Exhibit
10.1


CHANNELL
COMMERCIAL CORPORATION


as Domestic
Borrower


CHANNELL
COMMERCIAL CANADA INC.


as Canadian
Borrower


 


AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT


Dated:  July 30, 2007


$20,000,000


 


BANK OF AMERICA,
N.A.


Individually and
as Administrative Agent


BANK OF AMERICA,
N.A., CANADA BRANCH


Individually and
as Canadian Agent




THE LENDERS NAMED HEREIN


















TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1. CREDIT
  FACILITY

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Revolving Credit
  Facility.

  	
   

  	
  2

  
	
  1.2

  	
   

  	
  Domestic Letters of
  Credit; Domestic LC Guaranties.

  	
   

  	
  4

  
	
  1.3

  	
   

  	
  Domestic Term Loan and
  Domestic Cap Ex Facilities.

  	
   

  	
  5

  
	
  1.4

  	
   

  	
  Optional Reductions of
  Domestic Revolving Credit Commitments

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. INTEREST,
  FEES AND CHARGES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Interest.

  	
   

  	
  7

  
	
  2.2

  	
   

  	
  Computation of Interest
  and Fees.

  	
   

  	
  9

  
	
  2.3

  	
   

  	
  Fee Letter.

  	
   

  	
  9

  
	
  2.4

  	
   

  	
  Domestic Letter of
  Credit and Domestic LC Guaranty Fees.

  	
   

  	
  9

  
	
  2.5

  	
   

  	
  Unused Line Fee.

  	
   

  	
  10

  
	
  2.6

  	
   

  	
  Fronting Fees and
  Participation Fees

  	
   

  	
  10

  
	
  2.7

  	
   

  	
  Prepayment Fee.

  	
   

  	
  10

  
	
  2.8

  	
   

  	
  Audit Fees.

  	
   

  	
  11

  
	
  2.9

  	
   

  	
  Reimbursement of
  Expenses.

  	
   

  	
  11

  
	
  2.10

  	
   

  	
  Bank Charges.

  	
   

  	
  12

  
	
  2.11

  	
   

  	
  Collateral Protection
  Expenses; Appraisals.

  	
   

  	
  12

  
	
  2.12

  	
   

  	
  Payment of Charges.

  	
   

  	
  13

  
	
  2.13

  	
   

  	
  Taxes.

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. LOAN
  ADMINISTRATION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Manner of Borrowing
  Loans

  	
   

  	
  17

  
	
  3.2

  	
   

  	
  Payments.

  	
   

  	
  23

  
	
  3.3

  	
   

  	
  Mandatory and Optional
  Prepayments.

  	
   

  	
  27

  
	
  3.4

  	
   

  	
  Application of Payments
  and Collections.

  	
   

  	
  31

  
	
  3.5

  	
   

  	
  All Loans to Constitute
  One Obligation

  	
   

  	
  33

  
	
  3.6

  	
   

  	
  Loan Accounts.

  	
   

  	
  33

  
	
  3.7

  	
   

  	
  Statements of Account.

  	
   

  	
  33

  
	
  3.8

  	
   

  	
  Sharing of Payments,
  Etc.

  	
   

  	
  33

  
	
  3.9

  	
   

  	
  Increased Costs.

  	
   

  	
  35

  
	
  3.10

  	
   

  	
  Basis for Determining
  Interest Rate Inadequate or Unfair

  	
   

  	
  36

  
	
  3.11

  	
   

  	
  Location of Payments.

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. TERM AND
  TERMINATION

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Term of Agreement.

  	
   

  	
  37

  
	
  4.2

  	
   

  	
  Termination.

  	
   

  	
  37

  



 



 i
 









 


	
  SECTION 5. SECURITY
  INTERESTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Security Interest in
  Collateral.

  	
   

  	
  38

  
	
  5.2

  	
   

  	
  Other Collateral.

  	
   

  	
  42

  
	
  5.3

  	
   

  	
  Lien Perfection;
  Further Assurances.

  	
   

  	
  43

  
	
  5.4

  	
   

  	
  Lien on Realty.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6. COLLATERAL
  ADMINISTRATION

  	
   

  	
  44

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  General.

  	
   

  	
  44

  
	
  6.2

  	
   

  	
  Administration of
  Accounts.

  	
   

  	
  46

  
	
  6.3

  	
   

  	
  Records and Reports of
  Inventory.

  	
   

  	
  48

  
	
  6.4

  	
   

  	
  Administration of
  Equipment.

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  General Representations
  and Warranties.

  	
   

  	
  49

  
	
  7.2

  	
   

  	
  Continuous Nature of
  Representations and Warranties.

  	
   

  	
  59

  
	
  7.3

  	
   

  	
  Survival of
  Representations and Warranties.

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8. COVENANTS
  AND CONTINUING AGREEMENTS

  	
   

  	
  60

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Affirmative Covenants.

  	
   

  	
  60

  
	
  8.2

  	
   

  	
  Negative Covenants.

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. CONDITIONS
  PRECEDENT

  	
   

  	
  72

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Documentation.

  	
   

  	
  72

  
	
  9.2

  	
   

  	
  No Default.

  	
   

  	
  72

  
	
  9.3

  	
   

  	
  Other Conditions.

  	
   

  	
  72

  
	
  9.4

  	
   

  	
  No Litigation.

  	
   

  	
  72

  
	
  9.5

  	
   

  	
  Material Adverse Effect.

  	
   

  	
  72

  
	
  9.6

  	
   

  	
  Fees.

  	
   

  	
  72

  
	
  9.7

  	
   

  	
  Collateral.

  	
   

  	
  72

  
	
  9.8

  	
   

  	
  Diligence.

  	
   

  	
  73

  
	
  9.9

  	
   

  	
  Corporate Matters.

  	
   

  	
  73

  
	
  9.10

  	
   

  	
  Environmental Matters.

  	
   

  	
  73

  
	
  9.11

  	
   

  	
  Insurance.

  	
   

  	
  73

  
	
  9.12

  	
   

  	
  Legal Opinions.

  	
   

  	
  73

  
	
  9.13

  	
   

  	
  Reference Checks.

  	
   

  	
  74

  
	
  9.14

  	
   

  	
  Financial Statements.

  	
   

  	
  74

  
	
  9.15

  	
   

  	
  Updated Audit.

  	
   

  	
  74

  
	
  9.16

  	
   

  	
  Costs and Expenses.

  	
   

  	
  74

  
	
  9.17

  	
   

  	
  Representations and
  Warranties.

  	
   

  	
  74

  
	
  9.18

  	
   

  	
  Availability.

  	
   

  	
  74

  



 



 ii
 









 


	
  SECTION 10. EVENTS OF
  DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

  	
   

  	
  74

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Events of Default.

  	
   

  	
  74

  
	
  10.2

  	
   

  	
  Acceleration of the
  Obligations.

  	
   

  	
  78

  
	
  10.3

  	
   

  	
  Other Remedies.

  	
   

  	
  79

  
	
  10.4

  	
   

  	
  Set Off and Sharing of
  Payments.

  	
   

  	
  80

  
	
  10.5

  	
   

  	
  Remedies Cumulative; No
  Waiver.

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.
  ADMINISTRATIVE AGENT AND CANADIAN AGENT

  	
   

  	
  82

  
	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Authorization and
  Action.

  	
   

  	
  82

  
	
  11.2

  	
   

  	
  Administrative Agent’s
  and Canadian Agent’s Reliance, Etc.

  	
   

  	
  83

  
	
  11.3

  	
   

  	
  Bank of America, Bank
  of America Canada, and Affiliates.

  	
   

  	
  84

  
	
  11.4

  	
   

  	
  Lender Credit Decision.

  	
   

  	
  84

  
	
  11.5

  	
   

  	
  Indemnification.

  	
   

  	
  85

  
	
  11.6

  	
   

  	
  Rights and Remedies to
  be Exercised by Administrative Agent and Canadian Agent Only.

  	
   

  	
  85

  
	
  11.7

  	
   

  	
  Agency Provisions
  Relating to Collateral.

  	
   

  	
  86

  
	
  11.8

  	
   

  	
  Administrative Agent’s
  and Canadian Agent’s Right to Purchase Commitments.

  	
   

  	
  87

  
	
  11.9

  	
   

  	
  Right of Sale,
  Assignment, Participations.

  	
   

  	
  87

  
	
  11.10

  	
   

  	
  Amendment.

  	
   

  	
  88

  
	
  11.11

  	
   

  	
  Resignation of
  Administrative Agent or Canadian Agent; Appointment of Successor.

  	
   

  	
  89

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.
  MISCELLANEOUS

  	
   

  	
  90

  
	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Power of Attorney.

  	
   

  	
  90

  
	
  12.2

  	
   

  	
  Indemnity.

  	
   

  	
  91

  
	
  12.3

  	
   

  	
  Sale of Interest.

  	
   

  	
  92

  
	
  12.4

  	
   

  	
  Severability.

  	
   

  	
  92

  
	
  12.5

  	
   

  	
  Successors and Assigns.

  	
   

  	
  92

  
	
  12.6

  	
   

  	
  Cumulative Effect;
  Conflict of Terms.

  	
   

  	
  92

  
	
  12.7

  	
   

  	
  Execution in
  Counterparts.

  	
   

  	
  92

  
	
  12.8

  	
   

  	
  Notices.

  	
   

  	
  92

  
	
  12.9

  	
   

  	
  Consent.

  	
   

  	
  94

  
	
  12.10

  	
   

  	
  Credit Inquiries.

  	
   

  	
  94

  
	
  12.11

  	
   

  	
  Time of Essence.

  	
   

  	
  94

  
	
  12.12

  	
   

  	
  Entire Agreement.

  	
   

  	
  94

  
	
  12.13

  	
   

  	
  Interpretation.

  	
   

  	
  94

  
	
  12.14

  	
   

  	
  Confidentiality.

  	
   

  	
  94

  
	
  12.15

  	
   

  	
  Judgment.

  	
   

  	
  95

  
	
  12.16

  	
   

  	
  GOVERNING LAW; CONSENT
  TO FORUM.

  	
   

  	
  95

  
	
  12.17

  	
   

  	
  WAIVERS BY BORROWERS.

  	
   

  	
  96

  
	
  12.18

  	
   

  	
  Further Assurances.

  	
   

  	
  97

  
	
  12.19

  	
   

  	
  Interest Act (Canada).

  	
   

  	
  97

  
	
  12.20

  	
   

  	
  Arbitration

  	
   

  	
  98

  
	
  12.21

  	
   

  	
  Patriot Act Notice

  	
   

  	
  99

  



 



 iii















AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
is made as of July 30, 2007, by and among BANK OF AMERICA, N.A. (“Bank of
America”), with an office at 55 South Lake Avenue, Suite 900, Pasadena, California  91101, individually as a Lender and as
administrative agent (“Administrative Agent”) for itself and any other
financial institution which is or becomes a party hereto (each such financial
institution, including Bank of America, Bank of America Canada (as defined
below) as Canadian Lender, and each Canadian Participating Lender (as defined
in Appendix A attached hereto)), is referred to hereinafter individually as a “Lender”
and collectively as the “Lenders”), BANK OF AMERICA, N.A., CANADA BRANCH (“Bank
of America Canada”), a Canadian corporation with an office at 200 Front Street
West, Toronto, Ontario M5V 3L2 Canada, individually as the Canadian Lender and
as Canadian agent (“Canadian Agent”) for itself, the Canadian Lender and any
other financial entity which is or becomes a Canadian Participating Lender (as
defined in Appendix A attached hereto), the Lenders, CHANNELL COMMERCIAL
CORPORATION, a Delaware corporation, with its chief executive office and
principal place of business at 26040 Ynez Road, Temecula, California 92591-9022
(“Domestic Borrower”), and CHANNELL COMMERCIAL CANADA INC., an Ontario
corporation, with its chief executive office and principal place of business at
6185 Tomken Road, Units 3-5, Mississauga, Ontario  L5T 1X3 
Canada (“Canadian Borrower”). 
Domestic Borrower and Canadian Borrower are referred to collectively in
this Agreement as  “Borrowers”.


A.            Capitalized terms used in this Agreement
have the meanings assigned to them in Appendix A,
General Definitions.  Accounting terms
not otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied.


B.            This Agreement amends and restates in its
entirety that certain Loan and Security Agreement dated as of September 25,
2002, among Borrowers, the other borrowers named therein, the lenders named
therein, Bank of America, N.A. (as assignee of Banc of America Leasing and
Capital, LLC, as successor-in-interest to Fleet Capital Corporation), as
administrative agent, Bank of America, N.A., Canada Branch (as successor-in-interest
to BABC Global Finance Inc., as assignee of Fleet Capital Global Finance, Inc.,
as assignee of Fleet Capital Canada Corporation), as Canadian agent, and Bank of America, N.A. (as
assignee to BABC Global Finance Inc., as successor-in-interest to Fleet
National Bank, London U.K. branch, trading as FleetBoston Financial), as UK
agent (as heretofore amended, restated, extended, supplemented or otherwise
modified, the “Prior Loan Agreement”). On the Closing Date, (i) all outstanding
Revolving Credit Loans (as defined in the Prior Loan Agreement) under the Prior
Loan Agreement shall be deemed outstanding Revolving Credit Loans hereunder,
and (ii) all letters of credit issued and outstanding under the Prior Loan
Agreement shall be deemed to be issued and outstanding hereunder.



 1
 









SECTION 1. CREDIT FACILITY


Subject to the terms and conditions of, and in
reliance upon the representations and warranties made in, this Agreement and
the other Loan Documents, Lenders agree to make a total credit facility of up
to $20,000,000 available upon Borrower Representative’s request therefor, as
follows:


1.1           Revolving Credit
Facility.


1.1.1        Domestic Revolving Credit Loans. 
Each Lender having a Domestic Revolving Credit Commitment (each, a “Domestic
Lender”) agrees, severally and not jointly, for so long as no Default or Event
of Default exists, to make loans denominated in U.S. Dollars (such loans
relative to such Lender, its “Domestic Revolving Credit Loans”) to Domestic
Borrower from time to time during the period from the date hereof to but not
including the last day of the Term, as requested by Borrower Representative in
the manner set forth in Section 3.1.1(a) hereof, provided, that no Domestic
Revolving Credit Loan shall be made if, after giving effect to the making of
such Loan and the simultaneous application of the proceeds thereof:


(a)           the principal amount of the Domestic
Revolving Credit Exposure of such Lender (which, for purposes of clarification,
includes the Domestic LC Amount and outstanding Domestic LC Obligations, as
further set forth in the definition of “Domestic Revolving Credit Exposure”)
would exceed such Lender’s Domestic Revolving Credit Commitment minus such
Lender’s Domestic Revolving Loan Percentage of Reserves, if any;


(b)           the aggregate amount of the Domestic
Revolving Credit Exposure of all the Domestic Lenders would exceed the
Aggregate Borrowing Base then in effect (minus Reserves, if any); or


(c)           the aggregate amount of the Domestic
Revolving Credit Exposure of all the Domestic Lenders would exceed the
Revolving Credit Maximum Amount minus the Canadian Revolving Credit Exposure.


Domestic Revolving Credit Loans may be borrowed as
Domestic Base Rate Loans or Domestic LIBOR Loans.  Amounts borrowed under this Section 1.1.1 may
be repaid in whole or in part and, up to but excluding the last day of the
Term, reborrowed, all in accordance with the terms and conditions hereof.  The Domestic Revolving Credit Loans shall be
further evidenced by, and repayable in accordance with the terms of, the applicable
Revolving Notes and shall be secured by all of the Domestic Collateral.



 2
 









1.1.2        Canadian Revolving Credit Loans.


(a)           Subject to the terms and conditions
hereof, the Canadian Lender agrees, for so long as no Default or Event of
Default exists, to make loans to Canadian Borrower denominated in Canadian
Dollars (each such loan or extension of credit, a “Canadian Revolving Credit
Loan”) from time to time during the period from the date hereof to but not
including the last day of the Term, as requested by the Borrower Representative
in the manner set forth in Section 3.1.1(b) hereof; provided that
no Canadian Revolving Credit Loan shall be made if, after giving effect to the
making of such Loan and the simultaneous application of the proceeds thereof:


(i)            the aggregate amount of the Canadian
Revolving Credit Exposure of the Canadian Lender would exceed the Canadian
Borrowing Base then in effect minus Reserves applicable to Canadian
Revolving Credit Loans, if any, or


(ii)           the aggregate amount of the Domestic
Revolving Credit Exposure of all the Lenders would exceed the Revolving Credit
Maximum Amount minus the Canadian Revolving Credit Exposure.


The Canadian Revolving
Credit Loans shall be further evidenced by, and repayable in accordance with
the terms of, the applicable Revolving Note and shall be secured by all of the
Canadian Collateral.  Amounts borrowed
under this Section 1.1.2 may be repaid in whole or in part and, up to but
excluding the last day of the Term, reborrowed, all in accordance with the terms
and conditions hereof.  Upon the making
of each such Canadian Revolving Credit Loan and subject to Section 3.2.6,
each Canadian Participating Lender shall be deemed to have irrevocably and
unconditionally purchased from the Canadian Lender, without recourse or
warranty, an undivided interest and participation in each Canadian Revolving
Credit Loan to the extent of such Canadian Participating Lender’s Canadian
Percentage thereof.


(b)           Administrative Agent will determine the
Dollar Equivalent amount with respect to any (i) Canadian Revolving Credit
Loans as of the requested borrowing date, and (ii) outstanding Canadian
Revolving Credit Loans as of the last Business Day of each month, or on such
earlier date during such month as Administrative Agent reasonably believes
necessary, for all other purposes under this Agreement where the determination
of a Dollar Equivalent is required to be made.


1.1.3        Use of Proceeds.  The Revolving
Credit Loans shall be used by Borrowers solely for (a) the satisfaction of
certain existing Indebtedness of Borrowers identified on Schedule 1.1.3
hereto, (b) for the general operating capital needs of Borrowers in a
manner consistent with the provisions of this Agreement and all applicable
laws, and (c) for other purposes permitted under this Agreement.


1.1.4        Reserves. 
Administrative Agent shall have the right to establish reserves
(collectively, “Reserves”) in such amounts, and with respect to such
matters, as Administrative Agent shall reasonably deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrowers may
otherwise request under this Section 1.1 with respect to (a) price
adjustments, damages, unearned discounts, returned products or other matters
for which credit memoranda are issued in the ordinary course of Borrowers’ and
UK Guarantors’ businesses; (b) potential dilution related to Accounts of
Borrowers and UK Guarantors, (c) shrinkage, spoilage and obsolescence of
Domestic Borrower’s Inventory, (d) slow-moving Inventory of Domestic Borrower,
(e) other sums chargeable against Borrowers’ Loan Accounts as Revolving
Credit Loans under any section of this Agreement; (f) amounts owing by any
Borrower or any UK Guarantor to any Person to the extent secured by a Lien 



 3
 









on, or trust over, any
Property of a Borrower, including Prior Claims, landlord, bailee and customs
claims which are not subordinated to the satisfaction of Administrative Agent,
(g) with respect to UK Guarantors, claims of Preferential Creditors of the
UK Guarantors in their capacity as such, (h) with respect to Canadian Borrower,
claims of Preferential Creditors of the Canadian Borrower in their capacity as
such, (i) a permanent availability reserve, which Reserve shall be in the
amount of $300,000 on the Closing Date and shall be subject to change after the
Closing Date in the reasonable credit judgment of Administrative Agent, (j) the
Bank Product
Reserve, and (k) such other specific events, conditions or
contingencies as to which Administrative Agent, in its reasonable credit
judgment, determines Reserves should be established from time to time
hereunder.  Notwithstanding the
foregoing, Administrative Agent shall not establish any Reserves in respect of
any matters relating to any items of Collateral that have been taken into
account in determining Eligible Accounts and Eligible Inventory.


1.2           Domestic Letters of
Credit; Domestic LC Guaranties.


(a)           Administrative Agent agrees, for so long
as no Default or Event of Default exists and if requested by Borrower
Representative on behalf of Domestic Borrower, to (i) issue Domestic
Letters of Credit of Administrative Agent or an Affiliate of Administrative
Agent for the account of Domestic Borrower on the date requested by Borrower
Representative or (ii) execute Domestic LC Guaranties, by which Bank of
America, or an Affiliate of Administrative Agent, on the date requested by
Borrower Representative, shall guaranty the payment or performance by Domestic
Borrower of its reimbursement obligations with respect to Domestic Letters of
Credit, provided that (i) the Domestic LC Amount shall not exceed
$2,000,000 at any time, (ii) the principal amount of the Domestic Revolving
Credit Exposure of such Lender (which, for purposes of clarification, includes
the Domestic LC Amount and outstanding Domestic LC Obligations, as further set
forth in the definition of “Domestic Revolving Credit Exposure”) shall not
exceed such Lender’s Domestic Revolving Credit Commitment minus such Lender’s
Domestic Revolving Loan Percentage of Reserves, if any, (iii) the aggregate amount
of the Domestic Revolving Credit Exposure of all the Domestic Lenders would
exceed the Aggregate Borrowing Base then in effect (minus Reserves, if any),
and (iv) the aggregate amount of the Domestic Revolving Credit Exposure of all
the Domestic Lenders would exceed the Revolving Credit Maximum Amount minus the
Canadian Revolving Credit Exposure.  No
Domestic Letter of Credit which is a trade Domestic Letter of Credit or
Domestic LC Guaranty of a trade letter of credit may have an expiration date
that is more than 180 days after the date of issuance thereof; and no Domestic
Letter of Credit which is a standby Domestic Letter of Credit or Domestic LC
Guaranty of a standby letter of credit may have an expiration date that is more
than one year from the date of issuance thereof, which expiration date may be
extended for additional periods of up to one year, subject to the immediately
following sentence.  No Domestic Letter
of Credit or Domestic LC Guaranty may have an expiration date that is after 30
days prior to the last day of the Term. 
Each Domestic Letter of Credit shall be denominated in U.S.
Dollars.  Notwithstanding anything to the
contrary 



 4
 









contained herein,
Domestic Borrower, Administrative Agent and Domestic Lenders hereby agree that
all Domestic LC Obligations and all obligations of Domestic Borrower relating
thereto shall be satisfied by the prompt issuance of one or more Domestic
Revolving Credit Loans that are Domestic Base Rate Loans, which Domestic
Borrower hereby acknowledges are requested and Domestic Lenders hereby agree to
fund.  In the event that Domestic
Revolving Credit Loans are not, for any reason, promptly made to satisfy all
then existing Domestic LC Obligations, each Domestic Lender hereby agrees to
pay to Administrative Agent, on demand, an amount equal to such Domestic LC
Obligations multiplied by such Domestic Lender’s Domestic Revolving Loan
Percentage, and until so paid, such amount shall be secured by the Domestic
Collateral and shall bear interest and be payable at the same rate and in the
same manner as Domestic Base Rate Loans. 
Immediately upon the issuance of a Domestic Letter of Credit or a
Domestic LC Guaranty under this Agreement, each Domestic Lender shall be deemed
to have irrevocably and unconditionally purchased and received from
Administrative Agent, without recourse or warranty, an undivided interest and
participation therein equal to such Domestic LC Amount or Domestic LC
Obligations multiplied by such Domestic Lender’s Domestic Revolving Loan
Percentage.


1.3           Domestic Term Loan
and Domestic Cap Ex Facilities.


1.3.1        Domestic Term Loan.  Each Domestic
Lender, severally and not jointly, agrees to make a term loan (collectively,
the “Domestic Term Loan”) to Domestic Borrower on the Closing Date, in
the aggregate principal amount of such Domestic Lender’s Domestic Term Loan
Commitment.  The Domestic Term Loan shall
be repayable in accordance with the terms of the applicable Domestic Term Note
and shall be secured by all of the Domestic Collateral, and shall be initially
funded as a Domestic Base Rate Loan.  The
proceeds of the Domestic Term Loan shall be used solely for the purposes that
the Domestic Revolving Credit Loans are authorized to be used.


1.3.2        Domestic Cap Ex Loans.  Each Domestic
Lender agrees, severally and not jointly, for so long as no Default or Event of
Default exists, to make loans denominated in U.S. Dollars (such loans relative
to such Lender, its “Domestic Cap Ex Loans”), from time to time during the
period from the date hereof to but not including the last day of the Term, as
requested by Borrower Representative in the manner set forth in Section
3.1.1(d) hereof, provided, that no Domestic Cap Ex Loan shall be made unless
each of the following conditions has been satisfied, in form and substance satisfactory
to Administrative Agent in its sole discretion:


(a)           after giving effect to the making of such
Loan and the simultaneous application of the proceeds thereof, the aggregate
principal amount of the outstanding Domestic Cap Ex Loans of such Lender would
not exceed such Lender’s Domestic Cap Ex Loan Commitment;



 5
 









(b)           Borrower Representative shall have
provided evidence to Administrative Agent, in form and substance satisfactory
to Administrative Agent in its reasonable discretion, that Domestic Borrower
will use the proceeds of each requested Domestic Cap Ex Loan for Equipment (i)
to be used in Domestic Borrower’s business operations, (ii) to be located at a
location in compliance with this Agreement, and (iii) subject to no Liens other
than Permitted Liens;


(c)           Administrative Agent shall have received
the invoice from the seller of the Equipment evidencing the cost of the
Equipment Domestic Borrower proposes to purchase with the proceeds of each
Domestic Cap Ex Loan, and such invoice discloses that the original principal
amount of such requested Equipment Loan does not exceed (i) in the case of new
Equipment, eighty percent (80%) of the cost thereof or (ii) in the case of used
Equipment, fifty percent (50%) of the cost thereof, in each case, exclusive of
transportation, installation, taxes, perishable tooling and other soft costs
(as determined by Administrative Agent in its sole discretion) pertaining
thereto;


(d)           Administrative Agent shall have received,
in form and substance satisfactory to Administrative Agent in its reasonable
discretion, evidence of insurance covering the Equipment Domestic Borrower
proposes to purchase with the proceeds of each Domestic Cap Ex Loan;


(e)           the requested Domestic Cap Ex Loan is in
a minimum original principal amount of $250,000;


(f)            the aggregate original principal amount
of the requested Domestic Cap Ex Loan together with the original principal
amount of all other Domestic Cap Ex Loans funded by Lenders during such fiscal
year shall not exceed $3,000,000;


(g)           Borrower Representative shall have
delivered or caused to be delivered to Administrative Agent and each Domestic
Lender any and all documents, agreements and instruments deemed reasonably
necessary by Administrative Agent or any Domestic Lender in connection with the
making of such Domestic Cap Ex Loan including, without limitation, certificates
of title, if any, for such Equipment and, subject to clause (h) below, a
Domestic Cap Ex Note duly executed by Borrower;


(h)           Borrower Representative shall have
delivered or caused to be delivered to each Domestic Lender a Domestic Cap Ex
Note evidencing such Domestic Lender’s Domestic Cap Ex Loans upon the earlier
of (i) the date which is 12 months following the initial Domestic Cap Ex Loan,
(ii) the date which is 12 months following the most recent delivery of a
Domestic Cap Ex Note, and (iii) the date upon which the aggregate principal
amount of all Domestic Cap Ex Loans made since the most recent delivery of a
Domestic Cap Ex Note exceeds $1,000,000; and


(i)            the proceeds of the Domestic Cap Ex Loans
shall be used solely for the purpose of purchasing Equipment in accordance with
the provisions of this Section 1.3.2.



 6
 









Domestic Cap Ex Loans may be borrowed as Domestic Base
Rate Loans or Domestic LIBOR Loans. 
Amounts borrowed under this Section 1.3.2 may not be reborrowed.  The Domestic Cap Ex Loans shall be further evidenced
by, and repayable in accordance with the terms of, the applicable Domestic Cap
Ex Notes and shall be secured by all of the Domestic Collateral.


1.4           Optional Reductions of Domestic Revolving Credit
Commitments.  Domestic Borrower
may, at its option from time to time upon not less than three Business Days’
prior written notice to Administrative Agent, permanently reduce ratably in
part, the unused portion of the Domestic Revolving Credit Commitments,
provided, however, that (i) each such partial reduction shall be in an amount
of $1,000,000 or integral multiples of $250,000 in excess thereof and (ii) the
Domestic Revolving Credit Commitments shall not be reduced to an aggregate
amount of less than $10,000,000.  Except
for charges under subsection 3.2.5 applicable to prepayments of LIBOR
Advances, such reductions shall be without premium or penalty.


SECTION 2. INTEREST, FEES AND CHARGES


2.1           Interest.


2.1.1        Rates
of Interest.


(a)           Interest shall accrue on the principal
amount of the Domestic Base Rate Loans outstanding at the end of each day at a
fluctuating rate per annum equal to the Applicable Margin then in effect plus
the Domestic Base Rate.  Such rate of
interest shall increase or decrease by an amount equal to any increase or
decrease in the Domestic Base Rate, effective as of the opening of business on
the day that any such change in the Domestic Base Rate occurs.


(b)           Interest shall accrue on the principal
amount of Canadian Revolving Credit Loans outstanding at the end of each day at
a fluctuating rate per annum equal to the Applicable Margin then in effect plus
the Canadian Base Rate.  Such rate of
interest shall increase or decrease by an amount equal to any increase or
decrease in the Canadian Base Rate, effective as of the opening of business on the
day that any such change in the Canadian Base Rate occurs.


(c)           Interest shall accrue on the principal
amount of Domestic LIBOR Loans outstanding at the end of each day at a fixed
rate per annum equal to the Applicable Margin then in effect plus the
LIBOR for the applicable Interest Period for such Domestic LIBOR Loan.


(d)           Interest shall be paid solely in the same
currency as the underlying Loan is made.



 7
 









2.1.2        Default Rate of Interest. 
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest at
a rate per annum equal to 2.0% plus the interest rate otherwise applicable
thereto (the “Default Rate”).


2.1.3        Maximum
Interest.


(a)           In no event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under the Notes and
charged or collected pursuant to the terms of this Agreement or pursuant to the
Notes exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto
(the “Maximum Rate”).  If any
provisions of this Agreement or the Notes are in contravention of any such law,
such provisions shall be deemed amended to conform thereto.  If at any time, the amount of interest paid hereunder
is limited by the Maximum Rate, and the amount at which interest accrues
hereunder is subsequently below the Maximum Rate, the rate at which interest
accrues hereunder shall remain at the Maximum Rate, until such time as the
aggregate interest paid hereunder equals the amount of interest that would have
been paid had the Maximum Rate not applied.


(b)           Without limiting the provisions of
Section 2.1.3(a), if any provision of this Agreement or any of the other
Loan Documents would obligate Canadian Borrower to make any payment of interest
under the Canadian Obligations or other amount in an amount or calculated at a
rate which would be prohibited by law or would result in a receipt by the
applicable recipient of interest under the Canadian Obligations at a criminal
rate (as such terms are construed under the Criminal Code (Canada)) then,
notwithstanding such provision, such amount or rates shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by law or so result
in a receipt by such recipient of interest under the Canadian Obligations at a
criminal rate, such adjustment to be effected, to the extent necessary, as
follows:  (1) firstly, by reducing
the amount or rates of interest required to be paid to the recipient under this
Section 2.1.3(b); and (2) thereafter, by reducing any fees,
commissions, premiums and other amounts required to be paid by the Canadian
Borrower which would constitute interest under the Canadian Obligations for
purposes of Section 347 of the Criminal Code (Canada).  Notwithstanding the foregoing, and after
giving effect to all adjustments contemplated thereby, if the recipient of
payments by the Canadian Borrower shall have received an amount in excess of
the maximum permitted by that section of the Criminal Code (Canada), then
Canadian Borrower shall be entitled, by notice in writing to Canadian Agent for
the benefit of such recipient, to obtain reimbursement from such recipient in an
amount equal to such excess, and pending such reimbursement, such amount shall
be deemed to be an amount payable by such recipient to Canadian Borrower.  Any amount or rate of interest under the
Canadian Obligations referred to in this Section 2.1.3 shall be determined
in accordance with generally accepted actuarial practices and principles as an
effective annual rate of interest over the term that any Loan to Canadian
Borrower remains outstanding on the assumption that any charges, 



 8
 









fees or expenses
that fall within the meaning of “interest” (as defined in the Criminal Code
(Canada)) shall, if they relate to a specific period of time, be pro-rated over
that period of time and otherwise be pro-rated over the period from the Closing
Date to the date all Obligations have been indefeasibly paid in full and all
commitments to make Canadian Revolving Credit Loans have been terminated and,
in the event of a dispute, a certificate of a Fellow of the Canadian Institute
of Actuaries appointed by Canadian Agent shall be conclusive for the purposes
of such determination.


2.2           Computation of
Interest and Fees.


Interest, Domestic Letter of Credit and Domestic LC
Guaranty fees and unused line fees hereunder shall be calculated daily and
shall be computed on the actual number of days elapsed over a year of 360
days.  For the purpose of computing
interest hereunder, (a) all items of payment received by Administrative
Agent shall be applied by Administrative Agent on account of the Domestic
Obligations (subject to final payment of such items) one (1) Business Day
after receipt by Administrative Agent of such items in Administrative Agent’s
account located in Hartford, Connecticut and (b) all items of payment
received by Canadian Agent shall be applied by Canadian Agent on account of the
Canadian Obligations (subject to final payment of such items) one
(1) Business Day after receipt by Canadian Agent of such items in Canadian
Agent’s account located in Toronto, Ontario, Canada.  Unless otherwise set forth herein, all fees
shall be paid in the same currency as the underlying Loan is made or Domestic
Letter of Credit or Domestic LC Guaranty is issued for which such fee is
associated.


2.3           Fee Letter.


Borrowers shall pay to Administrative Agent certain
fees and other amounts in accordance with the terms of the fee letter between
Borrowers and Administrative Agent dated as of the date hereof (the “Fee Letter”).


2.4           Domestic Letter of
Credit and Domestic LC Guaranty Fees.  


Each applicable Borrower shall pay to Administrative
Agent (a) for Administrative Agent’s own account, a fronting fee equal to
0.25% multiplied by the available amount of each Domestic Letter of Credit
(and, without duplication, Domestic LC Guaranty) at the time of issuance of
such Domestic Letter of Credit (or, without duplication, Domestic LC Guaranty)
and at the time of any amendment to increase the amount of each such Domestic
Letter of Credit (or, without duplication, Domestic LC Guaranty)(on the amount
of any such increase), (b) for the ratable benefit of the applicable
Lenders, a fee equal to the Domestic LC Margin (provided that upon and after
the occurrence of an Event of Default, and during the continuation thereof, the
Domestic LC Margin shall be increased by 2.0% per annum) multiplied by the
aggregate available amount of all Domestic Letters of Credit and Domestic LC
Guaranties, as applicable, outstanding from time to time during the term of
this Agreement (calculated for each such Domestic Letter of Credit or Domestic
LC Guaranty from the date of issuance), which fees shall be payable monthly in
arrears on the first day of each month hereafter, and (c) for the benefit
of Bank of America as applicable, all normal and 



 9
 









customary charges
associated with the issuance, amendment, administration, processing, transfer
or negotiation of such Domestic Letters of Credit and Domestic LC Guaranties,
which fees and charges shall be deemed fully earned and shall be due and
payable upon issuance, amendment, transfer or negotiation of each such Domestic
Letter of Credit or Domestic LC Guaranty or such other times as notified by
Administrative Agent, as applicable, and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.


2.5           Unused Line Fee.  


Domestic Borrower shall pay to Administrative Agent,
for the ratable benefit of the Domestic Lenders, a fee (the “Unused Line Fee”)
equal to the Applicable Margin multiplied by the average daily amount by which
the Revolving Credit Maximum Amount exceeds the sum of the outstanding
principal balance of the Dollar Equivalent of the Revolving Credit Loans plus
the Domestic LC Amount plus the outstanding principal balance of the Domestic
Cap Ex Loans.  The Unused Line Fee shall
be payable in Dollars monthly in arrears on the first day of each month hereafter.


2.6           Fronting Fees and Participation Fees. 
The provisions of this Section 2.6 shall only be effective upon the
initial assignment of any of the Loans hereunder by Bank of America or Canadian
Lender to another lender in accordance with the provisions of this
Agreement.  When and as interest is
collected on Canadian Revolving Credit Loans, and until the Canadian Revolving
Credit Loans are refunded in accordance with Section 3.2.6, Canadian
Borrower shall distribute to the Canadian Lender a fee (the “Canadian
Fronting Fee”) equal to 1/8 of one percent (0.125%) per annum of the
outstanding principal balance of the Canadian Revolving Credit Loans, and
Canadian Agent shall distribute to the Canadian Participating Lenders, ratably,
a per annum fee (the “Canadian Participation Fee”) equal to the product
of such Canadian Participating Lender’s Canadian Percentage times the
Applicable Margin then in effect for Canadian Revolving Credit Loans with
respect to the aggregate principal amount of Canadian Revolving Credit Loans
outstanding from time to time during the term of this Agreement plus any
Default Rate then in effect.  The
Canadian Participation Fee shall be distributed by the Canadian Agent promptly
upon receipt of the relevant Applicable Margin by the Canadian Agent pursuant
to Section 2.1.1(b).  If Canadian
Borrower pays less than all of the interest then due and owing by it for any
period, that portion of the interest corresponding to the Canadian Participation
Fee shall be deemed to be the last portion of interest paid or to be paid.  For purposes of Section 2.13, any interest
distributed by Canadian Lender to a Canadian Participating Lender shall be
deemed to have been paid by Canadian Borrower.


2.7           Prepayment Fee.


Subject to the next sentence, Domestic Borrower shall
pay to Administrative Agent, for the ratable benefit of the Lenders, a fee in
the event that Borrowers elect to repay the Loans in full and terminate all
credit facilities provided pursuant to this Agreement.  Such fee shall be payable upon repayment of
the Loans and shall be in an amount equal to one percent (1%) of the Total
Credit Facility as of such date.



 10
 









2.8           Audit Fees.


Borrowers shall pay to Administrative Agent and
Canadian Agent, as the case may be, an audit fee of $850 per day per auditor
which is an employee of Administrative Agent or Canadian Agent (which daily
audit fee shall be subject to change from time to time without prior notice),
and, with respect to audits conducted by auditors which are not employees of
Administrative Agent or Canadian Agent, such audit fees as shall be charged by
such auditors, together with all reasonable out-of-pocket expenses incurred by
Administrative Agent or Canadian Agent, as the case may be, in connection with
audits of the books and records and Properties of Borrowers and their
Subsidiaries and such other matters as Administrative Agent or Canadian Agent,
as the case may be, shall deem appropriate in its sole judgment, whether such
audits are conducted by employees of Administrative Agent or Canadian Agent, as
the case may be, or by third parties hired by Administrative Agent or Canadian
Agent, as the case may be; provided that Canadian Borrower shall not be
responsible for such fees and expenses incurred with respect to Domestic
Borrower.  Such fees and out-of-pocket
expenses shall be payable within 10 days following the date of issuance by
Administrative Agent or Canadian Agent, as the case may be, of a request for
payment thereof to Borrower Representative.


