documents shall remain in full force and effect
as security for the Obligations.

(c) Amounts in respect of interest, fees and other amounts payable to or for the
account of the Agent or any Lender or Letter of Credit Issuer shall be
calculated (i) in accordance with the provisions of the Second Amended and
Restated Loan with respect to any

 

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period (or a portion of any period) ending prior to the Closing Date, and
(ii) in accordance with the provisions of this Agreement with respect to any
period (or a portion of any period) commencing on or after the Closing Date.

[The next page is the Signature Page]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date first above written.

 

BORROWER: Q.E.P. CO., INC. By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   Chief Executive Officer

ROBERTS CONSOLIDATED

INDUSTRIES, INC.

By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) ROBERTS HOLDING
INTERNATIONAL INC. By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) ROBERTS COMPANY CANADA
LIMITED By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized)

[Signature page to Third A&R Loan Agreement]

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Q.E.P. ZOCALIS HOLDING L.L.C. By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) BOIARDI PRODUCTS
CORPORATION By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) ROBERTS CAPITOL, INC. By
 

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) QEP-CALIFORNIA, INC. By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized) Q.E.P. STONE HOLDINGS,
INC. By  

/s/ Lewis Gould

Name:   Lewis Gould Its:   President (Duly Authorized)

[Signature page to Third A&R Loan Agreement]

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AGENT: BANK OF AMERICA, N.A. By:  

/s/ Deirdre Sikora

  Deirdre Sikora, Vice President LENDERS: BANK OF AMERICA, N.A. By:  

/s/ Deirdre Sikora

  Deirdre Sikora, Vice President LENDERS: HSBC BANK USA, NATIONAL ASSOCIATION
By:  

/s/ Jose V. Mazariegos

  Jose V. Mazariegos, Senior Vice President

[Signature page to Third A&R Loan Agreement]

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SCHEDULE 1

Borrowers:

Q.E.P. Co., Inc.

Roberts Consolidated Industries, Inc.

Roberts Holding International, Inc.

Roberts Company Canada Limited

Q.E.P. Stone Holdings, Inc.

Q.E.P. Zocalis Holdings L.L.C.

QEP-California, Inc.

Boiardi Products Corporation

Roberts Capitol, Inc.

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SCHEDULE 2

COMMITMENTS

 

Lender

   Mortgage Loan
Commitment     Revolving Loan
Commitment  

Bank of America, N.A.

   $ 1,335,799.72  (CAD)   $ 21,000,000  (USD)

HSBC Bank USA, National Association

   $ 890,533.15  (CAD)   $ 14,000,000  (USD)

TOTAL

   $ 2,226,332.87  (CAD)   $ 35,000,000  (USD)

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SCHEDULE 2 (continued)

LENDER ADDRESSES

 

Lender

  

Address

Bank of America, NA   

Bank of America Business Capital

2150 Black Rock Turnpike

CT2-201-01-01

Fairfield, CT 06825

Attn: Deirdre Sikora, Vice President

 

200 Glastonbury Boulevard

Glastonbury, CT 06033

Attn: Loan Administration

QEP Account Officer

HSBC Bank USA, National

Association

  

1441 Brickell Avenue.

16th Floor

Miami, FL 33131

Attn: Jose Mazariegos, Senior Vice President

Tel 305-539-4945

Fax 305-539-4930

Email:

jose.v.mazariegos@us.hsbc.com