Exhibit 10.1

CREDIT AND SECURITY AGREEMENT

Dated as of September 24, 2014

among

MFRI, INC.,
MIDWESCO FILTER RESOURCES, INC.,
PERMA·PIPE, INC.,
TC NILES CORPORATION,
TDC FILTER MANUFACTURING, INC.,
MM NILES CORPORATION,
PERMA-PIPE INTERNATIONAL COMPANY, LLC,
and PERMA-PIPE CANADA, INC.
as Borrowers,

and

BMO HARRIS BANK N.A.,
as Lender

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Table of Contents
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS                1

1.01
Defined Terms                                1

1.02
Other Interpretive Provisions                        32

1.03
Accounting Terms                                33

1.04
Uniform Commercial Code                            34

1.05
Rounding                                    34

1.06
Times of Day                                34

1.07
Letter of Credit Amounts                            34

ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS            34

2.01
Loan Commitments                                34

2.02
Borrowings, Conversions and Continuations of Loans            35

2.03
Letter of Credit Facility                            36

2.04
Reserved                                    37

2.05
Repayment of Loans                            37

2.06
Prepayments                                37

2.07
Change in Commitments                            39

2.08
Interest                                    39

2.09
Fees                                    40

2.10
Computation of Interest and Fees                        40

2.11
Evidence of Debt                                41

2.12
Payments Generally                                41

2.13
Nature and Extent of Each Borrower’s Liability                41

ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY            42

3.01
Taxes                                    42

3.02
Illegality                                    43

3.03
Inability to Determine Rates                            43

3.04
Increased Costs; Reserves on Eurodollar Rate Loans                44

3.05
Compensation for Losses                            45

3.06
Survival                                    46

ARTICLE IV
SECURITY AND ADMINISTRATION OF COLLATERAL            46

4.01
Security Interest in Collateral                        46

4.02
Other Collateral                                47

4.03
Collateral Administration                            49

4.04
Further Assurances                                51

4.05
Cash Management                                51

4.06
Information Regarding Collateral                        52

ARTICLE V
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS            52

5.01
Conditions of Initial Credit Extension                    52

5.02
Conditions to all Credit Extensions                        53

ARTICLE VI
REPRESENTATIONS AND WARRANTIES                53

6.01
Existence, Qualification and Power                        54

6.02
Authorization; No Contravention                        54

6.03
Governmental Authorization; Other Consents                54

6.04
Binding Effect                                54

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6.05
Financial Statements; No Material Adverse Effect                54

6.06
Litigation                                    55

6.07
No Default                                    55

6.08
Ownership of Property; Liens                        55

6.09
Environmental Compliance                            56

6.10
Insurance                                    57

6.11
Taxes                                    57

6.12
ERISA Compliance                                57

6.13
Subsidiaries; Equity Interests                        58

6.14
Margin Regulations; Investment Company Act                58

6.15
Disclosure                                    58

6.16
Compliance with Laws                            59

6.17
Intellectual Property; Licenses, Etc                        59

6.18
Labor Matters                                59

6.19
Deposit Accounts and Securities Accounts                    59

6.20
Accounts                                    60

6.21
Anti-Terrorism Laws and Foreign Asset Control Regulations            60

6.22
Brokers                                    61

6.23
Customer and Trade Relations                        61

6.24
Material Contracts                                61

6.25
Casualty                                    61

ARTICLE VII
AFFIRMATIVE COVENANTS                        61

7.01
Financial Statements                            61

7.02
Borrowing Base Certificate; Other Information                62

7.03
Notices                                    63

7.04
Payment of Obligations                            64

7.05
Preservation of Existence, Etc                        65

7.06
Maintenance of Properties                            65

7.07
Maintenance of Insurance                            65

7.08
Compliance with Laws                            65

7.09
Books and Records                                66

7.10
Inspection Rights and Appraisals; Meetings with the Lender            66

7.11
Use of Proceeds                                66

7.12
New Subsidiaries                                66

7.13
Further Assurances                                66

7.14
Licenses                                    67

7.15
Environmental Laws                            67

7.16
Landlord and Storage Agreements                        67

7.17
Material Contracts                                67

7.18
Treasury Management Services                        67

ARTICLE VIII
NEGATIVE COVENANTS                            68

8.01
Indebtedness                                68

8.02
Liens                                    69

8.03
Investments                                    71

8.04
Fundamental Changes                            71

8.05
Dispositions                                72

8.06
Restricted Payments                            73

8.07
Change in Nature of Business                        73

8.08
Transactions with Affiliates                            73

8.09
Burdensome Agreements                            73

8.10
Use of Proceeds                                74

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8.11
Prepayment of Indebtedness; Amendment to Material Agreements        74

8.12
Financial Covenants                            75

8.13
Creation of New Subsidiaries                        75

8.14
Securities of Subsidiaries                            75

8.15
Sale and Leaseback                                75

8.16
Operating Leases                                75

8.17
Bill-and-Hold Sales, Etc                            75

8.18
Fiscal Year End                                75

ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES                    75

9.01
Events of Default                                75

9.02
Remedies Upon Event of Default                        78

9.03
License                                    78

9.04
Limitation of Remedies                            78

ARTICLE X
MISCELLANEOUS                            79

10.01
Amendments, Etc                                79

10.02
Notices; Effectiveness; Electronic Communication                79

10.03
No Waiver; Cumulative Remedies                        80

10.04
Expenses; Indemnity; Damage Waiver                    80

10.05
Marshalling; Payments Set Aside                        82

10.06
Successors and Assigns                            82

10.07
Right of Setoff                                82

10.08
Interest Rate Limitation                            83

10.09
Counterparts; Integration; Effectiveness                    83

10.10
Survival                                    83

10.11
Severability                                    83

10.12
Governing Law; Jurisdiction; Etc                        83

10.13
Waiver of Jury Trial                                84

10.14
Electronic Execution of Assignments and Certain Other Documents        84

10.15
USA PATRIOT Act Notice                            85

10.16
No Advisory or Fiduciary Responsibility                    85

10.17
Attachments                                85

ARTICLE XI
CONTINUING GUARANTY                        85

11.01
Guaranty                                    85

11.02
Rights of the Lender                            86

11.03
Certain Waivers                                86

11.04
Obligations Independent                            86

11.05
Subrogation                                    86

11.06
Termination; Reinstatement                            87

11.07
Subordination                                87

11.08
Stay of Acceleration                                87

11.09
Condition of Borrowers                            87

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SCHEDULES
1.01
1.02
Existing Letters of Credit
Excluded Subsidiaries
4.02
Pledged Interests
4.06
Information Regarding Collateral
5.01
Good Standing and Foreign Qualification Jurisdictions
6.03
Governmental Authority
6.06
Litigation
6.08(b)(1)
Owned Real Estate
6.08(b)(2)
Leased Real Estate
6.09
Environmental Matters
6.10
Insurance
6.11
Proposed Tax Assessments
[6.12(d)
Pension Plans]
6.13(a)
Subsidiaries
6.13(b)
Other Equity Investments
6.18
Labor Matters
6.19
Deposit Accounts and Securities Accounts
6.24
Material Contracts
8.01
Existing Indebtedness
8.02
Existing Liens
8.03
Existing Investments
 
 
EXHIBITS
Form of
A
Committed Loan Notice
B
Revolving Loan Note

C
Compliance Certificate
D
Borrowing Base Certificate

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CREDIT AND SECURITY AGREEMENT
This CREDIT AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
September 24, 2014, among MFRI, INC., a Delaware corporation (the “Company”),
MIDWESCO FILTER RESOURCES, INC., a Delaware corporation (“Midwesco”),
PERMA-PIPE, INC., a Delaware corporation (“Perma-Pipe”), TC NILES CORPORATION, a
Delaware corporation (“TC Niles”), TDC FILTER MANUFACTURING, INC., a Delaware
corporation (“TDC”), MM NILES CORPORATION, a Delaware corporation (“MM Niles”),
and PERMA-PIPE CANADA, INC., a Delaware corporation (“Perma-Pipe Canada”) (each
of the Company, Midwesco, Perma-Pipe, TC Niles, TDC, MM Niles, and Perma-Pipe
Canada may be referred to herein individually, as a “Borrower” and collectively,
as “Borrowers”), and BMO HARRIS BANK N.A., as lender (the “Lender”).

Preliminary Statements
A.    The Borrowers have requested that the Lender provide a credit facility to
the Borrowers to finance their mutual and collective business enterprise.
B.    The Lender is willing to provide the credit facility on the terms and
conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

1.01Defined Terms. As used in this Agreement, the following terms shall have the
meanings set forth below:
“Account” means “accounts” as defined in the UCC.
“Account Debtor” means any Person who is or may become obligated under or on
account of any Account, Contractual Obligation, Chattel Paper or General
Intangible.
“ACH” means automated clearing house transfers.
“Acquisition” means the acquisition of (a) a controlling equity or other
ownership interest in another Person, whether by purchase of such equity or
other ownership interest or upon exercise of an option or warrant for, or
conversion of securities into, such equity or other ownership interest, or
(b) assets of another Person which constitute all or substantially all of the
assets of such Person or of a line or lines of business conducted by such
Person.
“Adjustment Date” means the first day of each fiscal quarter, commencing on
February 1, 2015.
“Agreement” means this Credit and Security Agreement.
"Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
“Allocable Amount” has the meaning specified in Section 2.13(c)(ii).

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“Applicable Margin” means with respect to any Type of Loan or the Unused Fee,
the percentages per annum set forth below, as based upon the Average
Availability for the immediately preceding fiscal quarter:
Level
Average Availability
Eurodollar Rate Revolving Loans
Base Rate Revolving Loans
Unused Line Fee
I
>$7,000,000
1.50%
—%
0.20%
II
>$4,000,000 but <$7,000,000
1.75%
—%
0.20%
III
<$4,000,000
2.00%
0.25%
0.20%

From the Closing Date until the first Adjustment Date, margins shall be
determined as if Level I were applicable. Thereafter, any increase or decrease
in the Applicable Margin resulting from a change in Average Availability shall
become effective as of each Adjustment Date based upon Average Availability for
the immediately preceding fiscal quarter. Average Availability shall be
calculated by the Lender based on the Borrowing Base Certificates delivered from
time to time pursuant to Section 7.02(a) (as the same may be adjusted as set
forth therein). If any Borrowing Base Certificate (including any required
financial information in support thereof) is not received by the Lender by the
date required pursuant to Section 7.02(a), then the Applicable Margin shall be
determined as if the Average Availability for the immediately preceding fiscal
quarter is at Level III until such time as such Borrowing Base Certificate and
supporting information is received.

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited Consolidated balance sheet of
the Company and its Subsidiaries for the fiscal year ended January 31, 2014, and
the related Consolidated statements of income or operations, retained earnings
and cash flows for such fiscal year of the Company and its Subsidiaries,
including the notes thereto.

“Auditor” has the meaning specified in Section 7.01(a).

“Auto-Extension Letter of Credit” has the meaning specified in Section
2.03(b)(iii).

“Availability” means the lesser of:
(a) the amount of the Revolving Credit Facility minus the Line Reserve minus
Total Revolving Credit Outstandings; and

(b) the Borrowing Base minus Total Revolving Credit Outstandings. In calculating
Availability at any time and for any purpose under this Agreement, the Borrower
Agent, on behalf of the Borrowers, shall certify to the Lender that all accounts
payable and Taxes are being paid on a timely basis and consistent with past
practices (absent which the Lender may establish a Reserve therefor).

“Availability Period” means the period from the Closing Date to the Revolving
Credit Termination Date

“Availability Reserves” means, without duplication of any other Reserves or
items that are otherwise addressed or excluded through eligibility criteria,
such reserves as the Lender from time to time determines in its reasonable
credit judgment as being appropriate, including the Rent and Charge Reserve,
Credit Product Reserves, dilution reserves and other reserves (a) to reflect the
impediments to the Lender’s ability to realize upon the Collateral consisting of
Eligible Accounts or Eligible Inventory included in the Borrowing Base, (b) to
reflect sums that any Loan Party may be required to pay under any Section of
this Agreement or any other Loan Document (including taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable

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under such leases) and has failed to pay, (c) to reflect amounts for which
claims may be reasonably expected to be asserted against the Collateral or the
Lender or (d) to reflect criteria, events, conditions, contingencies or risks
which adversely affect any component of the Borrowing Base, or the assets,
business, financial performance or financial condition of any Loan Party.

“Average Availability” means for any period, the average daily amount of
Availability during such period.

“Bankruptcy Code” means Title 11 of the United States Code.

“Base Rate” means, for any day, a fluctuating rate per annum equal to the
highest of (a) the rate of interest announced by the Lender from time to time as
its prime rate for such day (with any change in such rate announced by the
Lender taking effect at the opening of business on the day specified in the
public announcement of such change); (b) the Federal Funds Rate for such day,
plus 0.50%; and (c) Eurodollar Rate for one month Interest Periods plus 1.00%.

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

“Base Rate Revolving Loan” means a Revolving Loan that is a Base Rate Loan.

“Borrower Agent” has the meaning specified in Section 2.13(g).

“Borrowers” has the meaning specified in the introductory paragraph hereto.

“Borrowing” means any of a Revolving Borrowing.

“Borrowing Base” means, at any time of calculation, an amount equal to:
(a) the Value of Eligible Accounts (less all cash received but not yet applied
in respect of such Eligible Accounts) multiplied eighty-five percent (85%); plus
(b) the Value of Eligible Supported Accounts (less all cash received but not yet
applied in respect of such Eligible Supported Accounts) multiplied ninety
percent (90%); plus
(c) the lesser of (i) the Cost of Eligible Inventory other than work in progress
multiplied by sixty percent (60%) and (ii) $16,000,000; plus
(d) the lesser of (i) the Cost of Eligible Inventory constituting work in
progress multiplied by fifty-five percent (55%) and (ii) $2,500,000; minus
(e) the amount of all Availability Reserves.

The term “Borrowing Base” and the calculation thereof shall not include any
assets or property acquired in an Acquisition unless the Lender has conducted
Field Exams and appraisals reasonably required by it (with results reasonably
satisfactory to the Lender) and the Person owning such assets or property shall
be a (directly or indirectly) wholly-owned Domestic Subsidiary of the Company
and shall have become a Borrower.

“Borrowing Base Certificate” means a certificate, in the form of Exhibit D
attached hereto, by which Borrowers certify calculation of the Borrowing Base.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Lender’s Office is located and, if such day
relates to any interest rate settings as to a Eurodollar Rate Loan, any
fundings, disbursements, settlements and payments in respect of any such
Eurodollar Rate Loan, or any other dealings to be carried out pursuant to this
Agreement in respect of any such Eurodollar Rate Loan, means any such day that
is also a London Banking Day.

“Capital Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.

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“Cash Collateralize” means to pledge and deposit with or deliver to the Lender,
as collateral for any Obligations that are due or may become due, cash or
deposit account balances or other credit support in an amount equal to up to
103% of the maximum amount owing thereunder, all pursuant to documentation in
form and substance satisfactory to the Lender. “Cash Collateral” shall have a
meaning correlative to the foregoing and shall include proceeds.

“Cash Equivalents” means any of the following types of property, to the extent
owned by the Company or any of its Subsidiaries free and clear of all Liens
(other than Liens created under the Security Instruments): (a) cash, denominated
in Dollars; (b) readily marketable direct obligations of the government of the
United States or any agency or instrumentality thereof, or obligations the
timely payment of principal and interest on which are fully and unconditionally
guaranteed by the government of the United States or any state or municipality
thereof, in each case so long as such obligation has an investment grade rating
by S&P and Moody’s; (c) commercial paper rated at least P-1 (or the then
equivalent grade) by Moody’s and A-1 (or the then equivalent grade) by S&P, or
carrying an equivalent rating by a nationally recognized rating agency if at any
time neither Moody’s nor S&P shall be rating such obligations; (d) insured
certificates of deposit or bankers’ acceptances of, or time deposits with any
Lender or with any commercial bank that (i) is a member of the Federal Reserve
System, (ii) issues (or the parent of which issues) commercial paper rated as
described in the first portion of clause (c) above, (iii) is organized under the
laws of the United States or of any state thereof and (iv) has combined capital
and surplus of at least $500,000,000; (e) readily marketable general obligations
of any corporation organized under the laws of any state of the United States of
America, payable in the United States of America, expressed to mature not later
than twelve months following the date of issuance thereof and rated A or better
by S&P or A2 or better by Moody’s; and (f) readily marketable shares of
investment companies or money market funds that, in each case, invest solely in
the foregoing Investments described in clauses (a) through (e) above;

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

“Change of Control” means the occurrence of any of the following events:
(a) the Company ceases to own and control, beneficially and of record, directly
or indirectly, all Equity Interests in all other Borrowers;
(b) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have “beneficial ownership” of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than thirty percent (30%) of the total voting power of the
voting Equity Interests of the Company (or its successor by merger,
consolidation or purchase of all or substantially all of its assets); and the
Permitted Holders “beneficially own” (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the voting Equity Interest of the Company (or its
successor by merger, consolidation or purchase of all or substantially all of
its assets) than such other person;
(c) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board of Directors of the Company (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Company was approved by a vote of at
least a majority of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved or is a designee of the

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Permitted Holders or was nominated or elected by such Permitted Holders or any
of their designees) cease for any reason to constitute a majority of the Board
of Directors of the Company then in office;
(d) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and the other Borrowers
taken as a whole; or
(e) the adoption by the stockholders of the Company of a plan for the
liquidation or dissolution of the Company.

“Closing Date” means the first date all the conditions precedent in Section 5.01
are satisfied or waived in accordance with Section 10.01 (or, in the case of
Section 5.01(b), waived by the Person entitled to receive the applicable
payment).

“Code” means the Internal Revenue Code of 1986.

“Collateral” means, collectively, certain personal property of the Loan Parties
or any other Person in which the Lender or any Secured Party is granted a Lien
under any Security Instrument as security for all or any portion of the
Obligations or any other obligation arising under any Loan Document.

“Commitment” means a Revolving Credit Commitment.

“Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of
Loans from one Type to the other, or (c) a continuation of Eurodollar Rate
Loans, which, if in writing, shall be substantially in the form of Exhibit A.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. §1 et seq.),
as amended from time to time, and any successor statute.

“Company” has the meaning specified in the introductory paragraph hereto.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

“Concentration Account” has the meaning specified in Section 4.05(b).

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consolidated” means the consolidation, in accordance with GAAP, of the
financial condition or operating results of such Person and its Subsidiaries.
“Consolidated Capital Expenditures” means, with respect to the Company and its
Subsidiaries on a Consolidated basis, for any period the sum of (without
duplication) all expenditures (whether paid in cash or accrued as liabilities)
by the Company or any Subsidiary during such period for items that would be
classified as “property, plant or equipment” or comparable items on the
Consolidated balance sheet of the Company and its Subsidiaries, including
without limitation all transactional costs incurred in connection with such
expenditures provided the same have been capitalized; provided, that
Consolidated Capital Expenditures shall exclude any capital expenditures
(a) financed with Indebtedness permitted hereunder other than Loans, or (b) made
with Net Cash Proceeds from any Disposition described in clauses (b), (d) and
(h) of Section 8.05.
“Consolidated EBITDA” means, for any period, Consolidated Net Income for such
period; plus, to the extent deducted in determining such Consolidated Net
Income, without duplication, (a) Consolidated Interest Charges (net of interest
income for such period of the Company and its Subsidiaries) for such period,
plus (b) federal, state, local and foreign income tax expense for such period,
net of income tax credits, plus (c) depreciation and amortization for such
period, plus (d) non-cash expenses or losses and other non-cash charges incurred
and LIFO reserves established

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during such period (excluding any non-cash charges representing an accrual of,
or reserve for, cash charges to be paid within the next twelve months); plus
(e) expenses of up to $125,000.00 incurred in connection with the Transaction;
minus non-cash income, gains or profits or LIFO reserves terminated during such
period, in each case as determined for the Company and its Subsidiaries on a
Consolidated basis.

“Consolidated Fixed Charge Coverage Ratio” means the ratio, determined on a
Consolidated basis for the Company and its Subsidiaries for the most recent
Measurement Period, of (a) Consolidated EBITDA minus Consolidated Capital
Expenditures to (b) Consolidated Fixed Charges.

“Consolidated Fixed Charges” means, for any period, for the Company and its
Subsidiaries on a Consolidated basis, the sum of, without duplication,
(a) Consolidated Interest Charges paid or required to be paid in cash during
such period, (b) all principal repayments made or required to be made of
Indebtedness during such period, but excluding any such payments to the extent
constituting a refinancing of such Indebtedness through the incurrence of
additional Indebtedness otherwise expressly permitted under Section 8.02 and
repayments of Revolving Loans, (c) all Restricted Payments made in cash during
such period and (d) the aggregate amount of Federal, state, local and foreign
income taxes paid in cash, in each case, of or by the Company and its
Subsidiaries for the most recently completed Measurement Period, and (e) cash
contributions made to any Pension Plan (to the extent not deducted in the
calculation of the Consolidated Net Income) during such period, other than
contributions of up to $500,000 made within 180 days following the Closing Date
in connection with the Company’s proposed pension plan conversion.

“Consolidated Interest Charges” means, with respect to the Company and its
Subsidiaries for any period ending on the date of computation thereof, the gross
interest expense of the Company and its Subsidiaries, including without
limitation (a) the current amortized portion of all fees (including fees payable
in respect of any Swap Contract in the nature of an interest rate hedge and all
fees payable in respect of any Letter of Credit) payable in connection with the
incurrence of Indebtedness to the extent included in gross interest expense and
(b) the portion of any payments made in connection with Capital Leases allocable
to interest expense, all determined on a Consolidated basis; provided, however,
that Consolidated Interest Charges shall include the amount of payments in
respect of Synthetic Lease Obligations that are in the nature of interest.
“Consolidated Net Income” means, for any period, for the Company and its
Subsidiaries on a Consolidated basis, the net income after taxation of the
Company and its Subsidiaries for that period excluding (a) net losses or gains
realized in connection with (i) any sale, lease, conveyance or other disposition
of any asset (other than in the Ordinary Course of Business), or (ii) repayment,
repurchase or redemption of Indebtedness, and (b) extraordinary or nonrecurring
gain or income (or expense), including, any compensation charge incurred in
connection with the Transactions; provided that there shall be excluded from
Consolidated Net Income, without duplication, (x) the net income or loss of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting to the extent of the amount of dividends or distributions are not
actually paid to the Company or a Subsidiary in cash, (y) net income or loss of
any Person in which any other Person (other than the Company or a Subsidiary)
has an ownership interest, except (A) to the extent of the ratable ownership
interest in such Subsidiary so long as the Borrowers own a controlling portion
of the voting Equity Interests of such Subsidiary and otherwise have the power
to direct the management and distributions of such Subsidiary and (B) to the
extent of the amount of dividends or other distributions actually paid in cash
to the Company or a Subsidiary by such Person during such period and (z) the net
income of any Person to the extent the distribution of such net income is then
prohibited by any Restrictive Agreement.
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto. Without
limiting the generality of the foregoing, a Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly,

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power to vote 10% or more of the securities having ordinary voting power for the
election of directors, managing general partners or the equivalent.
“Control Agreement” means, with respect to any Deposit Account, any Securities
Account, commodity account, securities entitlement or commodity contract, an
agreement, in form and substance reasonably satisfactory to the Lender, among
the Lender, the financial institution or other Person at which such account is
maintained or with which such entitlement or contract is carried and the Loan
Party maintaining such account, effective to grant “control” (as defined under
the applicable UCC) over such account to the Lender.
“Controlled Account Bank” means each bank with whom Deposit Accounts are
maintained in which any funds of any of the Loan Parties are concentrated and
with whom a Control Agreement has been, or is required to be, executed in
accordance with the terms hereof.
“Controlled Deposit Account” means each Deposit Account (including all funds on
deposit therein) that is the subject of an effective Control Agreement and that
is maintained by any Loan Party with a financial institution approved by the
Lender.
“Controlled Securities Account” means each securities account or commodity
account (including all financial assets held therein and all certificates and
instruments, if any, representing or evidencing such financial assets) that is
the subject of an effective Control Agreement and that is maintained by any Loan
Party with a securities intermediary or commodity intermediary approved by the
Lender.
“Core Business” means any material line of business conducted by the Company and
its Subsidiaries as of the Closing Date and any business directly related
thereto.
“Cost” means with respect to Eligible Inventory, the lower of (a) cost (as
reflected in the general ledger of such Person) and (b) market value, in each
case, determined in accordance with GAAP calculated on a first-in, first-out
basis and in accordance with the Loan Parties’ accounting practices as in effect
on the Closing Date.
“Credit Extension” means each of the following: (a) a Borrowing and (b) a Letter
of Credit Extension.
“Credit Party” means (a) the Lender, (b) each Credit Product Provider to the
extent it holds secured Credit Product Obligations and was a Lender or an
Affiliate of the Lender when such Person provided Credit Product Arrangements to
the Borrowers, and (c) the successors and assigns of each of the foregoing.
“Credit Product Arrangements” means, collectively, Swap Contracts between a Loan
Party and the Lender or Affiliate of the Lender and Treasury Management and
Other Services.
“Credit Product Obligations” means Indebtedness and other obligations of any
Loan Party arising under Credit Product Arrangements and owing to any Credit
Product Provider; provided that Credit Product Obligations shall not include
Excluded Swap Obligations.
“Credit Product Provider” means the Lender or any of its Affiliates.
“Credit Product Reserve” means the reserves established by the Lender from time
to time in its reasonable judgment in respect of secured Credit Product
Obligations in an amount equal to up to 103% the maximum amount owing
thereunder.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.
“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would unless
cured or waived be an Event of Default.

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“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Margin with respect to Base Rate Loans plus (c) 2% per annum;
provided, however, that (i) with respect to a Eurodollar Rate Loan, until the
end of the Interest Period during which the Default Rate is first applicable,
the Default Rate shall be an interest rate equal to the interest rate (including
any Applicable Margin) otherwise applicable to such Eurodollar Rate Loan plus 2%
per annum, and thereafter as set forth in the portion of this sentence preceding
this proviso, and (ii) with respect to Letter of Credit Fees, the Default Rate
shall equal the Letter of Credit Fee, then in effect plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property
(including any Equity Interest), or part thereof, by any Person, including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Equity Interest” means any Equity Interest that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
(other than an Equity Interest to the extent redeemable in exchange for common
stock or other equivalent common Equity Interests so long as such Equity
Interest is not redeemable at the option of the holder thereof),or is redeemable
at the option of the holder thereof, in whole or in part, in each case on or
prior to the date that is 180 days after the Revolving Credit Maturity Date
(other than an Equity Interest which is redeemable solely in exchange for common
stock or other equivalent common Equity Interests), (b) is convertible into or
exchangeable for debt securities (unless only occurring at the sole option of
the issuer thereof), (c) (i) contains any repurchase obligation that may come
into effect prior to, (ii) requires cash dividend payments (other than taxes)
prior to, or (iii) provides the holders thereof with any rights to receive any
cash upon the occurrence of a change of control or sale of assets prior to, in
each case, the date that is 180 days after the Revolving Credit Maturity Date.
“Dollar” and “$” mean lawful money of the United States.
“Domestic Holding Company” means (i) a Subsidiary other than the Company, (ii)
Perma-Pipe Canada, unless otherwise designated in writing by the Borrower Agent,
(iii) Perma-Pipe International, and (iv) any other Domestic Subsidiary of the
Company designated in writing by the Borrower Agent as a holding company.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States (but excluding any territory or
possession thereof).
“Dominion Trigger Period” means the period (a) commencing on the day that (i) an
Event of Default occurs and is continuing or (ii) Availability is less than the
greater of (A) twenty percent (20%) of the Revolving Credit Commitment at such
time and (B) $5,000,000, in each case, for a period of three (3) consecutive
Business Days and (b) continuing until the date that during the previous
forty-five (45) consecutive days, (i) no Event of Default has existed and
(ii) Availability has been greater than the greater of (A) twenty percent (20%)
of the Revolving Credit Commitment at such time and (B) $5,000,000.
“Eligible Account” means Accounts due to a Borrower that are determined by the
Lender, in its reasonable credit judgment, to be Eligible Accounts. Except as
otherwise agreed by the Lender, none of the following shall be deemed to be
Eligible Accounts:
(a)Accounts to the extent not fully earned by performance or otherwise
constituting a progress billing (other than with respect to Perma-Pipe Projects,
provided that Perma-Pipe Projects that are at least 95% percent complete (as
determined by (x) billings as any date of measurement divided by (y) the total
contract amount of such project) shall not be deemed ineligible solely on
account of this clause (a)) or not evidenced by an invoice which has been
delivered to the applicable Account Debtor;
(b)Accounts that have been outstanding for more than ninety (90) days from the
original invoice date or more than sixty (60) days past the original due date,
whichever comes first;

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(c)Accounts due from any Account Debtor, (i) with respect to Accounts arising
other than with respect to any Perma-Pipe Project, twenty-five percent (25%) or
more of whose Accounts are otherwise ineligible under the terms of clause (b)
above or (ii) with respect to Accounts arising from an individual Perma-Pipe
Project of an Account Debtor, twenty-five percent (25%) or more of such Accounts
have been outstanding for more than sixty (60) days from the invoice date or
more than thirty (30) days past the due date, whichever comes first;
(d)Accounts with respect to which (i) any representation or warranty set for in
any Loan Document with respect thereto is not true and correct in all material
respects or (ii) a Borrower does not have good, valid and marketable title
thereto, free and clear of any Lien (other than Permitted Liens described in
clause (a) of Section 8.02);
(e)Accounts which are disputed or with respect to which a claim, counterclaim,
offset or chargeback has been asserted, but only to the extent of such dispute,
counterclaim, offset or chargeback;
(f)Accounts which (i) do not arise out of a sale of goods or rendition of
services in the Ordinary Course of Business, (ii) do not arise upon credit terms
usual to the business of the Borrowers or (iii) are not payable in Dollars and
Canadian Dollars;
(g)Accounts (i) upon which a Borrower’s right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which a Borrower is not able to bring suit or otherwise enforce its remedies
against the related Account Debtor through judicial process;
(h)Accounts which are owed by (i) any other Borrower or (ii) any Affiliate which
is not a Borrower;
(i)Accounts for which all material consents, approvals or authorizations of, or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given in connection with the performance of such Account
by the Account Debtor or in connection with the enforcement of such Account by
the Lender have not been duly obtained, effected or given or are not in full
force and effect;
(j)Accounts due from an Account Debtor which is the subject of any bankruptcy or
insolvency proceeding, has had a trustee or receiver appointed for all or a
substantial part of its property, has made an assignment for the benefit of
creditors or has suspended its business;
(k)Accounts due from any Governmental Authority, except to the extent that the
subject Account Debtor is the federal government of the United States of America
and has complied with the Federal Assignment of Claims Act of 1940 and any
similar state legislation;
(l)Accounts (i) owing from any Account Debtor that is also a supplier to or
creditor of a Borrower unless such Person has waived any right of setoff in a
manner reasonably acceptable to the Lender, but only to the extent of the
aggregate amount of such Borrower’s liability to such Account Debtor, (ii) to
the extent representing any manufacturer’s or supplier’s allowances, credits,
discounts, incentive plans or similar arrangements entitling such Borrower to
discounts on future purchase therefrom, (iii) to the extent constituting amounts
owed with respect to loans or advances, or (iv) to the extent relating to
payment of interest, fees or late charges;
(m)Accounts arising out of sales on a bill-and-hold, guaranteed sale,
sale‑or‑return, sale on approval or consignment basis or subject to any right of
return, setoff or charge back, provided that in Lender’s reasonable judgment, up
to $500,000 in the aggregate at any time of bill-and-hold Accounts may be
included as “Eligible Accounts”;
(n)Accounts arising out of sales to Account Debtors outside the United States or
Canada;
(o)Accounts that are evidenced by a judgment, Instrument or Chattel Paper;
(p)Accounts due from an Account Debtor and its Affiliates, the aggregate of
which Accounts due from such Account Debtor represents more than twenty-five
percent (25%) of all then outstanding Accounts owed to the Borrowers, but only
to the extent of such excess;
(q)Accounts constituting Permitted Investments made in accordance with clause
(b) of Section 8.03;
(r)Accounts that remain open after the applicable Account Debtor has made a
partial payment in respect of the applicable invoice (whether or not the
applicable Account Debtor has provided an explanation for such partial payment);
(s)Accounts where the applicable Account Debtor tendered a check or other item
of payment in full or partial satisfaction and such check or other item of
payment has been returned by the financial institution on which it is drawn; or
(t)Accounts for which payment has been received by the applicable Borrower but
such payment has not been applied to the applicable Account.

