Exhibit 10

 

Execution Version

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of November 18, 2011

 

among

 

CONTINENTAL MATERIALS CORPORATION,

as the Company,

 

THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,

as Lenders,

 

and

 

THE PRIVATEBANK AND TRUST COMPANY,

as Administrative Agent and Arranger

 

 

 

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SECTION 1

DEFINITIONS

1

1.1

Definitions

1

1.2

Other Interpretive Provisions

22

 

 

 

SECTION 2

COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT
PROCEDURES

22

2.1

Commitments

22

 

2.1.1

Revolving Loan Commitment

22

 

2.1.2

Term Loan Commitment

23

 

2.1.3

L/C Commitment

23

2.2

Loan Procedures

23

 

2.2.1

Various Types of Loans

23

 

2.2.2

Borrowing Procedures

23

 

2.2.3

Conversion and Continuation Procedures

24

2.3

Letter of Credit Procedures

25

 

2.3.1

L/C Applications

25

 

2.3.2

Participations in Letters of Credit

25

 

2.3.3

Reimbursement Obligations

26

 

2.3.4

Funding by Lenders to Issuing Lender

27

2.4

Commitments Several

27

2.5

Certain Conditions

28

 

 

 

SECTION 3

EVIDENCING OF LOANS

28

3.1

Notes

28

3.2

Recordkeeping

28

 

 

 

SECTION 4

INTEREST

28

4.1

Interest Rates

28

4.2

Interest Payment Dates

29

4.3

Setting and Notice of LIBOR Rates

29

4.4

Computation of Interest

29

 

 

 

SECTION 5

FEES

29

5.1

Non-Use Fee

29

5.2

Letter of Credit Fees

29

5.3

Administrative Agent’s Fees

30

 

 

 

SECTION 6

REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS

30

6.1

Reduction or Termination of the Revolving Commitment

30

 

6.1.1

Voluntary Permanent Reduction or Termination of the Revolving Commitment

30

 

6.1.2

Voluntary Temporary Reduction of the Revolving Commitment

30

 

6.1.3

All Reductions of the Revolving Commitment

31

6.2

Prepayments

31

 

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6.2.1

Voluntary Prepayments

31

6.3

Manner of Prepayments

32

 

6.3.1

All Prepayments

32

6.4

Repayments

32

 

6.4.1

Revolving Loans

32

 

6.4.2

Term Loan

32

 

 

 

SECTION 7

MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES

33

7.1

Making of Payments

33

7.2

Application of Certain Payments

33

7.3

Due Date Extension

33

7.4

Setoff

33

7.5

Proration of Payments

33

7.6

Taxes

34

 

 

 

SECTION 8

INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS

35

8.1

Increased Costs

35

8.2

Basis for Determining Interest Rate Inadequate or Unfair

36

8.3

Changes in Law Rendering LIBOR Loans Unlawful

37

8.4

Funding Losses

37

8.5

Right of Lenders to Fund through Other Offices

37

8.6

Discretion of Lenders as to Manner of Funding

38

8.7

Mitigation of Circumstances; Replacement of Lenders

38

8.8

Conclusiveness of Statements; Survival of Provisions

38

 

 

 

SECTION 9

REPRESENTATIONS AND WARRANTIES

38

9.1

Organization

38

9.2

Authorization; No Conflict

38

9.3

Validity and Binding Nature

39

9.4

Financial Condition

39

9.5

No Material Adverse Change

39

9.6

Litigation and Contingent Liabilities

39

9.7

Ownership of Properties; Liens

39

9.8

Equity Ownership; Subsidiaries

39

9.9

Pension Plans

40

9.10

Investment Company Act

40

9.11

Intentionally Omitted

40

9.12

Regulation U

41

9.13

Taxes

41

9.14

Solvency, etc.

41

9.15

Environmental Matters

41

9.16

Insurance

42

9.17

Real Property

42

9.18

Information

42

 

ii

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9.19

Intellectual Property

42

9.20

Burdensome Obligations

42

9.21

Labor Matters

42

9.22

No Default

43

9.23

Inactive Subsidiary

43

 

 

 

SECTION 10

AFFIRMATIVE COVENANTS

43

10.1

Reports, Certificates and Other Information

43

 

10.1.1

Annual Report

43

 

10.1.2

Interim Reports

43

 

10.1.3

Compliance Certificates

44

 

10.1.4

Reports to the SEC and to Shareholders

44

 

10.1.5

Notice of Default, Litigation and ERISA Matters

44

 

10.1.6

Borrowing Base Certificates and Additional Monthly Reports

45

 

10.1.7

Management Reports

45

 

10.1.8

Projections

45

 

10.1.9

Subordinated Debt Notices

46

 

10.1.10

Other Information

46

10.2

Books, Records and Inspections

46

10.3

Maintenance of Property; Insurance

46

10.4

Compliance with Laws, Material Contracts; Payment of Taxes and Liabilities

47

10.5

Maintenance of Existence, etc.

47

10.6

Use of Proceeds

48

10.7

Employee Benefit Plans

48

10.8

Environmental Matters

48

10.9

Further Assurances

48

10.10

Deposit Accounts

49

 

 

 

SECTION 11

NEGATIVE COVENANTS

49

11.1

Debt

49

11.2

Liens

49

11.3

Intentionally Omitted

49

11.4

Restricted Payments

50

11.5

Mergers, Consolidations, Sales

50

11.6

Modification of Organizational Documents

50

11.7

Transactions with Affiliates

50

11.8

Unconditional Purchase Obligations

50

11.9

Inconsistent Agreements

51

11.10

Business Activities; Issuance of Equity

51

11.11

Investments

51

11.12

Restriction of Amendments to Certain Documents

52

11.13

Financial Covenants

52

 

11.13.1

Minimum Fixed Charge Coverage Ratio

52

 

11.13.2

Minimum Tangible Net Worth

52

 

11.13.3

Balance Sheet Leverage Ratio

52

 

iii

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11.13.4

Capital Expenditures

52

 

11.13.5

Williams EcoLogix - Cash Expenditures

53

 

 

 

SECTION 12

EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

53

12.1

Conditions to Effectiveness

53

 

12.1.1

Notes

53

 

12.1.2

Authorization Documents

53

 

12.1.3

Consents, etc.

53

 

12.1.4

Borrowing Request and Letter of Direction

53

 

12.1.5

Guaranty and Collateral Agreement

53

 

12.1.6

Perfection Certificate

54

 

12.1.7

Mortgage Amendments

54

 

12.1.8

Date Down Endorsement and Tract Search

54

 

12.1.9

Collateral Access Agreements

54

 

12.1.10

Opinions of Counsel

54

 

12.1.11

Insurance

54

 

12.1.12

Intentionally Omitted

54

 

12.1.13

Payment of Fees

55

 

12.1.16

Intentionally Omitted

55

 

12.1.17

Search Results; Lien Terminations

55

 

12.1.18

Filings, Registrations and Recordings

55

 

12.1.19

Borrowing Base Certificate

55

 

12.1.20

Closing Certificate

55

 

12.1.21

Other

55

12.2

Conditions

56

 

12.2.1

Compliance with Warranties, No Default, etc.

56

 

 

 

SECTION 13

EVENTS OF DEFAULT AND THEIR EFFECT

56

13.1

Events of Default

56

 

13.1.1

Non-Payment of the Loans, etc.

56

 

13.1.2

Cross-Default

56

 

13.1.3

Bankruptcy, Insolvency, etc.

56

 

13.1.4

Non-Compliance with Loan Documents

57

 

13.1.5

Representations; Warranties

57

 

13.1.6

Pension Plans

57

 

13.1.7

Litigation

57

 

13.1.8

Invalidity of Collateral Documents, etc.

58

 

13.1.9

Invalidity of Subordination Provisions, etc.

58

 

13.1.10

Change of Control

58

 

13.1.11

Material Adverse Effect. The occurrence of any event having a Material Adverse
Effect

58

13.2

Effect of Event of Default

58

 

 

 

SECTION 14

THE AGENT

58

14.1

Appointment and Authorization

58

14.2

Issuing Lender

59

 

iv

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14.3

Delegation of Duties

59

14.4

Exculpation of Administrative Agent

59

14.5

Reliance by Administrative Agent

60

14.6

Notice of Default

60

14.7

Credit Decision

60

14.8

Indemnification

61

14.9

Administrative Agent in Individual Capacity

61

14.10

Successor Administrative Agent

62

14.11

Collateral Matters

62

14.12

Administrative Agent May File Proofs of Claim

62

 

 

 

SECTION 15

GENERAL

63

15.1

Waiver; Amendments

63

15.2

Confirmations

64

15.3

Notices

64

15.4

Computations

64

15.5

Costs, Expenses and Taxes

65

15.6

Assignments; Participations

65

 

15.6.1

Assignments

65

 

15.6.2

Participations

66

15.7

Register

66

15.8

GOVERNING LAW

67

15.9

Confidentiality

67

15.10

Severability

67

15.11

Nature of Remedies

68

15.12

Entire Agreement

68

15.13

Counterparts

68

15.14

Successors and Assigns

68

15.15

Captions

69

15.16

Customer Identification - USA Patriot Act Notice

69

15.17

INDEMNIFICATION BY THE COMPANY

69

15.18

Nonliability of Lenders

70

15.19

FORUM SELECTION AND CONSENT TO JURISDICTION

70

15.20

WAIVER OF JURY TRIAL

71

15.21

Waiver

71

 

v

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ANNEXES

 

 

ANNEX A

Lenders and Pro Rata Shares

ANNEX B

Addresses for Notices

 

 

SCHEDULES

 

 

SCHEDULE 9.6

Litigation and Contingent Liabilities

SCHEDULE 9.8

Equity Ownership and Subsidiaries

SCHEDULE 9.16

Insurance

SCHEDULE 9.17

Real Property

SCHEDULE 9.21

Labor Matters

SCHEDULE 11.1

Existing Debt

SCHEDULE 11.2

Existing Liens

SCHEDULE 11.11

Investments

SCHEDULE 12.1

Debt to be Repaid

 

 

EXHIBITS

 

 

EXHIBIT A

Form of Note (Section 3.1)

EXHIBIT B

Form of Compliance Certificate (Section 10.1.3)

EXHIBIT C

Form of Borrowing Base Certificate (Section 1.1)

EXHIBIT D

Form of Assignment Agreement (Section 15.6.1)

EXHIBIT E

Form of Notice of Borrowing (Section 2.2.2)

EXHIBIT F

Form of Notice of Conversion/Continuation (Section 2.2.3)

 

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AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 18, 2011 (this
“Agreement”) is entered into among CONTINENTAL MATERIALS CORPORATION, a Delaware
corporation (the “Company”), the financial institutions that are or may from
time to time become parties hereto (together with their respective successors
and assigns, the “Lenders”) and THE PRIVATEBANK AND TRUST COMPANY, an Illinois
state chartered bank (in its individual capacity, “PVBT”), as administrative
agent for the Lenders and as arranger.

 

WHEREAS, the Company, the Lender and the Administrative Agent are parties to
that certain Credit Agreement, dated as of April 16, 2009, by and among the
Company, the Lender and the Administrative Agent, as amended by that certain
First Amendment to Credit Agreement, dated as of November 18, 2009, by and among
the Company, the Lender and the Administrative Agent (the “First Amendment”), as
further amended by that certain Waiver and Second Amendment to Credit Agreement,
dated as of April 15, 2010, by and among the Company, the Lender and the
Administrative Agent (the “Second Amendment”), as further amended by that
certain Third Amendment to Credit Agreement, dated as of November 12, 2010, by
and among the Company, the Lender and the Administrative Agent (the “Third
Amendment”), as further amended by that certain Fourth Amendment to Credit
Agreement, dated as of December 31, 2010, by and among the Company, the Lender
and the Administrative Agent (the “Fourth Amendment”), and as further amended by
that certain Fifth Amendment to Credit Agreement, dated as of April 14, 2011, by
and among the Company, the Lender and the Administrative Agent (the “Fifth
Amendment”) (the “Existing Credit Agreement”); and

 

WHEREAS, the Company, the Lender and the Administrative Agent desire to amend
and restate the Existing Credit Agreement to provide for the credit facilities
set forth herein upon the terms and subject to the conditions set forth herein.

 

In consideration of the mutual agreements herein contained, the parties hereto
agree as follows:

 

SECTION 1            DEFINITIONS.

 

1.1           Definitions.  When used herein the following terms shall have the
following meanings:

 

Account Debtor is defined in the Guaranty and Collateral Agreement.

 

Account or Accounts is defined in the UCC.

 

Acquisition means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any business or division of a Person, (b) the acquisition of in excess of 50%
of the Capital Securities of any Person, or otherwise causing any Person to

 

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become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is already a Subsidiary).

 

Adjusted EBITDA means EBITDA for the applicable Computation Period plus any
gains from Asset Dispositions, any extraordinary gains and any gains from
discontinued operations (in each case, any gains shall be net of all costs and
expenses incurred in connection therewith and such gains shall only be included
to the extent such gains were subtracted in the calculation of EBITDA). 
Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, the calculation of Adjusted EBITDA shall exclude the
operating results of discontinued operations (profit or loss).

 

Administrative Agent means PVBT in its capacity as administrative agent for the
Lenders hereunder and any successor thereto in such capacity.

 

Affected Loan - see Section 8.3.

 

Affiliate of any Person means (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person and (c) with respect to any
Lender, any entity administered or managed by such Lender or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans.  A Person shall be deemed to be
“controlled by” any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.  Unless expressly stated otherwise
herein, neither the Administrative Agent nor any Lender shall be deemed an
Affiliate of any Loan Party.

 

Agent Fee Letter means the Amended and Restated Fee Letter dated as of the date
hereof between the Company and the Administrative Agent, as the same may be
amended, restated or supplemented from time to time.

 

Agreement - see the Preamble.

 

Applicable Margin means, for any day, the rate per annum set forth below, it
being understood that the Applicable Margin for (a) LIBOR Loans shall be the
percentage set forth under the column “LIBOR Margin”, (b) Base Rate Loans shall
be the percentage set forth under the column “Base Rate Margin”, (c) the Non-Use
Fee Rate shall be the percentage set forth under the column “Non-Use Fee Rate”
and (d) the L/C Fee shall be the percentage set forth under the column “L/C Fee
Rate”:

 

Revolving Loan

 

Term Loan

 

 

 

 

 

LIBOR
Margin

 

Base Rate
Margin

 

LIBOR
Margin

 

Base Rate
Margin

 

Non-Use
Fee Rate

 

L/C Fee
Rate

 

3.25

%

1.00

%

3.75

%

1.50

%

0.375

%

2.75

%

 

2

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Asset Disposition means the sale, lease, assignment or other transfer for value
(each, a “Disposition”) by any Loan Party to any Person (other than a Loan
Party) of any asset or right of such Loan Party (including, the loss,
destruction or damage of any thereof or any actual or threatened (in writing to
any Loan Party) condemnation, confiscation, requisition, seizure or taking
thereof) other than (a) the Disposition of any asset which is to be replaced,
and is in fact replaced, within ninety (90) days with another asset performing
the same or a similar function, and (b) the sale or lease of inventory in the
ordinary course of business.

 

Assignee - see Section 15.6.1.

 

Assignment Agreement - see Section 15.6.1.

 

Attorney Costs means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
legal services of such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.

 

Balance Sheet Leverage Ratio means, as of the last day of any Fiscal Quarter,
the ratio of (a) Total Debt as of such day to (b) Tangible Net Worth as of such
day.

 

Bank Product Agreements means those certain cash management service agreements
entered into from time to time between any Loan Party and a Lender or its
Affiliates in connection with any of the Bank Products.

 

Bank Product Obligations means all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by the Loan Parties to any
Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements
and irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all such amounts that a Loan Party is obligated
to reimburse to the Administrative Agent or any Lender as a result of the
Administrative Agent or such Lender purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to the Loan Parties pursuant to the Bank Product Agreements.

 

Bank Products means any service or facility extended to any Loan Party by any
Lender or its Affiliates including:  (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) Hedging Agreements.

 

Base Rate means at any time the greater of (a) the Federal Funds Rate plus 0.5%
and (b) the Prime Rate.

 

Base Rate Loan means any Loan which bears interest at or by reference to the
Base Rate.

 

Base Rate Margin - see the definition of Applicable Margin.

 

Borrowing Base means an amount equal to the total of (a) 80% of the unpaid
amount (net of such reserves and allowances as the Administrative Agent deems
necessary in its reasonable discretion) of all Eligible Accounts, plus (b) the
lesser of (i) 50% of the value of all Eligible Inventory valued at the lower of
cost (determined on a first in-first out or average basis, as the

 

3

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case may be, consistent with past practice) or market value (net of such
reserves and allowances as the Administrative Agent deems necessary in its
reasonable discretion, including, without limitation, reserves in respect of
slow-moving Inventory noted in any field audit report), and (ii) $8,500,000. 
Notwithstanding anything to the contrary contained herein, the availability
provided by (x) the Dating Program Accounts shall not exceed $5,000,000 in the
aggregate, and (y) the foreign Accounts covered by foreign account receivable
insurance shall not exceed $250,000 in the aggregate.

 

Borrowing Base Certificate means a certificate substantially in the form of
Exhibit C.

 

Business Day means any day on which PVBT is open for commercial banking business
in Chicago, Illinois and, in the case of a Business Day which relates to a LIBOR
Loan, on which dealings are carried on in the London interbank eurodollar
market.

 

Capital Expenditures means all expenditures which, in accordance with GAAP,
would be required to be capitalized and shown on the consolidated balance sheet
of the Company, including expenditures in respect of Capital Leases, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

 

Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.

 

Capital Securities means, with respect to any Person, all shares, interests,
participations or other equivalents (however designated, whether voting or
non-voting) of such Person’s capital, whether now outstanding or issued or
acquired after the Closing Date, including common shares, preferred shares,
membership interests in a limited liability company, limited or general
partnership interests in a partnership, interests in a trust, interests in other
unincorporated organizations or any other equivalent of such ownership interest.

 

Cash Collateralize means to deliver cash collateral to the Administrative Agent,
to be held as cash collateral for outstanding Letters of Credit in an amount
equal to 102% of the outstanding undrawn face amount of such Letters of Credit,
pursuant to documentation reasonably satisfactory to the Administrative Agent. 
Derivatives of such term have corresponding meanings.

 

Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Lender or its holding company) rated at least A-l
by Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate
of deposit, time deposit or banker’s acceptance, maturing not more than one year
after such time, or any overnight Federal Funds transaction that is issued or
sold by any Lender or its holding company (or by a

 

4

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commercial banking institution that is a member of the Federal Reserve System
and has a combined capital and surplus and undivided profits of not less than
$500,000,000), (d) any repurchase agreement entered into with any Lender (or
commercial banking institution of the nature referred to in clause (c)) which
(i) is secured by a fully perfected security interest in any obligation of the
type described in any of clauses (a) through (c) above and (ii) has a market
value at the time such repurchase agreement is entered into of not less than
100% of the repurchase obligation of such Lender (or other commercial banking
institution) thereunder, (e) money market accounts or mutual funds which invest
exclusively in assets satisfying the foregoing requirements, and (f) other short
term liquid investments approved in writing by the Administrative Agent.

 

Change of Control means the occurrence of any of the following events: (a) a
majority of the outstanding voting stock of the Company shall be acquired
(whether by transfer, accumulation or otherwise), directly or indirectly, by any
Person (including any group acting together), who owns on the date hereof less
than 10% of such voting stock, or (b) the Company shall cease to, directly or
indirectly, own and control 100% of each class of the outstanding Capital
Securities of each Subsidiary.

 

Closing Date - see Section 12.1.

 

Code means the Internal Revenue Code of 1986.

 

Collateral as such term is defined in the Guaranty and Collateral Agreement of
even date herewith executed by the Loan Parties.

 

Collateral Access Agreement means an agreement in form and substance reasonably
satisfactory to the Administrative Agent pursuant to which a mortgagee or lessor
of real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory or other property owned by
any Loan Party, acknowledges the Liens of the Administrative Agent and waives
any Liens held by such Person on such property, and, in the case of any such
agreement with a mortgagee or lessor, permits the Administrative Agent
reasonable access to and use of such real property following the occurrence and
during the continuance of an Event of Default to assemble, complete and sell any
Collateral stored or otherwise located thereon.

 

Collateral Documents means, collectively, the Guaranty and Collateral Agreement,
each Mortgage, each Environmental Indemnity Agreement, each Collateral Access
Agreement, each Perfection Certificate, each control agreement and any other
agreement or instrument pursuant to which the Company, any Subsidiary or any
other Person grants or purports to grant collateral to the Administrative Agent
for the benefit of the Lenders or otherwise relates to such collateral.

 

Commitment means, as to any Lender, such Lender’s commitment to make Loans, and
to issue or participate in Letters of Credit, under this Agreement.  The initial
amount of each Lender’s commitment to make Loans is set forth on Annex A.

 

Company - see the Preamble.

 

5

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Compliance Certificate means a Compliance Certificate in substantially the form
of Exhibit B.

 

Computation Period means each period of four consecutive Fiscal Quarters ending
on the last day of a Fiscal Quarter.

