Exhibit 10.3

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

made and entered into

 

as of September 26, 2006

 

by and among

 

WALCO INTERNATIONAL, INC.

a Delaware corporation (successor by merger to
Walco International, Inc., a California corporation)

 

EACH OF THE CREDIT PARTIES WHICH IS NOW OR HEREAFTER A
GUARANTOR HEREUNDER FROM TIME TO TIME,

 

EACH OF THE FINANCIAL INSTITUTIONS WHICH IS
A SIGNATORY HERETO OR
WHICH MAY FROM TIME TO TIME
BECOME A PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,

a national banking association
as Administrative Agent for such Financial Institutions,

 

GENERAL ELECTRIC CAPITAL CORPORATION,

a Delaware corporation
as Documentation Agent for such Financial Institutions,

 

and

 

J.P. MORGAN SECURITIES INC.,

as sole and exclusive Lead Arranger and Bookrunner

 

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Index to Credit Agreement

 

 

 

 

Page

1.

Definitions

1

 

1.1

Certain Defined Terms

1

 

1.2

Accounting Terms and Determinations

35

 

1.3

UCC and PPSA Changes

36

 

 

 

 

2.

Loans; Letters of Credit; Notes; Payments; Prepayments; Interest Rates

36

 

2.1

Commitments

36

 

2.2

Loans

36

 

2.3

Commitment Fees

39

 

2.4

Termination and Reductions of Commitments

39

 

2.5

Mandatory and Voluntary Prepayments

40

 

2.6

Notes; Payments

42

 

2.7

Application of Payments and Prepayments

42

 

2.8

Interest Rates for Loans

44

 

2.9

Special Provisions Applicable to LIBOR Borrowings

45

 

2.10

Letters of Credit

48

 

2.11

Swingline Loans

53

 

2.12

Pro-Rata Treatment

54

 

2.13

Sharing of Payments, Etc.

55

 

2.14

Recapture

56

 

2.15

Increase of Total Revolving Credit Commitment

57

 

 

 

 

3.

Collateral

59

 

3.1

Security Documents

59

 

3.2

Filing and Recording

59

 

 

 

 

4.

Conditions

60

 

4.1

All Loans

60

 

4.2

First Loan or Letter of Credit

61

 

 

 

 

5.

Representations and Warranties

63

 

5.1

Organization

63

 

5.2

Financial Statements

63

 

5.3

Enforceable Obligations; Authorization

63

 

5.4

Other Debt

64

 

5.5

Litigation

64

 

5.6

Taxes

64

 

5.7

No Material Misstatements

64

 

5.8

Subsidiaries

65

 

5.9

Representations by Others

65

 

5.10

Permits, Licenses, Etc.

65

 

5.11

ERISA

65

 

5.12

Title to Properties; Possession Under Leases

65

 

5.13

Assumed Names

66

 

5.14

Investment Company Act

66

 

5.15

Public Utility Holding Company Act

66

 

5.16

Agreements

66

 

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5.17

Environmental Matters

67

 

5.18

No Change in Credit Criteria or Collection Policies

67

 

5.19

Solvency

67

 

5.20

Status of Collateral

68

 

5.21

Term Loan Debt and Second Lien Debt Documents

68

 

5.22

Transactions with Related Parties

68

 

5.23

Patents, Trademarks and Copyrights

68

 

 

 

 

6.

Affirmative Covenants

69

 

6.1

Businesses and Properties

69

 

6.2

Taxes

69

 

6.3

Financial Statements and Information

70

 

6.4

Inspections; Field Examinations; Appraisals and Physical Counts

71

 

6.5

Further Assurances

72

 

6.6

Books and Records

72

 

6.7

Insurance

72

 

6.8

ERISA

73

 

6.9

Use of Proceeds

73

 

6.10

Guarantors, Joinder Agreements

74

 

6.11

Notice of Events

75

 

6.12

Environmental Matters

75

 

6.13

End of Fiscal Year

76

 

6.14

Pay Obligations and Perform Other Covenants

76

 

6.15

Cash Dominion; Collection and Application of Accounts

76

 

6.16

Accounts and Other Collateral Matters

77

 

6.17

Agreements

77

 

 

 

 

7.

Negative Covenants

78

 

7.1

Indebtedness

78

 

7.2

Liens

80

 

7.3

Contingent Liabilities

82

 

7.4

Mergers, Consolidations and Dispositions and Acquisitions of Assets

82

 

7.5

Nature of Business

85

 

7.6

Transactions with Related Parties

85

 

7.7

Investments, Loans

85

 

7.8

ERISA Compliance

86

 

7.9

Intentionally Deleted

86

 

7.10

Change in Accounting Method

86

 

7.11

Redemption, Dividends, Issuance of Equity Interests, Distributions and
Restricted Payments

86

 

7.12

Fixed Charge Coverage Ratio

88

 

7.13

Capital Expenditures

88

 

7.14

Intentionally Deleted

88

 

7.15

Sale of Accounts

88

 

7.16

Sale and Lease-Back Transactions

89

 

7.17

Change of Name or Place of Business

89

 

7.18

Restrictive Agreements

89

 

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7.19

Modification or Waiver of Documents Governing Term Loan Debt or Second Lien Debt

89

 

7.20

Availability

89

 

7.21

Anti-Terrorism Laws

89

 

 

 

 

8.

Events of Default and Remedies

90

 

8.1

Events of Default

90

 

8.2

Remedies Cumulative

93

 

 

 

 

9.

The Agent

93

 

9.1

Appointment, Powers and Immunities

93

 

9.2

Reliance

94

 

9.3

Defaults

94

 

9.4

Rights as a Lender

94

 

9.5

Indemnification

95

 

9.6

Non-Reliance on Agent and Other Lenders

95

 

9.7

Failure to Act

96

 

9.8

Resignation or Removal of Agent

96

 

 

 

 

10.

Miscellaneous

96

 

10.1

No Waiver

96

 

10.2

Notices

97

 

10.3

Governing Law

97

 

10.4

Survival; Parties Bound

97

 

10.5

Counterparts

97

 

10.6

Limitation of Interest

97

 

10.7

Survival

98

 

10.8

Captions

98

 

10.9

Expenses, Etc.

98

 

10.10

Indemnification

100

 

10.11

Amendments, Waivers, Etc.

101

 

10.12

Successors and Assigns

102

 

10.13

Entire Agreement

105

 

10.14

Severability

106

 

10.15

Disclosures

106

 

10.16

Capital Adequacy

106

 

10.17

Taxes

107

 

10.18

Waiver of Claims

109

 

10.19

Right of Setoff

109

 

10.20

Waiver of Right to Jury Trial

110

 

10.21

Additional Provisions Regarding Collection of Accounts and other Collateral

110

 

10.22

Hedging Obligations; Cash Management Obligations

111

 

10.23

Construction

113

 

10.24

Joint and Several Obligations

114

 

10.25

USA Patriot Act

114

 

10.26

Confidentiality

114

 

10.27

No Rights, Duties or Obligations of Documentation Agent

114

 

iii

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EXECUTION VERSION

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT (together with all amendments,
modifications and supplements hereto and restatements hereof, this “Agreement”)
is made and entered into as of September 26, 2006, by and among WALCO
INTERNATIONAL, INC. (“Borrower”), a Delaware corporation (successor by merger to
Walco International, Inc., a California corporation), EACH OF THE CREDIT PARTIES
WHICH IS NOW OR HEREAFTER A GUARANTOR HEREUNDER, EACH OF THE FINANCIAL
INSTITUTIONS WHICH IS A SIGNATORY HERETO OR WHICH MAY FROM TIME TO TIME BECOME A
PARTY HERETO (individually, a “Lender” and collectively, the “Lenders”),
JPMORGAN CHASE BANK, N.A. (“JPMorgan”), a national banking association, as
Administrative Agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Agent”), and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, as Documentation Agent for the Lenders (in
such capacity, together with its successors in such capacity, the “Documentation
Agent”).

 

W I T N E S S E T H:

 

Reference is hereby made to that certain Credit Agreement dated as of June 30,
2005, executed by and among the Borrower, the Credit Parties named therein, the
Lenders, the Agent, and the Documentation Agent (the “Original Agreement”).

 

In connection with the execution of that certain Term Loan Agreement of even
date herewith, by the Borrower, the Credit Parties named therein, the lenders
now or hereafter party thereto (the “New Term Lenders”) and Wilmington Trust
Company, a Delaware banking corporation, as Administrative Agent for the New
Term Lenders, pursuant to which the New Term Lenders will make available to the
Borrower of a new $45,000,000 term loan facility to effectively refinance,
replace and increase the existing Term Loans (as defined in the Original
Agreement), the Borrower, the undersigned Credit Parties, the Agent and the
Lenders now desire to amend and restate the Original Agreement in its entirety. 
Accordingly, the Original Agreement is hereby amended and restated in its
entirety to hereafter be and read as follows:

 

THAT, in consideration of the mutual covenants, agreements and undertakings
herein contained, the parties hereto agree as follows:

 

1.             Definitions.

 

1.1           Certain Defined Terms.  Unless a particular word or phrase is
otherwise defined or the context otherwise requires, capitalized words and
phrases used in the Loan Documents have the meanings provided below.

 

Accounts shall have the meaning set forth in Article 9 of the UCC and in the
PPSA.

 

Adjusted LIBOR Rate shall mean, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal

 

1

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to the sum of (a) the product of (i) the LIBOR Rate in effect for such Interest
Period and (ii) Statutory Reserves and (b) the Applicable Margin.

 

Affiliate of any Person shall mean any other Person which controls or is
controlled by or under common control with such Person.  For purposes of this
definition, “control” (including “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person through the
ownership of securities or by contract; provided that no Lender shall be an
Affiliate of the Borrower.  Without limiting the generality of the foregoing,
control of the right to vote of five percent (5%) or more of all voting
securities of a Person or beneficial ownership of five percent (5%) of the
outstanding equity interests in such Person shall be deemed to be control for
purposes of compliance with the provisions of Section 7.6 hereof; provided,
however, that with respect to any key management employees of the Borrower,
control of the right to vote of five percent (5%) or greater, but less than
fifteen percent (15%), of all voting securities of the Parent and/or the
Borrower or beneficial ownership of five percent (5%) or greater, but less than
fifteen percent (15%), of the outstanding equity interests in the Parent and/or
the Borrower by such key management employee shall not be deemed to be control
for purposes of compliance with the provisions of Section 7.6 hereof.

 

Agent shall have the meaning specified in the preamble to this Agreement.

 

Alternate Base Rate shall mean, for any day, a rate per annum (rounded upwards
to the nearest 1/16 of 1%) equal to the sum of (a) the greater of (i) the Prime
Rate (computed on the basis of the actual number of days elapsed over a 360-day
year) in effect on such day, and (ii) the Federal Funds Effective Rate (computed
on the basis of the actual number of days elapsed over a 360-day year) in effect
for such day plus 1/2 of 1% and (b) the Applicable Margin.  For purposes of this
Agreement, any change in the Alternate Base Rate due to a change in the Prime
Rate or Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or Federal Funds Effective Rate, respectively.  If
for any reason the Agent shall have determined (which determination shall be
conclusive and binding, absent manifest error) that it is unable to ascertain
the Federal Funds Effective Rate for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined without regard to
clause (a)(ii) until the circumstances giving rise to such inability no longer
exist.

 

Alternate Base Rate Borrowing shall mean, as of any date, that portion of the
principal balance of the Loans bearing interest at the Alternate Base Rate as of
such date.

 

Annual Audited Financial Statements shall mean (a) the annual financial
statements of the Credit Parties and their Subsidiaries, including all notes
thereto, which statements shall include, on a Consolidated basis, a balance
sheet as of the end of such fiscal year and a statement of operations, a
retained earnings statement and a statement of cash flows for such fiscal year,
all setting forth in comparative form the corresponding figures from the
previous fiscal year and accompanied by a report and opinion of independent
certified public accountants with an accounting firm of national standing and
with a reputation satisfactory to the Agent, which report shall not contain any
material qualification (and be without comment as to the accountants’ opinion
whether the Borrower is a “going concern” or can continue to be a “going
concern”),

 

2

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except that such report may contain qualification with respect to new accounting
principles mandated by the Financial Accounting Standards Board (or its
successor organization), and shall state that such financial statements, in the
opinion of such accountants, present fairly, in all material respects, the
financial position of such Person as of the date thereof and the results of its
operations and cash flows for the period covered thereby in conformity with GAAP
and (b) to the extent required by the Agent, annual consolidating financial
statements of the Credit Parties and their Subsidiaries containing a balance
sheet as of the end of such fiscal year and a statement of operations for such
fiscal year prepared in reasonable detail.  Such statements shall be accompanied
by a certificate of such accountants that in making the appropriate audit and/or
investigation in connection with such report and opinion, such accountants did
not become aware of any Default or Event of Default with respect to any of the
financial covenants set forth in Sections 7.12, 7.13 and 7.14 hereof, or if in
the opinion of such accountant any such Default or Event of Default exists, a
description of the nature and status thereof.

 

Applicable Lending Office shall mean, with respect to each Lender, such Lender’s
Domestic Lending Office in the case of an Alternate Base Rate Borrowing and such
Lender’s LIBOR Lending Office in the case of a LIBOR Borrowing.

 

Applicable Margin shall mean, a rate per annum of 2.00% for LIBOR Borrowings and
a rate per annum of .50% for Alternate Base Rate Borrowings; provided, however,
that as of the end of each fiscal quarter of the Borrower (commencing with the
period ending December 31, 2005), the Applicable Margin shall be adjusted upward
or downward, as applicable, to the respective amounts shown in the schedule
below based on the Leverage Ratio for the Credit Parties and their Subsidiaries,
on a Consolidated basis, tested as of the end of the applicable fiscal quarter
of the Credit Parties.  For purposes hereof, any such adjustment in the
respective amounts of the Applicable Margin, whether upward or downward, shall
be effective ten (10) Business Days after the applicable Annual Audited
Financial Statements or the Monthly Unaudited Financial Statements of the Credit
Parties have been delivered to and received by the Agent in accordance with the
terms of Sections 6.3(a) and 6.3(b) hereof; provided, however, if any such
financial statements are not delivered in a timely manner as required under the
terms of Sections 6.3(a) and 6.3(b) hereof, the Applicable Margin from the date
such financial statements were due until ten (10) Business Days after Agent and
Lenders receive the same will be the highest level set forth below for the
Applicable Margin.

 

Leverage Ratio

 

Per Annum Percentage for
Revolving Credit LIBOR
Borrowings

 

Per Annum Percentage for
Revolving Credit Alternate
Base Rate Borrowings

 

Greater than or equal to 6.5x

 

2.50

%

1.00

%

Less than 6.50x, but greater than or equal to 5.25x

 

2.25

%

0.75

%

Less than 5.25x, but greater than or equal to 4.25x

 

2.00

%

0.50

%

Less than 4.25x, but greater than or equal to 3.25x

 

1.75

%

0.25

%

Less than 3.25x

 

1.50

%

0.00

%

 

3

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Applications shall mean all applications and agreements for Letters of Credit,
or similar instruments or agreements, in Proper Form, now or hereafter executed
by any Person in connection with any Letter of Credit now or hereafter issued or
to be issued under the terms hereof at the request of the Borrower.

 

Approved Fund means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of
credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

 

Assignment and Acceptance shall have the meaning specified in
Section 10.12(c) hereof.

 

Availability shall mean at any time (a) the lesser at such time of (i) the Total
Revolving Credit Commitment (as such amount may be reduced in accordance with
the provisions of this Agreement) and (ii) the Borrowing Base, less (b) the sum
of (i) the aggregate amount of each Lender’s Revolving Credit Exposure at such
time, (ii) the aggregate amount of accrued and unpaid interest outstanding under
the Revolving Loans at such time, (iii) all other outstanding Obligations
hereunder or any other Loan Documents which are due and payable at such time,
including without limitation, Commitment Fees, fees related to any Letters of
Credit, and legal fees and other amounts payable under Section 10.9 hereof, and
(iv) all Reserves against Availability established by the Agent from time to
time.

 

Blocked Person shall mean (i) a Person that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order No. 13224; (ii) a
Person owned or controlled by, or acting for or on behalf of, any Person that is
listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224; (iii) a Person or entity with which any Lender is
prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires
to commit or supports “terrorism” as defined in the Executive Order No. 13224;
(v) a Person or entity that is named as a “specially designated national” on the
most current list published by the U.S. Treasury Department Office of Foreign
Asset Control at its official website or any replacement website or other
replacement official publication of such list, or (vi) a Person or entity who is
affiliated or associated with a Person or entity listed above.

 

Borrower shall have the meaning specified in the preamble of this Agreement.

 

Borrowing Base shall mean, as of any date, the amount of the then most recent
computation of the Borrowing Base, determined by calculating the amount equal to
the following:

 

4

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

 

(a)           85% of Eligible Accounts; plus

 

(b)           the lesser of (i) 65% of Eligible Inventory (valued, in each case,
at the lower of cost or fair market value on a first-in, first-out basis), and
(ii) 85% of the Net Recovery Rate of Eligible Inventory; provided, however, that
during the period commencing on April 1 and ending on September 30 of each
calendar year, the 65% advance rate for Eligible Inventory contained in clause
(i) above shall, at the discretion of the Agent, be increased to up to 75% and
the 85% advance rate for the Net Recovery Rate of Eligible Inventory contained
in clause (ii) above shall, at the discretion of the Agent, be increased to up
to 100%; plus

 

(c)           the lesser of (i) $10,000,000 or (ii) the sum of (1) up to 75% of
the Net Recovery Rate of the Eligible Equipment, and (2) up to 75% of the fair
market value of the Eligible Real Estate; provided, however, that the 75%
advance rate for the Net Recovery Rate of Eligible Equipment and the 75% advance
rate for Eligible Real Estate contained in clause (ii) above shall be subject to
the Equipment and Real Estate Annual Adjustments; less

 

(d)           all Reserves against the Borrowing Base established by the Agent
from time to time.

 

Notwithstanding anything to the contrary set forth in the immediately preceding
sentence, the Agent reserves the right to adjust downward, to a level acceptable
to the Agent in its Permitted Discretion, the advance rates set forth above for
Eligible Accounts if the average dilution percentage for all Accounts of the
Credit Parties ever exceeds five percent (5%).  For purposes hereof, “average
dilution percentage” shall mean for each dollar of gross sales by the Credit
Parties (other than the Parent), the average percentage of such dollar of gross
sales that is not collected by such Credit Parties for any reason, including
without limitation, any credits, rebates, refunds, returns, discounts or any
other reason.  The Borrowing Base may be computed by the Agent on as frequent as
a daily basis (based on all information reasonably available to the Agent,
including without limitation, the periodic reports and listings delivered to the
Agent in accordance with Sections 6.3(e), (f) and (g) hereof).

 

Business Day shall mean a day when the principal office in New York City of the
Agent is open for business and the Lenders’ Applicable Lending Offices are
generally open for business; provided, however, that with respect to LIBOR
Borrowings, Business Day shall also mean a day on which transactions in dollar
deposits between lenders may be carried on in the London eurodollar interbank
market.

 

Business Entity shall mean corporations, partnerships, limited liability
companies, joint ventures, joint stock associations, business trusts and other
business entities.

 

Canadian Subsidiary shall mean any Subsidiary of that is organized and domiciled
in the Canada.

 

Capital Expenditures shall mean, with respect to any Person for any period, all
capital expenditures of such Person, on a Consolidated basis, for such period
(including without limitation, the aggregate amount of Capital Lease Obligations
incurred during such period which

 

5

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

 

are required to be capitalized and reported as a liability on the consolidated
balance sheet of such Person), determined in accordance with GAAP, consistently
applied.  For the avoidance of doubt, the term “Capital Expenditures” shall not
include those items described in Section 7.4(e)(7).

 

Capital Lease Obligations shall mean the obligations of a Person to pay that
portion of rent or other amounts constituting payments of principal under a
lease of (or other agreement conveying the right to use) real and/or personal
Property which obligations are required to be classified and accounted for as a
capital lease on a balance sheet of such Person under GAAP (including Statement
of Financial Accounting Standards No. 13 of the Financial Accounting Standards
Board, as amended), provided that for purposes of this Agreement, the amount of
such obligations shall be only the capitalized amount thereof, determined in
accordance with GAAP (including such Statement No. 13).

 

Cash Dividends shall mean, with respect to any Person for any period, all fixed
and calculable cash dividend payments actually made with respect to any Equity
Interests of such Person for such period.

 

Cash Management Obligations shall mean any and all obligations and liabilities
of Borrower or any of its Subsidiaries to the Agent, JPMorgan, any other Lender
or any of their respective Affiliates, now existing or hereafter arising,
whether direct, indirect, joint, several, or joint and several, arising under or
in any way relating to or incurred in connection with (a) any deposit accounts
maintained by Borrower or any of its Subsidiaries with the Agent, JPMorgan, any
other Lender or any of their respective Affiliates, (b) any cash management
services or treasury administration services provided by Agent, JPMorgan, any
other Lender or any of their respective Affiliates (c) any documentation
relating thereto, or (d) any services or transactions relating thereto,
including without limitation, daylight overdraft exposure and credit card, debit
card and other similar products; provided, however, that with respect to any
such obligations and liabilities owing by the Borrower or any of its
Subsidiaries to any Lender other than the Agent, such other Lender notifies the
Agent in writing of the amount of such obligations and liabilities not less
frequently than once each calendar month or more frequently as the Agent
requires pursuant to written notice delivered to the Lenders.

 

Change of Control shall mean the occurrence of any of the following at any time
after the Closing Date:

 

(a)           at any time prior the consummation of an initial public offering
of any Equity Interests in the Parent, Charlesbank and/or its respective
Affiliates shall fail to either (i) beneficially own in the aggregate, directly
or indirectly, more than 50% of the aggregate voting power of all issued and
outstanding classes of Equity Interests in the Parent having the right to elect
Board of Directors of the Parent, or (ii) have the right to cause enough of
their nominees in the aggregate to be elected or appointed, and remain serving
at all times as, Board of Directors of the Parent so as to constitute a majority
of such Board of Directors;

 

(b)           at any time after the consummation of an initial public offering
of any Equity Interests in the Parent, any Person and/or its respective
Affiliates shall either (i)

 

6

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

 

beneficially own in the aggregate, directly or indirectly, 35% or more of the
aggregate voting power of all issued and outstanding classes of Equity Interests
in the Parent having the right to elect Board of Directors of the Parent, or
(ii) have the right to cause enough of their nominees in the aggregate to be
elected or appointed, and remain serving at all times as, Board of Directors of
the Parent so as to constitute a majority of such Board of Directors;

 

(c)           at any time the Parent shall cease to own directly, free and clear
of all Liens (other than in favor of the Agent for the ratable benefit of the
Lenders and subordinate and inferior Liens permitted under Section 7.2), both
legal title to and beneficial ownership of 100% of all issued and outstanding
Equity Interests of the Borrower; provided, however, that a transfer of the
legal title to and beneficial ownership of Equity Interests of the Borrower
having no more than 10% of the aggregate voting power of all classes of Equity
Interests in the Borrower or 10% of the total economic equity interests of the
Borrower to management employees of the Borrower shall not trigger a Change of
Control;

 

(d)           at any time (i) the Parent shall cease to have the right to elect,
directly or indirectly, by virtue of beneficial ownership of Equity Interests of
the Borrower, contract or otherwise, at least a majority in number of the
members of the Board of Directors of the Borrower or (ii) less than a majority
in number of the members of the Board of Directors of the Borrower shall have
been elected or appointed, directly or indirectly, by the Parent; or

 

(e)           the occurrence of a Change of Control (as defined in the Second
Lien Debt Documents).

 

As used above, “beneficially own” shall have the same meaning as defined in
Rules 13d-3 and 13d-5 of the Securities and Exchange Act of 1934, as amended, or
any successor provision thereto.

 

Charlesbank shall mean Charlesbank Equity Fund VI, Limited Partnership, a
Massachusetts limited partnership.

 

Closing Date shall mean the date of this Agreement.

 

Code shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

 

Collateral shall mean all collateral and security as described in the Security
Documents.

 

Collateral Access Agreement shall mean any landlord waiver, subordination or
other agreement, in form and substance satisfactory to the Agent, between the
Agent and any third party (including any warehouseman, bailee or other similar
Person) in possession of any Collateral or any landlord of any Credit Party for
any real Property where any Collateral is located, as such landlord waiver or
other agreement may be amended, restated, or otherwise modified from time to
time.

 

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Collateral Agent shall mean JPMorgan, in its capacity as the collateral agent of
the holders of the Obligations and the Term Loan Debt with respect to the
Collateral, in accordance with and pursuant to the terms of the First Lien
Intercreditor Agreement, and any successor collateral agent under the terms of
the First Lien Intercreditor Agreement.

 

Commitment Fee, with respect to any Lender, shall have the meaning assigned to
it in Section 2.3.

 

Commitment Percentage shall mean, with respect to any Lender, (a) prior to the
termination of the Total Revolving Credit Commitment, the ratio, expressed as a
percentage, of such Lender’s Commitment to the Total Revolving Credit
Commitment, and (b) after the termination of the Total Revolving Credit
Commitment, the ratio, expressed as a percentage, of the amount of such Lender’s
outstanding Loans and its portion of the Letter of Credit Exposure Amount and
the Swingline Exposure to the aggregate amount of all outstanding Loans and the
total Letter of Credit Exposure Amount and the Swingline Exposure.

 

Consequential Loss shall mean, with respect to (a) the payment of principal of
or interest on a LIBOR Borrowing on a day other than the last day of the
applicable Interest Period, (b) the failure to borrow or convert a LIBOR
Borrowing on the date specified by the Borrower for any reason, or (c) any
cessation of the Adjusted LIBOR Rate to apply to the Loans or any part thereof
pursuant to Section 2.9 hereof, in each case whether voluntary or involuntary,
any loss, expense, penalty, premium or liability incurred by any of the Lenders
or the Agent as a result thereof, including without limitation, any interest
paid by any of the Lenders to lenders of funds borrowed by it to make or carry
the Loans and any other costs and expenses sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or maintain the
Loans.

 

Consolidated shall mean, for any Person, as applied to any financial or
accounting term, such term determined on a consolidated basis in accordance with
GAAP (except as otherwise required herein) for such Person and all Subsidiaries
thereof.

 

Contingent Obligation shall mean, as to any Person, any obligation of such
Person guaranteeing the payment or performance of any Indebtedness, leases,
dividends or other obligations (collectively “primary obligations”) of any other
Person (the “primary obligor”), whether directly or indirectly, including
without limitation, any obligation of the Person for whom Contingent Obligations
is being determined, (a) to purchase any such primary obligation or other
property constituting direct or indirect security therefor, (b) assume or
contingently agree to become or be secondarily liable in respect of any such
primary obligation, (c) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital or
equity capital for the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (d) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (e) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided, however, that the
term “Contingent Obligation” shall not include endorsements of checks or other
negotiable instruments in the ordinary course of business.

 

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Contribution Agreement shall mean any Contribution Agreement executed by and
among the Borrower and its Subsidiaries, as the same may be amended, modified,
supplemented, restated and joined in pursuant to a Joinder Agreement, from time
to time.

 

Credit Parties shall mean the Borrower and the Guarantors, and Credit Party
shall mean any one of such Persons.

 

Debt Service Expense shall mean, with respect to the Credit Parties for any
period, the aggregate of regularly scheduled principal payments of all Funded
Debt (including, without limitation, regularly scheduled principal payments of
the Term Loan Debt and any mandatory principal payments of the Term Loan Debt
based upon Excess Cash Flow (as defined in the Term Loan Debt Purchase
Agreement), but excluding any principal payments of the Revolving Loans to the
extent there is not an equivalent permanent reduction in the Total Revolving
Credit Commitment), made or to be made by such Person during such period, on a
Consolidated basis, in accordance with GAAP, consistently applied. 
Notwithstanding the foregoing, for purposes of calculating the Debt Service
Expense for any period ending prior to the first anniversary of the Closing
Date, the component of the Debt Service Expense for regularly scheduled
principal payments of the Term Loan Debt (but not any other regularly scheduled
principal payments of any other Funded Debt, including without limitation, any
scheduled payments of the Term Loan Debt based upon Excess Cash Flow, as defined
in the Term Loan Debt Purchase Agreement) shall be deemed to be $450,000.

 

Default Rate shall mean, on any day, as follows:  (a) with respect to principal
which is outstanding under any Note, the sum of the Interest Option otherwise
applicable thereto on such day plus two percent per annum (it being understood
that if any such applicable Interest Option is based on the Adjusted LIBOR Rate,
the Default Rate with respect to the applicable principal amount shall only be
calculated with reference to the applicable Adjusted LIBOR Rate until the
Interest Period applicable thereto expires, and upon the expiration of such
applicable Interest Period, the Default Rate for such applicable principal
amount shall be computed on the basis of the Alternate Base Rate for such day
plus two percent per annum), and (b) with respect to accrued interest, fees and
other Obligations (other than past due principal outstanding under any Note),
the sum of the Alternate Base Rate for such day plus two percent per annum.

 

Discontinued Operations shall mean, as of any day, operations of any Credit
Party or any of its Subsidiaries which have been discontinued, and which, as of
such day, have been fully terminated, disposed of or liquidated.

 

Domestic Lending Office shall mean, with respect to any Lender, the office of
such Lender specified as its “Domestic Lending Office” opposite its name on the
signature pages hereof, or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.

 

Domestic Subsidiary shall mean any Subsidiary of that is organized and domiciled
in the Unites States of America.

 

EBITDA shall mean, with respect to the Credit Parties for any period, Net Income
for such period plus (a) without duplication and to only the extent deducted in
determining Net

 

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Income for such period, the sum of (i) Interest Expense, (ii) federal, state and
local income or franchise taxes, (iii) all amounts attributable to depreciation
and amortization expense, (iv) any extraordinary charges, (v) Permitted
Management Fees and customary and reasonable director’s fees and board expenses
for board of directors of the Credit Parties, (vi) amounts used to repurchase
from Charlesbank and/or any of its Affiliates the equity securities of the
Parent to the extent included within Permitted Affiliate Transactions, and
(vii) any other non-cash charges (including without limitation, (A) the issuance
of restricted stock or stock options, (B) equity losses of Affiliates that are
not a Subsidiary of any Credit Party, and (C) all charges attributable to the
use of the purchase accounting method), but excluding any non-cash charge in
respect of an item that was included in Net Income in a prior period and any
non-cash charge that relates to the write-down or write-off of Inventory, minus
(b) without duplication and to the extent included in Net Income, (i) any cash
payments made during such period in respect of non-cash charges described in
clause (a)(vii) taken in a prior period and (ii) any extraordinary gains and any
non-cash items of income, in each case of such Person for such period, computed
and calculated, without duplication, on a Consolidated basis and in accordance
with GAAP, consistently applied.

 

Eligible Assignee shall mean (i) a Lender, (ii) an Affiliate of a Lender,
(iii) an Approved Fund, or (iv) any other commercial lender, finance company,
insurance company, financial institution or fund reasonably acceptable to the
Agent and the Borrower; provided, however, that if an Event of Default has
occurred which has not been waived or cured to the satisfaction of the Agent and
the Required Lenders, such approval by the Borrower shall not be required.

 

Eligible Accounts shall mean, as at any date of determination thereof, all
Accounts of any one or more of the Credit Parties (other than (i) the Parent and
(ii) Subsidiaries of the Borrower that are not wholly-owned by the Borrower,
directly or indirectly) which comply with all of the following requirements:

 

(a)                                  all payments due on the Account have been
billed and invoiced in a timely fashion and in the normal course of business;

 

(b)                                 the Account has payment terms of 30 days or
less, or if the Account has payment terms of 31 to 180 days, such Accounts
having payment terms of 31 to 180 days shall not constitute more than ten
percent (10%) of the total Eligible Accounts;

 

(c)                                  no payment on the Account is more than 60
days past due;

 

(d)                                 the Account has been created by the
applicable Credit Party in the ordinary course of business from a completed,
outright and lawful sale of goods, to which such goods have been shipped and
title has passed to the applicable account debtor on an absolute sales basis, or
from the rendering of services by or on behalf of such Credit Party and is
deemed “earned” under the applicable service contract or other agreement between
such Credit Party and the applicable account debtor;

 

(e)                                  the Account is Collateral hereunder and is
subject to a first priority perfected Lien in favor of the Agent for the ratable
benefit of the Lenders and is free and clear of all other Liens of any nature
whatsoever (except for Liens permitted under

 

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Sections 7.2 (b), (d) and (e) below which do not have priority over the Lien in
favor of the Agent);

 

(f)                                    more than fifty percent (50%) of all
billed Accounts owing to by the applicable account debtor to the Credit Parties
are Eligible Accounts;

 

(g)                                 if applicable, the Account together with all
other Accounts owing from the applicable debtor and its Affiliates to the Credit
Parties is not in excess of thirty percent (30%) of the aggregate Eligible
Accounts (it being agreed that for purposes of this subparagraph, only the
aggregate amount of such Accounts owing from the applicable debtor and its
Affiliates in excess of such 30% concentration threshold shall be excluded from
Eligible Accounts);

 

(h)                                 the Account does not arise out of a
bill-and-hold, guaranteed sale, sale-and-return, consignment, sale-on-approval,
progress billing, promotional (including samples), C.O.D. or cash in advance
arrangement;

 

(i)                                     the Account is not subject to any
setoff, contra, offset, deduction, dispute, charge back, credit, counterclaim or
other defense arising out of the transactions represented by the Account or
independently thereof (but in each case regarding an undisputed liquidated sum,
only to the extent of such undisputed sum, and in each case regarding a disputed
sum or claim, only to the extent of the sum or amount claimed by the party
adverse to the applicable Credit Party);

 

(j)                                     the applicable account debtor has
finally accepted the goods or services from the sale out of which the Account
arose and has not (1) objected to such account debtor’s liability thereon,
(2) rejected any of such services or goods or (3) returned or repossessed any of
such goods, except for goods returned in the ordinary course of business for
which, in the case of goods returned, goods of equal or greater value have been
shipped in return;

 

(k)                                  the Account must not be “performance”
related and subject to future adjustment;

 

(1)                                  the applicable account debtor is not any
Governmental Authority, unless such account debtor is the United States of
America (or any agency, instrumentality, department or other political
subdivision thereof) and there has been compliance satisfactory to the Agent in
all respects with the Federal Assignment of Claims Act;

 

(m)                               the applicable account debtor is not a
director, officer, employee or any Affiliate of any of the Credit Parties;

 

(n)                                 the applicable account debtor must not be a
natural Person and must be organized under the laws of any state or province, or
have its principal place of business located within the United States or Canada
(to the extent located in a Canadian province in which the PPSA is in effect),
except for Accounts fully insured or backed by a letter of credit in all
respects acceptable to the Agent in its Permitted Discretion;

 

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(o)                                 the Account is not evidenced by a promissory
note or other instrument or by chattel paper;

 

(p)                                 the Account complies with all material Legal
Requirements (including without limitation, all usury laws, fair credit
reporting and billing laws, fair debt collection practices and rules, and
regulations relating to truth in lending and other similar matters);

 

(q)                                 the Account is in full force and effect and
constitutes a legal, valid and binding obligation of the applicable account
debtor enforceable in accordance with the terms thereof;

 

(r)                                    the Account is denominated in and
provides for payment by the applicable account debtor in U.S. dollars or
Canadian dollars (with the Borrower being required to report for Borrowing Base
purposes the U.S. dollar equivalent amount of Canadian dollar denominated
Accounts, and in determining the Borrowing Base for any purpose, the Agent shall
be entitled at any time to redetermine at any time the U.S. dollar equivalent of
Canadian dollar denominated Accounts based upon the most recent applicable
information then available to the Agent);

 

(s)                                  the Account has not been and is not
required to be charged or written off as uncollectible in accordance with GAAP;
and

 

(t)                                    except for Accounts fully backed by a
letter of credit in all respects acceptable to the Agent in its sole reasonable
credit judgment, the credit standing of the applicable account debtor in
relation to the amount of credit extended has not become unsatisfactory to the
Agent in its Permitted Discretion.

 

Standards of eligibility for Eligible Accounts may be fixed and revised from
time to time solely by the Agent based on events, conditions or other
circumstances arising or discovered after the Closing Date which adversely
affect or could reasonably be expected to adversely affect the Eligible Accounts
in the Permitted Discretion of the Agent, and the Agent may from time to time in
its Permitted Discretion exclude particular Accounts from the definition of
Eligible Accounts; provided, that the Agent shall use reasonable efforts to give
the Borrower written notice within five (5) Business Days after the effective
date of any change in such standards of eligibility or exclusions. 
Additionally, in determining the amount of an Eligible Account, the face amount
of an Account shall be reduced by, without duplication, to the extent not
reflected in such face amount, (i) unpaid sales, excise or similar taxes owed by
any of the Credit Parties, (ii) the amount of all accrued and actual discounts,
claims, credits or credits pending, promotional program allowances, price
adjustments, finance charges or other allowances, whether issued, owing, granted
or outstanding (including any amount that any Credit Party may be obligated to
rebate to the applicable account debtor pursuant to the terms of any agreement
or understanding (written or oral)) and (iii) the aggregate amount of all cash
received in respect of such Account but not yet applied by the Credit Parties to
reduce the amount of such Account.  Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, no Accounts purchased or
otherwise acquired through any acquisition or other Investment permitted
hereunder after the Closing Date shall be deemed to constitute Eligible Accounts
for purposes

 

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hereof unless and until the Agent shall have conducted a field examination (at
the Borrower’s cost and expense) of the applicable books, records and operations
for the assets or Subsidiary so acquired in order to reasonably satisfy the
Agent that the Accounts so acquired generally satisfy the above-described
standards of eligibility.

 

Eligible Equipment shall mean, as at any date of determination thereof, all
Equipment of any one or more of the Credit Parties (other than (i) the Parent
and (ii) Subsidiaries of the Borrower that are not wholly-owned by the Borrower,
directly or indirectly) which complies with all of the following requirements:

 

(a)                                  good title to such Equipment is owned by
and recorded on the books and records of the applicable Credit Party;

 

(b)                                 the applicable Credit Party has the right to
subject such Equipment to a Lien in favor of the Agent for the ratable benefit
of the Lenders, and such Equipment is subject to a first priority perfected Lien
in favor of the Agent and is free and clear of all other Liens of any nature
whatsoever (except for Liens permitted under Sections 7.2 (b) and (e) below
which do not have priority over the Lien in favor of the Agent);

 

(c)                                  the full purchase price for such Equipment
has been paid by the applicable Credit Party;

 

(d)                                 such Equipment is located at a real Property
location either owned or leased by any of the Credit Parties, so long as such
leased facility is covered by either (i) a Collateral Access Agreement delivered
to the Agent by the lessor thereof or (ii) a Reserve for rent, charges, and
other amounts due or to become due with respect to such facility has been
established by the Agent in its Permitted Discretion;

 

(e)                                  such Equipment is in good working order and
condition (ordinary wear and tear excepted) and is used or held for use by the
applicable Credit Party in the ordinary course of business of such Credit Party;

 

(f)                                    such Equipment is not subject to any
agreement which restricts the ability of the applicable Credit Party to use,
sell, transport or dispose of such Equipment or which restricts the Agent’s
ability to take possession of, sell or otherwise dispose of such Equipment; and

 

(g)                                 such Equipment does not constitute
“fixtures” under the applicable laws of the jurisdiction in which such Equipment
is located.

 

Standards of eligibility for Eligible Equipment may be fixed and revised from
time to time solely by the Agent based on events, conditions or other
circumstances arising or discovered after the Closing Date which adversely
affect or could reasonably be expected to adversely affect Eligible Equipment in
the Permitted Discretion of the Agent, and the Agent may from time to time in
its Permitted Discretion exclude particular Equipment from the definition of
Eligible Equipment; provided, that the Agent shall use reasonable efforts to
give the Borrower written notice within five (5) Business Days after the
effective date of any change in such standards of eligibility or

 

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exclusions.  Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, no Equipment purchased or otherwise
acquired through any acquisition or other Investment permitted hereunder after
the Closing Date shall be deemed to constitute Eligible Equipment for purposes
hereof unless and until the Agent shall have received an satisfactory appraisal
of such Equipment and conducted a field examination (both at the Borrower’s cost
and expense) of the applicable books, records and operations for the assets or
Subsidiary so acquired in order to reasonably satisfy the Agent that the
Equipment so acquired generally satisfies the above-described standards of
eligibility.

 

Eligible Inventory shall mean all finished goods Inventory of any one or more of
the Credit Parties (other than (i) the Parent and (ii) Subsidiaries of the
Borrower that are not wholly-owned by the Borrower, directly or indirectly)
which complies with all of the following requirements:

 

(a)                                  good title to such Inventory is owned by
and recorded on the books and records of the applicable Credit Party in the
ordinary course of business;

 

(b)                                 such Inventory is valued in accordance with
GAAP on a first in, first out basis at the lower of fair market value or cost;

 

(c)                                  such Inventory is Collateral hereunder and
is subject to a first priority perfected Lien in favor of the Agent for the
ratable benefit of the Lenders and is free and clear of all other Liens of any
nature whatsoever (except for Liens permitted under Sections 7.2 (b), (d) and
(e) below which do not have priority over the Lien in favor of the Agent);

 

(d)                                 such Inventory meets all applicable laws and
standards imposed by any Governmental Authority having regulatory authority over
it;

 

(e)                                  such Inventory is in good condition, is not
returned, shopworn, defective or damaged, and is currently usable or saleable in
the ordinary course of business of the Credit Parties;

 

(f)                                    such Inventory is not raw materials or
work-in-progress Inventory, is not scrap or remnants Inventory and is not
display items or manufacturing, replacement, packaging or shipping supplies or
materials;

 

(g)                                 such Inventory must not be in transit and
must be housed or stored in the United States or Canada at either a real
Property location either owned or leased by any of the Credit Parties or a
public warehouse facility utilized by any of the Credit Parties, so long as such
leased facility or public warehouse facility is covered by either (i) a
Collateral Access Agreement delivered to the Agent by the lessor or operator
thereof or (ii) a Reserve for rent, charges, and other amounts due or to become
due with respect to such facility has been established by the Agent in its
Permitted Discretion; provided, however, that Inventory in transit for which
title to such Inventory has transferred to any of the Credit Parties, such
Inventory has been physically received by any of the Credit Parties in the
continental United States or Canada, and such Inventory is adequately insured by
the Credit Parties

 

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in accordance with the other provisions of this Agreement and the other Loan
Documents shall not be excluded from Eligible Inventory solely as result of the
in-transit nature of such Inventory;

 

(h)                                 such Inventory is not in the possession of
or control of any bailee (other than a warehouseman as described above) or any
agent or processor for or customer of the Borrower or any of its applicable
Subsidiaries, unless either (A) such bailee, agent or processor has executed and
delivered to the Agent a Collateral Access Agreement, or (B) an adequate Reserve
for charges, and other amounts due or to become due with respect to such bailee,
agent or processor has been established by the Agent in its Permitted
Discretion;

 

(i)                                     such Inventory must be adequately
insured to the reasonable satisfaction of the Agent pursuant to insurance
coverage required by this Agreement and the Security Documents;

 

(j)                                     such Inventory has not been sold and
must not be on consignment; provided, that Inventory subject to bill-and-hold
arrangements with account debtors shall not be excluded from Eligible Inventory
solely as result of the bill-and-hold nature of such Inventory, so long as such
bill-and-hold Inventory is not subject to any Lien or other claim by any
bill-and-hold account debtor;

 

(k)                                  such Inventory is not obsolete or slow
moving;

 

(1)                                  such Inventory is not manufactured,
produced or sold pursuant to any license or other similar agreement of any
patent, trademark or copyright owned or sublicensed by any Person other than a
Credit Party, unless (A) such owner or sublicensor has executed and delivered to
the Agent an agreement reasonably satisfactory to the Agent consenting to the
Agent’s Lien against all Inventory subject to such license or other similar
agreement and permitting the Agent to resale such Inventory upon terms
acceptable to the Agent in the event of foreclosure or other recovery of such
Inventory by the Agent, or (B) the applicable license or other similar agreement
of any patent, trademark or copyright does not directly or indirectly restrict,
in the Agent’s reasonable judgment, the Agent’s ability to resale such Inventory
without further consent of the applicable licensor in the event of foreclosure
or other recovery of such Inventory by the Agent; and

 

(m)                               the Agent has not deemed such Inventory
ineligible because the Agent considers such Inventory in its Permitted
Discretion to be unmarketable or the value thereof to be impaired or its ability
to realize such value to be insecure.

 

Standards of eligibility for Eligible Inventory may be fixed and revised from
time to time solely by the Agent based on events, conditions or other
circumstances arising or discovered after the Closing Date which adversely
affect or could reasonably be expected to adversely affect Eligible Inventory in
the Permitted Discretion of the Agent, and the Agent may from time to time in
its Permitted Discretion exclude particular Inventory from the definition of
Eligible Inventory;

 

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provided, that the Agent shall use reasonable efforts to give the Borrower
written notice within five (5) Business Days after the effective date of any
change in such standards of eligibility or exclusions.  Notwithstanding anything
to the contrary contained in this Agreement or any other Loan Document, no
Inventory purchased or otherwise acquired through any acquisition or other
Investment permitted hereunder after the Closing Date shall be included within
the Borrowing Base for purposes hereof unless and until the Agent shall have
received a satisfactory appraisal of such Inventory and conducted a field
examination (both at the Borrower’s cost and expense) of the applicable books,
records and operations for the assets or Subsidiary so acquired in order to
reasonably satisfy the Agent that the Inventory so acquired generally satisfies
the above-described standards of eligibility.

 

Eligible Real Estate shall mean the Real Estate (other than Excluded Real
Estate) owned by any one or more of the Credit Parties (other than (i) the
Parent, (ii) Subsidiaries of the Borrower that are not wholly-owned by the
Borrower, directly or indirectly, or (iii) any non-Domestic Subsidiary) which
complies with all of the following requirements:

 

(a)                                  fee simple title to such Real Estate is
owned by and recorded on the books and records of the applicable Credit Party;

 

(b)                                 the Agent is satisfied that all actions
necessary or desirable in order to create perfected first priority Lien on such
real Property have been taken, including, the filing and recording of Mortgages,
such real Property is adequately protected by fully-paid valid title insurance
with endorsements and in amounts acceptable to the Agent, insuring that the
Agent, for the ratable benefit of the Lenders, has a perfected first priority
Lien on such real Property, and such real Property is free and clear of all
other Liens of any nature whatsoever (except for Liens permitted under Sections
7.2 (b), (d) and (e) below which do not have priority over the Lien in favor of
the Agent);

 

(c)                                  the full purchase price for such real
Property has been paid by the applicable Credit Party;

 

(d)                                 an appraisal report has been delivered to
the Agent in form, scope and substance satisfactory to the Agent; and

 

(e)                                  the Agent shall have received an
environmental assessment report covering such real Property and such report
shall not indicate that any pending, threatened or existing material
Environmental Claim or material Environmental Liabilities exists or that such
real Property is not in compliance with any Requirements of Environmental Law in
any material respect.

 

Standards of eligibility for Eligible Real Estate may be fixed and revised from
time to time solely by the Agent based on events, conditions or other
circumstances arising or discovered after the Closing Date which adversely
affect or could reasonably be expected to adversely affect Eligible Real Estate
in the Permitted Discretion of the Agent, and the Agent may from time to time in
its Permitted Discretion exclude particular parcels of the Real Estate from the
definition of Eligible Real Estate; provided, that the Agent shall use
reasonable efforts to give the Borrower written

 

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notice within five (5) Business Days after the effective date of any change in
such standards of eligibility or exclusions.

 

Environmental Claim shall mean any third party (including any Governmental
Authority) action, lawsuit, claim or proceeding (including claims or proceedings
at common law) which seeks to impose or alleges any liability for (i) pollution
or contamination by, or releases or threatened releases of, Hazardous Substances
into the air, surface water, ground water or land or the clean-up, abatement,
removal, remediation or monitoring of such pollution, contamination or Hazardous
Substances; (ii) generation, recycling, reclamation, handling, treatment,
storage, disposal or transportation of Hazardous Substances; (iii) exposure to
Hazardous Substances; (iv) the safety or health of employees or other Persons in
connection with any of the activities specified in any other subclause of this
definition; or (v) the manufacture, processing, distribution in commerce,
presence or use of Hazardous Substances.  An “Environmental Claim” includes a
common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit, or to adopt or amend a regulation, to the extent that such
a proceeding attempts to redress violations of the applicable permit, license,
or regulation as alleged by any Governmental Authority.

 

Environmental Liabilities shall mean all liabilities arising from any
Environmental Claim or Requirement of Environmental Law under any theory of
recovery, at law or in equity, and whether based on negligence, strict liability
or otherwise, including:  remedial, removal, response, abatement, restoration
(including natural resources), investigative, or monitoring liabilities,
personal injury and damage to property, natural resources or injuries to
persons, and any other related costs, expenses, losses, damages, penalties,
fines or liabilities, including attorney’s fees and court costs.  Environmental
Liability shall mean any one of them.