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“Eligible Inventory” means Inventory of the Borrowers that is determined by the
Lender, in its reasonable credit judgment, to be Eligible Inventory. Except as
otherwise agreed by the Lender, the following items of Inventory shall not be
included in Eligible Inventory:
a.Inventory that is not solely owned by a Borrower or a Borrower does not have
good and valid title thereto;
b.Inventory that (i) does not consist of finished goods, work-in-process
approved by Lender, or raw materials or (ii) is not readily saleable in the
Ordinary Course of Business;
c.Inventory that does not comply with each of the representations and warranties
respecting Inventory made by the Borrowers in the Loan Documents;
d.Inventory that is leased by or is on consignment to a Borrower;
e.Inventory that is (i) not located in the United States of America or Canada
(excluding territories or possessions of the United States or Canada) and (ii)
not located at a location that is owned by a Borrower, except (in the case of
this clause (ii)) to the extent that (A) such Borrower has furnished to the
Lender a Lien Waiver executed by the Person owning any such location on terms
reasonably acceptable to the Lender (or Lender has established a Rent and
Charges Reserve with respect to such location) and (B) the Cost of Inventory at
such location is greater than $100,000;
f.Inventory that is in transit, except between locations of Borrowers (or
between locations of Borrowers and customers, processors, or vendors in the
Ordinary Course of Business), provided that Inventory in transit between a
Borrower’s location and a customer shall only be included to the extent such
Inventory is subject to a valid contract or purchase order;
g.Inventory that is comprised of goods which: (i) are damaged, defective,
“seconds,” or otherwise unmerchantable; (ii) have been returned or are to be
returned to the vendor; (iii) are obsolete or slow moving (exceeding 12 months
of sales); (iv) are work-in-process (unless work-in-progress approved by the
Lender); (v) that constitute spare parts, discontinued products, promotional,
marketing, packaging and shipping materials or supplies used or consumed in the
Borrowers’ business and other similar non-merchandise categories; (vi) are not
in compliance with all standards imposed by any Governmental Authority having
regulatory authority over such Inventory, its use or sale; (vii) are bill and
hold goods; (viii) are subject to any warehouse receipt, bill of lading or
negotiable Document not issued in the name of Lender; or (xi) constitute
Hazardous Materials;
h.Inventory that is not subject to a perfected first priority Lien in favor of
the Lender (subject only to Permitted Liens set forth in clauses (a), (c), (d)
or (n) of Section 8.02 hereof);
i.Inventory that is not insured in compliance with the provisions of this
Agreement and the other Loan Documents;
j.Inventory not on a perpetual schedule;
k.Inventory that has been sold but not yet delivered; or
l.Inventory that is subject to any License or other arrangement that restricts
such Borrower’s or the Lender’s right to dispose of such Inventory, unless
(i) the Lender has received an appropriate Lien Waiver; and (ii) such Borrower
has not received notice of a dispute in respect of any such License or other
arrangement.

“Eligible Supported Accounts” means Accounts that are Eligible Accounts (except
for failure to comply with clause (n) of the definition thereof) and either (a)
such Eligible Accounts are fully backed by an irrevocable letter of credit on
terms, and issued by a financial institution, acceptable to the Lender and such
irrevocable letter of credit is in the possession of the Lender, or (b) such
Eligible Accounts are supported by credit insurance acceptable to the Lender,
naming the Lender as an additional insured;
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of a Loan Party or any of its Subsidiaries directly

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or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041 or
4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (g) the determination that any Pension Plan is
considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of
ERISA; or (h) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon
the Company or any ERISA Affiliate.
“Eurocurrency Liabilities” has the meaning specified in Section 3.04(e).
“Eurodollar Rate” means:
a.for any Interest Period with respect to a Eurodollar Rate Loan, the rate per
annum equal to the ICE Benchmark Administration (or the successor thereto if the
ICE Benchmark Administration is no longer making the LIBOR Rate available) LIBOR
Rate (“ICE LIBOR”), as published by Reuters (or other commercially available
source providing quotations of ICE LIBOR as designated by the Lender from time
to time) at approximately 11:00 a.m., London time, two London Banking Days prior
to the commencement of such Interest Period, for Dollar deposits (for delivery
on the first day of such Interest Period) with a term equivalent to such
Interest Period or, (ii) if such rate is not available at such time for any
reason, the rate per annum determined by the Lender to be the rate at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted and with a term equivalent to such Interest Period would
be offered by such other authoritative source (as is selected by Lender in its
sole reasonable discretion) to major banks in the London interbank eurodollar
market at their request at approximately 11:00 a.m. (London time) two London
Banking Days prior to the commencement of such Interest Period; and
b.for any interest calculation with respect to a Base Rate Loan on any date, the
rate per annum equal to (i) ICE LIBOR, at approximately 11:00 a.m., London time
determined two London Banking Days prior to such date for Dollar deposits being
delivered in the London interbank market for a term of one month commencing that
day or (ii) if such published rate is not available at such time for any reason,
the rate per annum determined by the Lender to be the rate at which deposits in
Dollars for delivery on the date of determination in same day funds in

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the approximate amount of the Base Rate Loan being made or maintained and with a
term equal to one month would be offered by such other authoritative source (as
is selected by the Lender in its sole reasonable discretion) to major banks in
the London interbank Eurodollar market at their request at the date and time of
determination.
“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on
clause (a) of the definition of the “Eurodollar Rate.”
“Event of Default” has the meaning specified in Section 9.01.
“Exchange Act” means the Securities Exchange Act of 1934 and the regulations
promulgated thereunder.
“Excluded Assets” means (a) all Real Estate of the Loan Parties, (b) all assets
or property (other than Inventory or Accounts) of the Loan Parties that would
otherwise be included as Collateral but for the express terms of (i) any permit,
lease, license, contract or other agreement or instrument constituting or
applicable to such asset or (ii) applicable Law (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9‑406, 9‑407,
9‑408 or 9‑409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable Law or principles of equity) that,
in each case, prohibits the grant to the Lender of a security interest in and to
such asset or property or under which the grant to the Lender of a security
interest in and to such asset or property may impair the validity or
enforceability of such asset or property (including any United States
intent‑to‑use trademark applications); provided, however, that such assets or
Property shall constitute “Excluded Assets” only to the extent and for so long
as such permit, lease, license, contract or other agreement or applicable Law
validly prohibits the creation of a Lien on such property in favor of the Lender
(as opposed to restricting any exercise of remedies hereunder or requiring the
consent of any Person (other than a Loan Party) or Governmental Authority for
any exercise of remedies hereunder (which exercise of remedies shall be subject
to Section 9.04, but such provision shall not limit the creation, attachment or
perfection of the Lien in favor of the Lender hereunder)) and, upon the
termination of such prohibition (by written consent or in any other manner),
such property shall cease to constitute “Excluded Assets”; (c) Excluded Trust
Accounts; (d) voting Equity Interests of any first‑tier Foreign Subsidiary in
excess of 65% of the aggregate voting Equity Interests of such first‑tier
Foreign Subsidiary, (e) to the extent that applicable Law requires that a
Subsidiary of any Loan Party issue nominee or directors qualifying shares, such
nominee or qualifying shares, and (f) other assets to the extent the Lender
determines in its reasonable judgment that the cost of obtaining such pledge or
security interest is excessive in relation to the benefit thereof; provided,
however, that Excluded Assets shall not include any Proceeds of property
described in clauses (a) through (e) above (unless such Proceeds are also
described in such clauses).
“Excluded Deposit Account” (a) Excluded Trust Accounts; (b) zero balance
disbursement accounts and (c) other Deposit Accounts maintained in the Ordinary
Course of Business containing cash amounts that do not exceed at any time
$20,000 for any such account and $50,000 in the aggregate for all such accounts
under this clause (c).
“Excluded Subsidiary” means (a) 7720 Lehigh Property LLC, an Illinois limited
liability company, for so long as the only assets owned by such Subsidiary
consist of real property with an aggregate net book value of less than
$4,000,000 and such Subsidiary conducts no operations other than incidental to
the ownership of such real property, (b) Midwesco Filter Cicero, LLC, an
Illinois limited liability company, for so long as the only assets owned by such
Subsidiary consist of real property and deferred tax assets with an aggregate
net book value of less than $750,000.00 and such Subsidiary conducts no
operations other than incidental to the ownership of such real property, (c)
Perma-Pipe International, and (d) each other Subsidiary identified on Schedule
1.02 hereto (as updated in writing by the Borrower Agent from time to time when
no Event of Default has occurred and is continuing or would result therefrom)
for so long as such Subsidiaries own no property or assets with an aggregate
fair market or book value (whichever is greater) in excess of $500,000
individually or $1,000,000 in the aggregate and have annual net income no
greater than $100,000 individually or $200,000 in the aggregate.
“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap
Obligation if, and to the extent that, all or a portion of the guarantee of such
Loan Party of, or the grant by such Loan Party of a Lien to secure, such Swap
Obligation (or any guarantee thereof) is or becomes illegal under the Commodity
Exchange Act or any rule, regulation or order of the commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by
virtue of such Loan Party’s failure for any reason to constitute an “eligible
contract participant” as defined

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in the Commodity Exchange Act and the regulations thereunder at the time the
guarantee of such Loan Party or the grant of such Lien becomes effective with
respect to such Swap Obligation. If a Swap Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the
portion of such Swap Obligation that is attributable to swaps for which such
guarantee or Lien is or becomes illegal.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of Lender, its applicable lending office located in, the
jurisdiction imposing such Tax (or any political subdivision thereof) or (ii)
that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of Lender
with respect to an applicable interest in a Loan or Commitment pursuant to a law
in effect on (i) the date hereof or (ii) the date on which Lender changes its
lending office, except in the case of clause (ii) to the extent that, pursuant
to Section 3.01(a)(ii) or (c), amounts with respect to such Taxes were payable
either to Lender immediately before Lender changed its lending office, and (c)
any U.S. federal withholding Taxes imposed under FATCA.
“Excluded Trust Account” (a) Deposit Accounts the balance of which consists
exclusively of (i) withheld income taxes and federal, state or local employment
taxes required to be paid to the Internal Revenue Service or state or local
government agencies with respect to employees of any Loan Party or (ii) amounts
required to be paid over to an employee benefit plan pursuant to DOL Reg. Sec.
2510.3 102 on behalf of or for the benefit of employees of any Loan Party,
(b) all segregated Deposit Accounts constituting (and the balance of which
consists solely of funds set aside in connection with) payroll accounts, trust
accounts, and accounts dedicated to the payment of accrued employee benefits,
medical, dental and employee benefits claims to employees of any Loan Party.
“Existing Agreement” means that certain Second Amended and Restated Loan and
Security Agreement dated as of April 30, 2012, by and among the Borrowers and
Bank of America, N.A., individually and as agent for the lenders, as amended
through the Closing Date.
“Existing Letters of Credit” means the letter of credit issued and outstanding
under the Existing Agreement which are identified on Schedule 1.01 hereto.
“Existing Mortgage Indebtedness” means Indebtedness owed by TDC in the aggregate
principal amount of approximately $4,800,000 in connection with the existing
mortgage financing at TDC’s property located at 2 Territorial Court,
Bolingbrook, Illinois.
“Extraordinary Expenses” means all costs, expenses, liabilities or advances that
Lender may incur or make during a Default or Event of Default, or during the
pendency of an proceeding of any Loan Party under any Debtor Relief Laws,
including those relating to (a) any audit, inspection, repossession, storage,
repair, appraisal, insurance, manufacture, preparation or advertising for sale,
sale, collection, or other preservation of or realization upon any Collateral;
(b) any action, arbitration or other proceeding (whether instituted by or
against the Lender, any Loan Party, any representative of creditors of a Loan
Party or any other Person) in any way relating to any Collateral (including the
validity, perfection, priority or avoidability of the Lender’s Liens with
respect to any Collateral), Loan Documents, Letters of Credit or Obligations,
including any lender liability or other claims; (c) the exercise, protection or
enforcement of any rights or remedies of the Lender in, or the monitoring of,
any proceeding applicable to any Loan Party under any Debtor Relief Laws;
(d) settlement or satisfaction of any taxes, charges or Liens with respect to
any Collateral; (e) any enforcement action; (f) negotiation and documentation of
any modification, waiver, workout, restructuring or forbearance with respect to
any Loan Documents or Obligations; and (g) Protective Advances. Such costs,
expenses and advances include transfer fees, Other Taxes, storage fees,
insurance costs, permit fees, utility reservation and standby fees, legal fees,
appraisal fees, brokers’ fees and commissions, auctioneers’ fees and
commissions, accountants’ fees, environmental study fees, wages and salaries
paid to employees of any Loan Party or independent contractors in liquidating
any Collateral, and travel expenses.
“FASB ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.

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“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code..
“Facility” means the Revolving Credit Facility.
“Facility Termination Date” means the date as of which Payment in Full of all
Obligations has occurred.
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender
on such day on such transactions as determined by the Lender.
“Field Exam” means any visit and inspection of the properties, assets and
records of any Loan Party during the term of this Agreement, which shall include
access to such properties, assets and records sufficient to permit the Lender or
its representatives to examine, audit and make extracts from any Loan Party’s
books and records, make examinations and audits of any Loan Party’s other
financial matters and Collateral as the Lender deems appropriate in its
reasonable credit judgment, and discussions with its officers, employees,
agents, advisors and independent accountants regarding such Loan Party’s
business, financial condition, assets, prospects and results of operations.
“FIRREA” means The Financial Institutions Reform, Recovery and Enforcement Act
of 1989.
“Fixed Charge Trigger Period” means the period (a) commencing on the day that
Availability is less than (i) the greater of (A) fourteen percent 14% of the
Revolving Credit Commitment at such time and (B) $3,500,000, in each case, for a
period of five (5) consecutive Business Days or (ii) $2,000,000 as of the end of
any Business Day, and (b) continuing until the date that during the previous
forty-five (45) consecutive days, Availability has been greater than the greater
of (i) fourteen percent (14%) of the Revolving Credit Commitment at such time
and (ii) $3,500,000 at all times during such period.
“Foreign Government Scheme or Arrangement” has the meaning specified in
Section 6.12(e).
“Foreign Plan” has the meaning specified in Section 6.12(e).
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“FLSA” means the Fair Labor Standards Act of 1938.
“FRB” means the Board of Governors of the Federal Reserve System of the United
States.
“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.
“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).
“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable

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by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
“Guarantor” means each Person who executes or becomes a party to this Agreement
as a “Guarantor” or otherwise executes and delivers a Guarantee of any of the
Obligations (it being understood that as of the Closing Date there are no
Guarantors).
“Guarantor Payment” has the meaning specified in Section 2.13(c).
“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Honor Date” has the meaning specified in Section 2.03(c).
“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as liabilities in
accordance with GAAP, (a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; (b) all direct or contingent
obligations of such Person arising under letters of credit (including standby
and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments; (c) net obligations of such Person under any Swap Contract; (d) all
obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the Ordinary Course of Business);
(e) indebtedness secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; (f) obligations under Capital Leases
and Synthetic Lease Obligations of such Person; (g) all obligations of such
Person with respect to the redemption, repayment or other repurchase or payment
in respect of any Disqualified Equity Interest; and (h) all guarantees of such
Person in respect of any of the foregoing. For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, to the extent such Indebtedness is recourse to such Person. The amount
of any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date. The amount of any Capital
Lease or Synthetic Lease Obligation as of any date shall be deemed to be the
amount of Attributable Indebtedness in respect thereof as of such date.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
clause (a), Other Taxes.
“Indemnitee” has the meaning specified in Section 10.04(b).

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“Information” has the meaning specified in Section 10.07.
“Intellectual Property” means all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.
“Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, (i) the last
day of each Interest Period applicable to such Eurodollar Rate Loan; provided
that if any Interest Period for a Eurodollar Loan is greater than three months,
the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates, (ii) any date that such
Loan is prepaid or converted, in whole or in part, and (iii) the Maturity Date
with respect to such Loan; and (b) as to any Base Rate Loan, (i) the first day
of each month with respect to interest accrued through the last day of each
month ending immediately prior to such date, (ii) any date that such Loan is
prepaid or converted, in whole or in part, and (iii) the Maturity Date with
respect to such Loan; provided, further, that interest accruing at the Default
Rate shall be payable from time to time upon demand of the Lender.
“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending, in each case, on the date one, two, three
or six months thereafter, as selected by the Borrower Agent in its Committed
Loan Notice; provided that:
i.any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;
ii.any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and
iii.no Interest Period shall extend beyond the Revolving Credit Maturity Date.

“Investment” means (a) a transaction or series of transactions resulting in an
Acquisition or merger, consolidation or combination of a Borrower or Subsidiary
with another Person; (b) an acquisition of record or beneficial ownership of any
Equity Interests of a Person; or (c) a direct or indirect loan, guarantee,
advance or capital contribution to or other investment in a Person, including
accounts receivable received from that Person.
“IP Rights” rights of any Person to use any Intellectual Property.
“IRS” means the United States Internal Revenue Service.
“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the Lender and any Borrower (or any Subsidiary) or in favor the Lender
and relating to any such Letter of Credit.
“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.
“Lease Payments” means all required payments of lessee under operating leases or
similar contractual arrangements (whether characterized as rent or otherwise)
other than payments arising from indemnification of the lessor.

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“Lender’s Office” means, with respect to any currency, the Lender’s address and,
as appropriate, account as set forth in Section 10.02, or such other address or
account with respect to such currency as the Lender may from time to time notify
to the Borrower Agent.
“Letter of Credit” means any standby or documentary letter of credit issued by
the Lender for the account of a Borrower, or any indemnity, guarantee, exposure
transmittal memorandum or similar form of credit support issued by the Lender
for the benefit of a Borrower, and shall include the Existing Letters of Credit.
“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the Lender.
“Letter of Credit Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Revolving Borrowing.
“Letter of Credit Conditions” means the following conditions necessary for
issuance of a Letter of Credit: (a) each of the conditions set forth in Section
5 is satisfied as determined by Lender; (b) after giving effect to such
issuance, total LC Obligations do not exceed the Letter of Credit Sublimit, no
Overadvance exists and Total Revolving Credit Outstandings do not exceed the
lesser of (i) Total Revolving Credit Commitments minus all Line Reserves and
(ii) the Borrowing Base; (c) the Letter of Credit and payments thereunder are
denominated in Dollars; and (d) the purpose and form of the proposed Letter of
Credit are satisfactory to Lender in its discretion.
“Letter of Credit Expiration Date” means the day that is 30 days prior to the
Revolving Credit Maturity Date then in effect (or, if such day is not a Business
Day, the next preceding Business Day).
“Letter of Credit Extension” means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.
“Letter of Credit Fees” means, collectively or individually as the context may
indicate, the fees with respect to Letters of Credit described in
Section 2.09(b).
“Letter of Credit Obligations” means, as at any date of determination, (a) the
aggregate undrawn amount of all outstanding Letters of Credit, plus (b) the
aggregate of all Unreimbursed Amounts, including all Letter of Credit
Borrowings, plus (c) the aggregate amount of all accrued and unpaid Letter of
Credit Fees. For purposes of computing the amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.07. For all purposes of this Agreement, if on any date
of determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.
“Letter of Credit Sublimit” means an amount equal to the lesser of
(a) $2,500,000 and (b) the Revolving Credit Commitments. The Letter of Credit
Sublimit is part of, and not in addition to, the Revolving Credit Commitments.
“License” means any license or agreement under which a Loan Party is granted IP
Rights in connection with any manufacture, marketing, distribution or
disposition of Collateral, any use of assets or property or any other conduct of
its business.
“Licensor” means any Person from whom a Loan Party obtains IP Rights.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest, or any preference, priority or other security agreement or
preferential arrangement in the nature of a security agreement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same economic effect
as any of the foregoing).

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“Lien Waiver” means an agreement, in form and substance reasonably satisfactory
to the Lender, by which (a) for any material Collateral located on leased
premises or premises subject to a mortgage, the lessor or mortgagee, as
applicable, waives or subordinates any Lien it may have on the Collateral, and
agrees to permit the Lender to enter upon the premises and remove the Collateral
or to use the premises to store or dispose of the Collateral; (b) for any
Collateral held by a warehouseman, processor, shipper, customs broker or freight
forwarder, such Person waives or subordinates any Lien it may have on the
Collateral, agrees to hold any Documents in its possession relating to the
Collateral as agent for the Lender, and agrees to deliver the Collateral to the
Lender upon request; (c) for any Collateral held by a repairman, mechanic or
bailee, such Person acknowledges the Lender’s Lien, waives or subordinates any
Lien it may have on the Collateral, and agrees to deliver the Collateral to the
Lender upon request; and (d) for any Collateral subject to a Licensor’s IP
Rights, the Licensor grants to the Lender the right, vis-à-vis such Licensor, to
enforce the Lender’s Liens with respect to the Collateral, including the right
to dispose of it with the benefit of the Intellectual Property, whether or not a
default exists under any applicable License.
“Line Reserve” means reserves as the Lender from time to time determines in its
reasonable credit judgment as being appropriate to reflect sums that any Loan
Party may be required to pay under any Section of this Agreement or any other
Loan Document and has failed to pay and amounts for which claims may be
reasonably expected to be asserted against the Collateral, including the Rent
and Charges Reserve and the aggregate amount of liabilities at any time secured
by Liens upon Collateral that are senior to the Lender’s Liens.
“Loan” means an extension of credit under Article II in the form of a Revolving
Loan.
“Loan Account” has the meaning assigned to such term in Section 2.11(a).
“Loan Documents” means this Agreement, each Note, each Security Instrument, each
Committed Loan Notice, each Issuer Document, each Borrowing Base Certificate,
each Compliance Certificate, any agreement creating or perfecting rights in Cash
Collateral securing any Obligation hereunder and all other instruments and
agreements heretofore or hereafter executed or delivered to or in favor of the
Lender in connection with the Loans made and transactions contemplated by this
Agreement.
“Loan Obligations” means all Obligations other than amounts (including fees)
owing by any Loan Party pursuant to any Credit Product Arrangements.
“Loan Parties” means the Borrowers and each Guarantor, if any.
“London Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar market.
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect on, the operations, business, assets, properties, liabilities
(actual or contingent), or condition (financial or otherwise) of either (i) the
Borrowers, taken as a whole or (ii) the Company and its Subsidiaries, taken as a
whole; (b) a material impairment of the ability of any Loan Party (other than an
Excluded Subsidiary) to perform its obligations under any material Loan Document
to which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party (other than an
Excluded Subsidiary) of any material provision of any Loan Document to which it
is a party or on the ability of the Lender to collect any Obligation or realize
upon any material portion of the Collateral.
“Material Contract” means any agreement or arrangement to which a Loan Party or
Subsidiary is party (other than the Loan Documents) for which breach,
termination, nonperformance or failure to renew could reasonably be expected to
have a Material Adverse Effect.
“Material License” has the meaning assigned to such term in Section 7.15.
“Maturity Date” means the Revolving Credit Maturity Date.

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“Measurement Period” means, at any date of determination, the most recently
completed trailing twelve month fiscal period of the Company and its
Subsidiaries for which financial statements have or should have been delivered
in accordance with Section 7.01(a) or 7.01(b).
“Minimum Collateral Amount” means, at any time, with respect to Cash Collateral
consisting of cash or Deposit Account balances provided in accordance with the
provisions of Sections 2.03(a)(ii)(B),  2.16(a)(i) or 2.16(a)(ii), an amount
equal to 103% of the Outstanding Amount of the applicable Letter of Credit
Obligations.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including any Loan Party or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.
“Net Cash Proceeds” means (a) with respect to any Disposition of Property,
proceeds (including, when received, any deferred or escrowed payments) received
by a Loan Party in cash from such disposition, net of (i) reasonable and
customary costs and expenses actually incurred in connection therewith,
including legal fees and sales commissions; (ii) amounts applied to repayment of
Debt secured by a Permitted Lien senior to Lender’s Liens on Collateral sold;
(iii) transfer or similar taxes; and (iv) reserves for indemnities, until such
reserves are no longer needed, and (b) with respect to any issuance of Equity
Interests or Indebtedness, proceeds received by a Loan Party in cash from such
issuance net of (i) reasonable and customary costs and expenses actually
incurred in connection therewith, including legal fees, if any, and (ii)
applicable taxes payable in connection with and at the time of such issuance.
“Note” means the Revolving Loan Note.
“Obligations” means (a) all amounts owing by any Loan Party to the Lender or any
other Credit Party pursuant to or in connection with this Agreement or any other
Loan Document or otherwise with respect to any Loan or Letter of Credit,
including without limitation, all principal, interest (including any interest
accruing after the filing of any petition in bankruptcy or the commencement of
any proceeding under any Debtor Relief Law relating to any Loan Party or would
accrue but for such filing or commencement, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), all
reimbursement obligations, fees, expenses, indemnification and reimbursement
payments, costs and expenses (including all fees and expenses of counsel to the
Lender incurred pursuant to this Agreement, any other Loan Document), whether
direct or indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising hereunder or thereunder, together with all
renewals, extensions, modifications or refinancings thereof and (b) all Credit
Product Obligations; provided that the Obligations of any Loan Party shall not
include its Excluded Swap Obligations.
“Ordinary Course of Business” means the ordinary course of business of the
Company and its Subsidiaries, consistent with past practices and undertaken in
good faith.
“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

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“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.
“Outstanding Amount” means (a) with respect to Revolving Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
Borrowings and any prepayments or repayments of Revolving Loans occurring on
such date and (b) with respect to any Letter of Credit Obligations on any date,
the aggregate outstanding amount of such Letter of Credit Obligations on such
date after giving effect to any Letter of Credit Extension occurring on such
date and any other changes in the aggregate amount of the Letter of Credit
Obligations as of such date, including as a result of any reimbursements of
amounts paid under outstanding unpaid drawings under any Letters of Credit or
any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date.
“Overadvance” has the meaning given to such term in Section 2.01(c).
“Participant” has the meaning assigned to such term in clause (b) of
Section 10.06.
“Patent Security Agreement” means any patent security agreement pursuant to
which a Loan Party assigns to the Lender, such Person’s interests in its
patents, as security for the Obligations.
“Payment in Full” means (a) the indefeasible payment in full in cash of all
Obligations, together with all accrued and unpaid interest and fees thereon,
other than Letter of Credit Obligations that have been fully Cash Collateralized
in an amount equal to 103% of the amount thereof or as to which other
arrangements with respect thereto satisfactory to the Lender shall have been
made, (b) the Commitments shall have terminated or expired, (c) the obligations
and liabilities of each other Borrower under all Credit Product Arrangements
shall have been fully, finally and irrevocably paid and satisfied in full and
the Credit Product Arrangements shall have expired or been terminated, or other
arrangements satisfactory to the counterparties shall have been made with
respect thereto, and (d) all claims of the Loan Parties against any Secured
Party arising on or before the payment date shall have been released on terms
acceptable to the Lender.
“Payment Item” means each check, draft or other item of payment payable to a
Borrower, including those constituting proceeds of any Collateral.
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Act” means the Pension Protection Act of 2006.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and Multiemployer Plans and set forth in, with respect to plan years
ending prior to the effective date of the Pension Act, Section 412 of the Code
and Section 302 of ERISA, each as in effect prior to the Pension Act and,
thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302,
303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by the Company and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code.

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“Permitted Holder” means each Person who, as of the Closing Date, beneficially
owns five percent (5%) or more (on a fully diluted basis) of the outstanding
common stock of the Company.
“Perma-Pipe International” means Perma-Pipe International Company, LLC, a
Delaware limited liability company.
“Perma-Pipe Projects” means projects performed by Perma-Pipe, Inc. that are
subject to a written contract entered into in the Ordinary Course of Business
between Perma-Pipe, Inc. and the applicable Account Debtor, which contract
provides for multiple billings and requires the applicable Account Debtor to pay
for interim shipments prior to final shipment and billing.
“Permitted Liens” has the meaning specified in Section 8.02.
“Permitted Sale Leaseback Transactions” means sale leaseback transactions
entered into by a Loan Party following the Closing Date on terms and conditions
acceptable to the Lender with an aggregate sale price not to exceed $15,000,000
in the aggregate for all Loan Parties; provided that the Net Cash Proceeds of
any such sale leaseback transaction shall be immediately applied to the
prepayment of Loans in accordance with Section 2.06(b)(vii).
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority,
or other entity.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of the Company or any
ERISA Affiliate or any such Plan to which the Company or any ERISA Affiliate is
required to contribute on behalf of any of its employees.
“Pledged Interests” means any Instrument, Investment Property or other Equity
Interests constituting Collateral (other than Excluded Assets) hereunder,
including the Pledged Interests as of the Closing Date which are set forth on
Schedule 4.02 hereto.
“Post-Closing Agreement” means that certain Post-Closing Agreement by and
between the Borrower Agent and the Lender dated as of the Closing Date with
respect to the satisfaction after the Closing Date of certain collateral
matters.
“Properly Contested” means with respect to any obligation of a Loan Party,
(a) the obligation is subject to a bona fide dispute regarding amount or such
Loan Party’s liability to pay; (b) the obligation is being properly contested in
good faith by appropriate proceedings promptly instituted and diligently
pursued; (c) appropriate reserves have been established in accordance with GAAP;
(d) non-payment could not have a Material Adverse Effect; (e) no Lien is imposed
on assets of a Loan Party, unless bonded and stayed to the satisfaction of the
Lender; and (f) if the obligation results from entry of a judgment or other
order, such judgment or order is stayed pending appeal or other judicial review.
“Qualified ECP” means any Loan Party with total assets exceeding $10,000,000, or
that constitutes an “eligible contract participant” under the Commodity Exchange
Act and can cause another Person to qualify as an “eligible contract
participant” under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Real Estate” means all land, together with the buildings, structures, parking
areas, and other improvements thereon, now or hereafter owned by any Loan Party,
including all easements, rights-of-way, and similar rights appurtenant thereto
and all leases, tenancies, and occupancies thereof.
“Recipient” means (a) the Lender or (b) or any other recipient of any payment to
be made by or on account of any obligation of any Loan Party hereunder, as
applicable.
“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of the Company as prescribed in the Securities
Laws.

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“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives of such Person and of
such Person’s Affiliates.
“Rent and Charges Reserve” means the aggregate of (a) all past due rent and
other amounts owing by a Borrower to any landlord, warehouseman, processor,
repairman, mechanic, shipper, freight forwarder, broker or other Person who
possesses any Collateral or could assert a Lien on any Collateral; and (b) a
reserve not to exceed three months’ rent and other charges that could be payable
to any such Person, unless it has executed a Lien Waiver.
“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.
“Reporting Trigger Period” means the period (a) commencing on the day that
(i) an Event of Default occurs and is continuing or (ii) Availability is less
than the greater of (A) twenty percent (20%) of the Revolving Credit Commitments
at such time and (B) $5,000,000, in each case, for a period of five (5)
consecutive Business Days and (b) continuing until the date that during the
previous forty-five (45) consecutive days, (i) no Event of Default has existed
and (ii) Availability has been greater than the greater of (A) twenty percent
(20%) of the Revolving Credit Commitments at such time and (B) $5,000,000 at all
times during such period.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Loans, a Committed Loan Notice and (b) with respect to an
Letter of Credit Extension, a Letter of Credit Application.
“Reserve” means any reserve constituting all or any portion of the Availability
Reserves or the Line Reserve.
“Responsible Officer” means, with respect to each Loan Party, the chief
executive officer, president, chief financial officer, treasurer, controller or
assistant treasurer or any vice president of such Loan Party. Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.
“Restricted Payment” means (i) any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
Equity Interest of the Company or any Subsidiary, (ii) any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other Equity Interest,
or on account of any return of capital to the Company’s or any Subsidiary’s
stockholders, partners or members (or the equivalent Person thereof) or (iii)
any distribution, advance or repayment of Indebtedness to or for the account of
a holder of 5% or more of the Equity Interests of the Company.
“Revolving Borrowing” means a borrowing consisting of simultaneous Revolving
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period, made by the Lender pursuant to Section 2.01(a).
“Revolving Credit Commitment” means Lender’s obligation to make Revolving Loans
to the Borrowers pursuant to Section 2.01(a).
“Revolving Credit Facility” means the facility described in Section 2.01(a) or
2.03 providing for Revolving Loans and Letter of Credit Extensions to or for the
benefit of the Borrowers by the Lender, in the maximum aggregate principal
amount at any time outstanding of $25,000,000, as adjusted from time to time
pursuant to the terms of this Agreement.
“Revolving Credit Maturity Date” means September 24, 2019.
“Revolving Credit Outstandings” means, the sum of the Outstanding Amount of
Revolving Loans and Letter of Credit Obligations at such time.

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“Revolving Credit Termination Date” means the earliest of (a) the Revolving
Credit Maturity Date, (b) the date of termination of the Revolving Credit
Commitments pursuant to Section 2.07(a), and (c) the date of termination of the
commitment of Lender to make Loans and of the obligation of the Lender to make
Letter of Credit Extensions pursuant to Section 9.02.
“Revolving Loan” means a Base Rate Loan or a Eurodollar Rate Loan made to the
Borrowers pursuant to Section 2.01(a).
“Revolving Loan Note” means a promissory note made by the Borrowers in favor of
the Lender evidencing Revolving Loans made by such Lender, substantially in the
form of Exhibit B.
“Royalties” means all royalties, fees, expense reimbursement and other amounts
payable by a Loan Party under a License.
“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The
McGraw‑Hill Companies, Inc., and any successor thereto.
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
“Securities Laws” means the Securities Act of 1933, the Exchange Act,
Sarbanes-Oxley Act of 2002 and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or incorporated
by the SEC or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date hereunder.
“Security Instruments” means, collectively or individually as the context may
indicate, the Agreement, the Control Agreements, the Patent Security Agreement,
the Trademark Security Agreement, each Lien Waiver and all other agreements
(including securities account control agreements), instruments and other
documents, whether now existing or hereafter in effect, pursuant to which any
Loan Party or other Person shall grant or convey to the Lender a Lien in
property as security for all or any portion of the Obligations.
“Shrink” means Inventory which has been lost, misplaced, stolen, or is otherwise
unaccounted for.
“Solvent” means, as to any Person, such Person (a) owns property or assets whose
fair salable value (as defined below) is greater than the amount required to pay
all of its debts (including contingent, subordinated, unmatured and unliquidated
liabilities); (b) owns property or assets whose present fair salable value is
greater than the probable total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Person as they become absolute
and matured; (c) is able to pay all of its debts as they mature; (d) has capital
that is not unreasonably small for its business and is sufficient to carry on
its business and transactions and all business and transactions in which it is
about to engage; (e) is not “insolvent” within the meaning of Section 101(32) of
the Bankruptcy Code; and (f) has not incurred (by way of assumption or
otherwise) any obligations or liabilities (contingent or otherwise) under any
Loan Documents, or made any conveyance in connection therewith, with actual
intent to hinder, delay or defraud either present or future creditors of such
Person or any of its Affiliates. “Fair salable value” means the amount that
could be obtained for assets within a reasonable time, either through collection
or through sale under ordinary selling conditions by a capable and diligent
seller to an interested buyer who is willing (but under no compulsion) to
purchase. For purposes hereof, the amount of all contingent liabilities at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, can reasonably be expected to become an
actual or matured liability.
“Specified Loan Party”: a Loan Party that is not then an “eligible contract
participant” under the Commodity Exchange Act (determined prior to giving effect
to Section 2.13(c)).
“Subordinated Indebtedness” means Indebtedness which is expressly subordinated
in right of payment to the prior payment in full of the Obligations and which is
in form and on terms approved in writing by the Lender.