 

Consolidated Net Income means, with respect to the Company and its Subsidiaries
for any period, the net income (or loss) of the Company and its Subsidiaries for
such period.

 

Contingent Liability means, with respect to any Person, each obligation and
liability of such Person and all such obligations and liabilities of such Person
incurred pursuant to any agreement, undertaking or arrangement by which such
Person:  (a) guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness, dividend,
obligation or other liability of any other Person in any manner (other than by
endorsement of instruments in the course of collection), including any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (b) guarantees the payment of dividends or other distributions
upon the Capital Securities of any other Person; (c) undertakes or agrees
(whether contingently or otherwise):  (i) to purchase, repurchase, or otherwise
acquire any indebtedness, obligation or liability of any other Person or any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, working capital or other financial condition of any other Person, or
(iii) to make payment to any other Person other than for value received;
(d) agrees to lease property or to purchase securities, property or services
from such other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment
of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss.  The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.

 

Controlled Group means all members of a controlled group of corporations, all
members of a controlled group of trades or businesses (whether or not
incorporated) under common control and all members of an affiliated service
group which, together with the Company or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

Dating Program means the extended terms program made available to the customers
of Williams Furnace and Phoenix Manufacturing, permitting such customers to
place orders and receive product during the period from (i) with respect to
Williams Furnace, April 1 to August 31 of a particular year, which program
requires such customers to pay one hundred percent (100%) of the invoiced amount
by October 10 of such year and (ii) with respect to Phoenix Manufacturing,
October 1 of a particular year to April 30 of the immediately succeeding year
(the “following year”), which program requires such customers to pay fifty
percent (50.0%) of

 

6

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the invoiced amount by June 10 of the following year, and the remaining invoiced
amount by July 10 of the following year, such programs to be on the terms and
conditions in place on the date hereof or such other terms and conditions that
are reasonably satisfactory to the Administrative Agent.

 

Dating Program Accounts means the Accounts owing to Williams Furnace or Phoenix
Manufacturing pursuant to the Dating Program.

 

Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person; provided that if such
Person has not assumed or otherwise become liable for such indebtedness, such
indebtedness shall be measured at the fair market value of such property
securing such indebtedness at the time of determination, (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn), bankers’ acceptances and similar obligations
issued for the account of such Person (including the Letters of Credit), (f) all
Hedging Obligations of such Person, (g) all Contingent Liabilities of such
Person, (h) all Debt of any partnership of which such Person is a general
partner and (i) any Capital Securities or other equity instrument, whether or
not mandatorily redeemable, that under GAAP is characterized as debt, whether
pursuant to financial accounting standards board issuance No. 150 or otherwise.

 

Debt to be Repaid means Debt listed on Schedule 12.1.

 

Designated Proceeds - see Section 6.2.2(a).

 

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

 

EBITDA means, for any Computation Period, the sum of the following with respect
to the Company and its Subsidiaries each as determined in accordance with GAAP:

 

(a)                                  Consolidated Net Income, plus

 

(b)                                 federal, state and other income taxes
deducted in the determination of Consolidated Net Income, plus

 

(c)                                  Interest Expense deducted in the
determination of Consolidated Net Income, plus

 

(d)                                 depreciation, depletion and amortization
expense deducted in the determination of Consolidated Net Income, plus

 

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(e)                                  any other non-cash charges and any
extraordinary charges deducted in the determination of Consolidated Net Income,
including any asset impairment charges (including write downs of goodwill),
minus

 

(f)                                    any gains from Asset Dispositions, any
extraordinary gains and any gains from discontinued operations included in the
determination of Consolidated Net Income.

 

All references to “non-cash” charges above shall only include items for which no
cash outlay could reasonably be expected at any time now or in the future.

 

Eligible Account shall mean an Account owing to any Loan Party which meets each
of the following requirements:

 

(a)                                  it arises from the sale or lease of goods
or the rendering of services which have been fully performed by such Loan Party;
and if it arises from the sale or lease of goods, (i) such goods comply with
such Account Debtor’s specifications (if any) and have been delivered to such
Account Debtor and (ii) the applicable Loan Party has possession of, or if
requested by the Administrative Agent, has delivered to Administrative Agent,
delivery receipts evidencing such delivery;

 

(b)                                 it (x) is subject to a perfected,
first-priority Lien in favor of the Administrative Agent for the benefit of the
Lenders, and (y) is not subject to any other assignment, claim or Lien, in each
case, other than Permitted Liens;

 

(c)                                  it is a valid, legally enforceable and
unconditional obligation of the Account Debtor with respect thereto, and is not
subject to the fulfillment of any condition whatsoever or any counterclaim,
credit, allowance, discount, rebate or adjustment by the Account Debtor with
respect thereto, or to any claim by such Account Debtor denying liability
thereunder in whole or in part and the Account Debtor has not refused to accept
and/or has not returned or offered to return any of the goods or services which
are the subject of such Account;

 

(d)                                 there is no bankruptcy, insolvency or
liquidation proceeding pending by or against the Account Debtor with respect
thereto;

 

(e)                                  the Account Debtor with respect thereto is
a resident or citizen of, and is located within, the United States, unless the
sale of goods or services giving rise to such Account is on letter of credit,
banker’s acceptance, other credit support terms reasonably satisfactory to the
Administrative Agent, or, in the case of foreign Accounts owed to Williams
Furnace or Phoenix Manufacturing, any such Account covered by foreign account
receivable insurance in at least the amount of such Account (in the case of each
such foreign Account, the amount of such Account for purposes of the Borrowing
Base calculation shall be equal to ninety-five percent (95%) of the original
amount of such Account minus $25,000 representing the applicable deductible);

 

(f)                                    it is not an Account arising from a “sale
on approval,” “sale or return,” “consignment” or “bill and hold” or subject to
any other repurchase or return agreement;

 

(g)                                 it is not an Account with respect to which
possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by any Loan Party (or by any agent or

 

8

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custodian of any Loan Party) for the account of or subject to further and/or
future direction from the Account Debtor with respect thereto;

 

(h)                                 it arises in the ordinary course of business
of the applicable Loan Party;

 

(i)                                     if the Account Debtor is the United
States or any department, agency or instrumentality thereof, the applicable Loan
Party has assigned its right to payment of such Account to the Administrative
Agent for the benefit of the Lenders pursuant to the Assignment of Claims Act of
1940, and evidence (reasonably satisfactory to the Administrative Agent) of such
assignment has been delivered to the Administrative Agent;

 

(j)                                     if the Account is evidenced by chattel
paper or an instrument, the originals of such chattel paper or instrument shall
have been endorsed and/or assigned and delivered to the Administrative Agent or,
in the case of electronic chattel paper, shall be in the control of the
Administrative Agent, in each case in a manner satisfactory to the
Administrative Agent;

 

(k)                                  such Account is evidenced by an invoice
delivered to the related Account Debtor and is not more than (i) sixty (60) days
past the due date thereof as reflected in the original invoice therefor, or
(ii) one-hundred (120) days past the original invoice date therefor (provided,
however, the requirement set forth in item (ii) of this clause (k) shall not
apply to the Dating Program Accounts to the extent the applicable Account
Debtors are in compliance with the terms and conditions of the Dating Program
with respect to the applicable Dating Program Accounts and a Senior Officer
certifies in the applicable Borrowing Base Certificate that to his or her
knowledge such Account Debtors are in compliance with the Dating Program and
that such Dating Program Accounts (including any portion thereof) are not more
than sixty (60) days past due);

 

(l)                                     it is not an Account with respect to an
Account Debtor that is located in any jurisdiction which has adopted a statute
or other requirement with respect to which any Person that obtains business from
within such jurisdiction must file a notice of business activities report or
make any other required filings in a timely manner in order to enforce its
claims in such jurisdiction’s courts unless (x) such notice of business
activities report has been duly and timely filed or the applicable Loan Party is
exempt from filing such report and has provided the Administrative Agent with
satisfactory evidence of such exemption or (y) the failure to make such filings
may be cured retroactively by the applicable Loan Party for a nominal fee;

 

(m)                               the Account Debtor with respect thereto is not
a Loan Party or an Affiliate of any Loan Party;

 

(n)                                 it is not owed by an Account Debtor with
respect to which twenty-five percent (25%) or more of the aggregate amount of
outstanding Accounts owed at such time by such Account Debtor is classified as
ineligible under clause (k) of this definition; and

 

(o)                                 if the aggregate amount of all Accounts owed
by the Account Debtor thereon exceeds twenty-five percent (25%) of the aggregate
amount of all Accounts at such time, then all Accounts owed by such Account
Debtor in excess of such amount shall be deemed ineligible.

 

9

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An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account; provided, however, if such Account then meets each of the
foregoing requirements it shall again be deemed an Eligible Account.

 

Eligible Inventory shall mean Inventory of any Loan Party which meets each of
the following requirements:

 

(a)                                  it (x) is subject to a perfected,
first-priority Lien in favor of the Administrative Agent for the benefit of the
Lenders and (y) is not subject to any other assignment, claim or Lien, in each
case, other than Permitted Liens;

 

(b)                                 it is salable and not slow-moving, obsolete
or discontinued;

 

(c)                                  it is in the possession and control of the
applicable Loan Party and it is stored and held at locations owned by the
applicable Loan Party or, if any such location is not so owned, the
Administrative Agent is in possession of a Collateral Access Agreement with
respect thereto;

 

(d)                                 it is not Inventory produced in violation of
the Fair Labor Standards Act and subject to the “hot goods” provisions contained
in Title 29 U.S.C. §215;

 

(e)                                  it is not subject to any agreement or
license which would restrict the Administrative Agent’s ability to sell or
otherwise dispose of such Inventory;

 

(f)                                    it is located in the United States or in
any territory or possession of the United States that has adopted Article 9 of
the UCC;

 

(g)                                 it is not “in transit” to the applicable
Loan Party or held by the applicable Loan Party on consignment;

 

(h)                                 it is not “work-in-progress” Inventory;

 

(i)                                     it is not supply items or packaging;

 

(j)                                     it is not identified to any purchase
order or contract to the extent progress or advance payments are received with
respect to such Inventory;

 

(k)                                  it does not breach any of the
representations, warranties or covenants pertaining to Inventory set forth in
the Loan Documents; and

 

(l)                                     the Administrative Agent shall not have
determined in the exercise of its reasonable credit judgment that it is
unacceptable due to age, type, category, quality, quantity and/or any other
reason whatsoever.

 

Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory; provided, however, if such Inventory then meets each of the foregoing
requirements it shall again be deemed Eligible Inventory.

 

10

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Environmental Claims means all claims, however asserted, by any governmental,
regulatory or judicial authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

 

Environmental Indemnity Agreement means the Hazardous Substance Remediation and
Indemnification Agreement dated as of the date of the Existing Credit Agreement
executed and delivered by the Company and the other Indemnitors named therein in
favor of the Administrative Agent, in form and substance satisfactory to the
Administrative Agent and as amended, restated or supplemented from time to time.

 

Environmental Laws means all present or future federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.

 

ERISA means the Employee Retirement Income Security Act of 1974.

 

Event of Default means any of the events described in Section 13.1.

 

Excess Availability shall mean an amount equal to (a) the Revolving Commitment
(as reduced from time to time pursuant to Section 6.1 hereof) minus (b) the
Revolving Outstandings.

 

Excess Cash Flow means, for any period, the remainder of (a) Adjusted EBITDA for
such period, minus (b) the sum, without duplication, of (i) scheduled repayments
of principal of the Term Loan made during such period, plus (ii) voluntary
prepayments of the Term Loan pursuant to Section 6.2.1 during such period, plus
(iii) mandatory prepayments of the Term Loan made pursuant to Section 6.2.2
during such period to the extent the amount of such mandatory prepayment was
included in Adjusted EBITDA for such period, plus (iv) cash payments made in
such period with respect to Capital Expenditures, plus (v) all income taxes paid
in cash by the Loan Parties during such period, plus (vi) cash Interest Expense
of the Loan Parties during such period.

 

Excluded Taxes means taxes based upon, or measured by, the Lender’s or
Administrative Agent’s (or a branch of the Lender’s or Administrative Agent’s)
overall net income, overall net receipts, or overall net profits (including
franchise taxes imposed in lieu of such taxes), but only to the extent such
taxes are imposed by a taxing authority (a) in a jurisdiction in which such
Lender or Administrative Agent is organized, (b) in a jurisdiction which the
Lender’s or Administrative Agent’s principal office is located, or (c) in a
jurisdiction in which such Lender’s or Administrative Agent’s lending office (or
branch) in respect of which payments under this Agreement are made is located.

 

Existing Credit Agreement - see the Recitals.

 

11

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Existing Covenant Default means the existing Event of Default under and as
defined in the Existing Credit Agreement resulting from the Company’s failure to
comply with the Fixed Charge Coverage Ratio contained in Section 11.13.2 of the
Existing Credit Agreement for the period ended October 1, 2011.

 

Federal Funds Rate means, for any day, a fluctuating interest rate equal for
each day during such period 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 for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent.  The Administrative
Agent’s determination of such rate shall be binding and conclusive absent
manifest error.

 

Fiscal Quarter means a fiscal quarter of a Fiscal Year.

 

Fiscal Year means the fiscal year of the Company and its Subsidiaries, which
period shall be the 12-month period ending on the Saturday closest to
December 31 of each year.  References to a Fiscal Year with a number
corresponding to any calendar year (e.g., “Fiscal Year 2011”) refer to the
Fiscal Year ending on the Saturday closest to December 31 of such calendar year.

 

Fixed Charge Coverage Ratio means, for any Computation Period, the ratio of
(a) the sum for such period of (i) Adjusted EBITDA, minus (ii) the sum of income
taxes paid in cash by the Loan Parties and all unfinanced Capital Expenditures
to (b) the sum for such period of (i) Interest Expense, plus (ii) required
payments of principal of Funded Debt (including the Term Loan but excluding the
Revolving Loans).

 

FRB means the Board of Governors of the Federal Reserve System or any successor
thereto.

 

Funded Debt means, as to any Person, all Debt of such Person that matures more
than one year from the date of its creation (or is renewable or extendible, at
the option of such Person, to a date more than one year from such date).

 

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

 

Group - see Section 2.2.1.

 

Guaranty and Collateral Agreement means the Amended and Restated Guaranty and
Collateral Agreement dated as of the date hereof executed and delivered by the
Loan Parties, together with any joinders thereto and any other guaranty and
collateral agreement executed by a

 

12

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Loan Party, in each case in form and substance satisfactory to the
Administrative Agent and as amended, restated or supplemented from time to time.

 

Hazardous Substances means (a) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the definition of “hazardous
substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous
substances”, “restricted hazardous waste”, “toxic substances”, “toxic
pollutants”, “contaminants”, “pollutants” or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
the exposure to, or release of which is prohibited, limited or regulated by any
governmental authority or for which any duty or standard of care is imposed
pursuant to, any Environmental Law.

 

Hedging Agreement means any interest rate, currency or commodity swap agreement,
cap agreement or collar agreement, and any other agreement or arrangement
designed to protect a Person against fluctuations in interest rates, currency
exchange rates or commodity prices.

 

Hedging Obligation means, with respect to any Person, any liability of such
Person under any Hedging Agreement.  The amount of any Person’s obligation in
respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person in
accordance with GAAP.

 

Hedging Obligation Amount means $100,000; provided, however, the amount shall
reduce to $0 on April 16, 2012 so long as the interest rate swap currently in
place with respect to the Term Loan expires or is otherwise terminated.  In the
event an interest rate swap with respect to the Term Loan (other than the
interest rate swap in place on the date hereof) is entered into after the date
hereof, the Borrower and Administrative Agent shall agree on the appropriate
Hedging Obligation Amount.

 

Inactive Subsidiary means Continental Copper, Inc., an Arizona corporation and
Wholly-Owned Subsidiary of the Company.

 

Indemnified Liabilities - see Section 15.17.

 

Interest Expense means for any period the consolidated interest expense of the
Company and its Subsidiaries for such period (including all imputed interest on
Capital Leases).

 

Interest Period means, as to any LIBOR Loan, the period commencing on the date
such Loan is borrowed or continued as, or converted into, a LIBOR Loan and
ending on the date one, two, three or six months thereafter as selected by the
Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:

 

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

 

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

 

(c)                                  the Company may not select any Interest
Period for a Revolving Loan which would extend beyond the scheduled Termination
Date; and

 

(d)                                 the Company may not select any Interest
Period for any portion of the Term Loan if, after giving effect to such
selection, the aggregate principal amount of the Term Loan having Interest
Periods ending after any date on which an installment of the Term Loan is
scheduled to be repaid would exceed the aggregate principal amount of the Term
Loan scheduled to be outstanding after giving effect to such repayment.

 

Inventory is defined in the Guaranty and Collateral Agreement.

 

Investment means, with respect to any Person, any investment in another Person,
whether by acquisition of any debt or Capital Security, by making any loan or
advance, by becoming obligated with respect to a Contingent Liability in respect
of obligations of such other Person (other than travel and similar advances to
employees in the ordinary course of business) or by making an Acquisition.

 

Issuing Lender means any Lender selected by the Required Lenders after the date
hereof, and their successors and assigns in such capacity.

 

L/C Application means, with respect to any request for the issuance of a Letter
of Credit, a letter of credit application in the form being used by the Issuing
Lender at the time of such request for the type of letter of credit requested.

 

L/C Fee Rate - see the definition of Applicable Margin.

 

Lender - see the Preamble.  References to the “Lenders” shall include the
Issuing Lender; for purposes of clarification only, to the extent that PVBT (or
any successor Issuing Lender) may have any rights or obligations in addition to
those of the other Lenders due to its status as Issuing Lender, its status as
such will be specifically referenced.  In addition to the foregoing, for the
purpose of identifying the Persons entitled to share in the Collateral and the
proceeds thereof under, and in accordance with the provisions of, this Agreement
and the Collateral Documents, the term “Lender” shall include Affiliates of a
Lender providing a Bank Product.

 

Lender Party - see Section 15.17.

 

Letter of Credit - see Section 2.1.3.

 

LIBOR Loan means any Loan which bears interest at a rate determined by reference
to the LIBOR Rate.

 

LIBOR Margin - see the definition of Applicable Margin.

 

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LIBOR Office means with respect to any Lender the office or offices of such
Lender which shall be making or maintaining the LIBOR Loans of such Lender
hereunder.  A LIBOR Office of any Lender may be, at the option of such Lender,
either a domestic or foreign office.

 

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

 

Lien means, with respect to any Person, any interest granted by such Person in
any real or personal property, asset or other right owned or being purchased or
acquired by such Person (including an interest in respect of a Capital Lease)
which secures payment or performance of any obligation and shall include any
mortgage, lien, encumbrance, title retention lien, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.

 

Loan Documents means this Agreement, the Notes, the Letters of Credit, the
Master Letter of Credit Agreement, the L/C Applications, the Agent Fee Letter,
the Collateral Documents, the Subordination Agreements (if any) and all
documents, instruments and agreements delivered in connection with the
foregoing.

 

Loan Party means the Company and each Subsidiary (including, without limitation,
each Guarantor referenced in the Guaranty and Collateral Agreement).

 

Loan or Loans means, as the context may require, Revolving Loans and the Term
Loan.

 

Mandatory Prepayment Event - see Section 6.2.2(a).

 

Margin Stock means any “margin stock” as defined in Regulation U.

 

Master Letter of Credit Agreement means, at any time, with respect to the
issuance of Letters of Credit, a master letter of credit agreement or
reimbursement agreement in the form, if any, being used by the Issuing Lender at
such time.

 

Material Adverse Effect means (a) a material adverse change in, or a material
adverse effect upon, the financial condition, operations, assets, business or
properties of the Loan Parties taken as a whole, (b) a material impairment of
the ability of any Loan Party to perform any of the Obligations under any Loan
Document or (c) a material adverse effect upon any substantial

 

15

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portion of the collateral under the Collateral Documents or upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document.

 

Mining Royalty Agreement means that certain Fee Sand and Gravel Lease, dated as
of October 21, 1996, by and between Valco Inc. and the Company, as amended,
restated or modified from time to time.

 

Mortgage means a mortgage, deed of trust, leasehold mortgage or similar
instrument granting the Administrative Agent a Lien on real property of any Loan
Party.

 

Mortgaged Property means the following real property locations (and the
buildings and other structures located thereon) as more fully described in the
applicable Mortgage:  (i) parcel(s) of land located in Colton, California owned
by Williams Furnace, (ii) parcel(s) of land located in Colorado Springs,
Colorado owned by McKinney Door and Hardware, Inc., and (iii) parcel(s) of land
located in Colorado Springs, Colorado owned by Transit Mix Concrete Co.

 

Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any other member of the
Controlled Group may have any liability.