 

Environmental Permit shall mean any permit, license, approval or other
authorization under any applicable law or regulation of the United States or of
any state, municipality or other subdivision thereof relating to pollution or
protection of health or the environment, including laws or regulations relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, Hazardous Substances or toxic materials or wastes into ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, recycling, presence, use, treatment,
storage, disposal, transport, or handling of wastes, pollutants, contaminants or
Hazardous Substances.

 

Equipment shall have the meaning set forth in Article 9 of the UCC and in the
PPSA.

 

Equipment and Real Estate Annual Adjustments shall mean annual adjustments of
the advance rates for the Eligible Equipment and Eligible Real Estate components
of the Borrowing Base, based upon either (a) annual reductions in such advance
rates, based upon a straight-line amortization basis over a seven (7) year
period for the Eligible Equipment advance rate and a ten (10) year period for
the Eligible Real Estate advance rate, or (b) annual recalculations (with no
increases in such advance rates possible) based upon annual reappraisals of the
Equipment and Real Estate Collateral, with the Borrower having the annual option
(each such annual option to be exercisable on or before April 30 of each
calendar year) to select which of the foregoing options shall be applicable for
the annual period ending as of June 30 of the applicable calendar year.  If the
amortization option is selected by the Borrower for any annual period ending
after

 

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the Borrower has previously selected the reappraisal option for a prior annual
period, the applicable 7-year and 10-year amortization periods for such advance
rate reductions described above shall commence (or recommence, if applicable) as
of the annual period ending immediately after the last such annual period for
which the reappraisal option has been selected, and thereafter, to the extent
selected by the Borrower, annual amortization reductions shall occur on such
amortization basis unless and until the Borrower selects the reappraisal option
for any subsequent annual period (it being agreed that any selection by the
Borrower of the reappraisal option for any annual period shall cause the
applicable 7-year and 10-year amortization periods for such advance rate
reductions to recommence as of the next annual period, if applicable, for which
the Borrower selects the amortization option).  If the annual reappraisal option
is selected by the Borrower for any annual period, then any requisite reduction
of the applicable advance rate(s) shall be implemented on June 30 of the
applicable calendar year (or as soon thereafter as the requisite appraisal
results are received by the Agent), it being agreed that the Agent shall
commence such annual reappraisals when required in order to have the applicable
appraisal results by June 30 of the applicable calendar year.

 

Equity Interests shall mean as to a Business Entity, all capital stock,
partnership interests, membership interests or other indicia of equity rights,
including without limitation, any warrants, options or other rights to acquire
such interests, issued by such Business Entity from time to time.

 

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and all rules, regulations, rulings and interpretations
adopted by the Internal Revenue Service or the Department of Labor thereunder.

 

ERISA Affiliate shall mean any trade or business (whether or not incorporated)
which together with the Borrower or any Subsidiary of the Borrower would be
treated as a single employer under the provisions of Title I or Title IV of
ERISA.

 

Event of Default shall mean any of the events specified in Section 8.1 hereof or
otherwise specified as an Event of Default in any other Loan Document, provided
there has been satisfied any requirement in connection with any such event for
the giving of notice or the lapse of time, or both, and Default shall mean any
of such events, whether or not any such requirement for the giving of notice, or
the lapse of any applicable grace or curative period (if any), or both, has been
satisfied.

 

Excess Interest Amount shall have the meaning attributed to such term in
Section 2.14 hereof.

 

Excluded Real Estate shall mean each of the real Properties listed as “excluded
real estate” on Schedule 1.1(a).

 

Federal Funds Effective Rate shall mean, for any day, a rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for

 

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any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

 

Financed Capital Expenditures shall mean (i) Capital Expenditures which are
financed at the time of purchase with Indebtedness otherwise permitted
hereunder, and (ii) Capital Lease Obligations to the extent the same constitute
Capital Expenditures otherwise permitted hereunder.

 

First Lien Intercreditor Agreement shall mean the Intercreditor and Collateral
Agency Agreement dated effective as of the Closing Date, by and among the
Borrower, the other Credit Parties, the Agent, as the representative of the
holders of the Obligations, the Collateral Agent, as the representative of the
holders of the Obligations and the Term Loan Debt, and Wilmington Trust Company,
a Delaware banking corporation, as the representative of the holders of the Term
Loan Debt, as the same may be amended, modified, supplemented, renewed, restated
or replaced in accordance with the terms of this Agreement.

 

Fixed Charge Coverage Ratio shall mean, with respect to the Credit Parties and
their Subsidiaries for any period, the ratio of (a) EBITDA less (i) Unfinanced
Capital Expenditures less (ii) cash payments of federal, state and local income
or franchise taxes to (b) the sum of (i) Debt Service Expense, (ii) cash
Interest Expense, and (iii) Unfinanced Cash Dividends, in each case of such
Person for the applicable period, computed and calculated on a Consolidated
basis in accordance with GAAP, consistently applied and without duplication. 
All components of the Fixed Charge Coverage Ratio shall be determined (1) on a
Consolidated basis for the twelve (12) most recent consecutive calendar months
ending on or prior to the date of determination and (2) in accordance with GAAP,
consistently applied.

 

Funded Debt shall mean, as to a particular Person at any particular time, the
sum of (a) all obligations for borrowed money (whether as a direct obligor on a
promissory note, bond, debenture or other similar instrument, as a reimbursement
obligor with respect to an issued letter of credit or similar instrument, as an
obligor under a Contingent Obligation in respect of borrowed money, or as any
other type of direct or contingent obligor), and (b) all Capital Lease
Obligations (other than the interest component of such obligations), each
calculated without duplication, on a Consolidated basis, and in accordance with
GAAP.

 

GAAP shall mean, as to a particular Person, those principles and practices
(a) which are recognized as such by the Financial Accounting Standards Board or
successor organization, and (b) which are consistently applied (or with respect
to which any change in principles and practice mandated by the Financial
Accounting Standards Board or successor organization are disclosed in writing to
the Agent) for all periods after the date hereof in a manner consistent with the
manner in which such principles and practices were applied to the most recent
audited financial statements of the relevant Person furnished to the Agent and
the Lenders prior to the Closing Date (or with respect to which any change in
principles and practice mandated by the Financial Accounting Standards Board or
successor organization are disclosed in writing to the Agent).

 

Governmental Authority shall mean any foreign governmental authority, the United
States of America, any state of the United States and any political subdivision
of any of the foregoing, and any agency, instrumentality, department,
commission, board, bureau, central

 

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bank, authority, court or other tribunal, in each case whether executive,
legislative, judicial, regulatory or administrative, having jurisdiction over
the Agent, any of the Lenders, any Credit Party, any Subsidiary of any Credit
Party, or their respective Property.

 

Grantor shall mean any Grantor, Assignor, Pledgor or Debtor, as such terms are
defined in any of the Security Documents.

 

Guarantors shall mean the Parent and its Subsidiaries, other than the Borrower
and any non-Domestic Subsidiaries not required to become a Guarantor pursuant to
Section 6.10.  In no event shall Inactive Subsidiaries shall be required to
execute or join in a Guaranty or any applicable Security Agreements except as
required under the terms of Section 6.10.

 

Guaranty shall mean each and every guaranty of the Obligations from time to time
executed and delivered to the Agent by any Guarantor, as amended, supplemented,
modified, joined in pursuant to a Joinder Agreement and restated from time to
time.

 

Hazardous Substance shall mean any hazardous or toxic waste, substance or
product or material defined or regulated by any Requirements of Environmental
Law, including solid waste (as defined under The Resource Conservation and
Recovery Act or its regulations, as amended), petroleum and any fraction thereof
and any radioactive materials and waste.

 

Hedging Obligations of a Person shall mean any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party’s assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collateral protection agreements, forward rate
currency or interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing; provided, however, that with respect to any such obligations owing by
the Borrower or any other Credit Party to any Lender other than the Agent, such
other Lender notifies the Agent in writing of the amount of such obligations not
less frequently than once each calendar month or more frequently as the Agent
requires pursuant to written notice delivered to the Lenders.

 

Highest Lawful Rate shall mean, with respect to the Agent or any Lender, the
maximum nonusurious rate of interest permitted to be charged by, as applicable,
the Agent or such Lender under applicable laws (if any) of the United States or
any state from time to time in effect.

 

Inactive Subsidiaries shall mean each of the Subsidiaries listed as inactive on
Schedule 5.8.

 

Indebtedness shall mean, as to any Person, without duplication:  (a) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money; (b) any other indebtedness which is evidenced by a bond,
debenture or similar instrument; (c) all Capital Lease Obligations of such
Person; (d) all obligations of such Person for the deferred purchase price of
Property or services (except current trade accounts payable arising in the
ordinary course

 

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of business and current accrued expenses, not the result of borrowing, arising
in the ordinary course of business); (e) all reimbursement obligations of such
Person in respect of outstanding letters of credit, acceptances and similar
obligations created for the account of such Person; (f) all indebtedness,
liabilities, and obligations secured by any Lien on any Property owned by such
Person even though such Person has not assumed or has not otherwise become
liable for the payment of any such indebtedness, liabilities or obligations
secured by such Lien, but only to the extent of the value of the Property
subject to such Lien (or, if less, the amount of the underlying indebtedness,
liability or obligation); (g) all Cash Management Obligations of such Person and
net liabilities of such Person in respect of Hedging Obligations (calculated on
a basis satisfactory to the Agent and in accordance with accepted practice);
(h) all liabilities of such Person in respect of unfunded vested benefits under
any Plan; and (i) all other indebtedness, liabilities and obligations of such
Person which are required to be included or listed in the liabilities section of
such Person’s balance sheet according to GAAP; provided, that such term shall
not mean or include (1) any Indebtedness in respect of which monies sufficient
to pay and discharge the same in full (either on the expressed date of maturity
thereof or on such earlier date as such Indebtedness may be duly called for
redemption and payment) shall be deposited with a depository, agency or trustee
acceptable to the Agent in trust for the payment thereof, (2) any operating
leases entered into in the ordinary course of business (to the extent such
operating leases do not constitute Capital Lease Obligations) or (3) Permitted
Management Fees.

 

Interest Expense shall mean, for any period, the total interest expense of the
Credit Parties and their Subsidiaries, determined on a Consolidated basis in
accordance with GAAP, consistently applied, and shall in any event include,
without limitation, (a) the amortization or write-off of debt discounts, (b) the
amortization or write-off of all debt issuance costs, commissions, discounts and
other fees payable in connection with the incurrence, amendment or refinancing
of Indebtedness (including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing),
(c) the portion of payments under Capital Lease Obligation allocable to interest
expense, and (d) net costs under Hedging Obligations in respect of interest
rates to the extent such net costs are allocable to such period in accordance
with GAAP.

 

Interest Option shall have the meaning specified in Section 2.8(a) hereof.

 

Interest Payment Dates shall mean (a) for Alternate Base Rate Borrowings (other
than Swingline Loans), (1) the last Business Day of each calendar month prior to
the Revolving Credit Termination Date, and (2) the Revolving Credit Termination
Date; (b) for LIBOR Borrowings, (1) if the Interest Period applicable to such
LIBOR Borrowing is equal to or less than three (3) months, the end of such
Interest Period, and (2) in all other cases, on that day which is three
(3) calendar months following the first day of the applicable Interest Period
(or, if there be no corresponding day, on the next succeeding day which is a
Business Day) and at the end of such Interest Period; and (c) for Swingline
Loans, (1) the last Business Day of each calendar month prior to the earlier to
occur of the Revolving Credit Termination Date or the date such Swingline Loans
are required to be paid with proceeds of Revolving Loans in accordance with
Section 2.11(c), and (2) the earlier to occur of the Revolving Credit
Termination Date or the date such Swingline Loans are required to be paid with
proceeds of Revolving Loans in accordance with Section 2.11(c).

 

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Interest Period shall mean the period commencing on the date of the applicable
LIBOR Borrowing and ending on the numerically corresponding day (or, if there is
no numerically corresponding day, on the last day) in the calendar month that is
one (1), two (2), three (3) or six (6) months thereafter, as the Borrower may
elect in accordance herewith; provided, however, that (a) if an Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless 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, (b) no Interest Period
shall end later than the Revolving Credit Termination Date, and (c) interest
shall accrue from and including the first day of an Interest Period to, but
excluding, the last day of such Interest Period.

 

Inventory shall have the meaning set forth in Article 9 of the UCC and in the
PPSA.

 

Investment shall mean the purchase or other acquisition of any securities or
Indebtedness of, or the making of any loan, advance, extension of credit,
transfer of Property or capital contribution to, or the incurring of any
Contingent Obligation in respect of the Indebtedness of, any Person.

 

Joinder Agreement shall mean any agreement, in Proper Form, executed by a
Subsidiary of any Credit Party from time to time in accordance with Section 6.10
hereof, pursuant to which such Subsidiary joins in the execution and delivery of
this Agreement, a Guaranty, the applicable Security Documents and the
Contribution Agreement.

 

JPMorgan shall mean JPMorgan Chase Bank, N.A., a national banking association,
together with its successors and assigns.

 

Legal Requirement shall mean any law, statute, ordinance, decree, requirement,
order, judgment, rule, regulation (or interpretation of any of the foregoing)
of, and the terms of any license or permit issued by, any Governmental
Authority.

 

Lender or Lenders shall have the meaning specified in the preamble of this
Agreement.  Unless the context otherwise requires, the term “Lenders” shall
include the Swingline Lender.

 

Letters of Credit shall mean Standby Letters of Credit and Trade Letters of
Credit.  Letter of Credit shall mean any one of the Standby Letters of Credit or
Trade Letters of Credit.

 

Letter of Credit Advances shall mean all sums which may from time to time be
paid by any and all of the Lenders pursuant to any and all of the Letters of
Credit, together with all other sums, fees, reimbursements or other obligations
which may be due to the Agent or any of the Lenders pursuant to any of the
Letters of Credit.

 

Letter of Credit Exposure Amount shall mean at any time the sum of (i) the
aggregate undrawn amount of all Letters of Credit outstanding at such time plus
(ii) the aggregate amount of all Letter of Credit Advances for which the Lenders
have not been reimbursed and which remain unpaid at such time.

 

Leverage Ratio shall mean, with respect to the Credit Parties and their
Subsidiaries as of any date that the Leverage Ratio is calculated, the ratio of
(a) Funded Debt of the Credit Parties

 

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and their Subsidiaries as of such date to (b)(i) EBITDA for the Credit Parties
and their Subsidiaries for the applicable calculation period.  For purposes of
calculating the Leverage Ratio, the components of the Leverage Ratio shall be
determined on a Consolidated basis and the EBITDA component shall be determined
for the four most recent consecutive fiscal quarters of the Credit Parties
ending on or prior to the date of determination.

 

LIBOR Borrowing shall mean, as of any date, that portion of the principal
balance of the Loans bearing interest at the Adjusted LIBOR Rate as of such
date.

 

LIBOR Lending Office shall mean, with respect to any Lender, the office of such
Lender specified as its “LIBOR Lending Office” opposite or below its name on the
signature pages hereof, or (if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify in writing to the Borrower and the Agent.

 

LIBOR Rate shall mean, with respect to any LIBOR Borrowing for any Interest
Period, an interest rate per annum equal to the rate appearing on Page 3750 of
the Dow Jones Market Service (or, if no such page exists, on any successor or
substitute page providing rate quotations comparable to those currently provided
on such page of the Dow Jones Market Service, as determined by the Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days before the commencement of such Interest Period
as the composite offered rate for dollar deposits approximately equal in
principal amount to the Agent’s portion of such LIBOR Borrowing and for a
maturity equal to the applicable Interest Period.  In the event that such rate
is not available at such time for any reason, then the “LIBOR Rate” with respect
to such LIBOR Borrowing for such Interest Period shall be the average interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) at which
dollar deposits of $5,000,000 and for a maturity equal to the applicable
Interest Period are offered by the principal London office of the Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days before the commencement of such
Interest Period.

 

Lien shall mean, with respect to any asset of any Person, (a) any mortgage,
pledge, charge, encumbrance, security interest, collateral assignment or other
lien or restriction of any kind on such asset, whether based on common law,
constitutional provision, statute or contract, (b) the interest of any vendor or
a lessor under any conditional sale agreement, title retention agreement or
capital lease relating to such asset, (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities, or (d) any other right of or arrangement with any creditor to have
such creditor’s claim satisfied out of such assets, or the proceeds therefrom,
prior to the general creditors of such Person owning such assets.

 

Loan Documents shall mean this Agreement, the Notes, the Applications, the
Security Documents, the Guaranties, the Contribution Agreement, the Joinder
Agreements, the Letters of Credit, the First Lien Intercreditor Agreement, the
Second Lien Intercreditor Agreement, all instruments, certificates and
agreements now or hereafter executed and delivered to the Agent and/or the
Lenders in connection with or pursuant to any of the foregoing (including
without limitation, any fee letter between the Agent, JPMorgan and/or any of its
Affiliates and the

 

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Borrower relating to the transactions contemplated by this Agreement), and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.

 

Loans shall mean the Revolving Loans and the Swingline Loans.  Loan shall mean
any one of the Revolving Loans or the Swingline Loans.

 

Lockbox Agreement shall collectively mean one or more lockbox agreements
required by the Agent, in Proper Form, to be executed and delivered to JPMorgan
by the Borrower and each of its Subsidiaries required by the Agent, together
with all modifications and/or replacements thereof which are approved in writing
by the Agent, for purposes of facilitating the collection of Accounts in
accordance with the terms of Section 6.15 hereof.  On or prior to the Closing
Date, the Borrower and each of its applicable Subsidiaries has executed and
delivered to JPMorgan one or more Lockbox Agreements in Proper Form.  No
Inactive Subsidiary shall be required to execute and deliver any Lockbox
Agreement unless and until such Inactive Subsidiary is required to become a
Guarantor under the terms of Section 6.10.

 

Material Adverse Effect shall mean a material adverse effect on (a) the
business, assets, property, or condition (financial or otherwise) of the Credit
Parties taken as a whole, (b) the ability of the Credit Parties to perform or
pay the Obligations in accordance with the terms hereof or of any other Loan
Document, (c) the validity or enforceability of this Agreement, any of the Notes
or any other Loan Documents or the rights or remedies of the Agent or the
Lenders hereunder or thereunder, or (d) the validity or enforceability of the
Agent’s Lien on any material portion of the Collateral or the priority of such
Lien.

 

Monthly Unaudited Financial Statements shall mean the financial statements of
the Credit Parties and their Subsidiaries, including all notes thereto, which
statements shall include (a) a balance sheet as of the end of the respective
calendar month or fiscal quarter, as applicable, (b) a statement of operations
for such respective calendar month or fiscal quarter, as applicable, and for the
fiscal year to date, subject to normal year-end adjustments, all setting forth
in comparative form the corresponding figures for the corresponding period of
the preceding fiscal year and for the Credit Parties’ Consolidated projections
for such period and (c) a statement of cash flows for the fiscal year to date,
subject to normal year-end adjustments, setting forth in comparative form the
corresponding figures in the corresponding period of the preceding fiscal year
and for the Credit Parties’ Consolidated projections for such period, all
prepared in reasonable detail and in accordance with GAAP and certified by a
Responsible Officer of the Parent as fairly and accurately presenting in all
material respects the financial condition and results of operations of the
Credit Parties and their Subsidiaries, on a Consolidated basis, at the dates and
for the periods indicated therein.  The Monthly Unaudited Financial Statements
for the Credit Parties and their Subsidiaries shall be prepared on a
Consolidated basis, and to the extent required by the Agent, a consolidating
basis, the parties recognizing that such consolidating statements will be
prepared in accordance with GAAP only to the extent normal and customary.

 

Mortgages shall mean any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Agent, for the ratable benefit of
the Lenders, on real property (including the Real Estate, other than Excluded
Real Estate) of any Credit Party (other than the Parent), including any
amendment, modification or supplement thereto.

 

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Net Income shall mean, for any period, the consolidated net income (or loss) of
the Credit Parties and their Subsidiaries, determined on a Consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of any
Credit Party or is merged into or consolidated with any Credit Party or any of
its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary of any Credit Party) in which any Credit Party or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by such Credit Party or such Subsidiary in the form
of dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of any Credit Party to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation (other than under any Loan
Document) or any Legal Requirement applicable to such Subsidiary.

 

Net Working Capital shall mean, on any date of calculation thereof, the
remainder of (a) the aggregate amount of Eligible Accounts and Eligible
Inventory (valued, in each case, at the lower of cost or fair market value on a
first-in first-out basis) as determined in accordance with GAAP consistently
applied, minus (b) the Consolidated current liabilities of all Credit Parties
determined on such date in accordance with GAAP.

 

Net Recovery Rate shall mean the “net recovery value percentage” or “net
recovery rate” under an orderly liquidation scenario for the Inventory or
Equipment, as applicable, of the applicable Credit Parties, as specifically set
forth and described in the most recent “net orderly liquidation value” appraisal
of such Inventory or Equipment, as applicable, received by and acceptable to the
Agent in all respects.

 

Notes shall mean the Revolving Credit Notes and the Swingline Note.  Note shall
mean any one of such promissory notes.

 

Obligations shall mean, without duplication, all obligations, liabilities and
Indebtedness of the Borrower and the Guarantors with respect to (a) the Security
Documents and all other Loan Documents, including without limitation, (i) the
principal of and interest on the Loans and (ii) the payment or performance of
all other obligations, liabilities and Indebtedness of the Borrower or the
Guarantors to the Agent and the Lenders hereunder, under the Notes, under the
Letters of Credit, under the Applications or under any one or more of the other
Loan Documents, including all fees, costs, expenses and indemnity obligations
hereunder and thereunder, (b) all Hedging Obligations at any time entered into
by the Borrower or any of its Subsidiaries with the Agent, JPMorgan, any other
Lender or any of their respective Affiliates, and (c) all Cash Management
Obligations.  The Obligations include interest (including post-petition
interest, whether or not such interest would be an allowable claim under any
applicable bankruptcy or other similar proceeding) and other obligations
accruing or arising after (a) commencement of any case under any bankruptcy or
similar laws by or against the Borrower or any Guarantor or (b) the personal
liability of the Borrower or any Guarantor for the Obligations shall be
discharged or otherwise cease to exist by operation of law or for any other
reason.

 

Officer’s Certificate shall mean a certificate substantially in the form of
Exhibit C attached hereto.

 

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Organizational Documents shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a limited partnership, the limited partnership
agreement and certificate of limited partnership of such limited partnership;
with respect to a joint venture, the joint venture agreement establishing such
joint venture; with respect to a limited liability company, the articles of
organization or certificate of formation and regulations or limited liability
company agreement of such limited liability company; and with respect to a
trust, the instrument establishing such trust; in each case including any and
all modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
materially adverse to the Lenders and which are consented to by the Agent.

 

Parent shall mean collectively Walco International Holdings, Inc. a Delaware
corporation, Steer Intermediate Corporation, a Delaware corporation, Walco
Holdings, Inc., a Delaware corporation, and Walco Intermediate, Inc., a Delaware
corporation.  When the context of any applicable provision hereof requires that
each such entity be referred to separately and not collectively, the term Parent
shall be construed accordingly.

 

Parties shall mean all Persons other than the Agent, the Collateral Agent or any
Lender executing any Loan Documents.

 

PBGC shall mean the Pension Benefit Guaranty Corporation.

 

Permitted Affiliate Transactions shall mean any of the following: 
(a) transactions with or among any Credit Party and any wholly-owned Subsidiary
of any Credit Party that is a Guarantor; (b) reasonable and customary directors’
fees, reasonable and customary directors’ indemnifications and similar
arrangements for directors and officers of the Credit Parties or any of its
Subsidiaries entered into in the ordinary course of business, together with any
payments made under any such indemnification arrangements; (c) customary and
reasonable loans and advances to officers, directors and employees of the Credit
Parties or any of their Subsidiaries for travel, entertainment, moving and other
relocation expenses, in each case made in the ordinary course of business;
(d) the incurrence of intercompany Indebtedness permitted pursuant to
Section 7.1(g) hereof; (e) Permitted Management Fees; and (f) other
transactions, contracts or agreements existing on the date of this Agreement and
which are set forth on Schedule 7.6 attached hereto, together with any renewals
and extensions of such existing transactions, contracts or agreements, so long
as such renewals and extensions are upon terms and conditions substantially
identical to the terms and conditions set forth in such existing transactions,
contracts and agreements (or otherwise no less favorable to the applicable
Credit Party and its Subsidiaries, as applicable).

 

Permitted Discretion shall mean a determination made, in good faith and in the
exercise of reasonable (from the perspective of a secured asset based lender)
business judgment, and in the event of any material change in the determination
of any Reserves, the Borrowing Base or eligibility of any components of the
Borrowing Base made by the Agent exercising its Permitted Discretion, the
Administrative Agent shall use reasonable efforts to give Borrower written
notice thereof promptly thereafter.

 

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Permitted Investment Securities shall mean each of the following, to the extent
the same is pledged as additional Collateral hereunder and is subject to a first
priority perfected Lien in favor of the Agent for the ratable benefit of the
Lenders (including a control or dominion agreement from any applicable Person in
favor of the Agent that is in all respects satisfactory to the Agent):  (a)
readily marketable, direct obligations of the United States of America or any
agency or wholly owned corporation thereof which are backed by the full faith
and credit of the United States, maturing within one (1) year after the date of
acquisition thereof, (b) certificates of deposit, commercial paper (if rated no
lower than A-1/P-1) or other short-term direct obligations of (i) JPMorgan or
(ii) any other domestic financial institution having capital and surplus in
excess of $5,000,000,000, maturing within six months after the date of
acquisition thereof, (c) money market funds having aggregate assets in excess of
$5,000,000,000, and (d) other Investments mutually agreed to in writing by the
Borrower and the Agent.

 

Permitted Management Fees shall mean management fees, monitoring fees and/or
service fees payable to Charlesbank and/or any of its Affiliates in an amount up
to, but not exceeding $250,000 in the aggregate during any fiscal year of the
Credit Parties, plus reimbursement to Charlesbank and/or any of its Affiliates
of reasonable and customary out-of-pocket expenses incurred in connection with
such management services provided by Charlesbank and/or any of its Affiliates,
provided that if any Event of Default has occurred and is continuing at the time
for payment of such fees or expense reimbursement, as applicable (or would occur
after giving effect thereto), such fees and expense reimbursement shall accrue
and be payable only upon the cure (or waiver) of such Event of Default.

 

Permitted Overadvance shall have the meaning specified in Section 2.2(h) hereof.

 

Person shall mean any individual, corporation, business trust, unincorporated
organization or association, partnership, joint venture, limited liability
company, Governmental Authority or any other form of entity.

 

Plan shall mean any plan subject to Title IV of ERISA and maintained for
employees of the Borrower or of any member of a “controlled group of
corporations”, as such term is defined in the Code, of which the Borrower, any
of its Subsidiaries or any ERISA Affiliate it may acquire from time to time is a
part, or any such plan to which the Borrower, any of its Subsidiaries or any
ERISA Affiliate is required to contribute on behalf of its employees.

 

PPSA shall mean the Personal Property Security Act (Alberta), as amended.

 

Prime Rate shall mean the rate of interest per annum publicly announced from
time to time by JPMorgan, or its successor financial institution, if any, at its
principal office in New York City as its prime rate in effect at such time. 
Without notice to the Borrower or any other Person, the Prime Rate shall change
automatically from time to time as and in the amount by which said prime rate
shall fluctuate, with each such change to be effective as of the date of each
change in such prime rate.  THE PRIME RATE IS A REFERENCE RATE AND DOES NOT
NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED BY JPMORGAN OR
SUCH SUCCESSOR FINANCIAL INSTITUTION TO ANY OF ITS CUSTOMERS.  JPMORGAN OR SUCH
SUCCESSOR FINANCIAL INSTITUTION MAY

 

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MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST AT, ABOVE AND BELOW
THE PRIME RATE.

 

Principal Office shall mean the principal office in New York City of the Agent,
or such other place as the Agent may from time to time by notice to the Borrower
designate.

 

Prohibited Transaction shall mean any non-exempt prohibited transaction set
forth in Section 406 of ERISA or Section 4975 of the Code.

 

Proper Form shall mean in form and substance satisfactory to the Agent.

 

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

 

Rate Selection Date shall mean that Business Day which is (a) in the case of the
Alternate Base Rate Borrowings, the date of such borrowing, or (b) in the case
of LIBOR Borrowings, the date three (3) Business Days preceding the first day of
any proposed Interest Period.

 

Rate Selection Notice shall have the meaning specified in Section 2.8(b)(1)
hereof.

 

Real Estate shall mean each of the real Properties listed on Schedule 1.1(a)
attached hereto.

 

Refinancing Indebtedness shall mean any Indebtedness of any Credit Parties or
any of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund, other Indebtedness
of such Person, provided, that:

 

(a)           such Refinancing Indebtedness is incurred only by such Persons who
are obligors on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded,

 

(b)           the principal amount of such Refinancing Indebtedness does not
exceed the then outstanding principal amount of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded;

 

(c)           the interest rate or rates to accrue under such Refinancing
Indebtedness do not exceed the lesser of (i) the interest rate or rates then
accruing on the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded or (ii) the prevailing market interest rate or rates which
are then applicable to, and generally available for, Indebtedness which is
similar in type, amount, maturity and other terms to the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded;

 

(d)           the maturities, amortization schedules, covenants, defaults,
remedies, subordination provisions (with respect to any Subordinated
Indebtedness), collateral security provisions (or absence thereof) and other
terms of such Refinancing Indebtedness are in each case the same or more
favorable to the applicable Credit Party and/or its applicable Subsidiaries as
those in the Indebtedness so extended, refinanced, renewed, replaced, defeased
or refunded;

 

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(e)           no Default or Event of Default has occurred and is continuing or
would result from the issuance or origination of such Refinancing Indebtedness;

 

(f)            if the Indebtedness that is extended, refinanced, renewed,
replaced, defeased or refunded was subordinated in right of payment to the
Obligations and/or priority as to the Liens of the Collateral Agent for the
ratable benefit of the Lenders, then the terms and conditions of such
Refinancing Indebtedness must include subordination terms and conditions that
are at least as favorable to the Agent and the Lenders as those that were
applicable to the extended, refinanced, renewed, replaced, defeased or refunded
Indebtedness; and

 

(g)           if the Indebtedness being refinanced is subject to the First Lien
Intercreditor Agreement and the Second Lien Intercreditor Agreement, such
Refinancing Indebtedness is either (1) permitted under the terms of the First
Lien Intercreditor Agreement and the Second Lien Intercreditor Agreement and
will remain subject to the terms of the First Lien Intercreditor Agreement and
the Second Lien Intercreditor Agreement or (2) subject to an intercreditor
agreement on terms no less favorable to the Agent and the Lenders as those
contained in the First Lien Intercreditor Agreement and the Second Lien
Intercreditor Agreement.

 

Regulation D shall mean Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect and shall include any successor or
other regulation relating to reserve requirements applicable to member Lenders
of the Federal Reserve System.

 

Regulatory Change shall mean, with respect to any Lender, any change on or after
the date of this Agreement in any Legal Requirement (including Regulation D) or
the adoption or making on or after such date of any Legal Requirement applying
to a class of Lenders including such Lender under any Legal Requirement (whether
or not having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.

 

Reportable Event shall mean a “reportable event” as defined in Section 4043(c)
of ERISA for which the notice requirement is not waived by the regulations
thereunder.

 

Request for Extension of Credit shall mean a written request for extension of
credit substantially in the form of Exhibit D attached hereto.

 

Required Lenders shall mean Lenders having greater than 66.67% of the Total
Revolving Credit Commitment; provided that after termination of the Total
Revolving Credit Commitment, Required Lenders shall mean Lenders having greater
than 66.67% of the aggregate amount of the outstanding Loans (other than the
Swingline Loans), Letter of Credit Exposure Amount and Swingline Exposure; and
provided further, however, if only two (2) Lenders are then parties to this
Agreement, Required Lenders shall mean both of such Lenders.

 

Requirements of Environmental Law shall mean all requirements imposed by any law
(including The Resource Conservation and Recovery Act, The Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Clean Air Act, and any state analogues of any of the foregoing), rule,
regulation, or order of any Governmental Authority which relate to (i)
pollution, protection or clean-up of the air, surface water, ground

 

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water, soils, or subsurface strata; (ii) solid, liquid or gaseous waste or
Hazardous Substance generation, recycling, reclamation, release, threatened
release, treatment, storage, disposal or transportation; (iii) exposure of
Persons or property to Hazardous Substances; (iv) the manufacture, presence,
processing, distribution in commerce, use, discharge, releases, threatened
releases, or emissions of Hazardous Substances into the environment; or (v) the
storage of any Hazardous Substances.  Requirement of Environmental Law shall
mean any one of them.

 

Reserves shall mean any and all reserves established by the Agent in its
Permitted Discretion with respect to Availability, the Borrowing Base or in
accordance with another provision of this Agreement or any other Loan Document
for purposes of reducing Borrower’s ability to utilize any portion of the Unused
Revolving Credit Commitments of all Lenders, including without limitation,
Reserves established in the aggregate amount of all liabilities in respect of
all Cash Management Obligations and all net liabilities in respect of all
Hedging Obligations, as calculated on a basis satisfactory to the Agent and in
accordance with accepted practice, of the Borrower or any of its Subsidiaries to
Agent or any other Lender.

 

Responsible Officer shall mean, with respect to any Person, the chief executive
officer, the president, any vice president, the chief financial officer, the
controller or the treasurer of such Person.

 

Revolving Credit Commitment shall mean, as to any Lender, the obligation of such
Lender to make Revolving Loans and incur liability for the Letter of Credit
Exposure Amount and the Swingline Loans in an aggregate principal amount at any
one time outstanding up to, but not exceeding, the amount set forth as such
Lender’s Revolving Credit Commitment in Schedule 1.1(b) attached hereto (as the
same may be reduced from time to time pursuant to Section 2.4 hereof).

 

Revolving Credit Commitment Percentage shall mean, with respect to any Lender,
the ratio, expressed as a percentage, of such Lender’s Revolving Credit
Commitment to the Total Revolving Credit Commitment.

 

Revolving Credit Exposure shall mean on any day, as to a particular Lender, the
sum of (a) the outstanding principal balance of such Lender’s Revolving Credit
Note on such day plus (b) the product of (i) such Lender’s Revolving Credit
Commitment Percentage times (ii) the sum of the Letter of Credit Exposure Amount
and the Swingline Exposure on such day.

 

Revolving Credit LIBOR Borrowing shall mean, as of any date, that portion of the
principal balance of the Revolving Loans bearing interest at the Adjusted LIBOR
Rate as of such date.

 

Revolving Credit Notes shall mean the promissory notes, each substantially in
the form of Exhibit A attached hereto, of the Borrower evidencing the Revolving
Loans, payable to the order of the respective Lenders in the amount of said
Lender’s Revolving Credit Commitment, and all renewals, extensions,
modifications, rearrangements and replacements thereof substitutions therefor. 
Revolving Credit Note shall mean any of such promissory notes.

 

Revolving Credit Termination Date shall mean the earlier of (a) June 30, 2010,
(b) any date that the Total Revolving Credit Commitment is terminated in full by
the Borrower pursuant

 

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to Section 2.4 hereof, and (c) any date the Revolving Credit Termination Date is
accelerated or the Total Revolving Credit Commitment is accelerated by the Agent
pursuant to Section 8.1 hereof.

 

Revolving Loans shall mean the Revolving Loans made pursuant to Section 2.1
hereof.  Revolving Loan shall mean one of such Revolving Loans.

 

Second Lien Debt shall mean the Indebtedness of the Borrower evidenced by one or
more senior secured notes issued by the Borrower, at a par value of $85,000,000
in aggregate principal amount, said senior notes to be (a) secured by a
secondary Lien against the Collateral which is in all respects inferior and
subordinate to the Collateral Agent’s Lien against the Collateral for the
ratable benefit of the Lenders and (b) due not earlier than (i) June 30, 2011
for the $40,000,000 “Loan A” portion thereof as described in the Second Lien
Debt Purchase Agreement and (ii) five (5) years after the Closing Date for the
$45,000,000 “Loan B” portion thereof as described in the Second Lien Debt
Purchase Agreement, and to otherwise be in Proper Form.

 

Second Lien Debt Documents shall mean the senior secured notes evidencing the
Second Lien Debt, the Second Lien Debt Purchase Agreement and all other
agreements, documents and instruments executed and delivered in connection
therewith, in each case as in effect (i) on June 30, 2005 for the $40,000,000
“Loan A” portion thereof as described in the Second Lien Debt Purchase
Agreement, and (ii) as of the Closing Date for the $45,000,000 “Loan B” portion
thereof as described in the Second Lien Debt Purchase Agreement, as each of the
same may be amended, modified, supplemented, renewed, restated or replaced in
accordance with the terms of this Agreement.

 

Second Lien Debt Purchase Agreement shall mean the Amended and Restated Secured
Term Loan Agreement dated effective as of the Closing Date, by and among the
Borrower, the other Credit Parties and Merrill Lynch PCG, Inc., as the initial
purchaser and holder of all of the Second Lien Debt, as the same may be amended,
modified, supplemented, renewed, restated or replaced in accordance with the
terms of this Agreement.

 

Second Lien Debt Transaction shall mean the transactions contemplated to occur
under or in connection with the Second Lien Debt Documents.

 

Second Lien Intercreditor Agreement shall mean the Amended and Restated
Intercreditor Agreement dated effective as of the Closing Date, by and among the
Borrower, the other Credit Parties, the Collateral Agent, as the representative
of the holders of the Obligations and the holders of the Term Loan Debt, and
Merrill Lynch PCG, Inc., as the representative of the holders of the Second Lien
Debt, as the same may be amended, modified, supplemented, renewed, restated or
replaced in accordance with the terms of this Agreement.

 

Security Agreements shall mean (a) the Amended and Restated Security Agreement
(Personal Property-Borrower) dated effective as of the Closing Date, between the
Borrower and the Collateral Agent, for the ratable benefit of the Lenders and
the holders of the Term Loan Debt, covering all Accounts, Inventory, Equipment
and all other tangible and intangible personal Property of the Borrower as more
particularly described therein, (b) the Amended and Restated Security Agreement
(Personal Property-Domestic Subsidiaries) dated effective as of the Closing

 

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Date, between each of the Borrower’s Domestic Subsidiaries that is a Guarantor
and the Collateral Agent, for the ratable benefit of the Lenders and the holders
of the Term Loan Debt, covering all Accounts, Inventory, Equipment and other
tangible and intangible personal Property of each of the Borrower’s Domestic
Subsidiaries that is a Guarantor as more particularly described therein, as the
same may hereafter be joined in pursuant to a Joinder Agreement, (c) the Amended
and Restated Security Agreement (Personal Property-Canadian Subsidiaries) dated
effective as of the Closing Date, between each of the Borrower’s Canadian
Subsidiaries that is a Guarantor and the Collateral Agent, for the ratable
benefit of the Lenders and the holders of the Term Loan Debt, covering all
Accounts, Inventory, Equipment and other tangible and intangible personal
Property of each of the Borrower’s Canadian Subsidiaries that is a Guarantor as
more particularly described therein, as the same may hereafter be joined in
pursuant to a Joinder Agreement, (d) the Amended and Restated Pledge Agreement
dated effective as of the Closing Date, between the Borrower and the Collateral
Agent, for the ratable benefit of the Lenders and the holders of the Term Loan
Debt, covering (i) all issued and outstanding Equity Interests in each of the
Borrower’s direct Subsidiaries that is a Guarantor and (ii) 65% of all issued
and outstanding Equity Interests in each of the Borrower’s non-Domestic
Subsidiaries that is not a Guarantor, (e) the Amended and Restated Pledge
Agreement dated effective as of the Closing Date, between Province Livestock
Supply, Ltd. and the Collateral Agent, for the ratable benefit of the Lenders
and the holders of the Term Loan Debt, covering all issued and outstanding
Equity Interests in each of the Borrower’s Subsidiaries that is a Guarantor and
for which Province Livestock Supply, Ltd. is the parent, (f) the Amended and
Restated Pledge Agreement dated effective as of the Closing Date, between Walco
Intermediate, Inc. and the Collateral Agent for the ratable benefit of the
Lenders and the holders of the Term Loan Debt, covering all Equity Interests in
the Borrower, (g) any and all other security agreements, pledge agreements,
collateral assignments or other similar documents now or hereafter executed in
favor of the Collateral Agent, for the ratable benefit of the Lenders and the
holders of the Term Loan Debt, as security for the payment or performance of any
and/or all of the Obligations, and (h) any amendment, modification, restatement
or supplement of all or any of the above-described agreements and assignments.

 

Security Documents shall mean the Security Agreements, the Mortgages, all
related financing statements and any and all other agreements, mortgages, deeds
of trust, chattel mortgages, security agreements, pledges, guaranties,
assignments of income, assignments of contract rights, assignments or pledges of
stock or partnership interests, standby agreements, subordination agreements,
undertakings and other instruments and financing statements now or hereafter
executed and delivered as security for the payment and performance of the
Obligations, as any of them may from time to time be amended, modified, restated
or supplemented.  Notwithstanding the foregoing or any other provision herein or
in any Term Loan Debt Document or any Security Document to the contrary, the
real property Collateral and the Liens of any Security Documents covering any
real property Collateral shall only secure the Obligations and the Collateral
Obligations (as defined in the First Lien Intercreditor Agreement) and shall not
secure any of the Term Loan Debt.

 

Standby Letters of Credit shall mean all standby letters of credit issued by the
Agent for the account or liability of the Borrower pursuant to the terms set
forth in this Agreement.

 

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Statutory Reserves shall mean a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentage (including without limitation,
any marginal, special, emergency or supplemental reserves) expressed as a
decimal, established by the Board of Governors of the Federal Reserve System of
the United States and any other banking authority to which any Lender is subject
with respect to the Adjusted LIBOR Rate for Eurocurrency Liabilities (as defined
in Regulation D), including without limitation, those reserve percentages
imposed under Regulation D.

 

Subordinated Indebtedness shall mean, with respect to any Credit Party,
Indebtedness subordinated in right of payment to the Credit Parties’ monetary
Obligations on terms satisfactory to and approved in writing by the Agent and
the Required Lenders, in their discretion, so long as all other terms thereof
(including without limitation, regularly scheduled payments and financial and
negative covenants) are satisfactory to and approved in writing by the Agent and
the Required Lenders, in their discretion.

 

Subsidiary shall mean, as to a particular parent Business Entity, any Business
Entity of which more than fifty percent (50%) of the Equity Interests issued by
such Business Entity is at the time directly or indirectly owned by such parent
Business Entity or by one or more of its Affiliates.

 

Swingline Exposure means, at any time, the aggregate principal amount of all
Swing Loans outstanding at such time.

 

Swingline Lender shall mean JPMorgan or any other Lender that becomes the Agent,
in each case in its capacity as the Swingline Lender hereunder.

 

Swingline Loans shall mean the Swingline Loans made pursuant to Section 2.11(a)
hereof.  Swingline Loan shall mean any one of such Swingline Loans.

 

Swingline Note shall mean the promissory note, substantially in the form of
Exhibit B attached hereto, of the Borrower evidencing the Swingline Loans,
payable to the order of the Swingline Lenders in the original principal amount
of $15,000,000, and all renewals, extensions, modifications, rearrangements and
replacements thereof substitutions therefor.

 

Term Loan Debt shall mean the Indebtedness of the Borrower evidenced by one or
more senior secured notes issued by the Borrower, at a par value of $45,000,000
in aggregate principal amount, said senior notes to be (a) secured by a first
Lien against the Collateral which is governed by the terms of the First Lien
Intercreditor Agreement and (b) due not earlier than May 31, 2011 and to
otherwise be in Proper Form.

 

Term Loan Debt Documents shall mean the senior secured notes evidencing the Term
Loan Debt, the Term Loan Debt Purchase Agreement and all other agreements,
documents and instruments executed and delivered in connection therewith, in
each case as in effect on the Closing Date and as each of the same may be
amended, modified, supplemented, renewed, restated or replaced in accordance
with the terms of this Agreement.

 

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Term Loan Debt Purchase Agreement shall mean the Term Loan Agreement dated
effective as of the Closing Date, by and among the Borrower, the other Credit
Parties, the initial purchaser(s) and holder(s) of all of the Term Loan Debt,
and Wilmington Trust Company, a Delaware banking corporation, as the
administrative agent for such holder(s) of the Term Loan Debt, as the same may
be amended, modified, supplemented, renewed, restated or replaced in accordance
with the terms of this Agreement.

 

Term Loan Debt Transaction shall mean the transactions contemplated to occur
under or in connection with the Term Loan Debt Documents.

 

Total Revolving Credit Commitment shall mean, on any day, the aggregate of all
of the Lenders’ Revolving Credit Commitments on such day.  As of the Closing
Date, the Total Revolving Credit Commitment is $110,000,000.

 

Trade Letters of Credit shall mean all trade or documentary letters of credit
issued by the Agent for the account or liability of the Borrower pursuant to the
terms set forth in this Agreement.

 

Tri-Party Agreements shall collectively mean tri-party agreements, in Proper
Form, to be executed and delivered by and among JPMorgan, the Borrower (and each
of its Subsidiaries required by the Agent) and the applicable financial
institutions described in Schedule 6.15 attached hereto, together with all
modifications and/or replacements thereof which are approved in writing by the
Collateral Agent, for purposes of either (a) facilitating the collection of
Accounts in accordance with the terms of Section 6.15 hereof, to the extent
payments of Accounts are processed through cash management services (including
lockbox arrangements) provided by any such specified financial institution
and/or deposited in one or more accounts maintained by the Borrower or its
applicable Subsidiary with any such specified financial institution or (b)
evidencing control for purposes of perfection of the Collateral Agent’s Lien,
for the ratable benefit of the Lenders, against one or more deposit accounts
maintained by the Borrower or its applicable Subsidiary with any such specified
financial institution.  As of the Closing Date, Schedule 6.15 attached hereto
describes all such accounts to be covered by a Tri-Party Agreement and specifies
whether the applicable Tri-Party Agreement is for purposes of facilitating the
collection of Accounts or perfecting the Collateral Agent’s Lien against such
accounts.  The Borrower agrees that neither the Borrower nor any of its
Subsidiaries shall establish any additional deposit accounts permitted to be
maintained hereunder with a financial institution other than JPMorgan unless
such additional deposit accounts are covered by a Tri-Party Agreement.

 

UCC shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or
priority of, or remedies with respect to, the Agent’s or any Lender’s Lien on
any Collateral.

 

Unfinanced Capital Expenditures shall mean all Capital Expenditures other than
Financed Capital Expenditures.

 

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Unfinanced Cash Dividends shall mean, with respect to any Person for any period,
all Cash Dividends of such Person for such period that are not paid either from
net proceeds of the Term Loan Debt or from net proceeds of any other permitted
Indebtedness of such Person incurred after the Closing Date.

 

Unused Revolving Credit Commitment shall mean, as to a particular Lender, the
daily difference of such Lender’s Revolving Credit Commitment on such day less
the Revolving Credit Exposure applicable to such Lender on such day.

 

1.2           Accounting Terms and Determinations.  Except where specifically
otherwise provided:

 

(a)           The symbol “$” and the word “dollars” shall mean lawful money of
the United States of America.

 

(b)           Any accounting term not otherwise defined shall have the meaning
ascribed to it under GAAP.  If any of the Credit Parties are required after the
Closing Date to implement any change(s) in its accounting principles and
practice as a result of any changes in GAAP mandated by the Financial Accounting
Standards Board or successor organization, and if such change(s) result in any
material change in the method of calculation of the Fixed Charge Coverage Ratio,
Leverage Ratio and/or any other financial covenant under this Agreement, then
for all periods after the date of implementation of such change(s) until one or
more appropriate amendments of this Agreement addressing such change(s) in GAAP
are negotiated, executed and delivered by the parties hereto in a form
acceptable to all such parties, the Fixed Charge Coverage Ratio, Leverage Ratio
and/or such other financial covenant, as applicable, shall be calculated
hereunder utilizing GAAP as in effect prior to such change(s).

 

(c)           Unless otherwise expressly provided, any accounting concept and
all financial covenants shall be determined on a Consolidated basis, and
financial measurements shall be computed without duplication.

 

(d)           Wherever the term “including” or any of its correlatives appears
in the Loan Documents, it shall be read as if it were written “including (by way
of example and without limiting the generality of the subject or concept
referred to)”.

 

(e)           Wherever the word “herein” or “hereof is used in any Loan
Document, it is a reference to that entire Loan Document and not just to the
subdivision of it in which the word is used.

 

(f)            References in any Loan Document to Section numbers are references
to the Sections of such Loan Document.