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“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity (but not a representative
office of such Person) of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other
governing body (other than securities or interests having such power only by
reason of the happening of a contingency) are at the time beneficially owned, or
the management of which is otherwise controlled, directly, or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise specified,
all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Company.
“Subsidiary Guarantor” means any Subsidiary of the Company which executes this
Agreement as a Guarantor.
“Swap Contract” means any swap agreement as defined in Section 101(53B)(A) of
the Bankruptcy Code.
“Swap Obligation” means, with respect to any Loan Party, any obligation to
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).
“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so‑called synthetic, off‑balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Threshold Amount” means $500,000.
“Total Facility Amount” means the sum of the the maximum aggregate principal
amount of the Revolving Credit Facility.
“Total Revolving Credit Outstandings” means, without duplication, the aggregate
Outstanding Amount of all Revolving Loans and Letter of Credit Outstandings at
such time.
“Trademark Security Agreement” means any trademark security agreement pursuant
to which any Loan Party assigns to the Lender, such Person’s interest in its
trademarks as security for the Obligations.
“Transaction” means the Loan Parties entering into the Loan Documents to which
they are a party and the initial funding of the Revolving Credit Facility.
“Treasury Management and Other Services” means (a) all arrangements for the
delivery of treasury management services, (b) all commercial credit card and
merchant card services; and (c) all other banking products or services
(including leases), other than Letters of Credit, in each case, to or for the
benefit of any Borrower which are entered into or maintained with the Lender or
Affiliate of the Lender and which are not prohibited by the express terms of the
Loan Documents.
“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

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“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of Illinois; provided that if, with respect to any financing statement or
by reason of any mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted to the Lender
pursuant to any applicable Loan Document is governed by the Uniform Commercial
Code as in effect in a jurisdiction of the United States other than Illinois,
the term “UCC” shall also include the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions of this
Agreement, each Loan Document and any financing statement relating to such
perfection or effect of perfection or non-perfection.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
“Unused Fee” has the meaning specified in Section 2.09(a).
“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.
“Value” means, with respect to an Eligible Account, the face amount of such
Eligible Account, net of any returns, rebates, discounts (calculated on the
shortest terms), credits, allowances or Taxes (including sales, excise or other
taxes) that have been or could reasonably be expected to be claimed by the
Account Debtor or any other Person.
“Withholding Agent” means any Loan Party and the Lender.
1.2Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:
(a)The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), including any such amendments, supplements or modifications in
connection with this Agreement of documents entered into in connection with the
Existing Agreement, (ii) any reference herein to any Person shall be construed
to include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property” shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
(b)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.”
(c)Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.3Accounting Terms.
a.Generally. All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis,

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as in effect from time to time, applied in a manner consistent with that used in
preparing the Audited Financial Statements, except as otherwise specifically
prescribed herein.
b.Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower Agent or the Lender shall so request, the
Lender and the Borrower Agent shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Lender); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower Agent
shall provide to the Lender financial statements and other documents required
under this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.
c.Other Pro Forma Calculations. Any pro forma calculation of the Consolidated
Fixed Charge Coverage Ratio shall be made (i) as if all Indebtedness incurred or
Investments or Disposition made at the time of such measurement had been
incurred or made, as applicable, on the first day of the Measurement Period most
recently ended for which the Borrower Agent has delivered (or was required to
deliver) financial statements pursuant to Sections 7.01(a) or 7.01(b), (ii) as
if all Indebtedness repaid at the time of such measurement had been paid on the
last day of the Measurement Period most recently ended for which the Borrower
Agent has delivered (or was required to deliver) financial statements pursuant
to Sections 7.01(a) or 7.01(b), and (iii) pro forma for any other element of the
relevant transaction that would affect the calculation of Consolidated Fixed
Charge Coverage Ratio.

1.04    Uniform Commercial Code. As used herein, the following terms are defined
in accordance with the UCC in effect in the State of Illinois from time to time:
“Account,” “Certificated Security,” “Chattel Paper,” “Deposit Account,”
“Equipment,” “Financial Asset,” “Document,” “Electronic Chattel Paper,”
Financial Asset,” “Fixture,” “General Intangibles,” Goods,” “Instruments,”
“Inventory,” “Investment Property,” “Letter of Credit Rights,” “Payment
Intangibles,” “Proceeds,” “Record,” “Security,” “Security Entitlement,”
“Software,” “Supporting Obligations,” “Tangible Chattel Paper” and
“Uncertificated Security.”

1.05    Rounding. Any financial ratios required to be maintained by the
Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

1.06    Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Central time (daylight or standard, as
applicable).

1.07    Letter of Credit Amounts. Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the undrawn amount of
such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.1Loan Commitments.
a.Revolving Credit Commitments. Subject to the terms and conditions set forth
herein, the Lender agrees to make Revolving Loans to the Borrowers from time to
time during the Availability Period for the Revolving Credit Facility, in an
aggregate amount not to exceed at any time outstanding the lesser of (x) the
amount of the Revolving Credit Facility, or (y) the Borrowing Base; subject in
each case to the following limitations:
i.after giving effect to any Revolving Borrowing, the Total Revolving
Outstandings shall not exceed the lesser of (A) the amount of the Revolving
Credit Facility minus the Line Reserves, if any, and (B) the Borrowing Base, and

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ii.the Outstanding Amount of all Letter of Credit Obligations shall not at any
time exceed the Letter of Credit Sublimit.

(I)    Within the limits of the Revolving Credit Commitment, and subject to the
other terms and conditions hereof, the Borrowers may borrow under this
Section 2.01(a), prepay under the terms of this Agreement, and reborrow under
this Section 2.01(a).
b.[Reserved].
c.Overadvances. If the aggregate Revolving Loans exceed the Borrowing Base
(“Overadvance”) at any time the excess amount shall be payable by Borrowers on
demand by the Lender, but all such Revolving Loans shall nevertheless constitute
Obligations secured by the Collateral and entitled to all benefits of the Loan
Documents. Any funding or sufferance of an Overadvance shall not constitute a
waiver of the Event of Default caused thereby.

2.2Borrowings, Conversions and Continuations of Loans.
a.Each Borrowing, each conversion of Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable notice to the Lender, which may be given by telephone. Each such
notice must be received by the Lender not later than 11:00 a.m. (i) two Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate
Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of
Base Rate Loans. Each telephonic notice by the Borrowers pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Lender of a
written Committed Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower Agent. Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof. Except as provided
in Sections 2.02(e) and 2.03(c), each Borrowing of or conversion to Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof. Each Committed Loan Notice (whether telephonic or written)
shall specify (i) the principal amount of Loans to be borrowed, converted or
continued, (ii) the Type of Loans to be borrowed or to which existing Loans are
to be converted, (iii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day) and (iv) if
applicable, the duration of the Interest Period with respect thereto. If the
Borrowers fail to specify a Type of Loan in a Committed Loan Notice or if the
Borrowers fail to give a timely notice requesting a conversion or continuation,
then the applicable Loans shall be made as, or converted to, Base Rate Loans.
Any such automatic conversion to Base Rate Loans shall be effective as of the
last day of the Interest Period then in effect with respect to the applicable
Eurodollar Rate Loans. If the Borrowers request a Borrowing of, conversion to,
or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.
b.Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of a Default, no Loans may be requested as, converted
to or continued as Eurodollar Rate Loans without the consent of the Lender.
c.The Lender shall promptly notify the Borrower Agent of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon determination
of such interest rate. At any time that Base Rate Loans are outstanding, the
Lender shall notify the Borrower Agent of any change in the Lender’s prime rate
used in determining the Base Rate promptly following the public announcement of
such change.
d.After giving effect to all conversions of Loans from one Type to the other,
and all continuations of Loans as the same Type, there shall not be more than
six (6) Interest Periods in effect in respect of the Facilities.
e.Borrowers hereby irrevocably authorize the Lender, in the Lender’s reasonable
discretion, to advance to Borrowers, and/or to pay and charge to Borrowers’ Loan
Account hereunder, all sums necessary to pay (i) any interest accrued on the
Obligations when due and to pay all fees, costs and expenses and other
Obligations at any time owed by any Loan Party to the Lender hereunder and
(ii) any service charge or expenses due pursuant to Section 10.04 when due. The
Lender shall advise the Borrower Agent of any such advance or charge promptly
after the making thereof. Such action on the part of the Lender shall not
constitute a waiver of the Lender’s rights and the Borrowers’ obligations under
Section 2.06(b)(vi). Any amount which is added to the principal balance of the
Loan Account as provided in this Section 2.02(e) shall constitute Revolving
Loans (notwithstanding the failure of the

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Borrowers to satisfy any of the conditions to Credit Extensions in Section 5.02)
and Obligations hereunder and shall bear interest at the interest rate then and
thereafter applicable to Base Rate Loans.

2.3Letter of Credit Facility.
a.The Letter of Credit Commitment.
i.Subject to the terms and conditions set forth herein, the Lender agrees, (1)
from time to time on any Business Day during the period from the Closing Date
until the earlier to occur of the Letter of Credit Expiration Date or the
termination of the Availability Period, to issue Letters of Credit at the
request of the Borrower Agent for the account of the Company or the Company and
any other Borrower, and to amend Letters of Credit previously issued by it, in
accordance with subsection (b) below, and (2) to honor drafts under the Letters
of Credit; provided that the Lender shall not be obligated to make any Letter of
Credit Extension with respect to any Letter of Credit, if as of the date of such
Letter of Credit Extension, (A) the Total Revolving Credit Outstandings would
exceed the Borrowing Base or the Revolving Credit Commitment minus the Line
Reserve, or (B) the Outstanding Amount of the Letter of Credit Obligations would
exceed the Letter of Credit Sublimit. Each request by the Borrower Agent for the
issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower Agent that the Letter of Credit Extension so
requested complies with the conditions set forth in the proviso to the preceding
sentence. Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrowers may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed. All Existing Letters of Credit, if any,
shall be deemed to have been issued pursuant hereto, and from and after the
Closing Date shall be subject to and governed by the terms and conditions hereof
and all fees in respect thereof pursuant to Section 2.09(b) shall be payable (in
substitution for any fees set forth in the applicable letter of credit
reimbursement agreements or applications relating to the Existing Letters of
Credit, except to the extent that such fees are also payable pursuant to
Section 2.09(b)) as if the Existing Letters of Credit had been issued on the
Closing Date. Notwithstanding the foregoing, (a) the Borrowers shall not be
required to pay any additional issuance fees with respect to the issuance of the
Existing Letters of Credit solely as a result of such letters of credit being
converted to a Letter of Credit hereunder, it being understood that the fees set
forth in Section 2.09(b) shall otherwise apply to the Existing Letters of Credit
and (b) no Existing Letter of Credit may be extended or renewed.
ii.The Lender shall not issue any Letter of Credit, if:
a.the expiry date of such requested Letter of Credit would occur (i) as to
standby Letters of Credit, more than twelve months after the date of issuance or
last renewal, and (ii) as to commercial Letters of Credit, later than the 270
days after the date of issuance thereof unless in each case the Lender has
approved such expiry date; or
b.the expiry date of such requested Letter of Credit would occur after the
Revolving Credit Maturity Date; provided, further, that a Letter of Credit may,
as a result of its express terms or as the result of the effect of an automatic
extension provision, have an expiration date of not more than one year beyond
the Revolving Credit Maturity Date so long as the Borrowers no later than 20
days prior to the Revolving Credit Maturity Date either (1) Cash Collateralize
the remaining Letter of Credit Obligations with respect to such Letter of Credit
in the Minimum Collateral Amount, (2) deliver to the Lender a backup letter of
credit having terms acceptable to the Lender and issued by a domestic financial
institution having a rating assigned by a Rating Agency to its senior unsecured
long term indebtedness of AA/Aa2 or (3) deliver to the Lender other collateral
satisfactory to the Lender;
iii.The Lender shall not be under any obligation to issue any Letter of Credit
if:
a.any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Lender from issuing such
Letter of Credit or any Law applicable to the Lender or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Lender shall prohibit, or request that the Lender refrain
from, the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Lender with respect to such Letter of Credit
any restriction, reserve or capital requirement (for which the Lender is not
otherwise compensated hereunder) not in effect on the Closing

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Date, or shall impose upon the Lender any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Lender in good faith
deems material to it; or
b.the issuance of such Letter of Credit would violate one or more policies of
the Lender; or
c.such Letter of Credit is in an initial amount less than $10,000.
iv.The Lender shall not amend any Letter of Credit if the Lender would not be
permitted at such time to issue such Letter of Credit in its amended form under
the terms hereof.
v.The Lender shall be under no obligation to amend any Letter of Credit if
(A) the Lender would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.
vi.

b.Procedures for Issuance and Amendment of Letters of Credit; Auto‑Extension
Letters of Credit.
i.Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower Agent delivered to the Lender in the form of a Letter of
Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrower Agent and, if applicable, of the applicable Borrower. Such
Letter of Credit Application must be received by the Lender not later than
11:00 a.m. at least two Business Days (or such later date and time as the Lender
may agree in a particular instance in its sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the Lender: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a Business Day);
(B) the amount thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing or presentation thereunder; (F) the full text of any
certificate to be presented by such beneficiary in case of any drawing or
presentation thereunder; and (G) such other matters as the Lender may reasonably
require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the Lender (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as the Lender may
reasonably require. Additionally, the Borrower Agent shall furnish to the Lender
such other documents and information pertaining to such requested Letter of
Credit issuance or amendment, including any Issuer Documents, as the Lender may
require.
ii.If the Borrower Agent so requests in any applicable Letter of Credit
Application, the Lender may, in its sole and absolute discretion, agree to issue
a Letter of Credit other than a commercial Letter of Credit that has automatic
extension provisions (each, an “Auto‑Extension Letter of Credit”); provided that
any such Auto‑Extension Letter of Credit must permit the Lender to prevent any
such extension at least once in each twelve‑month period (commencing with the
date of issuance of such Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in
each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued. Unless otherwise directed by the Lender, the Borrower Agent
shall not be required to make a specific request to the Lender for any such
extension.
iii.Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the Lender will also deliver to the Borrower Agent a true and complete
copy of such Letter of Credit or amendment.
c.Drawings and Reimbursements. Upon receipt from the beneficiary of any Letter
of Credit of any notice of a drawing or presentation of documents under such
Letter of Credit, the Lender shall notify the Borrower Agent thereof. Not later
than 1:00 p.m. on the date of any payment by the Lender under a Letter of Credit
(each such date, an “Honor Date”), any Borrower shall reimburse the Lender in
Dollars and in an amount equal to the amount of such drawing. In such event, the
Borrower Agent shall be deemed to have requested a Revolving Borrowing of Base
Rate Loans to be disbursed on the Honor Date in an amount equal to the amount of
such drawing that has not been reimbursed by any Borrower (the “Unreimbursed
Amount”), without regard to the minimum and multiples specified in Section 2.03
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Revolving Credit Commitments and the conditions set
forth in Section 5.02 (other than the delivery of a Committed Loan Notice).

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d.Obligations Absolute. The obligation of the Borrowers to reimburse the Lender
for each drawing under each Letter of Credit, and to repay each Letter of Credit
Borrowing shall be joint and several and absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:
i.any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;
ii.the existence of any claim, counterclaim, set-off, defense or other right
that any Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Lender or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;
iii.any draft, demand, certificate or other document or endorsement presented
under or in connection with such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;
iv.any payment by the Lender under such Letter of Credit against presentation of
a draft or certificate that does not strictly comply with the terms of such
Letter of Credit, or any payment made by the Lender under such Letter of Credit
to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or
v.any other circumstance or happening whatsoever, whether or not similar to any
of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Borrower or any
Subsidiary;

provided that, notwithstanding anything to the contrary provided herein, the
Borrower Agent may examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance
with the Borrower Agent’s instructions or other irregularity, the Borrower Agent
will immediately notify the Lender. The Borrower Agent shall be conclusively
deemed to have waived any such claim against the Lender unless such notice is
given as aforesaid.
e.Role of the Lender as Issuer of Letter of Credit. The Lender and the Borrowers
agree that, in paying any drawing under a Letter of Credit, the Lender shall not
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. Each Borrower
hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided that this
assumption is not intended to, and shall not, preclude Borrower’s pursuing such
rights and remedies as it may have against the beneficiary or transferee or any
other Person at law or under any other agreement. The Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and the Lender shall not be responsible for the validity or sufficiency of any
instrument endorsing, transferring or assigning or purporting to endorse,
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.
f.Applicability of ISP and UCP. Unless otherwise expressly agreed by the Lender
and the Borrower Agent, when a Letter of Credit is issued (including any such
agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP
shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform
Customs and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce at the time of issuance shall apply to each
commercial Letter of Credit.
g.Fronting Fee and Documentary and Processing Charges Payable to the Lender. The
Borrowers shall pay directly to the Lender for its own account a fronting fee
with respect to each Letter of Credit, at a rate equal to one-eighth of one
percent (0.125%), computed on the amount of such Letter of Credit (a “Fronting
Fee”), and payable upon the issuance or renewal (automatic or otherwise) thereof
or upon any amendment increasing the amount thereof. In addition, the Borrowers
shall pay directly to the Lender for its own account, in Dollars, the customary
issuance,

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presentation, amendment and other processing fees, and other standard costs and
charges, of the Lender relating to letters of credit issued by it as from time
to time in effect. Such customary fees and standard costs and charges are due
and payable on demand and are nonrefundable.
h.Conflict with Issuer Documents. In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.
i.Letters of Credit Issued for Account of Subsidiaries. Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary or any other Borrower,
each Borrower shall be obligated to reimburse the Lender hereunder for any and
all drawings under such Letter of Credit. Each Borrower hereby acknowledges that
the issuance of Letters of Credit for the account of Subsidiaries or any other
Borrower inures to the benefit of such Borrower, and that such Borrower’s
business derives substantial benefits from the businesses of such Subsidiaries
or other Borrower.

2.4Reserved.

2.5Repayment of Loans. The Borrowers shall repay to the Lender on the Maturity
Date for the Revolving Credit Facility the aggregate principal amount of all
Revolving Loans outstanding on such date.

2.6Prepayments.
a.Optional. The Borrowers may, upon notice to the Lender from the Borrower
Agent, at any time or from time to time voluntarily prepay Revolving Loans in
whole or in part without premium or penalty; provided that (A) such notice must
be received by the Lender not later than 11:00 a.m. (1) two Business Days prior
to any date of prepayment of Eurodollar Rate Loans and (2) on the date of
prepayment of Base Rate Loans; (B) any prepayment of Eurodollar Rate Loans shall
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof; and (C) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each
case, if less, the entire principal amount thereof then outstanding. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of
Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the
Interest Period(s) of such Loans. If such notice is given by the Borrower Agent,
the Borrowers shall make such prepayment and the payment amount specified in
such notice shall be due and payable on the date specified therein. Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest on the amount prepaid, together with any additional amounts required
pursuant to Section 3.05.
b.Mandatory.
i.[Reserved].
ii.Asset Dispositions. If any assets or property of a Loan Party or any of its
Domestic Subsidiaries is subject to a Disposition (other than any Disposition of
any property permitted by Section 8.05(a), (c), (f), (g) or (h)) which results
in the realization by such Person of Net Cash Proceeds in excess of $500,000,
the Borrowers shall prepay an aggregate principal amount of outstanding Loans up
to 100% of such Net Cash Proceeds immediately upon receipt thereof by such
Person.
iii.Equity Issuance. Upon the sale or issuance by any Loan Party or any of its
Domestic Subsidiaries of any of its Equity Interests and any sales or issuances
of Equity Interests to another Loan Party), the Borrowers shall prepay an
aggregate principal amount of outstanding Loans up to 100% of all Net Cash
Proceeds received therefrom immediately upon receipt thereof by such Loan Party
or such Subsidiary.
iv.Debt Incurrence. Upon the incurrence or issuance by any Loan Party or any of
its Domestic Subsidiaries of any Indebtedness (other than Indebtedness expressly
permitted to be incurred or issued pursuant to Section 8.01), the Borrowers
shall prepay an aggregate principal amount of outstanding Loans up to 100% of
all Net Cash Proceeds received therefrom immediately upon receipt thereof by
such Loan Party or such Domestic Subsidiary.
v.[Reserved.]
vi.Overadvances. If for any reason the Total Revolving Credit Outstandings at
any time exceed the lesser of (x) the Borrowing Base and (y) the amount of the
Revolving Credit Facility minus the Line Reserve at such time, the Borrowers
shall upon demand prepay Revolving Loans and Letter of Credit Borrowings and/or
Cash Collateralize the Letter of Credit Obligations in an aggregate amount equal
to such excess; provided, however, that the Borrowers shall not be required to
Cash Collateralize the Letter of Credit

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Obligations pursuant to this Section 2.06(b)(vi) unless, after the prepayment of
the Revolving Loans, the Total Revolving Credit Outstandings exceed the amount
of the Revolving Credit Facility at such time.
vii.Application of Mandatory Prepayments. Prepayments of the Revolving Credit
Facility made pursuant to this Section 2.06(b), first, shall be applied ratably
to the Letter of Credit Borrowings, second, shall be applied ratably to the
outstanding Revolving Loans, third, shall be used to Cash Collateralize the
remaining Letter of Credit Obligations in the Minimum Collateral Amount and,
fourth, the amount remaining, if any, after the prepayment in full of all Letter
of Credit Borrowings and Revolving Loans outstanding at such time and the Cash
Collateralization of the remaining Letter of Credit Obligations in the Minimum
Collateral Amount, may be retained by the Borrowers for use in the ordinary
course of Borrowers’ business. Upon the drawing of any Letter of Credit that has
been Cash Collateralized, the funds held as Cash Collateral shall be applied
(without any further action by or notice to or from the Borrowers or any other
Loan Party) to reimburse the Lender.
viii.Reinvestment. Notwithstanding the foregoing, (A) with respect to any Net
Cash Proceeds less than $500,000 realized in connection with a Disposition
described in Section 2.06(b)(ii), at the election of the Borrowers (as notified
by the Borrower Agent to the Lender on or prior to the date of such Disposition
or receipt of proceeds) and so long as no Default shall have occurred and be
continuing, such Loan Party or such Subsidiary may reinvest all or any portion
of such Net Cash Proceeds in operating assets within 180 days after the receipt
of such Net Cash Proceeds (the consummation of such reinvestment to be certified
by the Borrowers in writing to the Lender within such period); provided,
however, that any Net Cash Proceeds not so reinvested shall be immediately
applied to the prepayment of the Loans as set forth in this Section 2.06(b) and
(B) with respect to Net Cash Proceeds equal to or greater than $500,000 realized
in connection with a Disposition described in Section 2.06(b)(ii), if the
Borrowers have requested that Lender agree to permit Borrowers or the applicable
Subsidiary to repair or replace the Collateral subject to such Disposition, such
amounts shall be held as Cash Collateral and provisionally applied to reduce the
outstanding principal balance of the Revolving Credit Loans (but shall not
create Availability) until the earlier of Lender’s decision with respect thereto
or the expiration of 180 days from such request. If Lender, after consultation
with the Borrowers agrees in its reasonable judgment to permit such repair or
replacement, such amount shall, unless an Event of Default is in existence, be
remitted to Borrowers for use in replacing or repairing the Collateral so
Disposed of at such time and in such amounts as the Lender may determine in its
reasonable credit judgment. If Lender declines to permit such repair or
replacement or does not respond to Borrowers request within such 180 day period,
such amount shall be applied to the Loans in the manner otherwise specified in
this Section 2.06(b).

2.7Termination or Reduction of Commitments. The Borrowers may, upon five
Business Days’ prior notice to the Lender from the Borrower Agent, terminate the
Revolving Credit Commitments or the Letter of Credit Sublimit, or from time to
time permanently reduce the Revolving Credit Commitments or the Letter of Credit
Sublimit; provided that (i) any such notice shall be received by the Lender not
later than 11:00 a.m. five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
Borrowers shall not terminate or reduce (A) the Revolving Credit Commitments if,
after giving effect thereto and to any concurrent prepayments hereunder, the
Total Revolving Credit Outstandings would exceed the Revolving Credit
Commitments or (B) the Letter of Credit Sublimit if, after giving effect
thereto, the Outstanding Amount of Letter of Credit Obligations not fully Cash
Collateralized hereunder would exceed the Letter of Credit Sublimit and (iv) if,
after giving effect to any reduction or termination of the Revolving Credit
Commitments or the Letter of Credit Sublimit, the Letter of Credit Sublimit
exceeds the amount of the Revolving Credit Commitment such Sublimit shall be
automatically reduced by the amount of such excess. All fees accrued until the
effective date of any termination of the Revolving Credit Commitments shall be
paid on the effective date of such termination.
2.8Interest.
a.Subject to the provisions of subsection (b) below:  (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Margin.

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b.(i)    If any amount payable by the Borrowers under any Loan Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, then such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.
i.If any other Event of Default exists, then the Lender may require (and notify
the Borrowers thereof) that all outstanding Loan Obligations shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Law.
ii.Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable upon demand.
c.Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

2.9Fees.
a.Unused Fee. The Borrowers shall pay to the Lender a fee (the “Unused Fee”)
equal to the Applicable Margin times the actual daily amount by which the
Revolving Credit Commitments exceeds the sum of (i) the Outstanding Amount of
Revolving Loans and (ii) the Outstanding Amount of Letter of Credit Obligations.
The Unused Fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in ARTICLE V is
not met, and shall be due and payable quarterly in arrears on the first Business
Day of each August, November, February and May, commencing with the first such
date to occur after the Closing Date, and on the last day of the Availability
Period. If there is any change in the Applicable Margin during any quarter, the
actual daily amount shall be computed and multiplied by the Applicable Margin
separately for each period during such quarter that such Applicable Margin was
in effect.
b.Letter of Credit Fees. Subject to the provisions of the last sentence of this
clause (b), the Borrowers shall pay to the Lender in Dollars, a Letter of Credit
fee (“Letter of Credit Fee”) for each Letter of Credit equal to the Applicable
Margin for Eurodollar Rate Loans times the daily maximum amount available to be
drawn under such Letter of Credit (whether or not such maximum amount is then in
effect under such Letter of Credit). For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.07. The Letter of Credit
Fee shall accrue at all times during the Availability Period, including at any
time during which one or more of the conditions in ARTICLE V is not met, and
shall be due and payable quarterly in arrears on the first Business Day of each
August, November, February and May, commencing with the first such date to occur
after the Closing Date, and on the last day of the Availability Period. If there
is any change in the Applicable Margin for Eurodollar Rate Loans during any
quarter, the daily maximum amount of each Letter of Credit shall be computed and
multiplied by the Applicable Margin for Eurodollar Rate Loans separately for
each period during such quarter that such Applicable Margin was in effect. At
all times that the Default Rate shall be applicable to any Loans pursuant to
Section 2.08(b), the Letter of Credit Fees payable under this clause (b) shall
accrue and be payable at the Default Rate.
c.Fee Letter. The Borrowers agree to pay to the Lender, for its own account, the
fees payable in the amounts and at the times set forth in the Fee Letter.
d.Generally. All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Lender. Fees paid shall not be refundable
under any circumstances.

2.10Computation of Interest and Fees. All computations of interest for Base Rate
Loans (including Base Rate Loans determined by reference to the Eurodollar Rate)
and the Unused Line Fee shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year). Interest shall accrue on each Loan for
the day on which the Loan is made, and shall not accrue on a Loan, or any
portion thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.12(a), bear interest for one day. Each determination by the Lender
of an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.

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2.11Evidence of Debt. The Credit Extensions made by the Lender shall be
evidenced by one or more accounts or records maintained by the Lender (the “Loan
Account”) in the ordinary course of business. The accounts or records maintained
by the Lender shall be conclusive absent manifest error of the amount of the
Credit Extensions made by the Lender to the Borrowers and the interest and
payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder to
pay any amount owing with respect to the Obligations. Upon the request of the
Lender, the Borrowers shall execute and deliver to the Lender a Note, which
shall evidence the Lender’s Loans in addition to such accounts or records. The
Lender may attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.

2.12Payments Generally; Application.
a.All payments to be made by the Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Lender at the Lender’s Office in Dollars and in immediately
available funds not later than 2:00 p.m. on the date specified herein. All
payments received by the Lender after 2:00 p.m. shall be deemed received on the
next succeeding Business Day and any applicable interest or fee shall continue
to accrue. If any payment to be made by the Borrowers shall come due on a day
other than a Business Day, payment shall be made on the next following Business
Day, and such extension of time shall be reflected on computing interest or
fees, as the case may be.
b.All payments and, except as provided in Section 2.06, all proceeds of
Collateral received by Lender shall be applied, subject to the provisions of
this Agreement, first, to pay any fees, indemnities, or expense reimbursements
then due to Lender; second, to pay interest due in respect of all Loans and
Credit Product Obligations; third, to pay or prepay principal of the Loans and
unpaid reimbursement obligations in respect of Letters of Credit; fifth, to pay
an amount to Lender equal to all outstanding Letter of Credit Obligations to be
held as Cash Collateral for such Obligations; and sixth, to the payment of any
other Obligation (including amounts related to Credit Product Obligations) due
to Lender by Borrowers. Notwithstanding the foregoing, after the occurrence and
during the continence of an Event of Default, Lender shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Lender or its agent against the
Obligations, in such manner as Lender may deem advisable, notwithstanding any
entry by Lender upon any of its books and records.

2.13Nature and Extent of Each Borrower’s Liability.
a.Joint and Several Liability. Each Borrower agrees that it is jointly and
severally liable for all Obligations except Excluded Swap Obligations. Each
Borrower agrees that its guaranty obligations hereunder constitute a continuing
guaranty of payment and not of collection, that such obligations shall not be
discharged until the Facility Termination Date, and that such obligations are
absolute and unconditional, irrespective of (i) the genuineness, validity,
regularity, enforceability, subordination or any future modification of, or
change in, any Obligations or Loan Document, or any other document, instrument
or agreement to which any Borrower is or may become a party or be bound;
(ii) the absence of any action to enforce this Agreement (including this
Section) or any other Loan Document, or any waiver, consent or indulgence of any
kind by the Lender with respect thereto; (iii) the existence, value or condition
of, or failure to perfect a Lien or to preserve rights against, any security or
guaranty for the Obligations or any action, or the absence of any action, by the
Lender in respect thereof (including the release of any security or guaranty);
(iv) the insolvency of any Borrower; (v) any election by the Lender in
proceeding under Debtor Relief Laws for the application of Section 1111(b)(2) of
the Bankruptcy Code; (vi) any borrowing or grant of a Lien by any other
Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or
otherwise; (vii) the disallowance of any claims of the Lender against any
Borrower for the repayment of any Obligations under Section 502 of the
Bankruptcy Code or otherwise; or (viii) any other action or circumstances that
might otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor, except full payment in cash or Cash Collateralization of all
Obligations on the Facility Termination Date.
b.Waivers.
i.Each Borrower expressly waives all rights that it may have now or in the
future under any statute, at common law, in equity or otherwise, to compel the
Lender to marshal assets or to proceed against any Borrower, other Person or
security for the payment or performance of any Obligations before, or as a
condition to, proceeding against such Borrower. Each Borrower waives all
defenses available to a surety,

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guarantor or accommodation co-obligor other than full payment of all
Obligations. It is agreed among each Borrower, the Lender that the provisions of
this Section 2.13 are of the essence of the transaction contemplated by the Loan
Documents and that, but for such provisions, the Lender would decline to make
Loans and issue Letters of Credit. Each Borrower acknowledges that its guaranty
pursuant to this Section is necessary to the conduct and promotion of its
business, and can be expected to benefit such business.
ii.The Lender may, in its discretion, pursue such rights and remedies as they
deem appropriate, including realization upon Collateral by judicial foreclosure
or non-judicial sale or enforcement, without affecting any rights and remedies
under this Section 2.13. If, in taking any action in connection with the
exercise of any rights or remedies, the Lender shall forfeit any other rights or
remedies, including the right to enter a deficiency judgment against any
Borrower or other Person, whether because of any Applicable Laws pertaining to
“election of remedies” or otherwise, each Borrower consents to such action and
waives any claim based upon it, even if the action may result in loss of any
rights of subrogation that such Borrower might otherwise have had. Any election
of remedies that results in denial or impairment of the right of the Lender to
seek a deficiency judgment against any Borrower shall not impair any other
Borrower’s obligation to pay the full amount of the Obligations. Each Borrower
waives all rights and defenses arising out of an election of remedies, such as
nonjudicial foreclosure with respect to any security for the Obligations, even
though that election of remedies destroys such Borrower’s rights of subrogation
against any other Person. The Lender may bid all or a portion of the Obligations
at any foreclosure or trustee’s sale or at any private sale, and the amount of
such bid need not be paid by the Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether the
Lender or any other Person is the successful bidder, shall be conclusively
deemed to be the fair market value of the Collateral, and the difference between
such bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under this
Section 2.13, notwithstanding that any present or future law or court decision
may have the effect of reducing the amount of any deficiency claim to which the
Lender might otherwise be entitled but for such bidding at any such sale.
c.Extent of Liability; Contribution.
i.Notwithstanding anything herein to the contrary, each Borrower’s liability
under this Section 2.13 shall be limited to the greater of (i) all amounts for
which such Borrower is primarily liable, as described below, and (ii) such
Borrower’s Allocable Amount.
ii.If any Borrower makes a payment under this Section 2.13 of any Obligations
(other than amounts for which such Borrower is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments previously or
concurrently made by any other Borrower, exceeds the amount that such Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payments in the same proportion that such Borrower’s
Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such
Borrower shall be entitled to receive contribution and indemnification payments
from, and to be reimbursed by, each other Borrower for the amount of such
excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment. The “Allocable Amount” for any
Borrower shall be the maximum amount that could then be recovered from such
Borrower under this Section 2.13 without rendering such payment voidable under
Section 548 of the Bankruptcy Code or under any applicable state fraudulent
transfer or conveyance act, or similar statute or common law.
iii.Each Loan Party that is a Qualified ECP when its guaranty of or grant of
Lien as security for a Swap Obligation becomes effective hereby jointly and
severally, absolutely, unconditionally and irrevocably undertakes to provide
such funds or other support to each Specified Loan Party with respect to such
Swap Obligation as may be needed by such Specified Loan Party from time to time
to honor all of its obligations under the Loan Documents in respect of such Swap
Obligation (but, in each case, only up to the maximum amount of such liability
that can be hereby incurred without rendering such Qualified ECP’s obligations
and undertakings under this Section 2.13 voidable under any applicable
fraudulent transfer or conveyance act). The obligations and undertakings of each
Qualified ECP under this Section shall remain in full force and effect until
Payment in Full of the Obligations. Each Loan Party intends this Section to
constitute, and this Section shall be deemed to constitute, a guarantee of the
obligations of, and a “keepwell, support or other agreement” for the benefit of,
each Loan Party for all purposes of the Commodity Exchange Act.