 

Net Cash Proceeds means:

 

(a)                                  with respect to any Asset Disposition, the
aggregate cash proceeds (including cash proceeds received pursuant to policies
of insurance or by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received) received by
any Loan Party pursuant to such Asset Disposition net of (i) the direct costs
relating to such sale, transfer or other disposition (including sales
commissions and legal, accounting and investment banking fees), (ii) taxes paid
or reasonably estimated by the Company to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements) and (iii) amounts required to be applied to the repayment of any
Debt secured by a Lien on the asset subject to such Asset Disposition (other
than the Loans);

 

(b)                                 with respect to any issuance of Capital
Securities, the aggregate cash proceeds received by any Loan Party pursuant to
such issuance, net of the direct costs relating to such issuance (including
sales and underwriters’ commissions); and

 

(c)                                  with respect to any issuance of Debt, the
aggregate cash proceeds received by any Loan Party pursuant to such issuance,
net of the direct costs of such issuance (including up-front, underwriters’ and
placement fees).

 

Net Worth means, as of any date, the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated deficit) calculated
in conformity with GAAP.

 

Non-U.S. Participant - see Section 7.6(d).

 

16

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Non-Use Fee Rate - see the definition of Applicable Margin.

 

Note means a promissory note substantially in the form of Exhibit A.

 

Notice of Borrowing - see Section 2.2.2.

 

Notice of Conversion/Continuation - see Section 2.2.3.

 

Obligations means all obligations (monetary (including post-petition interest,
allowed or not) or otherwise) of any Loan Party under this Agreement and any
other Loan Document including Attorney Costs and any reimbursement obligations
of each Loan Party in respect of Letters of Credit and surety bonds, all Hedging
Obligations permitted hereunder which are owed to any Lender or its Affiliate or
Administrative Agent, and all Bank Products Obligations, all in each case
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.

 

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

 

Participant - see Section 15.6.2.

 

Pension Plan means a “pension plan”, as such term is defined in Section 3(2) of
ERISA, which is subject to Title IV of ERISA or the minimum funding standards of
ERISA (other than a Multiemployer Pension Plan), and as to which the Company or
any member of the Controlled Group may have any liability, including any
liability by reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under Section 4069 of ERISA.

 

Perfection Certificate means a perfection certificate executed and delivered to
the Administrative Agent by a Loan Party.

 

Permitted Lien means (i) Liens for Taxes, assessments or other governmental
charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and, in each case, for
which it maintains adequate reserves in accordance with GAAP and in respect of
which no Lien senior to the Liens of the Administrative Agent has been filed;
(ii) Liens arising in the ordinary course of business (such as (a) Liens of
carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law, and (b) Liens in the form of deposits or pledges incurred in
connection with worker’s compensation, unemployment compensation and other types
of social security (excluding Liens arising under ERISA) or in connection with
surety bonds, bids, performance bonds and similar obligations) for sums not
overdue or being contested in good faith by appropriate proceedings and not
involving any advances or borrowed money or the deferred purchase price of
property or services, which do not in the aggregate materially detract from the
value of the property or assets of any Loan Party or materially impair the use
thereof in the operation of any Loan Party’s business and, in each case, for
which it maintains adequate reserves in accordance with GAAP and in respect of
which no Lien senior to the Liens of the Administrative Agent has been filed;
(iii) Liens described on Schedule 11.2 as of the Closing Date; (iv) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding Two
Hundred Fifty Thousand and

 

17

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00/100 Dollars ($250,000.00) arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and by
appropriate proceedings and to the extent such judgments or awards do not
constitute an Event of Default under Section 13.1.7 hereof; (v) easements,
rights of way, restrictions, minor defects or irregularities in title (including
leasehold title) and other similar Liens not interfering in any material respect
with the ordinary conduct of the business of any Loan Party; (vi) subject to the
limitation set forth in Section 11.1(v), Liens arising in connection with
capitalized leases (and attaching only to the property being leased) and Liens
that constitute purchase money security interests on any property securing
Indebtedness incurred for the purpose of financing all or any part of the cost
of acquiring such property, provided that any such Lien attaches to such
property within twenty (20) days of the acquisition thereof and attaches solely
to the property so acquired; (vii) Liens granted to the Administrative Agent for
the benefit of the Lenders hereunder and under the other Loan Documents;
(viii) customary rights of set-off in favor of banks existing solely with
respect to cash and cash equivalents on deposit in one or more accounts
maintained by any Loan Party and not in violation of this Agreement (to the
extent arising in the ordinary course of business and not in connection with any
financing); (ix) the filing of UCC financing statements solely as a
precautionary measure in connection with operating leases permitted under this
Agreement; (x) Liens on premium refunds and insurance proceeds granted in favor
of insurance companies (or their financing affiliates) in connection with the
financing of insurance premiums; and (xi) extensions, renewals or replacements
of any Lien referred to in clauses (i) through (x) of this definition, provided
that the principal amount of the Debt secured thereby is not increased and that
any such extension, renewal or replacement is limited to the assets originally
encumbered thereby.

 

Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.

 

Phoenix Manufacturing means Phoenix Manufacturing, Inc., an Arizona corporation
and a Loan Party.

 

Prime Rate means, for any day, the rate of interest in effect for such day as
publicly announced from time to time by the Administrative Agent as its prime
rate (whether or not such rate is actually charged by the Administrative Agent),
which is not intended to be the Administrative Agent’s lowest or most favorable
rate of interest at any one time.  Any change in the Prime Rate announced by the
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change; provided that the
Administrative Agent shall not be obligated to give notice of any change in the
Prime Rate.

 

Pro Rata Share means:

 

(a)                                  with respect to a Lender’s obligation to
make Revolving Loans, participate in Letters of Credit, reimburse the Issuing
Lender, and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, (x) prior to the Revolving Commitment being terminated or
reduced to zero, the percentage obtained by dividing (i) such Lender’s Revolving
Commitment, by (ii) the

 

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aggregate Revolving Commitment of all Lenders and (y) from and after the time
the Revolving Commitment has been terminated or reduced to zero, the percentage
obtained by dividing (i) the aggregate unpaid principal amount of such Lender’s
Revolving Outstandings by (ii) the aggregate unpaid principal amount of all
Revolving Outstandings;

 

(b)                                 with respect to a Lender’s obligation to
make the Term Loan and receive payments of interest, fees, and principal with
respect thereto, (x) prior to the making of the Term Loan, the percentage
obtained by dividing (i) such Lender’s Term Loan Commitment, by (ii) the
aggregate amount of all Lenders’ Term Loan Commitments, and (y) from and after
the making of the Term Loan, the percentage obtained by dividing (i) the
principal amount of such Lender’s Term Loan by (ii) the aggregate principal
amount of the Term Loan; and

 

(c)                                  with respect to all other matters as to a
particular Lender, the percentage obtained by dividing (i) such Lender’s
Revolving Commitment plus such Lender’s Term Loan Commitment, by (ii) the
aggregate amount of the Revolving Commitment of all Lenders plus the Term Loan
Commitment of all Lenders; provided that in the event the Commitments have been
terminated or reduced to zero, Pro Rata Share shall be the percentage obtained
by dividing (A) the principal amount of such Lender’s Revolving Outstandings
plus the unpaid principal amount of such Lender’s Term Loan by (B) the principal
amount of all outstanding Revolving Outstandings plus the unpaid principal
amount of all Term Loans of all Lenders.

 

PVBT - see the Preamble.

 

Regulation D means Regulation D of the FRB.

 

Regulation U means Regulation U of the FRB.

 

Reportable Event means a reportable event as defined in Section 4043 of ERISA
and the regulations issued thereunder as to which the PBGC has not waived the
notification requirement of Section 4043(a), or the failure of a Pension Plan to
meet the minimum funding standards of Section 412 of the Code (without regard to
whether the Pension Plan is a plan described in Section 4021(a)(2) of ERISA) or
under Section 302 of ERISA.

 

Required Lenders means, at any time, Lenders having Pro Rata Shares (as
determined pursuant to clause (c) of the definition of “Pro Rata Shares”)
aggregating at least sixty-six and two-thirds percent (66.67%); provided that if
at any time there are two or fewer Lenders, “Required Lenders” shall mean all
Lenders.

 

Revolving Commitment means $20,000,000, as reduced from time to time pursuant to
Section 6.1.

 

Revolving Loan - see Section 2.1.1.

 

Revolving Loan Availability means the lesser of (i) the Revolving Commitment and
(ii) the Borrowing Base.

 

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Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit, plus (c) the Hedging Obligation Amount.

 

SEC means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.

 

Senior Officer means, with respect to any Loan Party, any of the chief executive
officer, the chief financial officer, the chief operating officer, the corporate
secretary, the controller or the treasurer of such Loan Party.

 

Stated Amount means, with respect to any Letter of Credit at any date of
determination, (a) the maximum aggregate amount available for drawing thereunder
under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit to the
extent such unreimbursed amounts have not been converted into Revolving Loans.

 

Subordinated Debt means any unsecured Debt of the Company which has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Required Lenders.

 

Subordinated Debt Documents means all documents and instruments relating to the
Subordinated Debt and all amendments and modifications thereof approved by the
Administrative Agent.

 

Subordination Agreements means all subordination agreements executed by a holder
of Subordinated Debt in favor of the Administrative Agent and the Lenders from
time to time after the Closing Date in form and substance and on terms and
conditions satisfactory to Administrative Agent.

 

Subsidiary means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person owns, directly or
indirectly, such number of outstanding Capital Securities as have more than 50%
of the ordinary voting power for the election of directors or other managers of
such corporation, partnership, limited liability company or other entity. 
Unless the context otherwise requires, each reference to Subsidiaries herein
shall be a reference to Subsidiaries of the Company.

 

Tangible Net Worth means the sum of the following with respect to the Company
and its Subsidiaries:  (i) Net Worth plus Subordinated Debt, if any; minus
(ii) goodwill, patents, trademarks, service marks, trade names, copyrights,
prepaid expenses, deposits, deferred charges and all other intangible assets and
all items that are treated as intangible assets under GAAP; minus (iii) all
obligations owed to the Company or any of its Subsidiaries by any Affiliate or
any of its Subsidiaries; and minus (iv) all loans owed by its officers,
stockholders, Subsidiaries or employees.

 

Taxes means any and all present and future taxes, duties, levies, imposts,
deductions, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing, but excluding Excluded Taxes.

 

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Term Loan Commitment means the original commitment of $10,000,000, as reduced to
$4,648,000 as of the date hereof to reflect prior payments of principal made in
respect of the Term Loan.

 

Term Loan Maturity Date means the earlier of (a) May 1, 2015 or (b) the
Termination Date.

 

Term Loan — see Section 2.1.2.

 

Termination Date means the earlier to occur of (a) May 1, 2015 or (b) such other
date on which the Commitments terminate pursuant to Section 6 or Section 13.

 

Termination Event means, with respect to a Pension Plan that is subject to Title
IV of ERISA, (a) a Reportable Event, (b) the withdrawal of Company or any other
member of the Controlled Group from such Pension Plan during a plan year in
which Company or any other member of the Controlled Group was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA, (c) the termination of such Pension Plan, the filing
of a notice of intent to terminate the Pension Plan or the treatment of an
amendment of such Pension Plan as a termination under Section 4041 of ERISA,
(d) the institution by the PBGC of proceedings to terminate such Pension Plan or
(e) any event or condition that might constitute grounds under Section 4042 of
ERISA for the termination of, or appointment of a trustee to administer, such
Pension Plan.

 

Total Debt means all Debt of the Company and its Subsidiaries, determined on a
consolidated basis, excluding (a) contingent obligations in respect of
Contingent Liabilities (except to the extent constituting Contingent Liabilities
in respect of Debt of a Person other than any Loan Party), (b) Hedging
Obligations, (c) Debt of the Company to Subsidiaries and Debt of Subsidiaries to
the Company or to other Subsidiaries, and (d) contingent obligations in respect
of undrawn letters of credit.

 

Total Plan Liability means, at any time, the present value of all vested and
unvested accrued benefits under all Pension Plans, determined as of the then
most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

Type - see Section 2.2.1.

 

UCC is defined in the Guaranty and Collateral Agreement.

 

Unfunded Liability means the amount (if any) by which the present value of all
vested and unvested accrued benefits under all Pension Plans exceeds the fair
market value of all assets allocable to those benefits, all determined as of the
then most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

Unmatured Event of Default means any event that, if it continues uncured, will,
with lapse of time or notice or both, constitute an Event of Default.

 

Williams EcoLogix means Williams EcoLogix, Inc., a Delaware corporation and a
Loan Party.

 

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Williams Furnace means Williams Furnace Co., a Delaware corporation and a Loan
Party.

 

Withholding Certificate - see Section 7.6(d).

 

Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of the Capital
Securities of which (except directors’ qualifying Capital Securities) are at the
time directly or indirectly owned by such Person and/or another Wholly-Owned
Subsidiary of such Person.

 

1.2                                 Other Interpretive Provisions.  (a)  The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.

 

(b)                                 Section, Annex, Schedule and
Exhibit references are to this Agreement unless otherwise specified.

 

(c)                                  The term “including” is not limiting and
means “including without limitation.”

 

(d)                                 In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including”; the words “to” and “until” each mean “to but excluding”, and the
word “through” means “to and including.”

 

(e)                                  Unless otherwise expressly provided herein,
(i) references to agreements (including this Agreement and the other Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and
other modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as including all
statutory and regulatory provisions amending, replacing, supplementing or
interpreting such statute or regulation.

 

(f)                                    This Agreement and the other Loan
Documents may use several different limitations, tests or measurements to
regulate the same or similar matters.  All such limitations, tests and
measurements are cumulative and each shall be performed in accordance with its
terms.

 

(g)                                 This Agreement and the other Loan Documents
are the result of negotiations among and have been reviewed by counsel to the
Administrative Agent, the Company, the Lenders and the other parties thereto and
are the products of all parties.  Accordingly, they shall not be construed
against the Administrative Agent or the Lenders merely because of the
Administrative Agent’s or Lenders’ involvement in their preparation.

 

SECTION 2                              COMMITMENTS OF THE LENDERS; BORROWING,
CONVERSION AND LETTER OF CREDIT PROCEDURES.

 

2.1                                 Commitments.  On and subject to the terms
and conditions of this Agreement, each of the Lenders, severally and for itself
alone, agrees to make loans to, and to issue or participate in letters of credit
for the account of, the Company as follows:

 

2.1.1            Revolving Loan Commitment.  Each Lender with a Revolving Loan
Commitment agrees to make loans on a revolving basis (“Revolving Loans”) from
time to

 

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time until the Termination Date in such Lender’s Pro Rata Share of such
aggregate amounts as the Company may request from all Lenders; provided that the
Revolving Outstandings will not at any time exceed Revolving Loan Availability.

 

2.1.2            Term Loan Commitment.  Each Lender with a Term Loan Commitment
previously made a loan to the Company (collectively, the “Term Loan”) on the
Closing Date referenced in the Existing Credit Agreement in such Lender’s Pro
Rata Share of the Term Loan Commitment.  The Commitments of the Lenders to make
the Term Loan expired concurrently with the making of the Term Loan on the
Closing Date referenced in the Existing Credit Agreement.  The parties hereto
acknowledge and agree that the outstanding principal amount of the Term Loan is
$4,648,000 as of the date hereof as reflected in the Amended and Restated Term
Loan Note referenced in Section 12 hereof.

 

2.1.3            L/C Commitment.  Subject to Section 2.3.1, the Issuing Lender
agrees to issue letters of credit, in each case containing such terms and
conditions as are permitted by this Agreement and are reasonably satisfactory to
the Issuing Lender (each, a “Letter of Credit”), at the request of and for the
account of the Company or the other Loan Parties at the direction of the Company
from time to time before the scheduled Termination Date and, as more fully set
forth in Section 2.3.2, each Lender agrees to purchase a participation in each
such Letter of Credit; provided that (a) the aggregate Stated Amount of all
Letters of Credit shall not at any time exceed $7,500,000 and (b) the Revolving
Outstandings shall not at any time exceed Revolving Loan Availability.

 

2.2                                 Loan Procedures.

 

2.2.1            Various Types of Loans.  Each Revolving Loan shall be, and the
Term Loan may be divided into tranches which are, either a Base Rate Loan or a
LIBOR Loan (each a “type” of Loan), as the Company shall specify in the related
notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3.  LIBOR
Loans having the same Interest Period which expire on the same day are sometimes
called a “Group” or collectively “Groups”.  Base Rate Loans and LIBOR Loans may
be outstanding at the same time, provided that not more than three (3) different
Groups of LIBOR Loans shall be outstanding with respect to the Revolving
Commitment at any one time, and not more than three (3) different Groups of
LIBOR Loans shall be outstanding with respect to the Term Loan Commitment at any
one time.  All borrowings, conversions and repayments of Loans shall be effected
so that each Lender will have a ratable share (according to its Pro Rata Share)
of all types and Groups of Loans.

 

2.2.2            Borrowing Procedures.  The Company shall give written notice
(each such written notice, a “Notice of Borrowing”) substantially in the form of
Exhibit E or telephonic notice (followed immediately by a Notice of Borrowing)
to the Administrative Agent of each proposed borrowing not later than (a) in the
case of a Base Rate borrowing, 11:00 A.M., Chicago time, on the proposed date of
such borrowing, and (b) in the case of a LIBOR borrowing, 11:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such
borrowing.  Each such notice shall be effective upon receipt by the
Administrative Agent, shall be irrevocable, and shall specify the date, amount
and type of borrowing and, in the case of a LIBOR borrowing, the initial
Interest Period therefor.  Promptly upon receipt of

 

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such notice, the Administrative Agent shall advise each Lender thereof.  Not
later than 1:00 P.M., Chicago time, on the date of a proposed borrowing, each
Lender shall provide the Administrative Agent at the office specified by the
Administrative Agent with immediately available funds covering such Lender’s Pro
Rata Share of such borrowing and, so long as the Administrative Agent has not
received written notice that the conditions precedent set forth in Section 12
with respect to such borrowing have not been satisfied, the Administrative Agent
shall pay over the funds received by the Administrative Agent to the Company on
the requested borrowing date.  Each borrowing shall be on a Business Day.  Each
Base Rate borrowing shall be in an aggregate amount of at least $100,000 and an
integral multiple of $100,000, and each LIBOR borrowing shall be in an aggregate
amount of at least $500,000 and an integral multiple of at least $100,000.

 

2.2.3            Conversion and Continuation Procedures.  (a)  Subject to
Section 2.2.1, the Company may, upon irrevocable written notice to the
Administrative Agent in accordance with clause (b) below:

 

(A)                              elect, as of any Business Day, to convert any
Loans (or any part thereof in an aggregate amount not less than $500,000 or a
higher integral multiple of $100,000) into Loans of the other type; or

 

(B)                                elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Loans having Interest Periods expiring on
such day (or any part thereof in an aggregate amount not less than $500,000 or a
higher integral multiple of $100,000) for a new Interest Period;

 

provided that after giving effect to any prepayment, conversion or continuation,
the aggregate principal amount of each Group of LIBOR Loans shall be at least
$500,000 and an integral multiple of $100,000.

 

(b)                                 The Company shall give written notice (each
such written notice, a “Notice of Conversion/Continuation”) substantially in the
form of Exhibit F or telephonic notice (followed immediately by a Notice of
Conversion/Continuation) to the Administrative Agent of each proposed conversion
or continuation not later than (i) in the case of conversion into Base Rate
Loans, 11:00 A.M., Chicago time, on the proposed date of such conversion and
(ii) in the case of conversion into or continuation of LIBOR Loans, 11:00 A.M.,
Chicago time, at least three Business Days prior to the proposed date of such
conversion or continuation, specifying in each case:

 

(A)                              the proposed date of conversion or
continuation;

 

(B)                                the aggregate amount of Loans to be converted
or continued;

 

(C)                                the type of Loans resulting from the proposed
conversion or continuation; and

 

(D)                               in the case of conversion into, or
continuation of, LIBOR Loans, the duration of the requested Interest Period
therefor.

 

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(c)                                  If upon the expiration of any Interest
Period applicable to LIBOR Loans, the Company has failed to select timely a new
Interest Period to be applicable to such LIBOR Loans, the Company shall be
deemed to have elected to convert such LIBOR Loans into Base Rate Loans
effective on the last day of such Interest Period.

 

(d)                                 The Administrative Agent will promptly
notify each Lender of its receipt of a notice of conversion or continuation
pursuant to this Section 2.2.3 or, if no timely notice is provided by the
Company, of the details of any automatic conversion.

 

(e)                                  Any conversion of a LIBOR Loan on a day
other than the last day of an Interest Period therefor shall be subject to
Section 8.4.