2.9           Reimbursement of
Expenses.


If, at any time or times regardless of whether or not
an Event of Default then exists, (a) Administrative Agent and/or Canadian
Agent incurs legal or accounting expenses or any other costs or out-of-pocket
expenses (including, without limitation, costs or expenses of any third party
consultants, and costs or expenses relating to due diligence, transportation,
computer, duplication, appraisal, audit, insurance, searches, filing and
recording of documents) in connection with (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents and the
closing of the transactions contemplated hereby, Administrative Agent’s and
Canadian Agent’s due diligence in connection therewith, any amendment of or
modification of this Agreement or any of the other Loan Documents, or any sale
or attempted sale of any interest herein to any assignee (including, without
limitation, printing and distribution of materials to prospective Lenders and
all costs associated with bank meetings, but excluding any closing fees paid to
Lenders in connection therewith) or (ii) the administration of this
Agreement or any of the other Loan Documents and the transactions contemplated
hereby and thereby; or (b) Administrative Agent, Canadian Agent, or any
Lender incurs legal or accounting expenses or any other costs or out-of-pocket
expenses (including, without limitation, costs or expenses of any third-party
consultants) in connection with (i) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Administrative Agent,
Canadian Agent, any Lender, any Borrower or any other Person) relating to the
Collateral, this Agreement or any of the other Loan Documents or any affairs of
Borrower, any of its Subsidiaries, or any Guarantor; (ii) any attempt to enforce
any rights of Administrative Agent, Canadian Agent, or any Lender against any
Borrower or any other Person which may be obligated to Administrative Agent,
Canadian Agent, or any Lender by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or
(iii) any attempt to inspect, verify, protect, preserve, restore, collect,
sell, liquidate or otherwise dispose of or realize upon the Collateral; then
all 



 11
 









such reasonable legal and
accounting expenses, other costs and out of pocket expenses of Administrative
Agent, Canadian Agent, or any Lender, as applicable, shall be charged to
Borrowers; provided, that Borrowers shall not be responsible for such costs and
out-of-pocket expenses to the extent incurred because of the gross negligence
or willful misconduct of Administrative Agent, Canadian Agent, or any Lender;
and provided, further, that Canadian Borrower shall not be responsible for such
fees and expenses incurred with respect to Domestic Borrower.  Borrowers shall also reimburse Administrative
Agent and Canadian Agent for expenses incurred by Administrative Agent and
Canadian Agent in their administration of the Collateral to the extent and in
the manner provided in Section 2.11 hereof.


2.10         Bank Charges.


Borrowers shall pay to Administrative Agent and
Canadian Agent any and all fees, costs or expenses which Administrative Agent
or Canadian Agent pays to a bank or other similar institution arising out of or
in connection with (a) the forwarding to Borrowers or any other Person on
behalf of any Borrower, by Administrative Agent or Canadian Agent, of proceeds
of Loans made to any Borrower pursuant to this Agreement and (b) the
depositing for collection by Administrative Agent or Canadian Agent of any check
or item of payment received or delivered to Administrative Agent or Canadian
Agent on account of the Obligations; provided that Canadian Borrower shall not
be responsible for such fees, costs or expenses incurred with respect to
Domestic Borrower.


2.11         Collateral Protection
Expenses; Appraisals.


All out-of-pocket expenses incurred in protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, provincial or local authority on any of the Collateral or in
respect of the sale thereof shall be borne and paid by Borrowers; provided that
Canadian Borrower shall not be liable for any such expenses incurred with
respect to Domestic Borrower.  If
Borrowers fail to promptly pay any portion thereof when due, Administrative
Agent or Canadian Agent, as the case may be, may, at its option, but shall not
be required to, pay the same and charge Borrowers therefor.  Additionally, from time to time, if
Administrative Agent or Canadian Agent or any Lender determines that obtaining
appraisals is necessary in order for it to comply with applicable laws or
regulations, or is otherwise necessary in the reasonable credit judgment of
Administrative Agent or Canadian Agent, as the case may be, and at any time if
a Default or an Event of Default shall have occurred and be continuing,
Administrative Agent or Canadian Agent, as the case may be, may, at Borrowers’
expense, obtain appraisals from appraisers (who may be personnel of
Administrative Agent or Canadian Agent, as the case may be), stating the then
current fair market value or liquidation value of all or any portion of the
real (or immovable) Property or personal (or movable) Property of Borrowers or
any of their Subsidiaries. 
Administrative Agent also shall have the right to obtain such appraisals
periodically, at Borrowers’ expense, with respect to the real estate or
equipment of Borrowers to confirm the continuing adequacy of the value of such
Collateral as the basis for the Domestic Term Loan and Domestic Cap Ex
Loans.  In the event that personnel of
Administrative Agent or Canadian Agent conduct any such appraisal,
Administrative Agent’s or Canadian Agent’s, as applicable, then-prevailing
internal cost of such appraisal shall be payable by Borrowers (which cost per
appraisal shall be subject to change from time to time with respect to future
appraisals without prior notice).



 12
 









2.12         Payment of Charges.


All amounts chargeable to Domestic Borrower under this
Agreement shall be Obligations secured by all of the Domestic Collateral, all
amounts chargeable to Canadian Borrower under this Agreement shall be
Obligations secured by all of the Canadian Collateral, and in each case shall
be, unless specifically otherwise provided, payable on demand and shall bear
interest from the date demand was made or such amount is due, as applicable,
until paid in full at the rate applicable to that portion of the outstanding
principal amount of the Domestic Term Loan bearing interest with reference to
the Domestic Base Rate from time to time, with respect to amounts chargeable to
Domestic Borrower, and at the rate applicable to Canadian Revolving Credit
Loans, with respect to amounts chargeable to Canadian Borrower.


2.13         Taxes.


2.13.1      Subject to Section 2.13.5, all payments made by
Domestic Borrower to any Lender under this Agreement or any other Loan Document
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future taxes, levies, assessments, imposts, duties,
fees, deductions or withholdings or similar charges, and all liabilities with
respect thereto, now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority, excluding, in the case of Administrative
Agent and each Lender, any tax based upon or measured by net income (or taxes
that are expressly in substitution for, or relieve the indemnitee from, any tax
based on or measured by net income) imposed on Administrative Agent or such
Lender (including, without limitation, any transferee or assignee (including a
participation holder) (any such entity, a “Transferee”)), as the case
may be, as a result of a present or former connection between the jurisdiction
of the governmental authority imposing such tax and Administrative Agent or
such Lender (excluding a connection arising solely from Administrative Agent or
such Lender or Transferee having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any other
Loan Document) (all such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions and withholdings being hereinafter called “Domestic
Non-Excluded Taxes”).


2.13.2      Subject to Section 2.13.5, if Domestic Borrower
shall be required by law to deduct or withhold any Domestic Non-Excluded Taxes
or Further Taxes from or in respect of any sum payable hereunder to any Lender
or Administrative Agent, then:


(a)           the sum payable shall be increased as
necessary so that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section), such Lender or Administrative Agent, as the case may be,
receives and retains an amount equal to the sum it would have received and
retained had no such deductions or withholdings been made;



 13
 









(b)           Domestic Borrower shall make such
deductions and withholdings;


(c)           Domestic Borrower shall pay the full
amount deducted or withheld to the relevant taxing authority or other authority
in accordance with applicable law; and


(d)           Domestic Borrower shall also pay to each
Lender or Administrative Agent for the account of such Lender, at the time
interest is paid, Further Taxes in the amount that the respective Lender
reasonably specifies is necessary to preserve the after-tax yield such Lender
would have received if such Domestic Non-Excluded Taxes or Further Taxes had
not been imposed.


2.13.3      Subject to Section 2.13.5, Domestic Borrower
agrees to indemnify and hold harmless each Lender and Administrative Agent for
the full amount of Domestic Non-Excluded Taxes and Further Taxes in the amount
that the respective Lender or Administrative Agent reasonably specifies as
necessary to preserve the after-tax yield such Lender or Administrative Agent
would have received if such Domestic Non-Excluded Taxes or Further Taxes had
not been imposed, and any liability (including penalties, interest, additions
to tax and expenses) arising therefrom or with respect thereto, whether or not
such Domestic Non-Excluded Taxes or Further Taxes were correctly or legally
asserted.  Payment under this
indemnification shall be made within 30 days after the date the applicable
Lender or Administrative Agent makes written demand therefor specifying the
amount and basis for such determination.


2.13.4      Within 30 days after the date of any payment by
Domestic Borrower of Domestic Non-Excluded Taxes or Further Taxes, Domestic
Borrower shall furnish to each Lender or Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to such Lender or Administrative Agent.


2.13.5      (a)  Each Lender
or Transferee that is not a “United States Person” within the meaning of
Section 7701(a)(30) of the Code, agrees that it will deliver to the Borrower
Representative and Administrative Agent on or before the date it becomes a
Lender or Transferee two duly completed and signed copies of Form W-8BEN, Form
W-8ECI or Form W-8IMY or successor applicable form (relating to such Person and
entitling it to an exemption from, or reduction of, withholding tax on all
payments to be made to such Person by the Domestic Borrower pursuant to this
Agreement or the other Loan Documents) certifying that such Person is entitled
to receive all payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal income taxes (or,
in the case of a Transferee, that any such deduction or withholding is no
greater than it would have been for the Lender (or the Transferee) that
transferred or assigned its interest to such Transferee).  A Form W-8BEN completed and delivered by
(i) certain foreign trusts, or (ii) persons claiming an exemption or
reduced rate of withholding at source under an 



 14
 









income tax treaty will not
be considered duly completed unless the Form W-8BEN contains such person’s U.S.
taxpayer identification number.  Each
such Lender or Transferee also agrees (x) to deliver to the Borrower
Representative and Administrative Agent two further completed and signed copies
of one of such forms (or successor applicable forms) on or before the date that
any such statement or form expires or becomes obsolete or after the occurrence
of any event (including, without limitation, a change in such Lender’s or
Transferee’s lending office) requiring a change in the most recent statement or
form previously delivered by it to the Borrower Representative and
Administrative Agent, and (y) to obtain such extensions of the time for
filing and to renew such statements or forms and certifications thereof as may
reasonably be requested by the Borrower Representative or Administrative Agent,
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such statements or forms
inapplicable or which would prevent such Lender or Transferee from duly
completing and delivering any such statement or form with respect to it and
such Lender or Transferee so advises the Borrower Representative and
Administrative Agent.  If such Person
fails to deliver the above forms or other documentation, then Administrative
Agent may withhold from any interest payment to such Person an amount
equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction, provided that the Domestic Borrower shall
not be required to increase any such amounts payable to any Lender pursuant to
Section 2.13.1, unless the obligation to pay such increased amounts would
not have arisen but for a change in law. 
Each Lender or Transferee that is a “United States person”, as defined
under Section 7701(a)(30) of the Code, and that is not a corporation
agrees that it will deliver to the Borrower Representative and Administrative
Agent a Form W-9 stating that it is entitled to an exemption from United States
backup withholding tax.


(b)           Domestic Borrower shall not be required to pay any
additional amounts to any Lender or Transferee pursuant to this
Section 2.13 if the obligation to pay such additional amounts arose solely
from a failure by such Lender or Transferee to comply with the provisions of
Section 2.13.5(a) above.


2.13.6      If any Lender or Transferee claims exemption from, or
reduction of, withholding tax under a United States tax treaty by providing IRS
Form W-8BEN or W-8IMY (or any successor form) or claims an exemption from
withholding tax by providing an IRS Form W-8ECI (or any successor form) and
such Lender or Transferee sells, assigns or (other than pursuant to
Section 2.13.8 below) otherwise transfers all or part of the Obligations
of Domestic Borrower to a transferee Lender or Transferee, such Lender or
Transferee agrees to notify Administrative Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of Domestic Borrower
to such Lender or Transferee.  To the
extent of such percentage amount, Administrative Agent will treat such Lender
or Transferee’s IRS Form W-8BEN or W-8IMY (or any successor form) as no longer
valid.



 15















2.13.7      If any Lender or Transferee claims an exemption from,
or reduction of, withholding tax under a United States tax treaty by providing
IRS Form W-8BEN or W-8IMY (or any successor form) or claims an exemption from
withholding tax by providing Form W-8ECI (or successor form) and such Lender or
Transferee grants a participation in the Obligations of Domestic Borrower to a
transferee Lender or Transferee, such Lender or Transferee agrees to notify
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Domestic Borrower, and such Lender or
Transferee agrees to undertake responsibility to provide to Administrative
Agent such forms and documentation (including IRS Form W-8IMY and forms and
documentation provided by each participant to the extent required by the IRS)
to enable the Domestic Borrower to comply with the withholding tax requirements
imposed by Sections 1441 and 1442 of the Code.


2.13.8      (a)  If the IRS
or any other governmental authority of the United States or other jurisdiction
asserts a claim that Administrative Agent or Domestic Borrower did not properly
withhold tax or any other amount from amounts paid to or for the account of any
Lender or Transferee (because the appropriate form was not delivered or was not
properly executed, or because such Lender or Transferee failed to notify
Administrative Agent or Domestic Borrower of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender or Transferee shall indemnify Administrative
Agent or Domestic Borrower fully for all amounts paid, directly or indirectly,
by Administrative Agent or Domestic Borrower as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Administrative Agent or Domestic Borrower under this
Section 2.13, together with all costs and expenses (including reasonable
fees and expenses of legal counsel).  The
obligation of the Lenders or Transferees under this Section 2.13.8 shall
survive the payment of all Obligations and the resignation or replacement of
Administrative Agent.


(b)           If 
Administrative Agent or any Lender (or Transferee), as applicable,
receives a refund of a tax for which a payment has been made by Domestic
Borrower pursuant to this Section 2.13, which refund in the good faith judgment
of Administrative Agent or such Lender (or Transferee), as the case may be, is
attributable to such payment made by Domestic Borrower, then Administrative
Agent or such Lender (or Transferee), as the case may be, shall reimburse
Domestic Borrower for such amount as Administrative Agent or such Lender (or
Transferee), as the case may be, determines will leave it, after such reimbursement,
in the same position it would have been in if the payment of such tax and any
payment by Domestic Borrower under this Section 2.13 had not been made.  Administrative Agent and each Lender (or
Transferee), as the case may be, shall exercise good faith in determining
whether to make a claim for any refund. 
Subject to this Section 2.13.8(b), upon the request of Domestic
Borrower, Administrative Agent or such Lender (or Transferee), as applicable,
shall use reasonable efforts to cooperate with Domestic Borrower with a view to
obtaining a refund of any Domestic Non-Excluded Taxes with respect to which
Domestic Borrower has paid any amounts pursuant to this Section 2.13 and which
Domestic Borrower reasonably believes were not correctly or legally asserted.



 16
 









2.13.9      Any and all payments or reimbursements made by the
Canadian Borrower hereunder and under the other Loan Documents to Canadian
Agent, Canadian Lender or any Canadian Participating Lender shall be made
in  Canadian Dollars, as applicable, free
and clear of and without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto;
excluding, however, the following: franchise taxes and taxes imposed on the net
income of  Canadian Agent or Canadian
Lender by the jurisdiction under the laws of which  Canadian Agent or Canadian Lender is
organized or doing business or any political subdivision thereof and franchise
taxes and taxes imposed on its net income by the jurisdiction of Canadian Agent’s
or Canadian Lender’s applicable lending office or any political subdivision
thereof (all such taxes, levies, imposts, deductions, charges or withholdings
and all liabilities with respect thereto, excluding such franchise taxes and
taxes imposed on net income, herein “Canadian Non-Excluded Taxes”).  If Canadian Borrower (or Canadian Agent)
shall be required by law or the administration thereof to deduct any such
Canadian Non-Excluded Taxes from or in respect of any sum payable hereunder to
Canadian Agent, Canadian Lender or any Canadian Participating Lender, then the
sum payable hereunder shall be increased as may be necessary so that, after all
required deductions are made, Canadian Agent, Canadian Lender and any such
Canadian Participating Lender receives an amount equal to the sum it would have
received had no such deductions been made. 
Whenever any Canadian Non-Excluded Taxes are deducted by Canadian
Borrower, as soon as practicable thereafter, the Borrower Representative shall
send to Canadian Agent for its own account or for the account of the Canadian
Lender or Canadian Participating Lenders, as the case may be, a certified copy
of an original official receipt received by Canadian Borrower showing payment
thereof or other evidence of such payment reasonably satisfactory to the
Canadian Agent.  If Canadian Borrower
fails to pay any Canadian Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to Canadian Agent the required receipts or other
required documentary evidence, Canadian Borrower shall indemnify Canadian
Agent, Canadian Lender and Canadian Participating Lenders for any incremental
taxes, interest or penalties that may become payable by Canadian Agent,
Canadian Lender or Canadian Participating Lenders as a result of any such
failure.  Without in any way limiting the
foregoing, Canadian Borrower shall indemnify and hold harmless Canadian Agent,
Canadian Lender and Canadian Participating Lenders for any Canadian
Non-Excluded Taxes (including related interest and penalties, if any) that may
be incurred by Canadian Agent, Canadian Lender and/or Canadian Participating
Lender in respect of arrangements pertaining to the refunding, pursuant to
Section 3.2.6, of the Canadian Revolving Credit Loans and the Canadian
Participation Fees provided for pursuant to Section 2.6.


2.13.10    The agreements in this Section 2.13 shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.


SECTION 3. LOAN ADMINISTRATION


3.1           Manner of Borrowing Loans. 
Borrowings under the credit facility established pursuant to
Section 1 hereof shall be as follows:



 17
 









3.1.1        Loan Requests.


(a)           Domestic Revolving Credit Loan Requests. 
A request for a Domestic Revolving Credit Loan shall be made, or shall
be deemed to be made, in the following manner: 
(i) Borrower Representative may give Administrative Agent notice of
its intention to borrow, in which notice Borrower Representative shall specify
the amount of the proposed borrowing and the proposed borrowing date, no later
than 10:00 a.m. Los Angeles time on the proposed borrowing date (or in
accordance with Section 3.1.7 in the case of a request for a Domestic
LIBOR Loan), provided, however, that no such request may be made at a
time when there exists a Default or an Event of Default; and (ii) the
becoming due of any amount required to be paid under this Agreement, or the
Notes, by Domestic Borrower, whether as interest or for any other Domestic
Obligation, shall be deemed irrevocably to be a request for a Domestic
Revolving Credit Loan bearing interest in relation to the Domestic Base Rate on
the due date in the amount required to pay such interest or other Domestic
Obligation.


(b)           Canadian Revolving Credit Loan Requests. 
A request for a Canadian Revolving Credit Loan shall be made, or shall
be deemed to be made, in the following manner: (i) Borrower Representative
may give Administrative Agent and Canadian Agent notice of its intention to
borrow, in a form specified by Administrative Agent and the Canadian Agent,
which notice must be received by each of Administrative Agent and the Canadian
Agent prior to 10:00 a.m. (Los Angeles time) one (1) Business Day prior to the
requested borrowing date (provided, however, that no such request may be
made at a time when there exists a Default or an Event of Default) specifying:
(A) the amount of the proposed borrowing (which shall be no less than
cdn$100,000) and (B) the requested borrowing date, which shall be a
Business Day; and (ii) the becoming due of any amount required to be paid
under this Agreement, or the Notes, by Canadian Borrower, whether as interest
or for any other Canadian Obligation, shall be deemed irrevocably to be a
request for a Canadian Revolving Credit Loan on the due date in the amount
required to pay such interest or other Canadian Obligation.


(c)           Domestic Cap Ex Loan Requests. 
A request for a Domestic Cap Ex Loan shall be made, or shall be deemed
to be made,  in the following
manner:  Borrower Representative may give
Administrative Agent notice of its intention to borrow, in which notice
Borrower Representative shall specify the amount of the proposed borrowing and
the proposed borrowing date, no later than 10:00 a.m. Los Angeles time on the
proposed borrowing date (or in accordance with Section 3.1.7 in the case
of a request for a Domestic LIBOR Loan), provided, however, that no such
request may be made at a time when there exists a Default or an Event of
Default.  In addition, Borrower shall
also comply with the requirements of Section 1.3.2 with respect to such
Domestic Cap Ex Loan.


3.1.2        Disbursement.  Each Borrower
hereby irrevocably authorizes Administrative Agent and Canadian Agent, as the
case may be, to disburse the proceeds of each Revolving Credit Loan and each
Domestic Cap Ex Loan requested, or deemed to be requested, pursuant to
Section 3.1.1 as follows: 
(a) the proceeds of each Revolving Credit 



 18
 









Loan requested under
Sections 3.1.1(a)(i) or 3.1.1(b)(i) shall be disbursed by
Administrative Agent or Canadian Agent, as the case may be, in Dollars or
Canadian Dollars, as the case may be, in immediately available funds, in the
case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower Representative, and in the case of each
subsequent borrowing, by wire transfer to such bank account as may be agreed
upon by Borrower Representative and Administrative Agent from time to time;
(b) the proceeds of each Revolving Credit Loan deemed requested under
Section 3.1.1(a)(ii) or 3.1.1(b)(ii)  shall be disbursed, as the
case may be, by Administrative Agent by way of direct payment of the relevant
interest or other Domestic Obligation or by Canadian Agent by way of direct
payment of the relevant interest or other Canadian Obligation; and (c) the
proceeds of each Domestic Cap Ex Loan requested under Section 3.1.1(c) shall be
disbursed by Administrative Agent in Dollars in immediately available funds, as
directed by Borrower Representative in writing with respect to such Domestic
Cap Ex Loan.


3.1.3        Payment by Lenders. 
Administrative Agent shall give to each Domestic Lender prompt written
notice (which notice shall specify the requested date and amount of the
applicable Domestic Revolving Credit Loan or Domestic Cap Ex Loan, whether such
Domestic Revolving Credit Loan or Domestic Cap Ex Loan shall be a Domestic
LIBOR Loan, and the amount of each Domestic Lender’s advance thereunder (in
accordance with its applicable Domestic Revolving Loan Percentage or Domestic
Cap Ex Loan Percentage, as applicable)) by facsimile, telex or cable of the
receipt by Administrative Agent from Borrower Representative of any request for
a Domestic Revolving Credit Loan or a Domestic Cap Ex Loan, and Administrative
Agent shall give to each Canadian Participating Lender prompt written notice by
facsimile, telex or cable of the receipt by Administrative Agent from Canadian
Lender of any Notice of Canadian Revolving Loan Refunding (as defined in
Section 3.2.6 below).  Each Domestic
Lender shall, and each Canadian Participating Lender shall, not later than
12:00 noon (Los Angeles time) or 12:00 noon (Toronto time), respectively, on
the applicable requested date of funding, wire to a bank designated by
Administrative Agent the amount of that Domestic Lender’s Domestic Revolving
Loan Percentage of the requested Domestic Revolving Credit Loan, Domestic
Lender’s Domestic Cap Ex Loan Percentage of the requested Domestic Cap Ex Loan,
or that Canadian Participating Lender’s Canadian Percentage of the outstanding
principal amount of Canadian Revolving Credit Loans.  The failure of any Domestic Lender or
Canadian Participating Lender to make the Domestic Revolving Credit Loans,
Domestic Cap Ex Loans, or Canadian Revolving Credit Loans refunding, as the
case may be, to be made by it shall not release any other Domestic Lender or
Canadian Participating Lender, as the case may be, of its obligations hereunder
to make its Domestic Revolving Credit Loan, Domestic Cap Ex Loans, or Canadian
Revolving Credit Loan refunding, as the case may be.  Neither Administrative Agent, or Canadian
Agent, nor any other Domestic Lender or Canadian Participating Lender shall be
responsible for the failure of any other Domestic Lender or Canadian
Participating Lender, as the case may be, to make the Domestic Revolving Credit
Loan, the Domestic Cap Ex Loan, or Canadian Revolving Credit Loan refunding, as
the case may be, to be made by such other Domestic Lender or Canadian
Participating Lender, as the case may be. 
The foregoing notwithstanding, Administrative Agent or Canadian Agent,
as applicable, in its sole discretion, may from its own funds make a Domestic
Revolving Credit 



 19
 









Loan on behalf of any
Domestic Lender, or a Domestic Cap Ex Loan, or a Canadian Revolving Credit Loan
refunding on behalf of any Canadian Participating Lender.  In such event, the Domestic Lender or
Canadian Participating Lender on behalf of whom Administrative Agent or
Canadian Agent made the Domestic Revolving Credit Loan, Domestic Cap Ex Loan or
Canadian Revolving Credit Loan refunding, as the case may be, shall reimburse
Administrative Agent or Canadian Agent, as applicable, for the amount of such
Domestic Revolving Credit Loan, Domestic Cap Ex Loan, or Canadian Revolving
Credit Loan refunding, as the case may be, made on its behalf, on a weekly (or
more frequent, as determined by Administrative Agent or Canadian Agent, as
applicable, in its sole discretion) basis. 
The entire amount of interest attributable to such Domestic Revolving
Credit Loan, Domestic Cap Ex Loan, or Canadian Revolving Credit Loan refunding,
as the case may be, for the period from the date on which such Domestic
Revolving Credit Loan, Domestic Cap Ex Loan, or Canadian Revolving Credit Loan
refunding, as the case may be, was made by Administrative Agent or Canadian
Agent on such Domestic Lender’s or Canadian Participating Lender’s, as the case
may be, behalf until Administrative Agent or Canadian Agent, as applicable, is
reimbursed by such Domestic Lender or Canadian Participating Lender, as the
case may be, shall be paid to Administrative Agent or Canadian Agent, as
applicable, for its own account.


3.1.4        Authorization.


(a)           Domestic Borrower hereby irrevocably
authorizes Administrative Agent to advance on behalf of Domestic Borrower, and
to charge to Domestic Borrower’s Domestic Loan Account hereunder as a Domestic
Revolving Credit Loan (which shall be a Domestic Base Rate Loan), a sum
sufficient to pay all interest accrued on the Domestic Obligations during the
immediately preceding month and to pay all fees, costs and expenses and other Domestic
Obligations at any time owed by Domestic Borrower to Administrative Agent or
any Lender hereunder.


(b)           Canadian Borrower hereby irrevocably
authorizes Canadian Agent to advance on behalf of Canadian Borrower, and to
charge to Canadian Borrower’s Canadian Loan Account hereunder as a Canadian
Revolving Credit Loan, a sum sufficient to pay interest accrued on the Canadian
Obligations during the immediately preceding month and to pay all fees, costs
and expenses and other Canadian Obligations at any time owed by Canadian
Borrower to Canadian Agent, Canadian Lender, or Canadian Participating Lenders
hereunder.


3.1.5        Domestic Letter of Credit and Domestic LC Guaranty
Requests.  A request for a Domestic Letter of Credit or
Domestic LC Guaranty shall be made in the following manner:  Borrower Representative may give
Administrative Agent a written notice of its request for the issuance of a
Domestic Letter of Credit or Domestic LC Guaranty, not later than 10:00 a.m.
Los Angeles time, three (3) Business Days before the proposed issuance date
thereof, in which notice Borrower Representative shall specify the proposed
beneficiary, issuance date, expiration date and format and wording for the
Domestic Letter of Credit or Domestic LC Guaranty being requested (which shall
be satisfactory to Administrative Agent, or any other Person asked to issue
such Domestic Letter of Credit or Domestic LC Guaranty); provided, that
no such request may be made at a time when there exists a Default or Event of
Default.  Such request shall be
accompanied by an executed application and reimbursement agreement in form and
substance satisfactory to Administrative Agent and the Person being asked to
issue the Domestic Letter of Credit or Domestic LC Guaranty, as well as any
required resolutions.



 20
 









3.1.6        Method of Making Requests. 
As an accommodation to Borrowers, unless a Default or an Event of
Default is then in existence, (a) Administrative Agent shall permit
telephonic requests for Domestic Revolving Credit Loans or Domestic Cap Ex
Loans to Administrative Agent; provided that in the case of requests for
Domestic Cap Ex Loans, Borrower has previously delivered to Administrative
Agent the written materials required by Section 1.3.2, (b) Administrative
Agent may, in its discretion, permit electronic transmittal of requests for
Domestic Letters of Credit and Domestic LC Guaranties to Administrative Agent,
and (c) Administrative Agent may, in Administrative Agent’s discretion,
permit electronic transmittal of instructions, authorizations, agreements or
reports to Administrative Agent.  All
other instructions, authorizations, agreements or reports must be in written
hard copy form (including by facsimile). 
Unless Borrower Representative specifically directs Administrative Agent
in writing not to accept or act upon telephonic or electronic communications
from Borrower Representative, Administrative Agent shall not have any liability
to Borrowers for any loss or damage suffered by Borrowers as a result of
Administrative Agent’s honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to
Administrative Agent by an authorized officer of Borrower Representative, and
Administrative Agent shall not have any duty to verify the origin of any such
communication or the authority of the Person sending it.  Each telephonic request for a Revolving
Credit Loan, Domestic Cap Ex Loan, Domestic Letter of Credit or Domestic LC Guaranty
accepted by Administrative Agent, hereunder shall be promptly followed by a
written confirmation of such request from Borrower Representative to
Administrative Agent.


3.1.7        Domestic LIBOR Loans. 
Notwithstanding the provisions of Section 3.1.1(a), in the event
Borrower Representative desires to obtain a Domestic LIBOR Loan, Borrower
Representative shall give Administrative Agent prior, written, irrevocable
notice no later than 10:00 a.m. Los Angeles time on the second (2nd) Business Day prior to the requested borrowing date
specifying (i) Borrower Representative’s election to obtain a Domestic
LIBOR Loan, (ii) the date of the proposed borrowing (which shall be a
Business Day), (iii) the length of the Interest Period, and (iv) the
amount to be borrowed, which amount shall be in a minimum principal amount of
$1,000,000 and may increase in integral multiples of $500,000.  In no event shall Domestic Borrower be
permitted to have outstanding at any one time in the aggregate more than five
(5) different Domestic LIBOR Loans.


3.1.8        Conversion of Domestic Base Rate Loans. 
Provided that no Default or Event of Default has occurred which is then
continuing, Borrower Representative may, on any Business Day, convert any
Domestic Base Rate Loan into a Domestic LIBOR Loan.  If Borrower Representative desires to convert
a Domestic Base Rate Loan, Borrower Representative shall give Administrative
Agent not less than two (2) Business Days’ prior 



 21
 









written notice (prior to
10:00 a.m. Los Angeles time on such Business Day), specifying the date of such
conversion, the amount to be converted, and the length of the Interest
Period.  Each conversion into or
conversion of a Domestic LIBOR Loan shall be in a minimum principal amount of
$1,000,000 and may increase in integral multiples of $500,000 in excess
thereof.  After giving effect to any
conversion of Domestic Base Rate Loans to Domestic LIBOR Loans, the number of
Domestic LIBOR Loans outstanding shall not exceed five (5).


3.1.9        Continuation of Domestic LIBOR Loans. 
Borrower Representative shall have the right on two (2) Business Days’
prior irrevocable written notice given to Administrative Agent by Borrower
Representative (prior to 10:00 a.m. Los Angeles time on such Business Day),
subject to the provisions hereof, to continue any Domestic LIBOR Loan into a
subsequent Interest Period of the same or a different permitted duration, in
each case subject to the satisfaction of the following conditions:


(a)           in the case of a continuation of less
than all Domestic LIBOR Loans, the Domestic LIBOR Loans continued shall each be
in a minimum principal amount of $1,000,000 and may increase in integral
multiples of $500,000; and


(b)           no Domestic LIBOR Loan (or portion
thereof) may be continued as a Domestic LIBOR Loan if a Default or Event of
Default has occurred which is then continuing or if, after giving effect to
such continuation, Domestic Borrower shall have outstanding in the aggregate
more than five (5) separate Domestic LIBOR Loans.


If Borrower Representative shall fail to give timely
notice of its election to continue any Domestic LIBOR Loan or portion thereof
as provided above, or if such continuation shall not be permitted, such
Domestic LIBOR Loan or portion thereof, unless such Domestic LIBOR Loan shall
be repaid, shall automatically be converted into a Domestic Base Rate Loan at
the end of the Interest Period then in effect with respect to such Domestic
LIBOR Loan.


3.1.10      Inability to Make Domestic LIBOR Loans. 
Notwithstanding any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of
this Section 3.1.10, the term “Lender” shall include the office or branch
where a Lender or any corporation or bank then controlling such Lender makes or
maintains any Domestic LIBOR Loan) to make or maintain its Domestic LIBOR Loans
or if with respect to any Interest Period, Administrative Agent is unable to
determine the LIBOR relating thereto, or adverse or unusual conditions in, or
changes in applicable law relating to, the London interbank market make it, in
the reasonable judgment of Administrative Agent impracticable to fund therein
any of the Domestic LIBOR Loans or make the projected LIBOR unreflective of the
actual costs of funds therefor to any Lender, the obligation of Administrative
Agent and Lenders to make or continue Domestic LIBOR Loans or convert Domestic
Base Rate Loans to Domestic LIBOR Loans, as the case may be, hereunder shall forthwith
be suspended during the pendency of such circumstances and Borrowers shall, if
any affected Domestic LIBOR Loans are then outstanding, promptly upon request
from Administrative Agent convert such affected Domestic LIBOR Loans into
Domestic Base Rate Loans.



 22
 









3.1.11      Borrower Representative.  Each Borrower
hereby designates Domestic Borrower as its representative and agent on its
behalf for the purposes of requests for Loans, giving instructions with respect
to the disbursement of the proceeds of the Loans, selecting interest rate
options, requesting Domestic Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or Borrowers under the Loan Documents.  Domestic Borrower hereby accepts such
appointment as Borrower Representative. 
Administrative Agent, Canadian Agent, and each Lender may regard any
notice or other communication pursuant to any Loan Document from Borrower
Representative as a notice or communication from all Borrowers, any group of
Borrowers or any Borrower, as the case may be, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to Borrower Representative on behalf of such Borrower or
Borrowers.  Each Borrower agrees that
each notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Borrower Representative shall be deemed for
all purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower.


3.2           Payments.


Except where evidenced by notes or other instruments
issued or made by Borrowers to any Lender and accepted by such Lender
specifically containing payment instructions that are in conflict with this
Section 3.2 (in which case the conflicting provisions of said notes or
other instruments shall govern and control), the Obligations shall be payable
as follows:


3.2.1        Principal.


(a)           Domestic Revolving Credit Loans. 
Principal payable on account of Domestic Revolving Credit Loans shall be
payable by Domestic Borrower to Administrative Agent for the ratable benefit of
Domestic Lenders, in addition to the circumstances described in
Section 3.3.3, immediately upon the earliest of (i) the receipt by
Administrative Agent or Domestic Borrower of any proceeds of any of the
Domestic Collateral (except as otherwise provided herein), including without
limitation pursuant to Sections 3.3.1, 3.3.2(a) and 6.2.4, to the extent
of such proceeds, subject to Domestic Borrower’s rights to reborrow such
amounts in compliance with Section 1.1.1 hereof; (ii) the occurrence
of an Event of Default in consequence of which Administrative Agent or Majority
Lenders elect to accelerate the maturity and payment of the Obligations, or
(iii) termination of this Agreement pursuant to Section 4 hereof.  Each payment (including principal prepayments)
by Domestic Borrower on account of principal of the Domestic Revolving Credit
Loans shall be applied first to Domestic Base Rate Loans, then to Domestic
LIBOR Loans.



 23
 









(b)           Domestic Term Loan. 
The principal amount of the Domestic Term Loan shall be payable in equal
monthly installments of $41,666.67 commencing with September 1, 2007 and on the
first day of each succeeding calendar month during the Term, and Domestic
Borrower shall in any event repay the then outstanding principal balance of the
Domestic Term Loan on the last day of the Term. 
Any prepayments of the Domestic Term Loan shall be applied to these
installments in the inverse order of their maturity.  Principal payable on account of Domestic
Terms Loans shall also be payable by Domestic Borrower to Administrative Agent
for the ratable benefit of Domestic Lenders, in addition to the circumstances
described in Section 3.3.3, immediately upon the earliest of (i) the
receipt by Administrative Agent or Domestic Borrower of any proceeds of any of
the Domestic Collateral (except as otherwise provided herein), including
without limitation pursuant to Sections 3.3.1 and 6.2.4, to the extent of
such proceeds; (ii) the occurrence of an Event of Default in consequence
of which Administrative Agent or Majority Lenders elect to accelerate the
maturity and payment of the Obligations, or (iii) termination of this
Agreement pursuant to Section 4 hereof. 
Each payment (including principal prepayments) by Domestic Borrower on
account of principal of the Domestic Term Loan shall be applied first to
Domestic Base Rate Loans, then to Domestic LIBOR Loans.


(c)           Domestic Cap Ex Loans. 
The principal amount of the Domestic Cap Ex Loans shall be payable in
monthly installments in the amounts set forth in each Domestic Cap Ex Note,
which amounts shall be equal to the original principal of such Domestic Cap Ex
Note divided by 60.  Such principal
payments shall be payable commencing with the first full calendar month
following the delivery of the initial Domestic Cap Ex Note and on the first day
of each succeeding calendar month during the Term, and Domestic Borrower shall
in any event repay the then outstanding principal balance of the Domestic Cap
Ex Loans on the last day of the Term. 
Any prepayments of the Domestic Cap Ex Loans shall be applied to these
installments in the inverse order of their maturity.  Principal payable on account of Domestic Cap
Ex Loans shall also be payable by Domestic Borrower to Administrative Agent for
the ratable benefit of Domestic Lenders, in addition to the circumstances
described in Section 3.3.3, immediately upon the earliest of (i) the
receipt by Administrative Agent or Domestic Borrower of any proceeds of any of
the Domestic Collateral (except as otherwise provided herein), including without
limitation pursuant to Sections 3.3.1 and 6.2.4, to the extent of such
proceeds; (ii) the occurrence of an Event of Default in consequence of
which Administrative Agent or Majority Lenders elect to accelerate the maturity
and payment of the Obligations, or (iii) termination of this Agreement
pursuant to Section 4 hereof.  Each
payment (including principal prepayments) by Domestic Borrower on account of
principal of the Domestic Cap Ex Loans shall be applied first to Domestic Base
Rate Loans, then to Domestic LIBOR Loans.



 24
 









(d)           Canadian Revolving Credit Loans. 
Principal on account of Canadian Revolving Credit Loans shall be payable
by Canadian Borrower to Canadian Agent for the ratable benefit of the Canadian
Lender and the Canadian Participating Lenders, in addition to the circumstances
described in Section 3.3.3, immediately upon the earliest of (i) the
receipt by Canadian Borrower of any proceeds of any of the Collateral (except
as otherwise provided herein), including without limitation pursuant to Sections 3.3.1,
3.3.2(b) and 6.2.4, to the extent of such proceeds, subject to Canadian
Borrower’s right to reborrow such amounts in compliance with Section 1.1.2
hereof, (ii) the occurrence of an Event of Default in consequence of which
Administrative Agent or Majority Lenders elect to accelerate the maturity and
payment of the Obligations, or (iii) termination of this Agreement
pursuant to Section 4 hereof.


3.2.2        Interest.  Interest
accrued on all Loans shall be due and payable on each applicable Interest Payment
Date and on the earliest of (a) the occurrence of an Event of Default in
consequence of which Administrative Agent or Majority Lenders elect to
accelerate the maturity and payment of the Obligations or (b) termination
of this Agreement pursuant to Section 4 hereof.


3.2.3        Costs, Fees and Charges.  Costs, fees
and charges payable pursuant to this Agreement shall be payable by Borrowers to
Administrative Agent and Canadian Agent, as and when provided in Section 2
or Section 3 hereof or to any other Person designated by Administrative
Agent or Canadian Agent in writing.


3.2.4        Other Obligations.  The balance
of the Domestic Obligations requiring the payment of money, if any, shall be
payable by Domestic Borrower to Administrative Agent for distribution to Domestic
Lenders or any other Lender, as appropriate, the balance of the Canadian
Obligations requiring the payment of money, if any, shall be payable by
Canadian Borrower to Canadian Agent for distribution to Canadian Agent,
Canadian Lender, and the Canadian Participating Lenders, as appropriate, in
each case as and when provided in this Agreement, the Other Agreements or the
Security Documents, or on demand, whichever is later.