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d.Direct Liability; Separate Borrowing Availability. Nothing contained in this
Section 2.13 shall limit the liability of any Borrower to pay Loans made
directly or indirectly to that Borrower (including Loans advanced to any other
Borrower and then re-loaned or otherwise transferred to, or for the benefit of,
such Borrower), Letter of Credit Obligations relating to Letters of Credit
issued to support such Borrower’s business, and all accrued interest, fees,
expenses and other related Obligations with respect thereto, for which such
Borrower shall be primarily liable for all purposes hereunder.
e.Joint Enterprise. Each Borrower has requested that the Lender make this credit
facility available to Borrowers on a combined basis, in order to finance
Borrowers’ business most efficiently and economically. The Borrowers’ business
is a mutual and collective enterprise, and the successful operation of each
Borrower is dependent upon the successful performance of the integrated group.
The Borrowers believe that consolidation of their credit facility will enhance
the borrowing power of each Borrower and ease administration of the facility,
all to their mutual advantage. The Borrowers acknowledge that the Lender’s
willingness to extend credit and to administer the Collateral on a combined
basis hereunder is done solely as an accommodation to Borrowers and at
Borrowers’ request.
f.Subordination. Each Loan Party hereby subordinates any claims, including any
rights at law or in equity to payment, subrogation, reimbursement, exoneration,
contribution, indemnification or set off, that it may have at any time against
any other Loan Party, howsoever arising, to the full payment in cash or Cash
Collateralization of all Obligations on the Facility Termination Date.
g.Borrower Agent. Each Borrower hereby irrevocably appoints and designates the
Company (“Borrower Agent”) as its representative and agent and attorney-in-fact
for all purposes under the Loan Documents, including requests for Credit
Extensions, designation of interest rates, delivery or receipt of communications
and all notices, preparation and delivery of Borrowing Base and financial
reports, receipt and payment of Obligations, requests for waivers, amendments or
other accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with the Lender. Any notice,
election, representation, warranty, agreement or undertaking by or on behalf of
any Loan Party by the Borrower Agent shall be deemed for all purposes to have
been made by such Loan Party and shall be binding upon and enforceable against
such Loan Party to the same extent as if made directly by such Loan Party and
Lender shall be entitled to rely thereon. The Lender may give any notice to or
communication with a Borrower or other Loan Party hereunder to Borrower Agent on
behalf of such Borrower or Loan Party.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY
3.1Taxes.
a.Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.
i.Any and all payments by or on account of any obligation of the Loan Parties
hereunder or under any other Loan Document shall be made free and clear of and
without deduction or withholding for any Taxes except as required by applicable
Law.
ii.If any applicable Laws (as determined in the good faith discretion of an
applicable Withholding Agent) requires the deduction or withholding of any Tax
from any such payment by a Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such Tax is an Indemnified Tax, then
the sum payable by the applicable Loan Party shall be increased as necessary so
that after such deduction or withholding has been made (including such
deductions and withholdings applicable to additional sums payable under this
Section) the applicable Recipient receives an amount equal to the sum it would
have received had no such deduction or withholding been made.
b.Payment of Other Taxes by the Borrowers. Without limiting the provisions of
subsection (a) above, the Loan Parties shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Law.
c.Tax Indemnification by the Borrowers. Without limiting the provisions of
subsection (a) or (b) above, each Loan Party shall, and does hereby, indemnify
the Lender, and shall make payment in respect thereof within 10 days after
demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section) withheld or deducted by the Loan Parties or the Lender or
paid by the Lender, as the case may be, and any reasonable expenses arising
therefrom or with respect

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thereto, whether or not such Indemnified Taxes were correctly or legally imposed
or asserted by the relevant Governmental Authority.
d.Evidence of Payments. Upon request by the Borrower Agent or the Lender, as the
case may be, after any payment of Taxes by the Loan Parties or by the Lender to
a Governmental Authority as provided in this Section 3.01, the Borrower Agent
shall deliver to the Lender or the Lender shall deliver to the Borrower Agent,
as the case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
Laws to report such payment or other evidence of such payment reasonably
satisfactory to the Borrower Agent or the Lender, as the case may be.
e.Treatment of Certain Refunds. If the Lender determines that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by any
Loan Party or with respect to which any Loan Party has paid additional amounts
pursuant to this Section, it shall pay to such Loan Party an amount equal to
such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by any Loan Party under this Section with respect to the Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses
incurred by the Lender, and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund), provided that
each Loan Party, upon the request of the Lender, agrees to repay the amount paid
over to any Loan Party (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event the Lender is
required to repay such refund to such Governmental Authority. This
subsection shall not be construed to require the Lender to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to any Loan Party or any other Person.
f.FATCA. If a payment made to a Lender under any Loan Document would be subject
to U.S. federal withholding Tax imposed by FATCA if the Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower at the time or times prescribed by law and at such
time or times reasonably requested by the Borrower such documentation prescribed
by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Borrower as
may be necessary for the Borrower to comply with their obligations under FATCA
and to determine that the Lender has complied with the Lender’s obligations
under FATCA or to determine the amount to deduct and withhold from such payment.
Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.
g.Survival. Each party’s obligations under this Section 3.01 shall survive the
termination of the Commitments and the repayment, satisfaction or discharge of
all obligations under any Loan Document.

3.2Illegality. If the Lender reasonably determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for the Lender or its applicable Lending Office to make, maintain or fund Loans
whose interest is determined by reference to the Eurodollar Rate, or to
determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of the
Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by the Lender to the Borrower Agent,
(i) any obligation of the Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended, and (ii) if
such notice asserts the illegality of the Lender making or maintaining Base Rate
Loans the interest rate on which is determined by reference to the Eurodollar
Rate component of the Base Rate, the interest rate on which Base Rate Loans of
such Lender shall, if necessary to avoid such illegality, be determined by the
Lender without reference to the Eurodollar Rate component of the Base Rate, in
each case until the Lender notifies the Borrower Agent that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
(x) the Loan Parties shall, upon demand from the Lender, prepay or, if
applicable, convert all Eurodollar Rate Loans of the Lender to Base Rate Loans
(the interest rate on which Base Rate Loans of the Lender shall, if necessary to
avoid such illegality, be determined by the Lender without reference to the
Eurodollar Rate component of the Base Rate), either on the last day of the
Interest Period therefor, if the Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice
asserts the illegality of the Lender determining or charging interest rates
based upon the Eurodollar Rate, the Lender shall during the period of such
suspension compute the Base Rate applicable to such Lender without reference to
the Eurodollar Rate component thereof until it is no longer illegal for the
Lender to determine or charge interest rates based upon the Eurodollar Rate.
Upon any such prepayment or conversion, the Loan Parties shall also pay accrued
interest on the amount so prepaid or converted.

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3.3Inability to Determine Rates. If the Lender determines that for any reason in
connection with any request for a Eurodollar Rate Loan or a conversion to or
continuation thereof that (a) Dollar deposits are not being offered to banks in
the London interbank eurodollar market for the applicable amount and Interest
Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not
exist for determining the Eurodollar Rate for any requested Interest Period with
respect to a proposed Eurodollar Rate Loan or in connection with an existing or
proposed Base Rate Loan, or (c) the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to the Lender of funding such Loan, the Lender will
promptly so notify the Borrower Agent. Thereafter, (x) the obligation of the
Lender to make or maintain Eurodollar Rate Loans shall be suspended, and (y) in
the event of a determination described in the preceding sentence with respect to
the Eurodollar Rate component of the Base Rate, the utilization of the
Eurodollar Rate component in determining the Base Rate shall be suspended, in
each case until the Lender revokes such notice. Upon receipt of such notice, the
Borrower Agent may revoke any pending request for a Borrowing of, conversion to
or continuation of Eurodollar Rate Loans or, failing that, will be deemed to
have converted such request into a request for a Borrowing of Base Rate Loans in
the amount specified therein.

3.4Increased Costs; Reserves on Eurodollar Rate Loans.
a.Increased Costs Generally. If any Change in Law shall:
i.impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, the Lender
(except any reserve requirement contemplated by Section 3.04(e));
ii.subject the Lender to any Taxes (other than (A) Indemnified Taxes, (B) Taxes
described in clauses (b) through (c) of the definition of Excluded Taxes and
(C) Connection Income Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto; or
iii.impose on the Lender or the London interbank market any other condition,
cost or expense (other than Taxes) affecting this Agreement or Eurodollar Rate
Loans made by the Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Loan the interest on which is determined by
reference to the Eurodollar Rate (or of maintaining its obligation to make any
such Loan), or to increase the cost to the Lender of in, issuing or maintaining
any Letter of Credit (or of maintaining its obligation to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by the Lender
hereunder (whether of principal, interest or any other amount) then, upon
request of the Lender, the Loan Parties will pay to the Lender, as the case may
be, such additional amount or amounts as will compensate the Lender, as the case
may be, for such additional costs incurred or reduction suffered.
b.Capital Requirements. If the Lender determines that any Change in Law
affecting the Lender or any Lending Office of the Lender or the Lender’s holding
company, if any, regarding capital or liquidity requirements has or would have
the effect of reducing the rate of return on the Lender’s capital or on the
capital of the Lender’s holding company, if any, as a consequence of this
Agreement, the Revolving Credit Commitments of the Lender or the Loans made by,
or participations in Letters of Credit held by, the Lender, or the Letters of
Credit issued by the Lender, to a level below that which the Lender or the
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration the Lender’s policies and the policies of the Lender’s
holding company with respect to capital adequacy), then from time to time
pursuant to subsection (c) below the Loan Parties will pay to the Lender such
additional amount or amounts as will compensate the Lender or the Lender’s
holding company for any such reduction suffered.
c.Certificates for Reimbursement. A certificate of the Lender setting forth the
amount or amounts necessary to compensate the Lender or its holding company, as
the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower Agent shall be conclusive absent manifest error. The
Loan Parties shall pay the Lender the amount shown as due on any such
certificate within 10 Business Days after receipt thereof.
d.Delay in Requests. Failure or delay on the part of the Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of the Lender’s right to demand such compensation, provided
that the Loan Parties shall not be required to compensate the Lender pursuant to
the foregoing

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provisions of this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that Lender notifies the Loan
Parties of the Change in Law giving rise to such increased costs or reductions
and of the Lender’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine‑month period referred to above shall be extended to
include the period of retroactive effect thereof).
e.Reserves on Eurodollar Rate Loans. The Borrowers shall pay to the Lender, as
long as the Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency Liabilities”), additional interest on the
unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs
of such reserves allocated to such Loan by the Lender (as determined by the
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Borrower Agent shall have received at least 10 days’ prior notice of such
additional interest from the Lender. If the Lender fails to give notice 10 days
prior to the relevant Interest Payment Date, such additional interest shall be
due and payable 10 days from receipt of such notice.
f.Similar Treatment. The Lender may not request compensation under this
Section 3.04 unless the Lender is generally requiring such amounts to be paid by
borrowers on similar loans to similarly situated borrowers.

3.5Compensation for Losses. Upon demand of the Lender, the Borrowers shall
promptly compensate the Lender for and hold the Lender harmless from any loss,
cost or expense incurred by it as a result of:
a.any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or
b.any failure by Borrowers (for a reason other than the failure of the Lender to
make a Loan) to prepay, borrow, continue or convert any Loan other than a Base
Rate Loan on the date or in the amount notified by the Borrower Agent;

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. The Borrowers shall also pay any
customary administrative fees charged by the Lender in connection with the
foregoing.
For purposes of calculating amounts payable by the Borrowers to the Lender under
this Section 3.05, the Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.
3.6Survival. All of the Borrowers’ obligations under this ARTICLE III shall
survive the occurrence of the Facility Termination Date.

ARTICLE IV

SECURITY AND ADMINISTRATION OF COLLATERAL

4.1Security Interest in Collateral. To secure the prompt payment and performance
to the Lender of the Obligations, each Loan Party hereby grants to the Lender
(and its Affiliates with respect to Credit Product Obligations) a continuing
Lien upon all of such Loan Party’s assets, including all of the following
property and interests in property of such Loan Party, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:
a.all Accounts;
b.all Goods, including, without limitation, all Equipment (including Rolling
Stock), Fixtures and Inventory;
c.all Chattel Paper (whether tangible or electronic);
d.the Commercial Tort Claims specified on Schedule 4.01;
e.all Deposit Accounts, all cash, and all other property from time to time
deposited therein or otherwise credited thereto and the monies and property in
the possession or under the control of the Lender or any affiliate,
representative, agent or correspondent of the Lender;

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f.all Documents
g.all General Intangibles (including, without limitation, all Payment
Intangibles, Intellectual Property and Licenses);
h.all Instruments (including, without limitation, Promissory Notes);
i.all Investment Property;
j.all Letter‑of‑Credit Rights;
k.all Pledged Interests;
l.all Supporting Obligations;
m.all other tangible and intangible personal property of such Loan Party
(whether or not subject to the UCC), including, without limitation, all bank and
other accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Loan Party described in the
preceding clauses of this Section 4.01 hereof (including, without limitation,
any proceeds of insurance thereon and all causes of action, claims and
warranties now or hereafter held by such Loan Party in respect of any of the
items listed above), and all books, correspondence, files and other Records
including, without limitation, all tapes, disks, cards, Software, data and
computer programs in the possession or under the control of such Loan Party or
any other Person from time to time acting for such Loan Party that at any time
evidence or contain information relating to any of the property described in the
preceding clauses of this Section 4.01 hereof or are otherwise necessary or
helpful in the collection or realization thereof; and
n.all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;

in each case howsoever such Loan Party’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include, and no Loan Party is pledging, nor granting a security interest
hereunder in, any Excluded Assets.
4.2Other Collateral.
a.Commercial Tort Claims. The Loan Parties shall promptly notify the Lender in
writing upon any Loan Party incurring or otherwise obtaining a Commercial Tort
Claim after the Closing Date against any third party and, upon request of the
Lender, promptly enter into an amendment to this Agreement and do such other
acts or things deemed appropriate by the Lender to give the Lender a security
interest in any such Commercial Tort Claim. The Loan Parties represent and
warrant that as of the date of this Agreement, to their knowledge, no Loan Party
possesses any Commercial Tort Claims.
b.Other Collateral. The Loan Parties shall promptly notify the Lender in writing
upon acquiring or otherwise obtaining any Collateral after the date hereof
consisting of Deposit Accounts, Investment Property, Letter of Credit Rights or
Electronic Chattel Paper and, upon the request of the Lender, promptly execute
such other documents, and do such other acts or things deemed appropriate by the
Lender to deliver to the Lender control with respect to such Collateral;
promptly notify the Lender in writing upon acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Documents or Instruments and,
upon the request of the Lender, will promptly execute such other documents, and
do such other acts or things deemed appropriate by the Lender to deliver to the
Lender possession of such Documents (to the extent negotiable) and Instruments,
and with respect to non‑negotiable Documents, to have such non‑negotiable
Documents issued in the name of the Lender; and with respect to Collateral in
the possession of a third party, other than Certificated Securities and Goods
covered by a Document, obtain an acknowledgment from the third party that it is
holding the Collateral for the benefit of the Lender.
c.Lien Perfection; Further Assurances. The Loan Parties shall execute and
deliver such instruments, assignments or documents (other than UCC-1 financing
statements as are required by the UCC) as are necessary to perfect the Lender’s
Lien upon any of the Collateral and shall take such other action as may be
required to perfect or to continue the perfection of the Lender’s Lien upon the
Collateral. Unless prohibited by applicable Law, each Loan Party hereby
authorizes the Lender to execute and file any such financing statement,
including financing statements that indicate the Collateral (a) as all assets of
such Loan Party or words of similar effect, or (b) as being of an equal or
lesser scope, or with greater or lesser detail, than as set forth in
Section 4.01 on such Loan Party’s behalf. Each Loan Party also hereby ratifies
its authorization for the Lender to have filed in any jurisdiction any like
financing

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statements or amendments thereto if filed prior to the date hereof. At the
Lender’s request, each Loan Party shall also promptly execute or cause to be
executed and shall deliver to the Lender any and all documents, instruments and
agreements deemed necessary by the Lender, to give effect to or carry out the
terms or intent of the Loan Documents.
d.[Reserved].
e.Investment Property and other Equity Interests.
i.Form of Pledged Interests. At no time shall any Pledged Interests: (a) be held
or maintained in the form of a security entitlement or credited to any
securities account other than security entitlements credited to a securities
account that is listed on Schedule 6.19 (as supplemented from time to time) and
that is subject to the control of the Lender pursuant to Section 4.05; and (b)
which constitute a “security” under Article 8 of any applicable Uniform
Commercial Code be maintained in the form of uncertificated securities. With
respect to any Pledged Interests that are “securities” under Article 8 of the
applicable UCC, such Pledged Interests are, and shall at all times be,
represented by the share certificates listed on Schedule 4.02 hereto (as
supplemented from time to time), and such share certificates, with stock powers
duly executed in blank by the applicable Loan Party, shall have been delivered
to the Lender.
ii.Delivery of Certificates. All certificates or instruments representing or
evidencing any Pledged Interests shall be delivered to and held by or on behalf
of the Lender pursuant hereto, shall be in suitable form for further transfer by
delivery, and shall be accompanied by all necessary instruments of transfer or
assignment, duly executed in blank. The Pledged Interests consisting of Equity
Interests pledged hereunder have been duly authorized and validly issued and are
fully paid and non‑assessable.
iii.Issuer Agreements. Upon reasonable request of the Lender and if required to
perfect the security interest of the Lender in any Pledged Interests, each Loan
Party that is the issuer of any Pledged Interests shall and shall cause each
other Person that is the issuer of any Pledged Interests to (a) acknowledge in
writing the security interest and Lien of the Lender in such Collateral granted
by the Loan Party owning such Pledged Interests, (b) agree in writing that, with
respect to any such Pledged Interests, it will comply with the instructions
originated by the Lender without further consent of any other Loan Party and (c)
confirm and agree in writing that, with respect to any such Pledged Interests,
it has not received notice of any other Lien therein (other than the Lien in
favor of the Lender hereunder) and will not comply with the instructions
originated by any Person (other than the Lender) without further consent of the
Lender.
iv.Distributions on Investment Property and other Equity Interests. In the event
that any cash dividend or cash distribution (a “Dividend”) is paid on any
Pledged Interests of any Loan Party at a time when no Event of Default has
occurred and is continuing, such Dividend may be paid directly to the applicable
Loan Party. If an Event of Default has occurred and is continuing, then, any
such Dividend or payment (other than Dividends described in clause (d) of
Section 8.06) shall be paid directly to the Lender for the benefit of the Credit
Parties.
v.Voting Rights with respect to Equity Interests. So long as no Event of Default
has occurred and is continuing, Loan Parties shall be entitled to exercise any
and all voting and other consensual rights pertaining to any of the Pledged
Interests or any part thereof for any purpose not prohibited by the terms of
this Agreement. If an Event of Default shall have occurred and be continuing,
all rights of Loan Parties to exercise the voting and other consensual rights
that it would otherwise be entitled to exercise shall, at the Lender’s option,
be suspended, and all such rights shall, at the Lender’s option, thereupon
become vested in the Lender for the benefit of the Credit Parties during the
continuation of such Event of Default, and the Lender shall, at its option,
thereupon have the sole right to exercise such voting and other consensual
rights and during the continuation of such Event of Default and the Lender shall
have the right to act with respect thereto as though it were the outright owner
thereof. After all Events of Default have been waived in accordance with the
provisions hereof, and so long as the Obligations shall not have been
accelerated, each Loan Party shall have the right to exercise the voting and
other consensual rights and powers that it would have otherwise been entitled to
pursuant to this Section 4.02(v).
vi.Securities Accounts. No Loan Party shall maintain any securities accounts
with any securities intermediary that are not identified on Schedule 6.19 (as
supplemented from time to time) and as to which such securities intermediary and
such Loan Party have entered into a Control Agreement with the Lender in which
such Loan Party irrevocably authorizes and directs such securities intermediary
to dispose of such Collateral at the direction of the Lender and to comply with
the instructions originated by the Lender without

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further consent of such Loan Party. The Lender agrees with the Loan Parties that
such instruction shall not be given by the Lender unless an Event of Default has
occurred and is continuing.
vii.Organizational Documents. With respect to each issuer of any Pledged
Interests of each Loan Party, such Loan Party shall promptly deliver to the
Lender (a) copies of the Organizational Documents of such issuer, together with
all amendments thereto and any shareholder or similar agreement in respect of
such Pledged Interests to which such Loan Party is a party and (b) at the
request of the Lender, the consent of each other party to any such document or
agreement to the pledge by such Loan Party of such Pledged Interests hereunder
and to the transfer of such Pledged Interests to the Lender or its nominee at
any time after the occurrence and during the continuance of an Event of Default.

4.3Collateral Administration.
a.Administration of Accounts.
i.Records and Schedules of Accounts. Each Borrower shall keep accurate and
complete records of its Accounts, including all payments and collections
thereon. If Accounts in an aggregate face amount of $500,000 or more cease to be
Eligible Accounts, Borrower Agent shall notify the Lender of such occurrence
promptly (and in any event within one Business Day) after Borrower Agent has
knowledge thereof.
ii.Taxes. If an Account of any Borrower includes a charge for any Taxes, the
Lender is authorized, in its discretion, to pay the amount thereof to the proper
taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that the Lender shall not be liable for any Taxes
that may be due from Borrowers or with respect to any Collateral.
iii.Account Verification. Whether or not a Default or Event of Default exists,
the Lender shall have the right at any time, in the name of the Lender, any
designee of the Lender or (during the continuance of any Event of Default) any
Borrower, to verify the validity, amount or any other matter relating to any
Accounts of Borrowers by mail, telephone or otherwise. Borrowers shall cooperate
fully with the Lender in an effort to facilitate and promptly conclude any such
verification process.
iv.Proceeds of Collateral. Borrowers shall request in writing and otherwise take
all necessary steps to ensure that all payments on Accounts or otherwise
relating to Collateral are made directly to the Concentration Account (or a
lockbox relating to the Concentration Account). If any Borrower or Subsidiary
receives cash or Payment Items with respect to any Collateral, it shall hold
same in trust for the Lender and promptly (not later than the next Business Day)
deposit same into the Concentration Account.
b.Administration of Inventory.
i.Records and Reports of Inventory. Each Borrower shall keep accurate and
complete records of its Inventory, including costs and daily withdrawals and
additions. Each Borrower shall conduct a physical inventory at least once per
calendar year (and on a more frequent basis if requested by the Lender when an
Event of Default exists) and periodic cycle counts consistent with historical
practices, and, upon request of Lender, shall provide to the Lender a report
based on each such inventory and count promptly upon completion thereof,
together with such supporting information as the Lender may request. The Lender
may participate in and observe each physical count. If any Event of Default is
continuing, the Lender may cause additional inventories to be taken and reports
made as the Lender determines (each, at the expense of the Loan Parties) in its
reasonable discretion.
ii.Returns of Inventory. No Borrower shall return any Inventory to a supplier,
vendor or other Person, whether for cash, credit or otherwise, unless (A) such
return is in the Ordinary Course of Business; (B) no Default, Event of Default
or Overadvance exists or would result therefrom; (C) the Lender is promptly
notified if the aggregate value of all Inventory returned in any month exceeds
$500,000; and (D) any payment received by a Borrower for a return is promptly
remitted to the Lender for application to the Obligations.
iii.Consignments, Sale and Maintenance. Each Borrower shall keep all Inventory
held on consignment or approval physically separate and readily identifiable
from all owned Inventory. No Borrower shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require a
Borrower to repurchase such Inventory in an aggregate amount in excess of
$500,000. Each Borrower shall take all steps to assure that all Inventory is
produced in accordance with applicable Law, including the FLSA. The Borrowers
shall use, store and maintain all Inventory with reasonable care and caution, in
accordance with applicable standards of any insurance and in conformity with all
applicable Laws.

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c.Landlord, Processor and Storage Agreements. Each Loan Party shall provide the
Lender, upon request with copies of all agreements between any Loan Party or any
of its Subsidiaries and any landlord, warehouseman, processor, bailee,
distributor or consignee which owns or is the lessee of any premises at which
any Collateral may, from time to time, be kept. With respect to any lease (other
than leases for sales offices), bailment, warehousing agreement, any processing
agreement or similar agreement in any case entered into after the Closing Date,
each Loan Party shall use commercially reasonable efforts to provide the Lender
with a Lien Waiver with respect to such premises. In the event Loan Parties do
not provide the Lender with any such Lien Waiver with respect to any such
premises within 30 days after Inventory is at such location or 90 days after the
Closing Date, whichever is later, Loan Parties acknowledge that, in the Lender’s
reasonable credit judgment, Inventory at such location shall not be Eligible
Inventory or the Lender shall establish a Rent and Charges Reserve for such
location.

4.4Further Assurances.
a.New Deposit Accounts and Securities Accounts. Concurrently with or prior to
the opening of a Deposit Account, Securities Account, commodities account,
securities entitlement or commodity contract by any Loan Party, other than any
Excluded Deposit Account, such Loan Party shall deliver to the Lender a Control
Agreement covering such Deposit Account, Securities Account, securities
entitlement or commodity contract, duly executed by such Loan Party, the Lender
and the applicable Controlled Account Bank, securities intermediary or financial
institution at which such account is maintained or with which such entitlement
or contract is carried, as the case may be.
b.UCC Authorization. The Lender is hereby irrevocably authorized to execute (if
necessary) and file or cause to be filed, with or if permitted by applicable Law
without the signature of any Borrower appearing thereon, all UCC financing
statements reflecting any Borrower as “debtor” and the Lender as “secured
party,” and continuations thereof and amendments thereto, as the Lender
reasonably deems necessary or advisable to give effect to the transactions
contemplated hereby and by the other Loan Documents.

4.5Cash Management.
a.Controlled Deposit Account. In accordance with the Post-Closing Agreement and
Section 7.19, the applicable Loan Party, the Lender and the applicable
Controlled Account Bank shall enter into a Control Agreement with respect to
each Deposit Account listed on Schedule 6.19, other than Excluded Deposit
Accounts, which shall include all lockboxes and related lockbox accounts used
for the collection of Accounts. Each Loan Party agrees that all invoices
rendered and other requests made by any Loan Party for payment in respect of
Accounts shall contain a written statement directing payment in respect of such
Accounts to be paid to a Controlled Deposit Account in its name. At the request
of the Lender, the Borrower Agent shall cause bank statements and/or other
reports to be delivered to the Lender not less often than monthly, accurately
setting forth all amounts deposited in each Deposit Account to ensure the proper
transfer of funds as set forth above. All remittances received by any Loan Party
on account of Accounts, together with the proceeds of any other Collateral,
shall be held as the Lender’s property, for its benefit and the benefit of the
Lender, by such Loan Party as trustee of an express trust for the Lender’s
benefit and such Loan Party shall immediately deposit same in kind in a
Controlled Deposit Account. The Lender retains the right at all times after the
occurrence and during the continuance of a Default or an Event of Default to
notify Account Debtors that a Loan Party’s Accounts have been assigned to the
Lender and to collect such Loan Party’s Accounts directly in its own name, or in
the name of the Lender’s agent, and to charge the collection costs and expenses,
including reasonable attorneys’ fees, to the Loan Account.
b.Concentration Account. Each Control Agreement with respect to a Controlled
Deposit Account shall require that, during a Dominion Trigger Period, the
Controlled Account Bank transfer all cash receipts and other collections
(provided that unless otherwise directed by the Lender, up to $100,000 shall be
permitted to remain in Perma-Pipe’s Canadian dollar account maintained at Bank
of Montreal) by ACH or wire transfer no less frequently than daily (and whether
or not there are then any outstanding Obligations) to the concentration account
maintained by the Lender at the Lender (the “Concentration Account”). The
Concentration Account shall at all times be under the sole dominion and control
of the Lender. The Loan Parties hereby acknowledge and agree that (i) the Loan
Parties have no right of withdrawal from the Concentration Account, (ii) the
funds on deposit in the Concentration Account shall at all times be collateral
security for all of the Obligations and (iii) the funds on deposit in the
Concentration Account shall be applied as provided in this Section 4.05(c)
below. In the event that, notwithstanding the provisions of this Section 4.04,
any Loan Party receives or otherwise has dominion and control of any such
proceeds or collections described above, such proceeds and collections shall be
held in trust by such Loan Party for the Lender,

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shall not be commingled with any of such Loan Party’s other funds or deposited
in any account of such Loan Party and shall, not later than the Business Day
after receipt thereof, be deposited into a Controlled Deposit Account or, during
a Dominion Trigger Event, the Concentration Account or dealt with in such other
fashion as such Loan Party may be instructed by the Lender.
c.Application of Funds in the Concentration Account. All funds received in the
Concentration Account in immediately available funds shall be applied in
accordance with Section 2.06(b)(vii). All funds received in the Concentration
Account that are not immediately available funds (checks, drafts and similar
forms of payment) shall be deemed applied by the Lender on account of the
Obligations (subject to final payment of such items) in accordance with the
foregoing sentence on the first Business Day after receipt by the Lender of such
items in the Lender’s account located in Chicago, Illinois. If as the result of
such application of funds a credit balance exists in the Concentration Account,
such credit balance shall not accrue interest in favor of Borrowers but shall,
so long as no Default or Event of Default then exists, be disbursed to Borrowers
or otherwise at Borrower Agent’s direction, upon Borrower Agent’s request. Upon
and during the continuance of any Event of Default, the Lender may, at its
option, offset such credit balance against any of the Obligations or hold such
credit balance as Collateral for the Obligations.

4.6Information Regarding Collateral. Each Borrower represents, warrants and
covenants that (a) the chief executive office of each Loan Party on the Closing
Date is located at the address or addresses specified on Schedule 4.06, and
(b) Schedule 4.06 contains a true and complete list of (i) the exact legal name,
jurisdiction of formation, and address within the United States of each Loan
Party and of each other Person that has effected any merger or consolidation
with a Loan Party or contributed or transferred to a Loan Party any property
constituting Collateral at any time during the five-year period preceding the
Closing Date (excluding Persons making sales in the ordinary course of their
businesses to a Loan Party of property constituting Inventory in the hands of
such seller), (ii) the exact legal name, jurisdiction of formation, jurisdiction
identification number, and each location of the chief executive office of each
Loan Party at any time during the five-year period preceding the Closing Date,
(iii) each location within the United States in which material goods
constituting Collateral are located as of the Closing Date (together with the
name of each owner of the property located at such address if not the applicable
Loan Party, a summary description of the relationship between the applicable
Loan Party and such Person and the maximum approximate book or market value of
the Collateral held or to be held at such location). The Company shall not
change, and shall not permit any other Loan Party to change, its name,
jurisdiction of formation (whether by reincorporation, merger or otherwise), the
location of its chief executive office or any location specified in
clause (b)(iii) of the immediately preceding sentence, or use or permit any
other Loan Party to use, any additional trade name, trademark or other trade
style, except upon giving not less than thirty (30) days’ prior written notice
to the Lender and taking or causing to be taken all such action at Borrowers’ or
such other Loan Parties’ expense as may be reasonably requested by the Lender to
perfect or maintain the perfection and priority of the Lien of the Lender in
Collateral.