 

(g)           References in any Loan Document to Exhibits, Schedules, Annexes
and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such
Loan Document, and they shall be deemed incorporated into such Loan Document by
reference.

 

(h)           Any term defined in the Loan Documents which refers to a
particular agreement, instrument or document shall also mean, refer to and
include all modifications,

 

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amendments, supplements, restatements, renewals, extensions and substitutions of
the same; provided, that nothing in this subsection shall be construed to
authorize any such modification, amendment, supplement, restatement, renewal,
extension or substitution except as may be permitted by other provisions of the
Loan Documents.

 

(i)            All times of day used in the Loan Documents mean local time in
Chicago, Illinois.

 

(j)            Defined terms may be used in the singular or plural, as the
context requires.

 

1.3           UCC and PPSA Changes.  All terms used herein which are defined in
the UCC and/or the PPSA shall, unless otherwise provided, have the meanings
ascribed to them in the UCC and/or the PPSA, as applicable, both as in effect on
the date of this Agreement and as hereafter amended.  The parties intend that
the terms used herein which are defined in the UCC and/or the PPSA, as
applicable, have, at all times, the broadest and most inclusive meanings
possible.  Accordingly, if the UCC and/or the PPSA, as applicable, shall in the
future be amended or held by a court to define any term used herein more broadly
or inclusively than the UCC and/or the PPSA, as applicable, in effect on the
date of this Agreement, then such term as used herein shall be given such
broadened meaning.  If the UCC and/or the PPSA, as applicable, shall in the
future be amended or held by a court to define any term used herein more
narrowly, or less inclusively, than the UCC and/or the PPSA, as applicable, in
effect on the date of this Agreement, such amendment or holding shall be
disregarded in defining terms used in this Agreement.

 

2.             Loans; Letters of Credit; Notes; Payments; Prepayments; Interest
Rates.

 

2.1           Commitments.  Subject to the terms and conditions hereof, each
Lender, severally and not jointly, agrees to make Revolving Loans to the
Borrower from time to time on and after the Closing Date until, but not
including, the Revolving Credit Termination Date, in an aggregate principal
amount at any one time outstanding (including such Lender’s Revolving Credit
Commitment Percentage of the Letter of Credit Exposure Amount and the Swingline
Exposure at such time) up to, but not exceeding such Lender’s Revolving Credit
Commitment.  Notwithstanding the foregoing, the aggregate principal amount of
the Revolving Loans outstanding at any time shall not exceed (a) the lesser of
(i) the Total Revolving Credit Commitment and (ii) the Borrowing Base at such
time less (b) the Letter of Credit Exposure Amount and the Swingline Exposure at
such time less (c) the aggregate amount of the items specified in clauses
(b)(ii) through (b)(iv) of the definition of “Availability.”  Subject to the
conditions herein, any such Revolving Loan prepaid prior to the Revolving Credit
Termination Date may be reborrowed as an additional Revolving Loan by the
Borrower pursuant to the terms of this Agreement.

 

2.2           Loans.

 

(a)           Subject to Sections 4.1 and 4.2 hereof, (i) all Loans (other than
Swingline Loans) shall be advanced and made ratably by the Lenders in accordance
with the Lenders’

 

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respective Revolving Credit Commitments, and (ii) the initial Revolving Loans
shall be made on the Closing Date by the Lenders upon the execution of this
Agreement.

 

(b)           When requesting a Revolving Loan hereunder, the Borrower shall
give the Agent notice of a request for a Loan in accordance with Section 4.1(a)
hereof; provided, however, no notice of a request for a Revolving Loan in
accordance with Section 4.1(a) hereof shall be required to be presented by the
Borrower to the Agent if a check, wire transfer request or other item issued by
the Borrower shall be presented for payment against any controlled disbursement
account maintained with the Agent in connection with the account or accounts
established and maintained by the Agent for the purposes of deposits and
collections of Accounts in accordance with Section 6.15(a) hereof, and the Agent
shall then cause the Lenders (subject to the settlement delay provisions of
Section 2.2(f) hereof) to make a Revolving Loan for the purpose of crediting
said controlled disbursement account in an amount sufficient to permit such
check, wire transfer request or other item to be honored if (i) such Revolving
Loan is to be made prior to the Revolving Credit Termination Date, (ii) the
Availability would be equal to or greater than zero after giving effect to such
Revolving Loan, and, if applicable, the resulting payment of any Obligations to
be contemporaneously paid with the proceeds of such requested Revolving Loan,
and (iii) no Default or Event of Default shall have occurred which is then
continuing.  Each such Revolving Loan advanced for the purpose of crediting any
such controlled disbursement account shall be deemed to be an Alternate Base
Rate Borrowing until a Rate Selection Notice is otherwise properly presented for
such Alternate Base Rate Borrowing converting such borrowing to a LIBOR
borrowing.  Notwithstanding anything to the contrary contained in Section 2.11,
if any request for a Loan in accordance with Section 4.1(a) hereof requests
Revolving Loans in the form of Alternate Base Rate Borrowings, the Agent may
make a Swingline Loan available to the Borrower in an aggregate amount not to
exceed the amount of such requested Revolving Loans, and the aggregate amount of
the corresponding requested Revolving Loans shall be reduced accordingly by the
principal amount of such Swingline Loan.  Except as otherwise provided in the
settlement delay provisions of Section 2.2(f) hereof, the Agent shall promptly
advise the Lenders of any notice of a request for a Loan (other than a Swingline
Loan) given pursuant to Section 4.1(a) or of any such Revolving Loan advanced
for purposes of crediting any such controlled disbursement account and of each
Lender’s portion of a requested borrowing (based on such Lender’s Revolving
Credit Commitment Percentage).

 

(c)           Except as otherwise provided or specified in the settlement delay
provisions of Section 2.2(f) below, each Lender shall make its Revolving Loans
available on the proposed dates thereof by causing its Applicable Lending Office
to pay the amount required to the Agent at the Principal Office in immediately
available funds not later than 1:00 p.m., and the Agent shall as soon as
practicable, but in no event later than 5:00 p.m. on such date, credit the
amount so received to a general deposit account designated and maintained by the
Borrower with the Agent at the Principal Office.  If a requested Revolving Loan
shall not occur on the Closing Date or any date specified by the Borrower as set
forth in the applicable Request for Extension of Credit, as the case may be,
because all of the conditions for such Revolving Loan set forth herein or in any
of the other Loan Documents shall not have been met, the Agent shall return the
amounts so received from the Lenders in respect of such requested Revolving Loan
to the applicable Lenders as soon as practicable.

 

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(d)           The obligations of the Lenders hereunder are several and not
joint; therefore, notwithstanding anything herein to the contrary:  (i) no
Lender shall be required to make Revolving Loans at any one time outstanding in
excess of such Lender’s Revolving Credit Commitment; (ii) if a Lender fails to
make a Revolving Loan as and when required hereunder and the Borrower
subsequently makes a repayment on the Revolving Loans, such repayment shall be
shared among the non-defaulting Lenders in accordance with the respective
Revolving Credit Commitment Percentages until each non-defaulting Lender has
received its Revolving Credit Commitment Percentage of all of the outstanding
Revolving Loans, after which the balance of such repayment shall be applied
against such defaulting Lender’s Commitment Percentage of the outstanding
Revolving Loans; and (iii) the failure of any Lender to make any Revolving Loan
or any payment in respect of its participation in Swing Loans and Letter of
Credit Advances shall not in itself relieve any other Lender of its obligation
to lend hereunder (provided, that no Lender shall be responsible for the failure
of any other Lender to make a Loan such other Lender is obligated to make
hereunder).

 

(e)           The Revolving Loans made by the Lenders on any date and the Swing
Loans made by the Swingline Lender shall be in integral multiples of $1.00;
provided, however, that the LIBOR Borrowings made on any date shall be in
minimum aggregate principal amounts of $1,000,000, with any increases over such
minimal amount being in integral aggregate multiples of $500,000.

 

(f)            The arrangements between the Agent and the Lenders with respect
to making and advancing the Revolving Loans and making payments under Letters of
Credit shall be handled on the following basis:  no less than once a week, the
Agent will provide each Lender with a statement showing, for the period of time
since the date of the most recent of such statements previously provided, the
aggregate principal amount of new Revolving Loans made to the Borrower, the
aggregate amount of new Letter of Credit Advances which have not been
reimbursed, the aggregate face amount of new Letters of Credit issued for the
account of the Borrower, the aggregate principal amount of new Swingline Loans
made to the Borrower, the amount of remittances and payments actually collected
and applied by the Agent to reduce the outstanding principal balance of the
Revolving Loans, to reduce the outstanding principal balance of the Swingline
Loans and to reimburse Letter of Credit Advances during such period and the
outstanding principal balances of the Revolving Loans and the Swingline Loans
and the aggregate Letter of Credit Exposure Amount outstanding at the end of
such period.  If a Lender’s pro-rata share (based on such Lender’s Revolving
Credit Commitment Percentage) of the Revolving Loans and the unreimbursed Letter
of Credit Advances made during such period exceeds such Lender’s pro-rata share
of remittances and payments applied to reduce the Revolving Loans and reimburse
Letter of Credit Advances during such period, the difference will be paid and
made available in same day funds by such Lender to the Agent, and if such
Lender’s pro-rata share (based on such Lender’s Revolving Credit Commitment
Percentage) of remittances and payments applied to reduce the Revolving Loans
and reimburse Letter of Credit Advances during such period exceeds such Lender’s
pro-rata share (based on such Lender’s Revolving Credit Commitment Percentage)
of the Revolving Loans and the unreimbursed Letter of Credit Advances made
during such period, the difference will be paid and made available in same day
funds by the Agent to such Lender.

 

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(g)           The Agent shall render to the Borrower each month a statement of
the Borrower’s account of all transactions of the type described in Section
2.2(f) hereof, which shall be deemed to be correct and accepted by and be
binding upon the Borrower unless the Agent receives a written statement of the
Borrower’s exceptions to such account statement within sixty (60) days after
such statement was rendered to the Borrower.

 

(h)           Notwithstanding anything to the contrary set forth in this Section
2.2 or in any other provision of this Agreement, the Agent, on its own
initiative and in its sole discretion, but for the ratable benefit of the
Lenders, may extend Revolving Loans or issue Letters of Credit in excess of
Availability (collectively “Permitted Overadvances”) in an aggregate amount at
any one time not exceeding $10,000,000, upon and subject to the following
terms:  (i) no Permitted Overadvances shall cause the aggregate amount of any
Lender’s Revolving Credit Exposure to exceed such Lender’s Revolving Credit
Commitment; (ii) no Permitted Overadvances shall be outstanding for more than
thirty (30) consecutive days; (iii) either (A) the Agent in good faith believed
that no Permitted Overadvance existed or would result at the time of such
Permitted Overadvance or (B) the applicable Permitted Overadvance results from
(1) a change in the standards of eligibility for any component of the Borrowing
Base and/or an increase in Reserves as determined by the Agent in accordance
with the other terms of this Agreement, (2) a determination by Agent that
certain components previously included in the Borrowing Base should be excluded
from eligibility under the Borrowing Base, or (3) the payment by the Agent of
any amounts reasonably required to maintain, protect or realize upon the
Collateral or to prevent a cessation of business by the Borrower or any of its
Subsidiaries; and (iv) no more than two (2) Permitted Overadvances can be
extended by the Agent during any 180 consecutive day period.

 

2.3           Commitment Fees.  In consideration of each Lender’s Revolving
Credit Commitment, the Borrower agrees to pay to the Agent for the account of
each Lender a commitment fee (each a “Commitment Fee”) (computed on the basis of
the actual number of days elapsed in a year composed of 360 days, subject to the
terms of Section 10.6 hereof) in an amount equal to the product of (A) 0.375%
times (B) such Lender’s average Unused Revolving Credit Commitment for the
applicable calculation period; provided, however, that such Lender’s pro rata
share of the Swingline Exposure shall be disregarded for purposes of calculating
such Lender’s Unused Revolving Credit Commitment for Commitment Fee purposes,
except in respect of the Swingline Lender, whose Unused Revolving Credit
Commitment for Commitment Fee purposes shall be reduced by the Swingline
Exposure.  The Commitment Fee shall be due and payable in arrears (i) on the
last Business Day of each September, December, March and June prior to the
Revolving Credit Termination Date, commencing September 30, 2005, and (ii) on
the Revolving Credit Termination Date, with each Commitment Fee to commence to
accrue as of the date hereof and to be effective as to any reduction in the
Total Revolving Credit Commitment pursuant to Section 2.4(a) below as of the
date of any such decrease, and each Commitment Fee shall cease to accrue (except
with respect to interest at the Default Rate on any unpaid portion thereof) on
the Revolving Credit Termination Date.  All past due Commitment Fees shall bear
interest at the Default Rate and shall be payable upon demand by the Agent.

 

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2.4           Termination and Reductions of Commitments.

 

(a)           Upon at least five (5) Business Days’ prior irrevocable written
notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce (except as noted
below), the Total Revolving Credit Commitment ratably among the Lenders in
accordance with the amounts of their Revolving Credit Commitments; provided,
however, that the Total Revolving Credit Commitment shall not be reduced at any
time to an amount less than the aggregate of each Lender’s Revolving Credit
Exposure outstanding at such time.  Each partial reduction of the Total
Revolving Credit Commitment shall be in a minimum of $1,000,000, or an integral
multiple of $100,000 in excess thereof.

 

(b)           Simultaneously with any termination or reduction of the Total
Revolving Credit Commitment pursuant to Section 2.4(a) above, the Borrower
hereby agrees to pay to each Lender, through the Agent, the Commitment Fee due
and owing through and including the date of such reduction on the amount of the
Revolving Credit Commitment of such Lender so reduced.

 

(c)           To effect the payment of any and all Commitment Fees and all other
Obligations outstanding and owing hereunder or under any other Loan Documents,
subject to the provisions of Sections 2.1 and 4.1 hereof, the Agent may, but
shall not be obligated to, cause the Lenders to make a Revolving Loan or request
that the Swingline Lender make a Swingline Loan if (i) such Revolving Loan or
Swingline Loan, as applicable, is to be made prior to the Revolving Credit
Termination Date, (ii) the Availability would be equal to or greater than zero
after giving effect to such Revolving Loan or Swingline Loan, as applicable, and
the resulting payment of Commitment Fees to be contemporaneously paid with the
proceeds of such Loan, and (iii) no Default or Event of Default shall have
occurred which is then continuing.  The inability of the Agent to cause the
payment of any such Commitment Fees or other Obligations in accordance with the
preceding sentence shall not in any way whatsoever affect the Borrower’s and
Guarantors’ obligation to otherwise pay such amounts in accordance with the
applicable terms hereof or of any other Loan Documents.

 

2.5           Mandatory and Voluntary Prepayments.

 

(a)           If the Revolving Credit Exposure applicable to a Lender at any
time exceeds such Lender’s Revolving Credit Commitment, the Agent shall notify
the Borrower of such excess amount (such notice being permitted to be given
orally and need not be in writing) and the Borrower shall immediately make a
prepayment on such Lender’s Revolving Credit Note or otherwise reimburse such
Lender for Letter of Credit Advances or cause one or more Swingline Loans to be
prepaid or one or more Letters of Credit to be canceled and surrendered in an
amount sufficient to reduce such Lender’s Revolving Credit Exposure to an amount
no greater than such Lender’s Revolving Credit Commitment.  Any prepayments
required by this subparagraph (a) shall be applied to outstanding Alternate Base
Rate Borrowings up to the full amount thereof before such prepayments are
applied to outstanding LIBOR Borrowings (together with any Consequential Loss
resulting from such prepayment).

 

(b)           The Borrower shall make prepayments of the Revolving Loans and the
Swingline Loans from time to time so that the Availability equals or exceeds
zero at all times.  Specifically, if the Availability at any time is less than
zero, the Agent shall notify the Borrower

 

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of the deficiency (such notice being permitted to be given orally and need not
be in writing) and the Borrower shall immediately make a prepayment on the
Revolving Credit Notes or otherwise reimburse the Agent for Letter of Credit
Advances or cause one or more Swingline Loans to be prepaid or one or more
Letters of Credit to be canceled and surrendered in an amount sufficient to
cause the Availability to be at least equal to zero.  Any prepayments required
by this subparagraph (b) shall be applied to outstanding Alternate Base Rate
Borrowings up to the full amount thereof before such prepayments are applied to
outstanding LIBOR Borrowings (together with any Consequential Loss resulting
from such prepayment).

 

(c)           In addition to the mandatory prepayments required by Sections
2.5(a) and 2.5(b) above, the Borrower shall have the right, at its option, to
prepay any of the Loans in whole at any time or in part from time to time,
without premium or penalty, except as otherwise provided in this Section 2.5 or
subsections (a), (b) or (c) of Section 2.9 hereof.  Each prepayment of Swingline
Loans or Revolving Loans Alternate Rate Borrowings may be made in any amount,
and such prepayments shall be applied against the Revolving Credit Notes or the
Swingline Note, as applicable.  Prepayments under this subparagraph (d) shall be
subject to the following additional conditions:

 

(1)           In giving notice of prepayment as hereinafter provided, the
Borrower shall specify, for the purpose of paragraphs (2) and (3) immediately
following, the manner of application of such prepayment as between Alternate
Base Rate Borrowings and LIBOR Rate Borrowings; provided, that in no event shall
any LIBOR Rate Borrowing (whether Revolving Loans or Terms Loans) be partially
prepaid.

 

(2)           Prepayments applied to any LIBOR Rate Borrowing may be made on any
Business Day, provided, that (i) the Borrower shall have given the Agent at
least five (5) Business Days’ prior irrevocable written or telecopied notice of
such prepayment (other than automatic payments of Revolving Loans with proceeds
from lockboxes in accordance with the terms of Section 6.15(b).  for which no
prior notice of prepayment shall be required), specifying the principal amount
of the LIBOR Borrowing to be prepaid, the particular LIBOR Borrowing to which
such prepayment is to be applied and the prepayment date; and (ii) if such
prepayment is made on any day other than the last day of the Interest Period
corresponding to the LIBOR Borrowing to be prepaid, the Borrower shall pay upon
demand directly to the Agent for the account of the Lenders the Consequential
Loss as a result of such prepayment.

 

(3)           Prepayments applied to any Alternate Base Rate Borrowing may be
made on any Business Day, provided, that with respect thereto (other than
automatic payments of Revolving Loans with proceeds from lockboxes in accordance
with the terms of Section 6.15(b).  for which no prior notice of prepayment
shall be required), the Borrower shall have given the Agent prior irrevocable
written notice or notice by telephone (which is to be promptly confirmed in
writing) of any such prepayment on the Business Day of such prepayment,
specifying the principal amount of the Alternate Base Rate Borrowing to be
prepaid.

 

(d)           If any notice of any prepayment has been given, the principal
amount specified in such notice, together with (in the case of any prepayment of
a LIBOR Borrowing)

 

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interest thereon to the date of prepayment and any resulting Consequential Loss,
shall be due and payable on such prepayment date.

 

2.6           Notes; Payments.

 

(a)           Subject to the provisions of Section 10.12 hereof relating to
replacement and substitution of the Notes, (i) all Revolving Loans made by a
Lender to the Borrower shall be evidenced by a single Revolving Credit Note
dated as of the Closing Date, delivered and payable to such Lender in a
principal amount equal to such Lender’s Revolving Credit Commitment as of the
Closing Date, and (ii) all Swingline Loans made by the Swingline Lender to the
Borrower shall be evidenced by a single Swingline Note dated as of June 30,
2005, delivered and payable to the Swingline Lender in a principal amount equal
to $15,000,000.

 

(b)           The outstanding principal balance of each and every Revolving
Loan, as evidenced by the Revolving Credit Notes, shall mature and be fully due
and payable on the Revolving Credit Termination Date.  The outstanding principal
balance of each and every Swingline Loan, as evidenced by the Swingline Note,
shall mature and be fully due and payable on the earlier to occur of the
Revolving Credit Termination Date or the date such Swingline Loans are required
to be paid with proceeds of Revolving Loans in accordance with Section 2.11(c).

 

(c)           Subject to Section 10.6 hereof, the Borrower hereby agrees to pay
accrued interest on the unpaid principal balance of the Loans on the Interest
Payment Dates, commencing with the first of such dates to occur after the date
hereof.  After the Revolving Credit Termination Date, accrued and unpaid
interest on the Revolving Loans and the Swingline Loans shall be payable on
demand.

 

(d)           To effect payment of accrued interest owing on the Loans as of the
Interest Payment Dates, subject to the provisions of Sections 2.1 and 4.1
hereof, the Agent may, but shall not be obligated to, cause the Lenders to make
a Revolving Loan or request that the Swingline Lender make a Swingline Loan to
pay in full the amount of accrued interest owing and payable on the Loans as of
the respective Interest Payment Date, if (i) such Revolving Loan or Swingline
Loan, as applicable, is to be made prior to the Revolving Credit Termination
Date, (ii) the Availability would be equal to or greater than zero after giving
effect to such Revolving Loan or Swingline Loan, as applicable, and the
resulting payment of accrued interest to be contemporaneously paid with the
proceeds of such Loan, and (iii) no Default or Event of Default shall have
occurred which is then continuing.  The inability of the Agent to cause a
payment of any accrued interest owing on the Loans on any Interest Payment Date
in accordance with the preceding sentence shall not in any way whatsoever effect
the Borrower’s and any Guarantor’s obligation to otherwise pay such amounts in
accordance with the applicable terms hereof or any other Loan Documents.

 

2.7           Application of Payments and Prepayments.

 

(a)           Prepayments on the Revolving Credit Notes shall be applied to
payment of the aggregate unpaid principal amounts of the Revolving Credit Notes,
with the balance of any such prepayments, if any, being applied to accrued
interest.  Payments of accrued interest on

 

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each Revolving Credit Note in accordance with Section 2.6(c) hereof shall be
applied to the aggregate accrued interest then outstanding under the Revolving
Credit Notes, while payment by the Borrower of the aggregate principal amount
outstanding under the Revolving Credit Notes on the Revolving Credit Termination
Date shall be applied to principal.

 

(b)           Prepayments on the Swingline Note shall be applied to payment of
the aggregate unpaid principal amount of the Swingline Note, with the balance of
any such prepayments, if any, being applied to accrued interest.  Payments of
accrued interest on the Swingline Note in accordance with Section 2.6(c) hereof
shall be applied to the aggregate accrued interest then outstanding under the
Swingline Note, while payment by the Borrower of the aggregate principal amount
outstanding under the Swingline Note on the Revolving Credit Termination Date
shall be applied to principal.

 

(c)           All payments remitted to the Agent and all such payments not
relating to principal or interest of specific Loans, or not constituting payment
of specific fees or other specific Obligations, and all proceeds of Collateral
received by the Agent, shall be applied, ratably, subject to the provisions of
this Agreement, first, to pay any fees, indemnities or expense reimbursements
then due to the Agent from any Credit Party (other than fees, indemnities and
expenses relating to Cash Management Obligations and Hedging Obligations);
second, to pay any fees or expense reimbursements then due to the Lenders from
any Credit Party (other than fees, indemnities and expenses relating to Cash
Management Obligations and Hedging Obligations); third, to pay interest due in
respect of all Swingline Loans; fourth, to pay interest due in respect of all
Revolving Loans; fifth, to pay or prepay principal of the Swingline Loans;
sixth, to pay or prepay principal of the Revolving Loans and unpaid
reimbursement obligations in respect of Letters of Credit; seventh, to the
payment of any other Obligation due to the Agent or any Lender (other than any
Hedging Obligations and Cash Management Obligations); and eighth, to the payment
of any Hedging Obligations and Cash Management Obligations.  Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
Borrower, or unless an Event of Default has occurred and is continuing, neither
the Agent nor any Lender shall apply any payments which it receives to any LIBOR
Borrowing, except (a) on the expiration date of the Interest Period applicable
to any such LIBOR Borrowing, or (b) in the event, and only to the extent, that
there are no outstanding Alternate Base Rate Borrowings and the Borrower has
consented to such application.

 

(d)           Except for any settlement delay provided or specified in Section
2.2(f) hereof, each payment or prepayment received by the Agent hereunder or
under any Note for the account of a Lender shall be paid promptly to such
Lender, in immediately available funds.  If the Agent fails to send to any
Lender the product of such Lender’s Revolving Credit Commitment Percentage times
the aggregate amount of any such payment or prepayment received by the Agent for
the account of all the Lenders by the close of business on the date such payment
was deemed received by the Agent in accordance with Section 2.7(e) below, the
Agent shall pay to such Lender interest on such Lender’s pro-rata portion of
such payment timely received by the Agent from such date of receipt by the Agent
to the date that such Lender receives its pro-rata portion of such payment, such
interest to accrue at the Federal Funds Effective Rate and to be payable upon
written request from such Lender.

 

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(e)           Other than automatic payments of Obligations with proceeds from
lockboxes in accordance with the terms of Section 6.15(b), all sums payable by
the Borrower to the Agent hereunder or pursuant to the Notes or any of the other
Loan Documents for its own account or the account of the Lenders shall be
payable in United States dollars in immediately available funds not later than
12:00 noon on the date such payment or prepayment is due and shall be made
without set-off, counterclaim or deduction of any kind.  Any such payment or
prepayment received and accepted by the Agent after 12:00 noon shall be
considered for all purposes (including the payment of interest, to the extent
permitted by law) as having been made on the next succeeding Business Day.  All
such payments or prepayments shall be made at the Principal Office.  If any
payment or prepayment becomes due and payable on a day which is not a Business
Day, then the date for the payment thereof shall be extended to the next
succeeding Business Day and interest shall be payable thereon at the then
applicable rate per annum during such extension.

 

2.8           Interest Rates for Loans.

 

(a)           Subject to Section 10.6 hereof, the Notes shall bear interest on
their respective outstanding principal balances at the Alternate Base Rate;
provided, that (1) all principal outstanding, whether then due and payable,
after the occurrence of an Event of Default which has not been cured to the
satisfaction of the Agent and the Required Lenders or waived in writing by the
Agent and the Required Lenders shall bear interest at the Default Rate, which
shall be due and payable upon demand, (2) past due principal and interest shall
bear interest at the Default Rate, which shall be payable on demand, and (3)
subject to the provisions hereof, the Borrower shall have the option of having
all or any portion of the principal balances from time to time outstanding under
the Notes (other than Swingline Loans) bear interest until their respective
maturities at a rate per annum equal to the Adjusted LIBOR Rate (together with
the Alternate Base Rate, individually herein called an “Interest Option” and
collectively called “Interest Options”).  The records of the Agent, with respect
to Interest Options, Interest Periods and the amounts of Loans to which they are
applicable shall be binding and conclusive, absent manifest error.  Interest on
the Loans shall be calculated at the Alternate Base Rate, except where it is
expressly provided pursuant to this Agreement that the Adjusted LIBOR Rate is to
apply.

 

(b)           The Borrower shall have the right to designate or convert its
Interest Options in accordance with the provisions hereof.  Provided no Default
or Event of Default has occurred and is continuing, and subject to the
provisions of the last sentence of Subsection 2.8(a) hereinabove and the
provisions of Section 2.9 hereof, the Borrower may elect to have the Adjusted
LIBOR Rate apply or continue to apply to all or any portion of the principal
balances of the Notes.  Each change in Interest Options shall be a conversion of
the rate of interest applicable to the specified portion of the Loans, but such
conversion alone shall not change the outstanding principal balance of the
Notes.  The Interest Options shall be designated or converted in the manner
provided below:

 

(1)           The Borrower shall give the Agent notice by telephone, promptly
confirmed by written notice (the “Rate Selection Notice”) substantially in the
form of Exhibit E hereto.  Each such telephone and written notice shall specify
the amount and type of borrowings which are the subject of the designation, if
any; the amount and type of borrowings into which such borrowings are to be
converted or for which an Interest

 

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Option is designated; the proposed date for the designation or conversion
(which, in the case of conversion of LIBOR Borrowings, shall be the last day of
the Interest Period applicable thereto) and the Interest Period or Periods, if
any, selected by the Borrower.  Such notice by telephone shall be irrevocable
and shall be given to the Agent no later than the applicable Rate Selection
Date.  If (a) a new Revolving Loan is to be a LIBOR Borrowing, (b) an existing
LIBOR Borrowing is maturing at the time that a new Revolving Loan is being
requested and the Borrower is electing to have such existing portion of the
outstanding principal balance of the Revolving Credit Notes going forward bear
interest at the same Interest Option and for the same Interest Period as the new
Revolving Loan, or (c) a portion of an Alternate Rate Borrowing is to be
converted so as to bear interest at the same Interest Option and for the same
Interest Period as the new Revolving Loan, then the Rate Selection Notice shall
be included in the Request for Extension of Credit applicable to the new
Revolving Loan, which shall be given to the Agent no later than the applicable
Rate Selection Date.

 

(2)           No more than five (5) LIBOR Borrowings and corresponding Interest
Periods shall be outstanding at any one time.  Each LIBOR Borrowing shall be in
a minimum aggregate principal amount of at least $500,000 for each Lender, with
any increases over such minimum amount being in integral aggregate multiples of
$100,000 for each Lender.

 

(3)           Principal included in any borrowing shall not be included in any
other borrowing which exists at the same time.

 

(4)           Each designation or conversion shall occur on a Business Day.

 

(5)           Except as provided in Section 2.9 hereof, no LIBOR Borrowing shall
be converted on any day other than the last day of the applicable Interest
Period.

 

(6)           The Agent shall promptly advise the Lenders of any Rate Selection
Notice given pursuant to this Section 2.8 and of each Lender’s pro-rata portion
of such designation or conversion hereunder.

 

(c)           All interest and fees (including the Commitment Fee, but excluding
any prepayment fee owing pursuant to Section 2.4 hereof) will be computed on the
basis of a year of 360 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable, unless the
effect of so computing shall be to cause the rate of interest to exceed the
Highest Lawful Rate.

 

2.9           Special Provisions Applicable to LIBOR Borrowings.

 

(a)           If, after the date of this Agreement, the adoption of any
applicable Legal Requirement or any change in any applicable Legal Requirement
or in the interpretation or administration thereof by any Governmental Authority
or compliance by the Agent or any Lender with any request or directive (whether
or not having the force of law) of any Governmental Authority shall at any time
make it unlawful or impracticable for any Lender to permit the establishment of
or to maintain any LIBOR Borrowing, the commitment of the Lenders to establish
or maintain the Adjusted LIBOR Rate affected by such adoption or change

 

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shall forthwith be canceled, the Agent or such Lender shall use reasonable
efforts to give the Borrower written notice thereof within a reasonable time
after discovery of such adoption or change by the Agent or such Lender, as
applicable (it being agreed, however, that any failure to provide such notice to
the Borrower shall not in any manner affect the rights under this Section 2.9(a)
of the Agent or any Lender), and the Borrower shall forthwith, upon demand by
the Agent to the Borrower, (1) convert the Adjusted LIBOR Rate with respect to
which such demand was made to the Alternate Base Rate; (2) pay all accrued and
unpaid interest to date on the amount so converted; and (3) pay any amounts
required to compensate the Agent and the Lenders for any additional cost or
expense which the Agent or any Lender may incur as a result of such adoption of
or change in such Legal Requirement or in the interpretation or administration
thereof and any Consequential Loss which the Agent or any Lender may incur as a
result of such conversion to the Alternate Base Rate.  If, when the Agent so
notifies the Borrower, the Borrower has given a Rate Selection Notice specifying
one or more borrowings of the type with respect to which such demand was made
but the selected Interest Period or Interest Periods has not yet begun, such
Rate Selection Notice shall be deemed to be of no force and effect, as if never
made, and the balance of the Loans specified in such Rate Selection Notice shall
bear interest at the Alternate Base Rate until a different available Interest
Option shall be designated in accordance herewith.

 

(b)           If the adoption of any applicable Legal Requirement or any change
in any applicable Legal Requirement or in the interpretation or administration
thereof by any Governmental Authority or compliance by the Agent or any Lender
with any request or directive (whether or not having the force of law) from any
Governmental Authority shall at any time as a result of any portion of the
principal balance of the Notes being maintained on the basis of the Adjusted
LIBOR Rate:

 

(1)           impose, modify, increase or deem applicable any reserve
requirement (excluding that portion of any reserve requirement included in the
calculation of the Statutory Reserves), special deposit requirement or similar
requirement (including state law requirements and Regulation D) imposed,
modified, increased or deemed applicable by any Governmental Authority against
assets held by the Agent or any Lender, or against deposits or accounts in or
for the account of the Agent or any Lender, or against loans made by the Agent
or any Lender, or against any other funds, obligations or other Property owned
or held by the Agent or any Lender; or

 

(2)           impose on the Agent or any Lender any other materially restrictive
or limiting condition regarding any LIBOR Borrowing;

 

and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such borrowing on the
basis of the Adjusted LIBOR Rate, or reduce the amount of principal or interest
received by any Lender, then the Agent or such Lender shall use reasonable
efforts to give the Borrower written notice thereof within a reasonable time
after discovery of such adoption or change by the Agent or such Lender, as
applicable (it being agreed, however, that any failure to provide such notice to
the Borrower shall not in any manner affect the rights under this Section 2.9(b)
of the Agent or any Lender), and, upon demand by such Lender, the Borrower shall
pay to such Lender, from time to time as specified by such Lender, additional
amounts which shall compensate such Lender for such increased cost or reduced
amount.  Such Lender will promptly notify the Borrower in writing of any event,
upon

 

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becoming actually aware of it, which will entitle any Lender to additional
amounts pursuant to this paragraph.  Such Lender’s determination of the amount
of any such increased cost, increased reserve requirement or reduced amount
shall be conclusive and binding, absent manifest error, provided that the
calculation thereof and reason therefore is certified and is set forth in
reasonable detail in such certification by such Lender.

 

The Borrower shall have the right, if it receives from any Lender any notice
referred to in the preceding paragraph, upon three (3) Business Days’ notice to
the Agent, either (i) to repay in full (but not in part) any borrowing with
respect to which such notice was given, together with any accrued interest
thereon, or (ii) to convert the Adjusted LIBOR Rate in effect with respect to
such borrowing from such Lender to the Alternate Base Rate; provided, that any
such repayment or conversion shall be accompanied by payment of (x) the amount
required to compensate the appropriate Lender or Lenders for the increased cost
or reduced amount referred to in the preceding paragraph; (y) all accrued and
unpaid interest to date on the amount so repaid or converted; and (z) any
Consequential Loss which may be incurred as a result of such repayment or
conversion.  Additionally, if it receives from any Lender any notice referred to
in the preceding paragraph, the Borrower shall also have the corresponding
rights in Section 10.16(c).

 

(c)           If for any reason with respect to any Interest Period the Agent
shall have in good faith determined (which determination shall be conclusive and
binding upon the Borrower) that:  (1) the Agent is unable through its customary
general practices to determine a rate at which the Agent is offered deposits in
United States dollars by prime banks in the London interbank market, in the
appropriate amount for the appropriate period, or by reason of circumstances
affecting the London interbank market, generally, the Agent is not being offered
deposits for the applicable Interest Period and in an amount equal to the amount
of the Agent’s pro-rata portion of any LIBOR Borrowing requested by the
Borrower, or (2) the Adjusted LIBOR Rate will not adequately and fairly reflect
the cost to any Lender of making and maintaining any LIBOR Borrowing hereunder
for any proposed Interest Period, then the Agent shall give the Borrower notice
thereof and thereupon, (A) any Rate Selection Notice previously given by the
Borrower designating an Adjusted LIBOR Rate which has not commenced as of the
date of such notice from the Agent shall be deemed for all purposes hereof to be
of no force and effect, as if never given, and (B) until the circumstances
giving rise to such notice from the Agent no longer exist, each Rate Selection
Notice requesting an Adjusted LIBOR Rate shall be deemed a request for an
Alternate Base Rate Borrowing, and each outstanding LIBOR Borrowing then in
effect shall be converted, without any notice to or from the Borrower, upon the
termination of the Interest Period then in effect to an Alternate Base Rate
Borrowing.

 

(d)           Each Credit Party, jointly and severally with all other Credit
Parties, hereby agrees to indemnify the Agent and each of the Lenders against
and hold each of them harmless from any Consequential Loss which it may incur or
sustain as a consequence of any prepayment (mandatory or optional) or default by
the Borrower in the payment of any principal amount of or interest on each Note
or any failure by the Borrower to convert or to borrow any LIBOR Borrowing on
the date specified by the Borrower.  This agreement shall survive the payment of
each Note.  A certificate as to any additional amounts payable to the Agent or
any Lender pursuant to this paragraph, detailing the basis therefore and
submitted by the Agent or such Lender to the Borrower

 

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shall be conclusive and binding upon the Credit Parties, absent manifest error,
provided the calculation thereof is set forth in reasonable detail in such
notice.

 

(e)           If the Borrower requests quotes of the Adjusted LIBOR Rate for
different Interest Periods being considered for election by the Borrower, the
Agent will use reasonable efforts to provide such quotes to the Borrower
promptly.  However, all such quotes provided shall be representative only and
shall not be binding on the Agent or any Lender, nor shall they be
determinative, directly or indirectly, of any Adjusted LIBOR Rate or any
component of any such rate, nor will the Borrower’s failure to receive or the
Agent’s failure to provide any requested quote or quotes either (1) excuse or
extend the time for performance of any obligation of the Borrower or for the
exercise of any right, option or election of the Borrower or (2) impose any duty
or liability on the Agent or any Lender.  If the Borrower requests a list of the
Business Days in any calendar month, the Agent will use reasonable efforts to
provide such list promptly.  However, any such list provided shall be understood
to identify only those days which the Agent believes in good faith at the time
such list is prepared will be the Business Days for such month.  The Agent shall
not have any liability for any failure to provide, delay in providing, error or
mistake in or omission from, any such quote or list.

 

(f)            With respect to any Lender having a LIBOR Lending Office which
differs from its Domestic Lending Office, all Loans advanced by such Lender’s
LIBOR Lending Office shall be deemed to have been made by such Lender and the
obligation of the Borrower to repay such Loans shall nevertheless be to such
Lender and shall be deemed held by such Lender, to the extent of such portions
of the Loan, for the account of such Lender’s LIBOR Lending Office.

 

(g)           Notwithstanding any provision of this Agreement to the contrary,
each Lender shall be entitled to fund and maintain its funding of all or any
part of the Loans hereunder in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement, all determinations hereunder
shall be made as if such Lender had actually funded and maintained its portion
of each LIBOR Borrowing during each Interest Period for the Loans through the
purchase of deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR Rate for such Interest Period.

 

(h)           The Borrower’s obligation to pay increased costs and Consequential
Loss with regard to each LIBOR Borrowing as specified in this Section 2.9 hereof
shall survive termination of this Agreement.

 

2.10         Letters of Credit.

 

(a)           Subject to the terms and conditions contained herein, the Borrower
shall have the right to utilize a portion of the Total Revolving Credit
Commitment from time to time prior to the Revolving Credit Termination Date to
obtain from the Agent one or more Letters of Credit for the account of the
Borrower in such amounts and in favor of such beneficiaries as the Borrower from
time to time shall request; provided, that in no event shall the Agent have any
obligation to or shall the Agent in any event issue any Letter of Credit if (i)
the face amount of such Letter of Credit, plus the Letter of Credit Exposure
Amount at such time would exceed $20,000,000, (ii) the face amount of such
Letter of Credit, plus the aggregate of each Lender’s Revolving Credit Exposure
at such time, would exceed the Availability, (iii) such Letter of

 

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Credit would have an expiry date beyond the earlier to occur of (1) five (5)
Business Days prior to the scheduled Revolving Credit Termination Date, (2) with
respect to Standby Letters of Credit, one full year after the issuance date of
such Standby Letter of Credit, or (3) with respect to Trade Letters of Credit,
one hundred eighty (180) days after the issuance date of such Trade Letter of
Credit; provided, however, that any Standby Letter of Credit with a one-year
term may provide for automatic renewals thereof for additional one-year periods
(which shall in no event extend beyond five (5) Business Days prior to the
scheduled Revolving Credit Termination Date), (iv) such Letter of Credit is not
in a form and does not contain terms satisfactory to the Agent in its sole and
absolute discretion, (v) the Borrower has not executed and delivered such
Applications and other instruments and agreements relating to such Letter of
Credit as the Agent shall have reasonably requested, (vi) any Default or Event
of Default has occurred and is continuing, or (vii) such Letter of Credit is not
being issued or has not been issued in connection with transactions occurring in
the ordinary course of business of the Borrower or any of its Subsidiaries. 
Each Letter of Credit may be issued for the account of or used by the Borrower
or any of its Subsidiaries, but the Borrower shall have full liability for each
Letter of Credit.

 

(b)           If requesting the issuance of any Letter of Credit, the Borrower
shall give at least five (5) Business Days’ prior written notice to the Agent,
at its Domestic Lending Office, which written notice shall be the requisite
Application for a Letter of Credit on the Agent’s customary form.  In accordance
with the provisions of Section 2.2(f) hereof, the Agent shall periodically
notify each Lender that a Letter of Credit has been requested in the amount
reflected in such Application and inform such Lender of the amount of its
pro-rata portion of such proposed Letter of Credit (based upon such Lender’s
Revolving Credit Commitment Percentage).

 

(c)           Simultaneously with the Agent’s issuance and delivery of any
Letter of Credit, the Agent shall be deemed, without further action, to have
sold to each other Lender, and such other Lender shall be deemed, without
further action by any party hereto, to have purchased from the Agent, a
participation interest (which participation shall be nonrecourse to the Agent)
equal to such other Lender’s Revolving Credit Commitment Percentage at such time
in such Letter of Credit and all of the Letter of Credit Exposure Amount related
to such Letter of Credit, provided that such participation interest shall not
cause any of such other Lender’s Revolving Credit Exposure to exceed such
Lender’s Revolving Credit Commitment.  Each Lender acknowledges and agrees that
its obligation to acquire participations in each Letter of Credit, as well as
its obligation to make the payments specified in this Section 2.10 and the right
of the Agent to receive the same in the manner specified herein, are absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including without limitation, the occurrence and continuance of a Default or
Event of Default hereunder, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.

 

(d)           The Borrower promises to pay to the order of the Agent the amount
of all Letter of Credit Advances.  Each Letter of Credit Advance shall be
considered for all purposes as a demand obligation owing by the Borrower to the
Agent, and each Letter of Credit Advance shall bear interest from the date
thereof at the Default Rate, without notice of presentment, demand, protest or
other formalities of any kind (said past due interest on such Letter of Credit
Advance being payable on demand).  To effect repayment of any such Letter of
Credit Advance, the Agent shall automatically satisfy such Letter of Credit
Advance (subject to the terms and conditions of Sections 2.1 and 4.1, hereof) by
causing the Lenders to make a Revolving Loan or

 

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the Swingline Lender to make a Swingline Loan if (i) such Letter of Credit
Advance is (and such Revolving Loan or Swingline Loan, as applicable, is to be)
made prior to the Revolving Credit Termination Date, (ii) the Availability would
be equal to or greater than zero after giving effect to such Revolving Loan or
Swingline Loan, as applicable, and the resulting repayment of such Letter of
Credit Advance to be contemporaneously paid with the proceeds of such Loan, and
(iii) no Default or Event of Default shall have occurred which is then
continuing.  The unavailability of a Revolving Loan or Swingline Loan to effect
repayment of any such Letter of Credit Advance in accordance with the preceding
sentence shall not in any way whatsoever affect the Borrower’s obligation to pay
each Letter of Credit Advance on demand and to pay interest at the Default Rate
on the amount of such unreimbursed Letter of Credit Advance.  Except for any
settlement delay provided in Section 2.2(f), the Agent will pay to each Lender
such Lender’s Commitment Percentage of all amounts received from the Borrower by
the Agent, if any, for application, in whole or in part, against the Letter of
Credit Advances in respect to any Letter of Credit, but only to the extent such
Lender has made its full pro-rata payment of each drawing under the Letter of
Credit to which such Letter of Credit Advance relates.  All rights, powers,
benefits and privileges of this Agreement with respect to the Revolving Credit
Notes, all security therefor (including the Collateral) and guaranties thereof
(including the Guaranties) and all restrictions, provisions for repayment or
acceleration and all other covenants, warranties, representations and agreements
of the Borrower contained in this Agreement with respect to the Revolving Credit
Notes shall apply to such Letter of Credit Advances.

 

(e)           In consideration of the issuance of each Letter of Credit pursuant
to the provisions of this Section 2.10, the Borrower agrees to pay (subject to
Section 10.6 hereof) to the Agent for the ratable benefit of the Lenders a
letter of credit fee (computed on the basis of the actual number of days elapsed
in a year composed of 360 days) in an amount equal to the product of (a) the
Applicable Margin in effect for LIBOR Borrowings of Revolving Loans for the
applicable period times (b) the undrawn upon amount of the applicable Letter of
Credit, with each letter of credit fee to commence to accrue as of the date of
issuance of such Letter of Credit and to be effective as to any reductions in
the undrawn amount of such Letter of Credit as of the date of any such reduction
(whether resulting from payments thereunder by the Agent, by agreement of the
beneficiary thereunder or automatically by the terms of the Letter of Credit). 
Each letter of credit fee shall cease to accrue (except with respect to interest
at the Default Rate on any unpaid portion thereof) on the date that such Letter
of Credit expires, is returned to the Agent undrawn upon by the beneficiary
thereof or is fully paid by the Agent.  Said letter of credit fees shall be
payable in arrears to the Agent at its Principal Office in immediately available
funds (i) on the first Business Day of each calendar month that such Letter of
Credit remains open, and (ii) on the date that such Letter of Credit expires, is
returned to the Agent undrawn upon by the beneficiary thereof or is fully paid
by the Agent.  All past due letter of credit fees shall bear interest at the
Default Rate and shall be payable upon demand by the Agent.  The Agent will pay
to each Lender, as soon as practicable after receiving any payment of letter of
credit fees described in the preceding sentence, an amount equal to the product
of (A) such Lender’s Revolving Credit Commitment Percentage times (B) the amount
of such fees received.  If the Agent fails to send to any Lender such Lender’s
pro-rata portion of any payment of such letter of credit fees timely received by
the Agent by the close of business on the Business Day such payment was received
by the Agent, the Agent shall pay to such Lender interest on such Lender’s
pro-rata portion of such letter of credit fees timely received by the Agent from
such date of receipt by the Agent to the date that such Lender receives its
pro-rata portion of such payment,

 

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such interest to accrue at the Federal Funds Effective Rate and to be payable
upon written request from such Lender.

 

(f)            The Borrower hereby agrees to pay to the Agent for the Agent’s
sole benefit a fronting fee equal to 0.125% of the face amount of each Letter of
Credit issued hereunder.  Fronting fees shall be payable on the date of issuance
of the applicable Letter of Credit.  The Borrower also hereby agrees to pay to
the Agent for the Agent’s sole benefit any and all documentary, processing,
amendment, negotiation, payment and other normal and customary fees which are
charged by the Agent in connection with the issuance, amendment, cancellation,
negotiation or transfer of any of Letter of Credit and the presentation or
payment of any draw under any such Letter of Credit, with all of such amounts
being due and payable to the Agent upon demand.

 

(g)           The obligations of the Borrower under this Agreement in respect of
the Letters of Credit and all Letter of Credit Advances are absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including the
following circumstances:

 

(1)           any lack of validity or enforceability of this Agreement, any
Letter of Credit or any Loan Document;

 

(2)           any amendment or waiver of default under or any consent to
departure from the terms of this Agreement or any Letter of Credit without the
express prior written consent of the Agent;

 

(3)           the existence of any claim, set-off, defense or other right which
any beneficiary or any transferee of any Letter of Credit (or any entities for
whom any such beneficiary or any such transferee may be acting), or any Person
(other than the Agent or the Lenders) may have, whether in connection with this
Agreement, the Letters of Credit, the transactions contemplated hereby or any
unrelated transaction;

 

(4)           any statement, 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 whatsoever; provided, that the Agent will examine each document
presented under each Letter of Credit to ascertain that such document appears on
its face to comply with the terms thereof; and

 

(5)           any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.

 

In the event that any restriction or limitation is imposed upon or determined or
held to be applicable to the Agent, any Lender or the Borrower by, under or
pursuant to any Legal Requirement now or hereafter in effect or by reason of any
interpretation thereof by any Governmental Authority, which in the respective
sole judgment of the Agent or any Lender would prevent any Lender from legally
incurring liability under a Letter of Credit issued or proposed to be issued
hereunder, then the Agent shall give prompt written notice thereof to the
Borrower, whereupon the Agent shall have no obligation to issue any additional
Letters of Credit

 

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then or at any time thereafter.  In addition, if as a result of any Regulatory
Change which imposes, modifies or deems applicable (x) any tax, reserve, special
deposit or similar requirement against any Letters of Credit issued or
participated to by any Lender; (y) any fee, expense or assessment against the
Letters of Credit issued by the Agent or any Lender for deposit insurance, or
(z) any other charge, expense or condition which increases the actual cost to
the Agent or any Lender of issuing or maintaining such Letters of Credit, or
reduces any amount Account by the Agent or any Lender hereunder in respect of
any Letter of Credit or any participation therein (which increase in cost, or
reduction in amount Account, shall be the result of the Agent’s or such Lender’s
reasonable allocation of the aggregate of such increases or reductions resulting
from such event), then the Borrower (subject to Section 10.6 hereof) shall pay
to the Agent or such Lender, upon demand and from time to time, amounts
sufficient to compensate such Person for each such increase from the effective
date of such increase to the date of demand therefor.  Each such demand shall be
accompanied by a certificate setting forth in reasonable detail the calculation
of the amount then being demanded in accordance with the preceding sentence and
each such certificate shall be conclusive absent manifest error.