3.2.5        Prepayment of or Failure to Borrow Domestic LIBOR
Loans.  Except as otherwise provided in this Section
3.2.5, repayment of a Domestic LIBOR Loan shall occur only on the last day of
the Interest Period for such Domestic LIBOR Loan.  Borrowers may prepay a Domestic LIBOR Loan
only upon at least two (2) Business Days prior written notice (which notice
shall be irrevocable), and subject to the provisions of this Section
3.2.5.  Domestic Borrower shall pay to
Administrative Agent, upon request of Administrative Agent, such amount or
amounts as shall be sufficient (in the reasonable opinion of Administrative
Agent) to compensate Domestic Lenders for any loss, cost, or expense incurred
as a result of:  (a) any payment of
a Domestic LIBOR Loan on a date other than the last day of the Interest Period
for such Loan; (b) any failure by Domestic Borrower to borrow a Domestic
LIBOR Loan on the date specified by Borrower Representative’s applicable
written notice; or (c) any failure by Domestic Borrower to pay a Domestic
LIBOR Loan on the date for payment specified in Borrower Representative’s written
notice. Without limiting the foregoing, in connection with any prepayment of a
Domestic LIBOR Loan, Borrowers shall pay, as applicable, to Administrative
Agent, for the ratable benefit of 



 25
 









Domestic Lenders, a “yield
maintenance fee” in an amount computed as follows:  the greater of (i) $150.00 (which amount
shall be subject to change from time to time without prior notice), and
(ii) the amount obtained when the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond
equivalent) with a maturity date closest to the Interest Period chosen pursuant
to the Domestic LIBOR Loan as to which the prepayment is made, is subtracted
from the LIBOR in effect at the time of prepayment.  If the result in clause (ii) above is
zero or a negative number, the yield maintenance fee shall be $150.00.  If the result in clause (ii) above is
a positive number, then the resulting percentage shall be multiplied by the
amount of the principal balance being prepaid. 
The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the Interest Period chosen pursuant to the Domestic
LIBOR Loan as to which the prepayment is made. 
Such amount shall be reduced to present value calculated by using the above
referenced United States Treasury securities rate  and the number of days remaining in the term
chosen pursuant to the Domestic LIBOR Loan as to which prepayment is made.  The resulting amount shall be, if greater
than $150.00, as applicable, the yield maintenance fee due to Administrative
Agent, for the ratable benefit of Domestic Lenders, upon the prepayment of a
Domestic LIBOR Loan.  If by reason of an
Event of Default, Administrative Agent or Majority Lenders elect to declare the
Obligations to be immediately due and payable, then any yield maintenance fee
with respect to a Domestic LIBOR Loan, as the case may be, shall become due and
payable in the same manner as though Borrowers had exercised such right of
prepayment.


3.2.6        Canadian Revolving Credit Loans Refunding.


(a)           If any Default or Event of Default shall
occur and be continuing, the Canadian Lender may, in its sole and absolute
discretion, direct that the Canadian Revolving Credit Loans owing to it be
refunded by delivering a notice (with such detail as Administrative Agent shall
request, a “Notice of Canadian Revolving Loan Refunding”) to
Administrative Agent.  Upon receipt of
any such notice, Administrative Agent shall (i) promptly give notice of
the contents thereof to the Canadian Participating Lenders and, unless an Event
of Default described in Sections 10.1.8 or 10.1.9 shall have occurred, to
the Borrower Representative and (ii) calculate the aggregate principal
amount of Canadian Revolving Credit Loans (the “Canadian Dollar Refunding Amount”).  Each such Notice of Canadian Revolving Loan
Refunding shall be deemed to constitute delivery of a notice to Administrative
Agent requesting each Canadian Participating Lender to immediately transfer to
the Canadian Lender, in immediately available funds, the amount of such
Canadian Participating Lender’s participation with reference to the Canadian
Dollar Refunding Amount, as the case may be.


(b)           Whenever, at any time after a Canadian
Participating Lender has funded a participating interest in a Canadian
Revolving Credit Loan, the Canadian Lender receives any payment on account
thereof, the Canadian Lender will distribute to Administrative Agent for
delivery to such Canadian Participating Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Canadian Participating 



 26
 









Lender’s
participating interest was outstanding and funded); provided, however,
that in the event that such payment received by the Canadian Lender is required
to be returned, such Canadian Participating Lender will return to
Administrative Agent for delivery to the Canadian Lender any portion thereof
previously distributed by Administrative Agent or the Canadian Lender to it.


(c)           Each Canadian Participating Lender’s
obligation to fund the participating interests referred to in this
Section 3.2.6 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Canadian
Participating Lender or any Borrower may have against the Canadian Lender, any
Canadian Participating Lender, any Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default, (iii) any adverse change in the condition (financial or
otherwise) of any Borrower, (iv) any breach of this Agreement or any other
Loan Document by any Borrower, any Guarantor, any Subsidiary of any Borrower or
any other Lender, or (v) any other circumstances, happening or event
whatsoever, whether or not similar to any of the foregoing.


3.2.7        Satisfaction of Corresponding
Obligations.  Any payment of
principal or interest under this Agreement in respect of a Domestic Term Loan,
Domestic Cap Ex Loan or a Revolving Credit Loan will be taken to be a payment
under the relevant Domestic Term Note, Domestic Cap Ex Note or Revolving Note,
as applicable (and all payments of principal or interest made under a Domestic
Term Note, Domestic Cap Ex Note, or a Revolving Note will also be taken to
discharge the equivalent liability under this Agreement).


3.3           Mandatory and
Optional Prepayments.


3.3.1        Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral.


(a)           Except as provided in Sections 6.4.2
and 8.2.10, if any Borrower or any of its Subsidiaries sells any of the
Equipment or real (or immovable) Property, or if any of the Collateral owned by
such Borrower or such Subsidiary is lost or destroyed or taken by condemnation,
(i) Domestic Borrower shall pay, in the case of Domestic Borrower and all other
Subsidiaries other than Canadian Borrower, unless otherwise agreed by Majority
Lenders, to Administrative Agent for the benefit of Administrative Agent and
the Lenders for application towards the Obligations, and (ii) Canadian Borrower
shall pay in the case of Canadian Borrower, to Canadian Agent for the benefit
of Canadian Agent, Canadian Lender, and the Canadian Participating Lenders for
application towards the Canadian Obligations, as and when received by such
Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as
herein provided, a sum equal to the proceeds (including insurance payments but
net of costs and taxes incurred in connection with such sale or event) received
by such Borrower or such Subsidiary from such sale, loss, destruction or 



 27
 









condemnation,
provided that (i) with respect to the sale, loss, destruction or taking of the
assets of the Channell Australia Entities, the proceeds of such sale, loss,
destruction or taking shall be, to the extent permitted under the Channell
Bushman Credit Facility, applied to the outstanding obligations under any
intercompany loans owed to Borrowers by the Channell Australia Entities, but
only to the extent any such intercompany loans exist at such time, and (ii)
Canadian Borrower shall only be required to pay from the proceeds of any of
sale, loss, destruction or taken of the assets of the Canadian Borrower an
amount equal to the then outstanding Canadian Obligations, and Domestic
Borrower shall make a payment in respect of the Domestic Obligations in an
amount equal to the remaining amount of such proceeds.


(b)           To the extent that the Domestic
Collateral sold, lost, destroyed or condemned consists of Equipment other than
Equipment that was purchased with the proceeds of Domestic Cap Ex Loans, real
Property, or other Property other than Accounts or Inventory, the applicable
prepayment under this Section 3.3.1 shall be applied (i) FIRST to the installments of principal due under the
Domestic Term Notes evidencing the Domestic Term Loan ratably, to be applied to
future installment payments in inverse order of maturity until paid in full, (ii) SECOND to the
installments of principal due under the Domestic Cap Ex Notes evidencing the
Domestic Cap Ex Loans  ratably, to be
applied to future installment payments in inverse order of maturity until paid
in full, (iii) THIRD to repay ratably outstanding
principal of Domestic Revolving Credit Loans (but shall not permanently reduce
the Domestic Revolving Credit Commitments), (iv) FOURTH
to pay any other Domestic Obligations owing by Domestic Borrower, and (v) FIFTH, at Administrative Agent’s option, to be held by
Administrative Agent as security for repayment of any remaining Domestic
Obligations (or to be released to Domestic Borrower, if there are no remaining
Obligations and the Commitment Termination has occurred).


(c)           To the extent that the Domestic
Collateral sold, lost, destroyed or condemned consists of Equipment purchased
with the proceeds of Domestic Cap Ex Loans, the applicable prepayment under
this Section 3.3.1 shall be applied (i) FIRST to
the installments of principal due under the Domestic Cap Ex Notes evidencing
the Domestic Cap Ex Loans  ratably, to be
applied to future installment payments in inverse order of maturity until paid
in full, (ii) SECOND
to the installments of principal due under the Domestic Term Notes evidencing
the Domestic Term Loan ratably, to be applied to future installment payments in
inverse order of maturity until paid in full, (iii) THIRD
to repay ratably outstanding principal of Domestic Revolving Credit Loans (but
shall not permanently reduce the Domestic Revolving Credit Commitments), (iv) FOURTH to pay any other Domestic Obligations owing by
Domestic Borrower, and (v) FIFTH at
Administrative Agent’s option, to be held by Administrative Agent as security
for repayment of any remaining Domestic Obligations (or to be released to
Domestic Borrower, if there are no remaining Obligations and the Commitment
Termination has occurred).



 28
 









(d)           any prepayment under this
Section 3.3.1 with respect to Canadian Collateral shall be applied (i) FIRST to repay ratably outstanding principal of Canadian
Revolving Credit Loans (but shall not permanently reduce the Canadian Revolving
Credit Sub-Limit), (ii) SECOND to pay
any other Canadian Obligations owing by Canadian Borrower, and (iii) THIRD, at Canadian Agent’s option, to be held by Canadian
Agent as security for repayment of any remaining Canadian Obligations (or to be
released to Canadian Borrower, if there are no remaining Canadian Obligations
and the Commitment Termination has occurred).


(e)           Notwithstanding the foregoing, if the
proceeds of insurance (net of costs and taxes incurred) with respect to any
loss or destruction of Equipment, Inventory or real (or immovable) Property
(i) are less than $250,000, unless an Event of Default is then in
existence, Administrative Agent shall remit such proceeds to the applicable
Borrower for use in replacing or repairing the damaged Collateral or
(ii) are equal to or greater than $250,000 and the applicable Borrower has
requested that Administrative Agent agree to permit such Borrower or the
applicable Subsidiary to repair or replace the damaged Collateral, such amounts
shall be provisionally applied to reduce the outstanding principal balance of
the applicable Revolving Credit Loans until the earlier of Administrative Agent’s
decision with respect thereto or the expiration of 120 days from such
request.  If Administrative Agent agrees,
in its reasonable judgment, to permit such repair or replacement under such
clause (ii), such amount shall, unless an Event of Default is in
existence, be remitted to the applicable Borrower for use in replacing or
repairing the damaged Collateral; if Administrative Agent declines to permit
such repair or replacement or does not respond to the applicable Borrower
within such 120 day period, such amount shall be applied to the Loans in the
manner specified in clauses (b) through (d) of this Section 3.3.1 until
payment thereof in full.


3.3.2        Prepayment Upon Exceeding Commitments and Borrowing
Base.


(a)           Domestic Revolving Credit Loans. 
Domestic Borrower shall prepay the outstanding principal amount of the
Domestic Revolving Credit Loans on any date on which (i) the aggregate amount
of the Domestic Revolving Credit Exposure of all the Domestic Lenders exceeds
the Aggregate Borrowing Base then in effect (minus Reserves, if any) or (ii)
the aggregate amount of the Domestic Revolving Credit Exposure of all the
Domestic Lenders and the Canadian Revolving Credit Exposure of the Canadian
Lender exceeds the Revolving Credit Maximum Amount (minus the Dollar Equivalent
of the aggregate principal amount of the outstanding Canadian Revolving Credit
Loans minus Reserves, if any), in the amount of such excess.


(b)           Canadian Revolving Credit Loans. 
Canadian Borrower shall prepay the outstanding principal amount of
Canadian Revolving Credit Loans on any date on which the aggregate amount of
the Canadian Revolving Credit Exposure of the Canadian Lender would exceed
(including, without limitation, solely as a result of fluctuation in exchange
rates) the Canadian Borrowing Base then in effect (minus  



 29
 









Reserves
applicable to Canadian Revolving Credit Loans, if any), in the amount of such
excess and in the applicable currency; provided, however, that if
such excess is solely as a result of fluctuation in exchange rates, such
repayment shall not be required to be made until two Business Days after notice
from the Canadian Agent, and Canadian Borrower shall not be obligated to pay
such amount unless such excess is greater than the Dollar Equivalent of an
amount equal to 1% of the Canadian Revolving Credit Sub-Limit then in
effect.  Any such prepayment shall be
applied to repay ratably outstanding principal of Canadian Revolving Credit
Loans (but shall not permanently reduce the Canadian Revolving Credit
Sub-Limit).


3.3.3        Proceeds from Issuance of Additional Indebtedness or
Equity.  If any Borrower or any Subsidiary issues any additional
Indebtedness for Money Borrowed or issues any additional equity in a manner
permitted under this Agreement, other  than (provided no Default
or Event of Default has occurred and is continuing) (A) for the purpose of
financing an asset or stock acquisition or merger approved by the Majority
Lenders, (B) Permitted Intercompany Loans, and (C) stock options in Domestic
Borrower granted to executives and other employees of Domestic Borrower, then
(i) Domestic Borrower shall pay, in the case of Domestic Borrower or any
Subsidiary other than the Canadian Borrower, to Administrative Agent for the
benefit of Administrative Agent, Canadian Agent, and the Lenders, and (ii)
Canadian Borrower shall pay, in the case of Canadian Borrower, to Canadian
Agent for the benefit of Canadian Agent, Canadian Lender, and the Canadian
Participating Lenders, when and as received by such Borrower or Subsidiary and
as a mandatory prepayment of the Domestic Obligations or the Canadian
Obligations, respectively, a sum equal to 100% of the net proceeds to such
Borrower or Subsidiary of the issuance of such Indebtedness or equity, provided
that (i), for so long as the Channell Bushman Credit Facility has not been
terminated, the Domestic Borrower shall only be required to make such prepayments
in connection with such issuance by any of the Channell Australia Entities to
the extent such prepayment is not required by, and does not violate, the
documents governing the Channell Bushman Credit Facility, and (ii) Canadian
Borrower shall only be required to pay from the net proceeds of the issuance of
such Indebtedness or equity by Canadian Borrower an amount equal to the then
outstanding Canadian Obligations, and Domestic Borrower shall make a payment in
respect of the Domestic Obligations in an amount equal to the remaining amount
of such proceeds, if any.  Any prepayment
under this Section 3.3.3 with respect to the issuance of such Indebtedness
for Money Borrowed or equity by Domestic Borrower or any of its Subsidiaries
(other than Canadian Borrower) shall be applied (i) FIRST
to the installments of principal due under the Domestic Term Notes evidencing
the Domestic Term Loan ratably, to be applied to future installment payments in
inverse order of maturity until paid in full, (ii) SECOND to
the installments of principal due under the Domestic Cap Ex Notes evidencing
the Domestic Cap Ex Loan ratably, to be applied to future installment payments
in inverse order of maturity until paid in full, and (iii) THIRD
to repay ratably the outstanding principal of Domestic Revolving Credit Loans
(but shall not permanently reduce the Domestic Revolving Credit Commitments),
and any prepayment under this Section 3.3.3 with respect to the issuance
of such Indebtedness for Money Borrowed or equity by Canadian Borrower shall be
applied to repay ratably outstanding principal of Canadian Revolving Credit
Loans (but shall not permanently reduce the Canadian Revolving Credit
Sub-Limit).



 30















3.3.4        Domestic LIBOR Loans.  If the
application of any payment made in accordance with the provisions of this
Section 3.3 at a time when no Event of Default has occurred and is
continuing would result in termination of a Domestic LIBOR Loan prior to the last
day of the Interest Period for such Domestic LIBOR Loan, the amount of such
prepayment shall not be applied to such Domestic LIBOR Loan, but will, at
Borrower Representative’s option, be held by Administrative Agent in a
non-interest bearing account or deposited by the applicable Borrower in an
interest-bearing account at a Lender or another bank satisfactory to
Administrative Agent, in its discretion, which account is in the name of
Administrative Agent, and from which account only Administrative Agent can make
any withdrawal, in each case to be applied as such amount would otherwise have
been applied under this Section 3.3 at the earlier to occur of (a) the
last day of the relevant Interest Period or (b) the occurrence of a Default or
an Event of Default.


3.3.5        Optional Prepayments.  Domestic
Borrower may, at its option from time to time upon not less than 3 Business
Days’ prior written notice to Administrative Agent, prepay installments of the
Domestic Term Notes or the Domestic Cap Ex Notes, provided that the
amount of any such prepayment is at least $500,000 and in integral multiples of
$100,000 above $500,000, and that such prepayments are made ratably with
respect to all such Domestic Term Notes or Domestic Cap Ex Notes, as
applicable.  Except for charges under
Section 3.2.5 applicable to prepayments of Domestic LIBOR Loans, subject
to Section 2.7, such prepayments shall be without premium or penalty.


3.4           Application of
Payments and Collections.


3.4.1        Collections.  All items of
payment received by Administrative Agent by 12:00 noon, Los Angeles time, or by
Canadian Agent by 12:00 noon, Toronto time, on any Business Day shall be deemed
received on that Business Day for purposes other than computation of
interest.  All items of payment received
after 12:00 noon, Los Angeles time, or 12:00 noon, Toronto time, on any
Business Day shall be deemed received on the following Business Day for
purposes other than computation of interest. 
Domestic Borrower irrevocably waives the right to direct the application
of any and all payments and collections at any time or times hereafter received
by Administrative Agent from or on behalf of Domestic Borrower or any of its
Subsidiaries (other than Canadian Borrower), and Domestic Borrower does hereby
irrevocably agree that Administrative Agent 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 Administrative Agent or its agent against the
Domestic Obligations, in such manner as Administrative Agent may deem
advisable, notwithstanding any entry by Administrative Agent or any Lender upon
any of its books and records.  Canadian
Borrower irrevocably waives the right to direct the application of any and all
payments and collections at any time or times hereafter received by Canadian
Agent from or on behalf of Canadian Borrower, and Canadian Borrower does hereby
irrevocably agree that Canadian Agent 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 Canadian Agent or its agent against the Canadian
Obligations, in such manner as Canadian Agent may deem advisable,
notwithstanding any entry by Canadian Agent or Canadian Lender or any Canadian Participating
Lender upon any of its books and records. 
If as the result of collections of 



 31
 









Accounts as authorized by
Section 6.2.4 hereof or otherwise, a credit balance exists in the Domestic
Loan Account, such credit balance shall not accrue interest in favor of
Domestic Borrower, but shall be disbursed to Domestic Borrower or otherwise
at  Borrower Representative’s direction
in the manner set forth in Section 3.1.2, upon  Borrower Representative’s request at any
time, so long as no Default or Event of Default then exists.  If as the result of collections of Accounts
authorized by Section 6.2.4 hereof or otherwise, a credit balance exists
in the Canadian Loan Account, such credit balance shall not accrue interest in
favor of Canadian Borrower, but shall be disbursed to Canadian Borrower or
otherwise at Borrower Representative’s direction in the manner set forth in
Section 3.1.2, upon Borrower Representative’s request at any time, so long
as no Default or Event of Default then exists. 
Administrative Agent may at its option, offset such credit balance with
respect to the Domestic Loan Account against any of the Domestic Obligations
upon and during the continuance of an Event of Default.  Canadian Agent may at its option, offset such
credit balance with respect to the Canadian Loan Account against any of the
Canadian Obligations upon and during the continuance of an Event of Default.


3.4.2        Apportionment; Application and Reversal of Payments. 
Principal and interest payments (i) by Domestic Borrower shall be
apportioned ratably among all Domestic Lenders (according to the unpaid
principal balance of the Loans to which such payments related held by each
Domestic Lender), and (ii) by Canadian Borrower shall be distributed to
Canadian Lender subject to Section 2.6 or, following a refunding in
accordance with Section 3.2.6, apportioned among Canadian Lender
and all Canadian Participating Lenders (according to the unpaid principal
balance of the Loans to which such payments related held by Canadian Lender and
each Canadian Participating Lender).  All
payments by Domestic Borrower shall be remitted to Administrative Agent and by
Canadian Borrower shall be remitted to Canadian Agent, and all such payments
not relating to principal or interest of specific Loans, or not constituting
payment of specific fees, and all proceeds of Collateral, except as otherwise
provided in this Agreement received by Administrative Agent or Canadian Agent,
as applicable, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any fees, indemnities, or expense
reimbursements then due to Administrative Agent, Canadian Agent, or
Lenders  from the applicable Borrower; second,
to pay interest due from the applicable Borrower in respect of all Loans made
to such Borrower, third, to pay or prepay principal of the Domestic Term
Loan made to such Borrower; fourth, to pay or prepay principal of the
Domestic Cap Ex Loans made to such Borrower; fifth, to pay or prepay
principal of the Revolving Credit Loans made to such Borrower and unpaid
reimbursement obligations in respect of Domestic Letters of Credit owed by such
Borrower; sixth, with respect to payments by Domestic Borrower, to pay
an amount to Administrative Agent equal to the available amount of all
outstanding Domestic Letters of Credit to be held as cash Collateral for
reimbursement and fee obligations in respect of such Domestic Letters of
Credit; seventh, to the payment of any Derivative Obligations due to
Administrative Agent, Canadian Agent, any Lender or any other Bank Product
Provider by such Borrower, and eighth, to the payment of any other
Obligations due to Administrative Agent, Canadian Agent, or any Lender by such
Borrower.  Except as expressly set forth
to the contrary, payments received (i) from Domestic Borrower shall be
applied only to the Domestic Obligations, and (ii) from Canadian Borrower
shall be applied only to the Canadian 



 32
 









Obligations.  Subject to the provisions of this
Section 3.4.2, after the occurrence and during the continuance of an Event
of Default, Administrative Agent and Canadian Agent 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 Administrative Agent or Canadian
Agent or their agents against the Obligations, in such manner as Administrative
Agent or Canadian Agent may deem advisable, notwithstanding any entry by
Administrative Agent, Canadian Agent, or any Lender upon any of its books and
records.


3.5           All Loans to Constitute One Obligation.


The Domestic Revolving Credit Loans, the Domestic Term
Loan, the Domestic Cap Ex Loans shall constitute one general Obligation of
Domestic Borrower, and shall be secured by Administrative Agent’s (for the
benefit of itself, and each Lender) Lien upon all of the Domestic
Collateral.  The Canadian Revolving
Credit Loans shall constitute one general Obligation of Canadian Borrower, and
shall be secured by Canadian Agent’s (on behalf of itself, Canadian Lender, and
the Canadian Participating Lenders) Lien upon all of the Canadian Collateral.


3.6           Loan Accounts.


Administrative Agent shall enter all Domestic
Revolving Credit Loans and the Domestic Term Loan as debits to a loan account
(the “Domestic Loan Account”), and Canadian Agent shall enter all Canadian
Revolving Credit Loans as debits to a loan account (the “Canadian Loan Account”,
and together with the Domestic Loan Account, each a “Loan Account”), and shall
also record in the relevant Loan Account all payments made by the relevant
Borrowers on any Obligations and all proceeds of the relevant Collateral which
are finally paid to Administrative Agent or Canadian Agent, as the case may be,
and may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrowers pursuant to this Agreement or any other Loan Document.


3.7           Statements of
Account.


Administrative Agent will account to Borrower
Representative monthly with a statement of Loans, charges and payments made
pursuant to this Agreement during the immediately preceding month, and such
account rendered by Administrative Agent shall be deemed final, binding and
conclusive upon Borrowers absent demonstrable error unless Administrative Agent
is notified by Borrower Representative in writing to the contrary within 30
days of the date each accounting is received by Borrower Representative.  Such notice shall only be deemed an objection
to those items specifically objected to therein.


3.8           Sharing of Payments,
Etc.


3.8.1        If any Domestic Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Domestic Revolving Credit Loan or any portion
of the Domestic Term Loan made by 



 33
 









it in excess of its
ratable share of payments on account of such Loans made by all Domestic
Lenders, such Domestic Lender shall forthwith purchase from each other Domestic
Lender such participation in such Loans as shall be necessary to cause such
purchasing Domestic Lender to share the excess payment ratably with each other
Domestic Lender; provided, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Domestic Lender, such
purchase from each Domestic Lender shall be rescinded and such Domestic Lenders
shall repay to the purchasing Domestic Lender the purchase price to the extent
of such recovery, together with an amount equal to such Domestic Lender’s
ratable share (according to the proportion of (i) the amount of such Domestic
Lender’s required repayment to (ii) the total amount so recovered from the
purchasing Domestic Lender) of any interest or other amount paid or payable by
the purchasing Domestic Lender in respect of the total amount so recovered.  Each Borrower agrees that any Domestic Lender
so purchasing a participation from another Domestic Lender pursuant to this
Section 3.8.1 may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Domestic Lender were the direct creditor of
Borrowers in the amount of such participation. 
Notwithstanding anything to the contrary contained herein, all purchases
and repayments to be made under this Section 3.8.1 shall be made through
Administrative Agent.


3.8.2        If Canadian Lender or any Canadian Participating
Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of any Canadian
Revolving Credit Loan  made or refunded
by it in excess of its ratable share of payments on account of such Loans made
or refunded by Canadian Agent and Canadian Participating Lenders in the
aggregate, such Lender shall forthwith purchase from Canadian Lender and each
other Canadian Participating Lender such participation in such Loans as shall
be necessary to cause such purchasing Lender to share the excess payment
ratably with Canadian Lender and each other Canadian Participating Lender; provided,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from Canadian Lender and each Canadian
Participating Lender shall be rescinded and Canadian Lender and such Canadian
Participating Lenders shall repay to the purchasing Lender the purchase price
to the extent of such recovery, together with an amount equal to such Lender’s
ratable share (according to the proportion of (i) the amount of such  Lender’s required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered.  Each Borrower agrees that
Canadian Lender and any Canadian Participating Lender so purchasing a
participation from Canadian Lender or a Canadian Participating Lender pursuant
to this Section 3.8.2 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrowers in the amount of such participation.  Notwithstanding anything to the contrary
contained herein, all purchases and repayments to be made under this
Section 3.8.2 shall be made through Canadian Agent.



 34
 









3.9           Increased Costs.


If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted or implemented after the date of this Agreement and
having general applicability to all banks or finance companies within the
jurisdiction in which any Lender operates (excluding, for the avoidance of
doubt, the effect of and phasing in of capital requirements or other
regulations or guidelines passed prior to the date of this Agreement), or any
interpretation or application thereof by any governmental authority charged
with the interpretation or application thereof, or the compliance of such
Lender therewith, shall:


(a)           (i) subject such Lender to any tax
with respect to this Agreement (other than (A) any tax based on or
measured by net income or otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or any similar tax based on
capital, net worth or comparable basis for measurement and (B) subject to
the provisions of Section 2.13, any tax collected by a withholding
on payments and which neither is computed by reference to the net income of the
payee nor is in the nature of an advance collection of a tax based on or
measured by the net income of the payee) or (ii) change the basis of
taxation of payments to such Lender of principal, fees, interest or any other
amount payable hereunder or under any Loan Documents (other than in respect of
(A) any tax based on or measured by net income or otherwise in the nature
of a net income tax, including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis for measurement and
(B) subject to the provisions of Section 2.13, any tax
collected by a withholding on payments and which neither is computed by
reference to the net income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of the payee);


(b)           impose, modify or hold applicable any
reserve (except any reserve taken into account in the determination of the
applicable LIBOR), special deposit, assessment or similar requirement against
assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of such Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the Federal Reserve
System; or


(c)           impose on such Lender or the London
interbank market any other condition with respect to any Loan Document and the
result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining its Loans hereunder by an amount that such
Lender deems to be material or the result of any of the foregoing is to reduce
the rate of return on such Lender’s capital as a consequence of its obligations
hereunder, or the result of any of the foregoing is to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of such
Loans by an amount that such Lender deems to be material, then, in any such
case, the applicable Borrower(s) shall pay such Lender, upon demand and
certification not later than sixty (60) days following Borrower Representative’s
receipt of notice of the imposition of such increased costs, such additional
amount as will compensate such Lender for such additional cost or such
reduction, as the case may be, to the extent such Lender has not otherwise been
compensated, with respect to a particular Loan, for such increased cost as a
result of 



 35
 









an increase in the
Domestic Base Rate, Canadian Base Rate or LIBOR.  An officer of such Lender shall determine the
amount of such additional cost or reduced amount using reasonable averaging and
attribution methods and shall certify the amount of such additional cost or
reduced amount to Borrower Representative, which certification shall include a
written explanation of such additional cost or reduction to Borrower
Representative.  Such certification shall
be conclusive absent manifest error.  If
a Lender claims any additional cost or reduced amount pursuant to this
Section 3.9, then such Lender shall use reasonable efforts (consistent
with legal and regulatory restrictions) to designate a different lending office
or to file any certificate or document reasonably requested by Borrower
Representative if the making of such designation or filing would avoid the need
for, or reduce the amount of, any such additional cost or reduced amount and
would not, in the sole discretion of such Lender, be otherwise disadvantageous
to such Lender.


3.10         Basis for Determining Interest
Rate Inadequate or Unfair


In the event that Administrative Agent or any Lender
shall have determined that:


(a)           reasonable means do not exist for
ascertaining the LIBOR for any Interest Period; or


(b)           Dollar deposits in the relevant amount
and for the relevant maturity are not available in the London interbank market
with respect to a proposed Domestic LIBOR Loan, or a proposed conversion of a
Domestic Base Rate Loan into a Domestic LIBOR Loan; then


Administrative Agent or such Lender, as applicable,
shall give Borrower Representative prompt written, telephonic or electronic
notice of the determination of such event. 
If such notice is given, (i) any such requested Domestic LIBOR Loan
shall be made as a Domestic Base Rate Loan, unless Borrower Representative
shall notify Administrative Agent, with respect to Domestic LIBOR Loans, no
later than 10:00 a.m. (Los Angeles time) two (2) Banking Days prior to the date
of such proposed borrowing that the request for such borrowing shall be
canceled, and (ii) any Domestic Base Rate Loan which was to have been
converted to an affected type of Domestic LIBOR Loan shall be continued as or
converted into a Domestic Base Rate Loan.


3.11         Location of Payments.


Notwithstanding anything else herein to the contrary,
all payments made by Borrowers or Borrower Representative on behalf of
Borrowers under this Agreement, whether principal or interest payments, fees,
expenses or other charges hereunder, shall be made to the applicable
Administrative Agent at its address for notices set forth in Section 12.8
of this Agreement.



 36
 









SECTION 4. TERM AND TERMINATION


4.1           Term of Agreement.


Subject to the right of Lenders to cease making Loans
to Borrowers during the continuance of any Default or Event of Default, this
Agreement shall be in effect from the Closing Date through and including June
30, 2010 (the “Term”), unless terminated as provided in Section 4.2
hereof.


4.2           Termination.


4.2.1        Termination by Lenders. 
Administrative Agent may, and at the direction of Majority Lenders shall,
terminate this Agreement without notice upon or after the occurrence and during
the continuance of an Event of Default.


4.2.2        Termination by Borrower Representative. 
Upon at least 60 days prior written notice to Administrative Agent and
Lenders, Borrower Representative may, at its option, terminate this Agreement; provided,
however, no such termination shall be effective until Borrowers have
paid or collateralized to Administrative Agent’s reasonable satisfaction all of
the Obligations in immediately available funds, all Domestic Letters of Credit
and Domestic LC Guaranties have expired, terminated or have been cash
collateralized to Administrative Agent’s reasonable satisfaction and Borrowers
have complied with Sections 2.7, 3.2.5 and 4.2.3(b) (if applicable).  Any notice of termination given by Borrower
Representative shall be irrevocable unless all Lenders otherwise agree in
writing, and no Lender shall have any obligation to make any Loans or issue or
procure any Domestic Letters of Credit or Domestic LC Guaranties on or after
the termination date stated in such notice. 
Borrower Representative may elect to terminate this Agreement in its
entirety only.  No section of this Agreement
or type of Loan available hereunder may be terminated singly.


4.2.3        Effect of Termination.


(a)           All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement.  All
undertakings, agreements, covenants, warranties and representations of
Borrowers and their Subsidiaries contained in the Loan Documents shall survive
any such termination and Administrative Agent and Canadian Agent shall retain
their Liens in the Collateral and Administrative Agent, Canadian Agent, and
each Lender shall retain all of its rights and remedies under the Loan
Documents notwithstanding such termination until all Obligations have been
discharged or paid, in full, in immediately available funds, including, without
limitation, all applicable Obligations under Sections 2.7, 3.2.5 and
4.2.3(b) resulting from such termination. 
Notwithstanding the foregoing or the payment in full of the Obligations,
none of Administrative Agent and Canadian Agent shall be required to terminate
its Liens in the Collateral unless, with respect to any loss or damage
Administrative Agent or Canadian Agent may incur as a result of dishonored
checks or other items of payment received by Administrative Agent or Canadian
Agent from Borrowers or any of their Subsidiaries 



 37
 









or any Account
Debtor and applied to the Obligations, Administrative Agent shall, at its
option, (i) have received a written agreement satisfactory to
Administrative Agent, executed by Borrowers and/or their Subsidiaries and by
any Person whose loans or other advances to Borrowers and/or their Subsidiaries
are used in whole or in part to satisfy the Obligations, indemnifying
Administrative Agent, Canadian Agent, and each Lender from any such loss or
damage or (ii) have retained cash Collateral for such period of time as
Administrative Agent, in its reasonable discretion, may deem necessary to
protect Administrative Agent, Canadian Agent, and each Lender from any such
loss or damage.


(b)           In the event that Borrower Representative
provides less than 60 days prior written notice of termination of this
Agreement as required by Section 4.2.2, in addition to any other amounts which
are required to be paid to Administrative Agent, Canadian Agent, or any Lender
under the Loan Documents, (i) Domestic Borrower agrees to pay to Administrative
Agent (for the ratable benefit of the Domestic Lenders), an amount equal to the
product  of (A)(I) the product  of (X) the aggregate
payoff amount of the Domestic Obligations times (Y) the interest rates
applicable to such Domestic Obligations, divided by (II) 360 times
(B) the difference between 60 and the number of days prior written notice of
termination of this Agreement given by Borrower Representative to
Administrative Agent and Lenders (the “Notice Days”) and (ii) Canadian Borrower
agrees to pay to Canadian Agent (for the benefit of Canadian Lender and,
subsequent to any Canadian Revolving Credit Loan refunding pursuant to Section
3.2.6, for the ratable benefit of Canadian Lender and Canadian Participating
Lenders) an amount equal to the product  of (A)(I) the product
of (X) the aggregate payoff amount of the Canadian Obligations times
(Y) the interest rates applicable to such Canadian Obligations, divided by
(II) 360 times (B) the Notice Days.


(c)           Upon termination of this Agreement and
repayment in full of the Obligations, each Administrative Agent shall promptly
execute and deliver to Borrowers such documents as reasonably requested by
Borrower Representative to evidence the release of Agents’ Liens in the
Collateral.


SECTION 5. SECURITY INTERESTS


5.1           Security Interest in
Collateral.


5.1.1        To secure the prompt payment and performance of the
Domestic Obligations (including, without limitation, the obligations of
Domestic Borrower under the Domestic Borrower Guaranty), Domestic Borrower
hereby grants to Administrative Agent for the benefit of itself, Canadian
Agent, each Lender and each Bank Product Provider, a continuing Lien upon all
of Domestic Borrower’s assets, including all of the following Property and
interests in Property of Domestic Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:



 38
 









(a)           Accounts;


(b)           Certificated Securities;


(c)           Chattel Paper;


(d)           Computer Hardware and Software and all rights with
respect thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;


(e)           Contract Rights;


(f)            Deposit Accounts;


(g)           Documents;


(h)           Equipment;


(i)            Financial Assets;


(j)            Fixtures;


(k)           General Intangibles, including Payment Intangibles and
Software;


(l)            Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;


(m)          Instruments;


(n)           Intellectual Property;


(o)           Inventory;


(p)           Investment Property;


(q)           money (of every jurisdiction whatsoever);


(r)            Letter-of-Credit Rights;


(s)           Payment Intangibles;


(t)            Security Entitlements;


(u)           Software;


(v)           Supporting Obligations;


(w)          Uncertificated Securities; and


(x)            to the extent not included in the foregoing, all other
personal property of any kind or description;



 39
 









together with all books, records, writings, data
bases, information and other property relating to, used or useful in connection
with, or evidencing, embodying, incorporating or referring to any of the
foregoing, and all Proceeds, products, offspring, rents, issues, profits and
returns of and from any of the foregoing; provided that (i) to the extent that
the provisions of any lease or license of Computer Hardware and Software or
Intellectual Property expressly prohibit (which prohibition is enforceable
under applicable law) any assignment thereof, and the grant of a security
interest therein, Administrative Agent will not enforce its security interest
in Domestic Borrower’s rights under such lease or license (other than in
respect of the Proceeds thereof) for so long as such prohibition continues, it
being understood that upon request of Administrative Agent, Domestic Borrower
will in good faith use reasonable efforts (other than the payment of money) to
obtain consent for the creation of a security interest in favor of
Administrative Agent (and to Administrative Agent’s enforcement of such
security interest) in Domestic Borrower’s rights under such lease or license,
(ii) with respect to other contracts or agreements, Contract Rights of Domestic
Borrower will be excluded from Domestic Collateral  to the extent assignment is expressly
prohibited by the underlying contract or agreement (which prohibition is
enforceable under applicable law), it being understood that upon request of
Administrative Agent, Domestic Borrower will in good faith use reasonable
efforts (other than the payment of money) to obtain consent for the creation of
a security interest in favor of Administrative Agent (and to Administrative
Agent’s enforcement of such security interest) in Domestic Borrower’s rights
under such contract or agreement, (iii) that the Domestic Collateral described
above (A) shall not include any of Domestic Borrower’s equity interests in
Channel de Mexico S.A. de C.V., CC Holdings, Inc., or Channell Bushman, and (B)
shall, with respect to each of Channell Commercial Canada, Inc. and Channell
Commercial Hong Kong Limited, be limited to 65% of the issued and outstanding
Securities of each such entity.