ARTICLE V

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

5.1Conditions of Initial Credit Extension. The obligation of the Lender to make
any initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:
a.The Lender’s receipt of the following items (except those items that are
expressly permitted to be delivered after the Closing Date pursuant to the Post
Closing Agreements), each properly executed by a Responsible Officer of the
signing Loan Party, each dated as of the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Lender and its legal counsel:
i.executed counterparts of this Agreement and each of the Security Instruments;
ii.a Note executed by the Borrowers in favor of the Lender if the Lender
requests a Note;
iii.such certificates of resolutions or other action, incumbency certificates
(including specimen signatures), and/or other certificates of Responsible
Officers of each Loan Party as the Lender may require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to act

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as a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;
iv.such documents and certifications as the Lender may reasonably require to
evidence that each Loan Party is duly organized or formed, and that each
Borrower is validly existing, in good standing and qualified to engage in
business in its jurisdiction of organization and in any other jurisdiction in
which the failure to be so qualified could reasonably be expected to have a
Material Adverse Effect, including certified copies of each Loan Party’s
Organization Documents, shareholders’ agreements, certificates of good standing
and/or qualification to engage in business from each jurisdiction identified on
Schedule 5.01 hereto;
v.a favorable opinion of DLA Piper LLP (US), counsel to the Loan Parties, and
appropriate local counsel to the Loan Parties, each addressed to the Lender and
its successors and assigns, as to the matters concerning the Loan Parties and
the Loan Documents as the Lender may reasonably request;
vi.certificates of Responsible Officers of the Borrower Agent or the applicable
Loan Parties either (A) identifying all consents, licenses and approvals
required in connection with the execution, delivery and performance by each Loan
Party and the validity against each such Loan Party of the Loan Documents to
which it is a party, and stating that such consents, licenses and approvals
shall be in full force and effect, and attaching true and correct copies thereof
or (B) stating that no such consents, licenses or approvals are so required;
vii.certificate of Responsible Officers of the Borrower Agent certifying that
the Company and its Subsidiaries, on a Consolidated basis, are Solvent.
viii.evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect;
ix.an initial Borrowing Base Certificate
x.initial Committed Loan Notice;
xi.delivery of such documents and/or evidence of other actions as may be
reasonably necessary under applicable Law to perfect the Liens of the Lender
under the Security Instruments as a first priority Lien in and to such other
Collateral as the Lender may require;
xii.Uniform Commercial Code search results showing only those Liens as are
acceptable to the Lender;
xiii.the Lender shall have received evidence of the payment in full and
cancellation of the Existing Credit Facility, including terminations of Uniform
Commercial Code and other financing statements filed in connection with the
Existing Agreement and other evidence of Lien releases and other related matters
on terms acceptable to the Lender;
xiv.copies of all material documents evidencing the Existing Mortgage
Indebtedness, certified as true and correct by the Borrower Agent, together with
a reasonably acceptable Lien Waiver with respect thereto; and
xv.executed counterparts of the Post-Closing Agreement;
xvi.such other assurances, certificates, documents, consents, or opinions as the
Lender may reasonably require.
b.Any fees required to be paid on or before the Closing Date shall have been
paid.
c.Unless waived by the Lender, the Borrowers shall have paid all reasonable
fees, charges and disbursements of counsel to the Lender to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of such reasonable
fees, charges and disbursements as shall constitute its reasonable estimate of
such reasonable fees, charges and disbursements incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrowers and the
Lender).
d.The Lender shall be satisfied that after giving effect to (i) the initial
Credit Extension hereunder, (ii) consummation of the Transactions and payment of
all fees and expenses in connection therewith and (iii) any payables kept open
beyond their customary payment practices, Availability shall be at least
$3,750,000.

5.2Conditions to all Credit Extensions. The obligation of the Lender to honor
any Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) or make the initial Credit Extension hereunder is subject to the
following conditions precedent:

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a.The representations and warranties of the Loan Parties contained in ARTICLE VI
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct
in all material respects (or in any respect, if such representations and
warranties are qualified per their terms by materiality, Material Adverse Effect
or other similar language) on and as of the date of such Credit Extension,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they shall be true and correct in all material
respects (or in any respect, if such representations and warranties are
qualified per their terms by materiality, Material Adverse Effect or other
similar language) as of such earlier date, and except that for purposes of this
Section 5.02(a), the representations and warranties contained in subsections (a)
and (b) of Section 6.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 7.01.
b.No Default shall have occurred and be continuing, or would result from such
proposed Credit Extension or from the application of the proceeds thereof.
c.The Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.
d.After giving effect to each Credit Extension, Total Revolving Credit
Outstandings do not exceed the lesser of (i) the Total Revolving Credit
Commitments minus all Line Reserves and (ii) the Borrowing Base.
Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) submitted by the Borrower Agent shall be deemed to be a
representation and warranty that the conditions specified in Sections 5.02(a),
5.02(b) and 5.02(d) have been satisfied on and as of the date of the applicable
Credit Extension.
ARTICLE VI

REPRESENTATIONS AND WARRANTIES

To induce the Credit Parties to enter into this Agreement and to make Loans and
to issue Letters of Credit hereunder, each Loan Party represents and warrants to
the Lender, subject to the limitation set forth in Section 5.02(a), that:
6.1Existence, Qualification and Power. Each Loan Party and each Subsidiary
(a) is a corporation, partnership or limited liability company duly organized or
formed, validly existing and in good standing under the Laws of the jurisdiction
of its incorporation, organization or formation, (b) has all requisite power and
authority and all requisite governmental licenses, authorizations, consents and
approvals to (i) own or lease its assets and carry on its business as is now
being conducted and (ii) execute, deliver and perform its obligations under the
Loan Documents to which it is a party and to consummate the Transactions to
which it is a party, and (c) is duly qualified and is licensed and in good
standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i), or
(c), to the extent that failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

6.2Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, and the
consummation of the Transactions, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene
the terms of the Organization Documents of any such Person; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien under
(i) any Contractual Obligation to which such Person is a party or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Law.

6.3Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document or the
consummation of the Transactions, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Security Instruments, or (c) the perfection or
maintenance of the Liens created

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under the Security Instruments (including the first priority nature thereof),
except for the authorizations, approvals, actions, notices and filings listed on
Schedule 6.03, all of which have been duly obtained, taken, given or made and
are in full force and effect.

6.4Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, except (a) as rights to indemnification
hereunder may be limited by applicable Law and (b) as the enforcement hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.

6.5Financial Statements; No Material Adverse Effect.
a.The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; (iii) show all material Indebtedness and other liabilities,
direct or contingent, of the Company and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.
b.The unaudited Consolidated and consolidating balance sheet of the Company and
its Subsidiaries dated as of April 30, 2014, and the related consolidated and
consolidating statements of income or operations, shareholders’ equity and cash
flows for the month then ended (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit adjustments.
c.Since the date of the Audited Financial Statements there has been no event or
circumstance, either individually or in the aggregate, that has had or could
reasonably be expected to have a Material Adverse Effect.
d.The Loan Parties, on a Consolidated basis, are Solvent. No transfer of
property has been or will be made by any Loan Party and no obligation has been
or will be incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of any Loan Party.

6.6Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of any Loan Party after due investigation,
threatened, at law, in equity, in arbitration or before any Governmental
Authority, by or against any Loan Party or any of its Subsidiaries or against
any of their properties or revenues that (a) purport to affect or pertain to
this Agreement or any other Loan Document or any of the Transactions or
(b) except as specifically disclosed in Schedule 6.06, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
and there has been no material adverse change in the status, or financial effect
on any Loan Party or any Subsidiary thereof, of the matters described on
Schedule 6.06.

6.7No Default. No Loan Party or any Subsidiary is in default under or with
respect to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Default
has occurred and is continuing or would result from the consummation of the
Transactions.

6.8Ownership of Property; Liens.
a.Each Loan Party and each of its Subsidiaries has good record and marketable
title in fee simple to or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each Loan Party and each of its
Subsidiaries has good and marketable title to, valid leasehold interests in, or
valid licenses to use all personal property and assets material to the ordinary
conduct of its business.

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b.Schedule 6.08(b)(1) sets forth the address (including street address, county
and state) of all Real Estate that is owned by the Loan Parties as of the
Closing Date. Each Loan Party and each of its Domestic Subsidiaries has good,
marketable and insurable fee simple title to the real property owned by such
Loan Party or such Subsidiary, free and clear of all Liens, other than Permitted
Liens. Schedule 6.08(b)(2) sets forth the address (including street address,
county and state) of all material operating leases of the Loan Parties, together
with a list of the lessor and its contact information with respect to each such
lease as of the Closing Date. Each of such leases is in full force and effect
and the Loan Parties are not in default of any material terms thereof.
c.Schedule 8.02 sets forth a complete and accurate list of (i) all Liens on the
property or assets of each Loan Party and each of its Domestic Subsidiaries and
(ii) all Liens on the property or assets of each Subsidiary that is not a
Domestic Subsidiary securing any material Indebtedness for borrowed money of
such Subsidiary, in each case, showing as of the Closing Date the lienholder
thereof, the principal amount of the obligations secured thereby and the
property or assets of such Loan Party or such Subsidiary subject thereto. The
property of (x) each Loan Party and each of its Domestic Subsidiaries is subject
to no Liens and (y) each Subsidiary that is not a Domestic Subsidiary is subject
to no Liens securing any material Indebtedness for Borrowed money, in each case,
other than Liens set forth on Schedule 8.02 and Permitted Liens.

6.9Environmental Compliance.
a.Except as disclosed in Schedule 6.09, no Loan Party or any Subsidiary thereof
(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law with respect to the Loan Party or any Subsidiary’s operations,
(ii) has become subject to a pending claim with respect to any Environmental
Liability or (iii) has received written notice of any claim with respect to any
Environmental Liability except, in each case, as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
b.Except as otherwise set forth in Schedule 6.09 or as would not individually or
in the aggregate reasonably be expected to result in a Material Adverse Effect,
(i) none of the properties currently owned or operated by any Loan Party or any
Subsidiary thereof is listed or, to the knowledge of the Loan Parties, proposed
for listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; (ii) there are no and, to the
knowledge of the Loan Parties, never have been any underground or above-ground
storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or disposed
on any property currently owned or operated by any Loan Party or any Subsidiary
thereof; (iii) to the knowledge of the Loan Parties, there is no asbestos or
asbestos-containing material on any property currently owned or operated by any
Loan Party or Subsidiary thereof; and (iv) Hazardous Materials have not been
released, discharged or disposed of by any Loan Party or Subsidiary in violation
of Environmental Laws or, to the knowledge of the Loan Parties, by any other
Person in violation of Environmental Laws on any property currently owned or
operated by any Loan Party or any Subsidiary thereof.
c.Except as otherwise set forth on Schedule 6.09 or as would not individually or
in the aggregate reasonably be expected to result in a Material Adverse Effect,
no Loan Party or any Subsidiary thereof is undertaking, and no Loan Party or any
Subsidiary thereof has completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and all Hazardous Materials generated,
used, treated, handled or stored by any Loan Party or any Subsidiary at, or
transported to or from by or on behalf of any Loan Party or any Subsidiary, any
property currently owned or operated by any Loan Party or any Subsidiary thereof
have, to the knowledge of the Loan Parties, been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any
Subsidiary thereof.
d.Each Loan Party conducts in the Ordinary Course of Business a review of the
effect of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof each Loan Party
has reasonably concluded that, except as set forth on Schedule 6.09, such
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

6.10Insurance. The properties of the Loan Parties and their Subsidiaries are
insured with financially sound and reputable insurance companies which are not
Affiliates of the Loan Parties, in such amounts, with such

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deductibles and covering such risks (including, without limitation, workmen’s
compensation, public liability, business interruption and property damage
insurance) as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Loan Parties or the
applicable Subsidiary operates. The Lender hereby acknowledges that no insurance
is maintained (and is deemed not customary) for any Loan Party that is a
Domestic Holding Company. Schedule 6.10 sets forth a description of all
insurance maintained by or on behalf of the Loan Parties as of the Closing Date.
As of the Closing Date, each insurance policy listed on Schedule 6.10 is in full
force and effect and all premiums in respect thereof that are due and payable
have been paid.

6.11Taxes. Each Loan Party and its Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being Properly
Contested and except where the failure to file such returns or reports could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the knowledge of the Loan Parties, there is no proposed tax
assessment against the Company or any Subsidiary that would, if made, have a
Material Adverse Effect. Neither the Company nor any Subsidiary thereof is party
to any tax sharing agreement.

6.12ERISA Compliance.
a.Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to be a qualified plan under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service to the effect
that the form of such Plan is qualified under Section 401(a) of the Code and the
trust related thereto has been determined by the Internal Revenue Service to be
exempt from federal income tax under Section 501(a) of the Code, or an
application for such a letter is currently being processed by the Internal
Revenue Service. To the best knowledge of each Loan Party, nothing has occurred
that would prevent or cause the loss of such tax-qualified status.
b.There are no pending or, to the knowledge of any Loan Party, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.
c.(i) No ERISA Event has occurred, and no Loan Party nor any ERISA Affiliate is
aware of any fact, event or circumstance that could reasonably be expected to
constitute or result in an ERISA Event with respect to any Pension Plan;
(ii) each Loan Party and each ERISA Affiliate has met all applicable
requirements under the Pension Funding Rules in respect of each Pension Plan,
and no waiver of the minimum funding standards under the Pension Funding Rules
has been applied for or obtained; (iii) as of the most recent valuation date for
any Pension Plan, the funding target attainment percentage (as defined in
Section 430(d)(2) of the Code) is 60% or higher and no Loan Party nor any ERISA
Affiliate knows of any facts or circumstances that could reasonably be expected
to cause the funding target attainment percentage for any such plan to drop
below 60% as of the most recent valuation date; (iv) no Loan Party nor any ERISA
Affiliate has incurred any liability to the PBGC other than for the payment of
premiums, and there are no premium payments which have become due that are
unpaid; (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no
Pension Plan has been terminated by the plan administrator thereof nor by the
PBGC, and no event or circumstance has occurred or exists that could reasonably
be expected to cause the PBGC to institute proceedings under Title IV of ERISA
to terminate any Pension Plan.
d.No Loan Party or any ERISA Affiliate maintains or contributes to, or has any
unsatisfied obligation to contribute to, or liability under, any active or
terminated Pension Plan other than (A) on the Closing Date, those listed on
Schedule 6.12(d) hereto and (B) thereafter, Pension Plans not otherwise
prohibited by this Agreement.
e.With respect to each scheme or arrangement mandated by a government other than
the United States (a “Foreign Government Scheme or Arrangement”) and with
respect to each employee benefit plan maintained or contributed to by any Loan
Party or any Subsidiary of any Loan Party that is not subject to United States
law (a “Foreign Plan”):
i.any employer and employee contributions required by law or by the terms of any
Foreign Government Scheme or Arrangement or any Foreign Plan have been made, or,
if applicable, accrued, in accordance with normal accounting practices;

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ii.the fair market value of the assets of each funded Foreign Plan, the
liability of each insurer for any Foreign Plan funded through insurance or the
book reserve established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the date hereof, with respect to all current and former
participants in such Foreign Plan according to the actuarial assumptions and
valuations most recently used to account for such obligations in accordance with
applicable generally accepted accounting principles; and
iii.each Foreign Plan required to be registered has been registered and has been
maintained in good standing with applicable regulatory authorities.

6.13Subsidiaries; Equity Interests. No Loan Party (a) has any Subsidiaries other
than those specifically disclosed in part (a) of Schedule 6.13 (which
Schedule sets forth the legal name, jurisdiction of incorporation or formation
and authorized Equity Interests of each such Subsidiary) or created or acquired
in compliance with Section 7.12, and (b) has any equity investments in any other
corporation or entity other than those specifically disclosed on part (b) of
Schedule 6.13 or made after the Closing Date in compliance with this Agreement
and the other Loan Documents. All of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and non-assessable and are
owned by a Loan Party (or a Subsidiary of a Loan Party) in the amounts, as of
the Closing Date, specified on Part (a) of Schedule 6.13 free and clear of all
Liens except for those created under the Security Instruments. All of the
outstanding Equity Interests in the Loan Parties (other than the Company) have
been validly issued, and are fully paid and non-assessable and are owned in the
amounts, as of the Closing Date, specified on part (c) of Schedule 6.13 free and
clear of all Liens except for those created under the Security Instruments.

6.14Margin Regulations; Investment Company Act. No Loan Party is engaged nor
will engage, principally or as one of its important activities, in the business
of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the FRB), or extending credit for the purpose of purchasing or
carrying margin stock. None of the Loan Parties, any Person Controlling any Loan
Party, or any Subsidiary is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

6.15Disclosure. Each Loan Party has disclosed or caused the Borrower Agent to
disclose to the Lender all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No report, financial statement,
certificate (including the Borrowing Base Certificates) or other information
furnished (whether in writing or orally) by or on behalf of any Loan Party or
any Subsidiary to the Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder or under any
other Loan Document (in each case, as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, each Loan Party represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time made.

6.16Compliance with Laws. Each Loan Party and each Subsidiary is in compliance
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its properties, except in
such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

6.17Intellectual Property; Licenses, Etc. Each Loan Party and its Subsidiaries
own, or possess the right to use, all of the Intellectual Property (including IP
Rights) that are reasonably necessary for the operation of their respective
businesses, without known conflict with the IP Rights of any other Person,
except to the extent any failure so to own or possess the right to use could not
reasonably be expected to have a Material Adverse Effect. To the knowledge of
each Loan Party, the operation by each Loan Party and its Subsidiaries of their
respective businesses does not infringe, in any material respect upon any IP
Rights held by any other Person.

6.18Labor Matters.

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a.Except as would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect or as set forth on Schedule 6.18:
i.there are no strikes, lockouts, slowdowns or other material labor disputes
against any Loan Party or any Subsidiary thereof pending or, to the knowledge of
any Loan Party, threatened;
ii.the hours worked by and payments made to employees of the Loan Parties or any
Subsidiary comply with the FLSA, if applicable, and any other applicable
federal, state, local or foreign Law dealing with such matters;
iii.no Loan Party or any of its Subsidiaries has incurred any liability or
obligation under the Worker Adjustment and Retraining Act, if applicable, or
similar applicable Law;
iv.except as set forth on Schedule 6.18 no Loan Party or any Subsidiary is a
party to or bound by any collective bargaining agreement, management agreement,
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement;
v.there are no representation proceedings pending or, to any Loan Party’s
knowledge, threatened to be filed with the National Labor Relations Board, and
no labor organization or group of employees of any Loan Party or any Subsidiary
has made a pending demand for recognition;
vi.there are no complaints, unfair labor practice charges, grievances,
arbitrations, unfair employment practices charges or any other claims or
complaints against any Loan Party or any Subsidiary pending or, to the knowledge
of any Loan Party, threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment of any employee of any Loan Party
or any of its Subsidiaries; and
vii.all payments due from any Loan Party and its Subsidiaries, or for which any
claim may be made against any Loan Party, on account of wages and employee
health and welfare insurance and other benefits, have been paid or properly
accrued in accordance with GAAP as a liability on the books of such Loan Party.
b.all payments due from any Loan Party and its Domestic Subsidiaries, or for
which any claim may be made against any Loan Party, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
properly accrued in accordance with GAAP as a liability on the books of such
Loan Party;
c.The consummation of the transactions contemplated by the Loan Documents will
not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which any Loan Party
or any of its Domestic Subsidiaries is bound.

6.19Deposit Accounts and Securities Accounts.
a.Part (a) of Schedule 6.19 sets forth a list of all Deposit Accounts maintained
by the Loan Parties as of the Closing Date, which Schedule includes, with
respect to each Deposit Account (i) the name and address of the depository;
(ii) the account number(s) maintained with such depository; and (iii) a contact
person at such depository.
b.Part (b) of Schedule 6.19 sets forth a list of all Securities Accounts or
securities entitlement or commodity contracts maintained by the Loan Parties as
of the Closing Date, which Schedule includes (i) the name and address of the
securities intermediary or institution holding such account or party to such
contract; (ii) the account number(s) maintained with such securities
intermediary or institution; and (iii) a contact person at such securities
intermediary or institution.
c.

6.20Accounts. The Lender may rely, in determining which Accounts are Eligible
Accounts, on all statements and representations made by the Loan Parties with
respect thereto. Each Borrower warrants, with respect to each Account at the
time it is shown as an Eligible Account in a Borrowing Base Certificate, that:
a.it is genuine and in all respects what it purports to be, and is not evidenced
by a judgment;
b.it arises out of a completed, bona fide sale and delivery of goods in the
Ordinary Course of Business, and substantially in accordance with any purchase
order, contract or other document relating thereto;
c.it is for a sum certain, maturing as stated in the invoice covering such sale,
a copy of which has been furnished or is available to the Lender on request;

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d.it is not subject to any offset, Lien (other than the Lender’s Lien),
deduction, defense, dispute, counterclaim or other adverse condition except as
arising in the Ordinary Course of Business and disclosed to the Lender; and it
is absolutely owing by the Account Debtor, without contingency in any respect;
e.no purchase order, agreement, document or applicable Laws restricts assignment
of the Account to the Lender (regardless of whether, under the UCC, the
restriction is ineffective), and the applicable Borrower is the sole payee or
remittance party shown on the invoice;
f.no extension, compromise, settlement, modification, credit, deduction or
return has been authorized with respect to the Account, except discounts or
allowances granted in the Ordinary Course of Business for prompt payment that
are reflected on the face of the invoice related thereto and in the reports
submitted to the Lender hereunder; and
g.to each Borrower’s knowledge, (i) there are no facts or circumstances that are
reasonably likely to impair the enforceability or collectability of such
Account; (ii) the Account Debtor had the capacity to contract when the Account
arose, continues to meet the applicable Borrower’s customary credit standards,
is Solvent, is not contemplating or subject to any proceeding under any Debtor
Relief Laws, and has not failed, or suspended or ceased doing business; and
(iii) there are no proceedings or actions threatened or pending against any
Account Debtor that could reasonably be expected to have a material adverse
effect on the Account Debtor’s financial condition.

6.21Anti-Terrorism Laws and Foreign Asset Control Regulations. Each Loan Party
and its Subsidiaries is in compliance in all material respects with, and the
advances of the Loans and use of the proceeds thereof will not violate, (a) the
Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading
With the Enemy Act”) or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the “Foreign Assets Control Regulations”) and any other enabling legislation or
executive order relating thereto, thereto (which for the avoidance of doubt
shall include, but shall not be limited to Executive Order 13224 of
September 21, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001))
(the “Executive Order”)) and/or (b) the Uniting And Strengthening America by
Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA
Patriot Act of 2001). Furthermore, none of the Borrowers or their Affiliates
(a) is or will become a “blocked person” as described in the Executive Order,
the Trading With the Enemy Act or the Foreign Assets Control Regulations or
(b) knowingly engages or will engage in any dealings or transactions, or be
otherwise associated, with any such “blocked person” or in any manner violative
of any such order. No part of the proceeds of the Loans will be used, directly
or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977.

6.22Brokers. No broker or finder brought about the obtaining, making or closing
of the Loans or transactions contemplated by the Loan Documents, and no Loan
Party or Affiliate thereof has any obligation to any Person in respect of any
finder’s or brokerage fees in connection therewith.

6.23Customer and Trade Relations. There exists no actual or, to the knowledge of
any Loan Party, threatened, termination or cancellation of, or any modification
or change in the business relationship of any Loan Party with any customers or
suppliers which are, individually or in the aggregate, material to its
operations, to the extent that such cancellation, modification or change would
reasonably be expected to result in a Material Adverse Effect.

6.24Material Contracts. A description of all Material Contracts to which any
Loan Party is a party or is bound as of the Closing Date are on file with the
SEC as of the Closing Date. The Loan Parties have delivered true, correct and
complete copies of such Material Contracts to the Lender on or before the date
hereof.

6.25Casualty. Neither the businesses nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

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6.26Senior Indebtedness. All Obligations including those to pay principal of and
interest (including post-petition interest, whether or not allowed as a claim
under bankruptcy or similar laws) on the Loans and other Obligations, and fees
and expenses in connection therewith, are entitled to the benefits of the
subordination and related provisions applicable to all Subordinated
Indebtedness. Each Loan Party acknowledges that the Lender is entering into this
Agreement and is extending its Commitments in reliance upon the subordination
provisions of the Subordinated Indebtedness.

ARTICLE VII

AFFIRMATIVE COVENANTS

So long as the Lender shall have any Commitment hereunder or any Loan Obligation
hereunder shall remain unpaid or unsatisfied, each Loan Party shall, and shall
cause each Subsidiary to:
7.1Financial Statements. Cause the Borrower Agent to deliver to the Lender:
a.as soon as available, but in any event within 120 days after the end of each
fiscal year of the Company, a Consolidated and consolidating balance sheet of
the Company and its Subsidiaries as at the end of such fiscal year, and the
related Consolidated and consolidating statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, (i) such Consolidated
statements to be audited and accompanied by a report and opinion of a Registered
Public Accounting Firm of nationally recognized standing reasonably acceptable
to the Lender (the “Auditor”), which report and opinion shall be prepared in
accordance with audit standards of the Public Company Accounting Oversight Board
and applicable Securities Laws and shall not be subject to any “going concern”
or like qualification or exception or any qualification or exception as to the
scope of such audit and shall include a certificate of the Auditor stating that
in making the examination necessary with respect to such audit it has not become
aware of any Default in respect of any term, covenant, condition of Section 8.12
or other provision in so far as they relate to accounting matters or, if any
such Default shall exist, stating the nature and status of such event, and
(ii) such consolidating statements to be certified by the chief executive
officer, chief financial officer, treasurer or controller of the Company to the
effect that such statements are fairly stated in all material respects when
considered in relation to the Consolidated financial statements of the Company
and its Subsidiaries;
b.monthly, as soon as available, but in any event within 30 days after the end
of each month (or 45 days after the end of any month that is also the end of a
fiscal quarter), unaudited Consolidated and consolidating balance sheets of the
Company as of the end of such month and the related statements of income and
cash flow for such month and for the portion of the fiscal year then elapsed,
setting forth in comparative form corresponding figures for the preceding fiscal
year and certified by the chief executive officer, chief financial officer,
treasurer or controller of the Company as prepared in accordance with GAAP and
fairly presenting the financial condition, results of operations, shareholders
equity and cash flows for such month and period, subject to normal year‑end
adjustments and the absence of footnotes;
c.as soon as available but not later than 30 days after the end of each fiscal
year in draft form and 90 days after the end of each fiscal year in final form,
annual operating budgets of the Company and its Subsidiaries on a Consolidated
basis for such fiscal year, in form reasonably satisfactory to the Lender,
including (i) Consolidated balance sheets and statements of income or operations
and cash flows and (ii) monthly Availability for Borrowers for the current
fiscal year.
As to any information contained in materials furnished pursuant to
Section 7.02(d), the Loan Parties shall not be separately required to furnish
such information under clause (a) or (b) above, but the foregoing shall not be
in derogation of the obligation of the Loan Parties to furnish the information
and materials described in subsections (a) and (b) above at the times specified
therein.
7.2Borrowing Base Certificate; Other Information. Cause the Borrower Agent to
deliver to the Lender, in form and detail satisfactory to the Lender:
a.on or before the 20th of each month from and after the date hereof, Borrower
Agent shall deliver to the Lender, in form acceptable to the Lender, a Borrowing
Base Certificate as of the last day of the immediately preceding month, with
such supporting materials as the Lender shall reasonably request (including
monthly reporting

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of gross inventory, inventory ineligibles and accounts receivable ineligibles).
If Borrower Agent deems it advisable or if Lender shall request at any time
during a Reporting Trigger Period, Borrower Agent shall execute and deliver to
the Lender Borrowing Base Certificates weekly within three (3) days of the prior
week end (consisting of a rolling forward of weekly sales, cash collections and
credits, with gross inventory, inventory ineligibles and account receivable
ineligibles being reported monthly). All calculations of Availability in any
Borrowing Base Certificate shall originally be made by Borrower Agent and
certified by a Responsible Officer, provided that the Lender may from time to
time review and adjust any such calculation (prompt notice of which shall be
given to the Borrower Agent) (a) to reflect its reasonable estimate of declines
in value of any Collateral, due to collections received in the Concentration
Account or otherwise; (b) to reflect changes in dilution, quality, mix and other
factors affecting Collateral; and (c) to the extent the calculation is not made
in accordance with this Agreement or does not accurately reflect the
Availability Reserve or the Borrowing Base;
b.on or before the 20th day of each calendar month from and after the date
hereof, Borrower Agent shall deliver to the Lender, in the form reasonably
acceptable to the Lender, (i) reconciliations of all Borrowers’ Accounts as
shown on the month end Borrowing Base Certificate for the immediately preceding
month to Borrowers’ accounts receivable agings, to Borrowers’ general ledger and
to Borrowers’ most recent financial statements, (ii) accounts payable agings,
(iii) accounts receivable agings, (iv) reconciliations of Borrowers’ Inventory
as shown on Borrowers’ perpetual inventory, to Borrowers’ general ledger and to
Borrowers’ financial statements and (v) Inventory status reports, all with
supporting materials as the Lender shall reasonably request;
c.a Compliance Certificate executed by the chief executive officer, chief
financial officer, treasurer or controller of the Borrower Agent which certifies
compliance with Section 8.12 and provides a reasonably detailed calculation of
the Fixed Charge Coverage Ratio and Availability delivered (i) concurrently with
delivery of financial statements under Sections 7.01(a) and 7.01(b) above,
whether or not a Fixed Charge Trigger Period then exists, (ii) on the first day
of any Fixed Charge Trigger Period (certifying compliance as of the last day of
the Measurement Period most recently ended prior to the start of such Fixed
Charge Trigger Period) and as of the last day of each Measurement Period
thereafter ending during any Fixed Charge Trigger Period and (iii) as requested
by the Lender while a Default or Event of Default exists;
d.promptly after the same are available, copies of each annual report, proxy or
financial statement sent to the stockholders of the Company;
e.at the Lender’s request (but not more frequently than monthly unless an Event
of Default has occurred and is continuing), a listing of each Borrower’s trade
payables, specifying the trade creditor and balance due, all in form
satisfactory to the Lender; and
f.promptly, such additional information regarding the business, financial or
corporate affairs of any Loan Party or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Lender may from time to time reasonably
request.
Documents required to be delivered pursuant to Section 7.01(a) or 7.01(b) or
Section 7.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower Agent posts such documents, or provides a link thereto on the Borrower
Agent’s website on the Internet at the website address listed in Section 10.02;
or (ii) on which such documents are posted on the Borrower Agent’s behalf on an
Internet or intranet website, if any, to which the Lender has access (whether a
commercial, third-party website or whether sponsored by the Lender); provided
that the Borrower Agent shall notify (which may be by facsimile or electronic
mail) the Lender of the posting of any such documents and provide to the Lender
by electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrowers shall
be required to provide paper copies of the Compliance Certificates required by
Section 7.02(b) to the Lender.
7.3Notices. Promptly upon any Responsible Officer of the Borrower Agent having
knowledge thereof, the Borrower Agent shall notify the Lender:
a.of the occurrence of any Default or Event of Default;
b.of any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including, if the same could reasonably be expected to
result in a Material Adverse Effect, (i) breach or non-performance of, or any
default under, a Contractual Obligation of any Loan Party or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
any Loan Party or any Subsidiary and any Governmental Authority; (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting any Loan

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Party or any Subsidiary, including pursuant to any applicable Environmental
Laws; violation or asserted violation of any applicable Law;
c.of the occurrence of any ERISA Event;
d.the creation or acquisition of any Subsidiary;
e.of any material change in accounting policies or financial reporting practices
by any Loan Party or any Subsidiary thereof;
f.of any change in any Loan Party’s senior executive officers;
g.of the discharge by any Loan Party of its present Auditors or any withdrawal
or resignation by such Auditors;
h.of any collective bargaining agreement or other labor contract to which a Loan
Party becomes a party, or the application for the certification of a collective
bargaining agent;
i.of the filing of any Lien for unpaid Taxes against any Loan Party in excess of
$10,000;
j.of any casualty or other insured damage to any material portion of the
Collateral or the commencement of any action or proceeding for the taking of any
interest in a material portion of the Collateral under power of eminent domain
or by condemnation or similar proceeding or if any material portion of the
Collateral is damaged or destroyed; and
k.of any failure by any Loan Party to pay rent at any of such Loan Party’s
locations if such failure continues for more than fifteen (15) days following
the day on which such rent first came due.
Each notice pursuant to this Section 7.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower Agent setting forth details of the
occurrence referred to therein and stating what action the Borrowers have taken
and proposes to take with respect thereto. Each notice pursuant to
Section 7.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.
7.4Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being Properly Contested; (b) all lawful claims
which, if unpaid, would by law become a Lien (other than a Permitted Lien) upon
its property; and (c) all Indebtedness having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
$1,250,000, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.

7.5Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization or formation except in a transaction permitted
by Section 8.04 or 8.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered Intellectual Property, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

7.6Maintenance of Properties. (a) Maintain, preserve and protect all of its
properties (other than insignificant properties) and equipment necessary in the
operation of its business in good working order and condition, ordinary wear and
tear excepted except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect; (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c) use the
standard of care typical in the industry in the operation and maintenance of its
facilities.

7.7Maintenance of Insurance.
a.Maintain with (i) companies having an A.M. Best Rating of at least “A” or
(ii) financially sound and reputable insurance companies reasonably acceptable
to the Lender and not Affiliates of the Loan Parties, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business and operating
in the same or similar locations or as is required by applicable Law, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons and as are reasonably acceptable to the Lender. The Lender
hereby acknowledges that no insurance is maintained (and is deemed not
customary) for any Loan Party that is a Domestic Holding Company.

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b.Cause all casualty policies, including fire and extended coverage policies,
maintained with respect to any Collateral to be endorsed or otherwise amended to
include (i) a non-contributing mortgagee clause (regarding improvements to real
property) and lenders’ loss payable clause (regarding personal property), in
form and substance reasonably satisfactory to the Lender, which endorsements or
amendments shall provide that the insurer shall pay all proceeds otherwise
payable to the Loan Parties under the policies directly to the Lender, and
(ii) a provision to the effect that none of the Loan Parties, Credit Parties or
any other Person shall be a co-insurer.
c.Cause commercial general liability policies to be endorsed to name the Lender
as an additional insured; and cause business interruption policies to name the
Lender as a loss payee and to be endorsed or amended to include (i) a provision
that, from and after the Closing Date, the insurer shall pay all proceeds
otherwise payable to the Loan Parties under the policies directly to the Lender,
and (ii) a provision to the effect that none of the Loan Parties, the Lender or
any other party shall be a co-insurer.
d.Use commercially reasonable efforts to cause each such policy referred to in
this Section 7.07 to also provide that it shall not be canceled, modified or not
renewed (i) by reason of nonpayment of premium except upon not less than thirty
(30) days’ prior written notice thereof by the insurer to the Lender (giving the
Lender the right to cure defaults in the payment of premiums) or (ii) for any
other reason except upon not less than thirty (30) days’ prior written notice
thereof by the insurer to the Lender.
e.Deliver to the Lender upon request (a) copies of each such policy of insurance
referred to in this Section 7.07 and (b) prior to the cancellation, modification
or non‑renewal of any such policy of insurance, a copy of a renewal or
replacement policy or insurance certificate (or other evidence of renewal of a
policy previously delivered to the Lender, including an insurance binder)
together with evidence reasonably satisfactory to the Lender of payment of the
premium therefor.
f.None of the Credit Parties, or their agents or employees shall be liable for
any loss or damage insured by the insurance policies required to be maintained
under this Section 7.07. Each Loan Party shall look solely to its insurance
companies or any other parties other than the Credit Parties for the recovery of
such loss or damage and such insurance companies shall have no rights of
subrogation against any Credit Party or its agents or employees. If, however,
the insurance policies do not provide waiver of subrogation rights against such
parties, as required above, then the Loan Parties hereby agree, to the extent
permitted by law, to waive their right of recovery, if any, against the Credit
Parties and their agents and employees. The designation of any form, type or
amount of insurance coverage by the any Credit Party under this Section 7.07
shall in no event be deemed a representation, warranty or advice by such Credit
Party that such insurance is adequate for the purposes of the business of the
Loan Parties or the protection of their properties.