 

(h)           Each Credit Party, jointly and severally with all other Credit
Parties, hereby indemnifies and holds harmless each Lender and the Agent from
and against any and all claims and damages, losses, liabilities, costs or
expenses which such Lender or the Agent may incur (or which may be claimed
against such lender or the agent by any person whatsoever) in connection with
the execution and delivery or transfer of or payment or failure to pay under any
Letter of Credit, including any claims, damages, losses, liabilities, costs or
expenses which the Agent or such Lender, as the case may be, may incur (whether
incurred as a result of, its own negligence or otherwise) by reason of or in
connection with the failure of any other Lender (whether as a result of its own
negligence or otherwise) to fulfill or comply with its obligations to the Agent
or such Lender, as the case may be, hereunder (but nothing herein contained
shall affect any rights the Credit Parties may have against such defaulting
Lender); provided, that the Credit Parties shall not be required to indemnify
any Lender or the Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the party seeking indemnification or such
party’s willful and knowing breach of any Loan Document or (ii) such Lender’s or
the Agent’s (as the case may be) failure to pay under any Letter of Credit after
the presentation to it of a request required to be paid under applicable law. 
Nothing in this Section 2.10(h) is intended to limit the obligations of the
Borrower or any other Credit Party under any other provision of this Agreement
or any other Loan Document.

 

(i)            The Agent shall review, on behalf of the Lenders, each draft and
any accompanying documents presented under a Letter of Credit.  Promptly after
it shall have ascertained that any draft and any accompanying documents
presented under such Letter of Credit appear on their face to be in substantial
conformity with the terms and conditions of such Letter of Credit, the Agent
shall make the appropriate payment to the beneficiary of such Letter of Credit. 
Subject to the settlement delay provisions of Section 2.2(f) hereof, the Agent
shall give telephonic or facsimile notice to the Lenders of the receipt and
amount of any draft presented under any Letter of Credit and the date on which
payment thereon will be made, and each of the Lenders shall, by 12:00 noon, on
the date such payment is to be made under such Letter of Credit, pay in
immediately available funds, an amount equal to the product of (A) such

 

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Lender’s Revolving Credit Commitment Percentage times (B) the amount of such
payment to be made by the Agent to the beneficiary under such Letter of Credit. 
Any Lender failing to timely deliver its requisite portion of any such payment
shall deliver the same to the Agent as soon as possible thereafter, together
with interest on such amount for each day from the due date for such payment to
the date of payment by such Lender to the Agent of such amount at a rate of
interest per annum equal to the Federal Funds Effective Rate for such period. 
Each Lender hereby absolutely and unconditionally assumes, as primary obligor
and not as a surety, and agrees to pay and discharge, and to indemnify and hold
the Agent harmless from liability and respect of, such Lender’s pro-rata share
(based on such Lender’s Revolving Credit Commitment Percentage) of any amounts
owing by such Lender to the Agent in accordance with the immediately preceding
sentence.  Nothing herein shall be deemed to require any Lender to pay to the
Agent any amount as reimbursement for any payment made by the Agent to acquire
(discount) for its own account prior to maturity thereof any acceptance created
under a Letter of Credit.

 

2.11         Swingline Loans.

 

(a)           Subject to the terms and conditions hereof, the Swingline Lender
may, in its sole discretion, make loans for the Swingline Lender’s own account
(each a “Swingline Loan”) to the extent the same would otherwise have been
available to the Borrower under the Total Revolving Credit Commitment in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
$15,000,000; provided, however, that at no time shall the Swingline Lender make
any Swingline Loan to the extent that, after giving effect to such Swingline
Loan, the aggregate amount of each Lender’s Revolving Credit Exposure at such
time would exceed the Availability or the amount of any Lender’s Revolving
Credit Exposure at such time would exceed such Lender’s Revolving Credit
Commitment; and provided further, however, that the Swingline Lender shall not,
without the consent of the Required Lenders, make any Swingline Loan if any
Event of Default exists of which the Swingline Lender has actual knowledge. 
Each Swingline Loan shall be an Alternate Base Rate Borrowing and shall in any
event mature no later than the Revolving Credit Termination Date.  Subject to
the conditions herein and within the limits set forth in the first sentence of
this paragraph, any Swingline Loan prepaid prior to the Revolving Credit
Termination Date may be reborrowed as an additional Swingline Loan by the
Borrower pursuant to the terms of this Agreement.

 

(b)           To request a Swingline Loan, the Borrower shall notify the Agent
of such request by telephone (confirmed by telecopy), not later than 1:00 p.m.,
on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable
and shall specify the requested date (which shall be a Business Day) and amount
of the requested Swingline Loan.  The Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower, and subject to the terms
of this Agreement, the Swingline Lender may make a Swingline Loan available to
the Borrower by means of a credit to the general deposit account of the Borrower
with the Swingline Lender by 5:00 p.m. on the requested date of such Swingline
Loan.

 

(c)           The Swingline Lender may demand at any time (but in no event shall
such demand be made less frequently than once per each calendar month) that each
Lender pay to the Agent, for the account of the Swingline Lender, in the manner
provided below, such Lender’s Revolving Credit Commitment Percentage of all or a
portion of the outstanding Swingline Loans, which demand shall be made through
the Agent, shall be in writing and shall specify the

 

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outstanding principal amount of Swingline Loans demanded to be paid.  The Agent
shall forward notice of each such demand to each Lender on the day such demand
is received by the Agent (except that any such notice or demand received by the
Agent after 1:00 p.m. on any Business Day or any such demand received on a day
that is not a Business Day shall not be required to be forwarded to the Lenders
by the Agent until the next succeeding Business Day), together with a statement
prepared by the Agent specifying the amount of each Lender’s Revolving Credit
Commitment Percentage of the aggregate principal amount of the Swingline Loans
stated to be outstanding in such notice or demanded to be paid pursuant to such
demand, and, notwithstanding whether or not the conditions precedent set forth
in Sections 4.1 or 4.2 shall have been satisfied (which conditions precedent,
for the purposes of payment of Swingline Loans only, the Lenders hereby
irrevocably waive), each Lender shall, before 10:00 a.m. on the Business Day
next succeeding the date of such Lender’s receipt of such notice, make available
to the Agent, in immediately available funds, for the account of the Swingline
Lender, the amount specified in such statement, provided that such amount shall
not cause such Lender’s Revolving Credit Exposure to exceed such Lender’s
Revolving Credit Commitment.  Upon such payment by a Lender, such Lender shall,
except as provided in Section 2.11(d) below, be deemed to have made a Revolving
Loan to the Borrower in the amount of such payment.  The Borrower agrees that
all such Revolving Loans so deemed made shall be deemed to have been requested
by it and directs that all proceeds thereof shall be used to repay the Swingline
Loans to the Swingline Lender, and the Agent shall use such funds received from
the Lenders to repay the Swingline Loans to the Swingline Lender.  To the extent
that any Lender fails to make such payment available to the Agent for the
account of the Swingline Lender, the Borrower shall repay such Swingline Loan on
demand.

 

(d)           Upon the occurrence of any Event of Default described in Sections
8.1(o) through 8.1(r), each Lender shall acquire, without recourse or warranty,
an undivided participation in each Swingline Loan otherwise required to be
repaid by such Lender pursuant to Section 2.11(c) above, which participation
shall be in a principal amount equal to such Lender’s Revolving Credit
Commitment Percentage of such Swingline Loan, by paying to the Swingline Lender
on the date on which such Lender would otherwise have been required to make a
payment in respect of such Swingline Loan pursuant to Section 2.11(c) above, in
immediately available funds, an amount equal to such Lender’s Revolving Credit
Commitment Percentage of such Swing Loan.  If all or part of such amount is not
in fact made available by such Lender to the Swingline Lender on such date, the
Swingline Lender shall be entitled to recover any such unpaid amount on demand
from such Lender together with interest accrued from such date at the Federal
Funds Rate for the first Business Day after such payment was due and thereafter
at the rate of interest then applicable to Alternate Base Rate Borrowings.

 

(e)           From and after the date on which any Lender (i) is deemed to have
made a Revolving Loan pursuant to Section 2.11(c) above with respect to any
Swingline Loan or (ii) purchases an undivided participation interest in a
Swingline Loan pursuant to Section 2.11(d) above, the Swingline Lender shall
promptly distribute to such Lender such Lender’s Revolving Credit Commitment
Percentage of all payments of principal of and interest received by the
Swingline Lender on account of such Swingline Loan other than those received
from a Lender pursuant to Sections 2.11(c) or (d) above.

 

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2.12         Pro-Rata Treatment.

 

(a)           Except to the extent otherwise provided herein (including without
limitation, as specified in Sections 2.2(f), 2.10(b) and 2.12(c) hereof):  (a)
each borrowing from the Lenders under Section 2.1 hereof shall be made, each
payment of Commitment Fees shall be made and applied for the account of the
Lenders, and each termination or reduction of the Revolving Credit Commitments
of the Lenders under Section 2.4 hereof shall be applied, pro-rata, according to
each Lender’s Revolving Credit Commitment Percentage; (b) each payment or
prepayment by the Borrower of principal of or interest on Loans (other than
Swingline Loans) shall be made to the Agent for the account of the Lenders
pro-rata in accordance with the respective unpaid principal amounts of such
Loans held by the Lenders, and amounts payable with respect to Swingline Loans
shall be paid only to the Swingline Lender; (c) the Lenders (other than the
Agent) shall purchase from the Agent participations in the Letters of Credit to
the extent of their respective Revolving Credit Commitment Percentages upon
issuance by the Agent of each Letter of Credit as otherwise provided for herein,
and (d) the Lenders (other than the Swingline Lender) shall purchase from the
Swingline Lender participations in the Swingline Loans to the extent of their
respective Revolving Credit Commitment Percentages upon request by the Swingline
Lender as otherwise provided for herein.

 

(b)           Except for any settlement delay provided or specified in Section
2.2(f), unless the Agent shall have been notified in writing by any Lender prior
to the date of a proposed Loan (other than a Swingline Loan) that such Lender
will not make the amount that would constitute such Lender’s Revolving Credit
Commitment Percentage of such Loan on such date available to the Agent at the
Principal Office, the Agent may assume that such Lender has made such amount
available to the Agent on such date, and the Agent may, in reliance upon such
assumption and subject to the terms and conditions of this Agreement, make such
amount available to the Borrower by depositing the same, in immediately
available funds, in a general deposit account designated and maintained by the
Borrower with the Agent at the Principal Office.  Any Lender failing to timely
deliver its requisite portion of such Loan shall deliver the same to the Agent
as soon as possible thereafter, together with interest on such amount for each
day from the due date for such payment to the date of payment by such Lender to
the Agent of such amount at a rate of interest per annum equal to the Federal
Funds Effective Rate for such period.  In addition, the Borrower hereby agrees
that upon demand by the Agent, the Borrower shall reimburse the Agent for any
such amount which any Lender has failed to timely deliver to the Agent, but
which the Agent may have previously made available to the Borrower in accordance
with the other provisions of this Section 2.12(b).  If a requested Loan shall
not occur on any date specified by the Borrower as set forth in the applicable
Request for Extension of Credit because all of the conditions for such Loan set
forth herein or in any of the other Loan Documents shall have not been met, the
Agent shall return the amounts so received from the Lenders in respect of such
requested Loan to the applicable Lenders as soon as practicable.

 

(c)           Notwithstanding any provision to the contrary contained in this
Section 2.12 or in any other provision hereof, each Lender shall only receive
interest upon and a portion of the Commitment Fee paid hereunder based upon the
amount of funds actually advanced by such Lender to Borrower from time to time.

 

2.13         Sharing of Payments, Etc.  Each of the Credit Parties agrees that,
in addition to (and without limitation of) any right of set-off, bankers’ lien
or counterclaim a Lender may otherwise have, each Lender shall be entitled, at
its option, to offset balances held by it for the

 

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account of any of the Credit Parties at any of its offices against any principal
of or interest on any of such Lender’s Loans to the Borrower hereunder, such
Lender’s Revolving Credit Commitment Percentage of the Letter of Credit Exposure
Amount, the Swingline Exposure or any other Obligation of the Borrower hereunder
(regardless of whether such Obligations of the Borrower are then due and
regardless of whether such offset balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and the Agent thereof,
provided, that such Lender’s failure to give such notice shall not affect the
validity thereof.  If a Lender shall obtain payment (other than the Swingline
Lender obtaining payment of all or any portion of a Swingline Loan) of any
principal of or interest on any Loan made by it under this Agreement, any Letter
of Credit Exposure Amount, any Swingline Exposure or other obligation then due
to such Lender hereunder, through the exercise of any right of set-off
(including, without limitation, any right of set-off or lien granted under
Section 10.19 hereof), banker’s lien, counterclaim or similar right, or
otherwise, it shall promptly purchase from the other Lenders participations in
the Loans made by, the Letter of Credit Exposure Amount or the Swingline
Exposure of, or the other obligations of the Borrower hereunder of, the other
Lenders in such amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Lenders shall share the benefit of
such payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such benefit) pro-rata in accordance with their
respective Revolving Credit Commitment Percentages.  To such end all the Lenders
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored.  Each of the Credit Parties agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Loans made by, Letter of Credit Exposure Amount or the
Swingline Exposure of, or other obligations hereunder of, the other Lenders may
exercise all rights of set-off, bankers’ lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of said Loans, Letter of Credit Exposure Amount, Swingline Exposure or
other obligations in the amount of such participation.  Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the Borrower.

 

2.14         Recapture.  If on any Interest Payment Date the Agent does not
receive for the account of one or more Lenders payment in full of interest
computed at the Alternate Base Rate and/or the Adjusted LIBOR Rate, as
applicable (computed without regard to any limitation by the Highest Lawful
Rate), because the sum of the Alternate Base Rate and/or the Adjusted LIBOR
Rate, as applicable (so computed), exceeds or has exceeded the Highest Lawful
Rate applicable to such Lenders, the Borrower shall pay to the Agent for the
account of such Lenders, in addition to interest otherwise required, on each
Interest Payment Date thereafter, the Excess Interest Amount (calculated as of
each such subsequent Interest Payment Date); provided, that in no event shall
the Borrower be required to pay, for any computation period, interest at a rate
exceeding the Highest Lawful Rate applicable to such Lenders during such
period.  As used herein, the term “Excess Interest Amount” shall mean, on any
day, the amount by which (a) the amount of all interest which would have accrued
prior to such day on the outstanding principal of the Notes of the applicable
Lender (had the Alternate Base Rate and/or the Adjusted LIBOR Rate, as
applicable, at all times been in effect without limitation by the Highest Lawful
Rate applicable to such Lender) exceeds (b) the aggregate amount of interest
actually paid to the Agent for the account of such Lender on its Notes on or
prior to such day.

 

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2.15         Increase of Total Revolving Credit Commitment.

 

(a)           At any time after the Closing Date, provided that no Default or
Event of Default shall have occurred and be continuing, the Borrower may request
from time to time one or more increases of the Total Revolving Credit Commitment
by notice to the Agent in writing of the amount of each such proposed increase
(each such notice, a “Revolving Credit Commitment Increase Notice”).  Any such
Revolving Credit Commitment Increase Notice must offer each Lender the
opportunity to subscribe for its pro rata share of the requested increase in the
Total Revolving Credit Commitment, and the Agent shall promptly provide to each
Lender a copy of any Revolving Credit Commitment Increase Notice received by the
Agent.  Within ten (10) Business Days after receipt by the Agent of the
applicable Revolving Credit Commitment Increase Notice, each Lender wishing to
subscribe for its pro rata share of the requested increase in the Total
Revolving Credit Commitment must deliver written notice of such fact to the
Agent.  If any portion of the requested increase in the Total Revolving Credit
Commitment is not subscribed for by the Lenders within such 10-day period, the
Borrower may, in its sole discretion, but with the consent of the Agent as to
any Person that is not at such time a Lender (which consent shall not be
unreasonably withheld or delayed, so long as such Person is an Eligible
Assignee), offer to any existing Lender or to one or more additional banks or
financial institutions the opportunity to participate in all or a portion of
such unsubscribed portion of the requested increase in the Total Revolving
Credit Commitment pursuant to Section 2.15(b) or(c) below, as applicable.

 

(b)           Any additional bank or financial institution that the Borrower
selects to offer a participation in the unsubscribed portion of the requested
increase in the Total Revolving Credit Commitment, and that elects to become a
party to this Agreement and obtain a Revolving Credit Commitment, shall execute
an agreement (a “New Lender Agreement”), in the form required by the Agent, with
the Borrower and the Agent, whereupon such bank or financial institution (a “New
Lender”) shall become a Lender for all purposes hereunder to the same extent as
if originally a party hereto and shall be bound by and entitled to the benefits
of this Agreement, and Schedule 1.1(b) shall be deemed to add the name and
Revolving Credit Commitment of such New Lender, provided that the Revolving
Credit Commitment of any such New Lender shall be in an amount not less than
$5,000,000.

 

(c)           Any Lender that accepts an offer by the Borrower to increase its
Revolving Credit Commitment pursuant to this Section 2.15 shall, in each case,
execute a commitment increase agreement (a “Revolving Credit Commitment Increase
Agreement”), in the form required by the Agent, with the Borrower and the Agent,
whereupon such Lender shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Revolving Credit Commitment as
so increased, and Schedule 1.1(b) hereof shall be deemed to be amended to
reflect such increase in the Revolving Credit Commitment of such Lender.

 

(d)           The effectiveness of any New Lender Agreement or Revolving Credit
Commitment Increase Agreement shall be contingent upon receipt by the Agent of
such corporate resolutions of the Borrower, if any, as the Agent shall
reasonably request with respect thereto.

 

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(e)           If any bank or financial institution becomes a New Lender pursuant
to Section 2.15(b) or if any Lender’s Revolving Credit Commitment is increased
pursuant to Section 2.15(c), additional Revolving Loans and additional liability
for Letter of Credits and Swingline Loans made or issued on or after the
effectiveness thereof (the “Re-Allocation Date”) shall be made pro rata (and the
Commitment Percentage of each Lender shall be correspondingly adjusted) based on
each Lender’s (including each New Lender’s) respective Revolving Credit
Commitment in effect on and after such Re-Allocation Date (except to the extent
that any such pro rata borrowings or incurring of liability would result in any
Lender making an aggregate principal amount of Revolving Loans and incurring
liability for the Letter of Credit Exposure Amount and Swingline Exposure in
excess of its Revolving Credit Commitment, in which case such excess amount will
be allocated to, and made or incurred by, such New Lender and/or Lenders with
such increased Revolving Credit Commitments to the extent of, and pro rata based
on, their respective Revolving Credit Commitments), and continuations of
Revolving Loans at the Adjusted LIBOR Rate that are outstanding on such
Re-Allocation Date shall be effected by repayment of such Revolving Loans on the
last day of the Interest Period applicable thereto and the extension of new
Revolving Loans at the Adjusted LIBOR Rate pro rata based on the Lenders’
respective Revolving Credit Commitments in effect on and after such
Re-Allocation Date.  In the event that on any such Re-Allocation Date there are
Revolving Loans outstanding that are Alternate Base Rate Borrowings, the
Borrower shall make prepayments thereof and borrow new Revolving Loans at the
Alternate Base Rate so that, after giving effect thereto, the Revolving Loans
outstanding at the Alternate Base Rate are held pro rata based on the Lenders’
respective Revolving Credit Commitments in effect on and after such
Re-Allocation Date.  In the event that on any such Re-Allocation Date there are
outstanding Revolving Loans that are LIBOR Borrowings, such Revolving Loans
shall remain outstanding with the respective holders thereof until the
expiration of their respective Interest Periods (unless the Borrower elects to
prepay any thereof in accordance with the applicable provisions of this
Agreement), and interest on and repayments of such Revolving Loans will be paid
thereon to the respective Lenders holding such Revolving Loans pro rata based on
the respective principal amounts thereof outstanding and each Lender’s Revolving
Credit Exposure will be adjusted accordingly until the end of the applicable
Interest Periods then in effect for such outstanding Revolving Loans, at which
time no such adjustment shall thereafter be made.

 

(f)            Notwithstanding anything to the contrary in this Section 2.15,
(i) no Lender shall have any obligation to increase its Revolving Credit
Commitment under this Section 2.15 unless it agrees in writing to do so in its
sole discretion, (ii) no Lender shall have any right to decrease the amount of
its Revolving Credit Commitment as a result of any requested increase of the
Total Revolving Credit Commitment pursuant to this Section 2.15, (iii) the Agent
shall have no obligation to find or locate any New Lender to participate in any
unsubscribed portion of any increase in the Total Revolving Credit Commitment
requested by the Borrower, (iv) each increase in the Total Revolving Credit
Commitment requested by the Borrower shall not be less than $10,000,000,
(v) after giving effect to any increase in the Total Revolving Credit Commitment
pursuant to this Section 2.15, the Total Revolving Credit Commitment shall not
exceed $150,000,000, and (vi) in the event the Borrower reduces the Total
Revolving Credit Commitment pursuant to Section 2.4 or any other provision of
this Agreement, the ability of the Borrower to request increases in the Total
Revolving Credit Commitment pursuant to this Section 2.15 shall automatically
terminate.

 

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(g)           The Borrower shall execute and deliver to the Agent (for delivery
by the Agent to each applicable Lender) a new Revolving Credit Note for
Revolving Loans payable to each applicable Lender (including each New Lender)
participating in any increase of the Total Revolving Credit Commitment in the
original principal amount of such Lender’s Revolving Credit Commitment after
giving effect to any such increase of the Total Revolving Credit Commitment;
provided, however, that the execution and delivery of any such new Revolving
Credit Note to an existing Lender shall be conditioned upon and subject to the
surrender by such existing Lender to the Agent (for delivery by the Agent to the
Borrower) of such Lender’s then existing Revolving Credit Note in the amount of
its Revolving Credit Commitment prior to such increase in the Total Revolving
Credit Commitment.

 

3.             Collateral.

 

3.1           Security Documents.  The Loans and all other Obligations shall be
secured by the Collateral, as and to the extent described in the Security
Documents, the First Lien Intercreditor Agreement and the Second Lien
Intercreditor Agreement, and the Agent and the Lenders are entitled to the
benefits thereof.  The Credit Parties shall duly execute and deliver the
Security Documents, all consents of third parties necessary to permit the
effective granting of the Liens created thereby, and other documents, all in
Proper Form, as may be reasonably required by the Agent to grant to the Agent,
for the ratable benefit of the Lenders, a valid, perfected and enforceable first
priority Lien on and security interest in the Collateral (subject only to the
Liens permitted under Section 7.2 hereof), including without limitation, any and
all original stock certificates, stock transfer powers, assignments and other
documents and instruments necessary or desirable under the laws of any
applicable jurisdiction with regard to the Equity Interests covered by any
Security Agreement.

 

3.2           Filing and Recording.  The Credit Parties shall, at their sole
cost and expense, cooperate with the Agent in causing all financing statements
and other Security Documents pursuant to this Agreement to be duly recorded
and/or filed or otherwise perfected in all places necessary to perfect the Liens
of the Agent, in the opinion of the Agent, and the Credit Parties shall take
such other actions as the Agent may reasonably request, in order to perfect and
protect the Liens of the Agent, for the ratable benefit of the Lenders, in the
Collateral.  Each of the Credit Parties, to the extent permitted by law, hereby
authorizes the Agent to file any financing statement, Mortgage or other Security
Document in respect of any Lien created pursuant to the Security Documents which
may at any time be required to perfect such Liens or which, in the reasonable
opinion of the Agent, may at any time be desirable, although the same may have
been executed only by the Agent or, at the option of the Agent, to sign such
financing statement on behalf of any Credit Party, and file the same, and each
of the Credit Parties hereby irrevocably designates the Agent, its agents,
representatives and designees as its agent and attorney-in-fact for this
purpose.  In the event that any re-recording or refiling thereof (or the filing
of any statements of continuation or assignment of any financing statement) is
required to protect and preserve such Lien, the Credit Parties shall, at the
Credit Parties’ cost and expense, cause the same to be recorded and/or refiled
at the time and in the manner requested by the Agent.

 

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4.             Conditions.

 

4.1           All Loans.  The obligation of each Lender to make any Loan (other
than a Swingline Loan, which shall be governed exclusively by the terms of
Section 2.11) and the obligation of the Agent to issue any Letter of Credit is
subject to the satisfaction of the following conditions:

 

(a)           the Agent shall have received the following, all of which shall be
duly executed and in Proper Form:  (1) in the case of a Loan, other than a
Revolving Loan for the purposes described in Sections 2.2(b), 2.4(c), 2.6(d) and
2.10(d),

 

(i)            with respect to each Alternate Base Rate Borrowing, Agent shall
have received by no later than 1:00 p.m. on the applicable Rate Selection Date,
telephonic notice from the Borrower of the proposed date and amount of such
Loan, and by no later than 2:00 p.m. Central time on the applicable Rate
Selection Date, a Request for Extension of Credit, signed by a Responsible
Officer of the Borrower, and

 

(ii)           with respect to each LIBOR Borrowing, Agent shall have received
by no later than 12:00 noon on the applicable Rate Selection Date, telephonic
notice from the Borrower of the proposed date and amount of such Loan, and no
later than 1:00 p.m. on the applicable Rate Selection Date, a Request for
Extension of Credit, signed by a Responsible Officer of the Borrower,

 

or, in the case of issuance of a Letter of Credit, a completed Application (as
may be required by the Agent) signed by a Responsible Officer of the Borrower by
12:00 noon five (5) Business Days prior to the proposed date of issuance of such
Letter of Credit and payment of the first letter of credit fee as and by the
time required in Section 2.10 of this Agreement, along with, in each case, such
financial information as the Agent may reasonably require to substantiate
compliance with all financial covenants contained herein by the Borrower if the
Agent reasonably believes at such time that the Borrower is not then in
compliance with any of the financial covenants contained herein; and (2) such
other Applications, certificates and other documents as the Agent may reasonably
require;

 

(b)           Availability must be in excess of or equal to zero, after giving
effect to the requested Revolving Loan(s) or Letter(s) of Credit and, if
applicable, the resulting payment of any Obligations to be contemporaneously
paid with the proceeds of such requested Revolving Loan;

 

(c)           all representations and warranties of any of the Credit Parties
set forth in this Agreement and in any other Loan Document shall be true and
correct in all material respects with the same effect as though made on and as
of such date, except for (i) those representations and warranties which relate
only to the Closing Date and (ii) those changes in such representations and
warranties otherwise permitted by the terms of this Agreement;

 

(d)           there shall have occurred no Material Adverse Effect, after giving
effect to the requested Loan(s) or Letter(s) of Credit;

 

(e)           no Default or Event of Default shall have occurred and be
continuing;

 

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(f)            if requested by the Agent, it shall have received a certificate
executed by a Responsible Officer of the Borrower as to the compliance with
subparagraphs (b) through (e) above;

 

(g)           the making of such Loan or the issuance of such Letter of Credit,
shall not be prohibited by, or subject the Agent or any Lender to, any penalty
or onerous condition under any Legal Requirement; and

 

(h)           the Borrower shall have paid all legal fees and other expenses of
the type described in Section 10.9 hereof for which invoices have been presented
through the date of such Loan or the issuance of such Letter of Credit.

 

4.2           First Loan or Letter of Credit.  In addition to the matters
described in Section 4.1 hereof, the obligation of any Lender to make the
initial Loan or the obligation of the Agent to issue the first Letter of Credit
is subject to the receipt by the Agent of each of the following, in Proper Form:

 

(a)           this Agreement and all other Loan Documents to be executed and
delivered as of the Closing Date by the applicable Credit Parties;

 

(b)           a certificate of corporate resolutions and incumbency executed by
the Secretary or an Assistant Secretary of the Borrower dated as of the date
hereof, authorizing (i) the Borrower’s entering into the transactions
contemplated hereby and (ii) the delivery by the Borrower of this Agreement and
all other Loan Documents to be executed and delivered as of the Closing Date by
the Borrower;

 

(c)           a certificate of corporate resolutions and incumbency executed by
the Secretary or an Assistant Secretary of each of the Guarantors dated as of
the date hereof, authorizing each of the Guarantors to (i) enter into the
transactions contemplated hereby and (ii) deliver this Agreement and all other
Loan Documents to be executed and delivered as of the Closing Date by the
Guarantors;

 

(d)           certificates from the Secretary of State or other appropriate
public official of the State of Delaware as to the continued existence and good
standing of the Borrower in the State of Delaware and from the State of
California as to the qualification to do business and good standing of the
Borrower in the State of California;

 

(e)           certificates from the Secretary of State or other appropriate
public official as to the continued existence and good standing of each of the
Guarantors in its applicable State of formation;

 

(f)            certificates from the appropriate public officials of the States
of Texas, Arizona, California, Colorado, Florida, Idaho, Iowa, Kansas, Nebraska,
New Mexico, Oklahoma, South Dakota, Tennessee, Utah and Wisconsin for the
Borrower, Walco Holdings, Inc., Walco Intermediate, Inc., and/or their Domestic
Subsidiaries that are Guarantors, as to the good standing and qualification as a
foreign corporation, to the extent it is necessary to be qualified to do
business as a foreign corporation in these jurisdictions;

 

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(g)           one copy of each of the Term Loan Debt Documents, including all
amendments and schedules thereto, certified as true and correct copies by a
Responsible Officer of the Borrower, together with evidence that all of the Term
Loan Debt Documents are in full force and effect, and all material consents,
approvals and filings required by any Governmental Authority in connection with
any and all Term Loan Debt Documents have been obtained and made;

 

(h)           evidence that the Term Loan Debt Transaction is contemporaneously
being duly and validly consummated on the Closing Date without modification,
amendment or waiver of any material provisions of any of the Term Loan Debt
Documents (except for such modifications, amendments or waivers as shall have
been approved in writing by the Required Lenders), all in accordance with the
terms, conditions and provisions of the Term Loan Debt Documents;

 

(i)            the Borrower’s receipt on the Closing Date of the entire
$45,000,000 amount of proceeds of the Term Loan Debt, net of customary and
reasonable closing costs, and the Borrower’s application of such net proceeds in
full satisfaction and payment of the Term Loans (as defined in the Original
Agreement), with the balance of such net proceeds being applied against the
Revolving Loans;

 

(j)            the First Lien Intercreditor Agreement;

 

(k)           the Second Lien Intercreditor Agreement and the Second Lien Debt
Purchase Agreement executed by Merrill Lynch PCG, Inc. and all other parties
thereto, whereby Merrill Lynch PCG, Inc. and such other parties, (1) consent to
the Term Loan Debt, and (2) increase to $210,000,000 the maximum combined funded
principal amount permitted under the Loans and the Term Loans (as defined in the
Term Loan Debt Purchase Agreement), all upon terms acceptable to and approved by
the Agent in its discretion;

 

(l)            a legal opinion from Goodwin Procter LLP, the independent counsel
for the Credit Parties, dated as of the Closing Date, addressed to the Agent and
acceptable in all respects to the Agent in its sole reasonable discretion;

 

(m)          certificates of insurance satisfactory to the Collateral Agent in
all respects evidencing the existence of all insurance required to be maintained
by the Borrower and its Subsidiaries pursuant to the terms of this Agreement,
the Security Documents and the Term Loan Debt Documents;

 

(n)           payment by the Borrower to the Lenders, the Agent and the Agent’s
applicable Affiliates of all fees required to be paid under the Loan Documents
and any separate fee letter with the Agent and the Agent’s applicable
Affiliates, and all expenses required to be paid under the Loan Documents for
which invoices have been presented; and

 

(o)           all other Loan Documents and any other instruments or documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as the Agent may reasonably request, executed by the Credit
Parties or any other Person required by the Agent.

 

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5.             Representations and Warranties.

 

Each of the Credit Parties represents and warrants to the Agent and the Lenders,
as to itself and each other Credit Party, that:

 

5.1           Organization.  Each Credit Party is duly organized, validly
existing and in good standing under the laws of the state of its incorporation
or formation; has all power and authority under its organizational documents to
own its respective Property and assets and to conduct its respective businesses
as presently conducted; and is duly qualified to do business and in good
standing in each and every state jurisdiction where its respective business
requires such qualification, except for those jurisdictions in which the failure
to qualify and/or be in good standing would not reasonably be expected to result
in a Material Adverse Effect.

 

5.2           Financial Statements.

 

(a)           The Consolidated financial statements of the Credit Parties and
their Subsidiaries delivered to the Agent and the Lenders in connection with
this Agreement, including without limitation, (i) the Annual Audited Financial
Statements dated as of June 30, 2005 and (ii) the Monthly Unaudited Financial
Statements dated as of June 30, 2006, fairly present in all material respects,
in accordance with GAAP, the Consolidated financial condition and the results of
operations of the Credit Parties and their Subsidiaries as of the dates and for
the periods indicated, subject to year-end audit adjustments and the absence of
footnotes in the case of such unaudited or any pro forma statements, and no
Material Adverse Effect has occurred since the dates of such financial
statements.

 

(b)           The Credit Parties have heretofore furnished to the Agent, for the
calendar months from the projected Closing Date through June 30, 2007 and for
each fiscal year of the Credit Parties thereafter through the Revolving Credit
Termination Date, projected income statements, balance sheets and cash flows of
the Credit Parties and their Subsidiaries, on a Consolidated basis, together
with one or more schedules demonstrating prospective compliance with all
financial covenants contained in this Agreement, such projections disclosing all
material assumptions made by the Credit Parties in formulating such
projections.  The projections are based upon estimates and assumptions which the
Credit Parties believe are reasonable in light of the conditions which existed
as of the time the projections were made, have been prepared on the basis of the
material assumptions stated therein and reflect as of the Closing Date an
estimate believed reasonable by the Credit Parties as to the results of
operations and other information projected therein.

 

5.3           Enforceable Obligations; Authorization.  The Loan Documents are
legal, valid and binding obligations of the respective Credit Parties executing
and delivering the same, enforceable against such Credit Parties in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors rights
generally and by general equitable principles regardless of whether considered
in a proceeding in equity or at law.  The execution, delivery and performance of
the Loan Documents have all been duly authorized by all necessary corporate, and
if necessary shareholder, action; are within the power and authority of each of
the Credit Parties; do not and will not violate any Legal Requirement material
to the business, assets or operations of any of

 

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the Credit Parties taken as a whole or the Organizational Documents of any of
the Credit Parties; do not and will not constitute a default under, any material
agreement or instrument by which any of the Credit Parties or any material
portion of any of the Credit Parties’ Property is bound or affected; and do not
and will not result in the creation of any Lien upon any Property of any of the
Credit Parties except as expressly contemplated therein.  All necessary
approvals of any Governmental Authority and all other requisite material
permits, registrations and consents for the performance have been obtained for
the delivery and performance of the Loan Documents.

 

5.4           Other Debt.  Except as set forth on Schedule 5.4 attached hereto,
no Credit Party is in default in the payment of any other Indebtedness or under
any agreement, mortgage, deed of trust, security agreement or lease to which it
is a party, the result of which would or could reasonably be expected to result
in a Material Adverse Effect.

 

5.5           Litigation.  Except as set forth on Schedule 5.5 attached hereto,
to the knowledge of the Credit Parties, there is no litigation or administrative
proceeding pending or threatened against, nor any outstanding judgment, order or
decree affecting, any of the Credit Parties or any of their Subsidiaries before
or by any Governmental Authority or arbitral body as to which there is a
reasonable possibility of an adverse determination and which individually or in
the aggregate have, or if adversely determined could reasonably be expected to
have, a Material Adverse Effect.  Except as set forth on Schedule 5.5 attached
hereto, as of the Closing Date there is no litigation or administrative
proceeding pending against, nor any outstanding judgment, order or decree
affecting, any of the Credit Parties or any of their Subsidiaries before or by
any Governmental Authority or arbitral body.  Except as set forth on Schedule
5.5 attached hereto, none of the Credit Parties, nor any of their Subsidiaries,
is knowingly in material default with respect to any judgment, writ, rule,
regulation, order or decree of any Governmental Authority.

 

5.6           Taxes.  Except as set forth on Schedule 5.6 attached hereto, the
Credit Parties and their Subsidiaries have filed all federal, state, local or
foreign tax returns required to have been filed by them and paid all taxes shown
thereon to be due, except those for which extensions have been obtained, and
except for those which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained in
accordance with GAAP.  There is no outstanding federal audit by the Internal
Revenue Service of the income tax returns of any of the Credit Parties or any of
their Subsidiaries claimed or raised in writing, and none of the Credit Parties
or any of their Subsidiaries have, as of the Closing Date, any extension of time
with respect to an assessment or deficiency relating to any Federal tax return
that is still in effect.  None of the Credit Parties or any of their
Subsidiaries have, as of the Closing Date, any extension of time with respect to
an assessment or deficiency relating to any state, local or foreign tax return
that is still in effect, other than extensions with respect to tax liabilities
where the failure by the applicable Credit Party to pay such tax liabilities
would not have a Material Adverse Effect.  None of the Credit Parties or any of
their Subsidiaries is a party to any tax sharing arrangement with any Person
(other than the affiliated group of which Walco Holdings is the parent).

 

5.7           No Material Misstatements.  No information, report, financial
statement, exhibit or schedule prepared and furnished by or on behalf of any
Credit Party to the Agent or any Lender in connection with this Agreement or any
other Loan Documents knowingly contains any material misstatement of fact or
knowingly omits to state any material fact necessary to make the

 

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statements therein, in the light of the circumstances under which they were
made, not misleading at the time prepared or furnished.

 

5.8           Subsidiaries.  As of the date hereof, the Credit Parties have no
Subsidiaries other than as listed on Schedule 5.8 attached hereto.  Except as
expressly indicated on Schedule 5.8 attached hereto, as of the Closing Date,
each of the Subsidiaries listed on Schedule 5.8 is wholly owned by the
applicable Credit Party.  As of the Closing Date, Schedule 5.8 sets forth
(a) the jurisdiction of incorporation or organization of each Subsidiary of the
Credit Parties, and (b) the percentage of the applicable Credit Party’s
ownership of the Equity Interests of each Subsidiary of the Credit Parties.

 

5.9           Representations by Others.  All representations and warranties
made by or on behalf of any of the Credit Parties in any Loan Document shall
constitute representations and warranties of the Credit Parties hereunder.

 

5.10         Permits, Licenses, Etc.  Each of the Credit Parties possess all
material permits from each applicable Governmental Authority, licenses from each
applicable Governmental Authority, patents, patent rights, trademarks, trademark
rights, trade names, trade name rights and copyrights which are reasonably
required to conduct their respective businesses.

 

5.11         ERISA.  No Reportable Event has occurred with respect to any Plan
which, when taken together with all other such Reportable Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in any material liability.  Each Plan complies in all material respects
with all applicable provisions of ERISA, and the Borrower or each ERISA
Affiliate have filed all reports required by ERISA and the Code to be filed with
respect to each Plan.  The Borrower does not have any knowledge of any event
which could reasonably be expected to result in a liability of the Borrower or
any ERISA Affiliate to the PBGC other than for applicable premiums.  No
accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
Plan.  No event has occurred and no condition exists that could reasonably be
expected to constitute grounds for a Plan to be terminated under circumstances
which would cause the Lien provided under Section 4068 of ERISA to attach to any
Property of the Borrower or any ERISA Affiliate.  No event has occurred and no
condition exists that could reasonably be expected to cause the Lien provided
under Section 302 of ERISA or Section 412 of the Code to attach to any Property
of the Borrower or any ERISA Affiliate.

 

5.12         Title to Properties; Possession Under Leases.

 

(a)           Except as set forth on Schedule 5.12 attached hereto, the Credit
Parties and each of their respective Subsidiaries have good and marketable title
to, or a valid leasehold interest in, all of their respective Property and
assets that are material to their respective business taken as a whole shown on
the most recent Consolidated balance sheet for the Credit Parties and their
Subsidiaries provided under the terms of Section 6.3(a) or Section 6.3(b), and
all assets and Property that are material to their respective business taken as
a whole, acquired since the date of such respective balance sheets, except for
such Property as is no longer used or useful in the conduct of their respective
businesses or as have been disposed of in the ordinary course of business or
otherwise in accordance with this Agreement, and except for minor defects in
title

 

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that do not interfere with the ability of the Credit Parties or any of their
Subsidiaries to conduct their respective businesses as now conducted or as
otherwise disclosed in the title insurance delivered to the Agent in accordance
with Section 4.2(cc).  All such assets and Property are free and clear of all
Liens other than those permitted by Section 7.2 hereof.

 

(b)           Except as set forth on Schedule 5.12 attached hereto, the Borrower
and each of its Subsidiaries have no knowledge of any material default under any
material leases to which any of them is a party and under which any of them is
in occupancy, except where non-compliance does not affect the Borrower’s or such
Subsidiary’s use or occupancy thereof, as applicable, and all such material
leases are in full force and effect.  Schedule 5.12 attached hereto sets forth
each of such leases of real Property in existence as of the Closing Date, and
upon the request of the Agent, the Borrower will provide the Agent with complete
and correct copies of all of such leases of real Property then in effect.

 

5.13         Assumed Names.  As of the Closing Date, neither the Borrower, nor
any of its Subsidiaries, is currently conducting its business under any assumed
name or names, except as set forth on Schedule 5.13 attached hereto.  Upon
written request by the Agent, the Borrower shall promptly furnish the Agent with
a then current listing of all assumed names that the Borrower and/or any of its
Subsidiaries is then utilizing in conducting their respective businesses.

 

5.14         Investment Company Act.  None of the Credit Parties or any of their
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended.

 

5.15         Public Utility Holding Company Act.  None of the Credit Parties or
any of their Subsidiaries is a “public utility company,” or an “affiliate” or a
“subsidiary company” of a “public utility company,” or a “holding company,” or a
“subsidiary company” of a “registered holding company,” or an “affiliate” of a
“registered holding company” as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended (“PUHCA”).

 

5.16         Agreements.  Schedule 5.16 attached hereto is a complete and
correct list, as of the Closing Date (after giving effect to the Term Loan Debt
Transaction), of (i) all credit agreements or indentures for borrowed money and
capitalized leases to which any of the Credit Parties or any of their
Subsidiaries is a party and all Property of any of the Credit Parties or any of
their Subsidiaries subject to any Lien securing such Indebtedness or capitalized
lease obligation, (ii) each letter of credit and guaranty to which any of the
Credit Parties or any of their Subsidiaries is a party, (iii) all other material
instruments in effect as of the date hereof providing for, evidencing, securing
or otherwise relating to any Indebtedness for borrowed money of any of the
Credit Parties or any of their Subsidiaries (other than the Indebtedness
hereunder), and (iv) all obligations of any of the Credit Parties or any of
their Subsidiaries to issuers of appeal bonds issued for account of any Credit
Party or any of its Subsidiaries.  The Borrower shall, upon, request by the
Agent, deliver to the Agent and the Lenders a complete and correct copy of all
such credit agreements, indentures, capitalized leases, letters of credit,
guarantees and other instruments described in Schedule 5.16 or arising after the
date hereof, including any modifications or supplements thereto, as in effect on
the date hereof.

 

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5.17         Environmental Matters.  Except as disclosed on Schedule 5.17
attached hereto or in any of the environmental assessments or studies described
on Schedule 5.17 attached hereto, to the Credit Parties’ knowledge:  (a) each of
the Credit Parties and their Subsidiaries are in material compliance with all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Requirement of
Environmental Law or Environmental Permit reasonably necessary to the conduct of
any material aspect of the business of any Credit Party or any of its
Subsidiaries; (b) each of the Credit Parties and their Subsidiaries (i) have
obtained and maintained in effect all Environmental Permits reasonably necessary
to the conduct of any material aspect of the business of any Credit Party or any
of its Subsidiaries, (ii) along with their respective Properties (whether leased
or owned) have been and are in material compliance with all applicable
Requirements of Environmental Law and Environmental Permits, (iii) along with
their respective Properties (whether leased or owned) are not subject to any
material (A) Environmental Claims or (B) Environmental Liabilities arising from
or based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof, and (iv) have not received individually
or collectively any notice of any material violation or alleged material
violation of any Requirements of Environmental Law or Environmental Permit or
any Environmental Claim in connection with their respective Properties; and
(c) none of the Credit Parties or any of their Subsidiaries has actual knowledge
of any material violation of any applicable Requirements of Environmental Law
and Environmental Permits by, or of any material Environmental Claims or
Environmental Liabilities arising against, any of the prior owners or operators
and predecessors in interest with respect to any of the Credit Parties’ or any
of their Subsidiaries’ respective Property.

 

5.18         No Change in Credit Criteria or Collection Policies.  To the best
knowledge of the Credit Parties, there has been no material adverse change in
credit criteria or collection policies concerning Accounts of Borrower or any of
its Subsidiaries since the date of the field exam described in
Section 4.2(k) which has had or which is likely to have, in the reasonable
judgment of any Responsible Officer of the Borrower, a Material Adverse Effect.

 

5.19         Solvency.

 

(a)           Immediately after the consummation of the Term Loan Debt
Transaction and the other transactions contemplated hereunder to occur on the
Closing Date, (i) the fair value of the assets of each Credit Party, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or
otherwise; (ii) the present fair saleable value of the property of each Credit
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Credit Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Credit Party will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted after the Closing
Date; provided, however, that for purposes of the foregoing representations and
warranties by the Canadian Subsidiaries of the Borrower set forth in clauses
(i), (ii) and (iii), the contingent liabilities of such Canadian Subsidiaries
under the terms of the Guaranty and under the terms of the guaranty by such
Canadian Subsidiaries of the Term Loan Debt and the Second Lien Debt shall be
excluded.  Notwithstanding the foregoing proviso,

 

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however, each Canadian Subsidiary of the Borrower represents and warrants that
applicable Canadian bankruptcy and insolvency laws do not provide such Canadian
Subsidiary with any fraudulent conveyance or other similar defense to the
enforcement of such Canadian Subsidiary’s Obligations under the Guaranty or any
applicable Security Document to which such Canadian Subsidiary is a party.

 

(b)           No Credit Party intends to, or will permit any of its Subsidiaries
to, and no Credit Party believes that it or any of its Subsidiaries will, incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it or any such Subsidiary
and the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.

 

5.20         Status of Collateral.  The Credit Parties are and shall be the sole
owners, free and clear of all Liens except in favor of the Agent or otherwise
permitted under Section 7.2 hereunder, of and fully authorized to sell,
transfer, pledge and/or grant a security interest in all of the Collateral
(other than Excluded Collateral, as defined in the applicable Security
Documents), and (b) to the Credit Parties’ knowledge, each Account included
within the Borrowing Base meets the requirements of the definition of Eligible
Account, each item of Inventory included within the Borrowing Base meets the
requirements of the definition of Eligible Inventory, each item of Equipment
included within the Borrowing Base meets the requirements of the definition of
Eligible Equipment, and each parcel of Real Estate (other than the Excluded Real
Estate) meets the requirements of the definition of Eligible Real Estate.

 

5.21         Term Loan Debt and Second Lien Debt Documents.  Each of the Term
Loan Debt Documents and the Second Lien Debt Documents constitutes the valid and
binding obligation of the applicable Credit Parties, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and moratorium laws and other laws affecting creditors’ rights
generally and by general principles of equity regardless of whether considered
in a proceeding in equity or at law.  The Credit Parties have no knowledge that
any of the representations and warranties contained in any of the Term Loan Debt
Documents or any of the Second Lien Debt Documents were not true and correct in
all material respects on and as of the date given or, except as consented to by
the Agent in writing or otherwise disclosed in writing to the Agent prior to the
Closing Date, that any of the material terms thereof have been modified, amended
or waived other than as permitted under Section 7.19.

 

5.22         Transactions with Related Parties.  Except as set forth on Schedule
5.22 attached hereto, any and all transactions, contracts, or other agreements
existing on the Closing Date which have been entered into by and among any
Credit Party and any officer, director, shareholder or Affiliate of any of the
Credit Parties (other than Permitted Affiliate Transactions), has been entered
into and made upon terms and conditions not less favorable to the applicable
Credit Parties than those terms which could have been obtained from wholly
independent and unrelated sources.