5.1.2        To secure the prompt payment and performance of the
Canadian Obligations, Canadian Borrower hereby grants to Canadian Agent for the
benefit of itself, Canadian Lender, and each Canadian Participating Lender, a
continuing security interest upon all of Canadian Borrower’s assets, including
all of the following Property and interests in Property of Canadian Borrower,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located:


(a)             Accounts;


(b)             Certificated Securities;


(c)             Chattel Paper;



 40
 









(d)             Computer Hardware and Software and all
rights with respect thereto, including, any and all licenses, options,
warranties, service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements, additions or model
conversions of any of the foregoing;


(e)             Contract Rights;


(f)              Deposit Accounts;


(g)             Documents;


(h)             Equipment;


(i)              Financial Assets;


(j)              Fixtures;


(k)             General Intangibles, including Payment
Intangibles and Software;


(l)              Goods (including all of its Equipment,
Fixtures and Inventory), and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor;


(m)            Instruments;


(n)             Intellectual Property;


(o)             Inventory;


(p)             Investment Property;


(q)             money (of every jurisdiction whatsoever);


(r)              Letter-of-Credit Rights;


(s)             Payment Intangibles;


(t)              Security Entitlements;


(u)             Software;


(v)             Supporting Obligations;


(w)            Uncertificated Securities; and


(x)              to the extent not included in the
foregoing, all other personal property of any kind or description;



 41
 









 


together with all books, records, writings, data
bases, information and other property relating to, used or useful in connection
with, or evidencing, embodying, incorporating or referring to any of the
foregoing, and all Proceeds, products, offspring, rents, issues, profits and
returns of and from any of the foregoing; provided, however, that
notwithstanding the foregoing this Section 5.1.2 shall not constitute a grant
of a security interest in any property to the extent that such grant of a
security interest is prohibited by any applicable law, requires a consent not
obtained of any governmental authority pursuant to such applicable law or is prohibited
by, or constitutes a breach or default under or results in the termination of
or requires any consent not obtained under any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or, in
the case of any Investment Property, any applicable shareholder or similar
agreement, except to the extent that such applicable law or the term in such
contract, license, agreement, instrument or other document or shareholder or
similar agreement providing for such prohibition, breach, default or
termination or requiring such consent is ineffective under applicable law, it
being understood that upon request of Canadian Agent, Canadian Borrower will in
good faith use reasonable efforts (other than the payment of money) to obtain
any such required consent. In addition to the foregoing grant of a security
interest, Canadian Borrower shall execute and deliver such debentures,
hypothecs, pledges and other security agreements as Canadian Agent may
reasonably request to provide Canadian Agent with a first-priority perfected
Lien on all assets of Canadian Borrower. 
In the event of a conflict between this Section 5.1.2 and
the Security Documents executed by Canadian Borrower, the latter shall govern.


5.2           Other Collateral.


5.2.1        Commercial Tort Claims.  Domestic
Borrower shall promptly notify Administrative Agent in writing upon incurring
or otherwise obtaining a Commercial Tort Claim after the Closing Date against
any third party and, upon request of Administrative Agent, promptly enter into
an amendment to this Agreement and do such other acts or things deemed
appropriate by Administrative Agent to give Administrative Agent a security
interest in any such Commercial Tort Claim.


5.2.2        Other Collateral.  Each Borrower
shall promptly notify Administrative Agent or Canadian Agent, as the case may
be, 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
Administrative Agent or Canadian Agent, as the case may be, promptly execute
such other documents, and do such other acts or things deemed appropriate by
Administrative Agent or Canadian Agent, as the case may be, to deliver to
Administrative Agent or Canadian Agent, as the case may be, control with
respect to such Collateral; promptly notify Administrative Agent or Canadian
Agent, as the case may be, in writing upon acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Documents (and Documents of
Title, as defined in the PPSA) or Instruments and, upon the request of
Administrative Agent or Canadian Agent, as the case may be, will promptly
execute such other documents, and do such other acts or things deemed
appropriate by Administrative Agent or Canadian Agent, as the case may be, to
deliver to Administrative Agent or Canadian Agent, as the case may be,
possession of such Documents (and Documents of Title, as defined in the PPSA)
which are 



 42
 









negotiable and
Instruments, and, with respect to nonnegotiable Documents (and Documents of
Title, as defined in the PPSA), to have such nonnegotiable Documents (and
Documents of Title, as defined in the PPSA) issued in the name of
Administrative Agent or Canadian Agent, as the case may be; and with respect to
Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document, obtain an acknowledgement from the
third party that it is holding the Collateral for the benefit of Administrative
Agent or Canadian Agent, as the case may be.


5.3           Lien Perfection;
Further Assurances.


Each Borrower hereby authorizes Administrative Agent
to file such UCC-1 and PPSA financing statements as are required by the UCC or
the PPSA, and any other applicable statutory scheme, and each Borrower shall
execute such other instruments, assignments or documents as are necessary to
perfect Administrative Agent’s Lien upon any of the Domestic Collateral and
Canadian Agent’s Lien upon any of the Canadian Collateral, and each Borrower
shall take such other action as may be required to perfect or to continue the
perfection of Administrative Agent’s Lien upon the Domestic Collateral and
Canadian Agent’s Lien upon the Canadian Collateral.  Without limiting the generality of the
preceding sentence, each Borrower hereby irrevocably authorizes Administrative
Agent and Canadian Agent, as applicable, to file any such financing statements,
including, without limitation, financing statements that indicate the portion
of the Collateral owned by such Borrower (a) as all assets of such
Borrower 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 5.1.  Each Borrower also hereby ratifies its
authorization for Administrative Agent and Canadian Agent, as the case may be,
to have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. 
The parties agree that a carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for the purposes of
the UCC and may be filed in any appropriate office in lieu thereof.  At Administrative Agent’s or Canadian Agent’s
request, each Borrower shall also promptly execute or cause to be executed and
shall deliver to Administrative Agent or Canadian Agent, as the case may be,
any and all documents, instruments and agreements deemed necessary by
Administrative Agent or Canadian Agent, as the case may be, to give effect to
or carry out the terms or intent of the Loan Documents.


5.4           Lien on Realty.


The due and punctual payment and performance of the
Domestic Obligations shall also be secured by the Lien created by Mortgages
upon all real (or immovable) Property of Domestic Borrower now or hereafter
owned.  The due and punctual payment and
performance of the Canadian Obligations shall also be secured by the Lien
created by Mortgages upon all real (or immovable) Property of Canadian Borrower
now or hereafter owned.  Each Mortgage
shall be executed by the applicable Borrower in favor of Administrative Agent
or Canadian Agent, 



 43
 









as the case may be.  Each Mortgage shall be duly recorded, at the
applicable Borrower’s expense, in each office where such recording is required
to constitute a fully perfected first Lien on the real (or immovable) Property
covered thereby.  Each applicable
Borrower shall deliver to Administrative Agent or Canadian Agent, as the case
may be, at such Borrower’s expense, mortgagee title insurance policies (or a
Canadian equivalent acceptable to the applicable Administrative Agent) issued
by a title insurance company satisfactory to Administrative Agent or Canadian
Agent, as the case may be, which policies shall be in form and substance
satisfactory to Administrative Agent or Canadian Agent, as the case may be, and
shall insure a valid first Lien in favor of Administrative Agent (for the
benefit of itself, Canadian Agent, and the Lenders), or in favor of Canadian
Agent (for the benefit of itself, Canadian Lender, and the Canadian
Participating Lenders), as the case may be, on the Property covered by each
Mortgage, subject only to those exceptions reasonably acceptable to
Administrative Agent or Canadian Agent, as the case may be, and its counsel.  Each applicable Borrower shall deliver to
Administrative Agent or Canadian Agent, as the case may be, such other
documents, including, without limitation, as-built survey prints of the real
(or immovable) Property (to the extent such as-built survey prints are already
in existence or, at the applicable Borrower’s sole option, prepared), as
Administrative Agent or Canadian Agent, as the case may be, and its counsel may
reasonably request relating to the real (or immovable) Property subject to the
Mortgages.


SECTION 6. COLLATERAL ADMINISTRATION


6.1           General.


6.1.1        Location of Collateral.  All tangible
Collateral, other than Inventory in transit and motor vehicles, will at all
times be kept by the applicable Borrowers and their Subsidiaries at one or more
of the business locations identified in Schedule 6.1.1 hereto as a
business location for such Borrower or Subsidiary.


6.1.2        Insurance of Collateral.  Each Borrower
shall maintain and pay for insurance upon all Collateral owned by such Borrower
wherever located and with respect to the business of such Borrower and each of
its Subsidiaries, covering casualty, hazard, public liability, workers’
compensation and such other risks in such amounts and with such insurance
companies as are reasonably satisfactory to Administrative Agent.  Each Borrower shall deliver certified copies
of such policies to Administrative Agent and Canadian Agent as promptly as
practicable, with satisfactory lender’s loss payable endorsements, naming
Administrative Agent, with respect to Domestic Collateral, and Canadian Agent,
with respect to Canadian Collateral, as a loss payee, assignee or additional
insured, as appropriate, as its interest may appear, and showing only such
other loss payees, assignees and additional insureds as are satisfactory to Administrative
Agent and Canadian Agent, as the case may be. 
Each policy of insurance or endorsement shall contain a clause  requiring the insurer to give not less than
10 days’ prior written notice to Administrative Agent or Canadian Agent, as the
case may be, in the event of cancellation of the policy for nonpayment of
premium and not less than 30 days’ prior written notice to Administrative Agent
or Canadian Agent, as the case may be, in the event of cancellation of the
policy for any other reason whatsoever and shall provide in substance that the
interest of Administrative Agent or Canadian Agent, as the case may be, shall
not be impaired or invalidated by any act or neglect of the applicable
Borrower, any of its Subsidiaries or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. Borrower Representative agrees to deliver to Administrative Agent
and Canadian Agent, as the case may be, promptly as 



 44
 









rendered, true copies of
all reports made in any reporting forms to insurance companies.  If any proceeds of business interruption
insurance are received by any Borrowers or any of their Subsidiaries, then (i)
Domestic Borrower shall remit to Administrative Agent (A) the proceeds of such
insurance received by Domestic Borrower and (B) an amount equal to the proceeds
received by any such Subsidiary (other than the Channell Australia Entities and
the Canadian Borrower), in each case, for application to the outstanding
balance of the Revolving Credit Loans, (ii) Canadian Borrower shall remit to
Canadian Agent the proceeds of such insurance received by Canadian Borrower for
application to the then outstanding Canadian Obligations; and (iii) to the
extent that the payment thereof does not violate the documents governing the
Channell Bushman Credit Facility, the Channell Australia Entities shall apply
the proceeds of any business interruption insurance received by them to the
repayment of outstanding obligations under any intercompany loans owed by such
entity to Borrowers (provided that, for the avoidance of doubt, such repayment
shall only be required to the extent any such intercompany loans exist at the
time of receipt of such insurance proceeds); provided that the maximum amount
Canadian Borrower shall be required to make under this Section 6.1.2 shall be
equal to the then outstanding Canadian Obligations, and Domestic Borrower shall
make a payment in respect of the Domestic Obligations in an amount equal to the
remaining amount, if any, of the proceeds from such business interruption
insurance received by Canadian Borrower.


Unless Borrower Representative provides Administrative
Agent and Canadian Agent, as the case may be, with evidence of the insurance
coverage required by this Agreement, Administrative Agent or Canadian Agent, as
the case may be, may purchase insurance at the applicable Borrowers’ expense to
protect Administrative Agent’s and Canadian Agent’s, as the case may be,
interests in the Properties of Borrowers and their Subsidiaries.  This insurance may, but need not, protect the
interests of Borrowers and their Subsidiaries. 
The coverage that Administrative Agent or Canadian Agent, as the case
may be, purchases may not pay any claim that Borrowers or any Subsidiary makes
or any claim that is made against Borrowers or any such Subsidiary in
connection with said Property.  Borrower
Representative may later cancel any insurance purchased by Administrative Agent
or Canadian Agent, but only after (a) providing Administrative Agent or Canadian
Agent, as the case may be, with evidence that Borrowers and their Subsidiaries
have obtained insurance as required by this Agreement, and (b) Administrative
Agent or Canadian Agent, as the case may be, shall have approved such
insurance.  If Administrative Agent or
Canadian Agent purchases insurance in accordance with this Section 6.1.2,
Borrowers will be responsible for the costs of that insurance, including
interest and any other charges Administrative Agent or Canadian Agent, as the
case may be, may impose in connection with the placement of insurance, until
the effective date of the cancellation or expiration of the insurance.  The costs of the insurance may be added to
the Obligations.  The costs of the
insurance may be more than the cost of insurance that Borrowers and their
Subsidiaries may be able to obtain on their own.



 45















6.1.3         Protection of Collateral.  Neither Administrative Agent, Canadian Agent,
nor Lenders shall  be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Administrative Agent’s, Canadian Agent’s, or any Lender’s
actual possession) or for any diminution in the value thereof, or for any act
or default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at the applicable Borrower’s or Subsidiary’s
sole risk.


6.2            Administration of Accounts.


6.2.1        Records, Schedules and Assignments of
Accounts.  Each Borrower shall keep
(and shall cause each of its Subsidiaries to keep) accurate and complete
records of its Accounts and all payments and collections thereon and Borrowers
shall submit to Administrative Agent and Canadian Agent on such periodic basis
as Administrative Agent or Canadian Agent shall request a sales and collections
report for the preceding period, in form consistent with the reports currently
prepared by Borrowers and their Subsidiaries with respect to such
information.  Concurrently with the
delivery of each Borrowing Base Certificate required by Section 8.1.4, or
more frequently as reasonably requested by Administrative Agent or Canadian
Agent, from and after the date hereof, Borrower Representative shall deliver to
Administrative Agent and Canadian Agent a detailed aged trial balance of all
Accounts of Borrowers and their Subsidiaries (other than the Channell Australia
Entities), and upon Administrative Agent’s or Canadian Agent’s request
therefor, copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Administrative Agent or
Canadian Agent shall reasonably request.


6.2.2        If an Account of a Borrower (or any of
its Subsidiaries (other than the Channell Australia Entities)) includes a
charge for any tax payable to any governmental taxing authority, Administrative
Agent and/or Canadian Agent, as the case may be, is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of the applicable Borrower or Subsidiary and to charge the applicable
Borrowers therefor, except for taxes that (i) are being actively contested
in good faith and by appropriate proceedings and with respect to which the
applicable Borrower or Subsidiary maintains reasonable reserves on its books
therefor and (ii) would not reasonably be expected to result in any Lien
on any material Property of Borrowers other than a Permitted Lien.  In no event shall Administrative Agent,
Canadian Agent, or any Lender be liable for any taxes to any governmental
taxing authority that may be due by any Borrower or any Subsidiary of a
Borrower.


6.2.3        Account Verification.  Any of Administrative Agent’s or Canadian Agent’s
officers, employees or agents shall have the right, at any time or times
hereafter, in the name of Administrative Agent or Canadian Agent, any designee
of Administrative Agent, Canadian Agent, or any Borrower or any of its
Subsidiaries, to verify the validity, amount or any other matter relating to
any Accounts owned by any such Person by mail, telephone, telegraph or
otherwise; provided, that unless a Default or an Event of Default is
then in existence, prior to conducting each set of verifications, Administrative
Agent and Canadian Agent shall generally consult with the applicable Borrower
or Subsidiary about the verification process. 
Each Borrower shall (and shall cause each of its Subsidiaries to)
cooperate fully with Administrative Agent and Canadian Agent in an effort to
facilitate and promptly conclude any such verification process.



 46
 









6.2.4        Maintenance of Dominion Accounts.


(a)           Domestic Borrower
shall maintain, and, if requested by Administrative Agent, shall cause each
Subsidiary of such Borrower (other than other Canadian Borrower and Restricted
Subsidiaries) to maintain, at Domestic Borrower’s expense, a Dominion Account
or Accounts pursuant to lockbox and blocked account arrangements acceptable to
Administrative Agent, with such banks as may be selected by Domestic  Borrower and be acceptable to Administrative
Agent for direct deposit of payments and other remittances.  Domestic Borrower shall issue, and shall
cause each of its Subsidiaries required to maintain such account arrangements
hereunder to issue, to any such banks an irrevocable letter of instruction
directing such banks to deposit all payments or other remittances received in
the lockbox and blocked accounts to Domestic Borrower’s Dominion Account for
application on account of the Domestic Obligations (with all such payments and
remittances to be applied, prior to the occurrence of an Event of Default,
first to outstanding Domestic Revolving Credit Loans with any remaining amounts
remitted to Domestic Borrower).


(b)           Canadian Borrower shall
maintain, at Canadian Borrower’s expense, the RBC Account (which is a Dominion
Account for purposes of this Agreement) pursuant to blocked account
arrangements acceptable to Administrative Agent (or other Dominion Account or
Accounts pursuant to blocked account arrangements acceptable to Administrative
Agent, with such banks as may be selected by Canadian Borrower and be
acceptable to Administrative Agent) for direct deposit of payments and other
remittances.  Amounts deposited in
Canadian Borrower’s Dominion Account shall be applied on account of the
Canadian Obligations in the event of the occurrence of an Event of Default.


(c)           UK Guarantors shall
maintain, at UK Guarantors’ expense, (i) a Dominion Account or Accounts
pursuant to collection account letters acceptable to Administrative Agent with
Bank of America for direct deposit of payments and other remittances and (ii)
their primary disbursement accounts and other cash management accounts with
Bank of America and shall close all of their other deposit and cash management
accounts in the United Kingdom, unless otherwise consented to by Administrative
Agent.  Amounts deposited in the UK
Guarantors’ Dominion Account shall be applied on account of the Domestic
Obligations (with all such payments and remittances to be applied, prior to the
occurrence of an Event of Default, first to outstanding Domestic Revolving
Credit Loans with any remaining amounts remitted to UK Guarantors).


(d)           All funds deposited
in any Dominion Account shall, to the extent of the applicable Obligations,
immediately become the property of, in the case of Domestic Borrower and its
Subsidiaries (other than Canadian Borrower and



 47
 









Restricted Subsidiaries), Administrative Agent, for the benefit of
itself, Canadian Agent, and the Lenders, and, in the case of Canadian Borrower,
Canadian Agent, for the benefit of Canadian Lender and the Canadian
Participating Lenders, and the applicable Borrowers shall obtain (and shall
cause their applicable Subsidiaries to obtain) the agreement by such banks in
favor of Administrative Agent and Canadian Agent, as applicable, to waive any
recoupment, compensation rights, offset rights and any security interest or
hypothec in, or against, the funds so deposited.  Neither Administrative Agent, nor Canadian
Agent assumes any responsibility for such lockbox and blocked account
arrangements, including, without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder.


6.2.5        Collection of Accounts, Proceeds of
Collateral.  To expedite collection,
each Borrower shall endeavor in the first instance, and shall cause its
Subsidiaries (other than Restricted Subsidiaries) to endeavor in the first
instance, to collect its Accounts for Administrative Agent or Canadian Agent,
as applicable.  All remittances received
by each applicable Borrower or Subsidiary on account of Accounts, together with
the proceeds of any other Collateral, shall be held as Administrative Agent’s
or Canadian Agent’s, as the case may be, property, for its benefit and the
benefit of the applicable Lenders, and other Agents, by such Borrower or
Subsidiary as trustee of an express trust for Administrative Agent’s or
Canadian Agent’s, as the case may be, benefit and such Borrower shall, and
shall cause its applicable Subsidiaries to, immediately deposit same in kind in
the lockboxes or a Dominion Account. 
Administrative Agent and Canadian Agent each 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 Borrowers’ and their applicable
Subsidiaries’ Accounts have been assigned to Administrative Agent or Canadian
Agent, as the case may be, and to collect such Borrowers’ and their applicable
Subsidiaries’ Accounts directly in its own name and to charge the collection
costs and expenses, including legal fees, to Borrowers.


6.3                Records and Reports of
Inventory.


Each Borrower shall keep records of its Inventory
which records shall be complete and accurate in all material respects.  Domestic Borrower will furnish to
Administrative Agent Inventory reports concurrently with the delivery of each
Borrowing Base Certificate described in Section 8.1.4 or more frequently
as requested by Administrative Agent, which reports will be in such other
format and detail as Administrative Agent shall request and shall include a
current list of all locations of Domestic Borrower’s Inventory.  Domestic Borrower shall conduct a physical
inventory no less frequently than annually and shall provide to Administrative
Agent a report based on each such physical inventory promptly thereafter,
together with such supporting information as Administrative Agent shall
reasonably request.  Upon Administrative
Agent’s request, Canadian Borrower and UK Guarantors shall furnish to
Administrative Agent perpetual listings of Inventory of such Person.



 48
 









6.4           Administration
of Equipment.


6.4.1        Records and Schedules of Equipment.  Each Borrower shall (and shall cause each of
its Subsidiaries to) keep records of its Equipment which shall be complete and
accurate in all material respects itemizing and describing the kind, type,
quantity and book value of its Equipment and all dispositions made in
accordance with Section 6.4.2 hereof, and Borrowers shall promptly after
the reasonable request therefor by Administrative Agent or Canadian Agent, and
shall cause each of their Subsidiaries to, furnish Agents with a current
schedule containing the foregoing information on at least an annual basis and
more often if reasonably requested by Agents, which schedule shall contain a
certification that, except as otherwise indicated  in such schedule, all such Equipment is
working in a satisfactory manner.  Promptly
after the reasonable request therefor by Administrative Agent or Canadian
Agent, each applicable Borrower shall (and shall cause each of its Subsidiaries
to) deliver to Administrative Agent or Canadian Agent, as applicable, any and
all evidence of ownership, if any, of any of its Equipment.


6.4.2        Dispositions of Equipment.  No Borrower shall, nor shall it permit any of
its Subsidiaries to, sell, lease or otherwise dispose of or transfer any of its
respective Equipment or other fixed assets or any part thereof without the
prior written consent of Administrative Agent, in the case of Domestic
Borrower, and Canadian Agent, in the case of Canadian Borrower; provided,
however, that the foregoing restriction shall not apply, for so long as no
Default or Event of Default exists and is continuing, to (a) dispositions
of Equipment and other fixed assets which, in the aggregate during any
consecutive twelve-month period, have a book value of $250,000 or less, provided
that all proceeds thereof are remitted to Administrative Agent or Canadian
Agent, as applicable, for application to the Loans as provided in
Section 3.3.1, (b) replacements of Equipment or other fixed assets
that are substantially worn, damaged or obsolete with Equipment or other fixed
assets which are useful in the business of the applicable Borrower or one of its
Subsidiaries, provided that the replacement Equipment or other fixed
assets shall be acquired within 180 days before or after any disposition of the
Equipment or other fixed assets that are to be replaced and the replacement
Equipment or other fixed assets shall be free and clear of Liens other than
Permitted Liens that are Purchase Money Liens, and (c) the sale, lease or other
disposition of or transfer of Equipment or other fixed assets of the Channell
Australia Entities, so long as the proceeds of such sale, lease, disposition,
or transfer shall be, to the extent permitted under the Channell Bushman Credit
Facility, applied to the outstanding obligations under any intercompany loans
owed to Borrowers, but only to the extent any such intercompany loans exist at such
time.  For the avoidance of doubt, if
there are no outstanding intercompany loans owed to Borrowers by the Channell
Australia Entities, then the sale, lease or other disposition of or transfer of
Equipment or other fixed assets of the Channell Australia Entities shall be
permitted under this Section 6.4.2.


SECTION 7. REPRESENTATIONS 
AND  WARRANTIES


7.1          General Representations and
Warranties.


To induce Administrative Agent, Canadian Agent, and
each Lender to enter into this Agreement and to make advances hereunder, each
Borrower warrants, represents and covenants to Administrative Agent, Canadian
Agent, and each Lender that:



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7.1.1        Organization and Qualification.  Domestic Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  Canadian Borrower is a
corporation duly organized and validly existing under the laws of Ontario.  CCEL is a private limited liability company  duly incorporated and validly existing under
the laws of England and Wales. CLU is a private limited liability company duly
incorporated and validly existing under the laws of England and Wales.  Each of Borrowers’ Subsidiaries not
referenced in the preceding sentences is a corporation, limited partnership or
limited liability company duly organized, validly existing and, with respect to
those Subsidiaries organized in the United States, in good standing under the
laws of the jurisdiction of its incorporation or organization.  Each Borrower and each of its Subsidiaries is
duly qualified and is authorized to do business and, with respect to Domestic
Borrower and those Subsidiaries organized in the United States, is in good
standing as a foreign limited liability company, limited partnership or
corporation, as applicable, in each state or jurisdiction listed on Schedule 7.1.1
hereto and in all other states and jurisdictions in which the failure of such
Borrower or any of its Subsidiaries to be so qualified would reasonably be
expected to have a Material Adverse Effect.


7.1.2        Power and Authority.  Each Borrower and each of its Subsidiaries is
duly authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party.  The execution, delivery and performance of this
Agreement by each Borrower, and the execution, delivery and performance of each
of the other Loan Documents by each Borrower and each of its Subsidiaries party
thereto, have been duly authorized by all necessary corporate or other relevant
action and do not and will not (a) require any consent or approval of the
shareholders or other equity holders of any Borrower or any of the
shareholders, partners or members, as the case may be, of any Subsidiary of any
Borrower (other than UK Guarantors); (b) contravene any Borrower’s or any
of its Subsidiaries’ charter, articles or certificate of incorporation,
partnership agreement, certificate of formation, by-laws, limited liability
agreement, operating agreement, unanimous shareholders agreement or other
organizational documents (as the case may be); (c) violate, or cause any
Borrower or any of its Subsidiaries to be in default under, any provision of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect having applicability to such Borrower or any
of its Subsidiaries, the violation of which would reasonably be expected to
have a Material Adverse Effect; (d) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which any Borrower or any of its Subsidiaries is a party
or by which it or its Properties may be bound or affected, the breach of or
default under which would reasonably be expected to have a Material Adverse
Effect; or (e) result in, or require, the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to any of the Properties
now owned or hereafter acquired by any Borrower or any of its Subsidiaries.


7.1.3        Legally Enforceable Agreement.  This Agreement is, and each of the other Loan
Documents when delivered under this Agreement will be, a legal, valid and
binding obligation of each Borrower party thereto and each of its Subsidiaries
party thereto, enforceable against it in accordance with its respective terms,
except as enforcement may be limited by applicable bankruptcy or insolvency
laws, and by general principles of equity.



 50
 









7.1.4        Capital Structure.  Schedule 7.1.4 hereto states, as
of the date hereof, (a) the correct name of each of the Subsidiaries of
each Borrower, its jurisdiction of incorporation or organization and the
percentage of its Voting Stock owned by Borrowers, (b) the name of each
Borrower’s and each of its Subsidiaries’ corporate or joint venture
relationships and the nature of the relationship, (c) the number, class
and holder of all outstanding Securities of Borrowers (other than Domestic
Borrower) and the holder of Securities of each Subsidiary of each Borrower and
(d) the number of issued and authorized, but unissued, Securities of each
Borrower (with respect to Domestic Borrower, as of the date set forth in such
schedule).  Attached as Schedule
7.1.4A hereto is the corporate organization chart of the Domestic Borrower
and its Subsidiaries as of the Closing Date. 
Each Borrower has good title to all of the Securities it purports to own
of each of such Subsidiaries, free and clear in each case of any Lien other
than Permitted Liens.  All such
Securities have been duly issued and are fully paid and non-assessable.  Except as set forth on Schedule 7.1.4,
as of the date hereof, there are no outstanding options to purchase, or any
rights or warrants to subscribe for, or any commitments or agreements to issue
or sell any Securities or obligations convertible into, or any powers of attorney
relating to, any Securities of any Borrower or any of its Subsidiaries.  Except as set forth on Schedule 7.1.4,
as of the date hereof, there are no outstanding agreements or instruments
binding upon any of any Borrower’s or any of its Subsidiaries’ partners,
members or shareholders, as the case may be, relating to the ownership of its
Securities.


7.1.5        Names.  No Borrower nor any of its Subsidiaries has
been known as or has used any legal, fictitious or trade names except those
listed on Schedule 7.1.5 hereto. 
Except as set forth on Schedule 7.1.5, no Borrower nor any
of its Subsidiaries has been the surviving entity of a merger or consolidation,
or the entity resulting from an amalgamation, or has acquired all or
substantially all of the assets of any Person. 
Each Borrower’s and each of its Subsidiaries’ respective jurisdictions
of incorporation or organization, Type of Organization and Organizational I.D.
Number, and any United Kingdom and Canadian equivalent thereof, are set forth
on Schedules 7.1.4 and 7.1.5. 
The respective exact legal names of each Borrower and each of its
Subsidiaries are set forth on Schedule 7.1.5.


7.1.6        Business Locations.  Each Borrower’s and each of its Subsidiaries’
chief executive office and other places of business as of the date hereof are
as listed on Schedule 6.1.1 hereto as updated from time to time by
Borrower Representative.  During the
preceding one-year period, no Borrower nor any of its Subsidiaries has had an
office or place of business other than as listed on Schedule 6.1.1.  All tangible Collateral is and will at all
times be kept by each Borrower and its Subsidiaries in accordance with
Section 6.1.1.  Except as shown on Schedule 6.1.1,
as  of the date hereof, no Inventory is
stored with a bailee, distributor, warehouseman or similar party, nor is any
Inventory consigned to any Person.



 51
 









7.1.7        Title to Properties; Priority of
Liens.  Each Borrower and each of its
Subsidiaries has good and indefeasible title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real (or immovable)
Property, and good title to all of the Collateral owned by such Borrower or
Subsidiary and all of its other Property, in each case, free and clear of all
Liens except Permitted Liens.  Each
Borrower and each of its Subsidiaries has paid or discharged all lawful claims
which, if unpaid, might become a Lien against any Borrower’s or such Subsidiary’s
Properties that is not a Permitted Lien. 
The Liens granted to Administrative Agent and Canadian Agent under
Section 5 hereof are first priority Liens, subject only to Permitted
Liens.


7.1.8        Accounts.  Administrative Agent and Canadian Agent may
rely, in determining which Accounts are Eligible Accounts, on all statements
and representations made by Borrowers and their Subsidiaries with respect to
any Account or Accounts.  With respect to
each Account of a Borrower and each Account of each Subsidiary of a Borrower,
whether or not such Account of such Borrower or such Subsidiary is an Eligible
Account, unless otherwise disclosed to Administrative Agent or Canadian Agent
in writing:


(a)           It is genuine and in
all respects what it purports to be, and it is not evidenced by a judgment;


(b)           It arises out of a
completed, bona fide sale and delivery of goods or rendition of services by
such Borrower or such Subsidiary, in the ordinary course of its business and in
accordance with the terms and conditions of all purchase orders, contracts or
other documents relating thereto to be complied with by any Borrower or any of
its Subsidiaries and forming a part of the contract between such Borrower or
such Subsidiary and the Account Debtor and the Account Debtor is not an
Affiliate of such Borrower or such Subsidiary, except to the extent such
Accounts with Affiliates exist in the ordinary course of business and
consistent with past practices;


(c)           It is for a
liquidated amount maturing as stated in the duplicate invoice covering such
sale or rendition of services, a copy of which has been furnished or is
available to Administrative Agent or Canadian Agent, as applicable;


(d)           There are no facts,
events or occurrences known to Borrowers which in any way impair the validity
or enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered or made
available to Administrative Agent or Canadian Agent, as applicable, with
respect thereto;


(e)           To the best of such
Borrower’s knowledge (with “knowledge” in this clause (e) referring to
the actual knowledge of those officers of such Borrower which are directly
involved in the administration of the credit facilities provided pursuant to
this Agreement), the Account Debtor thereunder (i) had the capacity to
contract at the time any contract or other document giving rise to the Account
was executed and (ii) is not involved in any bankruptcy or insolvency
proceeding; and



 52
 









(f)            To the best of such
Borrower’s knowledge (with “knowledge” in this clause (f) referring to
the actual knowledge of those officers of such Borrower which are directly
involved in the administration of the credit facilities provided pursuant to
this Agreement), there are no proceedings or actions which are pending against
the Account Debtor thereunder which are reasonably likely to result in any
material adverse change in such Account Debtor’s financial condition or the
collectability of such Account.


7.1.9        Equipment.  The Equipment of each Borrower and its
Subsidiaries is in good operating condition and repair as of the date hereof,
and all necessary replacements of and repairs thereto shall be made so that the
operating efficiency thereof shall be maintained and preserved, reasonable wear
and tear excepted, except where the failure to so maintain the same would not
reasonably be expected to have a Material Adverse Effect.  No Borrower will permit (nor will it allow
any of its Subsidiaries (other  than Restricted Subsidiaries) to
permit) any Equipment owned by such Borrower or Subsidiary to become affixed to
any real (or immovable) Property leased to such Borrower or such Subsidiary so
that an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real (or immovable) Property has
executed a landlord waiver or leasehold mortgage in favor of and in form reasonably
acceptable to Administrative Agent or Canadian Agent, as applicable, and no
Borrower will permit (nor will it allow any of its Subsidiaries (other  than
Restricted Subsidiaries) to permit) any of the Equipment of such Borrower or
such Subsidiary to become an accession to any personal (or movable) Property
other than Equipment that is subject to first priority (except for Permitted
Liens) Liens in favor of Administrative Agent or Canadian Agent, as applicable.


7.1.10      Financial Statements; Fiscal Year.  The Consolidated balance sheets of Domestic
Borrower and its Subsidiaries (including the accounts of all Subsidiaries of
Domestic Borrower and their respective Subsidiaries for the respective periods
during which a Subsidiary relationship existed) as of April 30, 2007, and the
related statements of income for the periods ended on such date, except for the
absence of footnote disclosures and normal year-end adjustments, have been
prepared in accordance with GAAP, and present fairly in all material respects the
financial positions of Domestic Borrower and such Persons, taken as a whole, at
such dates and the results of Domestic Borrower’s and such Persons’ operations,
taken as a whole, for such periods.  As
of the date hereof, since December 31, 2006, there has been no material adverse
change in the financial position of Domestic Borrower and such other Persons,
taken as a whole, as reflected in the Consolidated balance sheet as of such
date.  As of the date hereof, the fiscal
year of each Borrower and each of its Subsidiaries ends on December 31 of each
year.


7.1.11      Full Disclosure.  The financial statements referred to in
Section 7.1.10 hereof do not, nor does this Agreement or any other written
statement of any Borrower or any of its Subsidiaries to Administrative Agent,
Canadian Agent, or any Lender contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. To the best of Borrowers’ knowledge, there is no fact
pertaining directly to the business of Borrowers and their Subsidiaries or
their customers which any Borrower or any of its Subsidiaries has failed to
disclose to Administrative Agent, Canadian Agent, or any Lender in writing
which would reasonably be expected to have a Material Adverse Effect.



 53
 









7.1.12      Solvent Financial Condition.  Except as set forth on Schedule 7.1.12,
each Borrower and each of its Subsidiaries, is now and, after giving effect to
the initial Loans to be made and the initial Domestic Letters of Credit and
Domestic LC Guaranties to be issued hereunder and all related transactions,
will be, as of the Closing Date, Solvent.


7.1.13      Surety Obligations.  Except as set forth on Schedule 7.1.13,
as of the date hereof, no Borrower nor any of its Subsidiaries is obligated as
surety or indemnitor under any surety or similar bond or other contract issued
or entered into to assure payment, performance or completion of performance of
any undertaking or obligation of any Person.


7.1.14      Taxes.  Domestic Borrower’s federal tax
identification number is 95-2453261. 
Canadian Borrower’s original corporation number is Ontario Corporation
Number 1244636.  The federal tax
identification number of each Domestic Subsidiary of each Borrower is shown on Schedule 7.1.14
hereto.  Except as set forth on Schedule
7.1.14 hereto, each Borrower and each of its Subsidiaries has filed all
federal, national, state, provincial and local tax returns (including, without
limitation, any returns required under its jurisdiction of organization or
incorporation) and other reports relating to taxes it is required by law to
file, except where the failure to so file would not reasonably be expected to
have a Material Adverse Effect, and has paid, or made provision for the payment
of, all material taxes, assessments, fees, levies and other governmental
charges known by it to be due upon it, its income and Properties as and when
such taxes, assessments, fees, levies and charges are due and payable, unless
and to the extent any thereof are being actively contested in good faith and by
appropriate proceedings and each Borrower and each of its Subsidiaries
maintains reasonable reserves on its books therefor.  Except as set forth on Schedule 7.1.14
hereto, no tax Lien has been filed with respect to any such tax, fee or other
charge.  To the knowledge of each
Borrower, no claim is being asserted with respect to any such tax, fee or other
charge, except (a) as set forth on Schedule 7.1.14 hereto, and (b) where
any such claim would not reasonably be expected to result in a Material Adverse
Effect.  The provision for taxes on the
books of each Borrower and its Subsidiaries is adequate for all years not
closed by applicable statutes, and for the current fiscal year.  No Borrower, nor any of its Subsidiaries, has
entered into any “listed transactions” within the meaning of Treasury
Regulation 1.6011-4T(b)(2).


7.1.15      Brokers.  Except as shown on Schedule 7.1.15
hereto, there are no claims for brokerage commissions, finder’s fees or
investment banking fees in connection with the transactions contemplated by
this Agreement arising from any actions taken by any Borrower or any of its
Subsidiaries.


7.1.16      Patents, Trademarks, Copyrights and
Licenses.  Each Borrower and each of
its Subsidiaries owns, possesses or licenses or has the right to use all the
patents, trademarks, service marks, trade names, copyrights, licenses and other
Intellectual Property necessary for the present conduct of its business without
any known conflict with the rights of others, except for such conflicts as
would not reasonably be expected to have a Material Adverse Effect.  All such patents, registered trademarks,
trademark applications, registered service marks, registered tradenames,
registered copyrights, copyright applications, and



 54
 









licenses of Intellectual
Property are listed on Schedule 7.1.16 hereto.  No claim has been asserted against any
Borrower or any of its Subsidiaries which is currently pending that its use of
its Intellectual Property or the conduct of its business does or may infringe
upon the Intellectual Property rights of any third party, except for such
claims as would not reasonably be expected to have a Material Adverse
Effect.  To the knowledge of Borrowers
and except as set forth on Schedule 7.1.16 hereto, as of the date
hereof, no Person is engaging in any activity that infringes in any material
respect upon Borrowers’ or any of their Subsidiaries’ material Intellectual
Property.  Except as set forth on Schedule 7.1.16,
each Borrower’s and each of its Subsidiaries’ material license agreements
and similar arrangements relating to its Inventory (a) permits, and does
not restrict, the assignment by such Borrower or any of its Subsidiaries to
Administrative Agent or Canadian Agent, as the case may be, or any other Person
designated by Administrative Agent or Canadian Agent, as the case may be, of
all of such Borrower’s or such Subsidiary’s, as applicable, rights, title and
interest pertaining to such license agreement or such similar arrangement and
(b) would permit the continued use by such Borrower or such Subsidiary, or
Administrative Agent or Canadian Agent, as the case may be, or its assignee, of
such license agreement or such similar arrangement and the right to sell
Inventory subject to such license agreement for a period of no less than 6
months after a default or breach of such agreement or arrangement.  The consummation and performance of the
transactions and actions contemplated by this Agreement and the other Loan
Documents, including without limitation, the exercise by Administrative Agent
or Canadian Agent, as the case may be, of any of its rights or remedies under
Section 10, will not result in the termination or impairment of any of any
Borrower’s or any of its Subsidiaries’ ownership or rights relating to its
Intellectual Property, except for such Intellectual Property rights the loss or
impairment of which would not reasonably be expected to have a Material Adverse
Effect.  Except as listed on Schedule 7.1.16
and except as would not reasonably be expected to have a Material Adverse
Effect, (A) no Borrower nor any of its Subsidiaries is in breach of, or
default under, any term of any license or sublicense with respect to any of its
Intellectual Property and (B) to the knowledge of Borrowers, no other
party to such license or sublicense is in breach thereof or default thereunder,
and such license is valid and enforceable.