7.8Compliance with Laws. Comply in all material respects with the requirements
of all Laws (including without limitation all applicable Environmental Laws) and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being Properly Contested; or (b) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect.

7.9Books and Records. (a)  Maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and
business of the Loan Parties or such Subsidiary, as the case may be; and
(b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over any Loan Party or such Subsidiary, as the case may be.

7.10Inspection Rights and Appraisals; Meetings with the Lender.
a.Permit the Lender or its designees or representatives from time to time,
subject to reasonable notice and normal business hours (except, in each case,
when a Default or Event of Default exists), to conduct Field Exams and/or
appraisals of Inventory and to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its officers and Auditors; provided that
representatives of the Borrower Agent shall be given the opportunity to
participate in any discussions with the Auditors. The Lender shall not have any
duty to any Loan Party to share any results of any Field Exam with any Loan
Party. Appraisals may be shared with the Borrower Agent upon request. The Loan
Parties acknowledge that all Field

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Exams, appraisals, and reports are prepared by or for the Lender for its
purposes, and Loan Parties shall not be entitled to rely upon them.
b.Reimburse the Lender for all reasonable and documented out-of-pocket charges,
costs and expenses of the Lender in connection with up to two Field Exams during
any twelve (12) month period, provided, further, that no such limits shall apply
if an Event of Default has occurred and is continuing.
c.Without limiting the foregoing, the Loan Parties will participate and will
cause their key management personnel to participate in meetings with the Lender
periodically during each year, which meetings shall be held at such times and
such places as may be reasonably requested by the Lender.

7.11Use of Proceeds. With respect to the Borrowers only, use the proceeds of the
Credit Extensions (i) to refinance the Indebtedness under the Existing
Agreement, and (ii) for working capital, capital expenditures, and other general
corporate purposes not in contravention of any Law or of any Loan Document.

7.12New Subsidiaries. As soon as practicable but in any event within 30 Business
Days following the acquisition or creation of a Domestic Subsidiary other than
an Excluded Subsidiary, cause to be delivered to the Lender a joinder agreement
acceptable to the Lender duly executed by such Domestic Subsidiary sufficient to
cause such Subsidiary to become a Borrower hereunder (or, at the request of the
Borrower Agent with the consent of the Lender, a Guarantor), together with
executed counterparts of each other Loan Document, including legal opinions and
authorizing resolutions, reasonably requested by the Lender, including all
Security Instruments and other documents reasonably requested to establish and
preserve the Lien of the Lender in all Collateral of such Domestic Subsidiary.

7.13Compliance with ERISA. Do, and cause each of its ERISA Affiliates to do,
each of the following: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other applicable
Laws, including Foreign Benefit Laws; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; (c) cause each
Plan subject to any Foreign Benefit Law to maintain any required material
approvals by any Governmental Authority regulating such Plan, (d) make all
required material contributions to any Plan subject to the Pension Funding
Rules, and (e) make all required material contributions and payments to any
Foreign Plans.

7.14Further Assurances. At the Borrowers’ cost and expense, upon the reasonable
request of the Lender, duly execute and deliver or cause to be duly executed and
delivered, to the Lender such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Lender to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Document.

7.15Licenses. (a)  Keep in full force and effect each License (i) the expiration
or termination of which could reasonably be expected to materially adversely
affect the realizable value in the use or sale of a material amount of Inventory
or (ii) the expiration or termination of which could reasonably be expected to
have a Material Adverse Effect (each a “Material License”); (b) promptly notify
the Lender of (i) any material modification to any such Material License that
could reasonably be expected to be materially adverse to any Loan Party or the
Lender and (ii) entering into any new Material License; (c) pay all Royalties
(other than immaterial Royalties or Royalties being Properly Contested) arising
under such Material Licenses when due (subject to any cure or grace period
applicable thereto); and (d) notify the Lender of any material default or
material breach asserted in writing by any Person to have occurred under any
such Material License.

7.16Environmental Laws. Conduct its operations and keep and maintain its Real
Estate in material compliance with all Environmental Laws, other than any such
non-compliance which would not reasonably be expected to result, individually or
in the aggregate, in a Material Adverse Effect; (b) obtain and renew all
environmental permits necessary for its operations and properties, other than
any environmental permits the failure of which to obtain would not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect; and (c) implement any and all investigation, remediation, removal and
response actions that are required to comply with Environmental Laws pertaining
to the presence, generation, treatment, storage, use, disposal, transportation
or release of any Hazardous

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Materials on, at, in, under or about any of its Real Estate other than any such
non-compliance which would not reasonably be expected to result, individually or
in the aggregate, in a Material Adverse Effect.

7.17Landlord and Storage Agreements. Except as otherwise expressly permitted
hereunder, make all payments and otherwise perform all obligations in respect of
all leases of real property to which any Loan Party or any of its Domestic
Subsidiaries is a party and not allow such leases to lapse or be terminated by
the applicable Loan Party or Domestic Subsidiary or any rights to renew such
leases to be forfeited or cancelled by the applicable Loan Party or Domestic
Subsidiary, notify the Lender of any default by the applicable Loan Party or
Domestic Subsidiary with respect to such leases and cooperate with the Lender in
all respects to cure any such default by the applicable Loan Party or Domestic
Subsidiary, and cause each of its Domestic Subsidiaries to do so, except, in any
case, where the failure to do any of the foregoing, either individually or in
the aggregate, could not be reasonably likely to have a Material Adverse Effect.

7.18Material Contracts. Perform and observe all the payment terms and other
material terms and provisions of each Material Contract to be performed or
observed by it, maintain each such Material Contract in full force and effect,
enforce each such Material Contract in accordance with its terms, in the
exercise of Borrowers’ reasonable prudent business judgment and, upon reasonable
request of the Lender, at any time during the continuance of an Event of
Default, make to each other party to each such Material Contract such demands
and requests for information and reports or for action as any Loan Party or any
of its Subsidiaries is entitled to make under such Material Contract, and cause
each of its Subsidiaries to do so, except, in any case, where the failure to do
any of the foregoing, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

7.19Treasury Management Services.
a.Commencing with the date which is ninety (90) days after the Closing Date,
each Borrower shall maintain its deposit and lockbox accounts exclusively with
the Lender or Bank of Montreal and shall utilize the Lender or Bank of Montreal
for its primary disbursement accounts.
b.With respect to each Deposit Account (other than Excluded Accounts) maintained
by any Loan Party with a financial institution (other than Lender or Bank of
Montreal) that is not subject to an effective Control Agreement, the applicable
Loan Party shall, at all times, maintain and enforce a standing instruction to
sweep the balance of such Deposit Account as of the end of each Business Day to
a Controlled Deposit Account or a Deposit Account maintained with Lender. This
Section 7.19(b) shall not be construed to negate any Loan Party’s obligation to
comply with any other requirement in respect of Deposit Accounts in this
Agreement and failure to so comply shall be a Default hereunder.

ARTICLE VIII
NEGATIVE COVENANTS

So long as the Lender shall have any Commitment hereunder or any Loan Obligation
hereunder shall remain unpaid or unsatisfied, no Loan Party shall, nor shall it
permit any Subsidiary to, directly or indirectly:
8.1Indebtedness. Create, incur, assume or suffer to exist any Indebtedness or
issue any Disqualified Equity Interest, except:
a.Indebtedness under the Loan Documents;
b.Indebtedness outstanding on the date hereof (including Subordinated
Indebtedness) and listed on Schedule 8.01 and any refinancings, refundings,
renewals or extensions thereof; provided that (i) the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in connection
with such refinancing and by an amount equal to any existing commitments
unutilized thereunder, (ii) the average life to maturity of any refinancing,
refunding, renewal or extension of such Indebtedness permitted hereby is not
less than the then average life to maturity of the Indebtedness so refinanced or
replaced, (iii)  the direct or contingent obligors with respect to such
Indebtedness are not changed as a result of or in connection with such
refinancing, refunding, renewal or extension, (iv) any refinancing, refunding,
renewal or extension of Indebtedness subordinated to the Obligations shall be on
terms no less favorable to the Lender, and no more restrictive to the Loan
Parties, than

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the subordinated Indebtedness being refinanced, refunded, renewed or extended
and in an amount not less than the amount outstanding at the time thereof,
(v) the interest rate applicable to any such refinancing, refunding, renewing or
extending Indebtedness does not exceed the greater of the (A) interest rate for
the Indebtedness being refinanced, refunded, renewed, or extended and (B) the
otherwise market rate of interest for such Indebtedness, and (vi) such
refinancing, renewal, or extension does not impair or restrict, in any material
respect greater than as contained in the Indebtedness being refinanced,
refunded, renewed or extended, the ability of the Loan Parties to make
Distributions or transfer money and other property to or otherwise enter into
transactions among the other Loan Parties.
c.guarantees of any Borrower in respect of Indebtedness of any other Subsidiary
otherwise permitted hereunder; provided that such guaranty shall be subordinated
to the Obligations on terms reasonably acceptable to the Lender;
d.obligations (contingent or otherwise) of the Borrowers existing or arising
under any Swap Contract, provided that (i) such obligations are (or were)
entered into by such Person in the Ordinary Course of Business for the purpose
of directly mitigating risks associated with liabilities, commitments,
investments, assets, cash flows or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view,” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;
e.Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and
purchase money obligations for real property and fixed or capital assets within
the limitations set forth in Section 8.02(j); provided, however, that the
aggregate amount of all such Indebtedness, together with the Swap Termination
Value of Swap Contracts permitted under Section 8.01(d) above, at any time
outstanding shall not exceed $5,000,000;
f.additional Subordinated Indebtedness in an aggregate amount outstanding at any
one time not to exceed $15,000,000;
g.additional Indebtedness of Subsidiaries that are not Loan Parties in an
aggregate principal amount at any time outstanding not to exceed $25,000,000;
h.the endorsement of negotiable instruments for deposit or collection or similar
transactions in the Ordinary Course of Business;
i.other unsecured Indebtedness of (A) any Loan Party owing to any other Loan
Party or any other Subsidiary that is not a Loan Party (so long as such
Indebtedness owing to a Subsidiary that is not a Loan Party (x) bears interest
(and provided for fees) at a rate (or amount) no greater than the then current
arm’s length market rate (or amount) for similar Indebtedness, (y) does not
require the payment in cash of principal (at maturity or otherwise) prior to
ninety (90) days following the Maturity Date and (z) is subordinated to the
Obligations on terms reasonably acceptable to the Administrative Agent), (B) any
Subsidiary that is not a Loan Party owing to any other Subsidiary that is not a
Loan Party and (C) any Subsidiary that is not a Loan Party owing to any Loan
Party permitted to be incurred under Section 8.03(g) below; provided that any
such Indebtedness described in this clause (i) which is owing to a Loan Party,
shall (1) to the extent the aggregate principal amount thereof is in excess of
$500,000, be evidenced by promissory notes in form and substance satisfactory to
the Lender and pledged to the Lender on terms acceptable to it, and (2) not be
forgiven or otherwise discharged for any consideration other than payment in
full in cash unless the Lender otherwise consents;
j.so long as no Default has occurred and is continuing or would result from the
incurrence thereof, other unsecured Indebtedness (i) not exceeding $3,500,000 in
the aggregate in any fiscal year and (ii) in excess of $3,500,000 in any fiscal
year if (A) the Consolidated Fixed Charge Coverage Ratio (calculated on a pro
forma basis giving effect to such Indebtedness) as of the most recently ended
Measurement Period shall be at least 1.20 to 1.00, and (B) pro forma
Availability shall exceed $5,000,000 for each day during the 30 day period prior
to incurrence of such Indebtedness and immediately thereafter and (C) at least
ten (10) Business Days prior to each incurrence under this clause (ii), the
Borrower Agent has delivered a certificate to the Lender demonstrating
compliance with each of (A) and (B) above;
k.all Indebtedness associated the Liens in Sections 8.02 (f) or (h) below;
l.Indebtedness that is a permitted Investment under Section 8.03;
m.unsecured Indebtedness consisting of guaranties of certain performance bonds
(i) in existence on the Closing Date and (ii) as may be provided from time to
time after the closing date in the reasonable business judgment of the Company
in an aggregate amount of up to $25,000,000 (as such amount may be increased
from time to time in the reasonable judgment of the Lender), in each case, in
connection with that certain Bonding Agreement

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dated as of June 26, 2013 between the Company, Edward A. Crylen and MM&E LLC, an
Illinois limited liability company; and
n.other unsecured Indebtedness incurred in the Ordinary Course of Business on
arm’s length terms having a stated maturity date no earlier than 90 days
following the Revolving Credit Maturity Date and in an aggregate outstanding
principal amount not exceeding $250,000.

8.2Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following (“Permitted Liens”):
a.Liens in favor of the Lender pursuant to any Loan Document;
b.Liens existing on the date hereof and listed on Schedule 8.02 and any renewals
or extensions thereof, provided that (i) the property covered thereby is not
changed, (ii) the amount secured or benefited thereby is not increased from the
amount outstanding on the date of renewal or extension, except to the extent
provided in Section 8.01(b), (iii) the direct or any contingent obligor with
respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is otherwise permitted under
Section 8.01(b);
c.Liens for taxes, assessments or other governmental charges, not yet due or
which are being Properly Contested;
d.Liens of carriers, warehousemen, mechanics, materialmen, repairmen, landlords
or other like Liens imposed by Law or arising in the Ordinary Course of Business
which are not overdue for a period of more than 30 days or which are being
Properly Contested;
e.Liens, pledges of or deposits in the Ordinary Course of Business in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA or a Foreign Benefit Law;
f.Liens incurred in the Ordinary Course of Business on deposits to secure the
performance of bids, trade contracts and leases (other than Indebtedness),
statutory obligations, surety bonds (other than bonds related to judgments or
litigation), performance bonds and other obligations of a like nature, in all
cases, incurred in the Ordinary Course of Business;
g.Liens with respect to minor imperfections of title and easements,
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other similar restrictions, charges, encumbrances or title defects
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person and do not materially detract from the value
of or materially impair the use by the Loan Parties in the Ordinary Course of
Business of the property subject to or to be subject to such encumbrance;
h.Liens securing judgments for the payment of money not constituting an Event of
Default under Section 9.01 or securing appeal or other surety bonds related to
such judgments;
i.Liens securing Indebtedness permitted under Section 8.01(e); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition;
j.Liens on assets of Subsidiaries that are not Loan Parties securing
Indebtedness of such Subsidiaries permitted pursuant to clause (g) of
Section 8.01;
k.Liens securing Indebtedness permitted under Section 8.01(f);
l.operating leases or subleases granted by the Loan Parties to any other Person
in the Ordinary Course of Business;
m.Liens in favor of customs and revenue authorities imposed by Law to secure
payment of customs duties in connection with the importation of goods and
arising in the Ordinary Course of Business which are not overdue for a period of
more than 30 days or which are being Properly Contested; and
n.Liens on certain real estate of the Borrowers securing the Existing Mortgage
Indebtedness.

8.3Investments. Make any Investments, except:
a.Investments held by the Loan Parties in the form of Cash Equivalents that are
subject to the Lender’s Lien and control to the extent provided in Article IV;

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b.loans and advances to officers, directors and employees of the Loan Parties
and Subsidiaries made in the Ordinary Course of Business in an aggregate amount
at any one time outstanding not to exceed $500,000 or such other amount as may
from time to time be approved by Lender in writing;
c.(i) Investments by the Loan Parties and their Subsidiaries in their respective
Subsidiaries outstanding on the date hereof, (ii) additional Investments by the
Company and its Subsidiaries in Loan Parties, (iii) additional Investments by
Subsidiaries of the Company that are not Loan Parties in other Subsidiaries that
are not Loan Parties, and (iv) non-cash Investments in Subsidiaries that are not
Loan Parties consisting of accrued and unpaid or capitalized interest and fees
associated with Investments otherwise permitted under this Section 8.03;
d.Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
Ordinary Course of Business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled Account Debtors to the extent
reasonably necessary in order to prevent or limit loss;
e.guarantees permitted by Section 8.01;
f.Investments existing as of the date hereof (other than those set forth on
Schedule 6.13(a) and (b)) and as set forth in Schedule 8.03 (which Schedule 8.03
shall show, as of the date hereof, the amount, obligor or issuer and maturity,
if any, of any listed Investment) and extensions or renewals thereof, provided
that no such extension or renewal shall be permitted if it would (i) increase
the amount of such Investment at the time of such extension or renewal or
(ii) result in a Default hereunder; and
g.so long as no Default has occurred and is continuing or would result from such
Investment, other Investments (including Investments by the Loan Parties in
Subsidiaries that are not Loan Parties) (i) not exceeding $5,000,000 in the
aggregate in any fiscal year and (ii) in excess of $5,000,000 if (A) the
Consolidated Fixed Charge Coverage Ratio (calculated on a pro forma basis giving
effect to such Investment and any Indebtedness incurred in connection therewith)
as of the most recently ended Measurement Period shall be at least 1.20 to 1.00,
and (B) pro forma Availability shall exceed $5,000,000 for each day during the
30 day period prior to such Investment and immediately after making such
Investment and (C) at least ten (10) Business Days prior to each such Investment
under this clause (ii), the Borrower Agent has delivered a certificate to the
Lender demonstrating compliance with each of (A) and (B) above.

8.4Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, except that, so long as no Default exists or would result
therefrom, (a) any Subsidiary of the Company may merge or consolidate with or
liquidate or dissolve into a Loan Party; provided, that, (i) a Loan Party shall
be the continuing or surviving Person, and (ii) in the case of any merger or
consolidation of a Borrower and a Guarantor, such Borrower shall be the
continuing or surviving Person; (b) any Subsidiary of the Company may merge or
consolidate with any Person (or permit such Person to merge consolidate with
such Subsidiary) in connection with any permitted Acquisition; provided, that,
(i) the Person surviving such merger of consolidation shall be a wholly-owned
Subsidiary of a Loan Party and (ii) in the case of any merger or consolidation
in which a Loan Party is a party, such Loan Party shall be the continuing or
surviving Person or, if not, such continuing or surviving Person becomes a Loan
Party hereunder; and (c) any Subsidiary that is not a Loan Party may merge into
any other Subsidiary that is not a Loan Party; provided that, when any
wholly-owned Subsidiary is merging with another Subsidiary that is not
wholly-owned, the wholly-owned Subsidiary shall be the continuing or surviving
Person.

8.5Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:
a.Dispositions of Inventory in the Ordinary Course of Business;
b.Dispositions in the Ordinary Course of Business of Equipment or fixed assets
that are obsolete, worn out or no longer useful to the Core Business so long as
all proceeds thereof are remitted to the Lender for application to the
Obligations in accordance with Section 2.06(b)(vii) and (viii);
c.any Disposition that constitutes (i) an Investment permitted under
Section 8.03, (ii) a Lien permitted under Section 8.02, (iii) a merger,
dissolution, consolidation or liquidation permitted under Section 8.04(a), or
(iv) a Restricted Payment permitted under Section 8.06;
d.such Disposition that results from a casualty or condemnation in respect of
such property or assets and all proceeds thereof are remitted to the Lender for
application in accordance with Section 2.06(b)(vii) and (viii);

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e.such Disposition that consists of the sale or discount in the Ordinary Course
of Business of overdue accounts receivable that are not Eligible Accounts but
only in connection with the compromise or collection thereof, provided that the
Net Cash Proceeds from such Disposition shall be deposited in the Concentration
Account;
f.Dispositions among the Loan Parties or by any Subsidiary to a Loan Party;
g.Dispositions by any Subsidiary which is not a Loan Party to another Subsidiary
that is not a Loan Party; and
h.Dispositions of assets other than Account or Inventory with respect to which
the fair market value of all such assets Disposed of, whether individually or in
a series of related transactions, does not exceed $250,000 in the aggregate in
any fiscal year.

8.6Restricted Payments. Declare or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except
that, in each case (except Section 8.06(a)) so long as no Default or Event of
Default shall have occurred and be continuing (both before or as a result of the
making of such Restricted Payment):
a.each Subsidiary may make Restricted Payments, directly or indirectly, to any
Borrower;
b.each Subsidiary that is not a Domestic Subsidiary may make Restricted Payments
to any other Subsidiary that is not a Domestic Subsidiary or any other Person
that owns an Equity Interest in such Subsidiary that is not a Domestic
Subsidiary ratably according to their respective holdings of the type of Equity
Interest in respect of which such Restricted Payment is being made;
c.the Company and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common Equity
Interests of such Person;
d.the Company and each of its Subsidiaries may purchase, redeem or otherwise
acquire shares of its common stock or other common Equity Interests or warrants
or options to acquire any such shares from employees in connection with
customary employee or management agreements, plans or arrangements, or in
connection with termination of employment, all in an aggregate amount not in
excess of $500,000 in any fiscal year;
e.the Company shall be permitted to make other Restricted Payments in the form
of cash dividends and distributions with respect to shares of its common stock
or other common Equity Interests if (i) (A) the aggregate amount of such
Restricted Payments in any fiscal year does not exceed $3,500,000, (B) the
Consolidated Fixed Charge Coverage Ratio (calculated on a pro forma basis giving
effect to such Restricted Payment as of the most recently ended Measurement
Period) shall be at least 1.20 to 1.00 and (C) pro forma Availability shall
exceed $7,500,000 for each day during the 30 day period prior to such Restricted
Payment and immediately after making such Restricted Payment, and (ii) at least
ten (10) Business Days prior to each such Restricted Payment, the Borrower Agent
has delivered a certificate to the Lender demonstrating compliance with each of
(A) through (C) above; and
f.the Company shall be permitted to make other Restricted Payments in the form
of cash purchases, redemptions or other acquisitions of shares of its common
stock or other common Equity Interests in any fiscal year up to an aggregate
amount not to exceed 5% of the total amount of such Equity Interests outstanding
on the first day of such fiscal year if (i) (A) the aggregate amount of such
Restricted Payments in any fiscal year not to exceed $3,500,000, (B) the
Consolidated Fixed Charge Coverage Ratio (calculated on a pro forma basis giving
effect to such Restricted Payment as of the most recently ended Measurement
Period) shall be at least 1.20 to 1.00 and (C) pro forma Availability shall
exceed $7,500,000 for each day during the 30 day period prior to such Restricted
Payment and immediately after making such Restricted Payment, and (ii) at least
ten (10) Business Days prior to each such Restricted Payment, the Borrower Agent
has delivered a certificate to the Lender demonstrating compliance with each of
(A) through (C) above.

8.7Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrowers
and their Subsidiaries on the date hereof or any business substantially related
or incidental thereto.

8.8Transactions with Affiliates. Enter into any transaction of any kind with any
Affiliate of any Loan Party, whether or not in the Ordinary Course of Business,
other than transactions on fair and reasonable terms substantially as favorable
to such Borrower or such Subsidiary as would be obtainable by such Borrower or
such Subsidiary at the time in a comparable arm’s length transaction with a
Person other than an Affiliate, provided that the foregoing restriction shall
not apply to transactions between or among the Loan Parties.

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8.9Burdensome Agreements. Enter into any Contractual Obligation (other than this
Agreement or any other Loan Document) otherwise permitted under this Agreement
or the other Loan Documents that:
a.requires the grant of a Lien on any assets of any Loan Party to secure an
obligation of such Person if a Lien is granted to secure another obligation of
such Person; or
b.limits the ability (i) of any Subsidiary to make Restricted Payments to the
Company or any Borrower or to otherwise transfer property to the Company or any
Borrower, (ii) of any Subsidiary to guarantee the Indebtedness of the Borrowers
or become a direct Borrower hereunder, or (iii) of any Borrower or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person; provided, however, that this clause (iii) shall not prohibit any
negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under Section 8.01(e) solely to the extent any such negative pledge
relates to the property financed by or the subject of such Indebtedness.

8.10Use of Proceeds. Use the proceeds of any Credit Extension, whether directly
or indirectly, and whether immediately, incidentally or ultimately, in any
manner that might cause the Credit Extension or the application of such proceeds
to violate Regulations T, U or X of the FRB, in each case as in effect on the
date or dates of such Credit Extension and such use of proceeds.

8.11Prepayment of Indebtedness; Amendment to Material Agreements.
a.Prepay, redeem, purchase, repurchase, defease or otherwise satisfy prior to
the scheduled maturity thereof any Indebtedness, or make any payment in
violation of any subordination terms thereof, including in each case pursuant to
any change of control, sale of assets, issuance of any equity or otherwise as
may be set forth in the terms thereof or available to the Borrowers at its
option, except, so long as no Default or Event of Default shall exist prior to
or immediately thereafter, prepayments, redemptions, purchases, repurchases,
defeasances or other satisfaction (each a “Prepayment”) of:
i.Indebtedness refinanced with the proceeds of any permitted Subordinated Debt;
ii.Indebtedness refinanced in accordance with Section 8.01(b) and containing
terms and conditions (including terms of subordination, security and maturity)
no less favorable in any material respect to the Lender than the Indebtedness
subject to such Prepayment; and
iii.other Indebtedness so long as (A) the aggregate amount of such Prepayments
in any fiscal year not to exceed $3,500,000, (B) the Consolidated Fixed Charge
Coverage Ratio (calculated on a pro forma basis giving effect to such Prepayment
as of the most recently ended Measurement Period) shall be at least 1.20 to 1.00
and (C) pro forma Availability shall exceed $7,500,000 for each day during the
30 day period prior to such Prepayment and immediately after making such
Prepayment, and (ii) at least ten (10) Business Days prior to each such
Prepayment, the Borrower Agent has delivered a certificate to the Lender
demonstrating compliance with each of (A) through (C) above.
b.Amend, modify or change in any manner any term or condition of any document
evidencing or governing Subordinated Debt in any manner resulting in terms and
conditions that are less favorable in any material respect to the Lender than
the terms and conditions of such Indebtedness as of the Closing Date, including
terms of recourse, guarantees or credit support being less favorable to the
Lender than the terms of such Indebtedness as of the Closing Date.

8.12Financial Covenants.
a.Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio as of the last day of the Measurement Period most recently ended
before the commencement of a Fixed Charge Coverage Trigger Period and (ii) the
last day of each Measurement Period thereafter ending during any Fixed Charge
Coverage Trigger Period to be less than 1.00 to 1.00.
b.Minimum Availability. Permit Availability to be less than $1,000,000 at any
time.

8.13Creation of New Subsidiaries. Create or acquire any new Domestic Subsidiary
after the Closing Date except in compliance with Section 7.12.

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8.14Securities of Subsidiaries. Permit any Domestic Subsidiary to issue any
Equity Interests (whether for value or otherwise) to any Person other than a
Loan Party.

8.15Sale and Leaseback. Except for any Permitted Sale Leaseback Transaction,
enter into or permit any Subsidiary to, enter into any agreement or arrangement
with any other Person providing for the leasing by any Loan Party or any of the
Subsidiaries of real or personal property which has been or is to be sold or
transferred by any Loan Party or any of the Subsidiaries to such other Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of a Loan Party or any of
the Subsidiaries.

8.16Operating Leases. Maintain or enter into, or permit any Domestic Subsidiary
to maintain or enter into, any operating lease or similar contractual
arrangement as lessee (other than leases in which a Loan Party is the lessor) if
the aggregate Lease Payments under all such leases in any current or future
fiscal year would exceed $2,000,000 or such other amount as may from time to
time be approved by Lender in writing.

8.17Organization Documents; Fiscal Year. Without obtaining the prior written
consent of the Lender ,(a) amend, modify or otherwise change any of its
Organization Documents in any material respect, except in connection with a
transaction permitted under Section 8.04, but in any case not in any manner that
could have a material adverse effect on the interests of the Credit Parties, or
(b) change, or permit any Subsidiary of any Borrower to change its fiscal year
end to a date other than January 31.

8.18Domestic Holding Company Covenant. Cause each Domestic Holding Company not
to engage in any business activities, hold any assets or incur any Indebtedness
other than (i) acting solely as a holding company and transactions incidental
thereto, including maintaining policies of insurance with respect to directors
and officers liability and other insurable risks customary for similarly
situated companies, (ii) receiving and distributing the dividends, distributions
and payments permitted to be made pursuant to Section 8.06, (iii) entering into
engagement letters and similar type contracts and agreements with attorneys,
accountants and other professionals in connection with activities permitted
elsewhere in this Section 8.18, (iv) owning the Equity Interests of Subsidiaries
that are not Domestic Subsidiaries and certain intercompany loans permitted by
Section 8.03, and (v) holding nominal deposits not greater than $100,000 in the
aggregate for all Interim Holding Companies in deposit accounts in connection
with any activities permitted in this Section 8.18.

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

9.1Events of Default. Any of the following shall constitute an Event of Default:
(a)Non-Payment. Any Borrower fails to pay when and as required to be paid
herein, any Obligation; or
(b)Specific Covenants. Any Loan Party fails to perform or observe any term,
covenant or agreement contained (i) in any of Sections 7.01(a), 7.01(b),
7.02(a), 7.03, 7.05, 7.07, 7.10(a), or 7.11 or ARTICLE VIII, or (ii) in any of
Sections 4.04(a), 7.02(b) or 7.02(c) and such failure continues for three (3) or
more Business Days; or
(c)Other Defaults. Any Loan Party fails to perform or observe any other covenant
or agreement (not specified in subsection (a) or (b) above) contained in any
Loan Document on its part to be performed or observed and such failure continues
for thirty (30) days after the earlier of (i) receipt of notice of such default
by a Responsible Officer of the Borrower Agent from the Lender, or (ii) any
Responsible Officer of any Loan Party becomes aware of such default; or
(d)Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Loan Party or
its Subsidiaries herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
when made or deemed made in any material respect; or
(e)Cross-Default. (i) With respect to any Indebtedness or guarantee (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn

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committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $1,250,000,
any Loan Party or its Subsidiaries (A) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise, and after passage of any grace period) in respect of any such
Indebtedness or guarantee, or (B) fails to observe or perform any other
agreement or condition relating to any such Indebtedness or guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, and such default continues for more than the
grace or cure period, if any, therein specified, the effect of which default or
other event is to cause, or to permit the holder of such Indebtedness or
beneficiary of such guarantee (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such Indebtedness
to be demanded or to become due or to be repurchased, prepaid, defeased or
redeemed (automatically or otherwise), or an offer to repurchase, prepay,
defease or redeem such Indebtedness to be made, prior to its stated maturity, or
such guarantee to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an Early Termination Date
(as defined in such Swap Contract) resulting from (A) any event of default under
such Swap Contract as to which any Loan Party or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event
(as so defined) under such Swap Contract as to which any Loan Party or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by a Loan Party or any Subsidiary as a result thereof is
greater than Threshold Amount;
(f)Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the
institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for sixty
(60) calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for
sixty (60) calendar days, or an order for relief is entered in any such
proceeding; or
(g)Inability to Pay Debts; Attachment. (i) Any Loan Party admits in writing its
general inability to pay its debts as they become due, (ii) any writ or warrant
of attachment or execution or similar process is issued or levied against all or
any material part of the property of any Loan Party and is not released, vacated
or fully bonded within sixty (60) days after its issue or levy; (iii) any Loan
Party is enjoined, restrained or in any way prevented by any Governmental
Authority from conducting any material part of its business; (iv) any Loan Party
suffers the loss, revocation or termination of any material license, permit,
lease or agreement necessary to its business; (v) there is a cessation of any
material part of any Loan Party’s business for a material period of time; or
(vi) any material Collateral or material property or assets of a Loan Party is
taken or materially impaired through condemnation; or
(h)Judgments. There is entered against any Loan Party (i) one or more final
judgments or orders for the payment of money in an aggregate amount exceeding
Threshold Amount (to the extent not covered by insurance as to which the insurer
does not dispute coverage), or (ii) any one or more non-monetary final judgments
that have, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, such judgment or order
remains unvacated and unpaid and either (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period
of 30 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or
(i)ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of Threshold
Amount, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of Threshold Amount; or
(iii) the benefit liabilities of all Plans governed by Foreign Benefit Laws, or
the funding of which are regulated by any Foreign Benefit Laws, at any time
exceed all such Plans’ assets, as computed in accordance with applicable Law as
of the most recent valuation date for such Plans, by more than Threshold Amount;
or
(j)Invalidity of Loan Documents. Any material provision of any material Loan
Document, or any material Lien granted thereunder, at any time after its
execution and delivery and for any reason, other than as expressly permitted
hereunder or upon Payment in Full of all Obligations, ceases to be in full force
and effect (except with respect to immaterial assets); or any Loan Party or any
other Person contests in any manner the validity or

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enforceability of any material Loan Document or any material Lien granted to the
Lender pursuant to the Security Instruments; or any Loan Party denies that it
has any or further liability or obligation under any material Loan Document, or
purports to revoke, terminate or rescind any material Loan Document; or
(k)Indictment. (i) Any Loan Party is (A) criminally indicted or convicted of a
felony for fraud or dishonesty in connection with the Loan Parties’ business, or
(B) charged by a Governmental Authority under any law that would reasonably be
expected to lead to forfeiture of any material portion of Collateral, or
(ii) any director or senior officer of any Loan Party is (A) criminally indicted
or convicted of a felony for fraud or dishonesty in connection with the Loan
Parties’ business, unless such director or senior officer promptly resigns or is
removed or replaced or (B) charged by a Governmental Authority under any law
that would reasonably be expected to lead to forfeiture of any material portion
of Collateral; or
(l)Permitted Subordinated Debt. The subordination provisions relating to any
Subordinated Debt (the “Subordination Provisions”) shall fail to be enforceable
by the Lender (provided the Lender has not effectively waived the benefits
thereof) in accordance with the terms thereof or any Loan Party or any of its
Subsidiaries shall, directly or indirectly, disavow or contest in any manner
(i) the effectiveness, validity or enforceability of any of the Subordination
Provisions, or (ii) that any of such Subordination Provisions exist for the
benefit of the Lender; or
(m)Uninsured Loss. A loss, theft, damage or destruction occurs with respect to
any Collateral if the amount not covered by insurance exceeds Threshold Amount;
or
(n)Change of Control. There occurs any Change of Control.