 

2.3                                 Letter of Credit Procedures.

 

2.3.1            L/C Applications.  The Company shall execute and deliver to the
Issuing Lender the Master Letter of Credit Agreement from time to time in
effect.  The Company shall give notice to the Administrative Agent and the
Issuing Lender of the proposed issuance of each Letter of Credit on a Business
Day which is at least three (3) Business Days (or such lesser number of days as
the Administrative Agent and the Issuing Lender shall agree in any particular
instance in their sole discretion) prior to the proposed date of issuance of
such Letter of Credit.  Each such notice shall be accompanied by an L/C
Application, duly executed by the Company and in all respects satisfactory to
the Administrative Agent and the Issuing Lender, together with such other
documentation as the Administrative Agent or the Issuing Lender may request in
support thereof, it being understood that each L/C Application shall specify,
among other things, the date on which the proposed Letter of Credit is to be
issued, the expiration date of such Letter of Credit (which shall not be later
than the scheduled Termination Date unless the expiration date of such Letter of
Credit is on or before the date that is one year following the scheduled
Termination Date) and whether such Letter of Credit is to be transferable in
whole or in part.  Any Letter of Credit outstanding from and after the
Termination Date (whether the Termination Date results from the occurrence of
the scheduled maturity date, repayment in full of the Obligations (other than
Obligations in respect of outstanding Letters of Credit), the acceleration of
the Obligations or otherwise) shall immediately be Cash Collateralized.  Any
Letter of Credit outstanding after the Termination Date which is Cash
Collateralized for the benefit of the Issuing Lender shall be the sole
responsibility of the Issuing Lender.  So long as the Issuing Lender has not
received written notice that the conditions precedent set forth in Section 12
with respect to the issuance of such Letter of Credit have not been satisfied,
the Issuing Lender shall issue such Letter of Credit on the requested issuance
date.  The Issuing Lender shall promptly advise the Administrative Agent of the
issuance of each Letter of Credit and of any amendment thereto, extension
thereof or event or circumstance changing the amount available for drawing
thereunder.  In the event of any inconsistency between the terms of the Master
Letter of Credit Agreement, any L/C Application and the terms of this Agreement,
the terms of this Agreement shall control.

 

2.3.2            Participations in Letters of Credit.  Concurrently with the
issuance of each Letter of Credit, the Issuing Lender shall be deemed to have
sold and transferred to each Lender with a Revolving Loan Commitment, and each
such Lender shall be deemed

 

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irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender’s Pro Rata Share, in such Letter of Credit and the
Company’s reimbursement obligations with respect thereto.  If the Company does
not pay any reimbursement obligation when due, the Company shall be deemed to
have immediately requested that the Lenders make a Revolving Loan which is a
Base Rate Loan in a principal amount equal to such reimbursement obligations. 
The Administrative Agent shall promptly notify such Lenders of such deemed
request and, without the necessity of compliance with the requirements of
Section 2.2.2, Section 12.2 or otherwise such Lender shall make available to the
Administrative Agent its Pro Rata Share of such Loan.  The proceeds of such Loan
shall be paid over by the Administrative Agent to the Issuing Lender for the
account of the Company in satisfaction of such reimbursement obligations.  For
the purposes of this Agreement, the unparticipated portion of each Letter of
Credit shall be deemed to be the Issuing Lender’s “participation” therein.  The
Issuing Lender hereby agrees, upon request of the Administrative Agent or any
Lender, to deliver to the Administrative Agent or such Lender a list of all
outstanding Letters of Credit issued by the Issuing Lender, together with such
information related thereto as the Administrative Agent or such Lender may
reasonably request.

 

2.3.3    Reimbursement Obligations.  (a) The Company hereby unconditionally and
irrevocably agrees to reimburse the Issuing Lender for each payment or
disbursement made by the Issuing Lender under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made.  Any amount not reimbursed on the
date of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Lender is reimbursed by the
Company therefor at a rate per annum equal to the Base Rate from time to time in
effect plus the Base Rate Margin from time to time in effect (plus the default
rate of interest set forth in Section 4.1 to the extent an Event of Default
exists).  If any reimbursement obligation is not paid on the day a payment or
disbursement is made by the Issuing Lender under a Letter of Credit, the Company
hereby authorizes and directs the Administrative Agent to increase the principal
balance of the Revolving Loan as a Base Rate Loan in an amount equal to such
payment or disbursement made by the Issuing Lender with respect to such Letter
of Credit, except that if Revolving Loans are not available at such time as a
result of the existence of an Event of Default or otherwise, the reimbursement
obligation (including all interest accrued thereon) shall be payable on demand. 
The Issuing Lender shall notify the Company and the Administrative Agent
whenever any demand for payment is made under any Letter of Credit by the
beneficiary thereunder; provided that the failure of the Issuing Lender to so
notify the Company or the Administrative Agent shall not affect the rights of
the Issuing Lender or the Lenders in any manner whatsoever.

 

(b)           The Company’s reimbursement obligations hereunder shall be
irrevocable and unconditional under all circumstances, including (a) any lack of
validity or enforceability of any Letter of Credit, this Agreement or any other
Loan Document, (b) the existence of any claim, set-off, defense or other right
which any Loan Party may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Administrative Agent, the Issuing
Lender, any Lender or any other Person, whether in connection with any Letter of
Credit, this Agreement, any other Loan

 

26

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Document, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between any Loan Party and the beneficiary
named in any Letter of Credit), (c) the validity, sufficiency or genuineness of
any document which the Issuing Lender has determined complies on its face with
the terms of the applicable Letter of Credit, even if such document should later
prove to have been forged, fraudulent, invalid or insufficient in any respect or
any statement therein shall have been untrue or inaccurate in any respect, or
(d) the surrender or impairment of any security for the performance or
observance of any of the terms hereof.  Without limiting the foregoing, no
action or omission whatsoever by the Administrative Agent or any Lender
(excluding any Lender in its capacity as the Issuing Lender) under or in
connection with any Letter of Credit or any related matters shall result in any
liability of the Administrative Agent or any Lender to the Company, or relieve
the Company of any of its obligations hereunder to any such Person.

 

2.3.4    Funding by Lenders to Issuing Lender.  If the Issuing Lender makes any
payment or disbursement under any Letter of Credit and (a) the Company has not
reimbursed the Issuing Lender in full for such payment or disbursement by
11:00 A.M., Chicago time, on the date of such payment or disbursement, (b) a
Revolving Loan may not be made in accordance with Section 2.3.2 (as the result
of the existence of an Event of Default or otherwise) or (c) any reimbursement
received by the Issuing Lender from the Company is or must be returned or
rescinded upon or during any bankruptcy or reorganization of the Company or
otherwise, each other Lender with a Revolving Loan Commitment shall be obligated
to pay to the Administrative Agent for the account of the Issuing Lender, in
full or partial payment of the purchase price of its participation in such
Letter of Credit, its Pro Rata Share of such payment or disbursement (but no
such payment shall diminish the obligations of the Company under Section 2.3.3),
and, upon notice from the Issuing Lender, the Administrative Agent shall
promptly notify each other Lender thereof.  Each other Lender irrevocably and
unconditionally agrees to so pay to the Administrative Agent in immediately
available funds for the Issuing Lender’s account the amount of such other
Lender’s Pro Rata Share of such payment or disbursement.  If and to the extent
any Lender shall not have made such amount available to the Administrative Agent
by 2:00 P.M., Chicago time, on the Business Day on which such Lender receives
notice from the Administrative Agent of such payment or disbursement (it being
understood that any such notice received after noon, Chicago time, on any
Business Day shall be deemed to have been received on the next following
Business Day), such Lender agrees to pay interest on such amount to the
Administrative Agent for the Issuing Lender’s account forthwith on demand, for
each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Base Rate from time to time in
effect.  Any Lender’s failure to make available to the Administrative Agent its
Pro Rata Share of any such payment or disbursement shall not relieve any other
Lender of its obligation hereunder to make available to the Administrative Agent
such other Lender’s Pro Rata Share of such payment, but no Lender shall be
responsible for the failure of any other Lender to make available to the
Administrative Agent such other Lender’s Pro Rata Share of any such payment or
disbursement.

 

2.4           Commitments Several.  The failure of any Lender to make a
requested Loan on any date shall not relieve any other Lender of its obligation
(if any) to make a Loan on such date,

 

27

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but no Lender shall be responsible for the failure of any other Lender to make
any Loan to be made by such other Lender.

 

2.5           Certain Conditions.  Except as otherwise provided in Sections
2.2.2 and 2.3.4 of this Agreement, no Lender shall have an obligation to make
any Loan, or to permit the continuation of or any conversion into any LIBOR
Loan, and the Issuing Lender shall not have any obligation to issue any Letter
of Credit, if an Event of Default or Unmatured Event of Default exists.

 

SECTION 3            EVIDENCING OF LOANS.

 

3.1           Notes.  The Revolving Loans of each Lender shall be evidenced by a
Note, with appropriate insertions, payable to the order of such Lender in a face
principal amount equal to such Lender’s Revolving Loan Commitment.  The Term
Loan of each Lender shall be evidenced by a Note, with appropriate insertions,
payable to the order of such Lender in a face principal amount equal to such
Lender’s Term Loan Commitment.

 

3.2           Recordkeeping.  The Administrative Agent, on behalf of each
Lender, shall record in its records, the date and amount of each Loan made by
each Lender, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and
end.  The aggregate unpaid principal amount so recorded shall be rebuttably
presumptive evidence of the principal amount of the Loans owing and unpaid.  The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the Obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.

 

SECTION 4            INTEREST.

 

4.1           Interest Rates.  The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full as follows:

 

(a)           at all times while such Loan is a Base Rate Loan, at a rate per
annum equal to the sum of the Base Rate from time to time in effect plus the
Base Rate Margin from time to time in effect; and

 

(b)           at all times while such Loan is a LIBOR Loan, at a rate per annum
equal to the sum of the LIBOR Rate applicable to each Interest Period for such
Loan plus the LIBOR Margin from time to time in effect;

 

provided that at any time an Event of Default exists, unless the Required
Lenders otherwise consent, the interest rate applicable to each Loan shall
automatically be increased by 2%; provided further that such increase may
thereafter be rescinded by the Required Lenders, notwithstanding Section 15.1. 
The parties hereto acknowledge and agree that any and all Base Rate Loans and
LIBOR Loans (including the Interest Periods for all LIBOR Loans) outstanding on
the date hereof under the Existing Credit Agreement shall continue under this
Agreement and immediately become subject to the terms and conditions contained
in this Agreement.

 

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4.2           Interest Payment Dates.  Accrued interest on each Base Rate Loan
shall be payable in arrears on the last day of each calendar month and on the
Termination Date.  Accrued interest on each LIBOR Loan shall be payable on the
last day of each Interest Period relating to such Loan (and, in the case of a
LIBOR Loan with an Interest Period in excess of three months, on the three-month
anniversary of the first day of such Interest Period), upon a prepayment of such
Loan, and at maturity.  After the Termination Date, and at any time an Event of
Default exists, accrued interest on all Loans shall be payable on demand.

 

4.3           Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for
each Interest Period shall be determined by the Administrative Agent, and notice
thereof shall be given by the Administrative Agent promptly to the Company and
each Lender.  Each determination of the applicable LIBOR Rate by the
Administrative Agent shall be conclusive and binding upon the parties hereto, in
the absence of demonstrable error.  The Administrative Agent shall, upon written
request of the Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Administrative Agent in
determining any applicable LIBOR Rate hereunder.

 

4.4           Computation of Interest.  Interest on LIBOR Loans shall be
computed for the actual number of days elapsed on the basis of a year of 360
days.  Interest on Base Rate Loans shall be computed for the actual number of
days elapsed on the basis of a year of 365 or 366 days, as applicable.  The
applicable interest rate for each Base Rate Loan shall change simultaneously
with each change in the Base Rate.

 

SECTION 5            FEES.

 

5.1           Non-Use Fee.  The Company agrees to pay to the Administrative
Agent for the account of each Lender a non-use fee, for the period from the
Closing Date to the Termination Date, at the Non-Use Fee Rate in effect from
time to time on such Lender’s Pro Rata Share (as adjusted from time to time) of
the average unused amount of the Revolving Commitment during each calendar
quarter.  For purposes of calculating usage under this Section, the Revolving
Commitment shall be deemed used to the extent of Revolving Outstandings.  Such
non-use fee shall be payable in arrears on the last day of each calendar quarter
and on the Termination Date for any period then ending for which such non-use
fee shall not have previously been paid.  The non-use fee shall be computed for
the actual number of days elapsed on the basis of a year of 360 days.

 

5.2           Letter of Credit Fees.  (a)  The Company agrees to pay to the
Administrative Agent for the account of each Lender a letter of credit fee for
each Letter of Credit equal to the L/C Fee Rate in effect from time to time on
such Lender’s Pro Rata Share (as adjusted from time to time) of the undrawn
amount of such Letter of Credit (computed for the actual number of days elapsed
on the basis of a year of 360 days); provided that, unless the Required Lenders
otherwise consent, the rate applicable to each Letter of Credit shall be
increased by 2% at any time that an Event of Default exists.  Such letter of
credit fee shall be payable in arrears on the last day of each calendar quarter
and on the Termination Date (or such later date on which such Letter of Credit
expires or is terminated) for the period from the date of the issuance of each
Letter of Credit (or the last day on which the letter of credit fee was paid
with respect thereto) to the date such payment is due or, if earlier, the date
on which such Letter of Credit expired or was

 

29

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terminated.  Notwithstanding anything to the contrary contained herein, with
respect to the letter of credit fee that is payable at the L/C Fee Rate as
provided in this Section 5.2, 0.25% of such letter of credit fee shall be
considered a fronting fee payable entirely to the Issuing Lender.

 

(b)           In addition, with respect to each Letter of Credit, the Company
agrees to pay to the Issuing Lender, for its own account, such reasonable fees
and expenses as the Issuing Lender customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations.

 

5.3           Administrative Agent’s Fees.  The Company agrees to pay to the
Administrative Agent such agent’s fees as are mutually agreed to from time to
time by the Company and the Administrative Agent including the fees set forth in
the Agent Fee Letter.  The Company acknowledges and agrees that the Agent Fee
Letter continues to be in full force and effect for all purposes.

 

SECTION 6                                   REDUCTION OR TERMINATION OF THE
REVOLVING COMMITMENT; PREPAYMENTS.

 

6.1           Reduction or Termination of the Revolving Commitment.

 

6.1.1    Voluntary Permanent Reduction or Termination of the Revolving
Commitment.  The Company may from time to time on at least five (5) Business
Days’ prior written notice given in accordance with Section 15.3 hereof (which
the Administrative Agent shall promptly advise each Lender thereof) permanently
reduce the Revolving Commitment to an amount not less than the Revolving
Outstandings.  Any such reduction shall be in an amount not less than $500,000
or a higher integral multiple of $100,000.  Concurrently with any reduction of
the Revolving Commitment to zero, the Company shall pay all accrued interest on
the Revolving Loans, all accrued non-use fees and all accrued letter of credit
fees and shall Cash Collateralize in full all obligations arising with respect
to the Letters of Credit.

 

6.1.2    Voluntary Temporary Reduction of the Revolving Commitment.  The Company
may from time to time on at least five (5) Business Days’ prior written notice
given in accordance with Section 15.3 hereof (which the Administrative Agent
shall promptly advise each Lender thereof) temporarily reduce the Revolving
Commitment subject to the following terms and conditions:  (a) with respect to
any election made by the Company to temporarily decrease the Revolving
Commitment, the temporary decrease will automatically terminate on the one
hundred eightieth (180) day anniversary of such election (each, a “Temporary
Revolver Reduction Period” and each day during a Temporary Revolver Reduction
Period, a “Temporary Revolver Reduction Day”), (b) with respect to any election
made by the Company to temporarily decrease the Revolving Commitment, the
Revolving Commitment may be reduced to an amount not less than the greater of
(i) $10,000,000 and (ii) the Revolving Outstandings, (c) with respect to each
calendar year, there shall be no more than one (1) Temporary Revolver Reduction
Period election made by the Company and no more than a total of one hundred
eighty (180) Temporary Revolver Reduction Days, (d) each Temporary Revolver
Reduction Period shall be separated from any other Temporary Revolver Reduction
Period by at least one hundred eighty (180) days, and (e) except as otherwise
approved in writing by the Administrative Agent, no election may be made under

 

30

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this section during the existence of an Event of Default and any Temporary
Revolver Reduction Period in place shall immediately terminate upon the
occurrence of an Event of Default.  Notwithstanding the foregoing, the Company
may terminate any Temporary Revolver Reduction Period so long as no Event of
Default exists by providing the Administrative Agent with no less than five
(5) Business Days prior written notice of such termination..

 

6.1.3    All Reductions of the Revolving Commitment.  All reductions of the
Revolving Commitment shall reduce the Commitments ratably among the Lenders
according to their respective Pro Rata Shares.

 

6.2           Prepayments.

 

6.2.1    Voluntary Prepayments.  The Company may from time to time prepay the
Loans in whole or in part; provided that the Company shall give the
Administrative Agent (which shall promptly advise each Lender) notice thereof
not later than 11:00 A.M., Chicago time, on the day of such prepayment (which
shall be a Business Day), specifying the Loans to be prepaid and the date and
amount of prepayment.  Any such partial prepayment shall be in an amount equal
to $500,000 or a higher integral multiple of $100,000.

 

6.2.2        Mandatory Prepayments.

 

(a)           The Company shall make a prepayment of the Term Loan until paid in
full upon the occurrence of any of the following (each a “Mandatory Prepayment
Event”) at the following times and in the following amounts (such applicable
amounts being referred to as “Designated Proceeds”):

 

(i)                                     Concurrently with the receipt by any
Loan Party of any Net Cash Proceeds from any Asset Disposition (excluding an
aggregate of $200,000 in proceeds per Fiscal Year in respect of Asset
Dispositions occurring in such Fiscal Year), in an amount equal to 100% of such
Net Cash Proceeds.

 

(ii)                                  Concurrently with the receipt by any Loan
Party of any Net Cash Proceeds from any issuance of Capital Securities of any
Loan Party (excluding (x) any issuance of Capital Securities pursuant to any
employee or director option program, benefit plan or compensation program and
(y) any issuance by a Subsidiary to the Company or another Subsidiary), in an
amount equal to 100% of such Net Cash Proceeds.

 

(iii)                               Concurrently with the receipt by any Loan
Party of any Net Cash Proceeds from any issuance of any Debt of any Loan Party
(excluding Subordinated Debt permitted under Section 11.1), in an amount equal
to 100% of such Net Cash Proceeds.

 

(iv)                              Within one-hundred twenty (120) days after the
end of each Fiscal Year (commencing with Fiscal Year 2011), in an amount equal
to fifty percent (50.0%) of Excess Cash Flow for such Fiscal Year.

 

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(b)           If on any day the Revolving Outstandings exceed the Borrowing
Base, the Company shall immediately prepay Revolving Loans and/or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.

 

(c)           If on any day on which the Revolving Commitment is reduced
pursuant to Section 6.1 the Revolving Outstandings exceed the Revolving
Commitment, the Company shall immediately prepay Revolving Loans or Cash
Collateralize the outstanding Letters of Credit, or do a combination of the
foregoing, in an amount sufficient to eliminate such excess.

 

6.3           Manner of Prepayments.

 

6.3.1    All Prepayments.  Each voluntary partial prepayment of the Term Loan
shall be in a principal amount of $500,000 or a higher integral multiple of
$100,000.  Any partial prepayment of a Group of LIBOR Loans shall be subject to
the proviso to Section 2.2.3(a).  Any prepayment of a LIBOR Loan on a day other
than the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 8.4.  All
prepayments of the Term Loan shall be applied pro rata and in the inverse order
of maturity to the remaining installments thereof.  Except as otherwise provided
by this Agreement, all principal payments in respect of the Loans shall be
applied first, to repay outstanding Base Rate Loans and then to repay
outstanding LIBOR Rate Loans in direct order of Interest Period maturities.

 

6.4           Repayments.

 

6.4.1    Revolving Loans.  The Revolving Loans of each Lender shall be paid in
full and the Revolving Commitment shall terminate on the Termination Date.

 

6.4.2    Term Loan.  The principal amount of the Term Loan shall be paid in
installments as follows:

 

 

Payment Date

 

Term Loan

 

 

 

 

 

 

December 31, 2011

 

$

125,000

 

March 31, 2012

 

$

125,000

 

June 30, 2012

 

$

125,000

 

September 30, 2012

 

$

125,000

 

December 31, 2012

 

$

125,000

 

March 31, 2013

 

$

125,000

 

June 30, 2013

 

$

125,000

 

September 30, 2013

 

$

125,000

 

December 31, 2013

 

$

125,000

 

March 31, 2014

 

$

125,000

 

June 30, 2014

 

$

125,000

 

September 30, 2014

 

$

125,000

 

December 31, 2014

 

$

125,000

 

March 31, 2015

 

$

125,000

 

 

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Unless sooner paid in full, the outstanding principal balance of the Term Loan
shall be paid in full on the Term Loan Maturity Date.

 

SECTION 7            MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

 

7.1           Making of Payments.  All payments of principal or interest on the
Notes, and of all fees, shall be made by the Company to the Administrative Agent
in immediately available funds at the office specified by the Administrative
Agent not later than 2:00 p.m., Chicago time, on the date due; and funds
received after that hour shall be deemed to have been received by the
Administrative Agent on the following Business Day.  The Administrative Agent
shall promptly remit to each Lender its share of all such payments received in
collected funds by the Administrative Agent for the account of such Lender.  All
payments under Section 8.1 shall be made by the Company directly to the Lender
entitled thereto without setoff, counterclaim or other defense.

 

7.2           Application of Certain Payments.  So long as no Event of Default
has occurred and is continuing, (a) payments matching specific scheduled
payments then due shall be applied to those scheduled payments and (b) voluntary
and mandatory prepayments shall be applied as set forth in Sections 6.2 and
6.3.  After the occurrence and during the continuance of an Event of Default,
all amounts collected or received by the Administrative Agent or any Lender as
proceeds from the sale of, or other realization upon, all or any part of the
Collateral shall be applied as set forth in the Guaranty and Collateral
Agreement.  Concurrently with each remittance to any Lender of its share of any
such payment, the Administrative Agent shall advise such Lender as to the
application of such payment.