7.1.17      Governmental Consents.  Each Borrower and each of its Subsidiaries
has, and is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it, except where the failure to possess or so maintain such rights
would not reasonably be expected to have a Material Adverse Effect.  No action, consent or approval of,
registration or filing with or any other action by any governmental authority
is or will be required in connection with the borrowings hereunder, the
creation of the security interests contemplated hereby and the other
transactions contemplated to occur under the Loan Documents, except for
(a) the filing of UCC and PPSA financing statements and filings with the
United States Patent and Trademark Office, the United States Copyright Office
and foreign equivalent, as applicable, and such other comparable documents as
may be necessary to perfect the security interest of the Lenders hereunder in
any jurisdiction, (b) such filings as are required by Section 395 of the
Companies Act of England and Wales (as amended) or any applicable act of
Parliament or rule or regulations of England and Wales relating to creation of
security interests over land, and (c) such others as have been made or
obtained and are in full force and effect.



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7.1.18      Compliance with Laws.  Except as set forth on Schedule 7.1.18,
each Borrower and each of its Subsidiaries has duly complied in all material
respects with (except for such noncompliance with respect to which no action
may be taken by the applicable governmental authorities against any Borrower or
any of its Subsidiaries), and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all United States of America, Canadian and United Kingdom federal, state,
provincial and local laws, rules and regulations applicable to such Borrower or
such Subsidiary, as applicable, its Properties or the conduct of its business,
except for such non-compliance as would not reasonably be expected to have a
Material Adverse Effect, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries under any such
law, rule or regulation, except where (i) such noncompliance would not
reasonably be expected to have a Material Adverse Effect or (ii) no action may
be taken by the applicable governmental authorities against any Borrower or any
of its Subsidiaries with respect to such noncompliance.  Each Borrower and each of its Subsidiaries
has established and maintains an adequate monitoring system to insure that it
remains in compliance in all material respects with all federal, state,
provincial and local rules, laws and regulations applicable to it.  No Inventory has been produced in violation
of the Fair Labor Standards Act (29 U.S.C. §201 et seq.), as amended.


7.1.19      Restrictions.  Except pursuant to the documents governing
the Channell Bushman Credit Facility, no Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness.


7.1.20      Litigation.  Except as set forth on Schedule 7.1.20
hereto, there are no actions, suits, proceedings or investigations pending, or
to the knowledge of Borrowers, threatened, against or involving any Borrower or
any of its Subsidiaries, or the business, operations, Properties, prospects,
profits or condition of any Borrower or any of its Subsidiaries which, singly
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect.  No Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal, which, singly or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.


7.1.21      No Defaults.  No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrowers’ performance hereunder, constitute a Default or an Event of
Default.  No Borrower nor any of its
Subsidiaries is in default in (and no event has occurred and no condition
exists which constitutes, or which with the passage of time or the giving of
notice or both would constitute, a default in) the payment of any Indebtedness
to any Person for Money Borrowed in excess of $250,000.



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7.1.22      Leases.  Schedule 7.1.22 hereto is a
complete listing of all capitalized and operating personal (or movable)
Property leases of Borrowers and their Subsidiaries and all real (or immovable)
Property leases of Borrowers and their Subsidiaries.  Each Borrower and each of its Subsidiaries is
in full compliance with all of the terms of each of its respective capitalized
and operating leases, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.


7.1.23      Pension Plans.


(a)           Except as disclosed
on Schedule 7.1.23 hereto, no Borrower nor any of its Subsidiaries
has any Plan, Canadian Pension Plan or pension scheme.  Each Borrower and each of its Subsidiaries is
in compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan, except where the failure to so comply
would not reasonably be expected to have a Material Adverse Effect.  No fact or situation that would reasonably be
expected to have a Material Adverse Effect exists in connection with any
Plan.  Neither Domestic Borrower nor any
of its Subsidiaries has any material withdrawal liability in connection with a
Multiemployer Plan.


(b)           The Canadian Pension
Plans are duly registered under and have been administered in compliance with
the Income Tax Act (Canada) and all other applicable laws which require
registration (except where the failure to so comply would not reasonably be
expected to have a Material Adverse Effect) and no event has occurred which is
reasonably likely to cause the loss of such registered status.  All material obligations of Canadian Borrower
or any of its Subsidiaries (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Canadian Pension Plans and the funding agreements therefor have been performed
in a timely fashion.  There have been no
improper withdrawals or applications of the assets of the Canadian Pension
Plans or the Canadian Benefit Plans. 
There are no outstanding disputes, actions, suits or claims concerning
the assets of the Canadian Pension Plans or the Canadian Benefit Plans.  Each of the Canadian Pension Plans is fully
funded on a solvency basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the applicable governmental
authorities and which are consistent with generally accepted actuarial
principles).  Canadian Borrower and its
Subsidiaries have withheld all employee withholdings and have made all employer
contributions to be withheld and made by it pursuant to Canadian and any
provincial applicable law on account of Canadian Pension Plans, Canadian
Benefit Plans, Canadian employment insurance and employee income taxes.  No condition exists or transaction has
occurred in connection with any Canadian Pension Plan or Canadian Benefit Plan
which could result in the incurrence by Canadian Borrower or its Subsidiaries
of any liability, fine or penalty, except any liability, fine or penalty the
imposition of which would not reasonably be expected to have a Material Adverse
Effect.


(c)           All pension schemes
of UK Guarantors and any other Subsidiaries of Domestic Borrower that are
organized under the laws of England and Wales are operated and fully funded to
the extent required by law based on reasonable actuarial assumptions applicable
in the United Kingdom.



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7.1.24      Trade Relations.  There exists no actual or, to any Borrower’s
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any Borrower or
any of its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower
and its Subsidiaries, or with any material supplier, except in each case, where
the same would not reasonably be expected to have a Material Adverse Effect,
and there exists no present condition or state of facts or circumstances which
would prevent any Borrower or any of its Subsidiaries from conducting such
business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.


7.1.25      Labor Relations.  Except as described on Schedule 7.1.25
hereto, as of the date hereof, no Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement. 
There are no material grievances, disputes or controversies with any
union or any other organization of any Borrower’s or any of its Subsidiaries’
employees, or threats of strikes, work stoppages or any asserted pending
demands for collective bargaining by any union or organization, except those
that would not reasonably be expected to have a Material Adverse Effect.


7.1.26      Environmental Matters.


(a)           The properties now
or formerly owned or operated by each Borrower and its Subsidiaries (as
referred to in this Section 7.1.26, the “Owned Properties”) do not
contain any Hazardous Materials in amounts or concentrations which
(i) constitute, or constituted a violation of, or (ii) could give
rise to liability under, Environmental Laws resulting from any Release of
Hazardous Materials during such  Borrower’s
or its Subsidiaries’ ownership or operation of the Owned Properties or, to the
knowledge of such Borrower, at any other time, which violations and
liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.


(b)           The Owned Properties
currently owned or occupied by such Borrower or any of its Subsidiaries and all
operations of such Borrower and its Subsidiaries are in compliance, and, to the
extent that such Borrower or any of its Subsidiaries owned or operated any
Owned Properties in the past three years, in the last three years have been in
compliance, with all Environmental Laws and all Environmental Permits and all
necessary Environmental Permits have been obtained and are in effect, except to
the extent that such non-compliance or failure to obtain any necessary permits,
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.


(c)           During the time of
such Borrower’s or its Subsidiaries’ ownership or operation of the Owned
Properties and, to the knowledge of such Borrower, at any other time, there
have been no Releases at, from, under or proximate to the Owned Properties or
otherwise in connection with the operations of such Borrower or its
Subsidiaries, which Releases, in the aggregate, could reasonably



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be expected to
result in a Material Adverse Effect, and none of the Owned Properties currently
owned or operated by such Borrower and its Subsidiaries are listed on the
Federal National Priorities List (under CERCLA and as defined pursuant to
Environmental Law), or any similar listing in any other relevant jurisdiction.


(d)           No Borrower nor any
of its Subsidiaries has received any Environmental Claim in connection with any
of the Owned Properties or the operations of such Borrower or any of its
Subsidiaries or with regard to any Person whose liabilities for environmental
matters such Borrower or any of its Subsidiaries  has retained or assumed, in whole or in part,
contractually, by operation of law or otherwise, which Environmental Claim, in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect, nor do such Borrower or any of its Subsidiaries have reason to believe
that notice of any such Environmental Claim will be received or is being threatened.


Hazardous Materials have not been transported from any
of the Owned Properties by any Borrower or any of its Subsidiaries or, to the
knowledge of Borrowers, any other party, nor have Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of the Owned
Properties by any Borrower or any of its Subsidiaries in a manner that could
reasonably be expected to give rise to liability under any  Environmental Law that would constitute a
Material Adverse Effect, nor have any Borrower or any of its Subsidiaries
retained or assumed any liability, contractually, by operation of law or
otherwise, with respect to the generation, treatment, storage or disposal of
Hazardous Materials, which transportation, generation, treatment, storage or
disposal, or retained or assumed liabilities, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.


7.2           Continuous
Nature of Representations and Warranties.


Each representation and warranty contained in this
Agreement and the other Loan Documents shall be continuous in nature and shall
remain accurate, complete and not misleading at all times during the term of
this Agreement, except for changes in the nature of a Borrower’s or one of a
Borrower’s Subsidiary’s business or operations that would render the
information in any schedule attached hereto or to any other Loan Document
either inaccurate, incomplete or misleading, so long as Majority Lenders have
consented to such changes or such changes are expressly permitted by this
Agreement (provided that the consent of Majority Lenders shall not be required
(so long as Borrowers have notified Administrative Agent of such changes) with
respect to the following, to the extent otherwise expressly permitted by this
Agreement: (a) the entry into any capitalized or operating personal (or
movable) Property leases by any Borrowers or any of their Subsidiaries, or any
real (or immovable) Property leases by any Borrower or any of their
Subsidiaries not identified on Schedule 7.1.22 as of the Closing Date, (b) the
establishment by any Borrower or any of their Subsidiaries of any Plan,
Canadian Pension Plan or pension scheme not identified on Schedule 7.1.23 as of
the Closing Date, (c) the filing of any tax Lien permitted by Section 8.2.5(b),
or (d) the issuance of additional equity by Domestic Borrower).



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7.3           Survival of Representations and
Warranties.


All representations and warranties of Borrowers
contained in this Agreement or any of the other Loan Documents shall survive
the execution, delivery and acceptance thereof by Administrative Agent,
Canadian Agent, and each Lender and the parties thereto and the closing of the
transactions described therein or related thereto.


SECTION 8. COVENANTS  AND  CONTINUING 
AGREEMENTS


8.1           Affirmative
Covenants.


During the term of this Agreement, and thereafter for
so long as there are any Obligations outstanding, each Borrower covenants that,
unless otherwise consented to by Majority Lenders, in writing, it shall (and it
shall cause each of its Subsidiaries to):


8.1.1        Visits and Inspections; Lender
Meeting.  Permit representatives of
Administrative Agent and Canadian Agent, and during the continuation of any
Default or Event of Default any Lender, from time to time, as often as may be
reasonably requested, but only during normal business hours, to visit and
inspect the Properties of such Borrower and such Subsidiaries, inspect, audit
and make extracts from their books and records, and discuss with their
officers, their employees, their consultants and their independent accountants,
such Borrower’s and such Subsidiaries’ business, assets, liabilities, financial
condition, business prospects and results of operations.  Administrative Agent or Canadian Agent, as
applicable, if no Default or Event of Default then exists, shall give each
Borrower or Subsidiary reasonable prior notice of any such inspection or
audit.  Without limiting the foregoing,
each Borrower will participate and will cause its Subsidiaries and key
management personnel to participate in a meeting with Administrative Agent,
Canadian Agent, and Lenders periodically during each year, which meetings shall
be held at such times and such places as may be reasonably requested by
Administrative Agent and Canadian Agent.


8.1.2        Notices.  Promptly notify Administrative Agent in
writing of the occurrence of (a) any Default or Event of Default and
(b) any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading in any material respect as of the date
made or remade.  In addition, each
Borrower agrees to provide Administrative Agent with (i) 10 Business Days’
prior written notice of (A) any change in the legal name of such Borrower
or any of its Subsidiaries, (B) the adoption by such Borrower or any of
its Subsidiaries of any new fictitious name or tradename and (C) any
change in the principal place of business of such Borrower or any of its
Subsidiaries, and (ii) prompt written notice of any change in the
information disclosed in any exhibit or schedule hereto, in each case after
giving effect to the materiality limits and Material Adverse Effect
qualifications contained therein.


8.1.3        Financial Statements.  Keep, and cause each of its Subsidiaries to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with customary
accounting practices reflecting all its financial transactions; and cause to be
prepared and furnished to Administrative Agent,



 60















Canadian Agent, and each
Lender, the following, all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrowers’ certified public accountants concur in any
change therein and such change is disclosed to Administrative Agent and is
consistent with GAAP:


(a)           not later than 90 days after the close of
each fiscal year of Domestic Borrower, unqualified (except for a qualification
for a change in accounting principles with which the accountant concurs)
audited financial statements of Domestic Borrower and its Subsidiaries as of
the end of such year (including without limitation, a balance sheet, statement
of income and statement of cash flow), on a Consolidated basis, certified by a
firm of independent certified public accountants of recognized standing
selected by Borrowers but reasonably acceptable to Administrative Agent and,
within a reasonable time thereafter a copy of any management letter issued in
connection therewith;


(b)           not later than 30 days after the end of
each month hereafter, including the last month of Domestic Borrower’s fiscal
year, unaudited financial statements of Domestic Borrower and its Subsidiaries
as of the end of such month and of the portion of the fiscal year then elapsed
(including without limitation, a balance sheet, statement of income and
statement of cash flow), on a Consolidated and consolidating basis, certified
by the principal financial officer of Domestic Borrower as prepared in
accordance with GAAP and fairly presenting in all material respects the financial
position and results of operations of Domestic Borrower and its Subsidiaries
for such month and period subject only to changes from audit and year-end
adjustments and except that such statements need not contain notes;


(c)           together with each delivery of financial
statements pursuant to clauses (a) and (b) of this
Section 8.1.3, a management report (i) setting forth in comparative
form the corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the most recent Projections for
the current fiscal year delivered pursuant to Section 8.1.7 and
(ii) upon Administrative Agent’s request, identifying the reasons for any
significant variations from such Projections. 
The information above shall be presented in reasonable detail and shall
be certified by the chief financial officer of Domestic Borrower to the effect
that such information fairly presents in all material respects the results of
operations and financial condition of Domestic Borrower and its Subsidiaries as
at the dates and for the periods indicated;


(d)           upon Administrative Agent’s request,
promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements or financial statements which any Borrower has made available
to its Securities holders and copies of any regular, periodic and special
reports or registration statements which any Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;



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(e)           upon request of Administrative Agent,
copies of any annual report to be filed with the United States Department of
Labor in connection with each Plan;


(f)            concurrently with the delivery of the financial
statements described in paragraph (a) and (b) of this Section 8.1.3 and as
more frequently as Administrative Agent or Canadian Agent may request, a
statutory payables certificate with respect to Canadian Borrower and UK
Guarantors in the form of Exhibit 8.1.3(g) hereto; and


(g)           such other data and information
(financial and otherwise) as Administrative Agent, Canadian Agent, or any
Lender, from time to time, may reasonably request, bearing upon or related to
the Collateral or Borrowers’ or any of their Subsidiaries’ financial condition
or results of operations.


Concurrently with the delivery of the financial
statements described in paragraph (a) of this Section 8.1.3,
Borrowers shall forward to Administrative Agent a copy of the accountants’
letter to Domestic Borrower’s management that is prepared in connection with
such financial statements and at Administrative Agent’s request shall furnish
to Administrative Agent a certificate of the aforesaid certified public
accountants certifying to Administrative Agent that, based upon their
examination of the financial statements of Domestic Borrower and its
Subsidiaries, they are not aware of any Default or Event of Default, or, if
they are aware of such Default or Event of Default, specifying the nature thereof.  Concurrently with the delivery of the
financial statements described in paragraphs (a) and (b) of
this Section 8.1.3, or more frequently if reasonably requested by
Administrative Agent or Canadian Agent, Borrowers shall cause to be prepared
and furnished to Administrative Agent and Canadian Agent a Compliance
Certificate in the form of Exhibit 8.1.3 hereto executed by the
Chief Financial Officer of Domestic Borrower.


8.1.4        Borrowing Base Certificates. 
On or before the 15th day of each month from and after the date hereof,
Borrowers shall deliver to Administrative Agent a Borrowing Base Certificate as
of the last day of the immediately preceding month, with such supporting
materials as Administrative Agent shall reasonably request, which Borrowing Base
Certificate shall provide eligibility information with respect to Accounts of
the Account Creditors and Inventory of Domestic Borrower on a consolidated and
consolidating basis. If Administrative Agent deems it advisable in its sole
discretion, Borrowers shall execute and deliver to Administrative Agent
Borrowing Base Certificates more frequently than as provided above.


8.1.5        [Reserved].


8.1.6        Landlord, Processor and Storage Agreements. 
Provide Administrative Agent and Canadian Agent with copies of all agreements
between each Borrower or any of its Subsidiaries and any landlord, processor,
distributor, warehouseman or consignee which owns any premises at which any
Collateral may, from time to time, be kept.



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8.1.7        Projections.  No later than
thirty (30) days prior to the end of each fiscal year of Domestic Borrower,
deliver to Administrative Agent Consolidated and consolidating Projections of
Domestic Borrower and its Subsidiaries for the forthcoming fiscal year of
Domestic Borrower, month by month.


8.1.8        Subsidiaries.  Cause each
Domestic Subsidiary of Domestic Borrower (other  than Restricted
Subsidiaries) and upon Administrative Agent’s request each Foreign Subsidiary
of Domestic Borrower (other  than Restricted Subsidiaries and
Canadian Borrower), in each case whether now or hereafter in existence, to
execute and deliver to Administrative Agent a Guaranty Agreement and a Guaranty
Security Agreement pursuant to which such Subsidiary guaranties the payment of
all Obligations and grants to Administrative Agent (for the benefit of itself,
Canadian Agent, and Lenders) a first priority Lien (subject only to Permitted
Liens) on all of its Properties of the types described in Section 5.  Additionally, each Borrower and each
Subsidiary of a Borrower (other  than Restricted Subsidiaries)
shall execute and deliver to Administrative Agent a pledge agreement pursuant
to which such Borrower or such Subsidiary grants to Administrative Agent (for
the benefit of itself, Canadian Agent, and Lenders) a first priority Lien (subject
only to Permitted Liens) with respect to (a) all of the issued and outstanding
Securities of each Subsidiary of Domestic Borrower which is not a Restricted
Subsidiary (other than Canadian Borrower (with respect to which 65% of the
issued and outstanding Securities shall be pledged to Administrative Agent on
the Closing Date), and (b) 65% of the issued and outstanding Securities, in the
aggregate, of each Restricted Subsidiary (other than Channell Bushman and the
Channell Australia Entities) described in clause (b) of the
definition of “Restricted Subsidiary” if such Subsidiary possesses 2.5% or
greater of Consolidated assets of Domestic Borrower, determined in accordance
with GAAP, or owns any material Intellectual Property.  In addition, Borrowers shall cause each
Restricted Subsidiary of Domestic Borrower which ceases to be a Restricted
Subsidiary to comply with this Section 8.1.8, and Borrowers shall, and shall
cause each Subsidiary of Borrower (other than Restricted Subsidiaries) which
owns equity of such Restricted Subsidiary to, comply with this Section 8.1.8
with respect to each Restricted Subsidiary of Domestic Borrower which ceases to
be a Restricted Subsidiary.


8.1.9        Deposit and Brokerage Accounts. 
For each deposit account or brokerage account that any Borrower or any
of its Subsidiaries (other  than Restricted Subsidiaries) at any
time opens or maintains, such Borrower shall (or shall cause such Subsidiary
to), at Administrative Agent’s or Canadian Agent’s, as the case may be, request
and option, pursuant to an agreement in form and substance satisfactory to
Administrative Agent or Canadian Agent, as the case may be, cause the
depository bank or securities intermediary, as applicable, to agree to comply
at any time with instructions from Administrative Agent or Canadian Agent, as
the case may be, to such depository bank or securities intermediary, as
applicable, directing the disposition of funds from time to time credited to
such deposit or brokerage account, without further consent of such Borrower or
such Subsidiary.


8.1.10      ERISA.  Each Borrower
will, and will cause each of its Subsidiaries to, (a) comply with the
applicable provisions of ERISA and the Code (or their Canadian or United
Kingdom equivalent) and of the regulations and published interpretations
thereunder, except where the failure to comply therewith could not reasonably
be expected to 



 63
 









have a Material Adverse
Effect, and (b) furnish to Administrative Agent (i) promptly, and in
any event within 30 days after any responsible officer of such Borrower either
knows or has a reasonable basis to know that any Reportable Event has occurred,
that alone or together with any other Reportable Event could reasonably be
expected to result in material liability, of such Borrower, any Subsidiary or any
ERISA Affiliate to the PBGC, a statement of a responsible officer of such
Borrower (in his or her capacity as such) setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice such
Borrower, any Subsidiary or any ERISA Affiliate receives from the PBGC relating
to the intention of the PBGC to terminate any Plan or Plans or to appoint a
trustee to administer any Plan or Plans, (iii) within 30 days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with respect
to a Plan, a statement of a responsible officer of such Borrower setting forth
details as to such failure and the action proposed to be taken with respect
thereto, together with a copy of such notice given to the PBGC and
(iv) promptly and in any event within 30 days after receipt thereof by
such Borrower, any Subsidiary or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by such Borrower, any
Subsidiary or any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer Plan is, or is
expected to be, terminated or in Reorganization, in each case within the
meaning of Title IV of ERISA; provided, however, that no such notice or
statement will be required under this Section 8.1.10 unless the event,
when aggregated with all other events described in this Section 8.1.10
occurring at the same time, could be reasonably expected to result in liability
to such Borrower, any Subsidiary or any ERISA Affiliate in an amount that would
exceed $250,000 in the aggregate for such Borrower, its Subsidiaries and all
ERISA Affiliates.


8.1.11      Compliance with Environmental Laws. 
Except as any of the following, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, each
Borrower will, and will cause each of its Subsidiaries to, comply, and use its
reasonable best efforts to cause all lessees and other Persons occupying its
Properties to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and Properties; obtain and
renew all material Environmental Permits necessary for its operations and
Properties; and conduct any remedial action required by any governmental
authority in accordance with Environmental Laws; provided, however,
that no Borrower nor any of its Subsidiaries shall be required to undertake any
remedial action to the extent that its obligation to do so is being contested
in good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances.


8.1.12      Patents, Trademarks and Copyrights. 
Each Borrower will, and will cause each of its Subsidiaries (other than
Restricted Subsidiaries) to (a) as it deems appropriate in its business
judgment, use commercially reasonable efforts to register with the United
States Patent and Trademark Office, the United States Copyright Office or
foreign equivalent, as the case may be, all of its or their right, title and
interest in each material patent, trademark and copyright used in its or their
business which is so registrable under applicable



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law, (b) report each
such filing and registration to Administrative Agent, with respect to Domestic
Collateral, and Canadian Agent, with respect to Canadian Collateral, within
fifteen (15) Business Days after the last day of the fiscal quarter in which
such filing occurs and (c) promptly upon request by Administrative Agent,
with respect to Domestic Collateral, and Canadian Agent, with respect to Canadian
Collateral, execute and deliver any and all agreements, instruments, documents,
and papers (each of which shall be in form and substance reasonably
satisfactory to Administrative Agent or Canadian Agent, as applicable) as may
be necessary or as Administrative Agent or Canadian Agent, as applicable, may
reasonably request to grant (to the extent possible) to Administrative Agent,
for the benefit of itself, Canadian Agent, and the Lenders, and to Canadian
Agent, for the benefit of itself, Canadian Lender and the Canadian
Participating Lenders, a perfected, first priority security interest therein
and in any goodwill and general intangibles relating thereto or represented
thereby.


8.1.13      Canadian Pension and Benefit Plans.


(a)           For each existing Canadian Pension Plan
of Canadian Borrower or any of its Subsidiaries, Canadian Borrower or such
Subsidiary, as applicable, shall ensure that such plan retains its registered
status under and is administered in a timely manner in all material respects in
accordance with the applicable pension plan text, funding agreement, the Income
Tax Act (Canada) and all other applicable laws.


(b)           For each Canadian Pension Plan hereafter
adopted by Canadian Borrower or any of its Subsidiaries which is required to be
registered under the Income Tax Act (Canada) or any other applicable laws, the
Canadian Borrower or such Subsidiary, as applicable, shall use its best efforts
to seek and receive confirmation in writing from the applicable governmental
authorities to the effect that such plan is unconditionally registered under
the Income Tax Act (Canada) and such other applicable laws.


(c)           For each existing and hereafter adopted
Canadian Pension Plan and Canadian Benefit Plan of Canadian Borrower or any of
its Subsidiaries, Canadian Borrower or such Subsidiary, as applicable, shall in
a timely fashion perform in all material respects all obligations (including
fiduciary, funding, investment and administration obligations) required to be
performed in connection with such plan and the funding media therefor.


(d)           Canadian Borrower and each Subsidiary of
Canadian Borrower shall deliver to Administrative Agent and Canadian Agent, if
requested by Administrative Agent or Canadian Agent, promptly after the filing
thereof by Canadian Borrower or such Subsidiary, as applicable, with any
applicable governmental authority, (i) copies of each annual and other
return, report or valuation with respect to each Canadian Pension Plan of
Canadian Borrower or such Subsidiary, as applicable; (ii) promptly after
receipt thereof, a copy of any direction, order, notice, ruling or opinion that
Canadian Borrower or such Subsidiary, as



 65
 









applicable, may
receive from any applicable governmental authority with respect to any Canadian
Pension Plan of Canadian Borrower or such Subsidiary, as applicable; and
(iii) notification within 30 days of any increases having a cost to
Canadian Borrower or such Subsidiary, as applicable, in excess of $250,000 per
annum, in the benefits of any existing Canadian Pension Plan or Canadian Benefit
Plan, or the establishment of any new Canadian Pension Plan or Canadian Benefit
Plan, or the commencement of contributions to any such plan to which Canadian
Borrower or such Subsidiary, as applicable, was not previously contributing.


8.2          Negative Covenants.


During the Term, and thereafter for so long as there
are any Obligations outstanding, each Borrower covenants that, unless otherwise
consented to by Majority Lenders, in writing, it shall not (and it shall not
permit its Subsidiaries to):


8.2.1        Mergers; Consolidations; Acquisitions; Structural
Changes.  Merge, amalgamate or consolidate with any
Person; or acquire all or substantially all of the Properties of any Person; or
change its state or other jurisdiction of incorporation or organization or Type
of Organization; or change its legal name, except for:


(a)           mergers of any Subsidiary of a Borrower
into a Borrower or another Subsidiary (other than Canadian Borrower or a
Restricted Subsidiary) of a Borrower;


(b)           acquisitions of assets consisting of
fixed assets or real (or immovable) Property that constitute Capital
Expenditures permitted under Section 8.2.8; and


(c)           mergers of any Channell Australia Entity
into another Channell Australia Entity.


8.2.2        Loans and Advances.  Make any
loans or other advances of money to any Person, other than (a) for salary,
travel advances, advances against commissions and other similar advances to
employees and extensions of trade credit in the ordinary course of business,
(b) deposits with financial institutions permitted under this Agreement,
(c) prepaid expenses, and (d) Permitted Intercompany Loans.


8.2.3        Total Indebtedness.  Create,
incur, assume, or suffer to exist, any Indebtedness, except:


(a)           Obligations owing to Administrative
Agent, Canadian Agent, or any Lender under this Agreement or the other Loan
Documents;


(b)           Indebtedness existing on the date of this
Agreement and listed on Schedule 8.2.3(b) and any refinancing
thereof which does not increase the amount thereof;



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(c)           Contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business;


(d)           Guaranties of any Indebtedness permitted
hereunder;


(e)           To the extent not mentioned above, trade
payables, accruals and accounts payable in the ordinary course of business (in
each case to the extent not overdue) not for Money Borrowed;


(f)            Subordinated Debt in such amounts as may
be approved in writing by Administrative Agent and the Majority Lenders;


(g)           Purchase Money Indebtedness secured by a
Purchase Money Lien and Capitalized Lease Obligations (and any refinancing
thereof), provided that the aggregate unpaid principal amount for
Borrowers and their Subsidiaries of the foregoing (excluding any interest
component thereof) does not exceed $2,000,000;


(h)           Permitted Intercompany Loans;


(i)            Guaranties in the ordinary course of
business by any Borrower of any obligation owed by any Subsidiary to an
unrelated third party, and guaranties by Subsidiaries of Domestic Borrower of
any obligation owed by a Borrower to an unrelated third party, provided that
the guarantied obligations are otherwise permitted by this Agreement and do not
exceed at any time the sum of the amount set forth on Schedule 8.2.3(i) hereto
as of the Closing Date plus $75,000;


(j)            Indebtedness not included in
paragraphs (a) through (j) above which, when added to outstanding
Indebtedness permitted under paragraph (g) above, does not exceed at any time,
in the aggregate, the sum of $1,000,000; and


(k)           Indebtedness under the Channell Bushman
Credit Facility which does not exceed an aggregate principal amount of
AUD15,000,000.


8.2.4        Affiliate Transactions.  Enter into,
or be a party to, any transaction with any Affiliate of a Borrower, including
without limitation any management, consulting or similar fees, except, without
duplication, (a) in the ordinary course of and pursuant to the reasonable
requirements of such Borrower’s or such Subsidiary’s business and upon fair and
reasonable terms which are fully disclosed to Administrative Agent and are no
less favorable to such Borrower or such Subsidiary than would be obtained in a
comparable arms-length transaction with a Person not an Affiliate of such
Borrower or such Subsidiary, (b) those transactions identified on Schedule
8.2.4 hereto, (c) Permitted Intercompany Loans, and (d) the employment of
an Affiliate who is a natural person by any Borrower or any Subsidiary as an
officer, director or employee of such Borrower or Subsidiary, and (e) as
otherwise permitted under this Agreement.



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8.2.5        Limitation on Liens.  Create or
suffer to exist any Lien upon any of its Property, income or profits, whether
now owned or hereafter acquired, except:


(a)           Liens at any time granted in favor of
Administrative Agent or Canadian Agent pursuant to the Loan Documents;


(b)           Liens for taxes, assessments or
governmental charges (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due, or being contested in the manner described in
Section 7.1.14 hereto, but only if such Lien would not reasonably be
expected to have a Material Adverse Effect;


(c)           Liens arising in the ordinary course of
the business of such Borrower or any of its Subsidiaries by operation of law or
regulation, but only if payment in respect of any such Lien is not at the time
required and such Liens do not, in the aggregate, materially detract from the
value of the Property of such Borrower or any of its Subsidiaries or materially
impair the use thereof in the operation of the business of such Borrower or any
of its Subsidiaries;


(d)           Purchase Money Liens securing Permitted
Purchase Money Indebtedness and any renewals or extensions thereof so long as
the obligations secured or benefited thereby are not increased and such Liens
comply with the limitations set forth in the definition of “Purchase Money Lien”;


(e)           Such other Liens as appear on Schedule 8.2.5
hereto and any renewals or extensions thereof so long as the obligations
secured or benefited thereby are not increased and such Liens are not extended
beyond their scope from that existing on the Closing Date;


(f)            Liens incurred or deposits made in the
ordinary course of business in connection with (i) worker’s compensation,
social security, unemployment insurance and other like laws or (ii) sales
contracts, leases, statutory obligations, work in progress advances and other
similar obligations not incurred in connection with the borrowing of money or
the payment of the deferred purchase price of property;


(g)           Reservations, covenants, zoning and other
land use regulations, title exceptions or encumbrances granted in the ordinary
course of business, affecting real (or immovable) Property owned or leased by
such Borrower or one of its Subsidiaries; provided that such exceptions
do not in the aggregate materially interfere with the use of such Property in
the ordinary course of such Borrower’s or such Subsidiary’s business;


(h)           Judgment Liens that do not give rise to
an Event of Default under Section 10.1.15;



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(i)            Liens securing Capitalized Lease
Obligations permitted by Section 8.2.3(g) on and limited to the capital assets
acquired, constructed or financed with the proceeds of such Capitalized Lease
Obligations;


(j)            Liens securing the Channell Bushman
Credit Facility; and


(k)           Such other Liens as Majority Lenders may
hereafter approve in writing.


Notwithstanding any
provision contained herein or in any of the Loan Documents to the contrary,
Borrower shall not, nor shall it permit any of its Subsidiaries, to create or
suffer to exist any Liens on the equity interests in Channell Bushman.


8.2.6        Payments and Amendments of Certain Debt.


(a)           Make any payment of any part or all of
any Subordinated Debt or take any other action or omit to take any other action
in respect of any Subordinated Debt, except in accordance with the
subordination agreement relative thereto or the subordination provisions
thereof; or


(b)           Amend or modify any agreement, instrument
or document evidencing or relating to any Subordinated Debt.


8.2.7        Distributions.  Declare or
make any Distributions, except for:


(a)           Distributions by any Subsidiary of
Borrowers to a Borrower; and


(b)           Distributions paid solely in Securities
of such Borrower or any of its Subsidiaries;


(c)           Distributions by Domestic Borrower
consisting of the repurchase of the common stock of Domestic Borrower in the
open market in an amount not to exceed $200,000 in the aggregate during each
fiscal year of Domestic Borrower, subject in the case of each such Distribution
to the following: (i) Aggregate Availability as at such date shall not be less
than $2,000,000, after giving effect to such repurchase, (ii) no Default or
Event of Default shall then exist or would result therefrom, and (iii)
Borrowers and their Subsidiaries shall not be in violation of Section 8.2.19 as
of such date; and


(d)           Distributions by any Channell Australia
Entity to another Channell Australia Entity.


8.2.8        Capital Expenditures.  Make Capital
Expenditures (including, without limitation, by way of capitalized leases (but
counting in any fiscal year the full amount of the obligations under each
capitalized lease entered into during such fiscal year and counting no amount
in respect of capitalized leases entered into during any other fiscal year))
which, in the aggregate, (a) as to Borrowers and the UK Guarantors, exceed
$3,500,000 for any fiscal year of Domestic Borrower and (b) as to Borrowers and
all of their Subsidiaries, exceed $6,000,000 for any fiscal year of Domestic
Borrower.



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8.2.9        Operating Leases.  Incur any
obligation to pay rent under an operating lease in any fiscal year of Domestic
Borrower if to do so would result in the aggregate obligation of Borrowers and
their Subsidiaries to make cash payments under all operating leases in that
fiscal year to exceed the sum of the amount set forth in Schedule 8.2.9
as of the Closing Date plus $500,000.


8.2.10      Disposition of Assets.  Sell, lease
or otherwise dispose of any of its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except for:


(a)           unless a Default or Event of Default has
occurred and Agents or Lenders are exercising any default remedies pertaining
to mashalling, sale, liquidation or other control of such Inventory, sales of
Inventory in the ordinary course of business;


(b)           transfers of Property to such Borrower by
a Subsidiary of such Borrower or by any Subsidiary to a Borrower where the
Liens created by the Security Documents over such Property are not adversely
affected in any material respect;


(c)           dispositions of Property that is
substantially worn, damaged, uneconomic or obsolete (subject to
Section 6.4.2 hereof);


(d)           dispositions of investments described in
clauses (d), (e), (f) and (g) of the
definition of the term “Restricted Investments”; and


(e)           other dispositions expressly authorized
by this Agreement, including without limitation dispositions of Equipment and
other fixed assets permitted by Section 6.4.2 hereof; and


(f)            the subletting by either UK Guarantor of
its leasehold interest in the applicable Subject UK Leaseholds.


8.2.11      Securities of Subsidiaries. 
Permit any Subsidiaries of Domestic Borrower to issue any additional
Securities except to a Borrower and except for (i) director’s qualifying
Securities and to any other Subsidiary of Domestic Borrower provided such
Subsidiary pledges such Securities to the Agents in accordance with this
Agreement and the other Loan Documents and (ii) Securities issued by any
Channell Australia Entity to any other Channell Australia Entity.


8.2.12      Bill-and-Hold Sales, Etc. 
Make a sale to any customer on a bill-and-hold or consignment basis.


8.2.13      Restricted Investment.  Make or have
any Restricted Investment.



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8.2.14      Subsidiaries and Joint Ventures. 
Create, acquire or otherwise suffer to exist any Subsidiary or joint
venture arrangement not in existence as of the date hereof except for the
Subsidiary described on Schedule 8.2.13.


8.2.15      Tax Consolidation.  File or
consent to the filing of any consolidated income tax return with any Person
other than Domestic Borrower and its Subsidiaries.


8.2.16      Organizational Documents. 
Agree to, or suffer to occur, any amendment, supplement or addition to
its or any of its Subsidiaries’ charter, articles or certificate of
incorporation, certificate of formation, limited partnership agreement, bylaws,
limited liability agreement, operating agreement or other organizational
documents (as the case may be), that would reasonably be expected to have a
Material Adverse Effect.


8.2.17      Fiscal Year End.  Change its
fiscal year end.


8.2.18      Aggregate Availability.  Permit
Aggregate Availability to be less than $1,500,000 at any time.


8.2.19      UK Losses.  Permit UK
Loss, (i) as of the last day of each calendar month for the calendar month then
ended, to exceed negative $500,000 and (ii) as of
the last day of each calendar month for the twelve month period then ended, to
exceed negative $900,000; provided that,
notwithstanding anything to the contrary contained in this Agreement, a
violation of this covenant shall not constitute a Default or an Event of
Default under this Agreement nor otherwise impose upon Borrowers or their
Subsidiaries any additional Obligations nor any acceleration of the payment of
any outstanding Obligations, but rather in the event of a violation of this
Section 8.2.19, the sole and exclusive right and remedy shall consist of the
right of Administrative Agent, in its sole discretion, to deem the UK Borrowing
Base equal to $0 (unless and until such breach shall be cured by Borrowers and
their Subsidiaries delivering appropriate information to Administrative Agent
indicating, and Administrative Agent’s determination, that Borrowers and their
Subsidiaries have complied with this Section 8.2.19 for three consecutive
months subsequent to such breach (it being acknowledged that only a breach of
clause (b) of this Section 8.2.19 is capable of such cure)).


8.2.20      Post-Closing Deliveries.  Within 30
days of the Closing Date, fail to cause UK Guarantors to deliver fully executed
collection account agreements and/or amendments to the existing collection
account agreements in respect of (i) UK Guarantors’ accounts with Bank of
America, N.A., London U.K. Branch and (ii) such other accounts of UK
Guarantors, as may be requested by Administrative Agent, in its sole
discretion, in each case in form and substance reasonably acceptable to Administrative
Agent.



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SECTION 9. CONDITIONS PRECEDENT


Notwithstanding any other provision of this Agreement
or any of the other Loan Documents, and without affecting in any manner the
rights of Administrative Agent, Canadian Agent, or any Lender under the other
sections of this Agreement, no Lender shall be required to make any Loan, nor
shall Administrative Agent be required to or issue or procure any Domestic
Letter of Credit or Domestic LC Guaranty unless and until each of the following
conditions has been and continues to be satisfied:


9.1           Documentation.


Administrative Agent shall have received, in form and
substance reasonably satisfactory to Administrative Agent, Canadian Agent, and
their counsel, a duly executed copy of this Agreement and the other Loan Documents,
together with such additional documents, instruments and certificates as
Administrative Agent and Canadian Agent and their counsel shall require in
connection therewith from time to time, all in form and substance reasonably
satisfactory to Administrative Agent, Canadian Agent, and their counsel,
including, without limitation, the pledge by Domestic Borrower to
Administrative Agent of 65% of the outstanding equity of Canadian Borrower and
100% of the outstanding equity of Egerton, CLU and CCEL.


9.2           No Default.


No Default or Event of Default shall exist.