 

5.23         Patents, Trademarks and Copyrights.  Schedule 5.23 hereto sets
forth a true, accurate and complete listing, as of the date hereof, of all
patents, registered trademarks and copyrights, and applications therefor, of
each of the Credit Parties and each of their Subsidiaries as of the Closing
Date.  Except as created or permitted under the Loan Documents, no Lien

 

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exists with respect to the interest of any Credit Party or any of its
Subsidiaries in any such patents, registered trademarks or copyrights or
applications therefor, and no Credit Party or any of its Subsidiaries has
transferred or subordinated any interest it may have in such patents, registered
trademarks and copyrights and applications therefor.  The Borrower shall, from
time to time as necessary, deliver to the Agent an updated Schedule 5.23 to this
Agreement, together with a certificate of a Responsible Officer of the Borrower
certifying that the information set forth on such schedule is true, correct and
complete as of such date, which schedule may be used to prepare additional
Security Agreements, if necessary.

 

6.             Affirmative Covenants.

 

Until the Revolving Credit Commitments have expired or been terminated and the
Obligations shall have been paid in full and all Letters of Credit shall have
expired or terminated, each Credit Party executing this Agreement covenants and
agrees, jointly and severally with all of the Credit Parties, to perform and
observe (and cause each of its Subsidiaries to perform and observe) each and all
of the following covenants and agreements:

 

6.1           Businesses and Properties.  At all times:  (a) do or cause to be
done all things necessary to obtain, preserve, renew and keep in full force and
effect the rights, licenses, permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses;
(b) maintain and operate such businesses in the same general manner in which
they are presently conducted and operated, provided that the foregoing shall not
prohibit any merger, consolidation, liquidation, dissolution or any
discontinuance or sale of such business permitted under Section 7.4; (c) comply
in all material respects with all Legal Requirements applicable to the operation
of such businesses whether now in effect or hereafter enacted (including without
limitation, all Legal Requirements relating to public and employee health and
safety and all Environmental Laws) and with any and all other Legal
Requirements; and (d) keep and maintain all Property material to the conduct of
such businesses in good repair, working order and condition, ordinary wear and
tear excepted, and from time to time make, or cause to be made, all necessary
repairs, renewals, additions, improvements and replacements thereto necessary in
order that the business carried on in connection therewith may be properly
conducted at all times.

 

6.2           Taxes.  Pay and discharge promptly when due (giving effect to all
extensions of time permitted by the applicable Governmental Authority) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its Property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid, might give rise to Liens
upon such properties or any part thereof (except as otherwise permitted by
Section 7.2 hereof), unless being contested in good faith by appropriate
proceedings and as to which adequate reserves in an amount not less than the
aggregate amount secured by such Liens have been established in accordance with
GAAP; provided, however, that such contested amounts giving rise to such Liens
shall be immediately paid upon commencement of any procedure or proceeding to
foreclose any of such Liens unless the same shall be validly stayed by a court
of competent jurisdiction or a surety bond, which is satisfactory in all
respects to the Agent, is delivered to the Agent for the ratable benefit of the
Lenders in an amount no less than such contested amounts.

 

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6.3           Financial Statements and Information.  Furnish to the Agent each
of the following:

 

(a)           as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Credit Parties, Annual Audited
Financial Statements of the Credit Parties and their Subsidiaries;

 

(b)           as soon as available and in any event within thirty (30) days
after the end of each calendar month, Monthly Unaudited Financial Statements of
the Credit Parties and their Subsidiaries;

 

(c)           concurrently with the financial statements provided for in
Subsections 6.3(a) and 6.3(b) hereof, (1) an Officer’s Certificate, signed by a
Responsible Officer of applicable Credit Party, and (2) if applicable, a written
certificate in Proper Form, identifying each Subsidiary which is otherwise
required by the provisions of Section 6.10 hereof to become a Guarantor at the
request of the Agent, but which has not yet done so as of the date of such
certificate, and providing an explanation of the reasons why each such
Subsidiary is not a Guarantor, signed by a Responsible Officer of the applicable
Credit Party;

 

(d)           as soon as available and in any event within five (5) Business
Days after the date of issuance thereof (if any such audit report or management
letter is ever issued), any (1) interim or special audit report made by
independent accountants of the books of the Credit Parties or any of their
Subsidiaries or (2) management letter prepared by the independent public
accountants who reported on the financial statements provided for in Subsection
6.3(a) above, with respect to the internal audit and financial controls of the
Credit Parties and their Subsidiaries;

 

(e)           as soon as available and in any event within twenty (20) days
after the end of each calendar month, an Accounts report in a form as may be
reasonably required or requested by the Agent setting forth the sales,
collections and total customer debits and credits for the Borrower, on a
Consolidated and consolidating basis, for such month, certified by a Responsible
Officer of the Borrower; provided, however, that when Availability is less than
$15,000,000 for ten (10) consecutive Business Days, such Accounts report shall
be furnished weekly within three (3) Business Days after the end of each week,
and such weekly reporting shall remain in effect thereafter until Availability
is $15,000,000 or greater for thirty (30) consecutive days;

 

(f)            as soon as available and in any event within twenty (20) days
after the end of each calendar month, an Inventory Designation Report in the
form of Exhibit G;

 

(g)           as soon as available and in any event within twenty (20) days
after the end of each calendar month, Account agings and reconciliations,
accounts payable agings and reconciliations, lockbox statements and all other
schedules, computations and other information, all in reasonable detail, as may
be reasonably required or requested by the Agent with regard to the Borrower and
its Subsidiaries, all certified by a Responsible Officer of the Borrower;

 

(h)           as soon as available and in any event within twenty (20) days
after the end of each calendar month, a Borrowing Base Compliance Certificate,
signed by a Responsible Officer of the Borrower in the form attached hereto as
Exhibit F;

 

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(i)            as soon as available and in any event within thirty (30) days
prior to the commencement of each fiscal year of the Credit Parties,
management-prepared Consolidated financial projections of the Credit Parties and
their Subsidiaries for the immediately following three (3) fiscal years (setting
forth such projections on both an annual basis and on a monthly basis for the
upcoming fiscal year and on an annual basis only for the two (2) fiscal years
thereafter), such projections to be prepared and submitted in such format and
detail as reasonably requested by the Agent; and

 

(j)            such other information relating to the financial condition,
operations and business affairs of any Credit Party or any of its Subsidiaries
as from time to time may be reasonably requested by the Agent.

 

The Agent reserves the right to require information required to be delivered in
Sections 6.3(e)-(h) as frequently as weekly at any time an Event of Default does
not exist based on the Agent’s Permitted Discretion or more frequently at any
time Event of Default exists.

 

6.4           Inspections; Field Examinations; Appraisals and Physical Counts.

 

(a)           Upon reasonable notice (which may be telephonic notice), at all
reasonable times and as often as the Agent may request, permit any authorized
representative designated by the Agent, including without limitation, any
consultant engaged by the Agent, together with any authorized representatives of
any Lender desiring to accompany the Agent, to visit and inspect the Properties
and financial records of the Credit Parties and to make extracts from such
financial records and permit any authorized representative designated by the
Agent (together with any accompanying representatives of any Lender) to discuss
the affairs, finances and condition of the Credit Parties with any Responsible
Officer and the Credit Parties’ independent public accountants, as applicable. 
The Agent agrees that it shall schedule any meeting with any such independent
public accountant through the Borrower, and a Responsible Officer of the
Borrower shall have the right to be present at any such meeting.

 

(b)           The Agent and any consultant of the Agent shall each have the
right to examine (and any authorized representatives of any Lender shall have
the right to accompany the Agent during any such examination), as often as the
Agent may request, the existence and condition of the Accounts, books and
records of the Borrower and its Subsidiaries and to review their compliance with
the terms and conditions of this Agreement and the other Loan Documents, subject
to governmental confidentiality requirements.  The Agent shall also have the
right to verify with any and all customers of the Borrower and its Subsidiaries
the existence and condition of the Accounts, as often as the Agent may require,
without prior notice to or consent of the Borrower or any of its Subsidiaries. 
Without in any way limiting the foregoing, the Agent shall have the right to
(i) conduct field examinations of the Borrower and its Subsidiaries operations
at the Borrower’s expense as often as the Agent may request and (ii) to order
and obtain an appraisal of the Inventory, the Equipment and/or the Real Estate
of the Borrower and its Subsidiaries by an appraisal firm satisfactory to the
Agent as often as the Agent may request.  Without in any way limiting the
foregoing, the Borrower agrees to cooperate and to cause its Subsidiaries to
cooperate in all respects with the Agent and its representatives and consultants
in connection with any and all inspections, examinations and other actions taken
by the Agent or any of its representatives or consultants pursuant to this
Section 6.4.  The Borrower hereby

 

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agrees to promptly pay, upon demand by the Agent (or the applicable Lender, if
appropriate), any and all fees and expenses incurred by the Agent or any Lender
in connection with any inspection, examination, appraisal or review permitted by
the terms of this Section 6.4; provided, however, that so long as no Default or
Event of Default is continuing, the Borrower shall only be obligated to pay for
(x) two field examinations during each consecutive 12-month period (limited to
the prevailing rate then charged for field examinations, which is initially
anticipated to be $850.00 per day per examiner, plus all out-of-pocket expenses
of the Agent related to such filed examinations), (y) one Inventory appraisals
during each consecutive 12-month period, and (z) one Equipment appraisal and one
Real Estate appraisal of all real property then included within Eligible Real
Estate during any consecutive 12-month period, but only if the Borrower has
elected the reappraisal option for the applicable annual Equipment and Real
Estate Annual Adjustments (other than the initial field examinations and
appraisals for any Accounts, Equipment and/or Inventory acquired through an
acquisition or other Investment permitted under the terms of this agreement, it
being agreed that the Borrower shall be obligated to pay for each such initial
field examination and/or appraisal, as applicable, conducted with respect to
each such acquisition or Investment); provided further, however, that the
Borrower shall only be obligated to pay or reimburse such fees and expenses of
any Lender other than the Agent to the extent incurred by such Lender after the
occurrence of any Default or Event of Default which has not been cured to the
satisfaction of the Agent or waived in writing by the Agent and the Required
Lenders.

 

6.5           Further Assurances.  Upon request by the Agent, promptly execute
and deliver any and all other and further agreements and instruments and take
such further action as may be reasonably requested by the Agent to (a) cure any
defect in the execution and delivery of any Loan Document or more fully to
describe particular aspects of any of the Credit Parties’ agreements set forth
in the Loan Documents or so intended to be, (b) to carry out the provisions and
purposes of this Agreement an the other Loan Documents, and (c) grant, preserve,
protect and perfect the first priority Liens created or intended to be created
by the Security Documents in the Collateral.

 

6.6           Books and Records.  Maintain financial records and books in
accordance with accepted financial practice and GAAP.

 

6.7           Insurance.

 

(a)           Keep its insurable Properties adequately insured at all times by
financially sound and reputable insurers.

 

(b)           Maintain such other insurance, to such extent and against such
risks, including fire and other risks insured against by extended coverage and
employee liability, as is customary with companies similarly situated and in the
same or similar businesses, provided, however, that such insurance shall insure
the Property of the Borrower and each of its Subsidiaries against all risk of
physical damage, including without limitation, loss by fire, explosion, theft,
fraud and such other casualties as may be reasonably satisfactory to the Agent,
but in no event at any time in an amount less than the replacement value of the
Collateral.

 

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(c)           Maintain in full force and effect worker’s compensation coverage
and public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with its operations
and with the use of any Properties owned, occupied or controlled by the Borrower
or any of its Subsidiaries, in such amounts as the Agent shall reasonably deem
necessary.

 

(d)           Maintain such other insurance as may be required by law or as may
be reasonably requested by the Agent for purposes of assuring compliance with
this Section 6.1.

 

All insurance covering tangible personal Property subject to a Lien in favor of
the Agent for the benefit of the Lenders granted pursuant to the Security
Documents shall provide that, in the case of each separate loss, the full amount
of insurance proceeds shall be payable to the Agent and shall further provide
for at least 30 days’ prior written notice to the Agent of the cancellation or
substantial modification thereof.

 

6.8           ERISA.  At all times, except where a failure to comply with any of
the following, individually or in the aggregate, would or could reasonably be
expected to result in a material obligation or liability of any Credit Party: 
(a) make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the minimum funding standards requirements of ERISA;
(b) immediately upon acquiring knowledge of (i) any Reportable Event in
connection with any Plan for which no administrative or statutory exemption
exists or (ii) any Prohibited Transaction in connection with any Plan, that
could result in the imposition of material damages or a material excise tax on
the Borrower or any Subsidiary thereof, furnish the Agent a statement executed
by a Responsible Officer of the Borrower or such Subsidiary setting forth the
details thereof and the action which the Borrower or any such Subsidiary
proposes to take with respect thereto and, when known, any action taken by the
Internal Revenue Service with respect thereto; (c) notify the Agent promptly
upon receipt by the Borrower or any Subsidiary thereof of any notice of the
institution of any proceedings or other actions which may result in the
termination of any Plan by the PBGC and furnish the Agent with copies of such
notice; (d) pay when due, or within any applicable grace period allowed by the
PBGC, all required premium payments to the PBGC; (e) furnish the Agent with
copies of the annual report for each Plan filed with the Internal Revenue
Service not later than ten (10) days after the Agent requests such report;
(f) furnish the Agent with copies of any request for waiver of the funding
standards or extension of the amortization periods required by Sections 303 and
304 of ERISA or Section 412 of the Code promptly after the request is submitted
to the Secretary of the Treasury, the Department of Labor or the Internal
Revenue Service, as the case may be; and (g) pay when due all installment
contributions required under Section 302 of ERISA or Section 412 of the Code or
within 10 days of a failure to make any such required contributions when due
furnish the Agent with written notice of such failure.

 

6.9           Use of Proceeds.  Subject to the terms and conditions contained
herein, use the proceeds of the Loans for (a) financing ongoing working capital
needs of the Borrower and its Subsidiaries not otherwise prohibited herein,
including without limitation, the issuance of Letters of Credit for the account
of the Borrower or any of its Subsidiaries in accordance with and subject to the
terms of this Agreement; (b) general corporate purposes of the Borrower or any
of its Subsidiaries in the ordinary course of business not otherwise prohibited
herein; (c) payment of the Obligations, as provided in this Agreement;
(d) financing purchases and acquisitions

 

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permitted to be made by the Borrower under the terms of Section 7.4(e)(7); and
(e) financing dividends and distributions permitted to be made by the Borrower
under the terms of Section 7.11; provided, that no proceeds of any Loan shall be
used (w) for the purpose of purchasing or carrying directly or indirectly any
margin stock as defined in Regulation U (“Reg U”) of the Board of Governors of
the Federal Reserve System, (x) for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any such margin
stock, (y) for any other purpose which would cause such Loan to be a “purpose
credit” within the meaning of Reg U and (z) for any purpose which would
constitute a violation of Reg U or of Regulations G, T or X of the Board of
Governors of the Federal Reserve System or any successor regulation of any
thereof or of any other rule, statute or regulation governing margin stock from
time to time.

 

6.10         Guarantors, Joinder Agreements.  Promptly inform the Agent of the
creation or acquisition of any Subsidiary of any Credit Party or the
commencement of any business operations by any Inactive Subsidiary after the
Closing Date and, within thirty (30) days after the written request of the Agent
delivered in accordance with Section 10.2 below, cause (a) each such Subsidiary
that is a Domestic Subsidiary or created under the laws of Canada to become a
Guarantor by execution and delivery to the Agent, for the ratable benefit of the
Lenders, of a Guaranty or a Joinder Agreement (if a Joinder Agreement is
requested by the Agent in lieu of a Guaranty), (b) a first priority perfected
security interest (pari passu with a first priority security interest securing
the Term Loan Debt in accordance with and subject to the terms of the First Lien
Intercreditor Agreement) to be granted to the Collateral Agent in all of the
Equity Interests of such Subsidiary owned by any Credit Party or any of its
other Subsidiaries if such newly acquired or created Subsidiary or previously
Inactive Subsidiary is a Domestic Subsidiary or created under the laws of
Canada, or if such newly acquired or created Subsidiary or previously Inactive
Subsidiary is not a Domestic Subsidiary or a Subsidiary created under the laws
of Canada, then not more than sixty-five percent (65%) of all issued and
outstanding Equity Interests of such Subsidiary shall be pledged as Collateral
pursuant to the foregoing pledge requirement for Equity Interests, (c) cause
each such Subsidiary that is a Domestic Subsidiary or created under the laws of
Canada to grant to the Collateral Agent a security interest securing the
Obligations that is pari passu with a first priority security interest securing
the Term Loan Debt in accordance with and subject to the terms of the First Lien
Intercreditor Agreement (subject only to (i) Liens permitted under Sections
7.2(b) and (e) as to Accounts and Permitted Investment Securities which do not
have priority over the Lien of Collateral Agent, (ii) Liens permitted under
Section 7.2 as to all other Collateral which do not have priority over the Lien
of Collateral Agent, and (iii) purchase money Liens existing as of the date of
acquisition by Borrower or any other Subsidiary of the Borrower of such newly
acquired Subsidiary, if applicable) in all Accounts, Inventory, Equipment,
general intangibles and other tangible and intangible personal Property and all
real Property owned at any time by such Subsidiary and all products and proceeds
thereof (subject to similar exceptions as set forth in the Security Documents),
and (d) cause such Subsidiary to deliver to the Agent such related certificates,
legal opinions and documents (including Organizational Documents) as the Agent
may reasonably require; provided, however, that any Subsidiary that is not a
Domestic Subsidiary or created under the laws of Canada shall not be required to
become a Guarantor or grant any Liens hereunder.  To the extent reasonably
feasible, all of the foregoing requirements shall be affected by the execution
and delivery of a Joinder Agreement in a form acceptable to the Agent.

 

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6.11         Notice of Events.  Notify the Agent within one (1) Business Day
after any Responsible Officer of any of the Credit Parties acquires knowledge of
the occurrence of, or if any of the Credit Parties causes or intends to cause,
as the case may be, any of the following:  (i) the institution of any lawsuit,
administrative proceeding or investigation affecting any Credit Party or any of
its Subsidiaries, including without limitation, any audit by the Internal
Revenue Service, the adverse determination under which could reasonably be
expected to have a Material Adverse Effect; (ii) any development or change in
the business or affairs of any Credit Party or any of its Subsidiaries which has
had or which is likely to have, in the reasonable judgment of any Responsible
Officer of any of the Credit Parties, a Material Adverse Effect; (iii) any Event
of Default or Default, together with a reasonably detailed statement by a
Responsible Officer on behalf of the Borrower of the steps being taken to cure
the effect of such Event of Default or Default; (iv) the occurrence of a default
or event of default by any Credit Party or any of its Subsidiaries under any
agreement or series of related agreements to which it is a party, which default
or event of default could reasonably be expected to have a Material Adverse
Effect; (v) any material violation by, or investigation of any Credit Party or
any of its Subsidiaries in connection with any actual or alleged material
violation of any Legal Requirement imposed by the Environmental Protection
Agency, the Occupational Safety and Health Administration or any other
Governmental Authority which has or is likely to have, in the reasonable
judgment of any Responsible Officer of any Credit Party, a Material Adverse
Effect; (vi) any significant change in the accuracy of any material
representations and warranties of the any Credit Party or any of its
Subsidiaries in this Agreement or any other Loan Document (including without
limitation, the representations and warranties in Section 5.20(b)); (vii) the
delivery of any written notice of default or event of default to any Credit
Party by any representative or holder of any Term Loan Debt or the Second Lien
Debt; (viii) any amendment or modification of the Second Lien Debt Documents or
the Term Loan Debt Documents, such notice to be accompanied by copies of the
actual amendment or modification documents; and (ix) any of the following: 
(1) the occurrence of a Reportable Event with respect to any Plan; (2) the
institution of any steps by the Borrower, any ERISA Affiliate, the PBGC or any
other Person to terminate any Plan; (3) the institution of any steps by the
Borrower or any ERISA Affiliate to withdraw from any Plan; (4) a Prohibited
Transaction in connection with any Plan; (5) any material increase in the
contingent liability of the Borrower or any Subsidiary of the Borrower with
respect to any post-retirement welfare liability; or (6) the taking of any
action by, or the threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with respect to any of the
foregoing.

 

6.12         Environmental Matters.  Without limiting the generality of
Section 6.1(c) hereof, (a) comply in all material respects with all material
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Requirement of
Environmental Law, or Environmental Permit; (b) obtain and maintain in effect
all Environmental Permits reasonably necessary to the conduct of any material
aspect of its business; and (c) keep its Property free of any Environmental
Claims or Environmental Liabilities, other than Environmental Claims or
Environmental Liabilities, contingent or otherwise, disclosed in Schedule 5.17
attached hereto or any of the environmental assessments or studies described in
Schedule 5.17 attached hereto.  In the event that any Credit Party or any of its
Subsidiaries receives any demand or claim from any Person, including without
limitation, any Governmental Authority, asserting the liability of any Credit
Party or any of its Subsidiaries as a result of any Environmental Liabilities or
requesting or requiring that any

 

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Environmental Liabilities be remediated by any Credit Party or any of its
Subsidiaries, such Credit Party agrees to promptly take action and thereafter
diligently pursue the same to completion in a manner necessary to cause the
applicable Environmental Liabilities to be remediated as soon as reasonably
possible in accordance with all applicable Requirements of Environmental Law. 
Each Credit Party, jointly and severally with all other Credit Parties, hereby
indemnifies and agrees to hold the Agent and the Lenders harmless from and
against any and all liability, loss, damage, suit, action or proceeding arising
out of its respective business or the business of any of its Subsidiaries,
pertaining to any Environmental Liabilities, including without limitation,
claims of any Governmental Authority or any other Person arising under any
Requirement of Environmental Law; provided, that the foregoing indemnity shall
not apply to the extent, but only to the extent the applicable liability, loss,
damage, suit, action or proceeding is caused by the willful misconduct, knowing
and willful breach of any Loan Document or gross negligence of the party seeking
indemnification.

 

6.13         End of Fiscal Year.  Cause each of its fiscal years to end on
June 30th of the applicable year.

 

6.14         Pay Obligations and Perform Other Covenants.  Make full and timely
payment of the Obligations, whether now existing or hereafter arising, as and
when due and payable, duly comply with all of the terms and covenants contained
in this Agreement and in each of the other Loan Documents at all times and
places and in the manner set forth therein, and except for the filing of
continuation statements and the making of other filings by the Agent as secured
party or assignee, at all times take all actions necessary to maintain the Liens
and security interests provided for under or pursuant to this Agreement and the
Security Documents as valid perfected first priority Liens on the Collateral
intended to be covered thereby (pari passu with the first priority Liens
securing the Term Loan Debt in accordance with and subject to the terms of the
First Lien Intercreditor Agreement and subject only to the Liens expressly
permitted by Section 7.2 hereof) and supply all information to the Agent
necessary for such maintenance.

 

6.15         Cash Dominion; Collection and Application of Accounts.

 

(a)           At the Borrower’s own cost and expense, arrange (and cause each of
its Subsidiaries to arrange) for remittances on all Accounts to be made
(i) directly to one or more lockboxes designated by the Collateral Agent under
the terms of the Lockbox Agreement, (ii) directly to one or more deposit
accounts with a third-party financial institution linked to a lockbox, cash
management or similar depository system maintained with a third-party financial
institution, so long as (A) such deposit accounts and systems are subject to and
covered by a Tri-Party Agreement that facilitates the collection of Accounts by
the Collateral Agent in accordance with the terms of this Section 6.15, and
(B) the Borrower and its Subsidiaries cease to utilize all principal depository
accounts and lockbox, cash management and depository systems maintained with any
third-party financial institution on or before thirty (30) days after the
Closing Date, or (iii) in such other manner as the Agent may direct.  All
remittances on all Accounts processed through the lockboxes and received by the
Collateral Agent in accordance with this Section 6.15(a) shall at all times be
promptly deposited in one or more controlled disbursement or other accounts
designated by the Collateral Agent, subject to withdrawal by the Collateral
Agent only, as hereinafter provided and in connection therewith, the Collateral
Agent and JPMorgan are

 

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irrevocably authorized to cause all remittances on all Accounts received by the
Collateral Agent or JPMorgan from whatever means, whether pursuant to the
Lockbox Agreement, any Tri-Party Agreement or otherwise, to be promptly
deposited in such account or accounts designated by the Collateral Agent.  All
remittances and payments that are deposited in accordance with the foregoing
will be applied by the Collateral Agent on the same day received (or on the next
Business Day in the case of remittances and payments received after 11:00 a.m.)
to reduce the outstanding balance of the Revolving Loans, subject to the
continued accrual of interest for one (1) Business Day (or two Business Days in
the case of remittances and payments received after 11:00 a.m.) on the Revolving
Loan balances paid by such remittances and payments and in any event subject to
final collection in cash of the item deposited.

 

(b)           Notwithstanding any provision to the contrary in this
Section 6.15, the Borrower and its Subsidiaries shall be permitted to have from
time to time local depository accounts maintained with financial institutions
other than JPMorgan for local remittances, payroll, trust and escrow services of
the Borrower and its Subsidiaries in the ordinary course of business, with not
more than $500,000 in the aggregate being permitted to be held in all such local
depository or remittance accounts at any one time, provided in each case all
such accounts remain subject to a Tri-Party Agreement and which such permitted
amounts in such accounts shall not be subject to periodic sweeps to a controlled
disbursement account with the Collateral Agent unless an Event of Default then
exists.

 

(c)           Except as otherwise permitted under Section 6.15(b) above, the
Borrower and its Subsidiaries shall cause all payments, if any, received by the
Borrower or any of its Subsidiaries on account of Accounts which are not
forwarded directly to the above-described lockbox(es) or accounts (whether in
the form of cash, checks, notes, drafts, bills of exchanges, money orders or
otherwise) to be promptly deposited in the form received (but with any
endorsements of the Borrower or the applicable Subsidiary necessary for deposit
or collection) in the account or accounts designated by the Collateral Agent in
accordance with the provisions of Section 6.15(a) above.

 

6.16         Accounts and Other Collateral Matters.  Maintain books and records
pertaining to the respective Collateral owned by any Credit Party in detail,
form and scope as the Agent shall reasonably require.  Each Credit Party will,
promptly after any of its Responsible Officers learns thereof, report to the
Agent any material loss or destruction of, or substantial damage to, any of the
Collateral, and any other matters materially affecting the value, enforceability
or collectibility of any of the Collateral.  If any amount payable under or in
connection with any Account is evidenced by a promissory note or other
instrument, as such terms are defined in the Uniform Commercial Code, such
promissory note or instrument shall be promptly pledged, endorsed, assigned and
delivered to the Agent as additional Collateral if the original principal amount
of such promissory note or instrument is $50,000 or greater.  No Credit Party
shall redate, or allow any of its Subsidiaries to redate, any invoice or sale or
without written notice to the Agent, make or allow to be made sales on extended
dating beyond that customary in the industry.  No Credit Party nor any of its
Subsidiaries shall be entitled to pledge the Agent’s or any Lender’s credit on
any purchases or for any purpose whatsoever.

 

6.17         Agreements.  Promptly after Agent’s request, the Borrower shall
deliver or cause to be delivered to the Agent copies of all material employment
agreements, management fee

 

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agreements, tax sharing agreements, loan agreements, notes and other
documentation evidencing any Indebtedness of any Credit Party or any of its
Subsidiaries which the Agent may request.

 

7.             Negative Covenants.

 

Until the Revolving Credit Commitments have expired or been terminated and the
Obligations shall have been paid in full and all Letters of Credit shall have
expired or terminated, each Credit Party executing this Agreement covenants and
agrees, jointly and severally with all of the Credit Parties, that it will not
do (and will not suffer or permit any of its Subsidiaries, if any, to do) any of
the following:

 

7.1           Indebtedness.  Create, incur, suffer or permit to exist, or assume
or guarantee or become or remain liable with respect to any Indebtedness,
absolute, contingent, or otherwise, except the following:

 

(a)           Indebtedness to the Lenders and the Agent pursuant hereto;

 

(b)           Indebtedness secured by Liens permitted by Section 7.2 hereof;

 

(c)           Purchase money Indebtedness (including the amount of any Capital
Lease Obligations required to be capitalized and included as a liability on the
consolidated balance sheet of the Borrower and its Subsidiaries) incurred to
finance Capital Expenditures (to the extent otherwise permitted hereunder);

 

(d)           The Term Loan Debt and the Second Lien Debt, with no renewals,
extensions or increases of any thereof being permitted (other than
“payments-in-kind” of accrued and unpaid interest), unless the same has been
approved in writing by the Agent and the Required Lenders, or in the case of the
Term Loan Debt, the same is expressly permitted under the terms of the First
Lien Intercreditor Agreement;

 

(e)           Other liabilities or Indebtedness existing on the date of this
Agreement and set forth on Schedule 5.16 attached hereto;

 

(f)            Current accounts payable and unsecured current liabilities
(including current accrued expenses), not the result of borrowings, to vendors,
suppliers, landlords, lessors and persons providing services, for expenditures
on ordinary trade terms for goods and services normally required by the Borrower
or any of its Subsidiaries in the ordinary course of business;

 

(g)           Indebtedness of any Guarantor (other than the Parent) to the
Borrower or to any other Guarantor (other than the Parent), or the Indebtedness
of the Borrower to any Guarantor (other than the Parent), provided that no such
Indebtedness may be cancelled, compromised or otherwise discounted in any
respect without the written consent of the Required Lenders;

 

(h)           Current and deferred taxes and other assessments and governmental
charges (to the extent permitted by Section 7.2(e) hereof);

 

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(i)            Customary and prudent Hedging Obligations entered into in the
ordinary course of business with the Agent, any Lender or any of their
respective Affiliates for the sole purpose of protecting the Borrower and its
Subsidiaries against fluctuations in interest rates, currency exchange rates and
similar risks, so long as such Hedging Obligations are not speculative in nature
and are incurred in the normal course of business and consistent with industry
practices;

 

(j)            Refinancing Indebtedness, to the extent the same relates to any
Indebtedness permitted by Sections 7.1(c) and 7.1(e) hereof;

 

(k)           Contingent Liabilities permitted pursuant to Section 7.3;

 

(l)            Indebtedness arising under any performance or surety bond entered
in the ordinary course of business;

 

(m)          Unsecured Indebtedness assumed, acquired or incurred pursuant to
any acquisition permitted under Section 7.4(e)(7), provided, that (1) all such
Indebtedness constitutes Subordinated Indebtedness, and (2) the aggregate
principal amount of all such Indebtedness assumed, acquired or incurred,
together with the cash purchase price paid, in connection with all such
acquisitions permitted under Section 7.4(e)(7) does not exceed in the aggregate
during the period from the Closing Date through the Revolving Credit Termination
Date the applicable aggregate consideration limits set forth in
Section 7.4(e)(7);

 

(n)           Indebtedness incurred to finance the purchase or maintenance of
publicly-tradable securities owned by any Credit Party, so long as (1) such
Indebtedness is secured by all such securities, (2) such Indebtedness does not
exceed $500,000 in the aggregate at any one time outstanding, and
(3) Availability is $15,000,000 or greater at all times for the 90-day period
prior to such purchase or acquisition and immediately after giving effect to the
applicable down payment for such securities then being acquired;

 

(o)           Subordinated Indebtedness of Walco International Holdings, Inc. or
Steer Intermediate Corporation, provided, that accrued and unpaid interest on
such Indebtedness shall only be payable in the form of “payments-in-kind”; and

 

(p)           Other Indebtedness in an aggregate amount not to exceed at any one
time outstanding the difference between $3,000,000 and the principal amount of
Indebtedness then outstanding and permitted under Section 7.1 (n).

 

The Agent, the Lenders and each Credit Party agree that, notwithstanding
anything contained in Section 7.1(g) or in any other provision contained in this
Agreement which may appear to be to the contrary, the payment of any and all
Indebtedness permitted by Sections 7.1(g) hereof, including without limitation,
all Indebtedness now or hereafter outstanding and owing by any Credit Party to
another Credit Party under the Contribution Agreement (together with any and all
Liens from time to time securing the same as permitted by
Section 7.2(i) hereof), is hereby made and at all times hereafter shall be
inferior and subordinate in all respects to the Obligations from time to time
owing to the Agent or any Lender pursuant hereto and to any Lien against any
Collateral from time to time now or hereafter securing any of such Obligations
pursuant to the terms hereof and the Security Documents.  Additionally, the
Agent,

 

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the Lenders and each Credit Party agree that, notwithstanding anything contained
in any provision of this Agreement, any and all contractual, statutory or
constitutional Liens which may now or hereafter held by the Borrower against any
Property of any of the Borrower’s Subsidiaries as a result of any intercompany
lease or sublease by the Borrower to any of its Subsidiaries of any real
Property owned or leased by the Borrower are, and at all times hereafter shall
be, inferior and subordinate in all respects to any Lien now or hereafter held
by the Agent, for the ratable benefit of the Lenders, against any Collateral as
security for any of the Obligations pursuant to the terms hereof and the
Security Documents.  Each of the Credit Parties agrees to execute and deliver on
its own behalf, and to cause to be executed and delivered by and on behalf of
any of its Subsidiaries, any and all subordination agreements, in form and
content reasonably acceptable to the Agent, which the Agent may hereafter
require to further evidence the subordination of the payment of the Indebtedness
permitted by Section 7.1(g) above, the Liens permitted by Section 7.2(i) and any
such contractual, statutory or constitutional landlord’s Liens held by the
Borrower.

 

7.2           Liens.  Create or suffer to exist any Lien upon any of its
Property (including without limitation, Equity Interests in any Credit Party’s
Subsidiaries) now owned or hereafter acquired, or acquire any Property upon any
conditional sale or other title retention device or arrangement or any purchase
money security agreement; provided, however, that the Credit Parties and their
Subsidiaries (or any of them) may create or suffer to exist:

 

(a)           Liens in effect on the date hereof and which are described on
Schedule 7.2 attached hereto, provided, that the Property covered thereby does
not increase in scope and such Liens may not be renewed and extended, unless the
same relate to Refinancing Indebtedness permitted by Section 7.1(e) above;

 

(b)           Liens against the Collateral in favor of the Collateral Agent for
the ratable benefit of the Lenders as security for the Obligations and the
holders of the Term Loan Debt in accordance with and subject to the terms of the
First Intercreditor Agreement), and subordinate and inferior Liens against the
Collateral securing the Second Lien Debt;

 

(c)           Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance, old-age pensions and other social security benefits (not including
any lien described in Section 412(m) of the Code);

 

(d)           Liens imposed by law, such as carriers’, warehousemen’s,
mechanics’, materialmen’s, vendors’ and landlords’ liens and other similar
liens, incurred in good faith in the ordinary course of business and securing
obligations which are incurred in the ordinary course of business and are not
overdue for a period of more than 30 days or which are being contested in good
faith by appropriate proceedings pursued in good faith and as to which the
Borrower or any of its Subsidiaries, as the case may be, shall, to the extent
required by GAAP, consistently applied, have set aside on its books adequate
reserves;

 

(e)           Liens securing the payment of taxes, assessments and governmental
charges or levies (excluding any Lien imposed pursuant to any of the provisions
of ERISA), that are not delinquent, are permitted by Section 6.2 hereof, or are
being diligently contested in good

 

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faith by appropriate proceedings and as to which adequate reserves have been
established in accordance with GAAP; provided, however, that (1) a Reserve
against Availability will be established in an amount equal to the aggregate
amount of any and all such federal, state or local taxes which are being
diligently contested and (2) the aggregate amount of overdue taxes being
diligently contested in good faith at any one time secured by such Liens shall
not exceed $1,000,000;

 

(f)            Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under a landlord or owner of
the leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;

 

(g)           Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations, surety,
customs and appeal bonds and other obligations of like nature, incurred as an
incident to and in the ordinary course of business;

 

(h)           Purchase money Liens securing the Indebtedness permitted by
Section 7.1(c) above, provided, as a result of the creation of any such Lien,
(i) no Default or Event of Default shall have occurred and is continuing,
(ii) the principal amount of such Lien does not exceed 100% of the purchase
price of the asset acquired with such permitted Indebtedness plus accrued
interest on such Indebtedness plus protective advances made by the holder of
such permitted Indebtedness, and (iii) such Lien shall not apply to any other
Property other than the asset acquired with such purchase money Indebtedness;

 

(i)            Liens in favor of the Borrower or any Guarantor (other than the
Parent) securing any Indebtedness permitted pursuant to Sections 7.1(g) hereof;

 

(j)            Liens on fixed assets securing Indebtedness permitted to be
assumed, acquired or incurred in connection with acquisitions permitted under
Section 7.4(e)(7), provided, (i) the applicable Lien existed on the applicable
Property prior to the acquisition thereof by the Borrower or any Subsidiary or
existed on any Property of any Person that becomes a Subsidiary of the Borrower
after the date hereof prior to the time such Person becomes a Subsidiary,
(ii) the applicable Lien shall not apply to any other Property of the Borrower
or any Subsidiary, and (iii) the applicable Lien shall secure only those
obligations which it secures on the date of the applicable acquisition or the
date such Person becomes a Subsidiary, as the case may be;

 

(k)           Liens consisting of bankers’ liens and rights of setoff, but only
to the extent permitted under any applicable Tri-Party Agreements, and in each
case, arising by operation of law, and Liens on documents presented in letter of
credit drawings; and

 

(l)            Liens on securities securing Indebtedness to the extent permitted
in accordance with Section 7.1(n).

 

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Provided, however, notwithstanding anything contained above in this Section 7.2
to the contrary, if any of the permitted Liens are of the type that are being
contested in good faith by appropriate proceedings as to the Borrower or any of
its Subsidiaries, the Indebtedness giving rise to such contested Lien(s) must be
immediately paid upon commencement of any foreclosure process or proceeding with
respect to such Lien(s) unless the same shall be effectively stayed or a surety
bond with respect thereto (which is satisfactory in all respects to the Agent),
is posted.

 

7.3           Contingent Liabilities.  Create, incur, suffer or permit to exist,
directly or indirectly, any Contingent Obligations, other than:

 

(a)           The Obligations of each Guarantor to the Agent and the Lenders
under the terms of any Guaranty;

 

(b)           The guarantees by the Parent and any other Credit Party of the
Borrower of the Term Loan Debt and/or the Second Lien Debt;

 

(c)           Any Contingent Obligations of the Borrower under any Hedging
Obligations permitted by Section 7.1(i) above;

 

(d)           The guarantees by the Borrower of any Indebtedness of any other
Credit Party or by any Credit Party of any Indebtedness of the Borrower if such
Indebtedness so guaranteed is permitted under the terms of Section 7.1 above;

 

(e)           Endorsements of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;

 

(f)            Obligations in respect of Letters of Credit;

 

(g)           Agreements evidencing any Hedging Obligations to the extent
permitted by Section 7.3(c); and

 

(h)           obligations relating to Liens permitted under Sections 7.2(c),
7(d), 7(e), 7(f)or 7(g).

 

7.4           Mergers, Consolidations and Dispositions and Acquisitions of
Assets.  In any single transaction or series of related transactions, directly
or indirectly:

 

(a)           Wind up its affairs, liquidate or dissolve;

 

(b)           Be a party to any merger or consolidation;

 

(c)           Sell, convey, lease, transfer or otherwise dispose of all or any
portion of the assets (except for (1) the sale of Inventory in the ordinary
course of business for fair and adequate consideration and (2) the sale of
equipment, fixtures and other assets in accordance with the terms of
Section 7.4(e)(5) below) of the Borrower and/or its Subsidiaries, or agree to
take any such action;

 

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(d)           Sell, assign, pledge, transfer or otherwise dispose of, or in any
way part with control of, any Equity Interests of any of its Subsidiaries or any
Indebtedness or obligations of any character of any of its Subsidiaries, or
permit any such Subsidiary to do so with respect to any Equity Interests of any
other Subsidiary or any Indebtedness or obligations of any character of the
Borrower or any of its Subsidiaries, or permit any of its Subsidiaries to issue
any additional Equity Interests other than to the Borrower or any wholly-owned
Subsidiary of the Borrower; or

 

(e)           Purchase or otherwise acquire, directly or indirectly, in a single
transaction or a series of related transactions, all or a substantial portion of
the assets of any Person or any shares of Equity Interests of, or similar
interest in, any Person;

 

provided, however that notwithstanding the foregoing, any of the following
described actions may be undertaken, so long as no Default or Event of Default
then exists or would exist immediately after giving effect to the applicable
event:

 

(1)           any Business Entity comprising the Parent may merge or consolidate
with any other Business Entity comprising the Parent or may be dissolved or
liquidated, so long as such dissolution or liquidation results in all assets of
such Business Entity being owned by another Business Entity comprising the
Parent;

 

(2)           any Subsidiary of the Borrower may merge or consolidate with the
Borrower or any other Subsidiary of the Borrower, provided, that if one or more
of the entities so merging or consolidating was a Guarantor, and if the
surviving entity is not the Borrower or is not yet a Guarantor, such surviving
entity must become a Credit Party simultaneously with such merger by executing
and delivering to the Collateral Agent a Joinder Agreement, together with all
requested Security Documents, as required at such time by the Agent,
appropriately completed in Proper Form;

 

(3)           any of the Borrower’s Subsidiaries may sell, lease, transfer or
otherwise dispose of any of its assets to the Borrower or any other Subsidiary
of the Borrower, provided, that if the entity selling, leasing, transferring or
otherwise disposing of its assets is a Guarantor, and if the entity to whom the
sale, lease, transfer or other disposition was made is not the Borrower or is
not yet a Guarantor, such entity must become a Credit Party simultaneously with
the consummation of such lease, transfer or disposition by executing and
delivering to the Collateral Agent a Joinder Agreement, together with all
requested Security Documents, as required at such time by the Agent,
appropriately completed in Proper Form;

 

(4)           any Subsidiary of the Borrower may be dissolved or liquidated, so
long as such dissolution or liquidation results in all assets of such Subsidiary
being owned by the Borrower or a Subsidiary; provided, that if the entity
dissolving or liquidating is a Guarantor, and if the entity to whom all assets
of such dissolving or liquidating entity are transferred is not the Borrower or
is not yet a Guarantor, such entity to whom such assets are being transferred
must become a Credit Party simultaneously with the consummation of such
dissolution or liquidation by executing and delivering to the Collateral Agent a
Joinder Agreement, together with all requested Security

 

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Documents, as required at such time by the Agent, appropriately completed in
Proper Form;

 

(5)           the Borrower and its Subsidiaries may (i) sell, exchange or
otherwise dispose of Permitted Investment Securities in the ordinary course of
business; (ii) terminate, surrender or sublease a lease of real Property by the
Borrower or any of its Subsidiaries in the ordinary course of business;
(iii) sell Equipment that is obsolete, worn out or no longer needed in the
business of the Borrower or any of its Subsidiaries; (iv) enter into
sale-leaseback transactions relating to Property having a fair market value not
to exceed $1,000,000 in the aggregate during the period from the Closing Date
through the Revolving Credit Termination Date; and (v) sell any other fixed
assets (including real Property, equipment and fixtures) having a fair market
value not to exceed $1,000,000 in the aggregate during the period from June 30,
2005 through the Revolving Credit Termination Date; provided that all proceeds
of any of the foregoing (other than Section 7.4(e)(5)(h) above) shall be paid to
the Collateral Agent for application to outstanding Obligations and Term Loan
Debt, to the extent then outstanding, in accordance with the terms of the First
Lien Intercreditor Agreement;

 

(6)           to the extent any Collateral is sold or otherwise disposed of as
permitted by this Section 7.4, such Collateral shall be sold or otherwise
disposed of free and clear of the Liens of the Security Documents and the
Collateral Agent shall take such actions, including executing and filing
appropriate releases, as are appropriate in connection therewith, and no
approval of any of Lenders shall be required therefor;

 

(7)           the Borrower and/or any other Credit Party may purchase or
otherwise acquire, directly or indirectly, in a single transaction or a series
of related transactions, all or a substantial portion of the assets of any
Person or all or a majority of issued and outstanding shares of Equity Interests
of, or similar interest in, any Person, so long as (a) immediately after giving
effect to the applicable purchase or acquisition, no Default or Event of Default
exists (including without limitation, the Credit Parties are in compliance with
the Fixed Charge Coverage Ratio requirements of Section 7.12, tested on a pro
forma basis assuming that such purchase or acquisition had occurred at the
beginning of the four (4) most recent consecutive fiscal quarters of the Credit
Parties ending on or immediately prior to the date of such purchase or
acquisition), (b) average Availability at all times for the ninety (90)-day
period prior to such purchase or acquisition, as well as Availability
immediately after giving effect to the applicable purchase or acquisition, is
$20,000,000 or greater, (c) the aggregate purchase price paid (including without
limitation, any Indebtedness permitted to be assumed, acquired or incurred by
the Borrower and/or any of its Subsidiaries in connection therewith under
Section 7.1(m)) for all such purchases and acquisitions does not exceed
$60,000,000 in the aggregate during the period from June 30, 2005 through the
Revolving Credit Termination Date for all such other purchases and acquisitions,
and (d) if the purchase price paid (including without limitation, any
Indebtedness permitted to be assumed, acquired or incurred by the Borrower
and/or any of its Subsidiaries in connection therewith under Section 7.l(m)) for
the applicable purchase or acquisition exceeds $15,000,000 in the aggregate, the
Required Lenders shall have consented in writing to such purchase or
acquisition; and

 

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(8)           The Credit Parties may make Investments to the extent permitted by
Section 7.7.

 

7.5           Nature of Business.  Materially change the nature of its business
or enter into any business (or at any time own, directly or indirectly, a
majority of the Equity Interests of any entity which is engaged in any business)
which is substantially different from the business in which the Borrower and its
Subsidiaries are engaged in as of the Closing Date.

 

7.6           Transactions with Related Parties.  Except for any Permitted
Affiliate Transactions, enter into or be a party to any other transaction,
contract or agreement of any kind with any officer, director, shareholder,
partner, employee or Affiliate of any Credit Party (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any such Person), unless such transaction,
contract or agreement is in the ordinary course of and pursuant to the
reasonable requirements of the Borrower’s or any of its Subsidiaries’ business
and is made upon fair and reasonable terms and conditions not less favorable to
such Person than those which could have been obtained in a comparable
transaction from wholly independent and unrelated sources.

 

7.7           Investments, Loans.  Make, directly or indirectly, any loan or
advance to or have any Investment in any Person, or make any commitment to make
such loan, advance or Investment, except:

 

(a)           Equity Interests of any Credit Party acquired or issued in
accordance with the other provisions of this Agreement, including without
limitation, the provisions of Section 6.10 above, or Equity Interests of any
other Subsidiary of any Credit Party with the prior written consent of the
Agent;

 

(b)           Permitted Investment Securities;

 

(c)           loans otherwise permitted by the provisions of Section 7.1
(g) above;

 

(d)           loans to employees of the Borrower or any Subsidiary made in the
ordinary course of business, so long as the aggregate amount of all such loans
outstanding at any time does not exceed $100,000;

 

(e)           Investments of the Borrower and the other Credit Parties permitted
under the terms of Section 7.4(e)(7);

 

(f)            Investments consisting of Guarantees permitted by Section 7.3(d);

 

(g)           Investments consisting of deferred payment obligations in
connection with sales of assets permitted under Section 7.4(e)(5); and

 

(h)           Other Investments, including joint venture interests in
non-Subsidiary entities, in the aggregate amount not to exceed $500,000,
provided that such Investments have been approved by the Agent, such approval
not to be unreasonably withheld if (1) the aggregate amount of such Investments
does not exceed $500,000 in the aggregate during the period from the Closing
Date through the Revolving Credit Termination Date, and (2) Availability is

 

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$15,000,000 or greater at all times for the 90-day period prior to such
Investment and immediately after giving effect to such Investment.

 

7.8           ERISA Compliance.

 

(a)           At any time engage in any Prohibited Transaction with respect to a
Plan which could reasonably be expected to result in a material liability; or
permit any Plan to be terminated in a manner which could result in the
imposition of a Lien on any Property of the Borrower or any of its Subsidiaries
pursuant to ERISA.

 

(b)           Engage in any transaction in connection with which the Borrower or
any Subsidiary thereof would or could reasonably be expected to be subject to
either a material civil penalty assessed pursuant to the provisions of
Section 502 of ERISA or a material tax imposed under the provisions of
Section 4975 of the Code.

 

(c)           Terminate any Plan in a “distress termination” under Section 4041
of ERISA, or take any other action which could reasonably be expected to result
in a material liability of the Borrower or any Subsidiary thereof to the PBGC.

 

(d)           Fail to make payment when due of all amounts which, under the
provisions of any Plan, the Borrower or any Subsidiary thereof is required to
pay as contributions thereto, or, with respect to any Plan, permit to exist any
material “accumulated funding deficiency” (within the meaning of Section 302 of
ERISA and Section 412 of the Code), whether or not waived, with respect thereto.

 

(e)           Adopt an amendment to any Plan requiring the provision of security
under Section 307 of ERISA or Section 401(a)(29) of the Code.