 

7.3           Due Date Extension.  If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.

 

7.4           Setoff.  The Company, for itself and each other Loan Party, agrees
that the Administrative Agent and each Lender have all rights of set-off and
bankers’ lien provided by applicable law, and in addition thereto, the Company,
for itself and each other Loan Party, agrees that at any time any Event of
Default exists, the Administrative Agent and each Lender may apply to the
payment of any Obligations of the Company and each other Loan Party hereunder,
whether or not then due, any and all balances, credits, deposits, accounts or
moneys of the Company and each other Loan Party then or thereafter with the
Administrative Agent or such Lender.

 

7.5           Proration of Payments.  If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise, on account of (a) principal of or interest on any Loan, but excluding
(i) any payment pursuant to Section 8.7 or 15.6 and (ii) payments of interest on
any Affected Loan) or (b) its participation in any Letter of Credit) in excess
of its applicable Pro Rata Share of payments and other recoveries obtained by
all Lenders on account of principal of and interest on the Loans (or such
participation) then held by them,

 

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then such Lender shall purchase from the other Lenders such participations in
the Loans (or sub-participations in Letters of Credit) held by them as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.

 

7.6           Taxes.

 

(a)           All payments made by the Company hereunder or under any Loan
Documents shall be made without setoff, counterclaim, or other defense.  To the
extent permitted by applicable law, all payments hereunder or under the Loan
Documents (including any payment of principal, interest, or fees) to, or for the
benefit, of any person shall be made by the Company free and clear of and
without deduction or withholding for, or account of, any Taxes now or
hereinafter imposed by any taxing authority.

 

(b)           If the Company makes any payment hereunder or under any Loan
Document in respect of which it is required by applicable law to deduct or
withhold any Taxes, the Company shall increase the payment hereunder or under
any such Loan Document such that after the reduction for the amount of Taxes
withheld (and any taxes withheld or imposed with respect to the additional
payments required under this Section 7.6(b)), the amount paid to the Lenders or
the Administrative Agent equals the amount that was payable hereunder or under
any such Loan Document without regard to this Section 7.6(b).  To the extent the
Company withholds any Taxes on payments hereunder or under any Loan Document,
the Company shall pay the full amount deducted to the relevant taxing authority
within the time allowed for payment under applicable law and shall deliver to
the Administrative Agent within 30 days after it has made payment to such
authority a receipt issued by such authority (or other evidence satisfactory to
the Administrative Agent) evidencing the payment of all amounts so required to
be deducted or withheld from such payment.

 

(c)           If any Lender or the Administrative Agent is required by law to
make any payments of any Taxes on or in relation to any amounts received or
receivable hereunder or under any other Loan Document, or any Tax is assessed
against a Lender or the Administrative Agent with respect to amounts received or
receivable hereunder or under any other Loan Document, the Company will
indemnify such person against (i) such Tax (and any reasonable counsel fees and
expenses associated with such Tax) and (ii) any taxes imposed as a result of the
receipt of the payment under this Section 7.6(c).  A certificate prepared in
good faith as to the amount of such payment by such Lender or the Administrative
Agent shall, absent manifest error, be final, conclusive, and binding on all
parties.

 

(d)           (i)            To the extent permitted by applicable law, each
Lender that is not a United States person within the meaning of Code
Section 7701(a)(30) (a “Non-U.S. Participant”) shall deliver to the Company and
the Administrative Agent on or prior to the Closing Date (or in the case of a
Lender that is an Assignee, on the date of such assignment to such Lender) two
accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI, or
W-8IMY (or any successor or other applicable form prescribed by the IRS)
certifying to such Lender’s entitlement to a complete exemption from, or a
reduced rate in, United States withholding tax on

 

34

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interest payments to be made hereunder or any Loan.  If a Lender that is a
Non-U.S. Participant is claiming a complete exemption from withholding on
interest pursuant to Code Sections 871(h) or 881(c), the Lender shall deliver
(along with two accurate and complete original signed copies of IRS Form W-8BEN)
a certificate in form and substance reasonably acceptable to Administrative
Agent (any such certificate, a “Withholding Certificate”).  In addition, each
Lender that is a Non-U.S. Participant agrees that from time to time after the
Closing Date, (or in the case of a Lender that is an Assignee, after the date of
the assignment to such Lender), when a lapse in time (or change in circumstances
occurs) renders the prior certificates hereunder obsolete or inaccurate in any
material respect, such Lender shall, to the extent permitted under applicable
law, deliver to the Company and the Administrative Agent two new and accurate
and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or
any successor or other applicable forms prescribed by the IRS), and if
applicable, a new Withholding Certificate, to confirm or establish the
entitlement of such Lender or the Administrative Agent to an exemption from, or
reduction in, United States withholding tax on interest payments to be made
hereunder or any Loan.

 

(ii)           Each Lender that is not a Non-U.S. Participant (other than any
such Lender which is taxed as a corporation for U.S. federal income tax
purposes) shall provide two properly completed and duly executed copies of IRS
Form W-9 (or any successor or other applicable form) to the Company and the
Administrative Agent certifying that such Lender is exempt from United States
backup withholding tax.  To the extent that a form provided pursuant to this
Section 7.6(d)(ii) is rendered obsolete or inaccurate in any material respects
as result of change in circumstances with respect to the status of a Lender,
such Lender shall, to the extent permitted by applicable law, deliver to the
Company and the Administrative Agent revised forms necessary to confirm or
establish the entitlement to such Lender’s or Agent’s exemption from United
States backup withholding tax.

 

(iii)          The Company shall not be required to pay additional amounts to a
Lender, or indemnify any Lender, under this Section 7.6 to the extent that such
obligations would not have arisen but for the failure of such Lender to comply
with Section 7.6(d).

 

(iv)          Each Lender agrees to indemnify the Administrative Agent and hold
the Administrative Agent harmless for the full amount of any and all present or
future Taxes and related liabilities (including penalties, interest, additions
to tax and expenses, and any Taxes imposed by any jurisdiction on amounts
payable to the Administrative Agent under this Section 7.6) which are imposed on
or with respect to principal, interest or fees payable to such Lender hereunder
and which are not paid by the Company pursuant to this Section 7.6, whether or
not such Taxes or related liabilities were correctly or legally asserted.  This
indemnification shall be made within 30 days from the date the Administrative
Agent makes written demand therefor.

 

SECTION 8                                   INCREASED COSTS; SPECIAL PROVISIONS
FOR LIBOR LOANS.

 

8.1           Increased Costs.  (a)  If, after the date hereof, the adoption of,
or any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority,

 

35

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central bank or comparable agency:  (i) shall impose, modify or deem applicable
any reserve (including any reserve imposed by the FRB, but excluding any reserve
included in the determination of the LIBOR Rate pursuant to Section 4), special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by any Lender; or (ii) shall impose on any Lender
any other condition affecting its LIBOR Loans, its Note or its obligation to
make LIBOR Loans; and the result of anything described in clauses (i) and (ii)
above is to increase the cost to (or to impose a cost on) such Lender (or any
LIBOR Office of such Lender) of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by such Lender (or its LIBOR
Office) under this Agreement or under its Note with respect thereto, then upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to the Administrative
Agent), the Company shall pay directly to such Lender such additional amount as
will compensate such Lender for such increased cost or such reduction, so long
as such amounts have accrued on or after the day which is 180 days prior to the
date on which such Lender first made demand therefor.

 

(b)                                 If any Lender shall reasonably determine
that any change in, or the adoption or phase-in of, any applicable law, rule or
regulation regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by any Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender’s or such controlling
Person’s capital as a consequence of such Lender’s obligations hereunder or
under any Letter of Credit to a level below that which such Lender or such
controlling Person could have achieved but for such change, adoption, phase-in
or compliance (taking into consideration such Lender’s or such controlling
Person’s policies with respect to capital adequacy) by an amount deemed by such
Lender or such controlling Person to be material, then from time to time, upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to the Administrative
Agent), the Company shall pay to such Lender such additional amount as will
compensate such Lender or such controlling Person for such reduction so long as
such amounts have accrued on or after the day which is 180 days prior to the
date on which such Lender first made demand therefor.

 

8.2                                 Basis for Determining Interest Rate
Inadequate or Unfair.  If:

 

(a)                                  the Administrative Agent reasonably
determines (which determination shall be binding and conclusive on the Company)
that by reason of circumstances affecting the interbank LIBOR market adequate
and reasonable means do not exist for ascertaining the applicable LIBOR Rate; or

 

(b)                                 the Required Lenders advise the
Administrative Agent that the LIBOR Rate as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding LIBOR Loans for such Interest Period (taking into account
any amount to which such Lenders may be entitled under Section 8.1) or that the
making or

 

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funding of LIBOR Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such Lenders
materially affects such Loans;

 

then the Administrative Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Lender shall be under
any obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii)
on the last day of the current Interest Period for each LIBOR Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.

 

8.3                                 Changes in Law Rendering LIBOR Loans
Unlawful.  If any change in, or the adoption of any new, law or regulation, or
any change in the interpretation of any applicable law or regulation by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of any Lender cause a substantial
question as to whether it is) unlawful for any Lender to make, maintain or fund
LIBOR Loans, then such Lender shall promptly notify each of the other parties
hereto and, so long as such circumstances shall continue, (a) such Lender shall
have no obligation to make or convert any Base Rate Loan into a LIBOR Loan (but
shall make Base Rate Loans concurrently with the making of or conversion of Base
Rate Loans into LIBOR Loans by the Lenders which are not so affected, in each
case in an amount equal to the amount of LIBOR Loans which would be made or
converted into by such Lender at such time in the absence of such circumstances)
and (b) on the last day of the current Interest Period for each LIBOR Loan of
such Lender (or, in any event, on such earlier date as may be required by the
relevant law, regulation or interpretation), such LIBOR Loan shall, unless then
repaid in full, automatically convert to a Base Rate Loan.  Each Base Rate Loan
made by a Lender which, but for the circumstances described in the foregoing
sentence, would be a LIBOR Loan (an “Affected Loan”) shall remain outstanding
for the period corresponding to the Group of LIBOR Loans of which such Affected
Loan would be a part absent such circumstances.

 

8.4                                 Funding Losses.  The Company hereby agrees
that upon demand by any Lender (which demand shall be accompanied by a statement
setting forth the basis for the amount being claimed, a copy of which shall be
furnished to the Administrative Agent), the Company will indemnify such Lender
against any net loss or expense which such Lender may sustain or incur
(including any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan), as reasonably determined by such Lender, as a result
of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender on
a date other than the last day of an Interest Period for such Loan (including
any conversion pursuant to Section 8.3) or (b) any failure of the Company to
borrow, convert or continue any Loan on a date specified therefor in a notice of
borrowing, conversion or continuation pursuant to this Agreement.  For this
purpose, all notices to the Administrative Agent pursuant to this Agreement
shall be deemed to be irrevocable.

 

8.5                                 Right of Lenders to Fund through Other
Offices.  Each Lender may, if it so elects, fulfill its commitment as to any
LIBOR Loan by causing a foreign branch or Affiliate of such Lender to make such
Loan; provided that in such event for the purposes of this Agreement such Loan
shall be deemed to have been made by such Lender and the obligation of the
Company to repay such Loan shall nevertheless be to such Lender and shall be
deemed held by it, to the extent of such Loan, for the account of such branch or
Affiliate.

 

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8.6                                 Discretion of Lenders as to Manner of
Funding.  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
its Loans 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 each LIBOR Loan during each Interest
Period for such Loan 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.

 

8.7                                 Mitigation of Circumstances; Replacement of
Lenders.  (a)  Each Lender shall promptly notify the Company and the
Administrative Agent of any event of which it has knowledge which will result
in, and will use reasonable commercial efforts available to it (and not, in such
Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or
avoid, (i) any obligation by the Company to pay any amount pursuant to Sections
7.6 or 8.1 or (ii) the occurrence of any circumstances described in Sections 8.2
or 8.3 (and, if any Lender has given notice of any such event described in
clause (i) or (ii) above and thereafter such event ceases to exist, such Lender
shall promptly so notify the Company and the Administrative Agent).  Without
limiting the foregoing, each Lender will designate a different funding office if
such designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) above and such designation will not, in such
Lender’s sole judgment, be otherwise disadvantageous to such Lender.

 

8.8                                 Conclusiveness of Statements; Survival of
Provisions.  Determinations and statements of any Lender pursuant to Sections
8.1, 8.2, 8.3 or 8.4 shall be conclusive absent demonstrable error.  Lenders may
use reasonable averaging and attribution methods in determining compensation
under Sections 8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Obligations, cancellation of any Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.

 

SECTION 9                                   REPRESENTATIONS AND WARRANTIES.

 

To induce the Administrative Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make Loans and issue and participate in Letters of
Credit hereunder, the Company represents and warrants to the Administrative
Agent and the Lenders that:

 

9.1                                 Organization.  Each Loan Party is validly
existing and in good standing under the laws of its jurisdiction of
incorporation; and each Loan Party is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for such jurisdictions where the failure to so
qualify would not have a Material Adverse Effect.

 

9.2                                 Authorization; No Conflict.  Each Loan Party
is duly authorized to execute and deliver each Loan Document to which it is a
party, the Company is duly authorized to borrow monies hereunder and each Loan
Party is duly authorized to perform its Obligations under each Loan Document to
which it is a party.  The execution, delivery and performance by each Loan Party
of each Loan Document to which it is a party, and the borrowings by the Company
hereunder, do not and will not (a) require any consent or approval of any
governmental agency or authority (other than any consent or approval which has
been obtained and is in full force and

 

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effect), (b) conflict with (i) any provision of law applicable to such Loan
Party, the violation of which could reasonably be expected to result in a
Material Adverse Effect, (ii) the charter, by-laws or other organizational
documents of any Loan Party or (iii) any agreement, indenture, instrument or
other document, or any judgment, order or decree, which is binding upon any Loan
Party or any of their respective properties or (c) require, or result in, the
creation or imposition of any Lien on any asset of any Loan Party (other than
Liens in favor of the Administrative Agent created pursuant to the Collateral
Documents).

 

9.3                                 Validity and Binding Nature.  Each of this
Agreement and each other Loan Document to which any Loan Party is a party is the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, subject to bankruptcy, fraudulent transfer,
moratorium, reorganization, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity.

 

9.4                                 Financial Condition.  The audited
consolidated financial statements of the Company and its Subsidiaries as at
January 1, 2011, and the unaudited consolidated financial statements of the
Company and its Subsidiaries as at October 1, 2011 (such financial statements
providing sales and pre-tax income information), copies of which have been
delivered to each Lender, were prepared in accordance with GAAP (subject, in the
case of such unaudited statements, to the absence of footnotes and to normal
year-end adjustments) and present fairly the consolidated financial condition of
the Company and its Subsidiaries as at such dates and the results of their
operations for the periods then ended.

 

9.5                                 No Material Adverse Change.  Since October
1, 2011, there has been no material adverse change in the business, assets,
liabilities, properties, condition (financial or otherwise) or results of
operations of the Loan Parties taken as a whole.

 

9.6                                 Litigation and Contingent Liabilities.  No
litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Company’s
knowledge, threatened against any Loan Party which might reasonably be expected
to have a Material Adverse Effect, except as set forth in Schedule 9.6.  Other
than any liability incident to such litigation or proceedings, no Loan Party has
any material Contingent Liabilities not listed on Schedule 9.6 or permitted by
Section 11.1.

 

9.7                                 Ownership of Properties; Liens.  Each Loan
Party owns good and, in the case of real property, marketable title to all of
its material properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including patents, trademarks, trade names, service
marks and copyrights), free and clear of all Liens, charges and claims
(including infringement claims with respect to patents, trademarks, service
marks, copyrights and the like) other than Permitted Liens.

 

9.8                                 Equity Ownership; Subsidiaries.  All issued
and outstanding Capital Securities of the Loan Parties (other than the Company)
are duly authorized and validly issued, fully-paid, non-assessable, and free and
clear of all Liens other than those in favor of the Administrative Agent, and
such securities were issued in compliance with all applicable state and federal
laws concerning the issuance of securities.  Schedule 9.8 sets forth the
authorized Capital Securities of each Loan Party (other than the Company) as of
the Closing Date.  All of the issued and

 

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outstanding Capital Securities of the Loan Parties (other than the Company) are
owned as set forth on Schedule 9.8 as of the Closing Date.  As of the Closing
Date, except as set forth on Schedule 9.8, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Capital
Securities of any Loan Party (other than the Company).

 

9.9                                 Pension Plans.  (a) The Unfunded Liability
of all Pension Plans does not in the aggregate exceed twenty percent of the
Total Plan Liability for all such Pension Plans.  Each Pension Plan complies in
all material respects with all applicable requirements of law and regulations. 
No contribution failure under Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan has occurred with respect to any Pension Plan,
sufficient to give rise to a Lien under Section 302(f) of ERISA, or otherwise to
have a Material Adverse Effect.  There are no pending or, to the knowledge of
Company, threatened, claims, actions, investigations or lawsuits against any
Pension Plan, any fiduciary of any Pension Plan, or Company or other any member
of the Controlled Group with respect to a Pension Plan or a Multiemployer
Pension Plan which could reasonably be expected to have a Material Adverse
Effect.  Neither the Company nor any other member of the Controlled Group has
engaged in any prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Pension Plan or Multiemployer
Pension Plan which would subject that Person to any material liability.  Within
the past five years, neither the Company nor any other member of the Controlled
Group has engaged in a transaction which resulted in a Pension Plan with an
Unfunded Liability being transferred out of the Controlled Group, which could
reasonably be expected to have a Material Adverse Effect.  No Termination Event
has occurred or is reasonably expected to occur with respect to any Pension
Plan, which could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 All contributions (if any) have been made to
any Multiemployer Pension Plan that are required to be made by the Company or
any other member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable law; neither the Company nor
any other member of the Controlled Group has withdrawn or partially withdrawn
from any Multiemployer Pension Plan, incurred any withdrawal liability with
respect to any such plan or received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, could result in a withdrawal or
partial withdrawal from any such plan; and neither the Company nor any other
member of the Controlled Group has received any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of any excise tax, that
any such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or that any
such plan is or may become insolvent.

 

9.10                           Investment Company Act.  No Loan Party is an
“investment company” or a company “controlled” by an “investment company” or a
“subsidiary” of an “investment company,” within the meaning of the Investment
Company Act of 1940.

 

9.11                           Intentionally Omitted.

 

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9.12                           Regulation U.  The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.

 

9.13                           Taxes.  Each Loan Party has timely filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges due and payable with respect to such return,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.  The Loan Parties have made
adequate reserves on their books and records in accordance with GAAP for all
taxes that have accrued but which are not yet due and payable.  No Loan Party
has participated in any transaction that relates to a year of the taxpayer
(which is still open under the applicable statute of limitations) which is a
“reportable transaction” within the meaning of Treasury Regulation Section
1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).

 

9.14                           Solvency, etc.  On the Closing Date, and
immediately prior to and after giving effect to the issuance of each Letter of
Credit and each borrowing hereunder and the use of the proceeds thereof, with
respect to each Loan Party other than the Inactive Subsidiary, individually, (a)
the fair value of its assets is greater than the amount of its liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated in accordance with GAAP, (b) the present
fair saleable value of its assets is not less than the amount that will be
required to pay the probable liability on its debts as they become absolute and
matured, (c) it is able to realize upon its assets and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business, (d) it does not intend to, and
does not believe that it will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (e) it is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.

 

9.15                           Environmental Matters.  The on-going operations
of each Loan Party comply in all respects with all Environmental Laws, except
such non-compliance which could not (if enforced in accordance with applicable
law) reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.  Each Loan Party has obtained, and maintained in
good standing, all licenses, permits, authorizations, registrations and other
approvals required under any Environmental Law and required for their respective
ordinary course operations, and for their reasonably anticipated future
operations, and each Loan Party is in compliance with all terms and conditions
thereof, except where the failure to do so could not reasonably be expected to
result in material liability to any Loan Party and could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.  No Loan Party or any of its properties or operations is subject
to, or reasonably anticipates the issuance of, any written order from or
agreement with any Federal, state or local governmental authority, nor subject
to any judicial or docketed administrative or other proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Substance.  There are no
Hazardous Substances or other conditions or circumstances existing with respect
to any property, arising from operations prior to the Closing Date, or relating
to any waste disposal, of any Loan Party that would reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect. 
No Loan Party has any underground storage tanks that are not properly registered
or permitted under

 

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applicable Environmental Laws or that at any time have released, leaked,
disposed of or otherwise discharged Hazardous Substances.

 

9.16                           Insurance.  Set forth on Schedule 9.16 is a
complete and accurate summary of the property and casualty insurance program of
the Loan Parties as of the Closing Date (including the names of all insurers,
policy numbers, expiration dates, amounts and types of coverage, annual
premiums, exclusions, deductibles, self-insured retention, and a description in
reasonable detail of any self-insurance program, retrospective rating plan,
fronting arrangement or other risk assumption arrangement involving any Loan
Party).  Each Loan Party and its properties are insured with financially sound
and reputable insurance companies which are not Affiliates of the Loan Parties,
in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where such Loan Parties operate.