9.3           Other Conditions.


Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.


9.4           No Litigation.


No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to or arises out of
this Agreement or the consummation of the transactions contemplated hereby.


9.5           Material Adverse Effect.


Since December 31, 2006, there has not been any
material adverse change in Borrowers’ business, assets, condition (financial or
otherwise), operations, income or prospects and no event or condition exists
which would be reasonably likely to result in any Material Adverse Effect.


9.6           Fees.


The fees payable on the Closing Date pursuant to the
Fee Letter shall have been paid.


9.7           Collateral.



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Administrative Agent shall be reasonably satisfied
that, upon the filing of appropriate financing statements showing
Administrative Agent (for the benefit of itself, Canadian Agent, and each
Lender) as secured party with the appropriate governmental authorities,
Administrative Agent (for the benefit of itself, Canadian Agent, and each
Lender) will hold a first priority perfected Lien in the collateral described
therein subject only to Permitted Liens. 
Canadian Agent shall be reasonably satisfied that, upon the filing of
appropriate financing statements showing Canadian Agent (for the benefit of
itself, Canadian Lender and Canadian Participating Lenders) as secured party
with the appropriate governmental authorities, 
Canadian Agent (for the benefit of itself, Canadian Lender, and Canadian
Participating Lenders) will hold a first priority perfected Lien in the
collateral described therein subject only to Permitted Liens.


9.8           Diligence.


Administrative Agent and Canadian Agent shall have
completed and received all audits, inspections, legal due diligence and
research (including, without limitation, with respect to state sales tax
issues), appraisals and examinations as deemed necessary in Administrative
Agent’s and Canadian Agent’s reasonable opinion with respect to the Collateral
(including inventory, fixed assets and real (or immovable) Property), the books
and records of Borrowers and their Subsidiaries, the financial and business
condition and operations of Borrowers and their Subsidiaries, environmental
assessment studies and remediation plans, and the transactions contemplated
hereby.


9.9           Corporate Matters.


Administrative Agent shall be satisfied with the
corporate and legal structure and capitalization of Borrowers and each of their
Subsidiaries, including the charter and bylaws of Borrowers and each such
Subsidiary and each agreement or instrument relating thereto.


9.10         Environmental Matters.


Administrative Agent shall be satisfied as to the
existing and potential liability of Borrowers and their Subsidiaries with
respect to any environmental matters, and as to the compliance by Borrowers and
their Subsidiaries with all Environmental Laws.


9.11         Insurance.


Administrative Agent and Canadian Agent shall be
satisfied that Borrowers have obtained the insurance policies and the loss
payable and additional insured endorsements relating thereto required by
Section 6.1.2.


9.12         Legal Opinions.


Administrative Agent and Canadian Agent shall have
received satisfactory written opinions of counsel for Borrowers and their
Subsidiaries as to the transactions contemplated hereby (including, without
limitation, the tax aspects thereof and compliance with all applicable
securities laws), the status of Borrowers and their Subsidiaries, and the
legal, binding and enforceable effect of the Loan Documents.



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9.13         Reference Checks.


Administrative Agent shall have completed satisfactory
reference checks of the customers and vendors of Borrowers and their
Subsidiaries.


9.14         Financial Statements.


Administrative Agent shall have been satisfied with
its review of Borrowers’ financial statements for the fiscal year ending
December 31, 2006, and all interim financial statements of Borrowers delivered
to Administrative Agent (including, without limitation, as of April 30, 2007)
prior to the Closing Date.


9.15         Updated Audit.


Administrative Agent and Canadian Agent shall have
completed a satisfactory pre-closing updated audit of the books and records of
Borrowers and their Subsidiaries.


9.16         Costs and Expenses.


The reasonable costs and expenses of Administrative
Agent and Canadian Agent in connection with the preparation of the Loan
Documents payable pursuant to Section 2.9 and invoiced to Borrowers prior
to the Closing Date, shall have been paid.


9.17         Representations and Warranties.


The representations and warranties of Borrowers
contained in Section 7 shall be true and correct in all material respects.


9.18         Availability.


Administrative Agent shall have determined that
immediately after Lenders have made the initial Loans and after Administrative
Agent have procured the initial Domestic Letters of Credit and Domestic LC
Guaranties contemplated hereby, and Borrowers have paid (or, if accrued,
treated as paid) all closing costs incurred in connection with the transactions
contemplated hereby and have reserved an amount sufficient to pay all trade payables
greater than 60 days past due, Aggregate Availability shall not be less than
$1,500,000.


SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT


10.1         Events of Default.


The occurrence of one or more of the following events
shall constitute an “Event of Default”:



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10.1.1      Payment of Obligations.  Borrowers
shall fail to pay any of the Obligations hereunder or under any Note on the due
date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise), or, in the case of any payment required because of an Overadvance
(as defined below), within three Business Days of the due date thereof (whether
due at stated maturity, on demand, upon acceleration or otherwise).  As used in this Section 10.1.1, the term “Overadvance”
means the occurrence of any of the following: (a) the Domestic Revolving Credit
Exposure of all the Domestic Lenders exceeds (i) the Aggregate Borrowing Base
then in effect (minus Reserves, if any) or (ii) the Revolving Credit Maximum
Amount (minus the Dollar Equivalent of the aggregate principal amount of the
outstanding Canadian Revolving Credit Loans, if any) or (b) the aggregate
amount of the Canadian Revolving Credit Exposure of the Canadian Lender exceeds
(including, without limitation, as a result of fluctuation in exchange rates)
the Canadian Borrowing Base then in effect (minus Reserves applicable to
Canadian Revolving Credit Loans, if any).


10.1.2      Misrepresentations.  Any
representation, warranty or other statement made or furnished to Administrative
Agent, Canadian Agent, or any Lender by or on behalf of any Borrower, any
Subsidiary of any Borrower or any Guarantor in this Agreement, any of the other
Loan Documents or any instrument, certificate or financial statement furnished
in compliance with or in reference thereto proves to have been false or
misleading in any material respect when made, furnished or remade pursuant to
Section 7.2 hereof, unless (a) any breach described in this Section 10.1.2
was not intentional on the part of Borrowers and their Subsidiaries, (b) such
breach is capable of being cured as reasonably determined by Administrative
Agent, and (c) such breach is in fact so cured to Administrative Agent’s
satisfaction within fifteen days after the sooner to occur of Borrower
Representative’s receipt of notice of such breach from Administrative Agent or
the date on which such breach first becomes known to any officer of any
Borrower.


10.1.3      Breach of Specific Covenants. 
Any Borrower shall breach any covenant contained in Sections 6.1.2,
8.1.1 (other than, if no Event of Default shall have occurred and be
continuing, the last sentence thereof), 8.1.2, 8.1.4 or 8.2 (provided that if
at such time there are no outstanding Loans, a breach of the covenants
contained in Sections 8.2.3(g) and 8.2.8 shall not constitute a Default or an
Event of Default hereunder but Lenders may cease funding hereunder) hereof on
the date that Borrowers are required to perform, keep or observe such covenant
or shall fail to perform, keep or observe any covenant contained in
Section 8.1.3 or in the last sentence of Section 8.1.1 hereof within 5
days following the date on which Borrowers are required to perform, keep or
observe such covenant.


10.1.4      Breach of Other Covenants. 
Any Borrower shall fail or neglect to perform, keep or observe any
covenant contained in this Agreement (other than a covenant which is dealt with
specifically elsewhere in Section 10.1 hereof) and the breach of such
other covenant is not cured to Administrative Agent’s satisfaction within 30
days after the sooner to occur of Borrower Representative’s receipt of notice
of such breach from Administrative Agent or the date on which such failure or
neglect first becomes known to any officer of any Borrower.



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10.1.5      Default
Under Security Documents or Other Agreements.  Any event of
default shall occur under, or any Borrower, any of its Subsidiaries or any  Guarantor shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace or cure period.


10.1.6      Other
Defaults.  There shall occur any default or event of
default on the part of any Borrower, any Subsidiary of any Borrower or any
Guarantor under any agreement, document or instrument to which such Borrower,
such Subsidiary of any Borrower or such Guarantor is a party or by which such
Borrower, such Subsidiary of any Borrower or such Guarantor or any of its
Property is bound, evidencing or relating to any Indebtedness for Money
Borrowed (other than the Obligations) with an outstanding principal balance in
excess of $250,000, if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made or could be made in accordance with the terms
thereof.


10.1.7      Uninsured
Losses.  There shall occur any material loss, theft,
damage or destruction of any portion of the Collateral and the portion of such
Collateral that is not fully covered by insurance exceeds $200,000, in the
aggregate (subject to such deductibles and self-insurance retentions as
Administrative Agent or Canadian Agent, as the case may be, shall have
permitted).


10.1.8      Insolvency
and Related Proceedings.  Any Borrower, any Subsidiary
of any Borrower which is a Loan Party or any Guarantor (that is not a
Subsidiary of Domestic Borrower) shall cease to be Solvent or shall suffer the
appointment of a receiver, administrator, administrative receiver, trustee,
interim receiver, sheriff, monitor, sequestrator, custodian or similar
fiduciary, or shall pass or convene any meeting for the purpose of considering
any resolution for winding up or administration, or shall make an assignment,
composition or arrangement for the benefit of creditors, or any petition for an
order for relief (or similar proceedings, including, without limitation, an
application for a stay order or filing of a proposal or notice of intention to
make a proposal) shall be filed by or against any Borrower, any Subsidiary of
any Borrower (which is a Loan Party) or any Guarantor (that is not a Subsidiary
of Domestic Borrower) under the United States federal bankruptcy laws, the
Insolvency Laws of Canada, England’s Insolvency Act of 1986 or any other
insolvency laws in the United Kingdom (if against any Borrower, any Subsidiary
of any Borrower (which is a Loan Party) or any Guarantor (that is not a
Subsidiary of Domestic Borrower) the continuation of such proceeding for more
than 30 days or, with respect to any proceeding in the United Kingdom, 14
days), or any Borrower, any Subsidiary of any Borrower (which is a Loan Party)
or any Guarantor (that is not a Subsidiary of Domestic Borrower) shall make any
offer of settlement, extension or composition to their respective unsecured
creditors generally.  With respect to UK
Guarantors or any other Subsidiary of Domestic Borrower (which is a Loan Party)
organized under the laws of the United Kingdom, a petition has been presented
or a meeting convened or application made for the purpose of appointing an
administrator or receiver or other similar officer of, or for the making of an
administration order in respect of, UK Guarantors or any such Subsidiary and
(other than in the case of a petition to appoint an administrator or receiver
to which a grace period shall not apply), such petition or application is not
stayed or discharged within 14 days or in any event before it is heard.  Notwithstanding the foregoing provisions of
this Section 10.1.8, no Event of Default shall have occurred as a result of UK
Guarantors ceasing to be Solvent, so long as UK Guarantors are in compliance
with Section 8.2.19.



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10.1.9      Business
Disruption; Condemnation.  There shall occur a cessation
of a substantial part of the business of any Borrower or any Subsidiary of any
Borrower for a period which materially adversely affects Borrowers’ and their
Subsidiaries’, taken as a whole, capacity to continue their business on a
profitable basis; or any Borrower or any Subsidiary of any Borrower shall
suffer the loss or revocation of any material license or permit now held or
hereafter acquired by such Borrower or such Subsidiary which is necessary to
the continued or lawful operation of its business and any such loss or
revocation would reasonably be expected to have a Material Adverse Effect; or
any Borrower or any Subsidiary of any Borrower shall be enjoined, restrained or
in any way prevented by court, governmental or administrative order from
conducting all or any material part of its business affairs and any such action
would reasonably be expected to have a Material Adverse Effect; or any material
lease or agreement pursuant to which any Borrower or any Subsidiary of any
Borrower leases, uses or occupies any Property shall be canceled or terminated
prior to the expiration of its stated term, except any such lease or agreement
the cancellation or termination of which would not reasonably be expected to
have a Material Adverse Effect; or any material portion of the Collateral shall
be taken through condemnation or the value of such Property shall be impaired
through condemnation.


10.1.10        Change
of Ownership.  Any Borrower shall cease to own and control,
beneficially and of record (directly or indirectly), 100% (except for directors’
qualifying Securities) of the issued and outstanding Securities and Voting
Stock of each of its Subsidiaries which are Loan Parties.


10.1.11        Reportable
Event.  A Reportable Event shall occur which, in
Administrative Agent’s determination, constitutes grounds for the termination
by the PBGC of any Plan or for the appointment by the appropriate United States
district court of a trustee for any Plan, or if any Plan shall be terminated or
any such trustee shall be requested or appointed, or if any Borrower, any
Subsidiary of any Borrower or any Guarantor is in “default” (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer
Plan resulting from such Borrower’s, such Subsidiary’s or such Guarantor’s
complete or partial withdrawal from such Plan and any such event specified in
this Section 10.1.11 would reasonably be expected to have a Material Adverse
Effect.


10.1.12        Challenge
to Agreement.  Any Borrower, any Subsidiary of any Borrower
or any Guarantor, or any Designated Affiliate of any of them, shall challenge
or contest in any action, suit or proceeding the validity or enforceability of
this Agreement or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Administrative Agent or Canadian Agent.  Any holder of Subordinated Debt asserts in
writing that such Subordinated Debt is not subordinated to the Obligations in
accordance with its terms and Borrowers do not promptly deny in writing such
assertion and contest any attempt by such holder to take action based on such
assertion.



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10.1.13        Repudiation
of or Default Under Guaranty Agreement.  Any Guarantor
shall revoke or attempt to revoke the Guaranty Agreement signed by such Guarantor,
or shall repudiate such Guarantor’s liability thereunder or shall be in default
under the terms thereof (including any grace or cure period).


10.1.14        Criminal
Forfeiture.  Any Borrower, any Subsidiary of any Borrower
or any Guarantor shall be criminally indicted or convicted under any law that
could lead to a forfeiture of any material Property of any Borrower, any
Subsidiary of any Borrower or any Guarantor.


10.1.15        Judgments. 
Any money judgments, writ of attachment or similar processes (collectively,
“Judgments”) are issued or rendered against any Borrower, any Subsidiary
of any Borrower or any Guarantor, or any of their respective Property
(i) in the case of money judgments, in an amount of $150,000 or more for
any single judgment, attachment or process or $300,000 or more for all such
judgments, attachments or processes in the aggregate, in each case in excess of
any applicable insurance with respect to which the insurer has admitted
liability, and (ii) in the case of non-monetary Judgments, such Judgment
or Judgments (in the aggregate) would reasonably be expected to have a Material
Adverse Effect, in each case which Judgment is not stayed, appealed, released
or discharged within 30 days.


10.1.16        Canadian
Pension Plans.  Any of the following events or conditions has
occurred which could reasonably be expected to have a Material Adverse Effect:
(a) the withdrawal of Canadian Borrower or any of its Subsidiaries from a
Canadian Pension Plan; (b) the obligation to provide affected parties with written
notice of the intention to terminate or wind-up a Canadian Pension Plan in
whole or in part, whether voluntarily or by order of any applicable pension
regulatory authority; (c) the institution by any applicable pension regulatory
authority of any action to terminate, in whole or in part, any Canadian Pension
Plan; (d) any event or condition which would require the appointment of a
trustee or similar Person to administer a Canadian Pension Plan; or (e) any
event that would give rise to any liability or offense under Canadian pension
laws or that could jeopardize the registration of any Canadian Pension Plan.


10.2         Acceleration of the
Obligations.


Upon or at any time after
the occurrence and during the continuance of an Event of Default, (a) the
Domestic Revolving Credit Commitments and the Canadian Revolving Credit
Sub-Limit shall, at the option of Administrative Agent or Majority Lenders be
terminated and/or (b) Administrative Agent or Majority Lenders may declare
all or any portion of the Obligations at once due and payable without
presentment, demand, protest or further notice by Administrative Agent,
Canadian Agent, or any Lender, and Domestic Borrower shall forthwith pay to
Administrative Agent, and Canadian Borrower shall forthwith pay to Canadian Agent,
the full amount of such Obligations, provided, that upon the occurrence of an
Event of Default specified in Section 10.1.8 hereof, the Domestic
Revolving



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Credit Commitments
(together with the Canadian Revolving Credit Sub-Limit) and the Domestic Cap Ex
Commitments shall automatically be terminated and all of the Obligations shall
become automatically due and payable without declaration, notice or demand by
Administrative Agent, Canadian Agent, or any Lender.


10.3         Other Remedies.


Upon the occurrence and during
the continuance of an Event of Default, Administrative Agent and Canadian Agent
shall have and may exercise from time to time the following rights and
remedies:


10.3.1      All
of the rights and remedies of a secured party under the UCC or the PPSA or under
other applicable law, such additional rights as may be afforded under the Loan
Documents, and all other legal and equitable rights to which Administrative
Agent, Canadian Agent, or Lenders may be entitled, all of which rights and
remedies shall be cumulative and shall be in addition to any other rights or
remedies contained in this Agreement or any of the other Loan Documents, and
none of which shall be exclusive.


10.3.2      The
right to take immediate possession of the Collateral, and to (a) require
Borrowers and each of their Subsidiaries to assemble the Collateral, at
Borrowers’ expense, and make it available to Administrative Agent and/or
Canadian Agent at a place designated by Administrative Agent and/or Canadian
Agent which is reasonably convenient to both parties, and (b) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
any Borrower or any Subsidiary of any Borrower, such Borrower agrees not to
charge, or permit any of its Subsidiaries to charge, Administrative Agent or
Canadian Agent for storage thereof).


10.3.3      The
right to sell or otherwise dispose of all or any Collateral in its then
condition, or after any further manufacturing or processing thereof, at public
or private sale or sales, with such notice as may be required by law, in lots
or in bulk, for cash or on credit, all as Administrative Agent or Canadian
Agent, as applicable, in its sole discretion, may deem advisable.  Administrative Agent and/or Canadian Agent,
as applicable, may, at Administrative Agent’s and/or Canadian Agent’s, as
applicable, option, disclaim any and all warranties regarding the Collateral in
connection with any such sale.  Each
Borrower agrees that 10 days’ written notice to Borrower Representative of any
public or private sale or other disposition of Collateral shall be reasonable
notice thereof, and such sale shall be at such locations as Administrative
Agent and/or Canadian Agent may designate in said notice.  Administrative Agent and/or Canadian Agent,
as applicable, shall have the right to conduct such sales on Borrowers’ or any
of their Subsidiaries’ premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law.  Administrative Agent and/or Canadian Agent
shall have the right to sell, lease or otherwise dispose of the Collateral, or
any part thereof, for cash, credit or any combination thereof, and Administrative
Agent, on behalf of itself, Canadian Agent, and Lenders, and Canadian Agent, on
behalf of itself, Canadian Lender, and Canadian Participating Lenders, may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual



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payment of such purchase
price, may set off the amount of such price against the Obligations.  The proceeds realized from the sale of any
Collateral may be applied, after allowing one (1) Business Day for collection,
first to the costs, expenses and legal fees incurred by Administrative Agent
and/or Canadian Agent, as applicable, in collecting the Obligations, in
enforcing the rights of Administrative Agent, Canadian Agent, and Lenders under
the Loan Documents and in collecting, retaking, completing, protecting,
removing, storing, advertising for sale, selling and delivering any Collateral,
second to the interest due upon any of the Obligations; and third, to the
principal of the Obligations.  If any
deficiency shall arise with respect to the Domestic Obligations, Domestic Borrower
and each Guarantor of the Domestic Obligations shall remain jointly and
severally liable to Agents and Lenders therefor.  If any deficiency shall arise with respect to
the Canadian Obligations each Guarantor of the Canadian Obligations shall
remain jointly and severally liable, and Canadian Borrower shall remain liable,
to Canadian Agent, Canadian Lender, and Canadian Participating Lenders
therefor.


10.3.4      Administrative
Agent, with respect to the Domestic Collateral, 
and Canadian Agent, with respect to the Canadian Collateral, is hereby
granted a license or other right to use, without charge, Borrowers’ and each of
their Subsidiary’s labels, patents, copyrights, licenses, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the applicable Collateral, in
completing, advertising for sale and selling any applicable Collateral and
Borrowers’ and each of their Subsidiary’s rights under all licenses and all
franchise agreements shall inure to Administrative Agent’s and Canadian Agent’s,
as applicable, benefit.


10.3.5      Administrative
Agent may, at its option, require Domestic Borrower to deposit with
Administrative Agent funds equal to one hundred and five percent (105%) of the
Domestic LC Amount and, if Domestic Borrower fails to promptly make such
deposit, Administrative Agent may advance such amount as a Domestic Revolving
Credit Loan (provided that such Domestic Revolving Credit Loan and the Domestic
LC Amount shall only be counted once in determining Domestic
Availability).  Each such Domestic
Revolving Credit Loan shall be secured by all of the Domestic Collateral and
shall bear interest and be payable at the same rate and in the same manner as
the Domestic Base Rate Loans.  Any such
deposit or advance shall be held by Administrative Agent as a reserve to fund
future payments on such Domestic LC Guaranties and future drawings against such
Domestic Letters of Credit and fees payable in connection with such Domestic Letters
of Credit.  At such time as all Domestic
LC Guaranties have been paid or terminated and all Domestic Letters of Credit
have been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Domestic Obligations, or, if all Domestic
Obligations have been indefeasibly paid in full, returned to Domestic Borrower.


10.4         Set Off and Sharing of
Payments.


10.4.1      In
addition to any rights now or hereafter granted under applicable law and not by
way of limitation of any such rights, during the continuance of any Event of
Default, each Domestic Lender is hereby authorized by Domestic Borrower at any
time or from time to time, with prior written consent of Administrative Agent
and with



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reasonably prompt
subsequent notice to Borrower Representative (any prior or contemporaneous
notice to Borrowers being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Domestic
Lender at any of its offices for the account of Domestic Borrower or any of its
Subsidiaries (other than Canadian Borrower)(regardless of whether such balances
are then due to such Borrower or its Subsidiaries), and (b) other property
at any time held or owing by such Domestic Lender to or for the credit or for the
account of Domestic Borrower or any of its Subsidiaries (other than Canadian
Borrower), against and on account of any of the Domestic Obligations.  Any Domestic Lender exercising a right to set
off shall, to the extent the amount of any such set off exceeds its pro rata
share of the amount set off, purchase for cash (and the other Domestic Lenders
shall sell) interests in each such other Domestic Lender’s pro rata share of
the Domestic Obligations as would be necessary to cause such Domestic Lender to
share such excess with each other Domestic Lender in accordance with their
respective pro rata shares.  Domestic
Borrower agrees, to the fullest extent permitted by law, that any Domestic
Lender may exercise its right to set off with respect to amounts in excess of
its pro rata share of the Domestic Obligations and upon doing so shall deliver
such excess to Administrative Agent for the benefit of all Domestic Lenders, in
accordance with the Domestic Revolving Loan Percentages and the outstanding
principal amount of the Domestic Term Loan, as applicable, to be applied to the
Domestic Obligations in the manner set forth in subsections (b)-(d) of
Section 3.3.1 with respect to the application of proceeds of Domestic
Collateral.


10.4.2      In
addition to any rights now or hereafter granted under applicable law and not by
way of limitation of any such rights, during the continuance of any Event of
Default, Canadian Lender and each Canadian Participating Lender is hereby
authorized by Canadian Borrower at any time or from time to time, with prior
written consent of Canadian Agent and with reasonably prompt subsequent notice
to Borrower Representative (any prior or contemporaneous notice to Borrowers
being hereby expressly waived) to set off and to appropriate and to apply any
and all (a) balances held by Canadian Lender or such Canadian
Participating Lender at any of its offices for the account of Canadian Borrower
(regardless of whether such balances are then due to Canadian Borrower), and
(b) other property at any time held or owing by Canadian Lender or such
Canadian Participating Lender to or for the credit or for the account of
Canadian Borrower, against and on account of any of the Canadian
Obligations.  Canadian Lender, or any Canadian
Participating Lender, exercising a right to set off shall, to the extent the
amount of any such set off exceeds its Canadian Percentage of the amount set
off, purchase for cash (and Canadian Lender and the Canadian Participating
Lenders shall sell) interests in each such Lender’s Canadian Percentage of the
Canadian Obligations as would be necessary to cause Canadian Lender or such
Canadian Participating Lender, as applicable, to share such excess with
Canadian Lender and each Canadian Participating Lender in accordance with their
respective Canadian Percentages of the Canadian Obligations.  Canadian Borrower agrees, to the fullest
extent permitted by law, that Canadian Lender and any Canadian Participating
Lender may exercise its right to set off with respect to amounts in excess of
its Canadian Percentage of the Canadian Obligations and upon doing so shall
deliver such excess to Canadian Agent for the benefit of Canadian Lender and
all Canadian Participating Lenders, in accordance with the Canadian
Percentages, to be applied to the Canadian Obligations in the manner set forth
in subsections (b)-(d) of Section 3.3.1 with respect to the application of
proceeds of Canadian Collateral.



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10.5         Remedies Cumulative;
No Waiver.


All covenants,
conditions, provisions, warranties, guaranties, indemnities, and other
undertakings of Borrowers contained in this Agreement and the other Loan
Documents, or in any document referred to herein or contained in any agreement
supplementary hereto or in any schedule or in any Guaranty Agreement given to
Administrative Agent, Canadian Agent, or any Lender or contained in any other
agreement between any Lender and any Borrower or between Administrative Agent,
Canadian Agent, and any Borrower heretofore, concurrently, or hereafter entered
into, shall be deemed cumulative to and not in derogation or substitution of
any of the terms, covenants, conditions, or agreements of Borrowers herein
contained.  The failure or delay of
Administrative Agent, Canadian Agent, or any Lender to require strict
performance by Borrowers of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies,
but all such requirements, Liens, rights, powers, and remedies shall continue
in full force and effect until all Loans and other Obligations owing or to
become owing from Borrowers to Administrative Agent, Canadian Agent, and each Lender
have been fully satisfied.  None of the
undertakings, agreements, warranties, covenants and representations of
Borrowers and their Subsidiaries contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by Borrowers or any of
their Subsidiaries under this Agreement or any other Loan Document shall be
deemed to have been suspended or waived by Lenders or Administrative Agent,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of
Administrative Agent or Canadian Agent, as applicable, and directed to
Borrowers.


SECTION 11. ADMINISTRATIVE AGENT

AND CANADIAN AGENT


11.1         Authorization and
Action.


11.1.1      Each
Lender hereby appoints and authorizes Administrative Agent and Canadian Agent
to take such action on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Administrative Agent
and Canadian Agent, as applicable, by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto.  Each Lender hereby acknowledges that neither
Administrative Agent nor Canadian Agent has by reason of this Agreement assumed
a fiduciary relationship in respect of any Lender.  In performing its functions and duties under
this Agreement, Administrative Agent and Canadian Agent shall act solely as
agent of Lenders and shall not assume, or be deemed to have assumed, any
obligation toward, or relationship of agency or trust with or for, any Borrower
or any of its Subsidiaries.  As to any
matters not expressly provided for by this Agreement and the other Loan
Documents (including without limitation enforcement and collection of the
Notes), Administrative Agent



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and Canadian Agent
may, but shall not be required to, exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Lenders, whenever such instruction shall be requested by
Administrative Agent or Canadian Agent or required hereunder, or a greater or
lesser number of Lenders if so required hereunder, and such instructions shall
be binding upon all Lenders; provided, that Administrative Agent and Canadian
Agent shall be fully justified in failing or refusing to take any action which
exposes Administrative Agent and/or Canadian Agent to any liability or which is
contrary to this Agreement, the other Loan Documents or applicable law, unless
Administrative Agent and/or Canadian Agent is indemnified to its satisfaction
by the other Lenders against any and all liability and expense which it may
incur by reason of taking or continuing to take any such action.  If Administrative Agent and/or Canadian Agent
seeks the consent or approval of the Majority Lenders (or a greater or lesser
number of Lenders as required in this Agreement), with respect to any action
hereunder, Administrative Agent and/or Canadian Agent shall send notice thereof
to each Lender and shall notify each Lender at any time that the Majority
Lenders (or such greater or lesser number of Lenders) have instructed
Administrative Agent and/or Canadian Agent to act or refrain from acting
pursuant hereto.


11.1.2      Each
Lender hereby authorizes Administrative Agent to delegate to Canadian Agent any
and all of its obligations under this Agreement and the other Loan Documents
with respect to all actions required to be taken in Canada of any kind
whatsoever.  Canadian Agent, when acting
pursuant to the authority granted hereunder, shall have all the protections,
indemnities, rights and powers granted to Administrative Agent under this
Agreement and any other Loan Document.


11.2         Administrative Agent’s
and Canadian Agent’s Reliance, Etc.


Neither Administrative
Agent nor Canadian Agent, any Affiliate of Administrative Agent or Canadian
Agent, nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
its or their own gross negligence or willful misconduct.  Without limitation of the generality of the
foregoing, Administrative Agent and Canadian Agent:  (a) may treat each Lender party hereto
as the holder of Obligations until Administrative Agent receives written notice
of the assignment or transfer of such Lender’s portion of the Obligations
signed by such Lender and in form reasonably satisfactory to Administrative
Agent; (b) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts, (c) makes no warranties or
representations to any Lender and shall not be responsible to any Lender for
any recitals, statements, warranties or representations made in or in
connection with this Agreement or any other Loan Documents; (d) shall not
have any duty beyond Administrative Agent’s or Canadian Agent’s customary
practices in respect of loans in which Administrative Agent or Canadian Agent
is the only lender, to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or
the other Loan Documents on the part of any Borrower or any of their
Subsidiaries, to inspect the property (including the books and



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records) of any
Borrower or any of their Subsidiaries, to monitor the financial condition of
any Borrower or any of their Subsidiaries or to ascertain the existence or
possible existence or continuation of any Default or Event of Default;
(e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (f) shall not be liable to any
Lender for any action taken, or inaction, by Administrative Agent or Canadian
Agent upon the instructions of Majority Lenders pursuant to Section 11.1
hereof or refraining to take any action pending such instructions;
(g) shall not be liable for any apportionment or distributions of payments
made by it in good faith pursuant to Section 3 hereof; (h) shall
incur no liability under or in respect of this Agreement or the other Loan
Documents by acting upon any notice, consent, certificate, message or other
instrument or writing (which may be by telephone, facsimile, telegram, cable or
telex) believed in good faith by it to be genuine and signed or sent by the
proper party or parties; and (i) may assume that no Event of Default has
occurred and is continuing, unless Administrative Agent or Canadian Agent, as
applicable, has actual knowledge of the Event of Default, has received notice
from Borrowers or Borrowers’ independent certified public accountants stating
the nature of the Event of Default, or has received notice from a Lender
stating the nature of the Event of Default and that such Lender considers the
Event of Default to have occurred and to be continuing.  In the event any apportionment or
distribution described in clause (g) above is determined to have
been made in error, the sole recourse of any Person to whom payment was due but
not made shall be to recover from the recipients of such payments any payment
in excess of the amount to which they are determined to have been entitled.


11.3         Bank of America, Bank
of America Canada, and Affiliates.


With respect to its
commitment hereunder to make Loans, Bank of America, and Bank of America Canada
shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Administrative Agent and Canadian Agent, respectively; and the terms “Lender,” “Lenders”
or “Majority Lenders” shall, unless otherwise expressly indicated, include Bank
of America and Bank of America Canada in its individual capacity as a Lender.
Bank of America and Bank of America Canada and its Affiliates may lend money
to, and generally engage in any kind of business with, Borrowers, Borrowers’
Subsidiaries, and any Person who may do business with or own Securities of
Borrowers all as if Bank of America and Bank of America Canada were not
Administrative Agent and Canadian Agent, respectively, and without any duty to
account therefor to any other Lender.


11.4         Lender Credit Decision.


Each Lender acknowledges
that it has, independently and without reliance upon Administrative Agent or
Canadian Agent or any other Lender and based on the financial statements
referred to herein and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges
that it will, independently and without reliance upon Administrative Agent or
Canadian Agent or any other Lender and based on such documents



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and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.  Neither Administrative Agent nor Canadian
Agent shall have any duty or responsibility, either initially or on an ongoing
basis, to provide any Lender with any credit or other similar information
regarding Borrowers or any of their Subsidiaries.


11.5         Indemnification.


Lenders agree to
indemnify Administrative Agent and Canadian Agent (to the extent not reimbursed
by Borrowers), in accordance with their respective Aggregate Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Administrative Agent and/or Canadian Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by Administrative Agent and/or Canadian Agent under this Agreement; provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Administrative Agent’s or Canadian Agent’s gross
negligence or willful misconduct. 
Without limitation of the foregoing, each Lender agrees to reimburse
Administrative Agent and Canadian Agent promptly upon demand for its ratable
share, as set forth above, of any out-of-pocket expenses (including legal fees)
and allocated costs of audits and appraisals incurred by Administrative Agent
and/or Canadian Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiation, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Administrative Agent and/or Canadian Agent is not reimbursed
for such expenses by Borrowers.  The
obligations of Lenders under this Section 11.5 shall survive the payment
in full of all Obligations and the termination of this Agreement.  If after payment and distribution of any
amount by Administrative Agent and/or Canadian Agent to Lenders, any Lender or
any other Person, including any Borrower, any Subsidiary of any Borrower, any
creditor of any Borrower or any of its Subsidiaries, a liquidator,
administrator or trustee in bankruptcy, recovers from Administrative Agent
and/or Canadian Agent any amount found to have been wrongfully paid to
Administrative Agent and/or Canadian Agent or disbursed by Administrative Agent
and/or Canadian Agent to Lenders, then Lenders, in accordance with their
respective Aggregate Percentages, shall reimburse Administrative Agent and/or
Canadian Agent for all such amounts.


11.6         Rights and Remedies to
be Exercised by Administrative Agent and Canadian Agent Only.


Each Lender agrees that,
except as set forth in Section 10.4, no Lender shall have any right
individually (a) to realize upon the security created by this Agreement or
any other Loan Document, (b) to enforce any provision of this Agreement or
any other Loan Document, or (c) to make demand under this Agreement or any
other Loan Document.



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11.7         Agency Provisions
Relating to Collateral.


Each Lender authorizes
and ratifies Administrative Agent’s and Canadian Agent’s entry into this
Agreement and the Security Documents for the benefit of Lenders.  Each Lender agrees that any action taken by
Administrative Agent and/or Canadian Agent with respect to the Collateral in
accordance with the provisions of this Agreement or the Security Documents, and
the exercise by Administrative Agent and/or Canadian Agent of the powers set
forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all Lenders.  Administrative Agent and/or Canadian Agent,
as the case may be, are hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected Administrative Agent’s Liens upon the Domestic Collateral, for its
and Canadian Agent’s and the Lenders’ benefit, and Canadian Agent’s Liens upon
the Canadian Collateral, for its, Canadian Lender’s, and Canadian Participating
Lenders’ benefit.  Lenders hereby
irrevocably authorize Administrative Agent and Canadian Agent, as the case may
be, at its option and in its discretion, to release any Lien granted to or held
by Administrative Agent or Canadian Agent upon any Collateral (a) upon
termination of this Agreement and payment and satisfaction of all Obligations;
or (b) constituting property being sold or disposed of if the Borrower
Representative certifies to Administrative Agent and Canadian Agent, as the
case may be, that the sale or disposition is made in compliance with
Section 8.2.10 hereof (and Administrative Agent and Canadian Agent may
rely conclusively on any such certificate, without further inquiry); or
(c) constituting property in which the applicable Borrower or Subsidiary
of a Borrower owned no interest at the time the Lien was granted or at any time
thereafter; or (d) in connection with any foreclosure sale or other
disposition of Collateral after the occurrence and during the continuation of
an Event of Default or (e) if approved, authorized or ratified in writing
by Administrative Agent at the direction of all Lenders in the case of Domestic
Collateral and by Canadian Agent at the direction of Canadian Lender and
Canadian Participating Lenders in the case of Canadian Collateral.  Upon request by Administrative Agent or
Canadian Agent, as the case may be, at any time, Lenders will confirm in
writing Administrative Agent’s or Canadian Agent’s, as the case may be,
authority to release particular types or items of Collateral pursuant hereto.
Neither Administrative Agent nor Canadian Agent shall have any obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by the applicable Borrowers or Subsidiaries of Borrowers or
is cared for, protected or insured or has been encumbered or that the Liens
granted to Administrative Agent or Canadian Agent, as the case may be, herein
or pursuant to the Security Documents have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of its
rights, authorities and powers granted or available to Administrative Agent or
Canadian Agent, as the case may be, in this Section 11.7 or in any of the
Loan Documents, it being understood and agreed that in respect of the Collateral,
or any act, omission or event related thereto, Administrative Agent or Canadian
Agent, as the case may be, may act in any manner it may deem appropriate, in
its sole discretion, but consistent with the provisions of this Agreement,
including given Administrative Agent’s or Canadian Agent’s own interest in the
Collateral as a Lender and that neither Administrative Agent nor Canadian Agent
shall have any duty or liability whatsoever to any Lender.



 86
 









11.8         Administrative Agent’s
and Canadian Agent’s Right to Purchase Commitments.


Administrative Agent and
Canadian Agent shall have the right, but shall not be obligated, at any time
upon written notice to any Lender and with the consent of such Lender, which
may be granted or withheld in such Lender’s sole discretion, to purchase for
Administrative Agent’s or Canadian Agent’s, as the case may be, own account all
of such Lender’s interests in this Agreement, the other Loan Documents and the
Obligations, for the face amount of the outstanding Obligations owed to such Lender,
including without limitation all accrued and unpaid interest and fees.


11.9         Right of Sale,
Assignment, Participations.


Each Borrower hereby
consents to any Lender’s participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, such Lender’s rights, title, interests, remedies, powers, and
duties hereunder or thereunder subject to the terms and conditions set forth
below:


11.9.1      Sales,
Assignments.  Each Lender hereby agrees that, with respect
to any sale or assignment (other than pursuant to Section 3.2.6) (a) no
such sale or assignment shall be for an amount of less than $5,000,000 (or the
aggregate principal amount of Loans owing to such Lender, if less),
(b) each such sale or assignment shall be made on terms and conditions
which are customary in the industry at the time of the transaction,
(c) Administrative Agent and, in the absence of a Default or Event of
Default, Borrowers, must consent, such consent not to be unreasonably withheld,
to each such assignment to a Person that is not an original signatory to this
Agreement, and (d) the assignee Lender shall pay to Administrative Agent a
processing and recordation fee of $3,500 and any out-of-pocket legal fees and
expenses incurred by Administrative Agent in connection with any such sale or
assignment.  After such sale or
assignment has been consummated (i) the assignee Lender thereupon shall
become a “Lender” for all purposes of this Agreement and (ii) the
assigning Lender shall have no further liability for funding Loans under this
Agreement to the extent such liability was assumed by such other Lender.


11.9.2      Participations. 
Any Lender may grant participations in its extensions of credit
hereunder to any other Lender or other lending institution (a “Participant”),
provided that (a) no such participation shall be for an amount of
less than $5,000,000 (or the aggregate principal amount of Loans owing to such
Lender, if less), (b) no Participant shall thereby acquire any direct
rights under this Agreement, (c) no Participant shall be granted any right
to consent to any amendment, except to the extent any of the same pertain to
(i) reducing the aggregate principal amount of, or interest rate on, or
fees applicable to, any Loan in which such Participant has an interest, or
(ii) extending the final stated maturity of any Loan in which such
Participant has an interest or the stated maturity of any portion of any
payment of principal of, or interest or fees applicable to, any of the Loans;



 87
 









provided, that the rights described in this
subclause (ii) 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, (d) no sale of a participation in
extensions of credit shall in any manner relieve the originating Lender of its
obligations hereunder, (e) the originating Lender shall remain solely
responsible for the performance of such obligations, (f) Borrowers and
Administrative Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (g) in no
event shall any financial institution purchasing the participation grant a
participation in its participation interest in the Loans without the prior
written consent of Administrative Agent, and, in the absence of a Default or an
Event of Default, Borrowers, which consents shall not unreasonably be withheld
and (h) all amounts payable by Borrowers hereunder shall be determined as
if the originating Lender had not sold any such participation.  For greater certainty, the provisions of this
Section 11.9.2 do not apply to the Canadian Participating Lenders in their
capacities as such.