 

7.9           Intentionally Deleted.

 

7.10         Change in Accounting Method.  Make or permit any change in
accounting method or financial reporting practices except as may be required by
GAAP, as in effect from time to time.

 

7.11         Redemption, Dividends, Issuance of Equity Interests, Distributions
and Restricted Payments.  At any time, other than any Permitted Affiliate
Transactions:

 

(a)           Redeem (whether as a result of mandatory or optional redemption
obligations or rights), purchase, retire or otherwise acquire, directly or
indirectly, any of its Equity Interests, any warrants or other similar
instruments or set aside any amount for any such purpose;

 

(b)           Declare or pay, directly or indirectly, (i) any dividend or fund
any redemption, purchase, retirement or other acquisition of its Equity
Interests, except (1) dividends paid to the Borrower or any Guarantor which is a
direct parent of the Subsidiary paying the dividend (other than Cash Dividends
to the Parent, which shall not be paid at any time), and (2) non-cash dividends
paid to the holders of any Equity Interests of the Borrower or the Parent in the
form of additional Equity Interests of the Borrower or the Parent, as
applicable, or (ii) any

 

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management, consulting or monitoring fees to any Affiliate of the Borrower or
the Parent or any officer, director, shareholder, partner or employee of any
Affiliate of the Borrower or the Parent, except management or consulting fees
paid to the Borrower or any Guarantor (other than the Parent, to which no
management or consulting fees shall be paid);

 

(c)           Issue any additional Equity Interests in the Borrower, except for
Equity Interests issued to the Parent;

 

(d)           Make any other distribution of any Property, cash, securities or a
combination thereof, with respect to (whether by reduction of capital or
otherwise) any Equity Interests except as permitted in Section 7.11(b) above;

 

(e)           Set apart any money for a sinking fund or other analogous fund for
any dividend or other distribution on its Equity Interests or for any
redemption, purchase, retirement, or other acquisition of any of its Equity
Interests; or

 

(f)            Redeem (whether as a result of mandatory or optional redemption
obligations or rights), purchase, defease or retire for value, or make any
principal payment or prepayment on, the Term Loan Debt, the Second Lien Debt or
any Subordinated Indebtedness prior to the Revolving Credit Termination Date;
provided that (i) regularly scheduled payments of accrued and unpaid interest
(including such payments prohibited from being paid because of the existence of
a Default or Event of Default when the same were otherwise due and payable) may
be made on the Term Loan Debt and the Second Lien Debt, so long as no Default or
Event of Default shall have occurred and be continuing or would otherwise occur
as a result of any such payment of accrued and unpaid interest, (ii) regularly
scheduled principal installments (including such payments prohibited from being
paid because of the existence of a Default or Event of Default when the same
were otherwise due and payable) may be made on the Term Loan Debt, so long as no
Default or Event of Default shall have occurred and be continuing or would
otherwise occur as a result of any such payment of regularly scheduled principal
installments, (iii) annual mandatory prepayments equal to 25% of the Borrower’s
and its Subsidiaries’ Excess Cash Flow (as defined in the Term Loan Debt
Purchase Agreement) for each fiscal year (commencing with the fiscal year ending
June 30, 2008) may be made, so long as (A) immediately after giving effect to
the applicable prepayment, no Default or Event of Default exists, and
(B) average Availability at all times for the sixty (60)-day period prior to
such prepayment, as well as Availability immediately after giving effect to the
applicable prepayment, is $15,000,000 or greater; and (iv) voluntary prepayments
of the Term Loan Debt, in whole or in part, shall be permitted so long as
(A) immediately after giving effect to the applicable prepayment, no Default or
Event of Default exists, (B) any prepayments prior to the first anniversary of
the Closing Date do not require a prepayment fee or premium greater than 1 % of
the outstanding principal balance being prepaid, and (C) any prepayments on or
after the first anniversary of the Closing Date do not require or result in any
prepayment fee or premium being paid (it being agreed that any of the foregoing
conditions requiring that no Default or Event of Default exists or would
otherwise occur as a result of the applicable payment shall include the
requirement that the Credit Parties are in compliance with the Fixed Charge
Coverage Ratio requirements of Section 7.12, tested on a pro forma basis
assuming that the applicable payment had occurred at the beginning of the twelve
(12) most recent consecutive calendar months ending on or immediately prior to
the date of such payment);

 

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provided, however that notwithstanding the foregoing, any payments, dividends or
distributions on and any redemptions, purchases, retirements or other
acquisitions of Equity Interests otherwise prohibited under Sections 7.11(b) or
(e) shall be permitted to be made by the applicable Credit Party, so long as
(1) immediately after giving effect to the applicable payment, dividend or
distribution on or redemption, purchase, retirement or other acquisition of
Equity Interests, no Default or Event of Default exists (including without
limitation, the Credit Parties are in compliance with the Fixed Charge Coverage
Ratio requirements of Section 7.12, tested on a pro forma basis assuming that
payment, dividend, or distribution on or redemption, purchase, retirement or
other acquisition of Equity Interests had occurred at the beginning of the
twelve (12) most recent consecutive calendar months ending on or immediately
prior to the date of such payment, dividend, distribution, redemption, purchase,
retirement or acquisition of Equity Interests), (2) average Availability at all
times for the ninety (90)-day period prior to such payment, dividend or
distribution on or redemption, purchase, retirement or other acquisition of
Equity Interests, as well as Availability immediately after giving effect to the
applicable payment, dividend, distribution, redemption, purchase, retirement or
acquisition of Equity Interests, is equal to or greater than the sum of (A)
$20,000,000 and (B) the amount that would be payable as a mandatory prepayment
under the Term Loan Debt based upon Excess Cash Flow (as defined in the Term
Loan Debt Purchase Agreement) for the then applicable fiscal year assuming such
mandatory prepayment were calculated and payable under the Term Loan Debt
Purchase Agreement as of the date of payment of such applicable payment,
dividend, distribution, redemption, purchase, retirement or acquisition of
Equity Interests, and (3) the aggregate amount of all such payments, dividends
or distributions on and redemptions, purchases, retirements or other
acquisitions of Equity Interests actually made from the Closing Date through the
Revolving Credit Termination Date (excluding “payments-in-kind” of accrued and
unpaid interest) does not exceed $55,000,000.  Notwithstanding the foregoing,
however, in no event shall any payment, dividend, distribution, redemption,
purchase, retirement or acquisition of Equity Interests otherwise permitted
under the terms of the preceding sentence be made to the extent the same is
prohibited under the terms of the Term Loan Debt Documents or the Second Lien
Debt Documents.

 

7.12         Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage
Ratio of the Credit Parties and their Subsidiaries, on a Consolidated basis, to
be less than 1.10 to 1.0 at any time on and after June 30, 2006.

 

7.13         Capital Expenditures.  Permit the Credit Parties and their
Subsidiaries, on a Consolidated basis, to make or incur Capital Expenditures
(not including in the definition of Capital Expenditures for this purpose any
Capital Expenditures included in any future acquisition permitted under
Section 7.4(e)(7)) in excess of $5,000,000 in the aggregate during each fiscal
year ending on or after June 30, 2006.

 

7.14         Intentionally Deleted.

 

7.15         Sale of Accounts.  Sell, assign, discount (other than customary and
reasonable discounts in the ordinary course of business), transfer or otherwise
dispose of any Accounts, promissory notes, drafts or trade acceptances or other
rights to receive payment held by it, with or without recourse.

 

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7.16         Sale and Lease-Back Transactions.  Except as otherwise permitted
under Section 7.4(e)(5)(iv), enter into any arrangement, directly or indirectly,
with any Person whereby any Credit Party or any of its Subsidiaries shall sell
or transfer any Property, real or personal, which is used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such Property or other Property which such Credit Party or such Subsidiary
intends to use for substantially the same purpose or purposes as the Property
being sold or transferred.

 

7.17         Change of Name or Place of Business.  Permit any Credit Party or
any of its Subsidiaries to change its address, name, jurisdiction of
organization, location of its chief executive office or principal place of
business or the place it keeps its material books and records, unless such
Credit Party has (a) notified the Agent of such change in writing at least
thirty (30) days before the effective date of such change, (b) taken such
action, reasonably satisfactory to the Agent, to have caused the Liens against
all Collateral in favor of the Agent for the ratable benefit of the Lenders to
be at all times fully perfected and in full force and effect and (c) delivered
such certificates of Governmental Authorities as the Agent may require
substantiating such name change.

 

7.18         Restrictive Agreements.  Other than as imposed by law, identified
on Schedule 7.18, or provided in this Agreement, the Term Loan Debt Purchase
Agreement and the Second Lien Debt Purchase Agreement, directly or indirectly
agree to restrict or condition (a) the payment of any dividends or other
distributions to the Borrower or any of its Subsidiaries; (b) the payment of any
Indebtedness owed to the Borrower or any of its Subsidiaries; (c) the making of
any loans or advances to the Borrower or any of its Subsidiaries; or (d) the
transfer of any of its properties or assets to the Borrower or any of its
Subsidiaries.

 

7.19         Modification or Waiver of Documents Governing Term Loan Debt or
Second Lien Debt.  Request, join in or otherwise consent to any modification,
amendment or waiver of any material term of any of the Term Loan Debt Documents,
except as expressly permitted under the terms of the First Lien Intercreditor
Agreement, or the Second Lien Debt Documents.

 

7.20         Availability.  Allow Availability to be less than zero at any time,
except in connection with a Permitted Overadvance until required to be paid by
the Borrower in accordance with the terms hereof.

 

7.21         Anti-Terrorism Laws.  (a) Knowingly conduct any business or engage
in any transaction or dealing with any Blocked Person, including the making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person.

 

(b)           Knowingly deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to the Executive
Order No. 13224.

 

(c)           Knowingly engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in the Executive Order No. 13224, the
USA PATRIOT Act or any other Anti-Terrorism Law.

 

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The Borrower shall, and shall cause each other Credit Party to, deliver to Agent
any certification or other evidence requested from time to time by the Agent in
its sole discretion, confirming such Credit Party’s compliance with this
Section 7.21.

 

8.             Events of Default and Remedies.

 

8.1           Events of Default.  If any of the following events shall occur and
be continuing, then the Agent may (and, if directed by the Required Lenders,
shall), by written notice (or facsimile notice) to the Borrower, take any or all
of the following actions at the same or different times:  (1) accelerate the
Revolving Credit Termination Date and declare the Notes, all Letter of Credit
Advances, the Commitment Fees and all other Obligations then outstanding to be,
and thereupon the Notes, said Letter of Credit Advances, the Commitment Fees and
all other Obligations shall forthwith become, immediately due and payable,
without further notice of any kind, notice of intention to accelerate,
presentment and demand or protest, or other notice of any kind all of which are
hereby expressly WAIVED by the Borrower; (2) terminate all or any portion of the
Revolving Credit Commitments and any obligation to issue any additional Letters
of Credit; (3) demand that the Borrower and the Guarantors provide the Agent,
for the ratable benefit of the Lenders, and the Borrower and the Guarantors
jointly and severally agree upon such demand to, provide cash collateral in an
amount equal to the aggregate Letter of Credit Exposure Amount then outstanding,
on terms and pursuant to documents in agreement and satisfactory in all respects
to the Agent; and (4) exercise any and all other rights pursuant to the Loan
Documents or available under applicable law:

 

(a)           The Borrower shall fail to pay or prepay any Obligation (including
principal, interest, fees or any other amount) as and when due and payable,
whether at the due date thereof (by acceleration, lapse of time or otherwise) or
at any date fixed for prepayment thereof in accordance with the other provisions
of this Agreement; or

 

(b)           An Event of Default (as defined in either or both of the Term Loan
Debt Documents or the Second Lien Debt Documents) shall occur, or the Borrower
or any of its Subsidiaries (i) shall fail to pay when due, or within any
applicable period of grace, any other Indebtedness (excluding the Term Loan
Debt, the Second Lien Debt and Indebtedness outstanding hereunder) aggregating
in excess of $250,000 in principal amount unless such payment is being contested
in good faith (by appropriate proceedings) and adequate reserves have been
provided therefor, or (ii) shall default (beyond any applicable grace and
curative periods) in any other manner with respect to any other Indebtedness
(excluding the Term Loan Debt, the Second Lien Debt and Indebtedness outstanding
hereunder) aggregating in excess of $250,000 in principal amount if the effect
of any such default or event of default shall be to accelerate or to permit the
holder of any such other Indebtedness, at its option, to accelerate the maturity
of such Indebtedness prior to the stated maturity thereof; or

 

(c)           Any representation or warranty made or deemed made by the Borrower
or any Guarantor in connection with any Loan Document or in any certificate,
report, notice or financial statement furnished at any time in connection with
this Agreement shall prove to have been incorrect, false or misleading in any
material respect when made or deemed to have been made; or

 

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(d)           Except as provided in Sections 8.1(a) or 8.1(e), Default shall
occur in the punctual and complete performance or observance of any covenant,
condition or agreement to be observed or performed on the part of the Borrower,
any of its Subsidiaries or the Parent pursuant to the terms of any provision of
this Agreement or any other Loan Document, and such Default remains uncured five
(5) Business Days after the earlier to occur of (1) the Agent giving written
notice of such Default to the Borrower or (2) any Responsible Officer of the
Borrower or any of its Subsidiaries acquired actual knowledge of the existence
of such Default; or

 

(e)           Default shall occur in the punctual and complete performance or
observance of any covenant, condition or agreement to be observed or performed
on the part of any Credit Party or any of its Subsidiaries pursuant to the terms
of Section 6.2, Section 6.9, Section 6.11 or Article 7 hereof; or

 

(f)            Final judgment or judgments (or any decree or decrees for the
payment of any fine or any penalty) for the payment of an uninsured money award
in excess of $500,000 in the aggregate shall be rendered against any Credit
Party or any of its Subsidiaries and the same shall remain undischarged and
unpaid for a period of thirty (30) days during which execution shall not be
effectively stayed or bonded; or

 

(g)           Any Credit Party or any of its Subsidiaries shall have concealed,
removed, or permitted to be concealed or removed, any part of its Property, with
intent to hinder, delay or defraud its creditors or any of them, or made or
suffered a transfer of any of its Property which is or could reasonably be
expected to be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or

 

(h)           Intentionally Deleted; or

 

(i)            Any of the following shall occur where such occurrence could
reasonably be expected to result in any material liability of any Credit Party: 
(1) a Reportable Event shall have occurred with respect to a Plan; (2) the
filing by the Borrower, any ERISA Affiliate, or an administrator of any Plan of
a notice of intent to terminate such Plan under the provisions of Section 4041
of ERISA; (3) the receipt of notice by the Borrower, any ERISA Affiliate or an
administrator of a Plan that the PBGC has instituted proceedings to terminate
(or appoint a trustee to administer) such a Plan; (4) any other event or
condition exists which might reasonably be expected to, in the opinion of the
Agent, constitute grounds under the provisions of Section 4042 of ERISA for the
termination of or the appointment of a trustee to administer any Plan by the
PBGC; (5) a Plan shall fail to maintain a minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of standard is granted
under the provisions of Section 412(d) of the Code; (6) the Borrower or any
ERISA Affiliate has incurred, or is likely to incur, a liability under the
provisions of Section 4062, 4063, 4064 or 4201 of ERISA; (7) the Borrower or any
ERISA Affiliate fails to pay the full amount of an installment required under
Section 412(m) of the Code; (8) any Prohibited Transaction involving any Plan;
or (9) the occurrence of any other event or condition with respect to any Plan
which would constitute an event of default or default under any other material
agreement entered into by the Borrower or any ERISA Affiliate; or

 

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(j)            This Agreement, any Note, any of the Security Documents or any
other Loan Documents, or any material provision thereof, shall for any reason
cease to be, or shall be asserted by any Credit Party, not to be, a legal, valid
and binding obligation of any Credit Party, enforceable in accordance with its
terms, or the Lien purported to be created by any of the Security Documents
shall for any reason cease to be, or be asserted by any Credit Party not to be,
a valid, first priority perfected Lien (pari passu with a first priority Lien
securing the Term Loan Debt in accordance with and subject to the terms of the
First Lien Intercreditor Agreement) against any material portion of the
Collateral (except to the extent otherwise permitted under this Agreement or any
of the Security Documents); or

 

(k)           The Borrower or any of its Subsidiaries which is a party to the
Lockbox Agreement or any Tri-Party Agreement fails to perform and observe,
and/or cause to be performed and observed, all material covenants, provisions
and conditions to be performed, discharged and observed by the Borrower or any
such Subsidiary under the terms of the Lockbox Agreement or any Tri-Party
Agreement; or

 

(l)            Any financial institution (other than JPMorgan) which is a party
to any Tri-Party Agreement fails to perform and observe, and/or cause to be
performed and observed, all material covenants, provisions and conditions to be
performed, discharged and observed by such financial institution under the terms
of any Tri-Party Agreement and such failure remains uncured (or such defaulting
financial institution and applicable Tri-Party Agreement is not replaced by the
Borrower with a substitute financial institution and replacement Tri-Party
Agreement both reasonably acceptable to the Agent) five (5) Business Days after
the Agent gives written notice of such failure to the Borrower; or

 

(m)          A Change of Control shall occur; or

 

(n)           Any Credit Party or any of its Subsidiaries shall suffer any writ
of attachment or execution or any similar process to be issued or levied against
it or any substantial part of its Property having an aggregate value in excess
of $500,000 which is not released, stayed, bonded or vacated within thirty (30)
days after its issue or levy.

 

In addition, if any of the following events shall occur, then (1) the Notes, the
Letter of Credit Advances, the Commitment Fees and all other Obligations then
outstanding and payable hereunder shall automatically, without demand,
presentment, protest, notice of intent to accelerate, notice of acceleration or
other notice to any Person of any kind, all of which are hereby expressly WAIVED
by the Borrower, become immediately due and payable and (2) all Revolving Credit
Commitments and further obligations to issue any additional Letters of Credit
shall be immediately and automatically terminated.

 

(o)           Any Credit Party or any of its Subsidiaries shall commence a
voluntary proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to

 

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pay its debts as they become due or shall take any corporate action to authorize
any of the foregoing; or

 

(p)           An involuntary proceeding shall be commenced against any Credit
Party or any of its Subsidiaries seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of 60 days; or

 

(q)           Any involuntary order shall be entered in any proceeding against
any Credit Party or any of its Subsidiaries decreeing the dissolution,
liquidation or split-up thereof, and such order shall remain in effect for sixty
(60) days; or

 

(r)            Any Credit Party or any of its Subsidiaries shall admit in
writing its inability to pay its debts as they become due or fail generally to
pay its debts as they become due.

 

8.2           Remedies Cumulative.  No remedy, right or power conferred upon the
Agent or any Lender is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be cumulative.

 

9.             The Agent.

 

9.1           Appointment, Powers and Immunities.  Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Letters of Credit and the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto.  Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under the
Letters of Credit which the Agent has issued with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto.  The Agent (which
such term as used in this Section 9, shall, in each case, include reference to
its Affiliates and its own and its Affiliates’ officers, directors, employees’
and agents) (a) shall not have duties or responsibilities except those expressly
set forth in this Agreement, the Letters of Credit and the other Loan Documents,
and shall not by reason of this Agreement or any other Loan Document be a
trustee for any Lender; (b) shall not be responsible to any Lender for any
recitals, statements, representations or warranties contained in this Agreement,
the Letters of Credit or any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement, the Letters of Credit or any other Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Letters of Credit or any other Loan Document or any other
certificate or document referred to or provided for herein or therein or any
property covered thereby or for any failure by any Party or any other Person
(other than the Agent) to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under the Letters of Credit or any other
Loan Document except to the extent requested by the Required Lenders, provided
that the Agent shall not be required to take any action which exposes the Agent
to

 

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personal liability or which is contrary to this Agreement or any other Loan
Documents or applicable law, and (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under the Letters of Credit or
any other Loan Document or any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith. 
INCLUDING PURSUANT TO ITS OWN NEGLIGENCE, except for its own gross negligence or
willful misconduct.  The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by them with reasonable care.  Without in any way
limiting any of the foregoing, each Lender acknowledges that the Agent shall not
have any greater responsibility in the operation of the Letters of Credit than
is specified in the Uniform Customs and Practice for Documentary Credits (1993
Revision, International Chamber of Commerce Publication No. 500 or any successor
publication).  In any foreclosure proceeding concerning any collateral for the
Notes, each holder of a Note if bidding for its own account or for its own
account and the accounts of other Lenders is prohibited from including in the
amount of its bid an amount to be applied as a credit against its Note or the
Notes of the other Lenders, instead such holder must bid in cash only.  However,
in any such foreclosure proceeding, the Agent may (but shall not be obligated
to) submit a bid for all Lenders (including itself) in the form of a credit
against the Notes of all of the Lenders, and the Agent or its designee may (but
shall not be obligated to), with the consent of the Required Lenders, accept
title to such collateral for and on behalf of all Lenders.

 

9.2           Reliance.  The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel (which may be counsel for the
Borrower), independent accountants and other experts selected by the Agent.  As
to any matters not expressly provided for by this Agreement, the Letters of
Credit or any other Loan Document, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and thereunder in
accordance with instructions of the Required Lenders, and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.

 

9.3           Defaults.  The Agent shall not be deemed to have knowledge of the
occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans, non-payment of reimbursements of Letters of
Credit Advances, or nonpayment of Commitment Fees or Letter of Credit fees
payable hereunder or under any other Loan Documents) unless it has received
written notice from a Lender or a Credit Party specifying such Default or Event
of Default and stating that such notice is a “Notice of Default.”  In the event
that the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment).  The Agent shall
(subject to Section 9.7 hereof) take such action with respect to such Default or
Event of Default as shall be directed by the Required Lenders and within its
rights under the Loan Documents and at law or in equity, provided that, unless
and until the Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
permitted or within its rights under any of the Loan Documents or under
applicable law with respect to such Default or Event of Default.

 

9.4           Rights as a Lender.  With respect to its Revolving Credit
Commitment, the Loans and any Letter of Credit Exposure Amount, the Agent in its
capacity as a Lender hereunder shall

 

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have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term “Lender” or
“Lenders” shall, unless the context otherwise indicates, includes the Agent in
its individual capacity.  The Agent may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust, letter of credit, agency or other business with any Credit
Party (and any of its Affiliates) as if it were not acting as the Agent, and the
Agent may accept fees and other consideration from any Credit Party (in addition
to the fees heretofore agreed to between the Borrower or any other Credit Party
and the Agent) for services in connection with this Agreement or otherwise
without having to account for the same to the Lenders.

 

9.5           Indemnification.  The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 2.10(g), Section 10.9 or Section 10.10
hereof, but without limiting the obligations of the Borrower and the other
Credit Parties under said Sections 2.10(g), 10.9 and 10.10), ratably in
accordance with their respective Revolving Credit Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever (INCLUDING
THE CONSEQUENCES OF THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, but excluding the
gross negligence or willful misconduct of such indemnified person) which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement, the Letters of Credit or any other Loan Document
or any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
which the Borrower and the other Credit Parties is obligated to pay under
Sections 2.10(g), 10.9 and 10.10 hereof but excluding, unless a Default or Event
of Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents, INCLUDING THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, but excluding
the gross negligence or willful misconduct of such indemnified person.  The
obligations of the Lenders under this Section 9.5 shall survive the termination
of this Agreement and the repayment of the Indebtedness arising in connection
with this Agreement.

 

9.6           Non-Reliance on Agent and Other Lenders.  Each Lender agrees that
it has received current financial information with respect to the Borrower and
the other Credit Parties and that it has independently and without reliance on
the Agent or any other Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Borrower and the
other Credit Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Loan Documents.  The Agent shall not be
required to keep itself informed as to the performance or observance by any
Party of this Agreement, the Letters of Credit or any of the other Loan
Documents or any other document referred to or provided for herein or therein or
to inspect the properties or books of the Borrower or any other Credit Party. 
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent, under the Letters of
Credit or the other Loan Documents, the Agent shall not have any duty or

 

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responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
other Credit Party (or any of their Affiliates) which may come into the
possession of the Agent.

 

9.7           Failure to Act.  Except for action expressly required of the Agent
hereunder, under the Letters of Credit and under the other Loan Documents, the
Agent shall in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to its
satisfaction by the Lenders of their indemnification obligations under
Section 9.5 hereof against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.

 

9.8           Resignation or Removal of Agent.  Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower, and the Agent may
be removed at any time with or without cause by the Required Lenders.  Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent reasonably acceptable to the Borrower.  If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent’s giving
of notice of resignation or the Required Lenders’ removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
reasonably acceptable to the Borrower; provided, however, that if an Event of
Default has occurred which has not been waived or cured to the satisfaction of
the Agent and the Required Lenders, the Borrower’s approval of a successor Agent
shall not be required.  Any successor Agent shall be a Lender which has an
office in the United States with a combined capital and surplus of at least
$2,000,000,000.  Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder.  Such successor Agent shall promptly specify by notice to the
Borrower and the Lenders its office for the purpose of any notices and payments
hereunder.  After any retiring Agent’s resignation or removal hereunder as
Agent, the provisions of this Section 9 shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.

 

10.           Miscellaneous.

 

10.1         No Waiver.  No waiver of any Default or Event of Default shall be
deemed to be a waiver of any other Default or Event of Default.  No failure to
exercise and no delay on the part of the Agent or any Lender in exercising any
right or power under any Loan Document or at law or in equity shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or the abandonment or discontinuance of steps to enforce any such right
or power, preclude any further or other exercise thereof or the exercise of any
other right or power.  No course of dealing between any Credit Party and the
Agent or any Lender shall operate as a waiver of any right or power of the Agent
or any Lender.  No notice to or demand on any Credit Party or any other Person
shall entitle any Credit Party or any other Person to any other or further
notice or demand in similar or other circumstances.

 

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10.2         Notices.  Except as otherwise expressly permitted hereunder or
under any other Loan Document, all notices under the Loan Documents shall be in
writing and either (i) delivered to the intended recipient, (ii) mailed by
registered or certified mail, return receipt requested, or (iii) sent by
facsimile (promptly confirmed by mail, except for any notice pursuant to
Section 4.1(a) hereof which need not be confirmed by mail), in each case to the
intended recipient at the “Address for Notices” specified below its name on the
signature pages hereof; or, as to any Lender who is a signatory hereto, at such
other address as shall be designated by such Lender in a notice to the Borrower
and the Agent given in accordance with this Section 10.2 or to such other
address as a party may designate in a notice given in accordance with the
provisions of this Section 10.2.  The Borrower may change its address for
purposes hereof by providing written notice of such address change to the
Lenders and the Agent in accordance with the provisions of this Section 10.2,
with any such change in address only being effective ten (10) Business Days
after such change of address has been deemed given in accordance with the
provisions hereof.  Notices shall be deemed to have been given (whether actually
received or not) when delivered (or, if mailed, on the next Business Day after
deposit of such notice into the mail); however, the notices required or
permitted by Sections 2.2(b) and 4.1(a) hereof shall be effective only when
actually received by the Agent.

 

10.3         Governing Law.  Unless otherwise specified therein, each Loan
Document shall be governed by and construed in accordance with the laws of the
State of New York (other than the conflicts of laws principles thereof) and the
United States of America.

 

10.4         Survival; Parties Bound.  All representations, warranties,
covenants and agreements made by or on behalf of any Credit Party in connection
herewith shall survive the execution and delivery of the Loan Documents and
shall not be affected by any investigation made by any Person.  The term of this
Agreement shall be until the termination or lapse of all Revolving Credit
Commitments, the final maturity of each Note, the payment of all amounts due
under the Loan Documents, and the return in undrafted form of all outstanding
Letters of Credit (or the cash collateralization of all outstanding Letters of
Credit in an amount equal to the aggregate Letter of Credit Exposure Amount then
outstanding).

 

10.5         Counterparts.  This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.

 

10.6         Limitation of Interest.  The Borrower, the other Credit Parties and
the Lenders intend to strictly comply with all applicable laws, including
applicable usury laws, if any.  Accordingly, the provisions of this Section 10.6
shall govern and control over every other provision of this Agreement or any
other Loan Document which conflicts or is inconsistent with this Section, even
if such provision declares that it controls.  As used in this Section, the term
“interest” includes the aggregate of all charges, fees, benefits or other
compensation which constitute interest under applicable law, provided, that, to
the maximum extent permitted by applicable law, (a) any non-principal payment
shall be characterized as an expense or as compensation for something other than
the use, forbearance or detention of money and not as interest, and (b) all
interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal or in unequal parts during
the full term of the

 

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Loans and the Revolving Credit Commitments so that interest for the entire term
does not exceed the Highest Lawful Rate.  In no event shall the Borrower, any
other Credit Party or any other Person be obligated to pay, or the Agent or any
Lender have any right or privilege to reserve, receive or retain, (Y) any
interest in excess of the maximum amount of nonusurious interest permitted under
the laws of the United Stales or of any state, if any, which are applicable to
the Agent or such Lender, respectively, or (Z) total interest in excess of the
amount which the Agent or such Lender could lawfully have contracted for,
reserved, received, retained or charged had the interest been calculated for the
full term of the Loans at the Highest Lawful Rate, if any, applicable to the
Agent or such Lender.  None of the terms and provisions contained in this
Agreement or in any other Loan Document which directly or indirectly relate to
interest shall ever be construed without reference to this Section 10.6, or be
construed to create a contract to pay any Lender for the use, forbearance or
detention of money at an interest rate in excess of the Highest Lawful Rate
applicable to such Lender.  If the term of any Loans or the Notes is shortened
by reason of acceleration of maturity as a result of any Default or Event of
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason the Agent or any Lender at any
time is owed or receives (and/or has received) interest in excess of interest
calculated at the Highest Lawful Rate applicable to the Agent or such Lender,
then and in any such event all of any such excess interest owed to or received
by the Agent or such Lender shall be canceled automatically as of the date of
such acceleration, prepayment or other event which produces the excess, and, if
such excess interest has been paid to the Agent or such Lender, it shall be
credited pro tanto against the then-outstanding principal balance of the
Obligations to the Agent or such Lender, effective as of the date or dates when
the event occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied, whichever
occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.

 

10.7         Survival.  The obligations of the Borrower or any other Credit
Party, as applicable, under Sections 2.3, 2.4(b), 2.9, 2.10(g), 10.9, 10.10 and
10.17 hereof shall survive the repayment of the Loans and all other Obligations,
the termination of the Revolving Credit Commitments and the cancellation or
expiration of the Letters of Credit.

 

10.8         Captions.  The headings and captions appearing in the Loan
Documents have been included solely for convenience and shall not be considered
in construing the Loan Documents.

 

10.9         Expenses, Etc.  The Borrower agrees to pay or reimburse on demand
of the Agent the following:  (a) the reasonable fees, expenses, disbursements
and other charges of Locke Liddell & Sapp LLP, counsel to the Agent, or any
other legal counsel engaged by the Agent in connection with (i) the preparation,
execution and delivery of this Agreement (including the exhibits and schedules
hereto) and the Loan Documents and the making of the Loans and the issuance of
Letters of Credit hereunder and (ii) any modification, supplement or waiver of
any of the terms of this Agreement, the Letters of Credit or any other Loan
Document; (b) all out-of-pocket costs and expenses (including the fees,
disbursements and other charges of counsel to the Agent and of one separate
counsel for Lenders other than the Agent), in connection with any Default or
Event of Default or the enforcement of this Agreement, the Letters of Credit or
any other Loan Documents; (c) all transfer, stamp, documentary or other similar
taxes, assessments or charges levied on or against the Agent or any Lender by
any governmental or revenue

 

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authority in respect of this Agreement, any Letter of Credit or any other Loan
Document; (d) all out-of-pocket costs, expenses, taxes, assessments and other
charges incurred by the Agent in connection with any filing, registration,
recording or perfection of any security interest contemplated by this Agreement,
any other Loan Document, and the cost of title insurance for any Mortgage;
(e) expenses of due diligence incurred by the Agent prior to or as of the
Closing Date.

 

Except as otherwise expressly limited elsewhere in this Agreement or in any
other Loan Document, the Borrower shall pay (i) all reasonable, documented
out-of-pocket expenses incurred by the Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Agent, in
connection with the syndication and distribution (including, without limitation,
via the internet or through a service such as Intralinks) of the credit
facilities provided for herein, the preparation and administration of the Loan
Documents or any amendments, modifications or waivers of the provisions of the
Loan Documents (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by
the Agent in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by the Agent or any Lender, including the fees,
charges and disbursements of any counsel for the Agent and of one separate
counsel for Lenders other than the Agent, in connection with the enforcement,
collection or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.  Expenses being reimbursed by the Borrower under
this Section include, without limiting the generality of the foregoing, costs
and expenses (subject to express limitations set forth elsewhere in this
Agreement or in any other Loan Document) incurred in connection with:

 

(i)            appraisals;

 

(ii)           field examinations and the preparation of appraisal, field
examination or audit reports based on the fees charged by a third party retained
by the Agent or the internally allocated fees for each Person employed by the
Agent with respect to each field examination;

 

(iii)          lien and title searches and title insurance;

 

(iv)          environmental reviews;

 

(v)           taxes, fees and other charges for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect, protect,
and continue the Agent’s Liens;

 

(vi)          sums paid or incurred to take any action required of any Credit
Party under the Loan Documents that such Credit Party fails to pay or take; and

 

(vii)         forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the accounts and lockboxes, and costs
and expenses of preserving and protecting the Collateral.

 

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10.10       Indemnification.  Each Credit Party, jointly and severally with all
other Credit Parties, hereby agrees to indemnify the Agent, the Lenders and each
Affiliate thereof and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses, liabilities
(including Environmental Liabilities), claims (including Environmental Claims)
or damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any (a) actual or
proposed use by the Borrower or any other Credit Party of the proceeds of any
extension of credit (whether a Loan or a Letter of Credit) by any Lender
hereunder, (b) breach by any Credit Party of this Agreement or any other Loan
Document, (c) violation by any Credit Party or any of its Subsidiaries of any
law, rule, regulation or order including any Requirements of Environmental Law,
(d) Liens or security interests granted on any Property pursuant to or under the
Loan Documents, to the extent resulting from any Hazardous Substance located in,
on or under any such Property, (e) ownership by the Lenders or the Agent of any
Property following foreclosure under the Loan Documents, to the extent such
losses, liabilities, claims or damages arise out of or result from any Hazardous
Substance, located in, on or under such Property prior to or at the time of such
foreclosure, including losses, liabilities, claims or damages which are imposed
upon Persons under laws relating to or regulating Hazardous Substances, solely
by virtue of ownership, (f) any Lender or the Agent being deemed an operator of
any such Property by a court or other regulatory or administrative agency or
tribunal or other third party, to the extent such losses, liabilities, claims or
damages arise out of or result from any Hazardous Substance, petroleum,
petroleum product or petroleum waste located in on or under such Property at or
prior to the date of any foreclosure thereon under the Loan Document, or
(g) investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to any of the foregoing (including any
proceeding brought by any Credit Party against the Agent, any Lender and/or
their respective Affiliates), and each Credit Party, jointly and severally with
all other Credit Parties, agrees to reimburse the Agent and each Lender, and
each Affiliate thereof and their respective directors, officers, employees,
counsel and agents, upon demand for any out-of-pocket expenses (including
reasonable legal fees) incurred in connection with any such investigation or
proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM OR DAMAGE RESULTS FROM
THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; but excluding any such losses,
liabilities, claims, damages or expenses incurred by a Person or any Affiliate
thereof or their respective directors, officers, employees, counsel or agents by
reason of (i) the gross negligence or willful misconduct of or willful and
knowing breach of any Loan Document by such Person, affiliate, director,
officer, employee or agent or (ii) ownership or operation of any Property by the
Lenders or the Agent following foreclosure under the Loan Documents to the
extent, but only to the extent, such losses, liabilities, etc. are attributable
to the post-foreclosure actions of the Lender or the Agent.  Promptly after
receipt by an indemnified person of notice of any claim or the commencement of
any action, such indemnified person shall, if any claim in respect thereof is to
be made against any Credit Party under this Section 10.10, notify the such
Credit Party in writing of the claim or the commencement of that action.  The
Credit Parties shall not be liable for any settlement of any such claim or
action involving the payment of monetary damages effected without its written
consent not to be unreasonably withheld.  If any such claim or action shall be
brought against an indemnified person, it shall notify the

 

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applicable Credit Parties thereof, and such Credit Parties shall be entitled to
participate in the joint defense thereof.

 

10.11       Amendments, Waivers, Etc.

 

(a)           Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except (i) in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower, the Agent and the Required Lenders or (ii) in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the Agent and the Credit Party or Credit Parties that
are parties thereto, with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Revolving Credit Commitment of any Lender
without the written consent of such Lender, (ii) reduce or forgive the principal
amount of any Loan or Letter of Credit Advances or reduce the rate of interest
thereon, or reduce or forgive any interest or fees payable hereunder, without
the written consent of each Lender directly affected thereby (provided, that any
waiver of Default Rate interest shall not be considered a reduction of
interest), (iii) postpone any scheduled date of payment of the principal amount
of any Loan or Letter of Credit Advances, or any date for the payment of any
interest, fees or other Obligations payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Revolving Credit Commitment, without the written consent of each Lender
directly affected thereby, (iv) change any provision contained in Sections
2.2(d), 2.2(e), 2.7, 2.11, 2.12, 2.13, 10.9(b) or 10.10 hereof or this Section
10.11 or Section 10.16 hereof, without the written consent of each Lender
directly affected thereby, (v) increase the advance rates set forth in the
definition of Borrowing Base or add new categories of eligible assets, without
the written consent of each Lender, (vi) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision of any
Loan Document specifying the number or percentage of Lenders required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender, (vii) release
the Borrower or any Guarantor from its obligation under its Guaranty (except as
otherwise permitted herein or in the other Loan Documents), without the written
consent of each Lender, or (viii) except as otherwise expressly provided herein,
including without limitation, in Section 10.11(b) or in any Security Document,
release any of the Collateral without the written consent of each Lender;
provided, however, that that nothing in this Section 10.11 shall affect, limit
or restrict the Agent’s right to establish, fix, reduce, increase or otherwise
revise any standards of eligibility for any items included within the Borrowing
Base or any Reserves, from time to time in accordance with other provisions of
this Agreement and subject to the limitations set forth herein.  Anything in
this Section 10.11 to the contrary, no amendment, waiver or consent shall be
made with respect to Section 9 without the written consent of the Agent, and no
amendment, waiver or consent shall amend, modify or otherwise affect the rights
or duties of the Swingline Lender hereunder without the prior written consent of
the Swingline Lender.

 

(b)           The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release any Liens granted to the Agent by the
Credit Parties on any Collateral (i) upon the termination of the all Revolving
Credit Commitments, payment and satisfaction in full in cash of all Obligations,
(ii) constituting Property being sold or disposed of if the Credit Party
disposing of such Property certifies to the Agent that the sale or disposition
is made in compliance with the terms of this Agreement (and the Agent may rely
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any such certificate, without further inquiry), (iii) constituting Property
leased to a Credit Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement, or (iv) as required to effect any
sale or other disposition of such Collateral in connection with any exercise of
remedies of the Agent and the Lenders pursuant to Article 8.  Except as provided
in the preceding sentence or in Section 7.4(e)(5), the Agent will not release
any Liens on Collateral without the prior written authorization of the Required
Lenders; provided that, the Agent may in its discretion, release its Liens on
Collateral valued in the aggregate not in excess of $1,000,000 during any
calendar year without the prior written authorization of the Required Lenders. 
Any such release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Credit Parties in respect of) all interests retained by the
Credit Parties, including the proceeds of any sale, all of which shall continue
to constitute part of the Collateral.

 

(c)           If, in connection with any proposed amendment, waiver or consent
requiring the consent of “each Lender” or “each Lender affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrower may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement with an Eligible Assignee in compliance with all relevant provisions
of Section 10.12 hereof, and contemporaneously with the replacement of such
Non-Consenting Lender, the Borrower shall cause such substitute lender(s) to pay
in full, as the purchase price for such assignment, the Obligations owed to such
Non-Consenting Lender, including all accrued, unpaid interest thereon and any
Consequential Loss owing by the Borrower to such Non-Consenting Lender as a
result of such payment, without payment of any prepayment or termination fee. 
In such event, such Non-Consenting Lender agrees to abide by the relevant
provisions of Section 10.12 hereof in connection with the replacement of such
Non-Consenting Lender by the Eligible Assignee secured by the Agent or the
Borrower.  Notwithstanding the foregoing right of the Borrower to replace any
such Non-Consenting Lender, neither the Agent nor any Lender shall have any
obligation to the Borrower to find or locate any substitute lender or lenders to
replace any such Non-Consenting Lender.

 

10.12       Successors and Assigns.

 

(a)           This Agreement shall be binding upon and inure to the benefit of
the Borrower, the other Credit Parties, the Agent and the Lenders and their
respective successors and permitted assigns, provided that the undertaking of
the Lenders hereunder to make Loans to the Borrower and to issue Letters of
Credit for the account of the Borrower shall not inure to the benefit of any
successor of the Borrower.  Neither the Borrower nor any Credit Party may assign
or transfer any of its rights or obligations hereunder without the prior written
consent of all of the Lenders (and any attempted assignment or transfer by any
Credit Party without such consent shall be null and void), and no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section 10.12.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than (i) the
parties hereto, their respective successors and assigns permitted hereby,
(ii) any participant of a Lender (to the extent provided in subparagraph
(b) below), and (iii) to the extent expressly set forth herein, the Affiliates
of the Agent and each of the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

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(b)           Each Lender may sell participations to any Person in all or part
of any Loan, or all or part of its Notes, the Letter of Credit Exposure Amount,
the Swingline Exposure or the Revolving Credit Commitments, to another bank or
other entity, in which event, without limiting the foregoing, the provisions of
Sections 10.10 and 10.16 shall inure to the benefit of each purchaser of a
participation and the pro-rata treatment of payments, as described in
Section 2.12, shall be determined as if such Lender had not sold such
participation.  In the event any Lender shall sell any participation, (i) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such selling Lender in connection with such selling Lender’s
rights and obligations under the Loan Documents (including the Note(s) held by
such selling Lender), (ii) such Lender shall retain the sole right and
responsibility to enforce the obligations of the Borrower and the other Credit
Parties relating to the Loans, Letter of Credit Exposure Amount and Swingline
Exposure, including the right to approve any amendment, modification or waiver
of any provision of this Agreement other than (and then only if expressly
permitted by the applicable participation agreement) amendments, modifications
or waivers with respect to (A) any reduction of fees payable hereunder to the
Lender, (B) any reduction of the amount of principal or the rate of interest
payable on, or the dates fixed for the scheduled repayment of principal of, the
Loans and other sums to be paid to the Lenders hereunder, and (C) any
postponement of any date for the payment of any amount payable in respect of the
Loans of such Lender, (iii) the Credit Parties each agree, to the fullest extent
it may effectively do so under applicable law, that any participant of a Lender
may exercise all rights of set-off, bankers’ lien, counterclaim or similar
rights with respect to such participation as fully as if such participant were a
direct holder of Loans if such Lender has previously given notice of such
participation to the Borrower.

 

(c)           Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment and the
same portion of the related Loans at the time owing to it, the related Note or
Notes held by it and its Letter of Credit Exposure Amount) (a “Ratable
Assignment”); provided, however, that, (i) the Agent and the Borrower must give
their respective prior written consent, which consent will not be unreasonably
withheld, conditioned or delayed (except that (1) the Borrower in its sole
discretion may withhold its consent when otherwise required hereunder to any
proposed assignment to any affiliate of Cerberus Capital Management, Highland
Capital Management or Patriarch Partners and (2) the Borrower’s consent to any
such assignment shall not be required if (A) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund or (B) an Event of Default has
occurred which has not been waived or cured to the satisfaction of the Agent and
the Required Lenders), (ii) the aggregate amount of the applicable Revolving
Credit Commitment, Loans, Letter of Credit Exposure Amount and Swingline
Exposure (without duplication) of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance (as defined
below) with respect to such assignment is delivered to the Agent) shall in no
event be less than $10,000,000 (except for certain exceptions approved by the
Borrower and the Agent) and shall be in an amount that is an integral multiple
of $1,000,000 (unless all of the assigning Lender’s applicable Revolving Credit
Commitment, Loans, Letter of Credit Exposure Amount and Swingline Exposure is
being assigned); (iii) the aggregate amount of the applicable Revolving Credit
Commitment and/or Loans of the assigning Lender immediately after each partial
assignment must be at least $10,000,000 (except for certain exceptions approved
by the Borrower and the Agent) and shall be in an amount which is an integral
multiple of $1,000,000;

 

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(iv) each partial assignment must be a pro rata assignment of the assigning
Lender’s Revolving Credit Commitment, so that no Lender shall ever hold a
disproportionate percentage of the Total Revolving Credit Commitment; and
(v) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in its records, and to the Borrower, for its
acceptance if the Borrower’s approval of such assignment is otherwise required
under the terms of this Section 10.12, an Assignment and Acceptance in a form
required by the Agent (each an “Assignment and Acceptance”) with blanks
appropriately completed, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $5,000 (for which the
Borrower shall have no liability).  Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, unless a shorter period of time may be agreed to by
the Agent in its sole and absolute discretion, (A) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (B) the Lender
thereunder shall, to the extent provided in such assignment, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

 

(d)           By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows:  (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant thereto; (ii) such assignor
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Credit Party or any of its
Subsidiaries or the performance or observance by the Borrower or any other
Credit Party of any of its obligations hereunder; (iii) such assignee confirms
that it has received a copy of this Agreement and the other Loan Documents,
together with copies of the financial statements of the Borrower previously
delivered in accordance herewith and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it will
keep confidential all information with respect to any Credit Party furnished to
it by the Borrower or such Credit Party, such assignor Lender or the Agent
(other than information generally available to the public or otherwise available
to the Agent on a non-confidential basis or otherwise permitted pursuant to the
terms of this Agreement); (v) such assignee will, independently and without
reliance upon the Agent, such assignor Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all obligations that by the terms
of the Loan Documents are required to be performed by it as a Lender.

 

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(e)           The Agent shall maintain at its office a copy of each Assignment
and Acceptance delivered to it and a record of the names and addresses of the
Lenders and the Revolving Credit Commitments of, and principal amount of the
Loans, accrued and unpaid interest and other fees due thereunder owing to, and
the Letter of Credit Exposure Amount and Swingline Exposure of, each Lender from
time to time.  The entries in the register shall be conclusive, in the absence
of manifest error, and the Borrower, the Agent and the Lenders may treat each
person the name of which is recorded therein as a Lender hereunder for all
purposes of the Loan Documents.  Such records shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

(f)            Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee thereunder together with the Note(s) subject
to such assignment, the written consent to such assignment and the fee payable
in respect thereto, the Agent shall, if such Assignment and Acceptance has been
completed with blanks appropriately filled, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower and the Lenders. 
Contemporaneously with the receipt by the Borrower of such Assignment and
Acceptance and the surrender Note(s), the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note(s), a new
Note or Notes payable to the order of such assignee in an amount equal to the
applicable Revolving Credit Commitment, Loans, Letter of Credit Exposure Amount
and Swingline Exposure (without duplication) assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Revolving
Credit Commitment, Loans, Letter of Credit Exposure Amount and/or Swingline
Exposure hereunder, a new Note or Notes to the order of the assigning Lender in
an amount equal to the applicable Revolving Credit Commitment, Loans, Letter of
Credit Exposure Amount and/or Swingline Exposure retained by it hereunder.  Such
new Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note(s), shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially the
form of the surrendered Note(s).  Such surrendered Note shall be marked canceled
and returned to the Borrower.

 

(g)           Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.12, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to any Credit Party and/or any of its Subsidiaries
furnished to such Lender by or on behalf of such Credit Party or such applicable
Subsidiary.

 

(h)           Notwithstanding anything herein to the contrary, any Lender may at
any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including
without limitation, any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

10.13       Entire Agreement.  This Agreement and the other Loan Documents
embody the entire agreement and understanding among the Credit Parties, the
Agent and the Lenders relating

 

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to the subject matter hereof and supersedes all prior proposals, agreements and
understandings relating to the subject matter hereof.  Any conflict between the
provisions of this Agreement and the provisions of any other Loan Documents
shall be governed by the provisions of this Agreement.  The Credit Parties
certify that they are relying on no representation, warranty, covenant or
agreement except for those set forth in this Agreement and the other Loan
Documents of even date herewith.

 

10.14       Severability.  If any provision of any Loan Documents shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.

 

10.15       Disclosures.  Every reference in the Loan Documents to disclosures
of the Borrower or any other Credit Party to the Agent and the Lenders in
writing, to the extent that such references refer to disclosures at or prior to
the execution of this Agreement, shall be deemed strictly to refer only to
written disclosures delivered to the Agent and the Lenders in an orderly manner
prior to or concurrently with the execution hereof.