 

9.17                           Real Property.  Set forth on Schedule 9.17 is a
complete and accurate list, as of the Closing Date, of the address of all real
property owned or leased by any Loan Party, together with, in the case of leased
property, the name and mailing address of the lessor of such property.

 

9.18                           Information.  All information heretofore or
contemporaneously herewith furnished in writing by any Loan Party to the
Administrative Agent or any Lender for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender pursuant hereto or in connection herewith
will be (including, without limitation, all information filed prior to or after
the date hereof with the SEC), true and accurate in every material respect on
the date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Administrative Agent and the
Lenders that any projections, forecasts and other forward looking statements
provided by the Loan Parties are based on good faith estimates and assumptions
believed by the Loan Parties to be reasonable as of the date of the applicable
projections or assumptions and that actual results during the period or periods
covered by any such projections and forecasts may differ from projected or
forecasted results).

 

9.19                           Intellectual Property.  Each Loan Party owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as are necessary for the conduct of the
businesses of the Loan Parties, without any infringement upon rights of others
which could reasonably be expected to have a Material Adverse Effect.

 

9.20                           Burdensome Obligations.  No Loan Party is a party
to any agreement or contract or subject to any restriction contained in its
organizational documents which could reasonably be expected to have a Material
Adverse Effect.

 

9.21                           Labor Matters.  Except as set forth on Schedule
9.21, no Loan Party is subject to any labor or collective bargaining agreement. 
There are no existing or threatened strikes, lockouts or other labor disputes
involving any Loan Party that singly or in the aggregate could reasonably be
expected to have a Material Adverse Effect.  Hours worked by and payment made

 

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to employees of the Loan Parties are not in violation of the Fair Labor
Standards Act or any other applicable law, rule or regulation dealing with such
matters.

 

9.22                           No Default.  No Event of Default or Unmatured
Event of Default exists or would result from the incurrence by any Loan Party of
any Debt hereunder or under any other Loan Document.

 

9.23                           Inactive Subsidiary.  The Inactive Subsidiary has
ceased the operation of business and has no material assets or liabilities.

 

SECTION 10                             AFFIRMATIVE COVENANTS.

 

Until the expiration or termination of the Commitments and thereafter until all
Obligations hereunder and under the other Loan Documents are paid in full (other
than any Obligation arising solely from any Bank Product Agreement or contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) and all Letters of Credit have been terminated or Cash Collateralized,
the Company agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, it will:

 

10.1                           Reports, Certificates and Other Information. 
Furnish to the Administrative Agent and each Lender:

 

10.1.1                                          Annual Report.  Promptly when
available and in any event within one hundred twenty (120) days after the close
of each Fiscal Year: (a) a copy of the annual audit report of the Company and
its Subsidiaries for such Fiscal Year, including therein consolidated balance
sheets and statements of earnings and cash flows of the Company and its
Subsidiaries as at the end of such Fiscal Year, certified without adverse
reference to going concern value and without qualification by independent
auditors of recognized standing selected by the Company and reasonably
acceptable to the Administrative Agent, together with (i) a written statement
from such accountants to the effect that in making the examination necessary for
the signing of such annual audit report by such accountants, nothing came to
their attention that caused them to believe that the Company was not in
compliance with any provision of Section 11.13 of this Agreement insofar as such
provision relates to accounting matters or, if something has come to their
attention that caused them to believe that the Company was not in compliance
with any such provision, describing such non-compliance in reasonable detail and
(ii) a comparison with the budget for such Fiscal Year and a comparison with the
previous Fiscal Year; and (b) a consolidating balance sheet of the Company and
its Subsidiaries as of the end of such Fiscal Year and consolidating statement
of earnings and cash flows for the Company and its Subsidiaries for such Fiscal
Year, certified by a Senior Officer of the Company.

 

10.1.2                                          Interim Reports.  (a)  Promptly
when available and in any event within 45 days after the end of each Fiscal
Quarter, consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
and consolidating statements of earnings and cash flows for such Fiscal Quarter
and for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the

 

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previous Fiscal Year and a comparison with the budget for such period of the
current Fiscal Year, certified by a Senior Officer of the Company; and (b)
promptly when available and in any event within 30 days after the end of each
month, consolidated and consolidating statements of earnings for the Company and
its Subsidiaries for such month and for the period beginning with the first day
of such Fiscal Year and ending on the last day of such month, together with (x)
a comparison with the corresponding period of the previous Fiscal Year and a
comparison with the budget for such period of the current Fiscal Year, certified
by a Senior Officer of the Company, and (y) a monthly internal management report
providing an analysis of the financial performance for such month and for the
period beginning with the first day of the applicable Fiscal Year and ending on
the last day of such month.

 

10.1.3                                          Compliance Certificates. 
Contemporaneously with the furnishing of a copy of each annual audit report
pursuant to Section 10.1.1 and each set of quarterly statements pursuant to
Section 10.1.2, a duly completed compliance certificate in the form of Exhibit
B, with appropriate insertions, dated the date of such annual report or such
quarterly statements and signed by a Senior Officer of the Company, containing
(i) a computation of each of the financial ratios, restrictions and requirements
set forth in Section 11.13 and to the effect that such officer has not become
aware of any Event of Default or Unmatured Event of Default that has occurred
and is continuing or, if there is any such event, describing it and the steps,
if any, being taken to cure it and (ii) to the extent there has been a change in
the corporate structure of the Company or the Subsidiaries since the previously
delivered compliance certificate under this Section 10.1.3, an updated
organizational chart listing all Subsidiaries and the jurisdictions of their
respective incorporation.

 

10.1.4                                          Reports to the SEC and to
Shareholders.  Promptly upon the filing or sending thereof, copies of all
regular, periodic or special reports of any Loan Party filed with the SEC;
copies of all registration statements of any Loan Party filed with the SEC
(other than on Form S-8); copies of all proxy statements or other communications
made to security holders generally; and copies of any other filings, reports or
other documents to or from any securities exchange or the SEC upon the
Administrative Agent’s request.

 

10.1.5                                          Notice of Default, Litigation
and ERISA Matters.  Promptly upon becoming aware of any of the following,
written notice describing the same and the steps being taken by the Company or
the Subsidiary affected thereby with respect thereto:

 

(a)                                  the occurrence of an Event of Default or an
Unmatured Event of Default;

 

(b)                                 any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to the
Lenders which has been instituted or, to the knowledge of the Company, is
threatened against any Loan Party or to which any of the properties of any
thereof is subject which might reasonably be expected to have a Material Adverse
Effect;

 

(c)                                  the institution of any steps by any member
of the Controlled Group or any other Person to terminate any Pension Plan, or
the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA) or to any Multiemployer

 

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Pension Plan, or the taking of any action with respect to a Pension Plan which
could result in the requirement that the Company furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any event with
respect to any Pension Plan or Multiemployer Pension Plan which could result in
the incurrence by any member of the Controlled Group of any material liability,
fine or penalty (including any claim or demand for withdrawal liability or
partial withdrawal from any Multiemployer Pension Plan), or any material
increase in the contingent liability of the Company with respect to any
post-retirement welfare benefit plan or other employee benefit plan of the
Company or another member of the Controlled Group, or any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the Code, that any such plan is or may be
terminated, or that any such plan is or may become insolvent;

 

(d)                                 any cancellation or material change in any
insurance maintained by any Loan Party;

 

(e)                                  any other event (including (i) any
violation of any Environmental Law or the assertion of any Environmental Claim
or (ii) the enactment or effectiveness of any law, rule or regulation) which
might reasonably be expected to have a Material Adverse Effect; or

 

(f)                                    the imposition or occurrence of any Lien
for Taxes, assessments or other governmental charges other than any Permitted
Lien.

 

10.1.6                                          Borrowing Base Certificates and
Additional Monthly Reports.  Within fifteen (15) days of the end of each month,
(i) a Borrowing Base Certificate dated as of the end of such month and executed
by a Senior Officer of the Company on behalf of the Company (provided that
(a) the Company may deliver a Borrowing Base Certificate more frequently if it
chooses, and (b) during any time an Event of Default exists or Excess
Availability is, and continues to be, less than $5,000,000, the Administrative
Agent may require the Company to deliver Borrowing Base Certificates more
frequently), and (ii) reports setting forth the aging and other relevant
information of the accounts receivable, accounts payable and inventory of the
Loan Parties as of such month end (such reports to be in form and substance
reasonably acceptable to the Administrative Agent).

 

10.1.7                                          Management Reports.  Promptly
upon receipt thereof, copies of all detailed financial and management reports
submitted to the Company by independent auditors in connection with each annual
or interim audit made by such auditors of the books of the Company.

 

10.1.8                                          Projections.  As soon as
practicable, and in any event not later than thirty (30) days after the
commencement of each Fiscal Year, financial projections for the Company and its
Subsidiaries for such Fiscal Year (including monthly operating and cash flow
budgets) prepared in a manner consistent with the projections delivered by the
Company to the Administrative Agent prior to the Closing Date or otherwise in a
manner reasonably satisfactory to the Administrative Agent, accompanied by a
certificate of a Senior

 

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Officer of the Company on behalf of the Company to the effect that such
projections were based on good faith estimates of future financial performance
prepared by the Company.

 

10.1.9                                          Subordinated Debt Notices. 
Promptly following receipt, copies of any notices (including notices of default
or acceleration) received from any holder or trustee of, under or with respect
to any Subordinated Debt.

 

10.1.10                                    Other Information.  Promptly from
time to time, such other information concerning the Loan Parties as any Lender
or the Administrative Agent may reasonably request.

 

10.2                           Books, Records and Inspections.  Keep, and cause
each other Loan Party to keep, its books and records in accordance with sound
business practices sufficient to allow the preparation of financial statements
in accordance with GAAP; permit, and cause each other Loan Party to permit, any
Lender or the Administrative Agent or any representative thereof to inspect the
properties and operations of the Loan Parties; and permit, and cause each other
Loan Party to permit, at any reasonable time and with reasonable notice (or at
any time without notice if an Event of Default exists), any Lender or the
Administrative Agent or any representative thereof to visit any or all of its
offices, to discuss its financial matters with its officers and its independent
auditors (and the Company hereby authorizes such independent auditors to discuss
such financial matters with any Lender or the Administrative Agent or any
representative thereof), and to examine (and, at the expense of the Loan
Parties, photocopy extracts from) any of its books or other records; and permit,
and cause each other Loan Party to permit, the Administrative Agent and its
representatives to inspect the Inventory and other tangible assets of the Loan
Parties, to perform appraisals of the equipment of the Loan Parties, and to
inspect, audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts, correspondence and
other data relating to Inventory, Accounts and any other collateral.  All such
inspections or audits by the Administrative Agent shall be at the Company’s
expense, provided that so long as no Event of Default or Unmatured Event of
Default exists, the Company shall not be required to reimburse the
Administrative Agent for inspections or audits more frequently than once each
Fiscal Year.

 

10.3                           Maintenance of Property; Insurance.  (a)  Keep,
and cause each other Loan Party (other than the Inactive Subsidiary) to keep,
all property useful and necessary in the business of the Loan Parties in working
order and in substantially the same condition as of the date hereof, ordinary
wear and tear excepted.

 

(b)                                 Maintain, and cause each other Loan Party to
maintain, with responsible insurance companies, such insurance coverage as may
be required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated, but which shall insure against all risks and liabilities of the type
identified on Schedule 9.16 and shall have insured amounts no less than, and
deductibles no higher than, those set forth on such schedule; and, upon written
request of the Administrative Agent or any Lender, furnish within three
(3) Business Days of such request to the Administrative Agent or such Lender a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Loan Parties.  The Company shall cause each issuer
of an insurance policy to provide the

 

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Administrative Agent with an endorsement (i) showing the Administrative Agent as
lender’s loss payee with respect to each policy of property or casualty
insurance and naming the Administrative Agent as an additional insured with
respect to each policy of liability insurance, (ii) providing that thirty (30)
days’ notice will be given to the Administrative Agent prior to any cancellation
of, material reduction or change in coverage provided by or other material
modification to such policy and (iii) reasonably acceptable in all other
respects to the Administrative Agent.

 

(c)                                  UNLESS THE COMPANY PROVIDES THE
ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS
AGREEMENT WITHIN THREE (3) BUSINESS DAYS OF WRITTEN REQUEST BY THE
ADMINISTRATIVE AGENT OR ANY LENDER, THE ADMINISTRATIVE AGENT MAY PURCHASE
INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THE ADMINISTRATIVE AGENT’S AND THE
LENDERS’ INTERESTS IN THE COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT
ANY LOAN PARTY’S INTERESTS.  THE COVERAGE THAT THE ADMINISTRATIVE AGENT
PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST ANY LOAN PARTY IN
CONNECTION WITH THE COLLATERAL.  THE COMPANY MAY LATER CANCEL ANY INSURANCE
PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING THE
ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS
REQUIRED BY THIS AGREEMENT.  IF THE ADMINISTRATIVE AGENT PURCHASES INSURANCE FOR
THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT
INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE
PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE.  THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER.  THE COSTS OF THE INSURANCE
MAY BE MORE THAN THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO
OBTAIN ON THEIR OWN.

 

10.4                           Compliance with Laws, Material Contracts; Payment
of Taxes and Liabilities.  (a) Comply, and cause each Loan Party to comply, in
all material respects with all material applicable laws, rules, regulations,
decrees, orders, judgments, licenses, material contracts and permits, the
noncompliance with which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect; and (b) pay, and cause each Loan
Party to pay, prior to delinquency, all United States federal taxes and all
other material taxes and governmental charges against it or any of its property,
as well as claims of any kind which, if unpaid, might become a Lien on any of
its property, other than Liens permitted by Section 11.2; provided that the
foregoing shall not require the Company or any Subsidiary to pay any such tax or
charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP.

 

10.5                           Maintenance of Existence, etc.  Maintain and
preserve, and (subject to Section 11.5) cause each other Loan Party other than
the Inactive Subsidiary to maintain and preserve, (a) its existence and good
standing in the jurisdiction of its organization and (b) its qualification to do
business and good standing in each jurisdiction where the nature of its

 

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business makes such qualification necessary (other than such jurisdictions in
which the failure to be qualified or in good standing could not reasonably be
expected to have a Material Adverse Effect).  For the avoidance of doubt, the
Company may dissolve the Inactive Subsidiary with prior notice to the
Administrative Agent.

 

10.6                           Use of Proceeds.  Use the proceeds of the Loans
and the Letters of Credit, solely for working capital purposes, for Capital
Expenditures and for other general business purposes; and not use or permit any
proceeds of any Loan to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of “purchasing or carrying” any
Margin Stock.

 

10.7                           Employee Benefit Plans.

 

(a)                                  Maintain, and cause each other member of
the Controlled Group to maintain, each Pension Plan in substantial compliance
with all applicable requirements of law and regulations.

 

(b)                                 Make, and cause each other member of the
Controlled Group to make, on a timely basis, all required contributions to any
Multiemployer Pension Plan.

 

(c)                                  Not, and not permit any other member of the
Controlled Group to (i) seek a waiver of the minimum funding standards of ERISA,
(ii) terminate or withdraw from any Pension Plan or Multiemployer Pension Plan
or (iii) take any other action with respect to any Pension Plan that would
reasonably be expected to entitle the PBGC to terminate, impose liability in
respect of, or cause a trustee to be appointed to administer, any Pension Plan,
unless the actions or events described in clauses (i), (ii) and
(iii) individually or in the aggregate would not have a Material Adverse Effect.

 

10.8                           Environmental Matters.  If any release or
threatened release or other disposal of Hazardous Substances shall occur or
shall have occurred on any real property or any other assets of any Loan Party,
the Company shall, or shall cause the applicable Loan Party to, cause the prompt
containment and removal of such Hazardous Substances and the remediation of such
real property or other assets as necessary to comply with all Environmental Laws
and to preserve the value of such real property or other assets.  Without
limiting the generality of the foregoing, the Company shall, and shall cause
each other Loan Party to, comply with any Federal or state judicial or
administrative order requiring the performance at any real property of any Loan
Party of activities in response to the release or threatened release of a
Hazardous Substance.  To the extent that the transportation of Hazardous
Substances is permitted by this Agreement, the Company shall, and shall cause
its Subsidiaries to, dispose of such Hazardous Substances, or of any other
wastes, only at licensed disposal facilities operating in compliance with
Environmental Laws.

 

10.9                           Further Assurances.  Take, and cause each other
Loan Party to take, such actions as are necessary or as the Administrative Agent
or the Required Lenders may reasonably request from time to time to ensure that
the Obligations of each Loan Party under the Loan Documents are secured by
substantially all of the assets of the Company and each domestic Subsidiary (as
well as all Capital Securities of each domestic Subsidiary and 65% of all
Capital Securities of each direct foreign Subsidiary) and guaranteed by each
domestic Subsidiary (including, upon the

 

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acquisition or creation thereof, any Subsidiary acquired or created after the
Closing Date), in each case as the Administrative Agent may determine, including
(a) the execution and delivery of guaranties, security agreements, pledge
agreements, mortgages, deeds of trust, financing statements and other documents,
and the filing or recording of any of the foregoing and (b) the delivery of
certificated securities and other Collateral with respect to which perfection is
obtained by possession.  Notwithstanding anything to the contrary contained
herein, the Inactive Subsidiary shall not be required to become a Loan Party or
Guarantor so long as the Inactive Subsidiary continues to be a dormant company
without business operations, it being agreed that in the event the Inactive
Subsidiary commences business operations, the Company shall immediately inform
the Administrative Agent of such event and the Inactive Subsidiary shall be
required to become a Loan Party and Guarantor and execute all required
documentation in connection therewith.

 

10.10                     Deposit Accounts.  Unless the Administrative Agent
otherwise consents in writing, the Loan Parties shall maintain all of their
deposit and securities accounts with the Administrative Agent; provided that the
Loan Parties may maintain a maximum aggregate balance of $400,000 in local
depository accounts, except that the accounts with any single institution shall
not exceed a maximum aggregate balance of $100,000, it being agreed that each of
the Company and the Subsidiaries will, upon the Administrative Agent’s request,
use commercially reasonable efforts to cause the local depository institutions
to enter into account control agreements in favor of the Administrative Agent
(each such account control agreement to be on terms reasonably satisfactory to
the Administrative Agent in all respects).

 

SECTION 11                             NEGATIVE COVENANTS

 

Until the expiration or termination of the Commitments and thereafter until all
Obligations hereunder and under the other Loan Documents are paid in full (other
than any Obligation arising solely from any Bank Product Agreement or contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) and all Letters of Credit have been terminated or Cash Collateralized,
the Company agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, it will:

 

11.1                           Debt.  Not, and not permit any other Loan Party
to, incur, permit to remain outstanding, assume or in any way become committed
for Debt, except (i) Debt incurred hereunder or to any Lender or the
Administrative Agent, (ii) Debt existing on the date hereof as listed in
Schedule 11.1 hereto, (iii) Debt with respect to which the Required Lenders have
given the Company prior written consent; and (iv) Debt in the aggregate amount
not greater than $500,000 at any time.

 

11.2                           Liens.  Not, and not permit any other Loan Party
to, create, suffer or permit to exist any Lien of any kind or nature upon any of
their assets now or hereafter owned or acquired, or acquire or agree to acquire
any property or assets of any character under any conditional sale agreement or
other title retention agreement; notwithstanding the foregoing, Permitted Liens
are permitted hereunder.

 

11.3                           Intentionally Omitted.

 

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11.4                           Restricted Payments.  Not, and not permit any
other Loan Party to, (a) make any distribution to any holders of its Capital
Securities, (b) purchase or redeem any of its Capital Securities, (c) pay any
management fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance, repurchase or any
other payment in respect of any Subordinated Debt or (e) set aside funds for any
of the foregoing.  Notwithstanding the foregoing, (i) any Subsidiary may pay
dividends or make other distributions to the Company or to a domestic
Wholly-Owned Subsidiary, (ii) the Company may make regularly scheduled payments
of interest in respect of Subordinated Debt to the extent permitted under the
subordination provisions thereof, and (iii) from and after the date of this
Agreement, the Company may purchase its outstanding Capital Securities so long
as (A) no Event of Default exists as of the date of any proposed purchase, and
(B) the total of all such purchases from October 1, 2011 shall not exceed
$250,000 in the aggregate.

 

11.5                           Mergers, Consolidations, Sales.  Not, and not
permit any other Loan Party to, (a) be a party to any merger or consolidation,
or purchase or otherwise acquire all or substantially all of the assets or any
Capital Securities of any class of, or any partnership or joint venture interest
in, any other Person, (b) sell, transfer, convey or lease all or any substantial
part of its assets or Capital Securities (including the sale of Capital
Securities of any Subsidiary) except for sales of inventory in the ordinary
course of business, or (c) sell or assign with or without recourse any
receivables, except for (i) any such merger, consolidation, sale, transfer,
conveyance, lease or assignment of or by any Wholly-Owned Subsidiary into the
Company or into any other domestic Wholly-Owned Subsidiary; (ii) any such
purchase or other acquisition by the Company or any domestic Wholly-Owned
Subsidiary of the assets or Capital Securities of any Wholly-Owned Subsidiary;
and (iii) sales and dispositions of assets (excluding the Capital Securities of
Subsidiaries) for at least fair market value (as determined by the Board of
Directors of the Company) so long as the net book value of all assets sold or
otherwise disposed of in any Fiscal Year does not exceed $3,000,000.