11.9.3      Certain
Agreements of Borrowers.  Each Borrower agrees that
(a) it will use its reasonable efforts to assist and cooperate with each
Lender in any manner reasonably requested by such Lender to effect the sale of
participations in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents and making members of
management available at reasonable times to meet with and answer questions of
potential assignees and Participants; and (b) subject to the provisions of
Section 12.14 hereof, such Lender may disclose credit information
regarding such Borrower and its Subsidiaries to any potential Participant or
assignee.


11.10       Amendment.


No amendment or waiver of
any provision of this Agreement or any other Loan Document (including without
limitation any Note), nor consent to any departure by Borrowers or any of their
Subsidiaries therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders and Borrower Representative
and/or such Subsidiaries of Borrowers, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver or consent shall be
effective, unless (a) in writing and signed by each Lender, to do any of
the following:  (i) increase or
decrease the aggregate Domestic Revolving Credit Commitments, the Canadian
Revolving Credit Sub-Limit, the Domestic Cap Ex Commitments, or any Lender’s
Domestic Revolving Credit Commitment, or its Domestic Cap Ex Commitment, or its
Canadian Percentage, (ii) reduce the principal of, or interest on, any
amount payable hereunder or under any Note, other than those payable only to
Bank of America in its capacity as Administrative Agent, which may be reduced
by Bank of America unilaterally,



 88
 









and other than
those payable only to Bank of America Canada in its capacity as Canadian Agent,
which may be reduced by Bank of America Canada unilaterally,
(iii) postpone any date fixed for any payment of principal of, or interest
on, any amounts payable hereunder or under any Note, other than those payable
only to Bank of America in its capacity as Administrative Agent, which may be
postponed by Bank of America unilaterally and other than those payable only to
Bank of America Canada in its capacity as Canadian Agent, which may be
postponed by Bank of America Canada unilaterally, (iv) reduce the number
of Lenders that shall be required for Lenders or any of them to take any action
hereunder, (v) release or discharge any Person liable for the performance
of any obligations of Borrowers hereunder or under any of the Loan Documents,
(vi) amend any provision of this Agreement that requires the consent of
all Lenders or consent to or waive any breach thereof, (vii) amend the
definition of the term “Majority Lenders”, (viii) amend this
Section 11.10 or (ix) release any substantial portion of the
Collateral, unless otherwise permitted pursuant to Section 11.7 hereof or
the other terms of this Agreement; or (b) in writing and signed by
Administrative Agent or Canadian Agent, as the case may be, in addition to the
Lenders required above to take such action, to affect the rights or duties of
Administrative Agent or Canadian Agent, as the case may be, under this
Agreement, any Note or any other Loan Document.


11.11       Resignation of
Administrative Agent or Canadian Agent; Appointment of Successor.


Administrative Agent or
Canadian Agent may resign as Administrative Agent or Canadian Agent, as the
case may be, by giving not less than thirty (30) days’ prior written notice to
the Lenders and Borrower Representative. 
If Administrative Agent or Canadian Agent shall resign under this
Agreement, then, (a) subject to the consent of Borrower Representative
(which consent shall not be unreasonably withheld and which consent shall not
be required during any period in which a Default or an Event of Default
exists), the Majority Lenders shall appoint from among the Lenders a successor
Administrative Agent or Canadian Agent for the Lenders or (b) if a
successor Administrative Agent or Canadian Agent shall not be so appointed and
approved within the thirty (30) day period following Administrative Agent’s or
Canadian Agent’s notice to the Lenders and Borrower Representative of its
resignation, then Administrative Agent or Canadian Agent, as the case may be,
shall appoint a successor Administrative Agent or Canadian Agent, as the case
may be, who shall serve as Administrative Agent or Canadian Agent, as the case
may be, until such time as the Majority Lenders appoint a successor
Administrative Agent or Canadian Agent, as the case may be, subject to Borrower
Representative’s consent as set forth above. 
Upon its appointment, such successor Administrative Agent or Canadian
Agent, as the case may be, shall succeed to the rights, powers and duties of
Administrative Agent or Canadian Agent, as the case may be, and the term “Administrative
Agent” or “Canadian Agent”, as the case may be, shall mean such successor
effective upon its appointment, and the former Administrative Agent’s or
Canadian Agent’s rights, powers and duties as Administrative Agent or Canadian
Agent, as the case may be, shall be terminated without any other or further act
or deed on the part of such former Administrative Agent or Canadian Agent, as
the case may be, or any of the parties to this Agreement.  After the resignation of any Administrative
Agent or Canadian Agent hereunder, the provisions of this Section 11 shall
inure to the benefit of such former Administrative Agent or Canadian Agent, as
the case may be, and such former Administrative Agent or Canadian Agent, as the
case may be, shall not by reason of such resignation be deemed to be released
from liability for any actions taken or not taken by it while it was an
Administrative Agent or Canadian Agent, as the case may be, under this



 89















Agreement.  Notwithstanding the foregoing, without the
consent of Lenders or the Borrowers, an Affiliate of Bank of America Canada or
Bank of America may be appointed by Bank of America Canada to replace Bank of
America Canada as Canadian Agent hereunder; provided, that, such replacement
Canadian Agent shall provide prior notice to Borrowers of such replacement.


SECTION 12. MISCELLANEOUS


12.1         Power of Attorney.


Domestic Borrower hereby irrevocably designates,
makes, constitutes and appoints Administrative Agent (and all Persons
designated by Administrative Agent) as Domestic Borrower’s true and lawful
attorney (and agent-in-fact), solely with respect to the matters set forth in
this Section 12.1, and Administrative Agent, or Administrative Agent’s
agent, may, without notice to Domestic Borrower and in Domestic Borrower’s or
Administrative Agent’s name, but at the cost and expense of Domestic Borrower,
do the following, and Canadian Borrower hereby irrevocably designates, makes,
constitutes and appoints Canadian Agent (and all Persons designated by Canadian
Agent) as Canadian Borrower’s true and lawful attorney (and agent-in-fact),
solely with respect to the matters set forth in this Section 12.1, and
Canadian Agent, or Canadian Agent’s agent, may, without notice to Canadian
Borrower and in Canadian Borrower’s or Canadian Agent’s name, but at the cost
and expense of Canadian Borrower, do the following:


12.1.1      At such time or times as Administrative Agent or
Canadian Agent, as the case may be, or said agent, in its sole discretion, may
determine, endorse such Borrower’s name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Administrative Agent or Canadian
Agent, as the case may be, or under Administrative Agent’s or Canadian Agent’s,
as the case may be, control.


12.1.2      At such time or times upon or after the occurrence and
during the continuance of an Event of Default (provided that the occurrence of
an Event of Default shall not be required with respect to clauses (d)
and (f) below), as Administrative Agent or Canadian Agent, as the case
may be, or its agent in its sole discretion may determine: (a) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of such
Borrower’s rights and remedies with respect to the collection of the Accounts;
(b) settle, adjust, compromise, discharge or release any of the Accounts
or other Collateral or any legal proceedings brought to collect any of the
Accounts or other Collateral; (c) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Administrative Agent or Canadian Agent, as the case may be, deems advisable;
(d) take control, in any manner, of any item of payment or proceeds
relating to any Collateral; (e) prepare, file and sign such Borrower’s
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (f) receive, open and
dispose of all mail addressed to such Borrower; (g) notify postal authorities
to change the



 90
 









address for delivery
thereof to such address as Administrative Agent or Canadian Agent, as
applicable, may designate; (h) endorse the name of such Borrower upon any
of the items of payment or proceeds relating to any Collateral and deposit the
same to the account of Administrative Agent or Canadian Agent, as the case may
be, on account of the Obligations; (i) endorse the name of such Borrower
upon any chattel paper, document, instrument, invoice, freight bill, bill of
lading or similar document or agreement relating to the Accounts, Inventory and
any other Collateral; (j) use such Borrower’s stationery and sign the name
of such Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (k) use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral; (l) make and
adjust claims under policies of insurance; and (m) do all other acts and
things necessary, in Administrative Agent’s or Canadian Agent’s, as the case
may be, determination, to fulfill such Borrower’s obligations under this
Agreement.


The power of attorney granted hereby shall constitute
a power coupled with an interest and shall be irrevocable.


12.2         Indemnity.


Each Borrower hereby agrees to indemnify
Administrative Agent, Canadian Agent, and each Lender (and each of their
Affiliates, officers, directors, employees, agents and advisors (each an “Indemnitee”))
and hold each Indemnitee harmless from and against any liability, expense,
loss, damage, suit, action or proceeding ever suffered or incurred by any
Indemnitee (including reasonable legal fees and expenses) as the result of
(a) Borrowers’ or their Subsidiaries’ failure to observe, perform or
discharge Borrowers’ or their Subsidiaries’ duties hereunder or under the other
Loan Documents, or (b) any suit, action, proceeding or investigation
arising out of or related to the Loan Documents and the transactions
contemplated thereby (except any liabilities, expenses, losses, damages, suits,
actions or proceedings identified above which (i) are determined by a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or intentional misconduct of any such Indemnitee or
(ii) relate to a dispute between any Borrower or its Subsidiaries and any
Indemnitee with respect to the Loan Documents and which dispute is determined
adversely to such Indemnitee (and is not the subject of any settlement (unless
the settlement provides for a similar exclusion from Borrowers’ indemnification
obligations hereunder)) by a final, nonappealable judgment by a court of
competent jurisdiction).  In addition,
each Borrower shall defend the Indemnitees against and save them harmless from
all claims of any Person with respect to the Collateral (except those
determined by a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from the gross negligence or intentional
misconduct of any such Indemnitee). 
Without limiting the generality of the foregoing, these indemnities
shall extend to any claims asserted against any Indemnitee by any Person under
any Environmental Laws with respect to the Owned Properties by reason of any
Borrower’s or any other Person’s failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances.  Notwithstanding any contrary provision in
this Agreement, the obligations of Borrowers under this Section 12.2 shall
survive the payment in full of the Obligations and the termination of this
Agreement.



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12.3         Sale of Interest.


No Borrower may sell, assign or transfer any interest
in this Agreement, any of the other Loan Documents, or any of the Obligations,
or any portion thereof, including, without limitation, such Borrower’s rights,
title, interests, remedies, powers, and duties hereunder or thereunder.


12.4         Severability.


Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.


12.5         Successors and Assigns.


This Agreement, the Other Agreements and the Security
Documents shall be binding upon and inure to the benefit of the successors and
assigns of each Borrower, Administrative Agent, Canadian Agent, and each Lender
permitted under Section 11.9 or Section 11.11 hereof.


12.6         Cumulative Effect;
Conflict of Terms.


The provisions of the Other Agreements and the
Security Documents are hereby made cumulative with the provisions of this
Agreement.  Except as otherwise provided
in any of the other Loan Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
direct conflict with, or inconsistent with, any provision in any of the other
Loan Documents, the provision contained in this Agreement shall govern and
control.


12.7         Execution in
Counterparts.


This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument.


12.8         Notices.


Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given, delivered or received immediately when
delivered against receipt, one Business Day after deposit with an overnight
courier or, in the case of facsimile notice, when sent, addressed in the case
of each Lender to such Lender at such Lender’s



 92
 









address set forth on the
signature page to this Agreement (or set forth in the applicable assignment
agreement by which such Lender became a Lender under this Agreement), and with
respect to the following Persons, as follows:


	
   

  	
  If to Administrative Agent:

  	
  Bank of America,
  N.A.

  55 South Lake Avenue, Suite 900

  Pasadena, California 91101

  Attention: Portfolio Manager

  Facsimile No.: (626) 584-4602

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Sheppard,
  Mullin, Richter & Hampton LLP

  333 South Hope Street, 48th Floor

  Los Angeles, California 90071

  Attention: Brent E. Horstman, Esq.

  Facsimile No.: (213) 620-1398

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Canadian Agent:

  	
  Bank of America,
  N.A., Canada Branch

  200 Front Street West,

  Toronto, Ontario

  M5V 3L2 Canada

  Attention: General Manager

  Facsimile No.: (416) 236-4572

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Bank of America,
  N.A.

  55 South Lake Avenue, Suite 900

  Pasadena, California 91101

  Attention: Portfolio Manager

  Facsimile No.: (626) 584-4602

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Borrowers or Borrower Representative:

  	
  c/o Channell Commercial
  Corporation

  26040 Ynez Road

  Temecula, California 92589-9022

  Attention: Patrick McCready

  Facsimile No.: (951) 296-3965

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Irell &
  Manella LLP

  1800 Avenue of the Stars, Suite 900

  Los Angeles, California 90067

  Attention:
  Anthony T. Iler

  Facsimile No.: (310) 203-7199

  



or to such other address
as each party may designate for itself by notice given in accordance with this
Section 12.8; provided, however, that any notice, request or demand
to or upon Administrative Agent, Canadian Agent, or a Lender pursuant to
Section 3.1.1 or 4.2.2 hereof shall not be effective until received by
Administrative Agent, Canadian Agent, or such Lender.



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12.9         Consent.


Whenever Administrative Agent’s, Canadian Agent’s, or
Majority Lenders’ consent is required to be obtained under this Agreement, any
of the Other Agreements or any of the Security Documents as a condition to any
action, inaction, condition or event, except as otherwise specifically provided
herein, Administrative Agent, Canadian Agent, or Majority Lenders, as
applicable, shall be authorized to give or withhold such consent in their sole
and absolute discretion.


12.10       Credit Inquiries.


Subject to the confidentiality provisions of Section
12.14 hereof, each Borrower hereby authorizes and permits Administrative Agent,
Canadian Agent, and each Lender to respond to usual and customary credit
inquiries from third parties concerning such Borrower or any of its
Subsidiaries.


12.11       Time of Essence.


Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.


12.12       Entire Agreement.


This Agreement and the other Loan Documents, together
with all other instruments, agreements and certificates executed by the parties
in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.


12.13       Interpretation.


No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.


12.14       Confidentiality.


Administrative Agent, Canadian Agent, and each Lender
(and each of their officers, directors and employees) shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement and the
other Loan Documents in confidence in accordance with Administrative Agent’s,
Canadian Agent’s, and such Lender’s customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, shall use such information solely for the purposes
contemplated by this Agreement and in any event may make disclosure reasonably
required by a



 94
 









prospective participant
or assignee in connection with the contemplated participation or assignment or
as required by any governmental authority or representative thereof (provided
that, if possible, Administrative Agent shall provide reasonable prior notice
of any such disclosure) or as compelled by legal process (provided that, if
possible, Administrative Agent shall provide reasonable prior notice of any
such disclosure) and shall require any such participant or assignee to agree to
comply with this Section 12.14.


12.15       Judgment.


If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or under any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures Administrative
Agent could purchase the first currency with such other currency on the
Business Day preceding that on which final judgment is given.  The obligation of each Borrower in respect of
any such sum due from it to Administrative Agent, Canadian Agent, or any Lender
hereunder or under the other Loan Documents shall, notwithstanding any judgment
in a currency (the “Judgment Currency”) other than that in which such
sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that
on the Business Day following receipt by Administrative Agent, Canadian Agent,
or such Lender of any sum adjudged to be so due in the Judgment Currency,
Administrative Agent, Canadian Agent, or such Lender may in accordance with
normal banking procedures purchase the Agreement Currency with the Judgment
Currency.  If the amount of the Agreement
Currency so purchased is less than the sum originally due to Administrative
Agent, Canadian Agent, or such Lender in the Agreement Currency, each Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify Administrative Agent, Canadian Agent, or such Lender or the Person to
whom such obligation was owing against such loss.  If the amount of the Agreement Currency so
purchased is greater than the sum originally due to Administrative Agent,
Canadian Agent, or such Lender in such currency, Administrative Agent, Canadian
Agent, or such Lender agrees to return the amount of any excess to the
applicable Borrower (or to any other Person who may be entitled thereto under
applicable law).


12.16       GOVERNING LAW; CONSENT
TO FORUM.


THIS AGREEMENT HAS
BEEN NEGOTIATED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN LOS
ANGELES, CALIFORNIA.  THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE
LOCATED IN ANY JURISDICTION OTHER THAN CALIFORNIA,  THE LAWS OF SUCH JURISDICTION SHALL GOVERN
THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF, OR REALIZATION UNDER,
ADMINISTRATIVE AGENT’S OR CANADIAN AGENT’S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF ADMINISTRATIVE AGENT’S OR CANADIAN AGENT’S OTHER REMEDIES IN
RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF



 95
 









CALIFORNIA.  AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE
OF BUSINESS OF ANY BORROWER, ADMINISTRATIVE AGENT, CANADIAN AGENT, OR ANY
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF LOS
ANGELES COUNTY, CALIFORNIA, OR, AT ADMINISTRATIVE AGENT’S OR CANADIAN AGENT’S
OPTION, THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF
CALIFORNIA, SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN ANY BORROWER ON THE ONE HAND AND ADMINISTRATIVE AGENT,
CANADIAN AGENT, OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED THAT
ADMINISTRATIVE AGENT, CANADIAN AGENT, AND/OR ANY LENDER MAY INITIATE LEGAL OR
EQUITABLE PROCEEDINGS IN ANY OTHER COURT WHICH HAS SUBJECT MATTER JURISDICTION
OVER THE MATTER IN CONTROVERSY.  EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY
OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM  NON  CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.  EACH BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE BORROWER REPRESENTATIVE AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER
OF THE BORROWER REPRESENTATIVE’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID. 
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT
OF ADMINISTRATIVE AGENT, CANADIAN AGENT, OR ANY LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
ADMINISTRATIVE AGENT, CANADIAN AGENT, OR ANY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.


12.17       WAIVERS BY BORROWERS.


EACH BORROWER WAIVES (a) THE RIGHT TO TRIAL BY
JURY (WHICH ADMINISTRATIVE AGENT, CANADIAN AGENT, AND EACH LENDER HEREBY ALSO
WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT
OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL;



 96
 









(b) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY ADMINISTRATIVE AGENT, CANADIAN AGENT,
OR ANY LENDER ON WHICH ANY BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER ADMINISTRATIVE AGENT, CANADIAN AGENT, OR ANY
LENDER MAY DO IN THIS REGARD; (c) NOTICE PRIOR TO ADMINISTRATIVE AGENT’S
OR CANADIAN AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND
OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
ADMINISTRATIVE AGENT OR CANADIAN AGENT TO EXERCISE ANY OF ADMINISTRATIVE AGENT’S
OR CANADIAN AGENT’S REMEDIES; (d) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (e) NOTICE OF ACCEPTANCE HEREOF.  EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT’S, CANADIAN AGENT’S,
AND EACH LENDER’S ENTERING INTO THIS AGREEMENT AND THAT ADMINISTRATIVE AGENT,
CANADIAN AGENT, AND EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS
FUTURE DEALINGS WITH BORROWERS.  EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


12.18       Further Assurances.


Without limiting in any manner any other obligation,
requirement or agreement hereunder or under any of the other Loan Documents or
otherwise, Borrowers shall, at their expense and without expense to the
Lenders, Administrative Agent or Canadian Agent, do, execute and deliver such
further acts and documents as the Majority Lenders, Administrative Agent or the
Canadian Agent from time to time require for the assuring and confirming unto
the Lenders, Administrative Agent or the Canadian Agent of the rights hereby
created or intended now or hereafter so to be, or for carrying out the
intention or facilitating the performance of the terms of any Loan Document.


12.19       Interest Act (Canada).


For the purpose of complying with the Interest Act
(Canada), it is expressly stated that:


12.19.1      where interest
is calculated pursuant hereto at a rate based upon a 360-day period (for the
purposes of this Section 12.19.1, the “first rate”), the yearly rate or
percentage of interest to which the first rate is equivalent is the first rate
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by 360; and



 97
 









12.19.2      the parties
hereto acknowledge that there is a material distinction between the nominal and
effective rates of interest and that they are capable of making the
calculations necessary to compare such rates and that the calculations herein
are to be made using the nominal rate method and not on any basis that gives
effect to the principle of deemed reinvestment of interest.


12.20       Arbitration.  Notwithstanding
any other provision of this Agreement to the contrary, any controversy or claim
among the parties relating in any way to any Obligations or Loan Documents,
including any alleged tort, shall at the request of any party hereto be
determined by binding arbitration conducted in accordance with the United
States Arbitration Act (Title 9 U.S. Code). Arbitration proceedings will be
determined in accordance with the Act, the then-current rules and procedures
for the arbitration of financial services disputes of the American Arbitration
Association (“AAA”), and the terms of this Section.  In the event of any inconsistency, the terms
of this Section shall control.  If AAA is
unwilling or unable to serve as the provider of arbitration or to enforce any
provision of this Section, Administrative Agent or Canadian Agent may designate
another arbitration organization with similar procedures to serve as the
provider of arbitration.  The arbitration
proceedings shall be conducted in Los Angeles or Pasadena, California.  The arbitration hearing shall commence within
90 days of the arbitration demand and close within 90 days thereafter.  The arbitration award must be issued within
30 days after close of the hearing (subject to extension by the arbitrator for
up to 60 days upon a showing of good cause), and shall include a concise
written statement of reasons for the award. 
The arbitrator shall give effect to applicable statutes of limitation in
determining any controversy or claim, and for these purposes, service on AAA
under applicable AAA rules of a notice of claim is the equivalent of the filing
of a lawsuit.  Any dispute concerning
this Section or whether a controversy or claim is arbitrable shall be
determined by the arbitrator.  The
arbitrator shall have the power to award legal fees to the extent provided by
this Agreement.  Judgment upon an
arbitration award may be entered in any court having jurisdiction.  The institution and maintenance of an action
for judicial relief or pursuant to a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.  No
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim relates to an obligation secured by real property, but if all parties do
not consent to submission of such a controversy or claim to arbitration, it
shall be determined as provided in the next sentence.  At the request of any party, a controversy or
claim that is not submitted to arbitration as provided above shall be
determined by judicial reference; and if such an election is made, the parties
shall designate to the court a referee or referees selected under the auspices
of the AAA in the same manner as arbitrators are selected in AAA sponsored
proceedings and the presiding referee of the panel (or the referee if there is
a single referee) shall be an active attorney or retired judge; and judgment
upon the award rendered by such referee or referees shall be entered in the
court in which proceeding was commenced. 
None of the foregoing provisions of this Section shall limit the right
of Administrative Agent, Canadian Agent, or Lenders to exercise self-help
remedies, such as setoff, foreclosure or sale



 98
 









of any Collateral or to obtain provisional or
ancillary remedies from a court of competent jurisdiction before, after or
during any arbitration proceeding.  The
exercise of a remedy does not waive the right of any party to resort to
arbitration or reference.  At Administrative
Agent’s or Canadian Agent’s option, foreclosure under a Mortgage may be
accomplished either by exercise of power of sale thereunder or by judicial
foreclosure.


12.21       Patriot Act Notice. 
Administrative Agent and Lenders hereby notify Borrowers that pursuant
to the requirements of the Patriot Act, Administrative Agent and Lenders are
required to obtain, verify and record information that identifies each
Borrower, including its legal name, address, tax ID number and other
information that will allow Administrative Agent and Lenders to identify it in
accordance with the Patriot Act. 
Administrative Agent and Lenders will also require information regarding
each personal guarantor, if any, and may require information regarding
Borrowers’ management and owners, such as legal name, address, social security
number and date of birth.



 99
 









IN WITNESS WHEREOF, this Agreement has been duly
executed on the day and year specified at the beginning of this Agreement.


	
  

  	
   

  	
  CHANNELL
  COMMERCIAL CORPORATION,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  Patrick E. McCready

  
	
   

  	
   

  	
  Name:

  	
    Patrick
  E. McCready

  
	
   

  	
   

  	
  Title:

  	
     CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CHANNELL
  COMMERCIAL CANADA INC.,

  an Ontario corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William H. Channell, Jr.

  
	
   

  	
   

  	
  Name:

  	
  William H. Channell, Jr

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA,
  N.A.,

  as Administrative Agent and as a Domestic Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Matthew R. Van Steenhuyse

  
	
   

  	
   

  	
   

  	
  Matthew R. Van Steenhuyse

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA,
  N.A., CANADA BRANCH,

  as Canadian Agent and Canadian Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Nelson Lam

  
	
   

  	
   

  	
  Name:

  	
  Nelson Lam

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
														



 



 100















APPENDIX A


GENERAL
DEFINITIONS


When used in the Amended and Restated Loan and
Security Agreement dated as of July 30, 2007, by and among Bank of America,
N.A., individually and as Administrative Agent, the other financial
institutions which are or become parties thereto, Bank of America, N.A., Canada
Branch, individually and as Canadian Agent, 
Channell Commercial Corporation, a Delaware corporation, and Channell
Commercial Canada Inc., an Ontario corporation, (a) the terms Certificated
Security, Chattel Paper, Commercial Tort Claims, Deposit
Account, Document, Electronic Chattel Paper, Equipment,
Financial Asset, Fixture, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit
Rights, Security, Payment Intangibles,  Proceeds, Security Entitlement,
Software, Supporting Obligations, Tangible Chattel Paper
and Uncertificated Security, have the respective meanings assigned
thereto under the UCC (as defined below) or the PPSA (as defined below), as
applicable; (b) all terms indicating Collateral having the meanings
assigned thereto under the UCC or the PPSA, as applicable shall be deemed to
mean such Property, whether now owned or hereafter created or acquired by
Borrowers and their applicable Subsidiaries or in which Borrowers and their
applicable Subsidiaries now have or hereafter acquire any interest; (c) to
the extent that any term reflecting Collateral has different meanings under the
PPSA and the UCC, such term shall be defined in the alternative so as to
include both meanings; (d) capitalized terms which are not otherwise
defined have the respective meanings assigned thereto in said Amended and
Restated Loan and Security Agreement; and (e) the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):


“AAA” – as defined in Section 12.20 of the
Agreement.


“Account” – has the meaning assigned thereto
under the UCC and, in addition thereto, shall include all “accounts receivable”
and “accounts,” as such terms are defined in the PPSA and shall include as to
UK Guarantors the amounts now or subsequently standing to the credit of any
account which each UK Guarantor has, or has an interest in, with any person and
the debts represented thereby and all book and other debts and monetary claims
now or subsequently due or owing to each UK Guarantor, the proceeds of the same
and the benefit of all securities or investments, Liens and guarantees or other
rights of any nature now or subsequently enjoyed or held by it in relation
thereto (other than Accounts).


“Account Creditor” – collectively, Domestic
Borrower, Canadian Borrower, UK Guarantors and any other Subsidiary of Domestic
Borrower, if any, approved by Administrative Agent and Majority Lenders in writing
from time to time for inclusion as an “Account Creditor” for purposes of the
Loan Documents.


“Account Debtor” – any Person who is or may
become obligated on or under or on account of any Account, Contract Right,
Chattel Paper or General Intangible.


“Adjustment Date” – as defined in the
definition of “Applicable Margin”.



 A-1
 









“Administrative Agent” – Bank of America in its
capacity as administrative agent for the Lenders under the Agreement and any
successor in that capacity appointed pursuant to Section 11.11 of the
Agreement.


“Affiliate” - a Person: (a) which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, a Person; (b) which beneficially owns or
holds 5% or more of any class of the Voting Stock of a Person; or (c) 5%
or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held by a Person or a Subsidiary of a Person.


“Agents” – collectively, Administrative Agent
and Canadian Agent.


“Aggregate Availability” – the sum of the
Domestic Availability and the Canadian Availability.


“Aggregate Borrowing Base” means, as of each
date of determination, the sum of the Domestic Borrowing Base and the UK
Borrowing Base.


“Aggregate Percentage” - with respect to each
Lender, the percentage equal to the quotient of (a) such Lender’s Domestic
Revolving Credit Commitment  divided by
(b) the aggregate of all Domestic Revolving Credit Commitments.


“Agreement” - the Loan and Security Agreement
referred to in the first sentence of this Appendix A, all Exhibits and
Schedules thereto and this Appendix A, in each case either as originally
executed or as the same may from time to time be supplemented, modified, amended,
restated, extended or supplanted.


“Agreement Currency” – as defined in
Section 12.15 of the Agreement.


“Applicable Margin” - from the Closing Date to,
but not including, the first Adjustment Date (as hereinafter defined) the per
annum rates set forth below with respect to Domestic Base Rate Loans, Domestic
LIBOR Loans, and Canadian Revolving Credit Loans:




	
  Domestic Base Rate Loans
  (Revolving)

  	
   

  	
  0.50

  	
  %

  
	
  Domestic Base Rate
  Loans (Term)

  	
   

  	
  0.75

  	
  %

  
	
  Domestic Base Rate
  Loans (Cap Ex)

  	
   

  	
  0.75

  	
  %

  
	
  Domestic LIBOR Loans
  (Revolving)

  	
   

  	
  2.25

  	
  %

  
	
  Domestic LIBOR Loans
  (Term)

  	
   

  	
  2.50

  	
  %

  
	
  Domestic LIBOR Loans
  (Cap Ex)

  	
   

  	
  2.50

  	
  %

  
	
  Canadian Revolving
  Credit Loans

  	
   

  	
  2.50

  	
  %

  
	
  Unused Line Fee

  	
   

  	
  0.375

  	
  %

  






 



 A-2
 









The per annum rates set forth above will be adjusted
quarterly on the first day of each month after Administrative Agent’s receipt
of the monthly financial statements delivered by Borrowers to Administrative
Agent pursuant to Section 8.1.3(b) of the Agreement with respect to each
month (beginning with September 2007) which is a final month in a fiscal
quarter of Domestic Borrower (each such date an “Adjustment Date”),
effective prospectively, by reference to the Leverage Ratio as of the last day
of each such month, determined on the basis of such monthly financial
statements, in accordance with the following:


	
  Leverage Ratio

  	
   

  	
  Domestic Base

  Rate Loans

  (Revolving)

  	
   

  	
  Domestic Base

  Rate Loans

  (Term and Cap Ex)

  	
   

  	
  Domestic

  LIBOR Loans

  (Revolving)

  	
   

  	
  Domestic LIBOR Loans (Term

  and Cap Ex) and Canadian

  Revolving Credit Loans

  	
   

  	
  Unused

  Line Fee

  	
   

  
	
  >2.50

  	
   

  	
  0.50

  	
  %

  	
  0.75

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  0.375

  	
  %

  
	
  >1.00 and ≤2.50

  	
   

  	
  0.25

  	
  %

  	
  0.50

  	
  %

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  0.375

  	
  %

  
	
  ≤1.00

  	
   

  	
  0.00

  	
  %

  	
  0.25

  	
  %

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  0.25

  	
  %

  



 


provided that, (a) if Domestic Borrower’s audited
financial statements for any fiscal year delivered pursuant to
Section 8.1.3(a) of the Agreement reflect a Leverage Ratio that yields a
different Applicable Margin than that yielded by the monthly financial
statements previously delivered pursuant to Section 8.1.3(b) of the
Agreement for the last month of such fiscal year, the Applicable Margin shall
be readjusted retroactive to the preceding Adjustment Date and (b) if
Borrowers fail to deliver the financial statements required to be delivered
pursuant to Section 8.1.3(a) or Section 8.1.3(b) of the Agreement on
or before the due date thereof, the interest rate shall automatically adjust to
the highest interest rate set forth above, effective prospectively from such
due date until the next Adjustment Date.


“Bank of America Canada” — as defined in the
preamble to the Agreement, or its successor.


“Bank Product” - any of the following products,
services or facilities extended to any Borrower or any of its Subsidiaries by
any Lender or any of its Affiliates (each a “Bank Product Provider”) :
(a) Cash Management Services; (b) products under Hedging Agreements; (c)
commercial credit card and merchant card services; and (d) leases and other
banking products or services as may be requested by any Borrower or any of its
Subsidiaries, other than Domestic Letters of Credit.


“Bank Product Debt” - Indebtedness and other
obligations of any Borrower or any of its Subsidiaries relating to Bank
Products.


“Bank Product Provider” – as defined in the
definition of Bank Product.


“Bank Product Reserve” - the aggregate amount
of reserves established by Administrative Agent from time to time in its
reasonable discretion in respect of Bank Product Debt.


“Bankruptcy Event” – with respect to any
Person, such Person shall suffer the appointment of a receiver, trustee,
administrator, administrative receiver, interim receiver, sheriff, monitor,
sequestrator, custodian or similar fiduciary, or shall pass or convene any



 A-3
 









meeting for the purpose
of considering any resolution for winding up or administration, or shall make an
assignment, composition or arrangement for the benefit of creditors, or any
petition for an order for relief (or similar proceedings, including, without
limitation, an application for a stay order or filing of a proposal or notice
of intention to make a proposal) shall be filed by or against such Person under
the United States federal bankruptcy laws, the Insolvency Laws of Canada,
England’s Insolvency Act of 1986 or any other insolvency laws in the United
Kingdom (and the continuation of such proceeding for more than 30 days or, with
respect to any proceeding in the United Kingdom, 14 days), or such Person shall
make any offer of settlement, extension or composition to their respective
unsecured creditors generally.  With
respect to any Person organized under the laws of the United Kingdom, a
petition has been presented or a meeting convened or application made for the
purpose of appointing an administrator or receiver or other similar officer of,
or for the making of an administration order in respect of such Person and
(other than in the case of a petition to appoint an administrator or receiver
to which a grace period shall not apply), such petition or application is not
stayed or discharged within 14 days or in any event before it is heard.


“Borrowers” – as defined in the preamble to the
Agreement.


“Borrower Representative” – Domestic Borrower.


“Borrowing Base Certificate” – a certificate by
a responsible officer of Borrower Representative, substantially in the form of Exhibit 8.1.4
(or another form acceptable to Administrative Agent) setting forth the
calculation of the Domestic Borrowing Base, the Canadian Borrowing Base and the
UK Borrowing Base, including a calculation of each component thereof, all in
such detail as shall be satisfactory to Administrative Agent.  All calculations of the Domestic Borrowing
Base, Canadian Borrowing Base and UK Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be made by
Borrower Representative and certified to Administrative Agent; provided,
that each of Administrative Agent and Canadian Agent, as applicable, shall have
the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation after giving notice thereof to Borrower
Representative, (a) to reflect its reasonable estimate of declines in
value of any of the Collateral described therein, and (b) to the extent
that such calculation is not in accordance with this Agreement.


“Business Day” - (a) any day excluding
Saturday, Sunday and any day which is a legal holiday under the laws of the
State of California or is a day on which banking institutions located in the
State of California are closed, (b) with respect to any disbursements and
payments in and calculations pertaining to any Canadian Revolving Credit Loan,
any day which is a Business Day in clause (a) above and which is
also not a day on which commercial banks in Toronto, Canada, Atlanta, Georgia
and New York, New York are authorized or required by law to close, and (c) with
respect to the making, continuing, prepaying or repaying of any Domestic LIBOR
Loan, any day which is a Business Day described in clauses (a), (b)
and (c) above and which is also a day on which dealings in U.S. Dollars
are carried on in the London interbank eurodollar market.



 A-4
 









“Canadian Agent” – Bank of America Canada in
its capacity as Canadian Agent for the Canadian Lender and the Canadian
Participating Lenders under the Agreement and any successor in that capacity
appointed pursuant to Section 11.11 of the Agreement.


“Canadian Availability” – the amount of
additional money which Canadian Borrower is entitled to borrow from time to
time as Canadian Revolving Credit Loans, such amount being the lesser of
(i) the Revolving Credit Maximum Amount minus the aggregat amount of the
Domestic Revolving Credit Exposure of all the Domestic Lenders (which, for
purposes of clarification, includes the Domestic LC Amount and outstanding
Domestic LC Obligations, as further set forth in the definition of “Domestic
Revolving Credit Exposure”) minus the aggregate Canadian Revolving Credit
Exposure, and (ii) the difference derived when the sum of the Dollar
Equivalent of the principal amount of Canadian Revolving Credit Loans to
Canadian Borrower then outstanding (including any amounts which Administrative
Agent, Canadian Agent or Canadian Lender may have paid for the account of
Canadian Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by Canadian Borrower), and the Dollar Equivalent of any Reserves is
subtracted from the Dollar Equivalent of the Canadian Borrowing Base, subject
in each case to the other limitations in Section 1.1.2 of the
Agreement.  If the aggregate amount
outstanding under the Canadian Revolving Credit Loans is equal to or greater
than the Canadian Revolving Credit Sub-Limit or the Canadian Borrowing Base,
Canadian Availability is $0.


“Canadian Base Rate” – the Canadian Prime.


“Canadian Benefit Plans” – all material
employee benefit plans, programs or arrangements of any nature or kind
whatsoever that are not Canadian Pension Plans and are maintained or
contributed to by, or to which there is or may be an obligation to contribute
by, Canadian Borrower or its Subsidiaries in respect to their employees or
former employees in Canada.


“Canadian Borrower” – as defined in the
preamble to the Agreement.


“Canadian Borrower Guaranty” - the continuing
guaranty agreement executed by the Canadian Borrower, in form and substance
satisfactory to Administrative Agent.


“Canadian Borrowing Base” – as at any date of
determination thereof, the Dollar Equivalent of an amount equal to the lesser
of the following:


(a)         the Canadian Revolving Credit Sub-Limit; and


(b)         an amount equal to 85% of the net amount of Eligible
Accounts of Canadian Borrower outstanding at such date.


The advance rate set forth above may be adjusted
downward by Canadian Agent as Canadian Agent shall deem necessary or
appropriate in its reasonable credit judgment, including, without limitation,
adjustments with respect to Prior Claims or inventory subject to rights of
suppliers under Section 81.1 of Bankruptcy and Insolvency Act
(Canada).  For purposes hereof, the net
amount of Eligible Accounts at any time shall be the face amount



 A-5
 









of such Eligible Accounts
less any and all returns, rebates, discounts (which may, at Canadian Agent’s
option, be calculated on shortest terms), credits, allowances or excise taxes
of any nature at any time issued, owing, claimed by Account Debtors, granted,
outstanding or payable in connection with such Accounts at such time.


“Canadian Collateral” – all of the Property and
interests in Property of Canadian Borrower described in Section 5 of the
Agreement, and all other Property and interests in Property of Canadian
Borrower that now or hereafter secures the payment and performance of any of
the Canadian Obligations, and all other Property and interest in Property of
any Person that is identified in a Loan Document as “Canadian Collateral”.


“Canadian Dollar Equivalent” – at any time, as
to any amount denominated in U.S. Dollars, the equivalent amount in Canadian
Dollars determined by Administrative Agent at such time on the basis of the
spot rate for the purchase by Canadian Agent of such U.S. Dollars with Canadian
Dollars through a foreign exchange trading office selected by Canadian Agent or
such other rate which Administrative Agent may select based on reasonable
commercial practices.


“Canadian Dollar Refunding Amount” – as defined
in Section 3.2.6 of the Agreement.


“Canadian Dollars and cdn$” – each, lawful currency
of Canada.


“Canadian Fronting Fee” – as defined in Section
2.6(a) of the Agreement.