 

10.16       Capital Adequacy.

 

(a)           If after the date of this Agreement, any Lender shall have
determined that the adoption or effectiveness (regardless of whether previously
announced) of any applicable Legal Requirement or treaty regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, has or would have
the effect of increasing the cost of, or reducing the rate of return on the
capital of such Lender (or any holding company of which such Lender is a part)
as a consequence of its obligations hereunder or under any Letter of Credit or
its Note to a level below that which such Lender or holding company could have
achieved but for such adoption, change or compliance by an amount deemed by such
Lender to be material, then from time to time, upon demand by such Lender (with
a copy to the Agent) in the form of a certificate stating the cause of such
demand and reasonably detailed calculations therefor, the Borrower (subject to
Section 10.6 hereof) agrees to pay to such Lender such additional amount or
amounts as will compensate such Lender or holding company for such reduction.

 

(b)           The certificate of any Lender setting forth such amount or amounts
as shall be necessary to compensate such Lender or its holding company as
specified in Subsection 10.16(a) above (and setting forth the calculation
thereof in reasonable detail) shall be conclusive and binding, absent manifest
error.  The Borrower shall pay such Lender the amount shown as due on any such
certificate within five days after such Lender delivers such certificate.  In
preparing such certificate, such Lender may employ such assumptions and
allocations of costs and expenses as it shall in good faith deem reasonable and
may use any reasonable averaging and attribution method.

 

(c)           If any Lender requests compensation from the Borrower under this
Section 10.16 or under Sections 2.9(b) or 10.17, then at any time within 120
days after the Borrower’s receipt of the certificate from such Lender regarding
the circumstances and calculation of the

 

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applicable compensation so requested, the Borrower shall have the right to seek
and obtain one or more substitute lenders approved by the Agent (which approval
shall not be unreasonably withheld so long as each such substitute lender is an
Eligible Assignee) to replace such Lender hereunder in compliance with all
relevant provisions of Section 10.12 hereof.  Contemporaneously with the
replacement of such Lender hereunder with one or more such substitute lenders,
the Borrower shall cause such substitute lender(s) to pay in full, as the
purchase price for such assignment, the Obligations owed to such replaced
Lender, including all accrued, unpaid interest thereon and any Consequential
Loss owing by the Borrower to such replaced Lender as a result of such payment,
without payment to such replaced Lender of any prepayment fee otherwise payable
to such Lender under the terms of Section 2.4(b) above.  Notwithstanding the
foregoing terms and provisions of this Section 10.16, (i) the Borrower shall
remain obligated to make timely payment of the additional compensation set forth
in the certificate presented to the Borrower by such replaced Lender under the
terms of Section 10.16(b) above for the periods prior to the applicable
replacement date, and (ii) neither the Agent nor any Lender shall have any
obligation to the Borrower to find or locate any substitute lender or lenders to
replace any Lender requesting compensation from the Borrower under this
Section 10.16.

 

10.17       Taxes.

 

(a)           As used in this Section 10.17, the following terms shall have the
following meanings:

 

(i)            “Indemnifiable Tax” means any Tax, but excluding, in any case,
any Tax that (a) would not be imposed in respect of a payment to a Lender or the
Agent under the Notes held by such Lender or the Agent or under any of the other
Loan Documents except for a present or former connection between the
jurisdiction of the Governmental Authority imposing such Tax and such Lender or
the Agent (or a shareholder or other Person with an interest therein), including
a connection arising from such Lender’s or the Agent’s (or shareholder thereof)
being or having been a citizen or resident of such jurisdiction, or being or
having been organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment or fixed place
of business in such jurisdiction, but excluding a connection arising solely from
such Lender or the Agent having executed, delivered, performed its obligations
or received a payment under, or enforced, this Agreement, the Notes held by such
Lender or the Agent or any other Loan Documents, (b) is imposed under United
States federal income tax law or any state income or franchise tax law or (c) is
described in the final sentence of Section 17(e).

 

(ii)           “Tax” means any present or future tax, levy, impost, duty,
charge, assessment or fee of any nature (including interest thereon and
penalties and additions thereto) that is imposed by any Governmental Authority
in respect of a payment to a Lender or the Agent under the Notes or under any of
the other Loan Documents.

 

(b)           If the Borrower is required by any applicable Legal Requirement to
make any deduction or withholding for or on account of any Tax from any payment
to be made by it under this Agreement, under the Notes or under any other Loan
Documents to a Lender or the

 

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Agent, then the Borrower shall (i) promptly notify the Lender or the Agent that
is entitled to such payment of such requirement to so deduct or withhold such
Tax, (ii) pay to the relevant Governmental Authorities the full amount required
to be so deducted or withheld, (iii) promptly forward to such Lender or the
Agent an official receipt (or copies thereof), or other documentation reasonably
acceptable to such Lender or the Agent, evidencing such payment to such
Governmental Authorities and (iv) if such Tax is an Indemnifiable Tax, pay, to
the extent permitted by law to such Lender or the Agent, in addition to whatever
net amount of such payment is paid to such Lender or the Agent, such additional
amount as is necessary to ensure that the total amount actually received by such
Lender or the Agent (free and clear of Indemnifiable Tax) will equal the full
amount of the payment such Lender or the Agent would have received had no such
deduction or withholding been required.  If the Borrower pays any additional
amount to a Lender or the Agent pursuant to the preceding sentence and such
Lender or the Agent shall receive a refund of an Indemnifiable Tax with respect
to which, in the good faith opinion of such Lender or the Agent, such payment
was made, such Lender or the Agent shall pay to the Borrower the amount of such
refund promptly upon receipt thereof.

 

(c)           In the event that any Governmental Authority notifies the Borrower
that it has improperly failed to withhold or deduct any Tax from a payment
received by any Lender or the Agent under the Notes held by such Lender or the
Agent or under any other Loan Documents, the Borrower agrees to timely and fully
pay such Tax to such Governmental Authority and such Lender or the Agent shall,
upon receipt of written notice of such payment with respect to any Tax other
than an Indemnifiable Tax, promptly pay to the Borrower, an amount necessary in
order that the amount of such payment to the Borrower after payment of all Taxes
with respect to such payment, shall equal the amount of any Tax other than an
Indemnifiable Tax that the Borrower paid to such Governmental Authority pursuant
to this clause (c).

 

(d)           Each Lender or the Agent shall, upon request by the Borrower, take
requested measures to mitigate the amount of Indemnifiable Tax required to be
deducted or withheld from any payment made by the Borrower under this Agreement,
under the Notes or under any other Loan Documents if such measures can, in the
sole and absolute opinion of such Lender or the Agent, be taken without such
Lender or the Agent suffering any economic, legal, regulatory or other
disadvantage (provided, however, that no such Lender or the Agent shall be
required to designate a funding office that is not located in the United States
of America).

 

(e)           Each Lender or the Agent that (i) is organized under the laws of a
jurisdiction other than the United States of America and (ii)(A) is a party
hereto on the Closing Date or (B) becomes an assignee of an interest under this
Agreement under Section 10.12 after the Closing Date (unless such Lender or the
Agent was already a Lender or the Agent hereunder immediately prior to such
assignment) shall execute and deliver to the Borrower and the Agent one or more
(as the Borrower or the Agent may reasonably request) Forms W-8ECI, W-8BEN,
W-8IMY (as applicable) or other applicable form, certificate or document
prescribed by the United States Internal Revenue Service certifying as to such
Lender’s or the Agent’s entitlement to exemption from withholding or deduction
of Taxes.  The Borrower shall not be required to pay additional amounts to any
Lender or the Agent pursuant to this Section 10.17 to the extent that the
obligation to pay such additional amounts would not have arisen but for the
failure of such Lender or the Agent to comply with this paragraph.

 

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(f)            Each Lender and the Agent agrees that if it subsequently
recovers, or receives a permanent net tax benefit with respect to any amounts of
Taxes (i) previously paid by it and as to which it has been indemnified by or on
behalf of the Borrower or (ii) previously deducted by the Borrower (including,
without limitation, any Taxes deducted from any additional sums payable under
clause (b) above), the relevant Lender or the Agent, as the case may be, shall
reimburse the Borrower to the extent of the amount of any such recovery or
permanent net tax benefit (but only to the extent of any indemnity payments
made, or additional amounts paid, by or on behalf of the Borrower under this
Section 10.17 with respect to the Taxes giving rise to such recovery or tax
benefit); provided, however, that the Borrower, upon the request of the Lender
or the Agent, agrees to repay to such Note Lender or the Agent, the amount paid
over to the Borrower, in the event such Lender or the Agent is required to repay
such amount to the relevant taxing authority.

 

(g)           Notwithstanding the foregoing, in no event shall the amount
payable under this Section 10.17 (to the extent, if any, constituting interest
under applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement or the Notes,
exceed the Highest Lawful Rate or the maximum amount of interest permitted to be
charged by applicable laws.

 

10.18       Waiver of Claims.  Each Credit Party hereby waives and releases the
Agent and all Lenders from any and all claims or causes of action which the
Borrower may own, hold or claim in respect of any of them as of the date hereof.

 

10.19       Right of Setoff.  The Lenders each are hereby authorized at any time
and from time to time, without notice to any Credit Party (any such notice being
expressly waived by each Credit Party), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final, whether or not such
setoff results in any loss of interest or other penalty, and including without
limitation all certificates of deposit) at any time held, and any other funds or
property 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 any such Credit Party
against any and all of the Obligations irrespective of whether or not any of the
Obligations are then due and irrespective of whether or not Agent or such Lender
shall have made any demand under this Agreement, the Notes or any other Loan
Document.  Each Credit Party also hereby grants to Agent and to each of the
Lenders a security interest in and hereby transfers, assigns, sets over, and
conveys to the Agent and to each of the Lenders, as security for payment of all
Obligations, all such deposits, funds or property of any such Credit Party or
Indebtedness of the Agent or any Lender to any such Credit Party.  Should the
right of the Agent or any Lender to realize funds in any manner set forth
hereinabove be challenged and any application of such funds be reversed, whether
by court order or otherwise, the Lenders shall make restitution or refund to
such Credit Party, pro rata in accordance with their respective Commitment
Percentages.  Each Lender agrees to promptly notify the Borrower and the Agent
after any such setoff and application, provided that the failure to give such
notice will not affect the validity of such setoff and application.  The rights
of the Agent and the Lenders under this Section are in addition to other rights
and remedies (including without limitation other rights of setoff) which the
Agent or the Lenders may have.  This Section is subject to the terms and
provisions of Section 2.12 hereof.

 

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10.20       Waiver of Right to Jury Trial.  EXCEPT AS PROHIBITED BY APPLICABLE
LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR
ANY TRANSACTIONS EVIDENCED THEREBY.

 

10.21       Additional Provisions Regarding Collection of Accounts and other
Collateral.

 

(a)           Each Credit Party hereby designates and constitutes the Agent or
the Agent’s designee as such Credit Party’s attorney-in-fact with power to
endorse such Credit Party’s name upon any notes, acceptances, checks, drafts,
money orders or other evidence of payment of any Accounts or any other
Collateral that may come into its possession; to sign or endorse such Credit
Party’s name on any invoice, bill of lading or other title or ownership
documents relating to any Accounts or Inventory, drafts against any customers of
any Credit Party, assignments and verifications of Accounts and notices to
customers of any Credit Party; to send verifications of Accounts; and to notify
the U.S. Postal Service authorities to change the address for delivery of mail
addressed to any Credit Party to such address as the Agent may designate.  All
acts of said attorney or designee are hereby ratified and approved by each
Credit Party, and said attorneys or designee shall not be liable for any acts of
omission or commission, for any error of judgment or for any mistake of fact or
law, provided that the Agent or its designee shall not be relieved of liability
to the extent it is determined by a final judicial decision that its act, error
or mistake constituted gross negligence or willful misconduct or willful and
knowing breach of any Loan Document.  The power of attorney granted under this
subparagraph is coupled with an interest and is irrevocable until all of the
Obligations are paid in full and this Agreement and the Revolving Credit
Commitments are terminated.

 

(b)           The Agent, without notice to or consent of any Credit Party, at
any time after the occurrence and during the continuation of an Event of
Default, (i) may sue upon or otherwise collect, extend the time, of payment of,
or compromise or settle for cash, credit or otherwise upon any terms, any of the
Accounts or any instruments or insurance applicable thereto and/or release any
account debtor thereon; (ii) is authorized and empowered to accept or direct
shipments of Inventory and accept the return of the goods represented by any of
the Accounts; and (iii) shall have the right to receive, endorse, assign and/or
deliver in its name or the name of any Credit Party any and all checks, drafts
and other instruments for the payment of money relating to the Accounts, and
each Credit Party hereby waives notice of presentment, protest and non-payment
of any instrument so endorsed.

 

(c)           Nothing herein contained shall be construed to constitute any
Credit Party as agent of the Agent for any purpose whatsoever, and the Agent
shall not be responsible or liable for any shortage, discrepancy, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof (except to the extent it is determined by a
final judicial decision that the Agent’s or a Lender’s act or omission
constituted gross negligence of willful conduct or willful and knowing breach of
any Loan Document).  The Agent and the Lenders shall not, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts or any instrument received in payment thereof or for any

 

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damage resulting therefrom (except to the extent it is determined by a final
judicial decision that the Agent’s or such Lender’s error, omission or delay
constituted gross negligence or willful misconduct or willful and knowing breach
of any Loan Document).  The Agent and the Lenders do not, by anything herein or
in any assignment or otherwise, assume any Credit Party’s obligations under any
contract or agreement assigned to the Agent or the Lender, and the Agent and the
Lenders shall not be responsible in any way for the performance by any Credit
Party of any of the terms and conditions thereof.

 

(d)           Upon the occurrence and during the continuation of any Event of
Default:  (i) if any of the Accounts includes a charge for any tax payable to
any governmental tax authority, the Agent is hereby authorized (but in no event
obligated) in its discretion to pay the amount thereof to the proper taxing
authority for, the account of any Credit Party and to charge or any Credit
Party’s account therefor; and (ii) the Borrower shall notify the Agent if any
Accounts include any tax due to any such taxing authority and, in the absence of
such notice, the Agent shall have the right to retain the full proceeds of such
Accounts and shall not be liable for any taxes that may be due from any Credit
Party by reason of the sale and delivery creating such Accounts.

 

(e)           Upon the occurrence and continuation of any Event of Default, the
Agent may at any time and from time to time employ and maintain in the premises
of any Credit Party a custodian selected by the Agent who shall have full
authority to do all acts necessary to protect the Agent’s and Lenders’ interests
and to report to the Agent thereon.  Each Credit Party hereby agrees to
cooperate with any such custodian and to do so whatever the Agent may reasonably
request to preserve the Collateral.  All costs and expenses incurred by the
Agent by reason of the employment of the custodian shall be charged to the
Borrower’s account and added to the Obligations.

 

10.22       Hedging Obligations; Cash Management Obligations.

 

(a)           The term “Obligations,” as defined and used in this Agreement,
includes all Hedging Obligations and Cash Management Obligations of the Borrower
or any of its Subsidiaries (collectively, “Related Obligations”) to the Agent,
JPMorgan, any other Lender or any of their respective affiliates and branches
(each an “Obligee” and, collectively, the “Obligees”).  Accordingly, the benefit
of the Loan Documents and of the provisions of this Agreement relating to the
Collateral shall extend to and be available in respect of the Related
Obligations solely on the condition and understanding, as among the Agent and
all Obligees, that (i) the Related Obligations shall be entitled to the benefit
of the Loan Documents and the Collateral to the extent expressly set forth in
this Agreement and the other Loan Documents and to such extent the Agent shall
hold, and have the right and power to act with respect to, the Guaranty and the
Collateral on behalf of and as agent for the Obligees, but the Agent is
otherwise acting solely as agent for the Lenders and shall have no fiduciary
duty, duty of loyalty, duty of care, duty of disclosure or other obligation
whatsoever to any Obligee, (ii) all matters, acts and omissions relating in any
manner to the Guaranty, the Collateral, or the omission, creation, perfection,
priority, abandonment or release of any Lien, shall be governed solely by the
provisions of this Agreement and the other Loan Documents and no separate Lien,
right, power or remedy shall arise or exist in favor of any Obligee under any
separate instrument or agreement or in respect of any Related Obligation,
(iii) each Obligee shall be bound by all

 

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actions taken or omitted, in accordance with the provisions of this Agreement
and the other Loan Documents, by the Agent and the Required Lenders, each of
whom shall be entitled to act at its sole discretion and exclusively in its own
interest given its own Revolving Credit Commitment and its own interest in the
Loans, Letter of Credit Obligations and other Obligations to it arising under
this Agreement or the other Loan Documents, without any duty or liability to any
other Obligee or as to any Related Obligation and without regard to whether any
Related Obligation remains outstanding or is deprived of the benefit of the
Collateral or becomes unsecured or is otherwise affected or put in jeopardy
thereby, (d) no Obligee (except the Agents and the Lenders, to the extent set
forth in this Agreement) shall have any right to be notified of, or to direct,
require or be heard with respect to, any action taken or omitted in respect of
the Collateral or under this Agreement or the Loan Documents and (e) no Obligee
shall exercise any right of setoff, banker’s lien or similar right except to the
extent such right is exercised in compliance with Section 2.13.

 

(b)           Each Credit Party hereby, jointly and severally and irrevocably
and unconditionally, guarantees to each of the Obligees the full and prompt
payment and performance of any and all Related Obligations to each Obligee. 
Such guaranty shall be an absolute, continuing, irrevocable, and unconditional
guaranty of payment and performance, and not a guaranty of collection, and the
Credit Parties shall remain liable on such obligations hereunder until the
payment and performance in full of the Related Obligations.  No set-off,
counterclaim, recoupment, reduction, or diminution of any obligation, or any
defense of any kind or nature which the Borrower or any of its Subsidiaries may
have against any Obligee or any other party shall be available to, or shall be
asserted by, any Credit Party against any Obligee or any subsequent holder of
the Related Obligations or any part thereof or against payment of the Related
Obligations or any part thereof.

 

(c)           If any Credit Party becomes liable for any obligations or
indebtedness owing by any Subsidiary to any Obligee by endorsement or otherwise,
other than under this Section 10.22, such liability shall not be in any manner
impaired or affected hereby, and the rights of each Obligee shall be cumulative
of any and all other rights that any Obligee may ever have against such Credit
Party.

 

(d)           In the event of default in payment or performance of any of the
Related Obligations, or any part thereof, when any part of the Related
Obligations becomes due, whether by its terms, by acceleration, upon demand or
otherwise, the Credit Parties shall promptly pay the amount due thereon to the
applicable Obligee without notice or demand in dollars and it shall not be
necessary for any Obligee, in order to enforce such payment by the Credit
Parties, first to institute suit or exhaust its remedies against any Subsidiary
or others liable on such Related Obligations, or to enforce any rights against
any collateral which shall ever have been given to secure such Related
Obligations.  Notwithstanding anything to the contrary contained in this
Section 10.22, each Credit Party hereby irrevocably subordinates to the prior
and defeasible payment in full of the Related Obligations, any and all rights
such Credit Party may now or hereafter have under any agreement or at law or in
equity (including, without limitation, any law subrogating such Credit Party to
the rights of any of the Obligees) to assert any claim against or seek
contribution, indemnification or any other form of reimbursement from any
Subsidiary or any other party liable for payment of any or all of the Related
Obligations for any payment made by any Credit Party under or in connection with
this Section 10.22 or otherwise.

 

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(e)           Each Credit Party hereby agrees that its obligations under this
Section 10.22 shall not be released, discharged, diminished, impaired, reduced,
or affected for any reason or by the occurrence of any event, including, without
limitation, one or more of the following events, whether or not with notice to
or the consent of any Credit Party:  (i) the taking or accepting of collateral
as security for any or all of the Related Obligations or the release, surrender,
exchange, or subordination of any collateral now or hereafter securing any or
all of the Related Obligations; (ii) any partial release of the liability of the
Borrower or any other Credit Party hereunder, or the full or partial release of
any other guarantor from liability for any or all of the Related Obligations;
(iii) any disability of any Credit Party or any of its Subsidiaries, or the
dissolution, insolvency, or bankruptcy of any Credit Party, any of its
Subsidiaries, any guarantor or any other party at any time liable for the
payment of any or all of the Related Obligations; (iv) any renewal, extension,
modification, waiver, amendment, or rearrangement of any or all of the Related
Obligations or any instrument, document, or agreement evidencing, securing, or
otherwise relating to any or all of the Related Obligations; (v) any adjustment,
indulgence, forbearance, waiver, or compromise that may be granted or given by
any Obligee to any Credit Party, any of its Subsidiaries, or any other party
ever liable for any or all of the Related Obligations; (vi) any neglect, delay,
omission, failure, or refusal of any Obligee to take or prosecute any action for
the collection of any of the Related Obligations or to foreclose or take or
prosecute any action in connection with any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Related
Obligations; (vii) the unenforceability or invalidity of any or all of the
Related Obligations or of any instrument, document, or agreement evidencing,
securing, or otherwise relating to any or all of the Related Obligations;
(viii) any payment by any Subsidiary of any Credit Party or any other party to
any Obligee is held to constitute a preference under applicable bankruptcy or
insolvency law or if for any other reason any Obligee is required to refund any
payment or pay the amount thereof to someone else; (ix) the settlement or
compromise of any of the Related Obligations; (x) the non-perfection of any
security interest or lien securing any or all of the Related Obligations;
(xi) any impairment of any collateral securing any or all of the Related
Obligations; (xii) the failure of any Obligee to sell any collateral securing
any or all of the Related Obligations in a commercially reasonable manner or as
otherwise required by law; (xiii) any change in the corporate existence,
structure, or ownership of the Borrower or any of its Subsidiaries; or (xiv) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, any Credit Party or any of its Subsidiaries.

 

(f)            Each Credit Party hereby waives promptness, diligence, notice of
any default under the Related Obligations, demand of payment, notice of
acceptance of this guaranty, presentment, notice of protest, notice of dishonor,
notice of the incurring by any Subsidiary of any Credit Party of additional
obligations or indebtedness, and all other notices and demands with respect to
the Related Obligations and this guaranty.

 

10.23       Construction.  Each Credit Party, the Agent and each Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.

 

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10.24       Joint and Several Obligations.  Notwithstanding anything to the
contrary contained herein or in any other Loan Documents, each Credit Party
acknowledges that it and the other Credit Parties are jointly and severally
responsible for their respective agreements, covenants, representations,
warranties and obligations contained and set forth in this Agreement or in any
other Loan Document to which the applicable Credit Party is a party.

 

10.25       USA Patriot Act.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it may be required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.

 

10.26       Confidentiality.  Each Lender agrees to keep confidential
information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with such Lender’s customary practices and agrees
that it will only use such information in connection with the transactions
contemplated by this Agreement and not disclose any of such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information other than (a) to such Lender’s employees,
representatives, directors, attorneys, auditors, agents, professional advisors,
trustees or Affiliates who are advised of the confidential nature of such
information, (b) to the extent such information presently is or hereafter
becomes available to such Lender on a non-confidential basis from any source of
such information that is in the public domain at the time of disclosure, (c) to
the extent disclosure is required by law, regulation, subpoena or judicial order
or process (provided that notice of such requirement or order shall be promptly
furnished to the Borrower unless such notice is legally prohibited or such
disclosure is made during an examination of a Lender’s books and records by any
state or federal regulatory agency), (d) to any rating agency to the extent
required in connection with any rating to be assigned to such Lender, (e) to
assignees or participants or prospective assignees or participants who agree to
be bound by the provisions of this Section 10.26, (f) to the extent required in
connection with any litigation between any Credit Party and any Lender with
respect to the Loans or this Agreement and the other Loan Documents, or (g) with
the Borrower’s prior written consent

 

10.27       No Rights, Duties or Obligations of Documentation Agent.  The Credit
Parties, the Agent and each Lender acknowledge and agree that except for the
rights, powers, obligations and liabilities under this Agreement and the other
Loan Documents as a Lender, General Electric Capital Corporation, as
Documentation Agent, shall have no additional rights, powers, obligations or
liabilities under this Agreement or any other Loan Documents in its capacity as
Documentation Agent.

 

[Remainder of Page Left Blank Intentionally]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.

 

 

WALCO INTERNATIONAL, INC.,

 

a Delaware corporation, as Borrower

 

 

 

By:

/s/ William F. Lacey

 

Name:

William F. Lacey

 

Title:

Senior Vice President, CFO & Treasurer

 

 

 

Address for Notices:
Walco International, Inc.
7 Village Circle, Suite 200
Westlake, Texas 76262
Attention:  William F. Lacey
Facsimile:  (817) 601-6094

 

 

 

With a copy to:
Animal Health International, Inc.
7 Village Circle, Suite 200
Westlake, Texas 76262
Attention:  Legal Department
Facsimile:  (817) 859-3218

 

 

 

With a copy to:
Charlesbank Capital Partners 600
Atlantic Avenue, 26th Floor
Boston, Massachusetts 02210-2203
Attention:  Mark Rosen and Brandon White
Facsimile:  (617) 619-5402

 

 

 

With a copy to:
Goodwin Procter LLP
53 State Street
Boston, Massachusetts 02109
Attention:  Mark D. Smith
Facsimile:  (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

JPMORGAN CHASE BANK, N.A.,

 

a national banking association, as a Lender, as Agent and as Swingline Lender

 

 

 

By:

/s/ Kevin D. Padgett

 

Name:

Kevin D. Padgett

 

Title:

Vice President

 

 

 

Address for Notices:
2200 Ross Avenue, Sixth Floor
Dallas, Texas 75201
Attention:  Kevin Padgett

 

 

 

Domestic Lending Office:
2200 Ross Avenue, Sixth Floor
Dallas, Texas 75201

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

SUNTRUST BANK,

 

a Georgia banking corporation, as a Lender

 

 

 

By:

/s/ Patrick Wiggins

 

Name:

Patrick Wiggins

 

Title:

Vice President

 

 

 

Address for Notices:

 

303 Peachtree Street, 2nd Floor

 

Atlanta, Georgia 30308

 

Attention: Mark Pickering

 

Facsimile: (404) 588-7061

 

 

 

Domestic Lending Office:

 

303 Peachtree Street, 2nd Floor

 

Atlanta, Georgia 30308

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

a Delaware corporation, as a Lender and as Documentation Agent

 

 

 

By:

/s/ Jeffrey Skinner

 

Name:

Jeffrey A. Skinner

 

 

Duly Authorized Signatory

 

 

 

Address for Notices:

 

500 W. Monroe, 17th Floor

 

Chicago, Illinois 60661

 

Attention: Walco Account Manager

 

Facsimile: (312) 441-7026

 

 

 

Domestic Lending Office:

 

500 W. Monroe, 17th Floor

 

Chicago, Illinois 60661

 

 

 

 

 

THE CIT GROUP/BUSINESS CREDIT, INC.,

 

a New York corporation, as a Lender

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

Address for Notices:

 

c/o CIT Business Credit

 

5420 LBJ Freeway, Suite 200

 

Dallas, Texas 75240

 

Attention: Mark Porter

 

Facsimile: (972) 455-1690

 

 

 

Domestic Lending Office:

 

1211 Avenue of the Americas

 

New York, New York 10036

 

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

 

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

a Delaware corporation, as a Lender and as Documentation Agent

 

 

 

By:

 

 

Name:

 

 

 

Duly Authorized Signatory

 

 

 

Address for Notices:

 

500 W. Monroe, 17th Floor

 

Chicago, Illinois 60661

 

Attention: Walco Account Manager

 

Facsimile: (312) 441-7026

 

 

 

Domestic Lending Office:

 

500 W. Monroe, 17th Floor

 

Chicago, Illinois 60661

 

 

 

 

 

THE CIT GROUP/BUSINESS CREDIT, INC.,

 

a New York corporation, as a Lender

 

 

 

By:

/s/ Michael Song

 

Name:

Michael Song

 

Title:

Vice President

 

 

 

Address for Notices:

 

c/o CIT Business Credit

 

5420 LBJ Freeway, Suite 200

 

Dallas, Texas 75240

 

Attention: Walco Account Manager

 

Facsimile: (972) 455-1690

 

 

 

Domestic Lending Office:

 

1211 Avenue of the Americas

 

New York, New York 10036

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

119

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ANIMAL HEALTH INTERNATIONAL, INC.,

 

a Delaware corporation, as a Guarantor

 

 

 

By:

/s/ William F. Lacey

 

Name:

William F. Lacey

 

Title:

Senior Vice President, CFO & Treasurer

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

STEER INTERMEDIATE CORPORATION,

 

a Delaware corporation, as a Guarantor

 

 

 

By:

/s/ William F. Lacey

 

Name:

William F. Lacey

 

Title:

Senior Vice President, CFO & Treasurer

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

WALCO HOLDINGS, INC.,

 

a Delaware corporation, as a Guarantor

 

 

 

By:

/s/ William F. Lacey

 

Name:

William F. Lacey

 

Title:

Senior Vice President, CFO & Treasurer

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

WALCO INTERMEDIATE, INC.,

 

a Delaware corporation, as a Guarantor

 

 

 

By:

/s/ William F. Lacey

 

Name:

William F. Lacey

 

Title:

Senior Vice President, CFO & Treasurer

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

AMERICAN LIVESTOCK SUPPLY, INC.,

 

a Delaware corporation, as a Guarantor

 

 

 

By:

/s/ Jon Kuehl

 

Name:

John Kuehl

 

Title:

President

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

PROVINCE LIVESTOCK SUPPLY LTD.,

 

an Alberta corporation, as a Guarantor

 

 

 

By:

/s/ Scott Pastlewaite

 

Name:

Scott Pastlewaite

 

Title:

President

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

WESTERN VETERINARY SUPPLIES LTD.,

 

an Alberta corporation, as a Guarantor

 

 

 

 

By:

/s/ Scott Pastlewaite

 

Name:

Scott Pastlewaite

 

Title:

President

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

WALCO CANADA ANIMAL HEALTH LTD.,

 

an Alberta corporation, as a Guarantor

 

 

 

By:

/s/ Scott Pastlewaite

 

Name:

Scott Pastlewaite

 

Title:

President

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

 

WALCO TEXAS ANIMAL HEALTH, LLC,

 

a Texas limited liability company, as a Guarantor

 

 

 

By:

/s/ William F. Lacey

 

 

William F. Lacey, President

 

 

 

Address for Notices:

 

c/o Walco International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: William F. Lacey

 

Facsimile: (817) 601-6094

 

 

 

With a copy to:

 

Animal Health International, Inc.

 

7 Village Circle, Suite 200

 

Westlake, Texas 76262

 

Attention: Legal Department

 

Facsimile: (817) 859-3218

 

 

 

With a copy to:

 

Charlesbank Capital Partners 600

 

Atlantic Avenue, 26th Floor

 

Boston, Massachusetts 02210-2203

 

Attention: Mark Rosen and Brandon White

 

Facsimile: (617) 619-5402

 

 

 

With a copy to:

 

Goodwin Procter LLP

 

53 State Street

 

Boston, Massachusetts 02109

 

Attention: Mark D. Smith

 

Facsimile: (617)570-1231

 

[CREDIT AGREEMENT - SIGNATURE PAGE(S)]

 

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

 

Dallas, Texas

 

$

, 2006

 

FOR VALUE RECEIVED, WALCO INTERNATIONAL, INC., a California corporation (herein
called “Borrower”), promises to pay to the order of
                                         (herein called “Payee”), a
                                    , at the banking office of JPMORGAN CHASE
BANK, N.A., a national banking association acting in its capacity as Agent under
the Credit Agreement (together with its successors in such capacity being herein
called “Agent”), located at 2200 Ross Avenue, Sixth Floor, Dallas, Texas 75201,
Attention:  Kevin Padgett, or at such other place as Agent may hereafter
designate in writing, in immediately available funds and in lawful money of the
United States of America, the principal sum of                                 
Dollars ($                ), (or the unpaid balance of all principal advanced
against this note, if that amount is less), together with interest on the unpaid
principal balance of this note from time to time outstanding until maturity at
the rate or rates provided for in the Credit Agreement and interest on all past
due amounts, both principal and accrued interest, at the Past Due Rate;
provided, that for the full term of this note, the interest rate produced by the
aggregate of all sums paid or agreed to be paid to the holder of this note for
the use, forbearance or detention of the debt evidenced hereby shall not exceed
the Highest Lawful Rate, if any, applicable to Payee.

 

If, for any reason whatever, the interest paid or received on this note during
its full term produces a rate which exceeds the Highest Lawful Rate, if any,
applicable to Payee, the holder of this note shall refund to the payor or, at
the holder’s option, credit against the principal of this note such portion of
said interest as shall be necessary to cause the interest paid on this note to
produce a rate equal to the Highest Lawful Rate, if any, applicable to payee. 
All sums paid or agreed to be paid to the holder of this note for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.

 

This note has been issued pursuant to the terms of an Amended and Restated
Credit Agreement (which, as it may have been or may be amended, restated,
modified or supplemented from time to time, is herein called the “Credit
Agreement”) dated September 26,2006, by and among Borrower, Agent, Payee, each
of the Credit Parties which is now or hereafter a Guarantor thereunder, and
certain other signatory financial institutions named therein or which may be a
party thereto from time to time, to which reference is made for all purposes. 
This note is a Revolving Credit Note under the terms of the Credit Agreement,
and advances against this note by Payee or other holder hereof, payments and
prepayments hereunder and acceleration hereof shall be governed by the Credit
Agreement.  Capitalized words and phrases used herein and not defined herein and
which are defined in the Credit Agreement shall have the same meanings herein as
are ascribed to them in the Credit Agreement.

 

The unpaid principal balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Borrower.  All loans and advances and all payments and permitted prepayments
made hereon may be endorsed by the holder of this note on the schedule which is
attached hereto (and hereby made a part hereof for all purposes) or otherwise

 

EXHIBIT A

 

1

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

 

recorded in the holder’s records; provided, that any failure to make notation of
(a) any advance shall not cancel, limit or otherwise affect Borrower’s
obligations or any holder’s rights with respect to that advance, or (b) any
payment or permitted prepayment of principal shall not cancel, limit or
otherwise affect Borrower’s entitlement to credit for that payment as of the
date received by the holder.

Borrower and any and all co-makers, endorsers, guarantors and sureties severally
waive notice (including, but not limited to, notice of intent to accelerate and
notice of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of suit
for the purpose of fixing liability and consent that the time of payment hereof
may be extended and re-extended from time to time without notice to any of
them.  Each such person agrees that his, her or its liability on or with respect
to this note shall not be affected by any release of or change in any guaranty
or security at any time existing or by any failure to perfect or maintain
perfection of any lien against or security interest in any such security or the
partial or complete unenforceability of any guaranty or other surety obligation,
in each case in whole or in part, with or without notice and before or after
maturity.

 

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF) AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.

 

 

WALCO INTERNATIONAL, INC.,

 

a California corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

Dallas, Texas

 

$15,000,000.00

, 2006

 

FOR VALUE RECEIVED, WALCO INTERNATIONAL, INC., a California corporation (herein
called “Borrower”), promises to pay to the order of JPMORGAN CHASE BANK, N.A.
(herein called “Payee”), a national banking association, at the banking office
of JPMORGAN CHASE BANK, N.A. a national banking association acting in its
capacity as Agent under the Credit Agreement (together with its successors in
such capacity being herein called “Agent”), located at 2200 Ross Avenue, Sixth
Floor, Dallas, Texas 75201, Attention:  Kevin Padgett, or at such other place as
Agent may hereafter designate in writing, in immediately available funds and in
lawful money of the United States of America, the principal sum of Fifteen
Million Dollars ($ 15,000,000.00), (or the unpaid balance of all principal
advanced against this note, if that amount is less), together with interest on
the unpaid principal balance of this note from time to time outstanding until
maturity at the rate or rates provided for in the Credit Agreement and interest
on all past due amounts, both principal and accrued interest, at the Past Due
Rate; provided, that for the full term of this note, the interest rate produced
by the aggregate of all sums paid or agreed to be paid to the holder of this
note for the use, forbearance or detention of the debt evidenced hereby shall
not exceed the Highest Lawful Rate, if any, applicable to Payee.

 

If, for any reason whatever, the interest paid or received on this note during
its full term produces a rate which exceeds the Highest Lawful Rate, if any,
applicable to Payee, the holder of this note shall refund to the payor or, at
the holder’s option, credit against the principal of this note such portion of
said interest as shall be necessary to cause the interest paid on this note to
produce a rate equal to the Highest Lawful Rate, if any, applicable to payee. 
All sums paid or agreed to be paid to the holder of this note for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of this note, so that the interest rate
is uniform throughout the full term of this note.

 

This note has been issued pursuant to the terms of an Amended and Restated
Credit Agreement (which, as it may have been or may be amended, restated,
modified or supplemented from time to time, is herein called the “Credit
Agreement”) dated September 26,2006, by and among Borrower, Agent, Payee, each
of the Credit Parties which is now or hereafter a Guarantor thereunder, and
certain other signatory financial institutions named therein or which may be a
party thereto from time to time, to which reference is made for all purposes. 
This note is the Swingline Note under the terms of the Credit Agreement, and
advances against this note by Payee or other holder hereof, payments and
prepayments hereunder and acceleration hereof shall be governed by the Credit
Agreement.  Capitalized words and phrases used herein and not denned herein and
which are defined in the Credit Agreement shall have the same meanings herein as
are ascribed to them in the Credit Agreement.

 

The unpaid principal balance of this note at any time shall be the total of all
principal lent or advanced against this note less the sum of all principal
payments and permitted prepayments made on this note by or for the account of
Borrower.  All loans and advances and all payments and permitted prepayments
made hereon may be endorsed by the holder of this note on the schedule which is
attached hereto (and hereby made a part hereof for all purposes) or otherwise

 

EXHIBIT B

 

1

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

 

recorded in the holder’s records; provided, that any failure to make notation of
(a) any advance shall not cancel, limit or otherwise affect Borrower’s
obligations or any holder’s rights with respect to that advance, or (b) any
payment or permitted prepayment of principal shall not cancel, limit or
otherwise affect Borrower’s entitlement to credit for that payment as of the
date received by the holder.

 

Borrower and any and all co-makers, endorsers, guarantors and sureties severally
waive notice (including, but not limited to, notice of intent to accelerate and
notice of acceleration, notice of protest and notice of dishonor), demand,
presentment for payment, protest, diligence in collecting and the filing of suit
for the purpose of fixing liability and consent that the time of payment hereof
may be extended and re-extended from time to time without notice to any of
them.  Each such person agrees that his, her or its liability on or with respect
to this note shall not be affected by any release of or change in any guaranty
or security at any time existing or by any failure to perfect or maintain
perfection of any lien against or security interest in any such security or the
partial or complete unenforceability of any guaranty or other surety obligation,
in each case in whole or in part, with or without notice and before or after
maturity.

 

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF) AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.

 

 

WALCO INTERNATIONAL, INC.,

 

a California corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

OFFICER’S CERTIFICATE

 

Date:

 

[Name and address of Lender

or Agent, as the case may be]

 

Attention:

 

Re:          Financial Statements Required under Amended and Restated Credit
Agreement (as the same may have been amended, modified and restated from time to
time, the “Credit Agreement”) dated as of                         , 2006, by and
among Walco International, Inc., the financial institutions or party thereto
from time to time, each of the Credit Parties which is now or hereafter a
Guarantor thereunder, and JPMorgan Chase Bank, N.A., as Agent

 

Gentlemen:

 

Capitalized words and phrases used herein and not defined herein and defined in
the Credit Agreement are used herein with the same meanings as are assigned to
them in the Credit Agreement.

 

The undersigned hereby certifies, warrants and represents to the addressee named
above that to the best knowledge of the undersigned:

 

(1)           He or she is the duly appointed and acting [Insert title of
executing Responsible Officer] of Borrower;

 

(2)           The attached financial statements dated as of
                               were prepared in conformity with GAAP
consistently applied, subject only to normal and customary adjustments, and
present fairly the financial position of Parent and its Subsidiaries, on a
Consolidated and, if applicable, a consolidating basis, as of the date thereof
and the results of its operations for the period covered thereby.

 

(3)           The following constitute true, correct and complete financial
calculations, in accordance with the applicable provisions of the Credit
Agreement (it being understood and agreed that some of such applicable
provisions of the Credit Agreement may cause such financial calculations to not
be in accordance with GAAP), for the Parent and its Subsidiaries, on a
Consolidated basis, as of the end of the period covered by the attached
financial statements:

 

(a)

FIXED CHARGE COVERAGE RATIO:

 

 

 

 

(i)

EBITDA (see calculation below):

 

$

 

 

 

 

 

 

(ii)

Unfinanced Capital Expenditures:

 

$

 

EXHIBIT C

 

1

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

 

 

(iii)

cash payments of federal, state, and local income or franchise taxes:

 

$

 

 

 

 

 

 

(iv)

[Line (i) less Line (ii) less Line (iii)]:

 

$

 

 

 

 

 

 

(v)

Debt Service Expense:

 

$

 

 

 

 

 

 

(vi)

cash Interest Expense:

 

$

 

 

 

 

 

 

(vii)

Unfinanced Cash Dividends

 

$

 

 

 

 

 

 

(viii)

[Line (v) plus Line (vi) and Line (vii)]:

 

$

 

 

 

 

 

 

(ix)

Actual Fixed Charge Coverage Ratio [ratio of Line (iv) to Line (viii)]:

 

 

         to 1.00

 

 

 

 

 

 

 

(x)

Required Fixed Charge Coverage Ratio:

 

 

 1.10 to 1.00

 

 

 

 

 

 

(b)

CAPITAL EXPENDITURES:

 

 

 

 

 

 

 

 

 

 

(i)

Actual Capital Expenditures for current fiscal year:

 

 

$

 

 

 

 

 

 

 

(ii)

Maximum Allowed Capital Expenditures each fiscal year:

 

 

 $5,000,000

 

 

 

 

 

(c)

EBITDA:

 

 

 

 

 

 

 

 

(i)

Net Income:

 

$

 

 

 

 

 

 

(ii)

Interest Expense:

 

$

 

 

 

 

 

 

(iii)

Federal, state and local income and franchise taxes:

 

$

 

 

 

 

 

 

(iv)

depreciation and amortization expense:

 

$

 

 

 

 

 

 

(v)

any extraordinary charges:

 

$

 

 

 

 

 

 

(vi)

Permitted Management Fees:

 

$

 

 

 

 

 

 

(vii)

customary and reasonable director’s fees and board expenses for board of
directors of the Credit

 

$

 

2

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

 

 

 

Parties:

 

 

 

 

 

 

 

 

(viii)

amounts used to repurchase from Charlesbank and/or any of its Affiliates the
equity securities of the Parent to the extent included within Permitted
Affiliate Transactions:

 

$

 

 

 

 

 

 

(ix)

any other non-cash charges (including without limitation, (A) the issuance of
restricted stock or stock options, (B) equity losses of Affiliates that are not
a Subsidiary of any Credit Party, and (C) all charges attributable to the use of
the purchase accounting method), but excluding any non-cash charge in respect of
an item that was included in Net Income in a prior period and any non-cash
charge that relates to the write-down or write-off of Inventory:

 

$

 

 

 

 

 

 

(x)

[Sum of Lines (i) through (ix)]:

 

$

 

 

 

 

 

 

(xi)

cash payments made during such period in respect of non-cash charges described
in clause (ix) above taken in a prior period:

 

$

 

 

 

 

 

 

(xii)

any extraordinary gains and any non-cash items of income:

 

$

 

 

 

 

 

 

(xiii)

[Line (xi) plus Line (xii)]:

 

$

 

 

 

 

 

 

(xiv)

Actual EBITDA [Line (x) minus Line (xiii)]

 

 

$

 

 

 

 

 

(4)

The undersigned hereby certifies to his or her best knowledge as follows:

 

 

 

 

 

 

(a)

each representation or warranty of the Credit Parties set forth in the Credit
Agreement or any other Loan Document is true and correct in all material
respects on and as of the date hereof with the same effect as though such
representations and warranties had been made on and of this date, except for
(i) those representations and warranties which relate only to the Closing Date
or (ii) such changes in the representations and warranties otherwise permitted

 

3

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

 

 

 

by the terms of the Credit Agreement; and

 

 

 

 

(b)

no Event of Default or Default under the Credit Agreement has occurred and is
still continuing.

 

 

 

 

 

Name:

 

 

4

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

 

[Borrower’s Letterhead]

 

REQUEST FOR EXTENSION OF CREDIT

 

Date:

 

JPMorgan Chase Bank, N.A., Agent

2200 Ross Avenue, Sixth Floor

Dallas, Texas 75201

Attention:  Kevin Padgett

 

Re:          Loan under Amended and Restated Credit Agreement dated as of
                                    , 2006, by and among Walco
International, Inc., the financial institutions or party thereto from time to
time, each of the Credit Parties which is now or hereafter a Guarantor
thereunder, and JPMorgan Chase Bank, N.A., as Agent (as the same may have been
amended, modified and/or restated from time to time, the “Credit Agreement”)

 

Gentlemen:

 

Capitalized words and phrases used herein, but not defined herein, shall have
the same meanings as are ascribed to them in the Credit Agreement.

 

Borrower requests that a Revolving Loan be made under the Credit Agreement in
the amount of $                 and that such Revolving Loan be made on
                      , 20    , which is a Business Day (unless this request for
a Revolving Loan is received by Agent after 1:00 p.m., Chicago, Illinois time,
in which case, then on the next to occur Business Day hereafter).

 

The Revolving Loan is to be an (check one) o Alternate Base Rate Borrowing o
LIBOR Borrowing.  If the Revolving Loan is to be a LIBOR Borrowing, the Interest
Period is to be (check one) o one o two o three o six months.

 

[Borrower further requests that simultaneously with the making of the Revolving
Loan described above, the current [Alternate Base Rate Borrowing] [LIBOR
Borrowing] which matures on the same day that said Revolving Loan is to be made
(i) be converted to a LIBOR Borrowing with the same Interest Period selected for
such Revolving Loan and (ii) have its unpaid principal balance be combined with
the new Revolving Loan so that the aggregate thereof is treated as a single
LIBOR Borrowing for the Interest Period designated for the new Revolving Loan
above and for all other purposes in the Credit Agreement.]

 

Borrower hereby represents and warrants as follows:

 

(i)            each representation or warranty of the Credit Parties contained
in the Credit Agreement is true in all material respects on and as of the date
hereof with the same effect as though such representations and warranties had
been made on and

 

EXHIBIT D

 

1

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

 

of this date, except for (1) those representations and warranties which relate
only to the Closing Date or (2) such changes in the representations and
warranties otherwise permitted by the terms of the Credit Agreement;

 

(ii)           no Event of Default or Default under the Credit Agreement has
occurred and is still continuing;

 

(iii)          so far as is known to or is ascertainable by the officers of
Borrower, the business and operations of Borrower and all of its Subsidiaries,
as conducted at all times relevant to the transactions contemplated by the
Credit Agreement to and including the close of business on the date hereof, have
been and are in compliance with all applicable Legal Requirements materially
affecting the business and operations of Borrower or any of its Subsidiaries.

 

The undersigned Responsible Officer executing this Request for Extension of
Credit on behalf of Borrower is the duly elected, qualified and acting
                                .

 

 

WALCO INTERNATIONAL, INC.,

 

a California corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

RATE SELECTION NOTICE

 

Walco International, Inc., the financial institutions or party thereto from time
to time (collectively, the “Lenders”), each of the Credit Parties which is now
or hereafter a Guarantor thereunder, and JPMorgan Chase Bank, N.A., as Agent for
and on behalf of Lenders, executed and delivered that certain Amended and
Restated Credit Agreement (as amended, supplemented and restated, the “Credit
Agreement”) dated as of               , 2006.  Any term used herein and not
otherwise defined herein shall have the meaning herein ascribed to it in the
Credit Agreement.

 

In accordance with the Credit Agreement, Borrower hereby notifies Agent of the
exercise of an Interest Option.

 

D.

Current borrowing(s)

 

 

 

 

 

 

 

1.

 

Interest Option now in effect:

$

 

 

 

 

 

 

2.

 

Amount:

$

 

 

 

 

 

 

3.

 

Expiration of current Interest Period, if applicable:

             ,20

 

 

 

 

 

E.

Proposed borrowing

 

 

 

 

 

 

 

1.

 

Amount:

$

 

 

 

 

 

 

2.

 

Date Interest Option is to be effective:

             ,20

 

 

 

 

 

 

3.

 

Interest Option to be applicable (check one):

 

 

 

 

 

 

 

 

 

o

Alternate Base Rate

 

 

 

 

o

LIBOR Rate

 

 

 

 

 

 

 

 

4.

 

Interest Period (check one if applicable):

 

 

 

 

 

 

 

 

 

 

o

1 month

o

3 months

 

 

 

 

o

2 months

o

6 months

 

 

Borrower represents and warrants that the Interest Option and the Interest
Period (if applicable) selected above comply with all provisions of the Credit
Agreement and that there exists no Event of Default or Default under the Credit
Agreement.