 

11.6                           Modification of Organizational Documents.  Not
permit the charter, by-laws or other organizational documents of any Loan Party
to be amended or modified in any way which could reasonably be expected to
materially adversely affect the interests of the Lenders; not change, or allow
any Loan Party to change, its state of incorporation or its organizational form
unless such Loan Party gives the Administrative Agent ninety (90) days’ prior
written notice; provided, however, that the restrictions contained in this
Section 11.6 shall not apply to the Inactive Subsidiary so long as the Inactive
Subsidiary remains inactive with no business operations or material assets.

 

11.7                           Transactions with Affiliates.  Not, and not
permit any other Loan Party to, enter into, or cause, suffer or permit to exist
any transaction, arrangement or contract with any of its other Affiliates (other
than the Loan Parties) which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliates.

 

11.8                           Unconditional Purchase Obligations.  Not, and not
permit any other Loan Party to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services if such contract
requires that payment be made by it regardless of whether delivery is ever made
of such materials, supplies or other property or services.

 

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11.9                           Inconsistent Agreements.  Not, and not permit any
other Loan Party to, enter into any agreement containing any provision which
would (a) be violated or breached by any borrowing by the Company hereunder or
by the performance by any Loan Party of any of its Obligations hereunder or
under any other Loan Document, (b) prohibit any Loan Party from granting to the
Administrative Agent and the Lenders, a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
the Company or any other Subsidiary, or pay any Debt owed to the Company or any
other Subsidiary, (ii) make loans or advances to any Loan Party or
(iii) transfer any of its assets or properties to any Loan Party, other than
(A) customary restrictions and conditions contained in agreements relating to
the sale of all or a substantial part of the assets of any Subsidiary pending
such sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and
(C) customary provisions in leases and other contracts restricting the
assignment thereof.

 

11.10                     Business Activities; Issuance of Equity.  Not, and not
permit any other Loan Party to, engage in any line of business other than the
businesses engaged in on the date hereof and businesses reasonably related
thereto.  Not, and not permit any other Loan Party to, issue any Capital
Securities other than (a) any issuance of shares of the Company’s common Capital
Securities pursuant to any employee or director option program, benefit plan or
compensation program or (b) any issuance by a Subsidiary to the Company or
another Subsidiary in accordance with Section 11.4.

 

11.11                     Investments.  Not, and not permit any other Loan Party
to, make or permit to exist any Investment in any other Person, except the
following:

 

(a)                                  contributions by the Company to the capital
of any Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any other
domestic Wholly-Owned Subsidiary, so long as the recipient of any such capital
contribution has guaranteed the Obligations and such guaranty is secured by a
pledge of all of its Capital Securities and substantially all of its real and
personal property, in each case in accordance with Section 11.10;

 

(b)                                 Investments constituting Debt permitted by
Section 11.1;

 

(c)                                  Contingent Liabilities constituting Debt
permitted by Section 11.1 or Liens permitted by Section 11.2;

 

(d)                                 Cash Equivalent Investments;

 

(e)                                  bank deposits in the ordinary course of
business, provided that the aggregate amount of all such deposits which are
maintained with any bank other than a Lender shall not at any time exceed the
amounts described in Section 10.10 hereof;

 

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(f)                                    Investments in securities of Account
Debtors received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such account debtors;

 

(g)                                 Investments listed on Schedule 11.11 as of
the Closing Date;

 

(h)                                 extensions of credit upon customary terms to
their customers in the ordinary course of their business; and

 

(i)                                     extensions of credit to officers and
employees in accordance with policies in effect on the date of this Agreement to
the extent the Administrative Agent has received a written copy of such policy;

 

provided that (x) any Investment which when made complies with the requirements
of the definition of the term “Cash Equivalent Investment” may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), (g), (h) or (i) of this Section 11.11 shall be permitted to be made if,
immediately before or after giving effect thereto, any Event of Default or
Unmatured Event of Default exists.

 

11.12                     Restriction of Amendments to Certain Documents.  Not,
and not permit any other Loan Party to, make or agree to any amendment to or
modification of, or waive any of its rights under (a) any agreement or
instrument governing any Subordinated Debt which would (i) have the effect of
(x) providing for earlier payment in respect of principal or redemptions or
otherwise, (y) requiring collateral or guarantees to secure any Subordinated
Debt or (z) increasing the interest rate payable with respect to any
Subordinated Debt or (ii) otherwise adversely affect the interest of the Lenders
in any material respect, or (b) the Mining Royalty Agreement without prompt
notice thereof to the Administrative Agent (such notice to include a description
of the amendment, modification or waiver).

 

11.13                     Financial Covenants.

 

11.13.1                                    Minimum Fixed Charge Coverage Ratio. 
Not permit the Fixed Charge Coverage Ratio for any Computation Period to be less
than 1.15 to 1.00 for such Computation Period, commencing with the Computation
Period ending March 30, 2013.

 

11.13.2                                    Minimum Tangible Net Worth.  Not
permit Tangible Net Worth as of the last day of any Computation Period to be
less than $32,000,000 (provided that the required amount of Tangible Net Worth
shall increase (but not decrease) each Fiscal Year, commencing with Fiscal Year
2011, by an amount equal to fifty percent (50%) of the Consolidated Net Income
for the immediately preceding Fiscal Year.

 

11.13.3                                    Balance Sheet Leverage Ratio.  Not
permit the Balance Sheet Leverage Ratio as of the last day of any Computation
Period to exceed 1.00 to 1.00.

 

11.13.4                                    Capital Expenditures.  Not permit the
aggregate amount of all Capital Expenditures made by the Loan Parties (other
than Williams EcoLogix) in any Fiscal Year to exceed $3,500,000.

 

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11.13.5                                    Williams EcoLogix - Cash
Expenditures.  Not permit the cash expenditures of Williams EcoLogix to exceed
$2,500,000 on a cumulative basis commencing on March 24, 2011.

 

SECTION 12                             EFFECTIVENESS; CONDITIONS OF
LENDING, ETC.

 

The obligation of each Lender to make its Loans and of the Issuing Lender to
issue Letters of Credit is subject to the following conditions precedent:

 

12.1                           Conditions to Effectiveness.  The effectiveness
of this Agreement is, in addition to the conditions precedent specified in
Section 12.2, subject to the conditions precedent that (a) all Debt to be Repaid
has been (or concurrently with the initial borrowing hereunder will be) paid in
full, and that all agreements and instruments governing the Debt to be Repaid
and that all Liens securing such Debt to be Repaid have been (or concurrently
with the initial borrowing hereunder will be) terminated and (b) the
Administrative Agent shall have received all of the following, each duly
executed and dated the Closing Date (or such earlier date as shall be
satisfactory to the Administrative Agent), in form and substance satisfactory to
the Administrative Agent (and the date on which all such conditions precedent
have been satisfied or waived in writing by the Administrative Agent and the
Lenders is called the “Closing Date”):

 

12.1.1                  Notes.  An Amended and Restated Revolving Loan Note and
Amended and Restated Term Loan Note for each Lender.

 

12.1.2                  Authorization Documents.  For each Loan Party, such
Person’s (a) charter (or similar formation document), certified by the
appropriate governmental authority; (b) good standing certificates in its state
of incorporation and in each other state requested by the Administrative Agent;
(c) bylaws; (d) resolutions of its board of directors approving and authorizing
such Person’s execution, delivery and performance of the Loan Documents to which
it is party and the transactions contemplated thereby; and (e) signature and
incumbency certificates of its officers executing any of the Loan Documents (it
being understood that the Administrative Agent and each Lender may conclusively
rely on each such certificate until formally advised by a like certificate of
any changes therein), all certified by its secretary or an assistant secretary
(or similar officer) as being in full force and effect without modification.

 

12.1.3                  Consents, etc.  Certified copies of all
documents evidencing any necessary corporate action, consents and governmental
approvals (if any) required for the execution, delivery and performance by the
Loan Parties of the documents referred to in this Section 12.

 

12.1.4                  Borrowing Request and Letter of Direction.  A borrowing
request and letter of direction containing funds flow information with respect
to the proceeds of the Loans on the Closing Date.

 

12.1.5                  Guaranty and Collateral Agreement.  A counterpart of the
Guaranty and Collateral Agreement executed by each Loan Party, together with all
instruments, transfer powers and other items required to be delivered in
connection therewith.

 

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12.1.6                  Perfection Certificate.  A Perfection Certificate
completed and executed by each Loan Party.

 

12.1.7                  Mortgage Amendments.  With respect to the Mortgage
recorded in respect of each Mortgaged Property, a duly executed amendment to
such Mortgage in form and substance satisfactory to the Administrative Agent,
which amendments will include a confirmation and reaffirmation of the
liabilities and obligations of the applicable Loan Parties under the
Environmental Indemnity Agreement.

 

12.1.8                  Date Down Endorsement and Tract Search.  With respect to
the Mortgaged Property owned by Williams Furnace, the Company shall have
delivered, or caused to be delivered, a date-down endorsement to the title
insurance policy previously issued to the Administrative Agent, which date-down
endorsement shall be satisfactory to the Administrative Agent in form and
substance.  With respect to the Mortgaged Property owned by McKinney Door and
Hardware, Inc. located in Colorado Springs, Colorado and the Mortgaged Property
owned by Transit Mix Concrete Co. located in Colorado Springs, Colorado, the
Company shall have delivered, or caused to be delivered, a tract search, which
tract search (and the encumbrances and exceptions to title set forth therein)
shall be satisfactory to the Administrative Agent in form and substance.

 

12.1.9                                          Collateral Access Agreements. 
In the case of any leased real property, a Collateral Access Agreement from the
landlord of such property waiving any landlord’s Lien in respect of personal
property kept at the premises subject to such lease and permitting access to the
location by the Administrative Agent and its agents and containing such other
terms and provisions as may be required by the Administrative Agent (to the
extent that any Collateral Access Agreement is not delivered on the Closing Date
and the Administrative Agent elects to waive the delivery of such Collateral
Access Agreement as a closing condition, the Company and the applicable
Subsidiaries shall have forty-five (45) days after the Closing Date to deliver a
Collateral Access Agreement for each leased location listed on Schedule 9.17
hereof where a material amount of Collateral is located or historically has been
located, it being agreed that the failure to provide a reasonably acceptable
Collateral Access Agreement for all such leased locations within such forty-five
(45) day period shall result in an Event of Default.  All real property owned by
any Loan Party that will not be subject to a Mortgage will be subject to the
negative pledge set forth in the Guaranty and Collateral Agreement.

 

12.1.10                                                            Opinions of
Counsel.  Opinions of counsel for each Loan Party, including local counsel in
respect of each amendment to Mortgage, in each case in form and substance
satisfactory to the Administrative Agent.

 

12.1.11            Insurance.  Evidence of the existence of insurance required
to be maintained pursuant to Section 10.3(b), together with evidence that the
Administrative Agent has been named as a lender’s loss payee and an additional
insured on all related insurance policies.

 

12.1.12            Intentionally Omitted.

 

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12.1.13            Payment of Fees.  Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with all Attorney Costs of the Administrative
Agent to the extent invoiced prior to the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute the Administrative Agent’s
reasonable estimate of Attorney Costs incurred or to be incurred by the
Administrative Agent through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Company and the Administrative Agent).

 

12.1.14            Solvency Certificate.  A Solvency Certificate executed by a
Senior Officer of the Company.

 

12.1.15            Material Adverse Change.  The Administrative Agent shall be
satisfied that since October 1, 2011 there has been no material adverse change
in the business, assets, liabilities, properties, condition (financial or
otherwise) or results of operations of the Loan Parties taken as a whole.

 

12.1.16            Intentionally Omitted.

 

12.1.17            Search Results; Lien Terminations.  Certified copies of
Uniform Commercial Code search reports dated a date reasonably near to the
Closing Date, listing all effective financing statements which name any Loan
Party (under their present names and any previous names) as debtors, together
with (a) copies of such financing statements, (b) payoff letters evidencing
repayment in full of all Debt to be Repaid, the termination of all agreements
relating thereto and the release of all Liens granted in connection therewith,
with Uniform Commercial Code or other appropriate termination statements and
documents effective to evidence the foregoing (other than Liens permitted by
Section 11.2) and (c) such other Uniform Commercial Code termination statements
as the Administrative Agent may reasonably request.

 

12.1.18            Filings, Registrations and Recordings.  The Administrative
Agent shall have received each document (including Uniform Commercial Code
financing statements) required by the Collateral Documents or under law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for the
benefit of the Lenders, a perfected Lien on the collateral described therein,
prior to any other Liens (subject only to Liens permitted pursuant to
Section 11.2), in proper form for filing, registration or recording.

 

12.1.19            Borrowing Base Certificate.  A Borrowing Base Certificate
dated as of the Closing Date.

 

12.1.20            Closing Certificate.  A certificate executed by an officer of
the Company on behalf of the Company certifying the matters set forth in
Section 12.2.1 as of the Closing Date.

 

12.1.21            Other.  Such other documents as the Administrative Agent or
any Lender may reasonably request.

 

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12.2                           Conditions.  The obligation (a) of each Lender to
make each Loan and (b) of the Issuing Lender to issue each Letter of Credit is
subject to the following further conditions precedent that:

 

12.2.1                  Compliance with Warranties, No Default, etc.  Both
before and after giving effect to any borrowing and the issuance of any Letter
of Credit, the following statements shall be true and correct:

 

(a)                                  the representations and warranties of each
Loan Party set forth in this Agreement and the other Loan Documents shall be
true and correct in all respects with the same effect as if then made (except to
the extent stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date); and

 

(b)                                 no Event of Default or Unmatured Event of
Default shall have then occurred and be continuing.

 

Each request by the Company for the making of a Loan or the issuance of a Letter
of Credit shall be deemed to constitute a representation and warranty by the
Company that the conditions precedent set forth in this Section 12.2.1 are
satisfied at the time of the making of such Loan or the issuance of such Letter
of Credit.

 

SECTION 13                             EVENTS OF DEFAULT AND THEIR EFFECT.

 

13.1                           Events of Default.  Each of the following
shall constitute an Event of Default under this Agreement:

 

13.1.1                  Non-Payment of the Loans, etc.  The Company or any other
Loan Party shall fail to make any payment of principal or interest when and as
due; or, in the case of any other amounts payable hereunder or under any other
Loan Document, the Company or any other Loan Party shall fail to make such
payment within five (5) days of the due date thereof.

 

13.1.2                  Cross-Default.  There shall occur any default or event
of default, or any event which might become such with notice or the passage of
time or both, or any similar event, or any event which requires the prepayment
of borrowed money or the acceleration of the maturity thereof, under the terms
of any evidence of Indebtedness or other agreement issued or assumed or entered
into by the Company or any other Loan Party or under the terms of any indenture,
agreement or instrument under which any such evidence of Indebtedness or other
agreement is issued, assumed, secured or guaranteed, and such event shall
continue beyond any applicable period of grace.

 

13.1.3                  Bankruptcy, Insolvency, etc.  Any Loan Party becomes
insolvent or generally fails to pay, or admits in writing its inability or
refusal to pay, debts as they become due; or any Loan Party applies for,
consents to, or acquiesces in the appointment of a trustee, receiver or other
custodian for such Loan Party or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed for
any Loan Party or for a

 

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substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of any Loan Party, and if such
case or proceeding is not commenced by such Loan Party, it is consented to or
acquiesced in by such Loan Party, or remains for 60 days undismissed; or any
Loan Party takes any action to authorize, or in furtherance of, any of the
foregoing.

 

13.1.4                  Non-Compliance with Loan Documents.  (a) Failure by any
Loan Party to comply with or to perform any covenant set forth in Sections
10.1.1, 10.1.2, 10.1.3, 10.1.5, 10.1.6, 10.3(b) (solely as such section relates
to the maintenance of insurance at all times), 10.5 or 10.10 or Section 11; or
(b) failure by any Loan Party to comply with or to perform any other provision
of this Agreement or any other Loan Document (and not constituting an Event of
Default under any other provision of this Section 13) and continuance of such
failure described in this clause (b) for 30 days.

 

13.1.5                  Representations; Warranties.  Any representation or
warranty made by any Loan Party herein or any other Loan Document is breached or
is false or misleading in any material respect, or any schedule, certificate,
financial statement, report, notice or other writing furnished by any Loan Party
to the Administrative Agent or any Lender in connection herewith is false or
misleading in any material respect on the date as of which the facts therein set
forth are stated or certified.

 

13.1.6                  Pension Plans.  (a) Any Person institutes steps to
terminate a Pension Plan if as a result of such termination the Company or any
member of the Controlled Group could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension Plan, in
excess of $500,000; (b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(c) the Unfunded Liability exceeds twenty percent of the Total Plan Liability,
or (d) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that the Company or any member
of the Controlled Group have incurred on the date of such withdrawal) exceeds
$500,000.

 

13.1.7                                          Litigation.  Any suit, action or
other proceeding (judicial or administrative) commenced against the Company or
any other Loan Party, or with respect to any assets of the Company or any other
Loan Party, shall threaten to have a material and adverse effect on the future
operations of the Company or any other Loan Party; or a final judgment or
settlement shall be entered in, or agreed to in respect of, any such suit,
action or proceeding and said final judgment or settlement would have a Material
Adverse Effect on the Company and the other Loan Parties taken as a whole, it
being agreed that any final judgment or settlement (either individually or
collectively with all other judgments and settlements) in excess of $250,000
shall be deemed to have a Material Adverse Effect (provided that any amounts
covered by insurance shall not be included in such aggregate amount so long as
the insurance company has acknowledged coverage in writing).

 

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13.1.8                                          Invalidity of Collateral
Documents, etc.  Any Collateral Document shall cease to be in full force and
effect; or any Loan Party (or any Person by, through or on behalf of any Loan
Party) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.

 

13.1.9                                          Invalidity of Subordination
Provisions, etc.  Any subordination provision in any document or instrument
governing Subordinated Debt (if any), or any subordination provision in any
guaranty by any Subsidiary of any Subordinated Debt, shall cease to be in full
force and effect, or any Loan Party or any other Person (including the holder of
any applicable Subordinated Debt) shall contest in any manner the validity,
binding nature or enforceability of any such provision.

 

13.1.10                                    Change of Control.  A Change of
Control shall occur.

 

13.1.11                                    Material Adverse Effect. The
occurrence of any event having a Material Adverse Effect.

 

13.2                           Effect of Event of Default.  If any Event of
Default described in Section 13.1.3 shall occur in respect of the Company, the
Commitments shall immediately terminate and the Loans and all other Obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Administrative Agent may (and, upon
the written request of the Required Lenders shall) declare the Commitments to be
terminated in whole or in part and/or declare all or any part of the Loans and
all other Obligations hereunder to be due and payable and/or demand that the
Company immediately Cash Collateralize all or any Letters of Credit, whereupon
the Commitments shall immediately terminate (or be reduced, as applicable)
and/or the Loans and other Obligations hereunder shall become immediately due
and payable (in whole or in part, as applicable) and/or the Company shall
immediately become obligated to Cash Collateralize the Letters of Credit (all or
any, as applicable), all without presentment, demand, protest or notice of any
kind.  The Administrative Agent shall promptly advise the Company of any such
declaration, but failure to do so shall not impair the effect of such
declaration.  Any cash collateral delivered hereunder shall be held by the
Administrative Agent (without liability for interest thereon) and applied to the
Obligations arising in connection with any drawing under a Letter of Credit. 
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by the Administrative Agent to any remaining
Obligations hereunder and any excess shall be delivered to the Company or as a
court of competent jurisdiction may elect.

 

SECTION 14                             THE AGENT.

 

14.1                           Appointment and Authorization.  Each Lender
hereby irrevocably (subject to Section 14.10) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or

 

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in any other Loan Document, the Administrative Agent shall not have any duty or
responsibility except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.  Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

 

14.2                           Issuing Lender.  The Issuing Lender shall act on
behalf of the Lenders (according to their Pro Rata Shares) with respect to any
Letters of Credit issued by it and the documents associated therewith.  The
Issuing Lender shall have all of the benefits and immunities (a) provided to the
Administrative Agent in this Section 14 with respect to any acts taken or
omissions suffered by the Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term “Administrative Agent”, as used in this Section 14, included the Issuing
Lender with respect to such acts or omissions and (b) as additionally provided
in this Agreement with respect to the Issuing Lender.

 

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

 

14.4                           Exculpation of Administrative Agent.  None of the
Administrative Agent nor any of its directors, officers, employees or agents
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except to the extent resulting from its own
gross negligence or willful misconduct in connection with its duties expressly
set forth herein as determined by a final, nonappealable judgment by a court of
competent jurisdiction), or (b) be responsible in any manner to any Lender or
participant for any recital, statement, representation or warranty made by any
Loan Party or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of the Company or any other party to any Loan Document to perform its
Obligations hereunder or thereunder.  The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company’s Subsidiaries or
Affiliates.