9.2Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Lender may take any or all of the following actions:
(a)declare the commitment of the Lender to make Loans and any obligation of the
Lender to make Letter of Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;
(b)declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers;
(c)require that the Borrowers Cash Collateralize the Letter of Credit
Obligations or any other Obligations that are contingent or not yet due and
payable, in each case, in amount determined by the Lender in accordance with
this Agreement; and
(d)exercise on behalf of itself and the Lender all rights and remedies available
to it and the Lender under the Loan Documents or applicable Law;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Borrower under the Bankruptcy Code of the
United States, the obligation of the Lender to make Loans and any obligation of
the Lender to make Letter of Credit Extensions shall automatically terminate,
the unpaid principal amount of all outstanding Loans and all interest and other
amounts owing under the Loan Documents shall automatically become due and
payable, and the Borrowers shall be obligated to Cash Collateralize the Letter
of Credit Obligations, in each case without further act of the Lender.
No remedy herein is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of Law.
9.3License. The Lender is hereby granted an irrevocable, non‑exclusive license
or other right to use, license or sub‑license (without payment of royalty or
other compensation to any Person) any or all Intellectual Property of Loan
Parties, computer hardware and software, trade secrets, brochures, customer
lists, promotional and advertising materials, labels, packaging materials and
other Property, all in connection with the enforcement of remedies after an
Event of Default, including in advertising for sale, marketing, selling,
collecting, completing manufacture of, or otherwise exercising any rights or
remedies with respect to any Collateral after an Event of Default.

9.4Limitation of Remedies. Notwithstanding anything to the contrary contained in
this Agreement, if any enforceable term of any promissory note, contract,
agreement, permit, lease, license (including any licenses of any Intellectual
Property) or other General Intangible included as a part of the Collateral,
other than Accounts, requires

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the consent of the Person obligated on such promissory note or any Person (other
than the applicable obligor) obligated on such lease, contract or agreement, or
which has issued such permit or license or other General Intangible, other than
Accounts, for the assignment or transfer thereof or the enforcement of such Lien
not to give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination or other material remedy thereunder, then the
receipt of any such necessary consent shall be a condition to any exercise of
remedies against such Collateral under this Section 9 (but not to the creation,
attachment or perfection of the Lien of the Lender for the benefit of the Credit
Parties as provided herein).

ARTICLE X

MISCELLANEOUS

10.1Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrowers or
any other Borrower therefrom, shall be effective unless in writing signed by the
Lender and the Borrowers or the applicable Borrower, as the case may be. Each
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.

10.2Notices; Effectiveness; Electronic Communication.
a.Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone or in the case of notices otherwise
expressly provided herein (and except as provided in subsection (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:
i.If to a Loan Party or the Lender, to the address, telecopier number,
electronic mail address or telephone number specified for such Person below, as
changed pursuant to subsection (c) below:
(x) If to the Lender:
BMO Harris Bank N.A.

111 West Monroe
Chicago, Illinois 60603
Attention: Terrence McKenna
Facsimile No.: 312.765.1641

With a copy to:    McGuireWoods LLP
77 West Wacker Drive, Suite 4100
Chicago, IL 60601-1818
Attention: Wade Kennedy, Esq.
Telephone: 312.750.5748
Facsimile No.: 312.698.4530

(y) If to a Loan Party:
MFRI, Inc.

7720 North Lehigh Avenue
Niles, Illinois 60714
Attention: Karl J. Schmidt
Telephone: 847.929.1206
Facsimile No.: 847.910.1310

With a copy to:
DLA Piper LLP (US)

203 North LaSalle Street, Suite 1900
Chicago, Illinois 60601
Attention: James M. Phipps, Esq.
Telephone No.: 312.368.4088
Facsimile No.: 312.251.5735

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Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
b.Electronic Communications. Notices and other communications to the Lender
hereunder may be delivered or furnished by electronic communication (including
email and Internet or intranet websites) pursuant to procedures approved by the
Lender. The Lender or the Borrowers may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such procedures
may be limited to particular notices or communications.

Unless the Lender otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
c.Change of Address, Etc. Each of the Borrowers and the Lender may change its
address, telephone number, facsimile number or email address for notices and
other communications hereunder by notice to the other parties hereto.
d.Reliance by the Lender. The Lender shall be entitled to rely and act upon any
notices (including telephonic Committed Loan Notices) purportedly given by or on
behalf of the Borrowers even if (i) such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other
form of notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Borrowers shall indemnify
the Lender and the Related Parties of each of them from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrowers. All telephonic
notices to and other telephonic communications with the Lender may be recorded
by the Lender, and each of the parties hereto hereby consents to such recording.

10.3No Waiver; Cumulative Remedies. No failure by the Lender to exercise, and no
delay by any such Person in exercising, 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. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

10.4Expenses; Indemnity; Damage Waiver.
a.Costs and Expenses. The Borrowers shall pay all reasonable out-of-pocket
expenses (including any Extraordinary Expenses) incurred by the Lender and its
respective Affiliates, (A) in connection with this Agreement and the other Loan
Documents, including without limitation the reasonable fees, charges and
disbursements of (1) counsel for the Lender, (2) outside consultants for the
Lender, (3) appraisers (subject to Section 7.10), (4) Field Exams (subject to
Section 7.10), (5) all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of the Obligations, and
(6) environmental site assessments, (B) in connection with (1) the syndication
of the credit facilities provided for herein, (2) the preparation, negotiation,
administration, management, execution and delivery of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (3) the enforcement or protection of their rights
in connection with this Agreement or the Loan Documents or efforts to preserve,
protect, collect, or enforce the Collateral, or (4) any workout, restructuring

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or negotiations in respect of any Obligations; provided that such expenses under
clause (A) and (B) above as of the Closing Date shall not exceed $65,000 in the
aggregate.
b.Indemnification by the Loan Parties. Each Loan Party shall indemnify the
Lender (and any agent thereof), each other Credit Party and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold harmless each Indemnitee from, any and all losses, claims,
damages, liabilities and related expenses (including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee), incurred by any
Indemnitee or in connection with any investigative administrative or judicial
proceeding that may at any time (including, without limitation, at any time
following the payment of the Obligations) be asserted against any Indemnitee by
any third party or by the Borrowers or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder, the consummation of the transactions
contemplated hereby or thereby or, in the case of the Lender (and any agent
thereof) and its Related Parties only, the administration of this Agreement and
the other Loan Documents (including in respect of any matters addressed in
Section 4.01), (ii) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by the Lender to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by any Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Loan
Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any
Credit Party to, a Controlled Account Bank or other Person which has entered
into a Control Agreement with any Credit Party hereunder or (v) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrowers or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by the Borrowers or any other Loan Party against
an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if such Borrower or such other Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.
c.Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable Law, the Loan Parties shall not assert, and hereby waive, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby, except to the extent arising from such Indemnified Party’s bad faith,
gross negligence or willful misconduct as determined by a court of competent
jurisdiction by a final and non-appealable judgment.
d.Payments. All amounts due under this Section shall be payable not later than
ten Business Days after demand therefor.
e.Survival. The agreements in this Section shall survive the occurrence of the
Facility Termination Date.

10.5Marshalling; Payments Set Aside. The Lender shall not be under any
obligation to marshal any assets in favor of any Loan Party or against any
Obligations. To the extent that any payment by or on behalf of any Loan Party is
made to a Credit Party, or a Credit Party exercises its right of setoff, and
such payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by such Credit Party in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such setoff had not occurred.

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10.6Successors and Assigns.
a.Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Lender. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in subsection (c) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Credit Parties) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
b.Participations. The Lender may at any time, without the consent of, or notice
to, any Borrower, sell participations to any Person (other than a natural person
or any Borrower or any of the Borrowers’ Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of the Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Credit Commitment and/or
the Loans (including the Lender’s participations in Letter of Credit
Obligations) owing to it); provided that (i) the Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrowers shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement and
(iv) no Participant shall be granted any right to consent to any amendment,
except to the extent any of the same pertain to (1) reducing the aggregate
principal amount of, or interest rate on, or fees applicable to, any Loan or
(2) extending the final stated maturity of any Loan or the stated maturity of
any portion of any payment of principal of, or interest of fees applicable to,
any of the Loans; provided that the rights described in this subclause (2) shall
not be deemed to include the right to consent to any amendment with respect to
or which has the effect of requiring any mandatory prepayment of any portion of
any Loan or any amendment or waiver of any Default or Event of Default.

10.7Treatment of Certain Information; Confidentiality.
a.Each of the Credit Parties agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
trustees, officers, employees, agents, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrowers and their obligations, (g) with
the consent of the Borrower Agent or (h) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this
Section or (y) becomes available to the Credit Parties or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Loan Parties, provided that such source is not actually known by the such Credit
Party to be bound by, and in violation of, a confidentiality agreement with the
Borrower or another Loan Party.
b.For purposes of this Section, “Information” means all information received
from any Loan Party or any Subsidiary relating to a Loan Party or any Subsidiary
or any of their respective businesses, other than any such information that is
available to any Credit Party on a nonconfidential basis prior to disclosure by
a Loan Party or any Subsidiary, provided that, in the case of information
received from a Loan Party or any Subsidiary after the date hereof, any
information not marked “PUBLIC” at the time of delivery will be deemed to be
confidential; provided, that any information marked “PUBLIC may also be marked
“Confidential”. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
c.Each of the Credit Parties acknowledges that (a) the Information may include
material non-public information concerning a Loan Party or a Subsidiary, as the
case may be, (b) it has developed compliance

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procedures regarding the use of material non-public information and (c) it will
handle such material non-public information in accordance with applicable Law,
including Federal and state securities Laws.
d.Each of the Loan Parties hereby authorize the Lender to publish the name of
any Loan Party and the amount of the credit facility provided hereunder in any
“tombstone” or comparable advertisement which the Lender elects to publish. The
Lender reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.

10.8Right of Setoff. At any time during the continuance of an Event of Default,
the Lender and its Affiliates are authorized, to the fullest extent permitted by
applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by the Lender or such
Affiliate to or for the credit or the account of a Loan Party against any
Obligations, irrespective of whether or not the Lender of such Affiliate shall
have made any demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or are owed to a branch
or office of the Lender or such Affiliate different from the branch or office
holding such deposit or obligated on such indebtedness. The rights of the Lender
and each such Affiliate under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Person may have.

10.9Interest Rate Limitation. Notwithstanding anything to the contrary contained
in any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable Law (the “Maximum Rate”). If the Lender shall receive interest in
an amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Loans or, if it exceeds such unpaid principal, refunded to
the Borrowers. In determining whether the interest contracted for, charged, or
received by the Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

10.10Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

10.11Survival. All representations and warranties made hereunder and in any
other Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof
and thereof and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding and the Facility Termination Date shall not
have occurred. Such representations and warranties have been or will be relied
upon by the Credit Parties, regardless of any investigation made by any Credit
Party or on their behalf and notwithstanding that any Credit Party may have had
notice or knowledge of any Default at the time of any Credit Extension.

Further, the provisions of Sections 3.01, 3.04, and 3.05 and ARTICLE X shall
survive and remain in full force and effect regardless of the repayment of the
Obligations, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
10.12Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

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10.13Governing Law; Jurisdiction; Etc.
a.GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.
b.SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS SITTING IN COOK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE NORTHERN DISTRICT OF ILLINOIS, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH ILLINOIS STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE LENDER, MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWERS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.
c.WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.
d.SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AND ITS OTHER
NOTICE PARTIES AT THE THEN EFFECTIVE ADDRESSES FOR SUCH PARTY AND OTHER NOTICE
PARTIES UNDER SECTION 10.02 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON SUCH PARTY’S ACTUAL RECEIPT THEREOF. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.14Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.15Electronic Execution of Assignments and Certain Other Documents. The words
“execution,” “signed,” “signature,” and words of like import in any Assignment
and Assumption or in any amendment or other modification hereof (including
waivers and consents) shall be deemed to include electronic signatures or the
keeping of records in electronic form, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use
of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable Law, including the Federal Electronic Signatures
in Global and National Commerce Act or any Illinois or other state laws based on
the Uniform Electronic Transactions Act.

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10.16USA PATRIOT Act Notice. The Lender hereby notifies the Borrowers 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 Borrowers, which information
includes the name and address of the Borrowers and other information that will
allow the Lender to identify the Borrowers in accordance with the Act.

10.17No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Loan Party acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) (A) the arranging and other services regarding this
Agreement provided by the Credit Parties are arm’s-length commercial
transactions between each Loan Party, on the one hand, and the Credit Parties,
on the other hand, (B) each Loan Party has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and
(C) each Loan Party is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) each Credit Party is and has been acting solely
as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for any Loan Party or any of its Affiliates or any other Person and
(B) no Credit Party has any obligation to any Loan Party or any of its
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents,
(iii) the Credit Parties may be engaged in a board range of transactions that
involve interests that differ from those of the Loan Parties and their
Affiliates, and no Credit Party has any obligation to disclose any of such
interests to any Loan Party or its Affiliates and (iv) the Credit Parties have
not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to any of the transactions contemplated hereby (including
any amendment, waiver or other modification hereof or of any other Loan
Document) and each of the Loan Parties has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate. To the
fullest extent permitted by law, each Loan Party hereby waives and releases any
claims that it may have against any Credit Party with respect to any breach or
alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

10.18Attachments. The exhibits, schedules and annexes attached to this Agreement
are incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein; except, that, in the event of any conflict between any
of the provisions of such exhibits and the provisions of this Agreement, the
provisions of this Agreement shall prevail.

ARTICLE XI

CONTINUING GUARANTY

11.1Guaranty. Each Subsidiary Guarantor hereby absolutely and unconditionally
guarantees, as a guaranty of payment and performance and not merely as a
guaranty of collection, prompt payment when due, whether at stated maturity, by
required prepayment, upon acceleration, demand or otherwise, and at all times
thereafter, of any and all of the Obligations except as Excluded Swap
Obligations, whether for principal, interest, premiums, fees, indemnities,
damages, costs, expenses or otherwise, of the Borrowers to the Credit Parties,
arising hereunder or under any other Loan Document (including all renewals,
extensions, amendments, refinancings and other modifications thereof and all
costs, attorneys’ fees and expenses incurred by the Credit Parties in connection
with the collection or enforcement thereof). The Lender’s books and records
showing the amount of the Obligations shall be admissible in evidence in any
action or proceeding, and shall be binding upon each Subsidiary Guarantor, and
conclusive for the purpose of establishing the amount of the Obligations. This
Guaranty shall not be affected by the genuineness, validity, regularity or
enforceability of the Obligations or any instrument or agreement evidencing any
Obligations, or by the existence, validity, enforceability, perfection,
non-perfection or extent of any collateral therefor, or by any fact or
circumstance relating to the Obligations which might otherwise constitute a
defense to the obligations of any Subsidiary Guarantor under this Guaranty, and
each Subsidiary Guarantor hereby irrevocably waives any defenses it may now have
or hereafter acquire in any way relating to any or all of the foregoing.

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11.2Rights of the Lender. Each Subsidiary Guarantor consents and agrees that the
Credit Parties may, at any time and from time to time, without notice or demand,
and without affecting the enforceability or continuing effectiveness hereof:
(a) amend, extend, renew, compromise, discharge, accelerate or otherwise change
the time for payment or the terms of the Obligations or any part thereof;
(b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or
otherwise dispose of any security for the payment of this Guaranty or any
Obligations; (c) apply such security and direct the order or manner of sale
thereof as the Lender in their sole discretion may determine; and (d) release or
substitute one or more of any endorsers or other guarantors of any of the
Obligations. Without limiting the generality of the foregoing, each Subsidiary
Guarantor consents to the taking of, or failure to take, any action which might
in any manner or to any extent vary the risks of any Subsidiary Guarantor under
this Guaranty or which, but for this provision, might operate as a discharge of
any Subsidiary Guarantor.

11.3Certain Waivers. Each Subsidiary Guarantor waives (a) any defense arising by
reason of any disability or other defense of the Borrowers or any other
guarantor, or the cessation from any cause whatsoever (including any act or
omission of any Credit Party) of the liability of the Borrowers; (b) any defense
based on any claim that any Subsidiary Guarantor’s obligations exceed or are
more burdensome than those of the Borrowers; (c) the benefit of any statute of
limitations affecting any Subsidiary Guarantor’s liability hereunder; (d) any
right to proceed against the Borrowers, proceed against or exhaust any security
for the Obligations, or pursue any other remedy in the power of any Credit Party
whatsoever; (e) any benefit of and any right to participate in any security now
or hereafter held by any Credit Party; and (f) to the fullest extent permitted
by law, any and all other defenses or benefits that may be derived from or
afforded by applicable Law limiting the liability of or exonerating guarantors
or sureties. Each Subsidiary Guarantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Obligations, and all notices of acceptance of this Guaranty or of
the existence, creation or incurrence of new or additional Obligations.

11.4Obligations Independent. The obligations of each Subsidiary Guarantor
hereunder are those of primary obligor, and not merely as surety, and are
independent of the Obligations and the obligations of any other guarantor, and a
separate action may be brought against each Subsidiary Guarantor to enforce this
Guaranty whether or not any Borrower or any other person or entity is joined as
a party.

11.5Subrogation. No Subsidiary Guarantor shall exercise any right of
subrogation, contribution, indemnity, reimbursement or similar rights with
respect to any payments it makes under this Guaranty until the Facility
Termination Date. If any amounts are paid to any Subsidiary Guarantor in
violation of the foregoing limitation, then such amounts shall be held in trust
for the benefit of the Credit Parties and shall forthwith be paid to the Credit
Parties to reduce the amount of the Obligations, whether matured or unmatured.

11.6Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Obligations now or hereafter existing and shall remain in full
force and effect until the Facility Termination Date. Notwithstanding the
foregoing, this Guaranty shall continue in full force and effect or be revived,
as the case may be, if any payment by or on behalf of the Borrowers or any
Subsidiary Guarantor is made, or any of the Credit Parties exercises its right
of setoff, in respect of the Obligations and such payment or the proceeds of
such setoff or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by any of the Credit Parties in their discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Laws or otherwise, all as if such payment had
not been made or such setoff had not occurred and whether or not the Credit
Parties are in possession of or have released this Guaranty and regardless of
any prior revocation, rescission, termination or reduction. The obligations of
each Subsidiary Guarantor under this paragraph shall survive termination of this
Guaranty.

11.7Subordination. Each Subsidiary Guarantor hereby subordinates the payment of
all obligations and indebtedness of the Borrowers owing to each Subsidiary
Guarantor, whether now existing or hereafter arising, including but not limited
to any obligation of the Borrowers to any Subsidiary Guarantor as subrogee of
the Credit Parties or resulting from any Subsidiary Guarantor’ performance under
this Guaranty, to the Payment in Full of all Obligations. If the Credit Parties
so request, any such obligation or indebtedness of the Borrowers to any
Subsidiary Guarantor

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shall be enforced and performance received by any Subsidiary Guarantor as
trustee for the Credit Parties and the proceeds thereof shall be paid over to
the Credit Parties on account of the Obligations, but without reducing or
affecting in any manner the liability of any Subsidiary Guarantor under this
Guaranty.

11.8Stay of Acceleration. If acceleration of the time for payment of any of the
Obligations is stayed, in connection with any case commenced by or against any
Subsidiary Guarantor or the Borrowers under any Debtor Relief Laws, or
otherwise, all such amounts shall nonetheless be payable by each Subsidiary
Guarantor immediately upon demand by the Credit Parties.

11.9Condition of Borrowers. Each Subsidiary Guarantor acknowledges and agrees
that it has the sole responsibility for, and has adequate means of, obtaining
from the Borrowers and any other guarantor such information concerning the
financial condition, business and operations of the Borrowers and any such other
guarantor as each Subsidiary Guarantor requires, and that none of the Credit
Parties has any duty, and no Subsidiary Guarantor is relying on the Credit
Parties at any time, to disclose to any Subsidiary Guarantor any information
relating to the business, operations or financial condition of the Borrowers or
any other guarantor each Subsidiary Guarantor waiving any duty on the part of
the Credit Parties to disclose such information and any defense relating to the
failure to provide the same).

[Remainder of page is intentionally left blank; signature page(s) follows.]

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(Signature Page to Loan and Security Agreement)

 
 
MFRI, INC.

By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
MIDWESCO FILTER RESOURCES, INC.

By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
PERMA‑PIPE, INC.
By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
TC NILES, INC.

By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
TDC FILTER MANUFACTURING, INC.

By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
MM NILES, INC.

By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
PERMA‑PIPE INTERNATIONAL COMPANY, LLC.
By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer
 
 
 
 
 
PERMA‑PIPE CANADA, INC.
By: /s/ Karl J. Schmidt
 
 
Karl J. Schmidt
 
 
Vice President and Chief Financial Officer

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

 
 
 
 
 
BMO Harris Bank, N.A.,
By: /s/ Terrance McKenna Jr.
 
 
Name: Terrance McKenna Jr.
 
 
Title: Vice President

 
 
 

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

FINAL

SCHEDULE 1.01

Existing Letters of Credit

Beneficiary
Maximum 
Value
Amount Drawn
Issuing Bank
Description
Hartford Workman’s Comp
$25,000
$0
Bank of America
Hartford Workman’s Comp
(ASL-3014371-130MF3)
State Bank of India
$39,199
$0
Bank of America
State Bank of India –
Warranty
(68076479)
STX Heavy  Industries Co.
$44,228
$0
Bank of America
STX Heavy Industries Co. (68090658)

SCHEDULE 1.02

Excluded Subsidiaries

None.

SCHEDULE 4.02

Pledged Interests

Grantor
Issuer
Aggregate  Outstanding Equity  Interests
Number (or percentage) of Pledged  Equity  Interests
Certificate No. (if  any)
MFRI, Inc.
Midwesco Filter Resources, Inc.
100 shares
100%
R-1
MFRI, Inc.
Perma-Pipe, Inc.
100 shares
100%
1
Midwesco Filter
Resources, Inc.
TDC Filter Manufacturing, Inc.
10 shares of Common Stock
100%
R-4
Perma-Pipe, Inc.
Perma-Pipe Canada, Inc.
100 shares of Common Stock
100%
R-1
MFRI, Inc.
TC Niles Corporation
1,000 shares
100%
2
MFRI, Inc.
MM Niles Corporation
10 shares
100%
2

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

SCHEDULE 4.06
Information Regarding Collateral

Loan Party
Jurisdiction
Organizational Identification Number
Location of Chief Executive Office
Location of Material Goods
FMV of Collateral at Location

MFRI, Inc.
Delaware
2354631
7720 N. Lehigh
Avenue, Niles,
Illinois 60714

7720 N. Lehigh
Avenue, Niles,
Illinois 60714
N/A (Books and records)
Midwesco Filter
Resources, Inc.
Delaware
2,211,712
a.385 Battaile Drive
Winchester,VA 22601
b. 2508 Papermill Rd.
Winchester, Virginia 22601
N/A (Books and records)
Perma-Pipe, Inc.
Delaware
2,354,632
a. 5008 Curtis Lane
#11, New Iberia,
Louisiana 70560
b. 1310 Quarles
Drive, Lebanon,
Tennessee 37087

Value of goods stored ranges from $0 to $2,000,000 primarily finished WIP
awaiting shipment.
TDC Filter Manufacturing, Inc.
Delaware
2026249
2 Territorial Court,
Bolingbrook, IL 60440

Approximately $2,300,000
Perma-Pipe Canada, Inc.
Delaware
4,744,501
7720 N. Lehigh
Avenue, Niles,
Illinois 60714
N/A (Books and records)
TC Niles Corporation
Delaware
3074639
7720 N. Lehigh
Avenue, Niles,
Illinois 60714
N/A (Books and records)
MM Niles Corporation
Delaware
 
7720 N. Lehigh
Avenue, Niles,
Illinois 60714
N/A (Books and records)

CHANGES IN IDENTITY OR ORGANIZATIONAL STRUCTURE
1. TC Niles Corporation was formerly known as Thermal Care, Inc.
2. On April 30, 2013, MFRI, Inc. sold substantially all of the assets of Thermal
Care, Inc. to a subsidiary of IPEG, Inc.
3. MM Niles Corporation was formerly known as Midwesco Mechanical and Energy,
Inc.

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

SCHEDULE 5.01
Good Standing and Foreign Qualification Jurisdictions

Loan Party
Jurisdiction of  Organization & Type of Organization
Foreign  Qualifications
MFRI, Inc.
Delaware corporation
Illinois
Midwesco Filter Resources, Inc.
Delaware corporation
Illinois,
Louisiana, Oregon, Nevada, North Dakota, Virginia
Perma-Pipe, Inc.
Delaware corporation
California,
Illinois, Louisiana, Massachusetts, New Jersey, Tennessee
TDC Filter Manufacturing, Inc.
Delaware corporation
Illinois
Perma-Pipe Canada, Inc.
Delaware corporation
N/A
TC Niles Corporation
Delaware corporation
Illinois
MM Niles Corporation
Delaware corporation
Illinois

SCHEDULE 6.03
Governmental Authority
None.

SCHEDULE 6.06
Litigation
None.

SCHEDULE 6.08(b)(1)
Owned Real Estate Assets

Loan Party/Owner
Street Address
County 
Perma-Pipe, Inc.
5008 Curtis Lane #11,
New Iberia, Louisiana 70560
Iberia Parish
Perma-Pipe, Inc.
1310 Quarles Drive, Lebanon, Tennessee 37087
Wilson County
TDC Filter
Manufacturing, Inc
2 Territorial Court,
Bolingbrook, Illinois 60440
Will County
Midwesco Filter
Resources, Inc.
385 Battaile Drive,
Winchester, Virginia 22601
Winchester City
County

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

SCHEDULE 6.08(b)(2)
Leased Real Estate Assets

Loan 
Party 
/Tenant
Landlord
Street Address
County
Midwesco
Filter Resources, Inc.
Old National, LLC
114 Cameron St. Winchester, Virginia 22601
385 Battaile Drive
Winchester, Virginia 22601
Winchester City
County
Perma-
Pipe, Inc.
(1) Bayou Management
Services, L.L.C.
5200 Curtis Lane, New Iberia, Louisiana 70560 and
(2) ICM Investments
501 Emancipation Dr. Broussard, Louisiana
70518
5008 Curtis Lane
Vacant Lots 1-8 and 10-14 in Block
3 of Industrial Plaza
New Iberia, LA 70560
Iberia Parish
Perma-
Pipe, Inc.
Kilo Delta, Inc.
9284 Huntington Square, Suite 100
North Richland Hills, Texas 76182
9284 Huntington Square, Suite 100,
Office B, North Richland Hills, Texas 76182
Tarrant County
Perma-
Pipe, Inc.
24900 Pitkin, L.P.
c/o Stream Realty
15333, Suite 220
Houston, Texas 77032
24900 Pitkin, LP, Suite 325
Spring, Texas 77386
Harris County
Midwesco
Filter Resources, Inc.
Silverlake LLC
13 South London Street
Winchester, Virginia 22601
2508 Papermill Rd.
Winchester, Virginia 22601
Winchester City
County

SCHEDULE 6.09
Environmental Matters

None.

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

SCHEDULE 6.10
Insurance

Policy Number
Description
Insurer
Effective Date
Expiration Date
Limits
1011195763
Flood-office bldg, New Iberia
American Bankers
3/10/2014
3/10/2015
 $500,000 building/$500,000 contents
5061704
Credit Insurance
Euler Hermes
2/28/2014
2/28/2015
$1,400,000
18810530
Excess D&O xs $10 MIL
Illinois National
1/31/2014
1/31/2015
$10,000,000
81689116
D&O, EPLI, FID & K&R
Federal Insurance Company
1/31/2014
1/31/2015
 D&O: $10,000,000; EPLI: $3,000,000; Fid: $3,000,000; K&R: $2,000,000
G27103819001
Midwesco Filter - Pollution
Westchester Surplus Lines
1/21/2014
1/21/2015
$2,000,000
1011190326
Flood - Plant Bldg New Iberia
American Bankers
12/13/2013
12/13/2014
 $500,000 building/$500,000 contents
EN440
Property
Affiliated FM
11/1/2013
11/1/2014
$100,000,000
B0621M80768012
Terrorism-United Arab Emirates
Lloyds of London
11/1/2013
11/1/2014
$45,000,000
001828500
General Liability
Ironshore
11/1/2013
11/1/2014
 $1,000,000occ./ $2,000,000 agg.
G27091763
Pollution (Perma-Pipe, Inc.)
Westchester Surplus Lines
11/1/2013
11/1/2014
$2,000,000
NY13CGL120062IC
Midwesco Mechanical GL
Navigators
11/1/2013
11/1/2014
 $2,000,000 occ./ $3,000,000 agg.
1949737
Auto
National Union Fire Ins. Co.
11/1/2013
11/1/2014
 $1,000,000 CSL
WC29342308
All Other States Workers Comp.
Commerce & Industry
11/1/2013
11/1/2014
 $1,000,000/$1,000,000/$1,000 ,000
WC29342309
California Only - Workers Comp
Commerce & Industry
11/1/2013
11/1/2014
 $1,000,000/$1,000,000/$1,000 ,000
AUC655598603
Umbrella
American Guarantee
11/1/2013
11/1/2014
 $25,000,000 occ./$25,000,000 agg.
NHA065509
Excess Umbrella
RSUI Indemnity
11/1/2013
11/1/2014
 $24,000,000 occ./$24,000,000 agg.
01000153070
Flood - Lebanon, TN
Company
11/1/2013
11/1/2014
 $2,500,000 occ./$2,500,000 agg.

NAMED INSURED:
MFRI, Inc.
Midwesco Filter Resources, Inc.
TC Niles Corporation (fka Thermal Care, Inc.)
Perma-Pipe, Inc.
TDC Filter Manufacturing, Inc.
Midwesco Filter Cicero LLC
7720 Lehigh Property, LLC
Bayou Flow Technologies, LLC
MM Niles Corporation

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

SCHEDULE 6.11
Proposed Tax Assessments

None.

SCHEDULE 6.12(d)
Pension Plans

None.

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

SCHEDULE 6.13(a)
Subsidiaries

Loan Party
Subsidiaries
Jurisdiction of  Formation
Aggregate 
Outstanding
Equity Interests
Equity  Percentage
MFRI, Inc.
Midwesco Filter
Resources, Inc.
Delaware
100 shares
100%
Perma-Pipe, Inc.
Delaware
100 shares
100%
TC Niles
Corporation
Delaware
1,000 shares
100%
MM Niles
Corporation
Delaware
10 shares
100%
7720 LeHigh
Property, LLC
Illinois
LLC Interests
100%
MFRI Holdings
(B.V.I) Ltd.
British Virgin
Islands
1 share
100%
MFRI Luxembourg
SA
Luxembourg
42,000 shares
100%
Perma-Pipe, Inc.
Perma-Pipe Canada,
Inc.
Delaware
100 shares of Common Stock
100%
Midwesco Filter
Resources, Inc.
TDC Filter
Manufacturing, Inc.
Delaware
200 shares of Common Stock
100%
Midwesco Filter
Resources, Denmark
A/S
Denmark
7,000 shares
100%
Midwesco Filter
Cicero, LLC
Illinois
LLC Interests
100%
Perma-Pipe Canada, Inc.
Bayou Perma-Pipe
Canada, Ltd.
Alberta
Joint Venture Company
49%

SCHEDULE 6.13(b)
Other Equity Investments

None.

SCHEDULE 6.18
Labor Matters

None.

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

SCHEDULE 6.19
Deposit Accounts and Securities Accounts
Part (a)

Grantor
Pledged Account Name
Bank Name / Address

Type of Account
Pledged Account
TDC Filter Manufacturing, Inc
TDC Bolingbrook
Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole
brian.conole@baml.com

Lockbox
9429222803**
Perma-Pipe, Inc.
Perma Pipe DHC

Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole

Lockbox
9429222694**
Perma Pipe DHC

Bank of Montreal
100 King St. W-Main Floor
Toronto, Ontario M5X1A3
Attn: Wendy Chan
wendy.chan@bmo.com

CASH FOREIGN (CAD)

0002 1253-867
Perma Pipe DHC

JP Morgan Chase Bank, N.A.
P.O. Box 659754
San Antonio, Texas 78265-9754
CASH NILES
001115001012768*
Perma Pipe DHC

Wilson Bank and Trust
Lebanon, Tennessee
CASH LEBANON
202549*
Perma Pipe Oil & Gas
Capital One Bank
Branch 20
New Iberia, Louisiana
CASH NEW IBERIA
2081964656*
MFRI, Inc.
MFRI, Inc.
Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole
Op Cash Account / Drafts Payable
0080225356**

MFRI, Inc.
Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole
Master Operating

9429222926**

MFRI, Inc.
Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole
Blocked Depository

9429223240**

MFRI, Inc.
HSBC Bank USA
95 Washington St. 5N
Buffalo, New York 14203
To be closed

724002413*
MFRI, Inc.
Bank of America Merrill Lynch
P.O. Box 15284
Wilmington, Delaware 19850
Attn: Brian Conole
Flexible Spending

9429223144**

* Denotes Excluded Deposit Account.
**Account to be closed and open at the Lender.

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

Part (b)
None.