 

 

WALCO INTERNATIONAL, INC.,

 

a California corporation

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

EXHIBIT E

 

1

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

 

BORROWING BASE CERTIFICATE

 

(See Attached)

 

EXHIBIT F

 

1

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

 

WALCO INTERNATIONAL, INC.
Borrowing Base Calculation
31-Aug-06

 

CORE BORROWING BASE

 

 

 

 

 

(A)  Total Trade Accounts Receivable excluding Intercompany Accounts

 

$

 

 

67,418,745

 

Ineligible Accounts Receivable

 

 

 

 

 

Over 60 days past due date

 

 

 

453,598

 

Credits Greater than 60 Days Past Due

 

 

 

890,080

 

50 % Cross Aged

 

 

 

78,363

 

Employee or other Affiliate Sales

 

 

 

38,717

 

Finance Charges

 

 

 

128,979

 

Reserve for Eligible Extended Term A/R in excess of 10% of total Eligible A/R

 

 

 

4,195,534

 

Extended Term Receivables 180 days from invoice date

 

 

 

521,978

 

Cash Sales/COD’s

 

 

 

37,006

 

Non U.S. or Canadian Receivable

 

 

 

18,051

 

Contra Accounts

 

 

 

—

 

Notes Receivable from Customers

 

 

 

—

 

Government A/R

 

 

 

—

 

Other Ineligible Categories

 

 

 

688,940

 

(B)                   Total Ineligible A/R

 

$

 

 

7,051,247

 

 

 

 

 

 

 

Eligible A/R (line A less line B)

 

$

 

 

60,367,498

 

Available at 85% Advance Rate

 

 

 

 

 

(C)                   A/R Availability

 

$

 

 

51,312,374

 

 

 

 

 

 

 

(D)  Total Inventory before Ineligibles

 

 

 

83,371,994

 

 

 

 

 

 

 

Ineligible Inventory

 

 

 

 

 

Intercompany Profit

 

$

 

 

790,561

 

Slow Moving and Obsolete including Damaged/Expired

 

 

 

983,627

 

Consigned In/Out

 

 

 

1,176,542

 

Freight In

 

 

 

411,417

 

Raw Material

 

 

 

44,023

 

Shipping materials, maintenance parts, supplies

 

 

 

—

 

Non U.S. or Canadian inventory

 

 

 

—

 

Offsite Storage

 

 

 

508,613

 

Other Ineligible Categories

 

 

 

—

 

(E)                   Total Ineligible Inventory

 

$

 

 

3,914,783

 

 

 

 

 

 

 

Eligible Inventory (line D less line E)

 

$

 

 

79,457,211

 

Available at lower of 65% Advance Rate or 85% Net Recovery Rate

 

 

 

 

 

(F)                   Inventory Availability

 

$

 

 

50,216,958

 

 

 

 

 

 

 

(G)   Eligible Equipment Per Appraisals

 

$

 

 

2,085,351

 

 

 

 

 

 

 

(H)  Eligible Real Estate Per Appraisals

 

$

 

 

7,978,500

 

 

 

 

 

 

 

Eligible Real Estate & Equipment (line G plus line H)

 

$

 

 

10,063,851

 

 

 

 

 

 

 

(I)                    Real Estate & Equipment Availability at 75% Advance Rate

 

$

 

 

7,547,889

 

 

 

 

 

 

 

A/R Availability

 

$

51,312,374

 

 

 

Inventory Availability

 

50,216,958

 

 

 

RE&E Availability

 

7,547,889

 

 

 

Borrowing Base (line C plus line F plus line I)

 

 

 

109,077,220

 

 

 

 

 

 

 

(J)                    Maximum Revolver Availability

 

 

 

109,077,220

 

 

 

 

 

 

 

Aggregate Outstanding Revolving Credit and Swingline Loans

 

67,246,769

 

 

 

Aggregate Letter of Credit Obligations

 

432,677

 

 

 

Sales Tax Payable

 

72,502

 

 

 

Landlord/Rent Reserves-estimated

 

256,770

 

 

 

Environmental Reserves-estimated

 

445,000

 

 

 

(K)                  Total Non-SOFA Credit Obligations

 

 

 

68,453,718

 

 

 

 

 

 

 

Core Collateral Availability (line J less line K)

 

$

 

 

40,623,501

 

 

 

 

 

 

 

Total Availability

 

 

 

 

 

 

 

Core Collateral

 

40,623,501

 

 

 

Cash on hand

 

3,372,052

 

 

 

 

 

43,995,553

 

 

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

 

FORM OF INVENTORY DESIGNATION REPORT

 

(See Attached)

 

EXHIBIT G

 

1

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

 

Exhibit G to Walco International, Inc. Credit Agreement
Inventory Designation Report

 

Subject: Walco International, Inc., Inc

 

 

 

 

 

 

 

Only insert numbers in shaded Cells

 

 

 

We hereby certify the following information:

 

 

 

Date

 

 

 

 

 

 

 

I.      Gross Inventory per General Leger

 

 

 

 

 

 

 

Core finished Goods Inventory

 

 

 

Slow Moving/Obsolete/Damaged Finished Goods Inventory

 

 

 

Cosigned Inventory

 

 

 

Intercompany Profit

 

 

 

Other (including offsite)

 

 

 

 

 

 

 

Total Gross Inventory Per General Leger

 

$

0

 

 

 

 

 

II.    Ending Core Finished Goods Inventory per Last Inventory Report

 

 

 

 

 

 

 

plus: Inventory Manufactured/Purchased

 

 

 

plus: Other

 

 

 

less: Core Finished Good Product Sales

 

 

 

less: Transfers to Slow Moving/Obsolete/Damaged Goods Inventory

 

 

 

less: Shrinkage

 

 

 

less: Other (including offsite)

 

 

 

 

 

 

 

Ending Core Finished Goods Inventory as of                         , 200      

 

$

0

 

 

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

 

DISCLOSURE SCHEDULE

 

TO

 

CREDIT AGREEMENT

 

This Disclosure Schedule has been prepared in connection with the Amended and
Restated Credit Agreement (the “Agreement”), dated as of September     , 2006,
by and among Walco International, Inc. (“Borrower”), a Delaware corporation,
each of the Credit Parties which is now or hereafter a Guarantor thereunder,
each of the financial institutions which is a signatory thereto or which may
from time to time become a party thereto (individually, a “Lender” and
collectively, the “Lenders”), and JPMorgan Chase Bank, N.A. (“JPMorgan”), a
national banking association, as agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Agent”).  Unless otherwise
defined in these Schedules, all capitalized terms used herein have the meanings
ascribed to them in the Agreement.

 

These Disclosure Schedules are qualified in their entirety by reference to
specific provisions of the Agreement.  The inclusion of any information in these
Disclosure Schedules will not be deemed an admission or acknowledgement that
such information is required to be listed in the Disclosure Schedules or that
such items are material to the Borrower.

 

The headings, if any, of the individual sections of each of the Disclosure
Schedules are inserted for convenience only and will not be deemed to constitute
a part thereof or a part of the Agreement.

 

The annexes or exhibits to any Schedule form an integral part of such Schedule
and are incorporated therein by reference as if set forth fully therein.

 

The information contained herein is subject to any confidentiality agreements
there may be between the parties.

 

1

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

 

Schedule 1.1(a)

Real Estate

 

1.

550 East Frye Road, Suite I

 

Chandler, Arizona 85225

 

(Maricopa County)

 

 

2.

431 W. Amador Street

 

Fresno, California 93778

 

(Fresno County)

 

 

3.

303 8th Avenue

 

Greeley, Colorado 80631

 

(Weld County)

 

 

4.

10418 Main Street

 

Thonotosassa, Florida 33592

 

(Hillsborough County)

 

 

5.

203 4th Avenue West

 

P.O. Box 1275

 

Twin Falls, Idaho 83301

 

(Twin Falls County)

 

 

6.

3390 Jones Avenue

 

P.O. Box 475

 

Garden City, Kansas 67846

 

(Finney County)

 

 

7.

3490 Jones Avenue

 

Garden City, Kansas 67846

 

(Finney County)

 

 

8.

901 W. Brady Avenue

 

P.O. Box 459

 

Clovis, New Mexico 88101

 

(Curry County)

 

 

9.

1517 Highway 54 N.E.

 

P.O. Box 827

 

Guymon, Oklahoma 73942

 

(Texas County)

 

2

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

 

SCHEDULE 1.1(b)

 

LENDER COMMITMENTS

 

REVOLVING CREDIT COMMITMENTS

 

JPMorgan Chase Bank, N.A

 

$

35,357,142.86

 

 

 

 

 

General Electric Capital Corporation

 

$

27,500,000.00

 

 

 

 

 

The CIT Group/Business Credit, Inc.

 

$

23,571,428.57

 

 

 

 

 

SunTrust Bank

 

$

23,571,428.57

 

 

 

 

 

TOTAL

 

$

110,000,000.00

 

 

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

 

10.

7100 West Reno Avenue

 

Oklahoma City, Oklahoma 73127

 

(Oklahoma County)

 

 

11.

1601 East Rice Street

 

Sioux Falls, South Dakota 57103

 

(Minnehaha County)

 

 

12.

2840 Vanocker Road

 

P.O. Box 849

 

Sturgis, South Dakota 57785

 

(Meade County)

 

 

13.

9602 South Washington Street

 

Amarillo, Texas 79118

 

(Randall County)

 

 

14.

25 Dupree Drive

 

P.O. Box 1440

 

Buda, Texas 78610

 

(Hays County)

 

 

15.

806 West 7th Street

 

P.O. Box 245

 

Dalhart, Texas 79022

 

(Dallas County)

 

 

16.

2112 Jo Drive

 

DeSoto, Texas 79022

 

(Dallas County)

 

 

17.

11199 Rojas Drive

 

El Paso, Texas 75115

 

(El Paso County)

 

 

18.

1802 Pulliam Street

 

San Angelo, Texas 76905

 

(Tom Green County)

 

 

19.

3054 W. Washington Street

 

Highway 377 West

 

P.O. Box 954

 

Stephenville, Texas 76401

 

(Erath County)

 

3

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

 

20.

2921 Central Freeway North

 

P.O. Box 3098

 

Wichita Falls, Texas 76306

 

(Wichita County)

 

 

21.

North Highway 36

 

P.O. Box 360

 

Sealy, Texas 77474

 

(Austin County)

 

 

 

310 s. Manhattan (1 acre empty lot)

 

Amarillo, Texas 79104

 

(Randall County)

 

Excluded Real Estate

 

Main & Lafayette Streets

P.O. Box 298

Mayo, Florida 32066

(Lafayette County)

 

1210 East Trail Street

P.O. Box 1635

Fort Dodge Road

Dodge City, Kansas 67801

(Ford County)

 

1449-A West Old Highway 40

Salina, Kansas 67401

(Salina County)

 

2912 SE 3rd Avenue

P.O. Box 30428

Amarillo, Texas 79104

(Potter County)

 

802 West Oaklawn Road

P.O. Box 89

Pleasanton, Texas 78064

(Atascosa County)

 

426 N. Highway 87

P.O. Box 141

Tulia, Texas 79088

(Swisher County)

 

4

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

 

640 South Main Street

Spanish Fork, UT 84660

(Utah County)

 

Third Party Rights to Use or Occupy Owned Properties

 

1.                                       On July 27, 2004, Borrower entered into
an Agreement with Newport Laboratories, Inc. (“Newport”) whereby Borrower agreed
to allow Newport to use specified assets (specifically CAVL’s customer list, a
portion of the Amarillo facility, specified equipment, and the “CAVL” name
except in establishing any vendor accounts) in return for a royalty on all
vaccine sales by Newport to CAVL customers existing on March 1, 2004.  In
conjunction with the lease described above, Newport has the right to use a
portion of the property located at 9602 South Washington Street, Amarillo, TX.

 

5

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

 

Schedule 5.4

Other Debt

 

None.

 

6

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

 

Schedule 5.5

Litigation

 

Micro Beef Technologies, Inc. v. Lextron, Inc., et al., Civil Action No. 2: 
00CV100 (N.D. Tex.).  Plaintiff, Micro Beef Technologies, Inc. (“MBT”) alleges
that Walco infringed several of MBT’s patents concerning animal health
technologies.  Walco answered, denying infringement, and counterclaimed, seeking
a declaration that certain MBT patents were invalid.  In late 2005, in response
to the on-going settlement discussions, and as a sign of good faith, Walco
redesigned its health management software at issue.  Walco believes all of MBT’s
feed additive patents expired in February 2006, however there is one feed
additive patent which MBT asserts is still active.  However, even if the last
feed additive patent did not expire as MBT asserts, Walco believes it to be
invalid for obvious-type double patenting in view of the expired patents.  On
August 2, 2006, Walco advised Micro Beef of its views on these issues.

 

Multimin USA, Inc., et al. v. Walco International, Inc., et al., Civil Action
No. 4:  06-CV-260A (N.D. Tex.).  Plaintiffs Multimin USA, Inc. and Warburton
Technology, Ltd (collectively “Multimin”) allege trademark infringement,
violation of Lanham Act Section 43a, trademark dilution, trade secret
misappropriation, breach of contract, breach of fiduciary duty, and conspiracy. 
Plaintiff is seeking damages in excess of $1,000,000 for each claim, an
injunction enjoining Walco from using the marks Multimin, Mineral Max and
Mineral Max II, and an injunction enjoining Walco from selling Multimin,
MineralMax, and MineralMax II products.  Walco answered, denying the allegations
and asserting a counterclaim for attorney’s fees under Lanham Act Section 1117. 
This case is currently entering the discovery phase.

 

Ricky Rushing v. Walco International Inc.; Cause Number 05-C-0750-202; State of
Texas; District Court, Bowie County.  Plaintiff, a former employee of Walco,
seeks a declaratory judgment with regard to certain non-solicitation covenants
he agreed to as part of employment with Walco.  Walco filed a cross-complaint
seeking enforcement of the non-competition covenants, and further alleging
misappropriation of trade secrets and breach of fiduciary duty.  This case is
currently in the discovery phase.

 

Walco International v. Chad Spitzer; Cause Number 342-210794-05, State of Texas,
District Court of Tarrant County.  Plaintiff, Walco, alleges breach of contract
and is seeking damages in an unspecified amount and specific performance with
regard to certain non-solicitation covenants Defendant agreed to as part of
employment with Walco.  This case is currently in the discovery phase.

 

In the Matter of Sales of Unregistered Pesticide Products vs. Walco
International, Inc., etc.; Case #E2006/07-l, State of California, Director of
the Department of Pesticide Registration.  The State of California alleges that
Defendant, Walco sold unlicensed pesticides within the state of California.  The
parties are pursuing settlement possibilities.

 

Other Matters:

 

In August 2006, Hays County Texas filed suit against Walco for delinquent
personal property taxes.  Walco is currently investigating the matter.

 

7

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

 

USPTO Trademark Registration Opposition.  Cargill filed and used a “[ ] Max”
mark for computer software used for livestock feed management in 2000.  In 2003,
Walco filed for trademark protection for the mark “Mineral Max”.  Cargill later
filed the “Golden Max” mark for nutritional supplements.  Cargill opposed
Walco’s registration of the “Mineral Max” mark.  The parties have reached an
agreement in principal to settle this matter.

 

USPTO Trademark Registration Opposition.  Pfizer filed and used a “LS 50” mark
in connection with one of their products.  Pfizer recently opposed Walco’s
registration of the “Linco S 50” mark.  Linco is descriptive of the active
ingredient of Lincomicin.  S is the first initial of the second ingredient of
Spectamicin, and 50, which is the amount of active ingredients (50 mg).

 

This Schedule does not include open insurance claims or products liability
litigation covered by insurance.

 

8

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

 

Schedule 5.6

Taxes

 

Sales Tax

 

1.                                       The state of Texas is currently
conducting an audit of Borrower’s payment of sales taxes.  Borrower estimates
that its liability is less than $100,000.

 

2.                                       The state of California is currently
conducting an audit of Borrower’s payment of sales taxes.  Borrower estimates
that its liability is less than $100,000.

 

Personal Property Taxes

 

In August 2006, Hays County Texas filed suit against Walco for delinquent
personal property taxes.  Walco is currently investigating the matter.

 

Canada

 

The Canada Customs and Revenue Agency sent notice in August 2005 that they would
conduct an audit beginning in October of 2005 of the corporate tax returns for
RX Veterinary Supplies and Services Ltd for the fiscal years ending 2002 and
2003.  No auditors ever arrived to conduct the audit.  In January 2006, these
operations were sold and ceased to operate.

 

9

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

 

Schedule 5.8
Subsidiaries

 

Credit Party

 

Subsidiary and Jurisdiction
of Incorporation or
Organization

 

Percentage of the Credit
Party’s Ownership of the
Equity Interests of the
Subsidiary

Walco International, Inc. (Borrower), a California corporation

 

Walco do Brasil Produtos Veterinarios Ltda., a Brazilian corporation*

 

Credit Party owns 999 quotas; Luis Eduardo Schoueri owns 1 quota

 

 

Walco Mexico, S.A. De C.V., a Mexican corporation*

 

Credit Party owns 9,999 shares; Jose Francisco Hinojosa Cuellar owns 1 share

 

 

Province Livestock Supply, Ltd., a Canadian corporation

 

100%

 

 

Western Veterinary Supplies Ltd., a Canadian corporation

 

100%

 

 

American Livestock Supply, Inc., a Delaware corporation

 

100%

 

 

Walco Texas Animal Health, LLC, a Texas limited liability company

 

100%

 

 

Walco Animal Health, Ltd., a U.K. company

 

100%

Walco Holdings, Inc., a Delaware corporation

 

Walco Intermediate, Inc., a Delaware corporation

 

100%

Walco Intermediate, Inc., a Delaware corporation

 

Walco International, Inc., a Delaware corporation

 

100%

Animal Health International, Inc., a Delaware corporation

 

Steer Intermediate Corporation, a Delaware corporation

 

100%

Steer Intermediate Corporation, a Delaware corporation

 

Walco Holdings, Inc., a Delaware corporation

 

100%

 

 

 

 

 

American Livestock Supply, Inc., a Delaware corporation

 

None.

 

Not applicable.

Western Veterinary Supplies Ltd., a Canadian corporation

 

None.

 

Not applicable.

Province Livestock Supply, Ltd., a Canadian corporation

 

RX Veterinary Supplies and Services Ltd., a Canadian corporation*

 

100%

 

 

Walco Canada Animal Health Ltd., a Canadian corporation

 

100%

Walco Canada Animal

 

None.

 

Not applicable.

 

10

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

 

Health Ltd., a Canadian corporation

 

 

 

 

Walco Texas Animal Health, LLC, a Texas limited liability company

 

None.

 

Not applicable.

 

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

* Inactive.  Information provided is based on records available to the Borrower
that may be incomplete and/or outdated.

 

Inactive Subsidiaries

 

1.         Walco do Brasil Productos Veterinarios Ltda., a Brazilian corporation

2.         Walco Mexico, S.A. De C.V., a Mexican corporation

 

11

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

 

Schedule 5.12

Title to Properties; Possession Under Leases

 

Leases

 

1.                           Lease between Abilene Auction, Inc. (Landlord) and
Borrower (Tenant), dated as of September 1, 2005, for the property located at
3265 Judge Ely Blvd., Abilene, Texas 79601.

 

2.                           Lease between Dairy Farmers of America, Inc.
(Landlord) and Borrower (Tenant), dated as of January 2, 2002, for the property
located at 6350 North 2150 West, Almaga, Utah 84335.

 

3.                           Lease between Angelo L. Mazzei and Mary E. Mazzei
(Landlord) and Borrower (Tenant), dated as of August 1, 2004, for the property
located at 4840 East Brundage Lane, Bakersfield, California 93307.

 

4.                           Lease between Roger Dunn (Landlord) and Borrower
(Tenant), dated as of May 1, 2000, for the property located at 990 River Oaks
Road, Boaz, Alabama 35950.

 

5.                           Lease between Muenster Livestock Auction
Commission, Inc. (Landlord) and HiPro (Tenant), dated as of February 1, 2003,
for the property located at Business Highway 287 North, Bowie, Texas 76230.

 

6.                           Lease between William Nels Smith (Landlord) and
Borrower (Tenant), dated as of November 30, 1987, for the property located at
15760 S.E. 130th Street, Clackamus, Oregon 97015.

 

7.                           Lease between Arrow-Stevens Realty LLC (Landlord)
and Borrower (Tenant), dated as of September 1, 2002, for the property located
at 315 Industrial Drive, Clinton, North Carolina 28328.

 

8.                           Lease between Daniel C. Porter (Landlord) and
Borrower (Tenant), dated as of June 1, 1997, for the property located at 2540
4th Street East, Dickinson, North Dakota 58601.

 

9.                           Lease between Steven D. Smith and Jody L. Smith
(Landlord) and Borrower (Tenant), dated as of January 1, 2001, for the property
located at 2091 Last Chance Road, Elko, Nevada 89801.

 

10.                     Lease between 9960 McCombs L.P. (Landlord) and Borrower
(Tenant), dated as of September 1, 2005, for the property located at 11220 Rojas
Drive, El Paso, Texas 79935.

 

11.                     Lease between Dan Urquart (Landlord) and Borrower
(Tenant), dated as of November 1, 1991, for the property located at 150
Industrial Way, Fallon, Nevada 89406.

 

12.                     Lease between R. F. Wartig (Landlord) and Borrower
(Tenant), dated as of July 1, 2001, for the property located at 4221 North Broad
Street, Fremont, Nebraska 68025.

 

12

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

 

13.                     Lease between Panhandle Green Inc. (Landlord) and
Borrower (Tenant), dated as of April 1, 1993, for the property located at 2840
N. 10th Street, Gering, Nebraska 69341 (Mailing address:  2838 N. 10th Street,
Gering, Nebraska 69341).

 

14.                     Lease between McGuire Partners - Solana Limited
Partnership (Landlord) and Borrower (Tenant), dated as of March 18, 2005, for
the property located at 7 Village Circle Westlake, Texas 76262.

 

15.                     Lease between Tarrant County Ltd. Partnership (Landlord)
and Borrower (Tenant), dated as of June 5, 2002, for the property located at
1240 E. Northwest Highway, Grapevine, Texas 76051.

 

16.                     Lease between John D. Buchanan (Landlord) and Borrower
(Tenant), dated as of July 1, 1991, for the property located at 4700 10th Avenue
South, Great Falls, Montana 59405.

 

17.                     Lease between Nebraska Trust Company, Trustee of the
Robert J. McBride Trust (Landlord) and Borrower (Tenant), dated as of January 1,
2004, for the property located at 120 S. Lincoln, Hastings, Nebraska 68901.

 

18.                     Lease between Ralph Rollin Olson and Mabel M. Olson
(Landlord) and Borrower (Tenant), dated as of May 1, 1993, for the property
located at Puukapu, Waimea South Kohala, HI 96743 (Mailing Address:  1 Kauka
Lane, Kamuela, Hawaii 96743).

 

19.                     Lease between Maurice N. Waters (Landlord) and Borrower
(Tenant), dated as of July 1, 1994, for the property located at 200 West First
Street, Hereford, Texas 79045.

 

20.                     Lease between Triple R Associates LLP (Landlord) and
Borrower (Tenant), dated as of December 15, 1997, for the property located at
613 Atlas Avenue, Madison, Wisconsin 53708.

 

21.                     Lease between Shelby Distribution Park, LLC (Landlord)
and Borrower (Tenant), dated as of February 1, 2004, for the property located at
4605 Hickory Hill Road, Memphis, Tennessee 38141.

 

22.                     Lease between Christopher R. Folk (Landlord) and
Borrower (Tenant), dated as of June 28, 1999, for the property located at 4869
E. Raines Road, Memphis, Tennessee 38175.

 

23.                     Lease between 11 Street Investments, Limited Partnership
(Landlord) and Borrower (Tenant), dated as of June 25, 2004, for the property
located at 1908 Rockefeller Drive, Ceres, CA.

 

24.                     Lease between Workman Enterprises, Inc. (Landlord) and
Borrower (Tenant), dated as of May 1, 2004, for the property located at 1409
South University Drive, Nacogdoches, Texas 75961.

 

25.                     Lease between Walker, LLC (Landlord) and Borrower
(Tenant), dated as of May 1, 2003, for the property located at 2300 Northwest
9th Street, Okeechobee, Florida.

 

13

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

 

26.                     Lease between Carl Ross d/b/a Safari Business Center
(Landlord) and Borrower (Tenant), dated as Of April 1, 2004, for the property
located at 1906 E. Cedar Avenue, Ontario, California 91761.

 

27.                     Lease between Andrew F. Giambroni and Beverly Ann
Giambroni, as trustees of the Giambroni Family Trust (Landlord) and Borrower
(Tenant), dated as of September 1, 1998, for the property located at 115 Metzger
Road, Red Bluff, California 96080.

 

28.                     Lease between Joe W. Bevers (Landlord) and Borrower
(Tenant), dated as of December 1, 2001, for the property located at 1709-1713 S.
E. Main Street, Roswell, New Mexico 88201.

 

29.                     Sublease between Charlie Schwab (Landlord) and Borrower
(Tenant), dated as of September 1, 2005, for the property located at 1961 S.
Highway 83, Scott City, Kansas 67871.

 

30.                     Lease between G F Land Partnership (Landlord) and
Borrower (Tenant), dated as of August 25, 2006, for the property located at 1421
38th Avenue W., Spencer, Iowa 51301.

 

31.                     Lease between The Oscar M. Hall Revocable Trust, Oscar
M. Hall and Margie L. Hall (Landlord) and Borrower (Tenant), dated as of April
1, 2000, for the property located at 1202 and 1204 ESI Drive, Springdale,
Arkansas 72764.

 

32.                     Lease between CBS Real Estate Group Partnership
(Landlord) and Borrower (Tenant), dated as of November 1, 2000, for the property
located at 3058 W. Washington Street, Stephenville, Texas 76401.

 

33.                     Lease between John W. Eakin and Carl van der Merwe
(Landlord) and Borrower (Tenant), dated as of December 1, 2004, for the property
located at 120 E. South Hill Road, Sunnyside, Washington 98944.

 

34.                     Lease between Dairyman’s Cooperative Creamery
Association (Landlord) and Borrower (Tenant), dated as of September 1, 1995, for
the property located at 979 Bardsley, Tulare, California.

 

35.                     Lease between H & H Properties (Landlord) and Borrower
(Tenant), dated as of May 1, 1994, for the property located at 408 N. Highway
87, Tulia, Texas 79088.

 

36.                     Lease between LPR Livestock Auction (Landlord) and
Borrower (Tenant), dated as of May 1, 1996, for the property located at 1815
South Kings Highway, Texarkana, Texas 75501.

 

37.                     Lease between R. S. Properties of Walcott (Landlord) and
Borrower (Tenant), dated as of November 1, 1994, for the property located at 126
E. Meadow Lane, Walcott, Iowa 52773.

 

14

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

 

38.                     Lease between Bobby and Barbara Nance (Landlord) and
Borrower (Tenant), dated as of October 8, 2001, for the property located at 3031
W. Pawnee, Suite 400, Wichita, Kansas 67213.

 

39.                     Lease between Charles Rose and Ross Zimmerman (Landlord)
and Borrower (Tenant), dated as of November 1, 2002, for the property located at
4320 W. Winnemucca Blvd., Winnemucca, Nevada 89445.

 

40.                     Lease between David Brown and Teresa Brown (Landlord)
and Borrower (Tenant), dated as of February 20, 2003, for the property located
at 1615 Avenue E, Wisner, Nebraska 68791.

 

41.                     Lease between Grafton West (Landlord) and Walco (Canada)
Animal Health, Inc. (Tenant), dated as of July 1, 2005, for the property located
at 9471 - 49th Street, Edmonton, Alberta T6B 2L8.

 

42.                     Lease between Crestline Builders Market (1977) Ltd.
(Landlord) and Western Veterinary Supply Ltd. (Tenant), dated as of November 1,
2003, for the property located at 3026 -2nd Avenue North, Lethbridge, Alberta
T1H 3C6.

 

43.                     Oral Lease between J. Mrak and R. Mrak (Landlord) and RX
Veterinary Supplies and Services Ltd. for the property located at 2620 -
2nd Avenue North, Lethbridge, Alberta T1H3C4.

 

44.                     Oral Lease between Warehouse Rentals Ltd. (Landlord) and
RX Veterinary Supplies and Services Ltd. for the property located at 6823 -
52nd Avenue, Red Deer, Alberta T4N 4L2.

 

45.                     Lease between Garden City Leasing Company LLC (Landlord)
and Borrower (Tenant), dated as of January 10, 2005, for the property located at
3997 W. Jones Avenue, Garden City, Kansas 67846.

 

46.                     Lease between Camary Properties L.L.C. (Landlord) and
Borrower (Tenant), dated March 9, 205, for the property located at 1215 E.
Morris Street, Ste. Al, Hammond, Louisiana 70403.

 

47.                     Lease between Woodward Livestock Auction, Inc.
(Landlord) and Borrower (Tenant), dated January 1, 2006, for the property
located at 900 North Lakeview, Woodward, Oklahoma.

 

48.                     Lease between RJN Properties, Ltd. (Landlord) and Walco
International, Inc. (Tenant), commencing October 2, 2002, for property located
at 1412 N. Getty, Uvalde, Texas 78802.

 

49.                     Lease between S&S Dairy Supply, Inc. (Landlord) and
Walco Texas Animal Health, LLC, dated September 18, 2006, for property located
at 20115 Texas Highway 11 East, Winnsboro, Texas 75494.

 

15

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

 

Walco Holdings, Inc. is also party from time to time to leases for storage space
which are not individually, or in the aggregate, material to the business of
Walco Holdings, Inc..

 

16

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

 

Schedule 5.13
Assumed Names

 

Sunwest Industries

DVM Resources

Walco Feed Additives

Central Arizona Veterinary Laboratories (“CAVL”)

Holt

Holt Products

InfoTech

ITA

M & M Supply Company of Florida

Paragon

R & R Olson

RXV Products

Walco Technologies

 

17

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

 

Schedule 5.16

Agreements

 

To the extent not paid off as of the Closing Date:

 

1.                                       The Credit Agreement, dated as of June
30, 2005, by and among Walco International, Inc. (“Borrower”) and other
Guarantors named therein as guarantors, the Lenders named therein, JPMorgan
Chase Bank, N.A., a national banking association, as Administrative Agent and
General Electric Capital Corporation, as Documentation Agent.

 

2.                                       The secured term loan agreement, dated
June 30, 2005 by and among Walco International, Inc. (“Borrower”) and Merrill
Lynch PCG, Inc. (the Lender”).

 

3.                                       Standby Letter of Credit as amended
issued by Borrower in favor of Employers Insurance of Wausau dated as of July
20, 2005 in the amount of $300,000.00.

 

4.                                       Standby Letter of Credit as amended
issued by Borrower in favor of Aetna Life Insurance Company dated as of December
28, 2005 in the amount of $132,677.10.

 

18

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

 

Schedule 5.17

Environmental Matters

 

None.

 

19

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

 

Schedule 5.22

Transactions with Related Parties

 

This Schedule does not include agreements that are expected to terminate as of
the Closing Date, promissory notes that are expected to be paid in full as of
the Closing Date, or agreements with parties that are expected to no longer be
an officer, director, shareholder or Affiliate of any of the Credit Parties as
of the Closing Date.

 

1.                                       Corporate Development and
Administrative Services Agreement, dated as of June 30, 2005, among Charlesbank
Capital Partners, LLC, Animal Health International, Inc., f/k/a Steer Parent
Corporation, and Borrower.

 

2.                                       Employment Agreement by and between
Borrower and Jim Robison, dated as of May 1, 1997, as amended.

 

3.                                       Employment Agreement by and between
Borrower and Greg Eveland, dated as of September 1, 1997, as amended.

 

4.                                       Employment Agreement by and between
Borrower and William Lacey, dated as of August 15, 2003, as amended.

 

5.                                       Employment Agreement by and between
Borrower and Mark Moon, dated as of June 3, 2002, as amended.

 

6.                                       Employment Agreement by and between
Borrower and Damian Olthoff, dated as of April 1, 2006.

 

7.                                       Employment Agreement by and between
Borrower and Nicholas Reid, dated as of February 1, 2006.

 

8.                                       Employment Agreement by and between
Borrower and Scott Postlewaite, dated as of May 13, 2002.

 

9.                                       Stockholders Agreement, dated as of
June 29, 2005, among Animal Health International, Inc., f/k/a Steer Parent
Corporation and the Stockholders (as defined therein).

 

10.                                 Steer Parent Corporation 2005 Stock Option
and Grant Plan and the Restricted Stock Agreements entered into pursuant thereto
and any issuances of equity securities and related agreements thereunder.

 

11.                                 Director Indemnification Agreement by and
between Animal Health International, Inc., f/k/a Steer Parent Corporation and
James C. Robison, dated as of June 30, 2005.

 

12.                                 Director Indemnification Agreement by and
between Animal Health International, Inc., f/k/a Steer Parent Corporation and
Brandon White, dated as of June 30, 2005.

 

20

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

 

13.                                 Director Indemnification Agreement by and
between Animal Health International, Inc., f/k/a Steer Parent Corporation and
Michael Eisenson, dated as of June 30, 2005.

 

14.                                 Director Indemnification Agreement by and
between Animal Health International, Inc., f/k/a Steer Parent Corporation and
Mark Rosen, dated as of June 30, 2005.

 

15.                                 Borrower has severance agreements in place
with the following additional individuals:

 

21

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

 

Schedule 5.23

Patents, Trademarks and Copyrights

 

United States Trademark Registrations

 

Trademark

 

Registration No.

 

Filing Date

 

Issuance Date

 

 

 

 

 

 

 

-50 BELOW

 

2,332,021

 

02/18/99

 

03/21/00

AFTER-BIRTH

 

2,655,779

 

02/28/01

 

12/03/02

AGRI PHARM (words & design)

 

1,027,733

 

07/11/74

 

12/23/75

AGRI BLOCK

 

3,106,174

 

12/14/04

 

06/20/06

AGRI PHARM (standard character)

 

3,060,223

 

02/09/05

 

02/21/06

AMERICAN LIVESTOCK SUPPLY

 

2,249,071

 

11/24/97

 

06/01/99

ANEM-X (stylized)

 

2,448,175

 

10/16/98

 

05/01/01

COCCICOR

 

1,698,740

 

07/24/91

 

07/07/92

COMEBACK

 

2,255,087

 

12/08/97

 

06/22/99

COVERT

 

2,647,268

 

12/18/00

 

11/05/02

DERMALOG

 

2,580,432

 

03/16/01

 

06/11/02

DEXASONE

 

2,857,871

 

12/20/02

 

06/29/04

DUO PEN

 

962,500

 

05/08/72

 

07/03/73

EQUI-DEX CHERRY

 

3,033.11

 

05/06/04

 

12/20/05

EXALT

 

2,456,199

 

06/21/99

 

05/29/01

EXIT

 

2,058,430

 

02/12/96

 

04/29/97

E-Z Tear

 

3140682

 

05/17/05

 

09/05/06

FIRST COMPANION

 

2,392,486

 

10/11/96

 

10/10/00

GOOD START

 

1,955,002

 

03/29/95

 

02/06/96

GUAGE

 

2,644,536

 

12/22/00

 

10/29/02

ITA (and design)

 

2,521,274

 

06/01/00

 

12/18/01

IVERMAX

 

2,733,324

 

08/25/02

 

07/01/03

KETA-STHETIC

 

1,915,956

 

10/17/94

 

09/05/95

LUBISEPTOL

 

1,837,664

 

07/23/93

 

05/31/94

NASAL-VAX

 

2,701,501

 

12/28/01

 

03/25/03

NEOVET

 

1,063,116

 

08/25/76

 

04/12/77

Octagon Logo

 

1,383,793

 

06/12/85

 

02/18/86

ORIGIN

 

2,453,950

 

06/21/99

 

05/22/01

OTO SOOTHE

 

2,656,711

 

02/05/02

 

12/03/02

OXY-MYCIN

 

1,087,993

 

08/17/77

 

03/28/78

PACESETTER (and design)

 

2,751,326

 

04/11/01

 

08/12/03

PARAGON

 

2,069,515

 

05/31/96

 

06/10/97

PERFECT COAT

 

3,074,544

 

05/07/04

 

03/28/06

RE-NU

 

3,088,524

 

05/07/04

 

05/02/06

RESIST

 

2,794,958

 

01/30/03

 

12/16/03

RXV

 

1,408,163

 

06/12/85

 

09/09/86

RXV PRODUCTS

 

1,376,847

 

06/12/85

 

01/07/86

RXV RESCUE

 

2,314,616

 

02/18/99

 

02/01/00

RXV-BP-1

 

1,831,046

 

07/23/93

 

04/19/94

SCOURVAX

 

2,716,602

 

09/13/01

 

05/13/03

SUPPRESSOR

 

2,012,726

 

02/27/95

 

10/29/96

SUPRA-SULFA

 

1,064,285

 

11/07/75

 

04/26/77

TETNI-VAX

 

2,730,779

 

06/24/03

 

06/24/03

 

22

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

 

Trademark

 

Registration No.

 

Filing Date

 

Issuance Date

 

 

 

 

 

 

 

TRIPLE-HISTAMINE

 

2,129,878

 

06/10/96

 

01/20/98

VITA-JEC

 

969,052

 

08/02/72

 

09/25/73

VITA-ORAL

 

1,831,045

 

07/23/93

 

04/19/94

WI/WALCO (and design)

 

2,193,857

 

11/04/97

 

10/06/98

 

United States Trademark Applications

 

Trademark

 

Serial No.

 

Filing Date

 

 

 

 

 

AGRI-BOND

 

78-532437

 

12/14/04

AMERICAN PET SUPPLY

 

78/313,745

 

10/15/03

ANIMALHEALTHPROS

 

78/260,482

 

06/10/03

ANNEXUS

 

78-756274

 

11/17/05

BOVI FRESH

 

78-554368

 

01/26/05

BOVI-PLAZ

 

78/329,287

 

11/18/03

BP-1

 

78/343,671

 

12/19/03

CANINE IMUNO-VAX

 

78/188,989

 

11/26/02

CEFTI-JEC

 

78/808,086

 

02/06/06

CHORHEXIZOLE

 

78/766,781

 

12/05/05

DIA-ROBE

 

78-793141

 

01/17/06

DIGEST-RITE

 

78-766789

 

12/05/05

D/TOX/BESC

 

78/231,751

 

03/31/03

EQUI/MINTIC/SPR

 

78/219,137

 

02/26/03

EQUI-BOOST

 

78/211,133

 

02/05/03

EQUI-DEX APPLE

 

78/414,155

 

05/06/04

EQUI-SPONGE

 

78/903,864

 

06/08/06

EQUI-THRUSH

 

78/250,992

 

05/16/03

EXCELLENCE IN ANIMAL HEALTH

 

78/208,459

 

01/29/03

EXILE

 

78/907,720

 

06/14/06

FIRST IMPRESSIONS

 

78/573,006

 

02/23/05

GUT CHECK

 

78-766808

 

12/05/05

JUST LIKE MOM

 

78-554372

 

01/26/05

LAST FLIGHT

 

78/863,712

 

04/18/06

LINCO S 50

 

78-434457

 

01/14/04

LINCO-JECT

 

78/226,420

 

03/17/03

MASTI-VAX

 

78-790013

 

01/12/06

MINERAL MAX

 

76/489,397

 

02/11/03

MIRACLE FLX PELLETS

 

78/414,146

 

05/06/04

MIRACLE FLX SOLUTION

 

78/414,141

 

05/06/04

MIRACLE HOOF

 

78/414,150

 

05/06/04

MIRACLE SAND OUT

 

78-809119

 

02/07/06

MIRACLE SHEEN

 

78/861,802

 

04/14/06

MIRACLE WEIGHT GAIN

 

78-793011

 

01/17/06

NAX-C-FUR

 

78/836,278

 

03/14/06

NONE (LOGO ONLY)

 

78-791114

 

01/13/06

NUTRI-SORB

 

78/260,476

 

06/10/03

OUTLAST

 

78-766802

 

12/05/05

RANCH PACK

 

78-593519

 

03/23/05

 

23

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

 

RESCUE

 

78-590051

 

03/18/05

RXV

 

78-780389

 

12/23/05

SHU FLY

 

78-766793

 

12/05/05

VETQUI CELL

 

78-903,908

 

06/08/06

WI WALCO TECHNOLOGIES EXCELLENCE IN ANIMAL MANAGEMENT

 

78-836276

 

03/14/05

 

United States Patents (owned)

 

Patent

 

Patent Number

 

Filing Date

 

Issuance
Date

 

 

 

 

 

 

 

“Accurate Metering Control Systems and Method for Livestock Feeding Operation.”

 

5,424,957

 

10/07/93

 

06/13/95

 

State Trademark Registrations

 

Trademark

 

Registration
No.

 

Issue Date

 

State

 

 

 

 

 

 

 

 

 

HOLT PRODUCTS COMPANY

 

061,016

 

12/17/97

 

Wisconsin

 

HOLT PRODUCTS

 

061,017

 

12/17/97

 

Wisconsin

 

HOLT

 

061,018

 

12/17/97

 

Wisconsin

 

 

Canadian Trademark Registrations

 

Trademark

 

Registration No.

 

Issue Date

 

 

 

 

 

SUPPRESSOR

 

CA1249362

 

3/3/05

NOROMYCIN

 

CA1249363

 

3/3/05

NOROVET

 

CA1249364

 

3/3/05

 

Patent Applications

 

Patent Title

 

Application
No.

 

Filing Date

 

 

 

 

 

Calf Bottle

 

10/995,452

 

11/23/04

 

24

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

 

Patents

 

Patent

 

Patent No.

 

Filing Date

 

Issue Date

Accurate Metering and Control System and Method for Livestock Feeding Operation
(1)

 

5,424,957

 

10/7/1993

 

6/13/1995

 

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

(1) This patent will be assigned from Info Tech to Borrower.

 

USPTO Trademark Registration Opposition. Cargill filed and used a “[ ] Max” mark
for computer software used for livestock feed management in 2000. In 2003, Walco
International filed for trademark protection for the mark “Mineral Max”. 
Cargill later filed the “Golden Max” mark for nutritional supplements.  Cargill
opposed Walco International’s registration of the “Mineral Max” mark.  The
matter is currently pending before the U.S. Trademark and Trial Appeal Board.

 

USPTO Trademark Registration Opposition. Pfizer filed and used a “LS 50” mark in
connection with one of their products.  Pfizer recently opposed Walco
International’s registration of the “Linco S 50” mark.  Linco is descriptive of
the active ingredient of Lincomicin. S is the first initial of the second
ingredient of Spectamicin, and 50, which is the amount of active ingredients (50
mg).

 

25

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

 

Schedule 6.15
Financial Institutions and Accounts

 

Division
Name

 

Bank
Name

 

Bank
Location

Guymon, OK

 

The City National Bank & Trust

 

Guymon, OK

Hereford, TX

 

First National Bank

 

Hereford, TX

Pleasanton, TX

 

Texas Champion Bank

 

Charlotte, TX

Greeley, CO

 

Bank of Colorado

 

Sterling, CO

Gering, NE

 

US Bank

 

St. Paul, MN

Fremont, NE

 

US Bank

 

St. Paul, MN

Tulia, TX

 

Wells Fargo Bank

 

Tulia, TX

Wichita Falls, TX

 

State National Bank

 

Iowa Park, TX

Sioux Falls, SD

 

Wells Fargo South Dakota, N.A.

 

Sioux Falls, SD

Hastings, NE

 

Heritage Bank

 

Hastings, NE

Mayo, FL

 

Lafayette County State Bank

 

Mayo, FL

Dunn, NC

 

Centura

 

Dunn, NC

Sturgis, SD

 

First Western Bank

 

Sturgis, SD

Nacogdoches, TX

 

Bancorp South

 

Nacogdoches, TX

Sealy, TX

 

Citizens State Bank

 

Sealy, TX

Texarkana, TX

 

Capital One Bank

 

Texarkana, TX

Bowie, TX

 

Jackboro Nat’l Bank/The Bowie Bank

 

Bowie, TX

Wisner, NE

 

The Citizens Natl Bank of Wisner

 

Wisner, NE

Dickinson, ND

 

Bank of the West

 

Dickinson, ND

Spanish Fork, UT

 

Zions First National Bank

 

Spanish Fork, UT

Billings/Great Fall, MT

 

First Interstate Bank

 

Great Falls, MT

Cache Valley

 

Zions First National Bank

 

Spanish Fork, UT

Kamuela, HI

 

First Hawaiian Bank

 

Kamuela, HI

Holt-Deposits

 

M&l Marshall & llsley Bank #50720

 

Madison, Wl

Canada-Walco

 

Royal Bank of Canada

 

Lethbridge AB

Canada-RX Vet Supplies

 

Royal Bank of Canada

 

Lethbridge AB

Canada-Western Vet

 

Royal Bank of Canada

 

Lethbridge AB

Divisional Depository (Multiple Divisions)

 

Bank of America

 

Fresno, CA

Credit Card Depository

 

Chase Bank

 

Dallas, TX

Credit Card Depository-Holt

 

Chase Bank

 

Dallas, TX

COD Secure Depository

 

Chase Bank

 

Dallas, TX

Lock Box Account

 

Chase Bank

 

Dallas, TX

Corporate Miscellaneous Deposit

 

Chase Bank

 

Dallas, TX

Corporate Petty Cash Account

 

Bank of America

 

Grapevine, TX

Main Concentration Account

 

Chase Bank

 

Dallas, TX

Health Plan Disbursements

 

Chase Bank

 

Dallas, TX

Payroll Disbursements

 

Chase Bank

 

Dallas, TX

FEDI Account

 

Chase Bank

 

Dallas, TX

AP Main Disbursements Pos Pay

 

Chase Bank

 

Dallas, TX

FSA Funding Account

 

Chase Bank

 

Dallas, TX

CAPS Funding Account

 

Chase Bank

 

Dallas, TX

Walco International Holdings Inc.

 

Chase Bank

 

Dallas, TX

Woodward, OK

 

MidFirst Bank

 

Woodward, OK

 

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With the following exceptions, signatories on all above accounts are William F.
Lacey, Henry Moomaw III, and Barry Fischer:

 

1.                                       Signatories on the accounts with Royal
Bank of Canada are Scott Postlewaite, Allen Carmichael.

 

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Schedule 7.2

Liens

 

This Schedule does not include liens of Fleet National Bank, individually and as
administrative agent or collateral agent, with respect to assets of various
entities, because release and termination of such liens are expected to be filed
on the Closing Date.

 

Alberta Registries (Canada)

 

Province Livestock Supply Ltd.

 

1.                                       GMAC LeaseCo Corporation holds a
security interest in several GMC vehicles.  The registration numbers are
04110511997, 04110512060, 04110512607, and 04111513661.

2.                                      Chrysler Financial Canada and
DaimlerChrysler Services Canada Inc. hold a security interest in a 2003 Jeep
Liberty.  The registration number is 03012001263.

3.                                       Ford Credit Canada Leasing Company
holds a security interest in a 2004 Ford F350.  The registration number is
04060112242.

4.                                       Citicorp Vendor Finance, Ltd. holds a
security interest in equipment.  The registration number is 03110619602.

 

Walco International, Inc.

 

1.                                       Citicorp Vendor Finance, Ltd. holds a
security interest in equipment.  The registration number is 03110619602.

 

UCC (United States)

 

Walco International, Inc.

 

1.                                       Bayer Corporation and Bayer Healthcare
LLC hold a security interest in all Baytril 100 Injectible Solution, now owned
or hereafter acquired, and the proceeds and Accounts Receivable arising from the
sale thereof.  The financing statements were filed in California, and the file
numbers are 9829360201, 00076C0196, 0315560782, 04-1006521019, and 0418161115.

2.                                       Crown Credit Company holds a security
interest in specific equipment.  The financing statements were filed in
California, and the file numbers are 0205360593, 0233160846, 04-1003386126,
05-7022314024, and 0205360600.

3.                                       Minolta Business Solutions, Inc. (fka
Minolta Business Systems, Inc.) holds a security interest in specific leased
equipment and specific equipment.  The financing statements were filed in
California, and the file numbers are 0229160559 and 0310060586.

4.                                       IBM Credit Corporation and IBM Credit
LLC hold a security interest in specific leased equipment.  The financing
statements were filed in California, and the file numbers are 0300860032,
0300960480, and 0302760566.

5.                                       Inter-Tel Leasing Inc. holds a security
interest in Axxess Telephone System.  The financing statement was filed in
California, and the file number is 0406160615.

 

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6.                                       Citicorp Del Lease, Inc., DBA Citicorp
Dealer Finance, holds a security interest in specific equipment.  The financing
statement was filed in California, and the file number is 0218160669.

 

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Schedule 7.6
Permitted Affiliate Transactions

 

SEE SCHEDULE 5.22

 

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Schedule 7.18
Restrictive Agreements

 

None.

 

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