 

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14.5                           Reliance by Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution, representation,
notice, consent, certificate, electronic mail message, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Company), independent accountants and
other experts selected by the Administrative Agent.  The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it so
requests, confirmation from the Lenders of their obligation to indemnify the
Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
each Lender.  For purposes of determining compliance with the conditions
specified in Section 12, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received written notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

 

14.6                           Notice of Default.  The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any Event
of Default or Unmatured Event of Default except with respect to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Event of Default or Unmatured Event of
Default and stating that such notice is a “notice of default”.  The
Administrative Agent will notify the Lenders of its receipt of any such notice. 
The Administrative Agent shall take such action with respect to such Event of
Default or Unmatured Event of Default as may be requested by the Required
Lenders in accordance with Section 13; provided that unless and until the
Administrative Agent has received any such request, the Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default or Unmatured Event of Default as
it shall deem advisable or in the best interest of the Lenders.

 

14.7                           Credit Decision.  Each Lender acknowledges that
the Administrative Agent has not made any representation or warranty to it, and
that no act by the Administrative Agent hereafter taken, including any consent
and acceptance of any assignment or review of the affairs of the Loan Parties,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender as to any matter, including whether the
Administrative Agent has disclosed material information in its possession.  Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties, and made its own
decision to enter into this Agreement and to extend credit to the Company
hereunder.  Each Lender also represents that

 

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it will, independently and without reliance upon the Administrative Agent and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company.  Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial or other
condition or creditworthiness of the Company which may come into the possession
of the Administrative Agent.

 

14.8                           Indemnification.  Whether or not the transactions
contemplated hereby are consummated, each Lender shall indemnify upon demand the
Administrative Agent and its directors, officers, employees and agents (to the
extent not reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), according to its applicable Pro Rata Share,
from and against any and all Indemnified Liabilities (as hereinafter defined);
provided that no Lender shall be liable for any payment to any such Person of
any portion of the Indemnified Liabilities to the extent determined by a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from the applicable Person’s own gross negligence or willful misconduct.  No
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section.  Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs and Taxes) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Company.  The undertaking in this Section shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit,
any foreclosure under, or modification, release or discharge of, any or all of
the Collateral Documents, termination of this Agreement and the resignation or
replacement of the Administrative Agent.

 

14.9                           Administrative Agent in Individual Capacity. 
PVBT and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Loan Parties and Affiliates as though PVBT were not the
Administrative Agent hereunder and without notice to or consent of any Lender. 
Each Lender acknowledges that, pursuant to such activities, PVBT or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Affiliate) and acknowledge that the Administrative
Agent shall be under no obligation to provide such information to them.  With
respect to their Loans (if any), PVBT and its Affiliates shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though PVBT were not the

 

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Administrative Agent, and the terms “Lender” and “Lenders” include PVBT and its
Affiliates, to the extent applicable, in their individual capacities.

 

14.10                     Successor Administrative Agent.  The Administrative
Agent may resign as Administrative Agent upon 30 days’ notice to the Lenders. 
If the Administrative Agent resigns under this Agreement, the Required Lenders
shall, with (so long as no Event of Default exists) the consent of the Company
(which shall not be unreasonably withheld or delayed), appoint from among the
Lenders a successor agent for the Lenders.  If no successor agent is appointed
prior to the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Company, a successor agent from among the Lenders.  Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term “Administrative Agent” shall mean such successor agent, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent’s resignation
hereunder as Administrative Agent, the provisions of this Section 14 and
Sections 15.5 and 15.17 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.  If no successor agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.

 

14.11                     Collateral Matters.  The Lenders irrevocably authorize
the Administrative Agent, at its option and in its discretion, (a) to release
any Lien granted to or held by the Administrative Agent under any Collateral
Document (i) upon termination of the Commitments and payment in full of all
Loans and all other obligations of the Company hereunder (other than any
Obligation arising solely from any Bank Product Agreement or contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) and the expiration or termination of all Letters of Credit (or Cash
Collateralization of all such Letters of Credit); (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; or (iii) subject to Section 15.1, if approved,
authorized or ratified in writing by the Required Lenders; or (b) to subordinate
its interest in any Collateral to any holder of a Lien on such Collateral which
is permitted by Section 11.2 (it being understood that the Administrative Agent
may conclusively rely on a certificate from the Company in determining whether
the Debt secured by any such Lien is permitted by Section 11.1).  Upon request
by the Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent’s authority to release, or subordinate its interest in,
particular types or items of Collateral pursuant to this Section 14.11.  Each
Lender hereby authorizes the Administrative Agent to give blockage notices in
connection with any Subordinated Debt at the direction of Required Lenders and
agrees that it will not act unilaterally to deliver such notices.

 

14.12                     Administrative Agent May File Proofs of Claim.  In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent

 

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shall have made any demand on the Company) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

(a)                                  to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans,
and all other Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Sections 5, 15.5 and
15.17) allowed in such judicial proceedings; and

 

(b)                                 to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5, 15.5 and 15.17.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

 

SECTION 15                             GENERAL.

 

15.1                           Waiver; Amendments.  No delay on the part of the
Administrative Agent or any Lender in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise by
any of them of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy.  No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement or the other Loan Documents shall in any event be effective unless the
same shall be in writing and acknowledged by Lenders having aggregate Pro Rata
Shares of not less than the aggregate Pro Rata Shares expressly designated
herein with respect thereto or, in the absence of such designation as to any
provision of this Agreement, by the Required Lenders, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.  No amendment,
modification, waiver or consent shall (a) extend or increase the Commitment of
any Lender without the written consent of such Lender, (b) extend the date
scheduled for payment of any principal (excluding mandatory prepayments) of or
interest on the Loans or any fees payable hereunder without the written consent
of each Lender directly affected thereby, (c) reduce the principal amount of any
Loan, the rate of interest thereon or any fees payable hereunder, without the
consent of each Lender directly affected thereby (except for periodic
adjustments of interest rates and fees resulting from

 

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a change in the Applicable Margin as provided for in this Agreement); or
(d) release any party from its obligations under the Guaranty and Collateral
Agreement or all or any substantial part of the Collateral granted under the
Collateral Documents, change the definition of Required Lenders, any provision
of this Section 15.1 or reduce the aggregate Pro Rata Share required to effect
an amendment, modification, waiver or consent, without, in each case, the
written consent of all Lenders.  No provision of Sections 6.2.2 or 6.3 with
respect to the timing or application of mandatory prepayments of the Loans shall
be amended, modified or waived without the consent of Lenders having a majority
of the aggregate Pro Rata Shares of the Term Loans affected thereby.  No
provision of Section 14 or other provision of this Agreement affecting the
Administrative Agent in its capacity as such shall be amended, modified or
waived without the consent of the Administrative Agent.  No provision of this
Agreement relating to the rights or duties of the Issuing Lender in its capacity
as such shall be amended, modified or waived without the consent of the Issuing
Lender.

 

15.2                           Confirmations.  The Company and each holder of a
Note agree from time to time, upon written request received by it from the
other, to confirm to the other in writing (with a copy of each such confirmation
to the Administrative Agent) the aggregate unpaid principal amount of the Loans
then outstanding under such Note.

 

15.3                           Notices.  Except as otherwise provided in
Sections 2.2.2 and 2.2.3, all notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its address
shown on Annex B or at such other address as such party may, by written notice
received by the other parties, have designated as its address for such purpose. 
Notices sent by facsimile transmission shall be deemed to have been given when
sent; notices sent by mail shall be deemed to have been given three Business
Days after the date when sent by registered or certified mail, postage prepaid;
and notices sent by hand delivery or overnight courier service shall be deemed
to have been given when received.  For purposes of Sections 2.2.2 and 2.2.3, the
Administrative Agent shall be entitled to rely on telephonic instructions from
any person that the Administrative Agent in good faith believes is an authorized
officer or employee of the Company, and the Company shall hold the
Administrative Agent and each other Lender harmless from any loss, cost or
expense resulting from any such reliance.

 

15.4                           Computations.  Where the character or amount
of any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purpose of this Agreement, such determination or calculation
shall, to the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with GAAP, consistently applied; provided that
if the Company notifies the Administrative Agent that the Company wishes to
amend any covenant in Sections 10 or 11.13 (or any related definition) to
eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Company
that the Required Lenders wish to amend Sections 10 or 11.13 (or any related
definition) for such purpose), then the Company’s compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant (or related definition) is amended in a manner satisfactory to
the Company and the Required Lenders.

 

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15.5                           Costs, Expenses and Taxes.  The Company agrees to
pay on demand all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including Attorney Costs and any Taxes) in connection with
the preparation, negotiation, execution, syndication, delivery and
administration (including perfection and protection of any Collateral and the
costs of Intralinks (or other similar service), if applicable) of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including
any amendment, supplement or waiver to any Loan Document), whether or not the
transactions contemplated hereby or thereby shall be consummated, and all
reasonable out-of-pocket costs and expenses (including Attorney Costs and any
Taxes) incurred by the Administrative Agent and each Lender after an Event of
Default in connection with the collection of the Obligations or the enforcement
of this Agreement the other Loan Documents or any such other documents or during
any workout, restructuring or negotiations in respect thereof.  In addition, the
Company agrees to pay, and to hold the Administrative Agent and the Lenders
harmless from all liability for, any fees of the Company’s auditors in
connection with any reasonable exercise by the Administrative Agent and the
Lenders of their rights pursuant to Section 10.2.  All Obligations provided for
in this Section 15.5 shall survive repayment of the Loans, cancellation of the
Notes, expiration or termination of the Letters of Credit and termination of
this Agreement.

 

15.6                           Assignments; Participations.

 

15.6.1                                          Assignments.  (a)  Any Lender
may at any time assign to one or more Persons (any such Person, an “Assignee”)
all or any portion of such Lender’s Loans and Commitments, with the prior
written consent of the Administrative Agent, the Issuing Lender (for an
assignment of the Revolving Loans and the Revolving Commitment) and, so long as
no Event of Default exists, the Company (which consents shall not be
unreasonably withheld or delayed and shall not be required for an assignment by
a Lender to a Lender or an Affiliate of a Lender).  Except as the Administrative
Agent may otherwise agree, any such assignment shall be in a minimum aggregate
amount equal to $5,000,000 or, if less, the remaining Commitment and Loans held
by the assigning Lender.  The Company and the Administrative Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned to an Assignee until the Administrative Agent
shall have received and accepted an effective assignment agreement in
substantially the form of Exhibit D hereto (an “Assignment Agreement”) executed,
delivered and fully completed by the applicable parties thereto and a processing
fee of $3,500.  Any attempted assignment by a Lender not made in accordance with
this Section 15.6.1 shall be treated as the sale of a participation under
Section 15.6.2.

 

(b)         From and after the date on which the conditions described above have
been met, (i) such Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (ii) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, shall be released from its rights (other
than its indemnification rights) and obligations hereunder.  Upon the request of
the Assignee (and, as applicable, the assigning Lender) pursuant to an effective
Assignment Agreement, the Company shall execute and deliver to the
Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata

 

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Share of the Revolving Commitment plus the principal amount of the Assignee’s
Term Loan (and, as applicable, a Note in the principal amount of the Pro Rata
Share of the Revolving Commitment retained by the assigning Lender plus the
principal amount of the Term Loan retained by the assigning Lender).  Each such
Note shall be dated the effective date of such assignment.  Upon receipt by the
assigning Lender of such Note, the assigning Lender shall return to the Company
any prior Note held by it.

 

(c)          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 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.

 

15.6.2                                          Participations.  Any Lender may
at any time sell to one or more Persons participating interests in its Loans,
Commitments or other interests hereunder (any such Person, a “Participant”).  In
the event of a sale by a Lender of a participating interest to a Participant,
(a) such Lender’s obligations hereunder shall remain unchanged for all purposes,
(b) the Company and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations hereunder and (c) all amounts payable by the Company shall be
determined as if such Lender had not sold such participation and shall be paid
directly to such Lender.  No Participant shall have any direct or indirect
voting rights hereunder except with respect to any event described in
Section 15.1 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders.  Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant.  The Company agrees that if
amounts outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement; provided that such right of set-off shall be subject to the
obligation of each Participant to share with the Lenders, and the Lenders agree
to share with each Participant, as provided in Section 7.5.  The Company also
agrees that each Participant shall be entitled to the benefits of Section 7.6 or
8 as if it were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to
Section 7.6 or 8 than would have been paid to the participating Lender on such
date if no participation had been sold and that each Participant complies with
Section 7.6(d) as if it were an Assignee).

 

15.7                           Register.  The Administrative Agent shall
maintain a copy of each Assignment Agreement delivered and accepted by it and
register (the “Register”) for the recordation of names and addresses of the
Lenders and the Commitment of each Lender from time to time and whether such
Lender is the original Lender or the Assignee.  No assignment shall be effective
unless and until the Assignment Agreement is accepted and registered in the
Register. All records of transfer of a Lender’s interest in the Register shall
be conclusive, absent manifest error, as to the ownership of the interests in
the Loans. The Administrative Agent shall not incur

 

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any liability of any kind with respect to any Lender with respect to the
maintenance of the Register.

 

15.8                           GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE
SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

 

15.9                           Confidentiality.  As required by federal law and
the Administrative Agent’s policies and practices, the Administrative Agent may
need to obtain, verify, and record certain customer identification information
and documentation in connection with opening or maintaining accounts, or
establishing or continuing to provide services.  The Administrative Agent and
each Lender agree to use commercially reasonable efforts (equivalent to the
efforts the Administrative Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all information provided to them by any Loan Party and designated as
confidential, except that the Administrative Agent and each Lender may disclose
such information (a) to Persons employed or engaged by the Administrative Agent
or such Lender in evaluating, approving, structuring or administering the Loans
and the Commitments; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this
Section 15.9 (and any such assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by them
as described in clause (a) above); (c) as required or requested by any federal
or state regulatory authority or examiner, or any insurance industry
association, or as reasonably believed by the Administrative Agent or such
Lender to be compelled by any court decree, subpoena or legal or administrative
order or process; (d) as, on the advice of the Administrative Agent’s or such
Lender’s counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any litigation to
which the Administrative Agent or such Lender is a party; (f) to any nationally
recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender; (g) to any Affiliate of the Administrative Agent, the Issuing Lender or
any other Lender who may provide Bank Products to the Loan Parties; or (h) that
ceases to be confidential through no fault of the Administrative Agent or any
Lender.  Notwithstanding the foregoing, the Company consents to the publication
by the Administrative Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and the Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.

 

15.10                     Severability.  Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.  All obligations
of the Company and rights of the Administrative Agent and the Lenders expressed
herein or in any other Loan Document shall be in addition to and not in
limitation of those provided by applicable law.

 

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15.11                     Nature of Remedies.  All Obligations of the Company
and rights of the Administrative Agent and the Lenders expressed herein or in
any other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.  No failure to exercise and no delay in exercising,
on the part of the Administrative Agent or any Lender, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.

 

15.12                     Entire Agreement.  This Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding among the
parties hereto and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof (except as relates to the fees described in
Section 5.3) and any prior arrangements made with respect to the payment by the
Company of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of the Administrative Agent or
the Lenders.  Upon the closing of the transactions contemplated by this
Agreement and the other Loan Documents, the Existing Credit Agreement shall be
amended, restated and replaced for all purposes by this Agreement; provided,
however, the Company, the Lender and the Administrative Agent hereby agree that,
notwithstanding anything to the contrary contained herein, (a) this Agreement
amends, restates and consolidates (but does not discharge) the liabilities and
obligations of the Company under the Existing Credit Agreement, (b) this
Agreement is being entered into in replacement of (and not in discharge of the
liabilities and obligations evidenced by) the Existing Credit Agreement, (c) the
representations and warranties made by the Company in the Existing Credit
Agreement and all other Loan Documents in connection with the closing of the
transactions contemplated by the Existing Credit Agreement shall continue for
all purposes unaffected by this Agreement or any other Loan Document, (d) any
Event of Default existing under the Existing Credit Agreement or any other Loan
Document (whether known or unknown on the date hereof) shall continue for all
purposes and shall constitute an Event of Default hereunder, and (e) except for
amendments, restatements and/or supplements to the other Loan Documents in
connection with the closing of this Agreement, all other Loan Documents entered
into in connection with or otherwise related to the Existing Credit Agreement
shall continue in full force and effect for all purposes unaffected by this
Agreement or any other Loan Document.

 

15.13                     Counterparts.  This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement. 
Receipt of an executed signature page to this Agreement by facsimile or other
electronic transmission shall constitute effective delivery thereof.  Electronic
records of executed Loan Documents maintained by the Lenders shall be deemed to
be originals.

 

15.14                     Successors and Assigns.  This Agreement shall
be binding upon the Company, the Lenders and the Administrative Agent and their
respective successors and assigns, and shall inure to the benefit of the
Company, the Lenders and the Administrative Agent and the successors and assigns
of the Lenders and the Administrative Agent.  No other Person shall be a direct
or indirect legal beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any of the other Loan Documents. 
The Company may not

 

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assign or transfer any of its rights or Obligations under this Agreement without
the prior written consent of the Administrative Agent and each Lender.

 

15.15                     Captions.  Section captions used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.

 

15.16                     Customer Identification - USA Patriot Act Notice. 
Each Lender and PVBT (for itself and not on behalf of any other party) hereby
notifies the Loan Parties 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 is required to obtain, verify and record information that identifies the Loan
Parties, which information includes the name and address of the Loan Parties and
other information that will allow such Lender or PVBT, as applicable, to
identify the Loan Parties in accordance with the Act.

 

15.17                     INDEMNIFICATION BY THE COMPANY.  IN CONSIDERATION OF
THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT AND THE
LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, THE
COMPANY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVE AGENT,
EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND
AGENTS OF THE ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “LENDER PARTY”) FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS
(COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED BY THE LENDER PARTIES OR
ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY TENDER
OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS OR SIMILAR
TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING,
RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF
ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY,
(C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY
PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS CONDUCTED THEREON,
(D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY
LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY
OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON
ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION.  IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, THE COMPANY

 

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HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION
OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE
LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17 SHALL SURVIVE REPAYMENT
OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE
LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR
DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS
AGREEMENT.

 

15.18                     Nonliability of Lenders.  The relationship between the
Company on the one hand and the Lenders and the Administrative Agent on the
other hand shall be solely that of borrower and lender.  Neither the
Administrative Agent nor any Lender has any fiduciary relationship with or duty
to any Loan Party arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Loan Parties, on the
one hand, and the Administrative Agent and the Lenders, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor.  Neither
the Administrative Agent nor any Lender undertakes any responsibility to any
Loan Party to review or inform any Loan Party of any matter in connection with
any phase of any Loan Party’s business or operations.  The Company agrees, on
behalf of itself and each other Loan Party, that neither the Administrative
Agent nor any Lender shall have liability to any Loan Party (whether sounding in
tort, contract or otherwise) for losses suffered by any Loan Party in connection
with, arising out of, or in any way related to the transactions contemplated and
the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought.  NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING
FROM THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH
INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH
THIS AGREEMENT, NOR SHALL ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO,
AND THE COMPANY ON BEHALF OF ITSELF AND EACH OTHER LOAN PARTY, HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER
BEFORE OR AFTER THE CLOSING DATE).  The Company acknowledges that it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party.  No joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Lenders or among the Loan Parties
and the Lenders.

 

15.19                     FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN
THIS

 

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AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE.  THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF ILLINOIS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

 

15.20                     WAIVER OF JURY TRIAL.  EACH OF THE COMPANY, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP
EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

15.21                     Waiver.  It is hereby agreed and understood that,
subject to the complete fulfillment and performance of the conditions precedent
set forth in Section 12.1 of this Amendment, the Lender hereby waives the
Existing Covenant Default and all of its rights and remedies with respect to the
Existing Covenant Default.  The waiver hereunder will not in any way operate as
(a) an amendment or modification of the Existing Credit Agreement or this
Agreement, (b) a waiver of repayment by the Company of any portion of the
outstanding Obligations under the Existing Credit Agreement or this Agreement,
or (c) a waiver of, or consent with respect to, any existing or future Event of
Default (other than the Existing Covenant Default), or a waiver or abandonment
to any right or remedy available to the Lender with respect to any such Event of
Default (other than the Existing Covenant Default), all of which rights are
reserved.

 

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The parties hereto have caused this Agreement to be duly executed and delivered
by their duly authorized officers as of the date first set forth above.

 

 

CONTINENTAL MATERIALS CORPORATION,

 

as the Company and a Loan Party

 

 

 

By:

/s/ Joseph J. Sum

 

 

Joseph J. Sum

 

 

Chief Financial Officer

 

 

 

 

 

THE PRIVATEBANK AND TRUST COMPANY, as Administrative Agent, as a Lender and the
initial Issuing Lender

 

 

 

By:

/s/ Steven M. Cohen

 

 

Steven M. Cohen

 

 

Managing Director & Senior Vice President

 

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