SCHEDULE 8.01
Existing Indebtedness

Borrower
Lender
Date
Principal
Amount
Outstanding Amount
(As of 07/31/14)
Maturity Date
Secured/
Collateral
Repaid at Closing
(Y/N)?
MFRI, Inc.
Bank of America
July 11, 2002, as amended
$25.0 million (which may be increased subject to performance levels)
$
15,713,199

November 30, 2016

Secured

All domestic assets
Y
MFRI, Inc.
Bank of America
July 11, 2002, as amended
$3.0 million
$
214,286

November 30, 2016
Secured

All domestic assets
Y
Perma-Pipe, Inc.
Wilson Bank & Trust
June 19, 2012
$1.8 million
$
1,582,026

July 1, 2027

Secured

manufacturing facility in Lebanon, Tennessee
N
TDC Filter Manufacturing, Inc.
EverBank Business Property Lending
March 4, 2008
$5.4 million
$
4,752,473

March 2033
Secured

Filtration Products manufacturing facility located in Bolingbrook Illinois
N
Perma-Pipe, Inc.
LaSalle Capital Lease
January 31, 2012
$1.2 million
$
654,046

January 2017
Secured

Equipment
N
MFRI, Inc.
Winthrop Resources Corporation – Captal Lease
Between 2011 and 2012
Lease payments will not start until the full line of approximately $250,000 is
fully utilized
between June 2014 and May 2015
Secured

IT Equipment
N

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

SCHEDULE 8.02
Existing Liens

DOMESTIC LIENS

 UCC FILE #
 FILE DATE
 SECURED PARTY
 FILING JURISDICTION:
 COLLATERAL:
 CURRENT THROUGH:
MFRI, Inc.
21638174
7/5/2002
 Bank of
 DE SOS
 All assets of Debtor
8/21/2014
 AS: 63201472
 AS: 08-28-
 America, N.A.,
 
 **For deleted goods see:
 
 CO: 2007
2006
 as Agent
 
 AM: 2010 1698178 – deletes certain goods –described
 
0250596
 CO: 01-16-
 
 
 on Exhibit A to AM
 
 AM: 2010
2007
 
 
 
 
1698178
 AM: 05-14-
 
 
 
 
 CO: 2012
2010
 
 
 
 
0215410
 CO: 01-18-
 
 
 
 
 
2012
 
 
 
 
21725872
7/15/2002
 Bank of
 DE SOS
 All equity interests in (i) Midwesco Filter Resources,
8/21/2014
 CO: 2007
 CO: 01-16-
 America, N.A.,
 
 Inc.,
 
0248145
2007
 as Agent
 
 (ii) Perma-Pipe, Inc. and (iii) Thermal Care, Inc.
 
 AS: 2007
 AS: 08-28-
 
 
 
 
3053195
2006
 
 
 
 
 CO: 2012
 CO: 01-18-
 
 
 
 
0215345
2012
 
 
 
 
 2009 3868871
11/25/2009
Winthrop Resources Corporation
 DE SOS
 Lease
8/21/2014
 2010 0185169
1/19/2010
Winthrop Resources Corporation
 DE SOS
 Leased equipment
8/21/2014
 2010 1496854 AM: 2010 3889908
 04-29-2010 AM: 11-05-10
 Winthrop Resources Corporation
 DE SOS
 Leased equipment
8/21/2014
 2010 1704315
5/14/2010
 Banc of America
 DE SOS
 Equipment under Master Loan and Security
8/21/2014
 AM: 2010
 AM: 07-14-
 Leasing &
 
 Agreement No. 21090-70000
 
2443103
2010
 Capital, LLC
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443319
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443715
2010
 
 
 
 

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

 AM: 2010
 AM: 07-14-
 
 
 
 
2451213
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451221
 2010 AM:
 
 
 
 
 AM: 2013
4/25/2013
 
 
 
 
1700013
 
 
 
 
 
 2010 2689374
8/3/2010
 Winthrop Resources Corporation
 DE SOS
 Leased equipment
8/21/2014
 2010 3715285
10/22/2010
 Winthrop Resources Corporation
 DE SOS
 Leased equipment
8/21/2014
 2011 1088684
3/24/2011
 CIT Communications Finance Corporation
 DE SOS
 Leased equipment
8/21/2014
 2011 4514793
11/25/2011
 Winthrop Resources
 DE SOS
 Leased equipment
8/21/2014
 2012 0382822
1/31/2012
 LaSalle Systems
 DE SOS
 Leased equipment
8/21/2014
 PA: 2012
 PA: 02-02-
 Leasing, Inc.
 
 
 
0623944
2012
 
 
 
 
 PA: 2012
 PA: 05-09-
 MB Financial
 
 
 
1969965
2012
 Bank, N.A.
 
 
 
 PA: 2012
 PA: 07-13-
 
 
 
 
2883181
2012
 MB Financial
 
 
 
 2013 1176339
3/27/2013
 Winthrop Resources Corporation
 DE SOS
 Leased equipment
8/21/2014
014943757
1/19/2010
 CIT
 IL SOS
 Leased equipment
8/26/2014
 
 
 Communications
 
 
 certified 09-
 
 
 Finance Corporation
 
 
 03-14
015742089
11/5/2010
 CIT Technology Financing Services, Inc.
 IL SOS
 Leased equipment
 08-26-14 certified 09-03-14
 Midwesco Filter Resources, Inc.
21638133
7/5/2002
 Bank of
 DE SOS
 All assets of Debtor.
8/21/2014
 AS: 63202009
 AS: 08-28-
 America, N.A.,
 
 **For deleted goods see:
 
 CO: 2007
2006
 as Agent
 
 AM: 01707847 – deletes certain goods –described on
 
0248269
 CO: 01-16-
 
 
 Exhibit A to AM
 
 AM: 2010
2007
 
 
 
 
1707821
 AM: 05-17-
 
 
 
 
 CO: 2012
2010
 
 
 
 
0215279
 CO: 01-18-
 
 
 
 
 
2012
 
 
 
 

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

21725849
7/15/2002
 Bank of
 DE SOS
 All equity interests in TDC Filter Manufacturing, Inc.,
8/21/2014
 AS: 63202082
 AS: 08-28-
 America, N.A.,
 
 whether constituting general intangibles or investment
 
 CO: 2007
2006
 as Agent
 
 property – see Exhibit A to UCC.
 
0248210
 CO: 01-16-
 
 
 
 
 CO: 2012
2007
 
 
 
 
0215204
 CO: 01-18-
 
 
 
 
 
2012
 
 
 
 
 2010 1704315*
5/14/2010
 Banc of America
 DE SOS
 Equipment under Master Loan and Security
8/21/2014
 AM: 2010
 AM: 07-14-
 Leasing &
 
 Agreement No. 21090-70000
 
2443103
2010
 Capital, LLC
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443319
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443715
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451213
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451221
 2010 AM:
 
 
 
 
 AM: 2013
4/25/2013
 
 
 
 
1700013
 
 
 
 
 
 Perma-Pipe, Inc.
21638182
7/5/2002
 Bank of
 DE SOS
 All assets of Debtor.
8/21/2014
 AM: 32168493
 AM: 08-04-
 America, N.A.,
 
 **For deleted personal property/goods see:
 
 AS: 63201886
2003
 as Agent
 
 AM: 32168493 – deletes personal property described
 
 CO: 2007
 AS: 08-28-
 
 
 in Lease Schedule No.001, dated 4-29-03, as
 
0248293
2006
 
 
 amended, to Master Lease Agreement No. AFI0334,
 
 AM: 2010
 CO: 01-16-
 
 
 dated 4-29-03, by & between Perma-Pipe, Inc., as
 
1707847
2007
 
 
 Lessee and Applied Financial, LLC, as Lessor
 

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

 CO: 2012
 AM: 05-17-
 
 
 AM: 01707847 – deletes certain goods –described on
 
0215154
2010
 
 
 Exhibit A to AM
 
 
 CO: 01-18- 2012
 
 
 
 
 60103036 CO: 2010 4168492
 01-04-2006 CO: 11-29-2010
 General Electric Capital Corporation
 DE SOS
 Leased equipment
8/21/2014
 2010 1704315*
5/14/2010
 Banc of America
 DE SOS
 Equipment under Master Loan and Security
8/21/2014
 AM: 2010
 AM: 07-14-
 Leasing &
 
 Agreement No. 21090-70000
 
2443103
2010
 Capital, LLC
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443319
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443715
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451213
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451221
 2010 AM:
 
 
 
 
 AM: 2013
4/25/2013
 
 
 
 
1700013
 
 
 
 
 
 2013 2336809
6/18/2013
 Konica Minolta Business Solutions USA, Inc.
 DE SOS
 Leased Equipment
8/21/2014
014694994
10/15/2009
 CIT Technology Financing Services, Inc.
 IL SOS
 Leased Equipment
 08-26-14 certified listing as of 09-03-14
 DT – Book 1492, Pages 1363-1376, Wilson County
 
 
 TN, Wilson County Recorder
 1 Deed of Trust (23.8 acres)
8/26/2014
 Register of Deeds
 
 
 
 
 
 TC Niles Corporation
21638208
7/5/2002
 Bank of
 DE SOS
 All assets of Debtor.
8/21/2014
 AS: 63201332
 AS: 08-28-
 America, N.A.,
 
 **For deleted assets see:
 
 CO: 2007
2006
 as Agent
 
 AM: 01707862
 
0248483
 CO: 01-16-
 
 
 AM: 31798264
 
 AM: 2010
2007
 
 
 
 
1707862
 AM: 05-17-
 
 
 
 
 CO: 2012
2010
 
 
 
 
0215048
 CO: 01-18-
 
 
 
 
 AM: 2013
2012
 
 
 
 
1781377
 AM: 05-09-
 
 
 
 
 AM: 2013
2013
 
 
 
 
1798264
 AM: 05-10-
 
 
 
 
 
2013
 
 
 
 
 TDC Filter Manufacturing, Inc.

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

21638042
7/5/2002
 Bank of
 DE SOS
 All assets of Debtor.
8/21/2014
 AS: 63201530
 AS: 08-28-
 America, N.A.,
 
 **For deleted assets see:
 
 CO: 2007
2006
 as Agent
 
 AM: 01691678 – equipment as described on Exhibit A
 
0250695
 CO: 01-16-
 
 
 to AM.
 
 AM: 2010
2007
 
 
 
 
1691678
 AM: 05-14-
 
 
 
 
 CO: 2012
2010
 
 
 
 
0215097
 CO: 01-18-
 
 
 
 
 
2012
 
 
 
 
 2008 0785582 CO: 2013
 03-04-2008 CO: 01-11-
 Business Property
 DE SOS
 All collateral re: Building D, Two Territorial, Bolingbrook, IL
8/21/2014
 0164153 AS: 2013 1110759
 2013 AS: 03-11-2013
 Lending, Inc.
 
 
 
 2010 1360118
4/20/2010
 General Electric Capital Corporation
 DE SOS
 Leased equipment
8/21/2014
 2010 1704315*
5/14/2010
 Banc of America
 DE SOS
 Equipment under Master Loan and Security
8/21/2014
 AM: 2010
 AM: 07-14-
 Leasing &
 
 Agreement
 
2443103
2010
 Capital, LLC
 
 No. 21090-70000
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443319
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2443715
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451213
2010
 
 
 
 
 AM: 2010
 AM: 07-14-
 
 
 
 
2451221
 2010 AM:
 
 
 
 
 AM: 2013
4/25/2013
 
 
 
 
1700013
 
 
 
 
 

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

MATERIAL FOREIGN LIENS AND INDEBTEDNESS

Borrower
Lender
Date
Principal
Amount
Outstanding Amount
(As of 07/31/14)
Maturity Date
Secured/ Unsecured
Collateral
Nordic Air Filtration A/S
RealKredit Danmark
March 27, 2012
7.9 million Danish Kroners
$1,266,787
March 2032
Secured
Filtration Products manufacturing facility in Denmark
Nordic Air Filtration A/S
Danske Bank 6686C
December 10, 2012
1.4 million Euros
$1,670,479
December 2017
Secured
equipment
Perma-Pipe Middle East FZC
National Bank of Fujairah
End of 2012
0.4 million Dirhams
$231,056
between January and March of 2015
Secured
vehicle
Perma-Pipe Middle East FZC
National Bank of Fujairah
N/A
$9,600,000
$3,163,053
Revolver
Secured
Working capital
Perma-Pipe Saudi
HSBC Bank Middle East Limited
April 10, 2012
22.2 million Dirhams
$3,326,111
April 2017
Secured
equipment and office furniture
Nordic Air Filtration A/S
Danske Leasing
July 1, 2011
2.2 million DKK
$513,754
June 2016
Secured
equipment
Perma-Pipe India

HDFC Bank, India
2011 and 2013
3.1 million Indian Rupees
$6,717
2014 and 2016
Secured
vehicles

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

ALL INTERCOMPANY LOANS
MFRI Total Consolidation
Intercompany - Accts for Reconcilation
July 31, 2014
(Unaudited)

 
 
MFRI, Inc.
7720 Lehigh
MM Niles
TC Niles, Inc.
Midwesco Filter
Cicero
TDC
Perma Pipe
Perma Pipe
Permalert
PP Canada
Domestic
MFRD
Nordic
 NAFME
 BVI
 Luxembourg
  PPME
 PPSA
 PPAD
 PPIL
 Eliminations
 
 
 
 Avenue Property
 
 
 Resources Inc
 
 
 DHC
 O&G
 
 
 Subtotal
 
 
 
 
 
 
 
 
 
 Foreign
 Intercompany Trade Rec/Pay - MFRI / Lehigh
00-130 1
(1,370,656
)
1,370,656

—

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / BVI
00-130 2
250

0

0

0

0

0

0

0

0

0

0

250

0

0

0

(250
)
0

0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / Cicero
00-130 3
66,861

0

0

0

0

(66,861
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay -MFRI/Luxembourg
00-130 4
39,839

0

0

0

0

0

0

0

0

0

0

39,839

0

0

0

0

(39,839
)
0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / Filter
00-130 5
24,190,485

0

0

0

(24,190,485
)
0

0

0

0

0

0

—

0

0

0

0

0

0

0

0

0

—

 Intercompany Trade Rec/Pay - MFRI / TDC
00-130 7
1,824,114

0

0

0

0

0

(1,824,114
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Trade Rec/Pay - MFRI / NAFME
00-131 0
343

0

0

0

0

0

0

0

0

0

0

343

0

0

(343
)
0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / TC
00-131 5
(7,245,458
)
0

0

7,245,458

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / PPOG
00-131 9
(17,337,291
)
0

0

0

0

0

0

0

17,337,291

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - MFRI / PP
00-132 0
15,294,229

0

0

0

0

0

0

(15,294,229
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

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

 Intercompany Trade Rec/Pay - MFRI / PPKSA
00-132 1
264,024

0

0

0

0

0

0

0

0

0

0

264,024

0

0

0

0

0

0

(263,878
)
0

0

(146
)
 Intercompany Trade Rec/Pay - MFRI / PPME
00-132 3
2,544,422

0

0

0

0

0

0

0

0

0

0

2,544,422

0

0

0

0

0

(2,543,487
)
0

0

0

(934
)
 Intercompany Trade Rec/Pay - PP / PPME
00-132 5
0

0

0

0

0

0

0

1,650,092

0

0

0

1,650,092

0

0

0

0

0

(1,649,562
)
0

0

0

(530
)
 Intercompany Trade Rec/Pay - PPME / PPIL India
00-132 6
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

3,222

0

0

(3,355
)
133

 Intercompany Trade Rec/Pay - PP / PP Canada
00-132 7
0

0

0

0

0

0

0

824

0

0

(824
)
0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - PPME / PPKSA
00-132 8
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

9,233,634

(9,216,930
)
0

0

(16,704
)
 Intercompany Trade Rec/Pay - MFRI/PPC
00-133 0
75,672

0

0

0

0

0

0

0

0

0

(75,672
)
0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - Filter/Cicero
00-133
0

0

0

0

3,050,125

(3,050,125
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - Filter/TDC
00-133 3
0

0

0

0

47,625

0

(47,625
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay -Filter/Nordic
00-133 7
0

0

0

0

3,431

0

0

0

0

0

0

3,431

0

(3,431
)
0

0

0

0

0

0

0

—

IC Trade Rec/Pay - PPME / NAFME
00-133 9
0

0

0

0

0

0

0

0

0

0

0

0

0

0

(41,577
)
0

0

41,577

0

0

0

0

 Intercompany Trade Rec/Pay - TDC/Cicero
00-134 5
0

0

0

0

0

1,856,876

(1,856,876
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - TDC/Nordic
00-134 7
0

0

0

0

0

0

(1,134
)
0

0

0

0

(1,134
)
0

1,134

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - Nordic / NAFME
00-135 1
0

0

0

0

0

0

0

0

0

0

0

0

0

60,398

(60,397
)
0

0

0

0

0

0

(1
)

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

 Intercompany Trade Rec/Pay - TC Niles/ MFRD
00-135 7
0

0

0

73,809

0

0

0

0

0

0

0

73,809

(73,809
)
0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay -Luxembourg / TC Niles
00-135 9
0

0

0

201,167

0

0

0

0

0

0

0

201,167

0

0

0

0

(201,167
)
0

0

0

0

0

 Intercompany Trade Rec/Pay - PP / PPOG
00-136 1
0

0

0

0

0

0

0

11,665,710

(11,665,710
)
0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - PPDHC / PPA
00-136 2
0

0

0

0

0

0

0

1,459,922

0

(1,459,922
)
0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - PPDHC/ PPSA
00-136 4
0

0

0

0

0

0

0

881,889

0

0

0

881,889

0

0

0

0

0

0

(881,889
)
0

0

(28
)
 Intercompany Trade Rec/Pay - PP / PP India
00-136 5
0

0

0

0

0

0

0

4,034

0

0

0

4,034

0

0

0

0

0

0

0

0

(4,034
)
0

 Intercompany Trade Rec/Pay - MFRI / MM&E
00-137 0
959,639

0

(959,639
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

 Intercompany Trade Rec/Pay - PPME / PPAD
00-137 2
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

136,645

0

(136,645
)
0

0

 Intercompany Trade Rec/Pay - PPME/ Permalert
00-137 3
0

0

0

0

0

0

0

0

0

62,485

0

62,485

0

0

0

0

0

(62,480
)
0

0

0

(5
)
IC Trade Payable/Receivable PPSA/Permalert
00-137 4
0

0

0

0

0

0

0

0

0

39,829

0

39,829

0

0

0

0

0

0

(39,822
)
0

0

(7
)
 Intercompany Trade Rec/Pay - MFRI / PA
00-137 6
(1,042,559
)
0

0

0

0

0

0

0

0

1,042,559

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec BVI/PPME
00-271 1
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

3,704

0

(3,703
)
0

0

0

(1
)
IC Interest & Dividends Pay/Rec PP/PPME
00-271 2
0

0

0

0

0

0

0

1,866,402

0

0

0

1,866,402

0

0

0

0

0

(1,865,718
)
0

0

0

(685
)
IC Interest & Dividends Pay/Rec PPME/PPSA
00-271 4
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1,378,447

(1,378,447
)
0

0

—

IC Interest & Dividends Pay/RecMFRI/Luxem bourg
00-272 4
2,787

0

0

0

0

0

0

0

0

0

0

2,787

0

0

0

0

(2,787
)
0

0

0

0

0

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

IC Interest & Dividends Pay/Rec MFRD/Luxembourg
00-273 3
0

0

0

0

0

0

0

0

0

0

0

0

3,518

0

0

0

(3,518
)
0

0

0

0

0

IC Interest &
00-
(372
)
0

0

0

0

0

0

0

0

0

0

(372
)
0

0

0

372

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/TC
00-274 3
(418,954)

0

0

—

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/ PPC
00-274 4
4,073

0

0

0

0

0

0

0

0

0

(4,073
)
0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/Filter
00-274 5
6,611,822

0

0

0

(6,611,822
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/TDC
00-274 7
3,684,685

0

0

0

0

0

(3,684,685
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/PPME
00-274 8
604,846

0

0

0

0

0

0

0

0

0

0

604,846

0

0

0

0

0

(604,638
)
0

0

0

(208
)
IC Interest & Dividends Pay/Rec MFRI/PPOG
00-274 9
(902,789
)
0

0

0

0

0

0

0

902,789

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/PP
00-275 0
6,403,982

0

0

0

0

0

0

(6,403,982
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/PA
00-277 6
(8,715
)
0

0

0

0

0

0

0

0

8,715

0

0

0

0

0

0

0

0

0

0

0

0

IC Interest & Dividends Pay/Rec MFRI/MME
00-279 8
330,853

0

(330,853
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Loan Payable/Receivable MFRI/TDC
00-294 3
3,452,549

0

0

0

0

0

(3,452,549
)
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

IC Loan Payable/Receivable MFRI/Luxembourg
00-294 4
58,000

0

0

0

0

0

0

0

0

0

0

58,000

0

0

0

0

(58,000
)
0

0

0

0

0

IC Loan Payable/Receivable MFRD/Luxembourg
00-296 3
0

0

0

0

0

0

0

0

0

0

0

0

100,000

0

0

0

(100,000
)
0

0

0

0

0

IC Loan Payable/Receivable BVI/PPME
00-298 1
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

1,275,713

0

(1,275,404
)
0

0

0

(310
)

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

IC Loan Payable/Receivable PP/PP Canada
00-298 3
0

0

0

0

0

0

0

6,514,051

0

0

(6,514,051
)
0

0

0

0

0

0

0

0

0

0

0

IC Loan Payable/Receivable PPME/PPSA
00-298 4
0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

13,132,122

(13,132,122
)
0

0

—

Total Intercompany
 
38,505,635

1,370,656

(1,290,492
)
7,520,434

(27,701,126
)
(1,260,110
)
(10,866,983
)
2,344,713

6,574,370

(306,334
)
(6,594,620
)
8,222,334

29,709

58,101

(102,317
)
1,279,539

(405,311
)
15,920,655

(24,913,088
)
(136,645
)
(7,389
)
(19,426
)

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

SCHEDULE 8.03
Existing Investments
None.

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

EXHIBIT A
FORM OF COMMITTED LOAN NOTICE
Date: ___________, _____
To: BMO Harris Bank N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit and Security Agreement, dated as of
September 24, 2014 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement”; the terms defined
therein being used herein as therein defined), by and among MFRI, INC., a
Delaware corporation (the “Borrower Agent”), MIDWESCO FILTER RESOURCES, INC., a
Delaware corporation (“Midwesco”), PERMAPIPE, INC., a Delaware corporation
(“Perma-Pipe”), TC NILES CORPORATION, a Delaware corporation (“TC Niles”), TDC
FILTER MANUFACTURING, INC., a Delaware corporation (“TDC”), MM NILES
CORPORATION, a Delaware corporation (“MM Niles”), and PERMAPIPE CANADA, INC., a
Delaware corporation (“Perma-Pipe Canada”; each of the Borrower Agent, Midwesco,
Perma-Pipe, TC Niles, TDC, MM Niles, and Perma-Pipe Canada may be referred to
herein individually, as a “Borrower” and collectively, as “Borrowers”), and BMO
HARRIS BANK N.A., as Lender.

The undersigned hereby requests (select one):

o A Borrowing of Revolving Loans

o A conversion or continuation of Revolving Loans

1. On _________________________ (a Business Day).
2. In the amount of $_______________.
3. Comprised of ______________________________.
[Type of Loan requested, i.e., Base Rate Loan or Eurodollar Rate Loan]
4. For Eurodollar Rate Loans: with an Interest Period of ___ months.

After giving effect to the Revolving Borrowing, if any, requested herein the
limitations set forth in Section 2.01(a)(i) and (ii) of the Agreement have been
met.

In connection with any Borrowing requested hereunder, the matters set forth in
Sections 5.02 of the Agreement are true, correct and complete as of the date
hereof.

[Signature Page Follows]
MFRI, INC., as Borrower Agent
By:        
Name:    
Title:    

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

EXHIBIT B
FORM OF
REVOLVING LOAN NOTE

$25,000,000.00                                    September 24, 2014

FOR VALUE RECEIVED, each of the undersigned (the “Borrowers”) hereby, jointly
and severally, promises to pay to BMO Harris Bank N.A. or registered assigns
(the “Lender”), in accordance with the provisions of the Agreement (as
hereinafter defined), the principal amount of each Revolving Loan from time to
time made by the Lender to the Borrowers under that certain Credit and Security
Agreement, dated as of the date hereof (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
“Agreement”; the terms defined therein being used herein as therein defined),
among the Borrowers and the Lender.

Each Borrower, jointly and severally, promises to pay interest on the unpaid
principal amount of each Revolving Loan from the date of such Revolving Loan
until such principal amount is paid in full, at such interest rates and at such
times as provided in the Agreement. All payments of principal and interest shall
be made to the Lender for the account of the Lender in Dollars in immediately
available funds at the Lender’s Office. If any amount is not paid in full when
due hereunder, such unpaid amount shall bear interest, to be paid upon demand,
from the due date thereof until the date of actual payment (and before as well
as after judgment) computed at the per annum rate set forth in the Agreement.

This Revolving Loan Note is one of the notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Revolving Loan Note is also
is secured by the Collateral. Upon the occurrence and continuation of one or
more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Revolving Loan Note shall become, or may be declared to
be, immediately due and payable all as provided in the Agreement. Revolving
Loans made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender in the ordinary course of business. The Lender
may also attach schedules to this Revolving Loan Note and endorse thereon the
date, amount and maturity of its Revolving Loans and payments with respect
thereto.

Each Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Revolving Loan Note.

[Signature Page Follows]

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

THIS REVOLVING LOAN NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS

MFRI, INC.
By:
Name:
Title:

MIDWESCO FILTER RESOURCES, INC.
By:
Name:
Title:

PERMA-PIPE, INC.
By:
Name:
Title:

TC NILES CORPORATION
By:
Name:
Title:

TDC FILTER MANUFACTURING, INC.
By:
Name:
Title:

MM NILES CORPORATION
By:
Name:
Title:

PERMA-PIPE CANADA, INC.
By:
Name:
Title:

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

REVOLVING LOANS AND PAYMENTS WITH RESPECT THERETO

Date
Type of Loan
Amount of Loan Made
End of Interest Period
Amount of Principal or Interest Paid This Date
Outstanding Principal Balance This Date
Notation Made By
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date: __________, _____

To: BMO Harris Bank, N.A.

Ladies and Gentlemen:

Reference is made to that certain Credit and Security Agreement, dated as of
September 24, 2014 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement”; the terms defined
therein being used herein as therein defined), MFRI, INC., a Delaware
corporation (the “Company” or “Borrower Agent”), MIDWESCO FILTER RESOURCES,
INC., a Delaware corporation (“Midwesco”), PERMAPIPE, INC., a Delaware
corporation (“Perma-Pipe”), TC NILES CORPORATION, a Delaware corporation (“TC
Niles”), TDC FILTER MANUFACTURING, INC., a Delaware corporation (“TDC”), MM
NILES CORPORATION, a Delaware corporation (“MM Niles”), and PERMAPIPE CANADA,
INC., a Delaware corporation (“Perma-Pipe Canada”; each of the Borrower Agent,
Midwesco, Perma-Pipe, TC Niles, TDC, MM Niles, and Perma-Pipe Canada may be
referred to herein individually, as a “Borrower” and collectively, as the
“Borrowers”), and BMO HARRIS BANK N.A., as Lender.

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the [Chief Financial Officer] [Treasurer] [Controller] of the Borrower
Agent, and that, as such, he/she is authorized to execute and deliver this
Certificate to the Lender on the behalf of the Borrowers, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited Consolidated financial
statements and consolidating financial statements required by Section 7.01(a) of
the Agreement for the fiscal year of Company and its Subsidiaries ended as of
the above date, together with the report and opinion of an independent certified
public accountant required by such section and, with respect to the Consolidated
financial statements, such financial statements are fairly stated in all
material respects when considered in relation to the Consolidated financial
statements.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 7.01(b) of the Agreement for the month ended as of the above date.
Such financial statements fairly present the financial condition, results of
operations, shareholders equity and cash flows of Borrower Agent and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end adjustments and the absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the Loan
Parties during the accounting period covered by the attached financial
statements.

3. A review of the activities of the Loan Parties during such fiscal period has
been made under the supervision of the undersigned with a view to determining
whether during such fiscal period the Loan

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Parties performed and observed all their respective Obligations under the Loan
Documents, and

[select one:]

[to the best knowledge of the undersigned during such fiscal period, each Loan
Party performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]

--or--

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Loan Parties contained in Article
VI of the Agreement, and any representations and warranties of the Loan Parties
that are contained in any document furnished at any time under or in connection
with the Loan Documents, are true and correct on and as of the date hereof,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they are true and correct as of such earlier
date, and except that for purposes of this Certificate, the representations and
warranties contained in subsections (a) and (b) of Section 6.05 of the Agreement
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 7.01 of the Agreement, including
the statements in connection with which this Certificate is delivered.

5. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the date of this Certificate.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
_______________, _____.
MFRI, INC.,
as Borrower Agent
By:
Name:
Title:

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SCHEDULE 2
to the Compliance Certificate
($ in000’s)

For the trailing twelve (12) month period ended ___________________ (“Statement
Date”)

I. Section 8.12(a) – Consolidated Fixed Charge Coverage Ratio.

A. Consolidated EBITDA with respect to the Company and its Subsidiaries on a
Consolidated basis for the trailing twelve (12) month period ending on the above
Statement Date (“Subject Period”):

1. Consolidated Net Income for Subject Period:                 $
2. Consolidated Interest Charges for Subject Period (net of interest income for
such period of the
Company and its Subsidiaries):                          $
3. Federal, state, local and foreign income taxes for Subject Period (net of
income tax credits): $
4. Depreciation expenses for Subject Period:                     $
5. Amortization expenses for Subject Period:                     $
6. Non-cash expenses or losses and other non-cash charges incurred and LIFO
reserves established during such period (excluding any non-cash charges
representing an accrual of, or reserve for cash charges to be paid within the
next twelve months):                 $
7. Expenses of up to $[____________] incurred in connection with the
Transaction. $
8. Non-cash income, gains or profits or LIFO reserves terminated during such
period $
9. Consolidated EBITDA (Lines A.1. + A.2. + A.3. +A.4. + A.5. + A.6. + A.7. –
A.8.): $

B. Consolidated Capital Expenditures for the Company and its Subsidiaries on a
Consolidated basis for the Subject Period:
1. All expenditures (whether paid in cash or accrued as liabilities) by the
Company or any Subsidiary for items that would be classified as “property, plant
or equipment” or comparable items, including without limitation all
transactional costs incurred in connection with such expenditures provided the
same have been capitalized:                 $
2. Capital expenditures (i) financed with Indebtedness permitted under the
Agreement other than Loans, or (ii) made with Net Cash Proceeds from any
Disposition described in clauses (b), (d) and (h) of Section 8.05 of the
Agreement:                             $
3. Consolidated Capital Expenditures: (Lines B.1. – B.2.)                 $

C. Consolidated Fixed Charges for the Company and its Subsidiaries on a
Consolidated basis for the Subject Period:
1. Consolidated Interest Charges paid or required to be paid in cash:         $
2. All principal repayments made or required to be paid of Indebtedness, but
excluding any such payments to the extent constituting a refinancing of such
Indebtedness through the incurrence of additional Indebtedness otherwise
expressly permitted under Section 8.02 of the Agreement and repayments of the
Revolving Loans:                             $
3. Restricted Payments made in cash:                             $
4. Aggregate Federal, state, local and foreign income taxes paid in
cash:         $
5. Cash contributions made to any Pension Plan (to the extent not deducted in
the calculation of the Consolidated Net Income), other than contributions of up
to $500,000 made within 180 days following the Closing Date in connection with
the Company’s proposed pension plan
conversion:                                                     $
6. Consolidated Fixed Charges (Lines C.1. + C.2. + C.3. + C.4. +C.5): $

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

D. Consolidated Fixed Charge Coverage Ratio ((Line A.9. – Line B.3.) ÷ Line
C.6.):     to 1.00

Minimum Required during a Fixed Charge                        1.00 to 1.00
Trigger Period (check if applicable):

II. Section 8.12(b) – Minimum Availability.

A. Revolving Credit Facility as of Statement Date:                     $
B. Line Reserve as of Statement Date:                         $
C. Total Revolving Credit Outstanding as of Statement Date:             $
D. Line II.A. - Line II.B. - Line II.C.:                             $
E. Borrowing Base as of Statement Date:                         $
F. Total Revolving Credit Outstanding as of Statement Date:             $
G. Line II.E. - Line II.F.:                                 $
H. Availability (the lesser of Line D and Line G)                     $

At any time, Availability to be equal to or greater than:        $1,000,000.00

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EXHIBIT D
RECONCILIATION OF ACCOUNTS RECEIVABLE

Borrower:

Aging Dated Last Borrowing Base Certificate sent to BMO #__1__
Date

Accounts Receivable balance (from line 4 of BBC)
ADD         1. Sales on aging, not on BBC
(Ref. Date (s) )
2. Colle    ctions on BBC, not on Aging
(Ref. Date (s) )
3. Lock Box deposits received, not on Aging
(Ref. Date (s) )
4. Credits on BBC, not on Aging
(Ref. Date (s) )
5. Discounts on BBC, not on Aging
(Ref. Date (s) )
SUBTOTAL

SUBTRACT     1. Sales on BBC, not on Aging
(Ref. Date (s) )
2. Collections on Aging, not on BBC
(Ref. Date (s) )
3. Lock Box deposits received, not on BBC
(Last Deposit Date )
4. Credits on Aging, not on BBC
(Ref. Date(s) )
5. Discounts on Aging, not on BBC
(Ref. Date (s) )
SUBTOTAL

Adjusted Accounts Receivables $ -
Total Accounts Receivable per Aging
Collateral Over (Short) Aging $ -
If Adjusted Accounts Receivable does not equal Accounts Receivable per Aging
Does aging balance to G/L        Yes        No

Explanation of Differences (Please attach documentation if necessary)

Reference adjusted on BBC # _________ _ _ Date:_____________________
Authorized Signature ____________________________ Title: _____________________