“Canadian Lender” – Bank of America Canada, in
its capacity as provider of Canadian Revolving Credit Loans.


“Canadian Loan Account” – as defined in
Section 3.6 of the Agreement.


“Canadian Non-Excluded Taxes” – as defined in
Section 2.13.9 of the Agreement.


“Canadian Obligations” – all Loans made by the
Canadian Lender and all other advances, debts, liabilities, obligations,
covenants and duties, together with all interest (including, without
limitation, whether accruing prior to or subsequent to the commencement of a
bankruptcy or similar proceeding with Canadian Borrower as a debtor thereof and
whether or not such interest is an allowed claim in any such proceeding), fees
and other charges thereon, owing, arising, due or payable from Canadian
Borrower to Canadian Agent, for its own benefit, or from Canadian Borrower to
Canadian Agent for the benefit of Canadian Lender or Canadian Participating
Lenders, of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, whether arising under the Agreement or
any of the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired, including without limitation any Derivative Obligations owing by
Canadian Borrower to Canadian Agent, Canadian Lender or any Canadian Participating
Lender.



 A-6
 









“Canadian Participating Lender” – each Lender (other than Canadian Lender)
that has a Canadian Percentage as identified on Schedule 1.1; it
being understood and agreed that each Canadian Affiliate of a Domestic Lender
(other than Bank of America) which is not a non-resident of Canada for purposes
of Part XIII of the Income Tax Act (Canada) or any successor provision
thereto shall be a Canadian Participating Lender.


“Canadian Participation Fee” – as defined in Section 2.6 of the
Agreement.


“Canadian Pension Plan” – each plan, program or arrangement which
is considered to be a pension plan under any applicable pension benefits
standard or tax statute and/or regulation in Canada established, maintained or
contributed to by, or to which there is or may be an obligation to contribute
by, Canadian Borrower or its Subsidiaries in respect of its employees or former
employees.


“Canadian Percentage” – relative to the Canadian Lender and any
Canadian Participating Lender, the applicable percentage relating to such
Person’s obligation to fund Canadian Revolving Credit Loans pursuant to
Section 3.2.6 of the Agreement as set forth opposite its name on Schedule 1.1
to the Agreement, as such percentage may be adjusted from time to time pursuant
to assignment agreements executed by such Lender and delivered pursuant to
Section 11.9 of the Agreement.  A
Lender shall not have any Canadian Percentage if its percentage under the
Canadian Percentage column is zero or is blank.


“Canadian Prime” – the annual rate of interest announced by the Canadian
Agent as its “reference rate” for commercial loans made by it in Canada in
Canadian Dollars.  The “reference rate”
is a rate set by the Canadian Agent based upon various factors including its
cost and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.  Any
change in the reference rate announced by the Canadian Agent shall take effect
at the opening of business on the day specified in the public announcement of
such change.


“Canadian Revolving Credit Exposure” – at any date, the amount equal to the
Dollar Equivalent of the aggregate principal amount of all Canadian Revolving
Credit Loans.


“Canadian Revolving Credit Loan” – as defined in Section 1.1.2 of the
Agreement.


“Canadian Revolving Credit Sub-Limit” – $1,000,000, as such amount may be
reduced from time to time in accordance with the provisions of the Agreement.


“Capital Expenditures” - expenditures made or
liabilities incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including the total principal portion of Capitalized Lease
Obligations; provided that “Capital Expenditures” shall exclude (i) an



 A-7
 









amount up to $250,000
during each consecutive twelve-month period corresponding to the net proceeds
of dispositions of Equipment and Fixed Assets made in accordance with Section
6.4.2(a), and (ii) replacements of Equipment or fixed assets made in accordance
with Section 6.4.2(b).


“Capitalized Lease Obligation” - any
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.


“Cash Management Services” - any services
provided from time to time by any Lender  or any of
its Affiliates to any Borrower or any of their Subsidiaries in connection with
operating, collections, payroll, trust, or other depository or disbursement
accounts, including automatic clearinghouse, controlled disbursement,
depository, electronic funds transfer, information reporting, lockbox, stop
payment, overdraft and/or wire transfer services.


“CCEL” – Channell Commercial Europe Limited, a limited
liability company incorporated under the laws of England and Wales (Company
number 02837910), with its registered office and principal place of business at
2nd Floor Bayheath House, Fairway, Petts Wood Kent, United Kingdom  BR5 1EG.


“CERCLA” – as defined in the definition of “Environmental Laws”.


“Channell Australia Entities” – collectively, Channell Bushman, Bushmans
Group Pty Limited, Channell Pty Limited, Bushmans Engineering Pty Limited,
Polyrib Tanks Pty Limited  and Australian
Bushman Tanks Pty Limited.


“Channell Bushman” – Channell Bushman Pty Limited.


“Channell Bushman Credit Facility” – the credit facilities provided pursuant
to the Corporate Letter of Offer, dated May 16, 2007, by and among National
Australia Bank Limited, Channell Bushman, Bushmans Group Pty Limited, Channell
Pty Limited, Bushmans Engineering Pty Limited, Polyrib Tanks Pty Limited  and Australian Bushman Tanks Pty Limited, as
such agreement may be amended, amended and restated, supplemented, modified,
refinanced, replaced or otherwise restructured, in whole or in part from time
to time (including increasing the amount of available borrowings thereunder and
whether or not with the same or any other agent, lender or group of lenders).


“Closing Date” - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied or waived by the
Agents and the Lenders and the initial Loans are made or the initial Domestic
Letters of Credit or Domestic LC Guaranties are issued under the Agreement.


“Closing Date Lenders” – Bank of America and Bank of America
Canada.


“CLU” – Channell Limited, a limited liability company
incorporated under the laws of England and Wales (Company number 00912862),
with its registered office and principal place of business at 2nd Floor Bayheath
House, Fairway, Petts Wood Kent, United Kingdom 
BR5 1EG.



 A-8
 









“Code” – the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.


“Collateral” – collectively, the Canadian Collateral, the Domestic
Collateral and the UK Collateral.


“Commitment Termination” – collectively, the termination of the
Domestic Revolving Credit Commitments and the termination of the obligation of
Canadian Lender to fund Canadian Revolving Credit Loans to Canadian Borrower
under Section 1.1.2 of the Agreement.


“Computer Hardware and Software” – all of Borrowers’ rights (including
rights as licensee and lessee) with respect to (a) computer and other
electronic data processing hardware, including all integrated computer systems,
central processing units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories,
peripheral devices and other related computer hardware; (b) all Software
and all software programs designed for use on the computers and electronic data
processing hardware described in clause (a) above, including all operating
system software, utilities and application programs in any form (source code
and object code in magnetic tape, disk or hard copy format or any other
listings whatsoever); (c) any firmware associated with any of the
foregoing; and (d) any documentation 
for hardware, Software and firmware described in clauses (a),
(b) and (c) above, including flow charts, logic diagrams,
manuals, specifications, training materials, charts and pseudo codes.


“Consolidated” - the consolidation in
accordance with GAAP of the accounts or other items as to which such term
applies.


“Contract Right” -  any right of Borrowers to payment under a
contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.


“Current Assets” – at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets shown
on a balance sheet at such date in accordance with GAAP.


“Dated Account” – those Accounts of Domestic Borrower with respect to
which Domestic Borrower  has granted
seasonal or promotional terms up to 90 days from normal terms.


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



 A-9
 









“Default Rate” - as defined in
Section 2.1.2 of the Agreement.


“Derivative Obligations” - every obligation of
a Person under any forward contract, futures contract, swap, option or other
financing agreement or arrangement (including, without limitation, Bank Product
Debt), the value of which is dependent upon interest rates, currency exchange
rates, commodities or other indices.


“Designated Affiliate” - a Person: (a) which is
not an officer of any Borrower or any Subsidiary of Domestic Borrower, or an
immediate family member of the family of William H. Channell, Jr.;
(b) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, a Person;
(c) which beneficially owns or holds 10% or more of any class of the
Voting Stock of a Person; or (d) 10% or more of the Voting Stock (or in
the case of a Person which is not a corporation, 10% or more of the equity
interest) of which is beneficially owned or held by a Person or a Subsidiary of
a Person.


“Distribution” - in respect of any Person means
and includes: (a) the payment of any dividends or other distributions on
Securities (except distributions in such Securities) and (b) the redemption or
acquisition of Securities of such Person, as the case may be, unless made
contemporaneously from the net proceeds of the sale of Securities.


“Dollars”, “dollar”, “U.S. Dollar”,
“U.S. dollar” and “$” – each, lawful currency of the United States.


“Dollar Equivalent” – at any time (a) as to any amount denominated in
U.S. Dollars, the amount thereof at such time, (b) as to any amount
denominated in Canadian Dollars, the equivalent amount in U.S. Dollars
determined by Administrative Agent at such time on the basis of the spot rate
for the purchase by Canadian Agent of such Canadian Dollars with U.S. Dollars
through a foreign exchange trading office selected by Canadian Agent or such
other rate which Administrative Agent may select based on reasonable commercial
practices, and (c) as to any amount denominated in Sterling, the
equivalent amount in U.S. Dollars determined by Administrative Agent at such
time on the basis of the spot rate for the purchase by Administrative Agent of
such Sterling with U.S. Dollars through a foreign exchange trading office
selected by Administrative Agent or such other rate which Administrative Agent
may select based on reasonable commercial practices.


“Domestic Availability” – the amount of additional money which
Domestic Borrower is entitled to borrow from time to time as Domestic Revolving
Credit Loans, such amount being the lesser of:


(i) the
Revolving Credit Maximum Amount minus the aggregate amount of the Domestic
Revolving Credit Exposure of all the Domestic Lenders (which, for purposes of
clarification, includes the Domestic LC Amount and the outstanding Domestic LC
Obligations, as further set forth in the definition of “Domestic Revolving
Credit Exposure”) minus the aggregate Canadian Revolving Credit Exposure; and



 A-10
 









(ii) the
result of:


(A)  the Aggregate Borrowing Base; minus


(B)  the outstanding principal amount of Domestic
Revolving Credit Loans (including any amounts which Administrative Agent or any
Lender may have paid for the account of Domestic Borrower pursuant to any of
the Loan Documents and which have not been reimbursed by Domestic Borrower),
the Domestic LC Amount and the outstanding Domestic LC Obligations, and any Reserves.


If the aggregate amount
outstanding under the Domestic Revolving Credit Loans is equal to or greater
than the aggregate Domestic Revolving Credit Commitments or the Aggregate
Borrowing Base, Domestic Availability is $0.


“Domestic Base Rate” - the rate of interest
announced or quoted by Bank of America from time to time as its prime rate for
commercial loans, whether or not such rate is the lowest rate charged by Bank
of America to its most preferred borrowers; and, if such prime rate for commercial
loans is discontinued by Bank of America as a standard, a comparable reference
rate designated by Bank of America as a substitute therefor shall be the
Domestic Base Rate.


“Domestic Base Rate Loan” - any Loan hereunder
bearing interest computed by reference to the Domestic Base Rate, including,
without limitation, those portions of the outstanding principal amounts of the
Domestic Term Loan and the Domestic Cap Ex Loans bearing interest with
reference to the Domestic Base Rate.


“Domestic Borrower” – as defined in the preamble to the Agreement.


“Domestic Borrower Guaranty” - the continuing
guaranty agreement executed by the Domestic Borrower, in form and substance
satisfactory to Agents.


“Domestic Borrowing Base” - as at any date of
determination thereof, an amount equal to (without duplication) the sum of
(a) 85% of the net amount of Eligible Accounts of the Domestic Borrower
plus (b) the Inventory Component. 
The advance rate set forth above in clause (a) may be adjusted downward
by Administrative Agent as Administrative Agent shall deem necessary or
appropriate in its reasonable credit judgment. 
For purposes hereof, the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts less any and all returns,
rebates, discounts (which may, at Administrative Agent’s option, be calculated
on shortest terms), credits, allowances or excise taxes of any nature at any
time issued, owing, claimed by Account Debtors, granted, outstanding or payable
in connection with such Accounts at such time.


“Domestic Cap Ex Loan” – as defined in Section 1.3.2 of the
Agreement.



 A-11
 









“Domestic Cap Ex Loan Commitment” - with
respect to any Domestic Lender, the amount of such Domestic Lender’s commitment
to make a term loan to Domestic Borrower pursuant to Section 1.3.2 of the
Agreement, as set forth below such Domestic Lender’s name on Schedule 1.1
hereto under the heading “Domestic Cap Ex Loan Commitment”.  The Domestic Cap Ex Commitments of all the
Lenders shall not exceed $5,000,000, as such amount may be reduced from time to
time in accordance with the provisions of this Agreement.


“Domestic Cap Ex Loan Percentage” - with
respect to each Domestic Lender, the percentage equal to the quotient of such
Domestic Lender’s Domestic Cap Ex Commitment divided by the aggregate of all
Domestic Cap Ex Commitments.


“Domestic Cap Ex Notes” - the secured
promissory notes to be executed by Borrowers in favor of each applicable Lender
to evidence the Domestic Cap Ex Loans, which shall be in the form of Exhibit 1.3
to the Agreement, together with any replacement or successor notes therefor.


“Domestic Collateral” - all of the Property and
interests in Property of Domestic Borrower described in Section 5 of the
Agreement, and all other Property and interests in Property of Domestic
Borrower or any Subsidiary of Domestic Borrower (other  than
Restricted Subsidiaries and Canadian Borrower) that now or hereafter secures
the payment and performance of any of the Domestic Obligations, and all other
Property and interest in Property of any Person that is identified in a Loan
Document as “Domestic Collateral”.


“Domestic LC Amount” - at any time, the
aggregate undrawn available amount of all Domestic Letters of Credit and
Domestic LC Guaranties then outstanding.


“Domestic LC Guaranty” - any guaranty pursuant
to which Administrative Agent or any Affiliate of Administrative Agent shall
guaranty the payment or performance by Domestic Borrower of its reimbursement
obligation under any Domestic Letter of Credit.


“Domestic LC Margin” – the Applicable Margin then in effect for
Domestic LIBOR Loans which are Domestic Revolving Credit Loans per annum.


“Domestic LC Obligations” - any Obligations
that arise from any draw against any Domestic Letter of Credit or against any
Domestic Letter of Credit supported by a Domestic LC Guaranty.


“Domestic Lender” – as defined in Section 1.1.1 of the Agreement.


“Domestic Letter of Credit” - any standby or
commercial letter of credit issued by Administrative Agent, or any Affiliate of
Administrative Agent for the account of Domestic Borrower.



 A-12
 









“Domestic LIBOR Loan” – any Loan made hereunder to Domestic
Borrower bearing interest computed by reference to the LIBOR, including,
without limitation, that portion of the outstanding principal amount of the
Domestic Term Loan bearing interest with reference to the LIBOR.


“Domestic Loan Account” - as defined in
Section 3.6 of the Agreement.


“Domestic Non-Excluded Taxes” – as defined in Section 2.13.1 of the
Agreement.


“Domestic Obligations” - all Loans made by any
Domestic Lender, all Domestic LC Obligations and all other advances, debts,
liabilities, obligations, covenants and duties, together with all interest
(including, without limitation, whether accruing prior to or subsequent to the
commencement of a bankruptcy or similar proceeding with Domestic Borrower as a
debtor thereof and whether or not such interest is an allowed claim in any such
proceeding), fees and other charges thereon, owing, arising, due or payable
from Domestic Borrower to Administrative Agent or Canadian Agent, for its own
benefit and the benefit of the Lenders, or from Domestic Borrower to Bank of
America or to any other affiliate of Bank of America, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other instrument,
whether arising under the Agreement or any of the other Loan Documents or
otherwise, whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now
existing or hereafter arising and however acquired, including without
limitation any Derivative Obligations owing by Domestic Borrower to
Administrative Agent, Canadian Agent, or any Lender.


“Domestic Revolving Credit Commitment” – as to any Lender, the obligation of such
Lender to make Domestic Revolving Credit Loans and to participate in Domestic
Letters of Credit issued for the account of Domestic Borrower, subject in each
case to the limitations provided herein and the other terms hereof, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth below such Lender’s name on Schedule 1.1 hereto under the
heading “Domestic Revolving Credit Commitment”, as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.  The Domestic Revolving Credit Commitments of
all the Lenders shall not exceed $12,500,000, as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.


“Domestic Revolving Credit Exposure” – at any date, (a) as to all Domestic
Lenders, the amount equal to the sum of the aggregate outstanding principal
amount of all Domestic Revolving Credit Loans, the Domestic LC Amount and all
Domestic LC Obligations then outstanding, and (b) as to any Domestic
Lender, the amount equal to the sum of 
(i) the aggregate principal amount of all then outstanding Domestic
Revolving Credit Loans made by such Domestic Lender, and (ii) such
Domestic Lender’s Domestic Revolving Loan Percentage of the Domestic LC Amount
and the then outstanding Domestic LC Obligations.


“Domestic Revolving Credit Loan” – as defined in Section 1.1.1 of the
Agreement.



 A-13
 









“Domestic Revolving Loan Percentage” - with
respect to each Domestic Lender, the percentage equal to the quotient of such
Domestic Lender’s Domestic Revolving Credit Commitment divided by the aggregate
of all Domestic Revolving Credit Commitments.


“Domestic Subsidiary” – a Subsidiary of a Borrower that is not a
Foreign Subsidiary or a Borrower.


“Domestic Term Loan” – as defined in Section 1.3.1 of the
Agreement.


“Domestic Term Loan Commitment” - with respect
to any Domestic Lender, the amount of such Domestic Lender’s commitment to make
a term loan to Domestic Borrower pursuant to Section 1.3.1 of the
Agreement, as set forth below such Domestic Lender’s name on Schedule 1.1
hereto under the heading “Domestic Term Loan Commitment”.  The Domestic Term Loan Commitments of all the
Lenders shall not exceed $2,500,000, as such amount may be reduced from time to
time in accordance with the provisions of this Agreement.


“Domestic Term Notes” - the secured promissory
notes to be executed by Borrowers in favor of each applicable Lender to
evidence the Domestic Term Loan, which shall be in the form of Exhibit 1.4
to the Agreement, together with any replacement or successor notes therefor.


“Dominion Account” - a special bank account or
accounts of Administrative Agent or Canadian Agent, as the case may be,
established by Borrowers and their Subsidiaries pursuant to Section 6.2.4
of the Agreement at a bank or banks selected by Borrowers (provided that UK
Guarantors shall select Bank of America) and their Subsidiaries, but acceptable
to Administrative Agent or Canadian Agent, as the case may be, in its
reasonable discretion, and over which Administrative Agent and Canadian Agent,
as the case may be, shall have access and control for withdrawal purposes in
accordance with the terms of the applicable blocked account arrangements
approved by the applicable Agents.


“EBITDA” - for any period, without duplication,
the Consolidated net income (or loss) of Borrowers and UK Guarantors, plus
(a) Borrowers’ and UK Guarantors’ Consolidated interest expense for that
period (including fees paid in cash associated with this Agreement), including
without limitation any rent payable with respect to Capitalized Lease
Obligations which should, in accordance with GAAP, be treated as interest
expense, to the extent paid during that period in cash, plus
(b) the aggregate amount of federal, state and provincial income taxes on
or measured by such Consolidated net income of Borrowers and UK Guarantors to
the extent paid or accrued for that period, plus (c) the
Consolidated depreciation and amortization expense of Borrowers and UK
Guarantors for that period, plus (d) the Consolidated non-cash expenses
of Borrowers and UK Guarantors for that period, minus (e) any
Consolidated non-cash income of Borrowers and UK Guarantors for that period, in
each case determined in accordance with GAAP, consistently applied.



 A-14
 









“Egerton” – A.C. Egerton (Holdings) Limited (Company number
00818919), a limited liability company incorporated under the laws of England
and Wales and whose registered office is c/o Channell Limited, 2nd Floor
Bayheath House, Fairway, Petts Wood Kent, United Kingdom  BR5 1EG.


“Eligible Account” - an Account of an Account
Creditor arising in the ordinary course of the business of the applicable
Account Creditor from the sale of goods or rendition of services which
Administrative Agent, in its reasonable credit judgment, deems to be an Eligible
Account.  Without limiting the generality
of the foregoing, no Account shall be an Eligible Account if:


(a)           it arises out of a sale made or services
rendered by the applicable Account Creditor to a Subsidiary of any Borrower or
an Affiliate of any Borrower (excluding, with respect to Accounts arising out
of sale, such portion of such Accounts which arises out of services rendered in
connection with such sales); or


(b)           it remains unpaid more than 90 days after
the original invoice date or more than 60 days after its due date unless
(i) such Account is a Dated Account, or (ii) the sale pertaining to such
Account is on letter of credit, guaranty or acceptance terms, or is insured by
credit insurance, in each case acceptable to Administrative Agent in its
reasonable credit judgment; or


(c)           it is owed by an Account Debtor with
respect to which the      total unpaid Accounts of such Account
Debtor exceed 20% of the net amount of all Eligible Accounts, but only to the
extent of such excess; except with respect to Accounts with Comcast Corporation
or one of its affiliates, as the Account Debtor, and Verizon Communications,
Inc. or one of its affiliates, as the Account Debtor, for which Accounts the
foregoing 20% concentration limit shall be increased to 40% in the aggregate
for all such Accounts during such periods as such Account Debtor maintains a
Dun & Bradstreet rating of not less than 5A2; or


(d)           any material covenant, representation or
warranty contained in the Agreement with respect to such Account has been breached;
or


(e)           it is a “contra” account; or


(f)            the Account Debtor is also a creditor or
supplier of the applicable Account Creditor or any Subsidiary of the applicable
Account Creditor, or the Account Debtor has disputed liability with respect to
such Account, or the Account Debtor has made any claim with respect to any
other Account due from such Account Debtor to the applicable Account Creditor
or any Subsidiary of the applicable Account Creditor, or the Account otherwise
is or may become subject to right of setoff by the Account Debtor, provided,
that any such Account shall be eligible to the extent such amount thereof
exceeds such contract, dispute, claim, setoff or similar right; or



 A-15















(g)           the Account Debtor has commenced a
voluntary case under the United States federal bankruptcy laws, the Insolvency
Laws of Canada or England’s Insolvency Act of 1986 (or any other applicable
insolvency laws) as now constituted or hereafter amended, or made an assignment
for the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the Account Debtor
in an involuntary case under the United States federal bankruptcy laws, the Insolvency
Laws of Canada or England’s Insolvency Act of 1986 (or any other applicable
insolvency laws), as now constituted or hereafter amended, or any other
petition or other application for relief under the United States federal
bankruptcy laws, the Insolvency Laws of Canada or England’s Insolvency Act of
1986 (or any other applicable insolvency laws), as now constituted or hereafter
amended, has been filed against the Account Debtor, or if the Account Debtor
has failed, suspended business, ceased to be Solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs, unless in any such
case the sale pertaining to such Account is on letter of credit, guaranty or
acceptance terms, or is insured by credit insurance, in each case acceptable to
Administrative Agent in its reasonable credit judgment; or


(h)           (i) in the case of Domestic Borrower, it
arises from a sale made or services rendered to an Account Debtor headquartered
outside the United States of America, unless the sale is either (A) to an
Account Debtor headquartered in Ontario or any other province of Canada in
which the PPSA has been adopted in substantially the same form or with the same
effect as currently in effect in Ontario, or (B) on letter of credit, guaranty
or acceptance terms, in each case acceptable to Administrative Agent in its
reasonable credit judgment (or insured by credit insurance acceptable to
Administrative Agent in its sole discretion), and (ii) in the case of
Canadian Borrower, it arises from a sale made or services rendered to an
Account Debtor headquartered outside Canada, unless the sale is either
(A) to an Account Debtor headquartered in the United States of America, or
(B) on letter of credit, guaranty or acceptance terms, in each case
acceptable to Administrative Agent and the Canadian Agent in their reasonable
credit judgment (or insured by credit insurance acceptable to Canadian Agent in
its sole discretion), and (iii) in the case of UK Guarantors, it arises
from a sale made or services rendered to an Account Debtor headquartered
outside of the United Kingdom, the United States of America or Canada unless
the sale is on letter of credit, guaranty or acceptance terms, in each case
acceptable to Administrative Agent in their reasonable credit judgment; or


(i)            (i) in the case of Domestic
Borrower, it arises from a sale made or services rendered to an Account Debtor
not organized under the laws of the United States of America, unless the
sale is either (A) to an Account Debtor organized under the laws of Ontario or
any other province of Canada in which the PPSA has been adopted in
substantially the same form or with the same effect as currently in effect in
Ontario, or (B) on letter of credit, guaranty or acceptance terms, in each case
acceptable to Administrative Agent in its reasonable credit judgment (or
insured by



 A-16
 









credit insurance
acceptable to Administrative Agent in its sole discretion), and (ii) in
the case of Canadian Borrower, it arises from a sale made or services rendered
to an Account Debtor not organized under the laws of Canada, unless the sale is
either (A) to an Account Debtor organized under the laws of the United
States of America, or (B) on letter of credit, guaranty or acceptance
terms, in each case acceptable to Administrative Agent and the Canadian Agent
in their reasonable credit judgment (or insured by credit insurance acceptable
to Canadian Agent in its sole discretion), and (iii) in the case of UK
Guarantors, it arises from a sale made or services rendered to an Account
Debtor not organized under the laws of the United Kingdom, the United States of
America or Canada unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Administrative Agent in their
reasonable credit judgment; or


(j)            (a) it arises from a sale to the
Account Debtor on a bill-and-hold or consignment basis; or (b) it is
subject to a reserve established by the applicable Account Creditor or any of
its Subsidiaries for potential returns or refunds, to the extent of such
reserve; or


(k)           the Account Debtor is the United States
of America, the United Kingdom (or any country therein), or Her Majesty the
Queen in right of Canada, or any department, agency or instrumentality of any
of the foregoing, unless the applicable Account Creditor assigns its right to
payment of such Account to Administrative Agent, in a manner satisfactory to
Administrative Agent, in its reasonable credit judgment, so as to comply with
the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as amended) or
the Financial Administration Act (Canada) as applicable; or


(l)            it is not at all times subject to
Administrative Agent’s or Canadian Agent’s, as the case may be, duly perfected,
first priority security interest and to no other Lien that is not a Permitted
Lien; or


(m)          the goods giving rise to such Account
have not been shipped to the Account Debtor or the services giving rise to such
Account have not been performed by the applicable Account Creditor and accepted
by the Account Debtor or the Account otherwise does not represent a final sale;
or


(n)           the Account is evidenced by chattel paper
or an instrument of any kind, or has been reduced to judgment; or


(o)           if such Account is a Dated Account, such
account remains unpaid more than 120 days after the original invoice date; or


(p)           the applicable Account Creditor or a
Subsidiary of the applicable Account Creditor has made any agreement with the
Account Debtor for any deduction or rebate therefrom (but only to the extent of
such deduction or rebate), except for discounts or allowances which are made in
the ordinary course of business for prompt payment or otherwise and which
discounts or allowances are reflected in the calculation of the face value of
each invoice related to such Account; or



 A-17
 









(q)           more than 25% of the Accounts owing from
the Account Debtor are not Eligible Accounts hereunder; or


(r)            it is not otherwise acceptable to
Administrative Agent in its reasonable credit judgment.


“Eligible Inventory” – Inventory of Domestic
Borrower (other than packaging materials and supplies, tooling, samples and
literature) which Administrative Agent, in its reasonable credit judgment,
deems to be Eligible Inventory.  Without
limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory if:


(a)           it is not raw materials or finished
goods; or


(b)           it is not in good, new and saleable
condition; or


(c)           it is slow-moving, obsolete or
unmerchantable; or


(d)           it does not meet all standards imposed by
any governmental agency or authority; or


(e)           it does not conform in all material
respect to any covenants, warranties and representations set forth in the
Agreement; or


(f)            it is not at all times subject to
Administrative Agent’s duly perfected, first priority security interest and no
other Lien except a Permitted Lien; or


(g)           it is not situated at a location in
compliance with the Agreement or is in transit, provided that Inventory
situated at a location not owned by Domestic Borrower will be Eligible
Inventory only if Administrative Agent has received a satisfactory landlord’s
agreement or bailee letter, as applicable, with respect to such location; or


(h)           it is not otherwise acceptable to
Administrative Agent in its reasonable credit judgment.


“Environmental Claim” - any written accusation,
allegation, notice of violation, claim, demand, order, directive, cost recovery
action or other cause of action by, or on behalf of, any governmental authority
or any Person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), remedial action costs, tangible or
intangible property damage, natural resource damages, nuisance relating to
Hazardous Material, pollution, any adverse effect on the environment caused by
any Hazardous Material, or fines, penalties or restrictions, resulting from or
based upon: (a) the existence, or the continuation of the existence, of a
Release (including sudden or non-sudden, accidental or non-accidental
Releases); (b) exposure to any Hazardous Material; (c) the presence,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Material; or (d) the violation or alleged violation of any Environmental
Law or Environmental Permit.



 A-18
 









“Environmental Laws” – all applicable federal,
provincial, state, municipal or local (whether in the United States of America,
Canada or United Kingdom) laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any governmental authorities, in each case relating to
environmental, health, safety and land use matters, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (“CERCLA”), the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, and,
to the extent legally enforceable, the Emergency Planning and Community
Right-to-Know Act, the Environmental Protection Act (Ontario) or any other act,
rule, guideline or policy of Canada or any jurisdiction thereof having the
force of law relating to environmental, health, safety and land use matters.


“Environmental Permit” – any applicable permit,
approval, authorization, certificate, license, variance, filing or permission
required by or from any governmental authority pursuant to any Environmental
Law.


“ERISA” - the Employee Retirement Income
Security Act of 1974, as amended, and all rules and regulations from time to
time promulgated thereunder.


“ERISA Affiliate” – any trade or business
(whether or not incorporated) that, together with Domestic Borrower, is treated
as a single employer under Section 414(b) or (c) of the Code, or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.


“Event of Default” - as defined in
Section 10.1 of the Agreement.


“Fee Letter” – as defined in Section 2.3
of the Agreement.


“Foreign Subsidiary” – a Subsidiary of a
Borrower that (a) is organized under the laws of a country (or political
subdivision thereof) other  than the United States of America and
(b) holds all or substantially all of its assets outside the United States
of America.


“Further Taxes” – any and all present or future
taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or
similar charges (including net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 2.13 of the Agreement.


“GAAP” - generally accepted accounting
principles in the United States of America in effect from time to time.



 A-19
 









“Guarantors” – each Borrower, and each
Subsidiary of Domestic Borrower which is neither a Borrower nor a Restricted
Subsidiary, and each other Person who now or hereafter guarantees payment or
performance of the whole or any part of the Obligations.


“Guaranty Agreements” – the Domestic Borrower
Guaranty, the UK Guaranty and the continuing guaranty agreements executed by
the Subsidiaries of Domestic Borrower which are neither Borrowers nor
Restricted Subsidiaries, in form and substance satisfactory to Administrative
Agent, together with each other guaranty hereafter executed by any Guarantor.


“Guaranty Security Agreements” – the security
agreements executed by the Subsidiaries of Domestic Borrower which are neither
Borrowers nor Restricted Subsidiaries, in form and substance satisfactory to
Administrative Agent, as collateral security for the payment and performance of
the obligations of the Guarantors under the applicable Guaranty Agreements.


“Hazardous Materials” - all explosive or
radioactive substances or wastes, hazardous or toxic substances or wastes,
pollutants, solid, liquid or gaseous wastes, including petroleum or petroleum
distillates, friable asbestos or asbestos-containing materials, polychlorinated
biphenyls (“PCBs”) or PCB-containing materials or equipment, radon gas,
infectious or medical wastes regulated pursuant to any Environmental Law and
all other substances or wastes of any nature regulated pursuant to any
Environmental Law.


“Hedging Agreement” - an agreement relating to
any swap, cap, floor, collar, option, forward, cross right or obligation, or
combination thereof or similar transaction, with respect to interest rate,
foreign exchange, currency, commodity, credit or equity risk.


“Indebtedness” - as applied to a Person means,
without duplication:


(a)           all items which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including, without limitation, Capitalized Lease
Obligations;


(b)           all obligations of other Persons which
such Person has guaranteed;


(c)           all reimbursement obligations in
connection with letters of credit or letter of credit guaranties issued for the
account of such Person;


(d)           Derivative Obligations; and


(e)           in the case of Borrowers (without
duplication), the applicable Obligations.


“Indemnitee” – as defined in Section 12.2
of the Agreement.



 A-20
 









“Insolvency Laws of Canada” – each of the
Bankruptcy and Insolvency Act (Canada) and the Companies Creditors’ Arrangement
Act (Canada), each as now and hereafter in effect, any successors to such
statutes and any other applicable insolvency or other similar law of any
Canadian jurisdiction including, without limitation, any law of any Canadian
jurisdiction permitting a debtor to obtain a stay or a compromise of the claims
of its creditors against it.


“Intellectual Property” – all past, present and
future: trade secrets, know-how and other proprietary information; trademarks,
internet domain names, service marks, trade dress, trade names, business names,
designs, logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification
sheets, computer software, source codes, object codes, executable code, data,
databases and other physical manifestations, embodiments or incorporations of
any of the foregoing; the right to sue for all past, present and future
infringements of any of the foregoing; all other intellectual property; and all
common law and other rights throughout the world in and to all of the
foregoing.


“Interest Payment Date” – as to any Domestic
Base Rate Loan, Domestic LIBOR Loan, or Canadian Revolving Credit Loan, the
first calendar day of each month (for the immediately preceding month),
computed through the last calendar day of the preceding month.


“Interest Period” – as applicable to any
Domestic LIBOR Loan, a period commencing on the date such Domestic LIBOR Loan
is made, continued or converted, and ending on the date which is one (1) month,
two (2) months, three (3) months, or six (6) months later, as may then be
requested by Borrower Representative; provided that (a) any Interest
Period which would otherwise end on a day which is not a Business Day shall end
on the next preceding or succeeding Business Day as is Administrative Agent’s
custom in the market to which such Domestic LIBOR Loan relates; (b) there
remains a minimum of one (1) month, two (2) months, three (3) months or six (6)
months (depending upon which Interest Period Borrower Representative in the
Term; and (c) all Interest Periods of the same duration which commence on
the same date shall end on the same date.


“Inventory Component” – as at any date of
determination, the lesser of (a) $8,000,000 and (b) the sum of (i) 50% of the
value of Eligible Inventory consisting of raw materials, plus (ii) 70% of the
value of Eligible Inventory consisting of finished goods.  As used herein, “value” shall be determined
on a first-in, first-out, lower of cost or market basis in accordance with
GAAP.


“Judgment Currency” – as defined in
Section 12.15 of the Agreement.



 A-21
 









“Judgments” – as defined in
Section 10.1.15 of the Agreement.


“Legal Requirement” - any requirement imposed
upon Administrative Agent, Canadian Agent, or any Lender by any law of the
United States of America or Canada or the United Kingdom or by any regulation,
order, interpretation, ruling or official directive (whether or not having the
force of law) of the Federal Reserve Board, the Bank of Canada, the Bank of
England or any other board, central bank or governmental or administrative
agency, institution or authority of the United States of America, Canada, the
United Kingdom or any political subdivision of either thereof.


“Lender” –as defined in the preamble to the Agreement.


“Leverage Ratio” - as of the last day of any
fiscal quarter of Domestic Borrower, the ratio of (a) Consolidated
Indebtedness for Money Borrowed of Borrowers as of such date, to
(b) EBITDA for the most recently ended twelve month period ending on such
date.


“LIBOR”
–  as applicable to any Domestic LIBOR
Loan, the rate per annum (rounded upward, if necessary, to the nearest 1/32nd
of one percent) as determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such Domestic LIBOR Loan which
appears on the Telerate page 3750 as of 11:00 a.m. (London Time) on the date
that is two (2) London Banking Days preceding the first day of such Domestic
LIBOR Loan; provided, however, if the rate described above does not appear on
the Telerate System on any applicable interest determination date, the LIBOR
rate shall be the rate (rounded upwards as described above, if necessary) for
deposits in U.S. dollars for a period substantially equal to the interest
period on the Reuters Page “LIBO” (or such other page as may replace the LIBO
Page on that service for the purpose of displaying such rates), as of 11:00
a.m. (London Time), on the day that is two (2) London Banking Days prior to the
beginning of such interest period.  If
both the Telerate and Reuters systems are unavailable, then the rate for that
date will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such Domestic LIBOR Loan which are
offered by four (4) major banks in the London interbank market at approximately
11:00 a.m. (London time), on the day that is two (2) London Banking Days
preceding the first day of such Domestic LIBOR Loan as selected by
Administrative Agent.  The principal
London office of each of the major London banks so selected will be requested
to provide a quotation of its U.S. dollar deposit offered rate.  If at least two (2) such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations.  If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such Domestic LIBOR Loan offered by major
banks in New York City at approximately 11:00 a.m. (New York City time), on the
date that is two (2) London Banking Days preceding the first day of such
Domestic LIBOR Loan.  In the event that
Administrative Agent is unable to obtain any such quotation as provided above,
it will be determined that LIBOR pursuant to such Domestic LIBOR Loan cannot be
determined.  In the event that the Board
of Governors of the Federal Reserve System shall impose a Reserve Percentage
with respect to LIBOR deposits of Bank of America then, for any period during
which such Reserve Percentage shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve Percentage.



 A-22
 









“Lien” - any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on common law, statute or
contract.  The term “Lien” shall also
include hypothecs, rights of sellers under conditional sales contracts or title
retention agreements, reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrowers (and their applicable Subsidiaries) shall be deemed to be
the owner of any Property which they have acquired or hold subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.


“Loan Account” – as defined in Section 3.6
of the Agreement.


“Loan Documents” - the Agreement, the Other
Agreements and the Security Documents.


“Loan Party” — collectively, Borrowers, each
Subsidiary of a Borrower which has either guarantied any of the Obligations or
provided a security interest in any of its assets to secure any of the
Obligations, each Guarantor, and any other Person which has provided a security
interest in any of its assets to secure any of the Obligations.


“Loans” - all loans and advances of any kind
made by Administrative Agent, Canadian Agent, or any Lender (or by any
affiliate of Bank of America) pursuant to the Agreement.


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


“Majority Lenders” – as of any date, Domestic
Lenders holding 51% of the sum of the aggregate Domestic Revolving Credit
Commitments plus the aggregate outstanding principal amount of the Domestic
Term Loan and following the termination of the Domestic Revolving Credit
Commitments, Lenders holding 51% or more of the outstanding Loans (including
affiliates of such Domestic Lenders which are Canadian Participating Lenders,
whether or not a refunding has occurred), Domestic LC Amounts, Domestic LC
Obligations not yet reimbursed by Domestic Borrower or funded with a Domestic
Revolving Credit Loan, provided, that (a) in each case, if there
are 2 or more Lenders with outstanding Loans, a portion of the Domestic LC
Amount, unfunded and unreimbursed Domestic LC Obligations or Domestic Revolving
Credit Commitments, at least 2 Lenders shall be required to constitute Majority
Lenders; and (b) prior to termination of the Domestic Revolving Credit
Commitments, if any Domestic Lender breaches its obligation to fund any requested
Domestic Revolving Credit Loan, for so long as such breach exists, its voting
rights hereunder shall be calculated with reference to its outstanding Loans,
portion of the Domestic LC Amount and unfunded and unreimbursed Domestic LC
Obligations, rather than its Domestic Revolving Credit Commitment.



 A-23
 









“Material Adverse Effect” - (a) a material
adverse effect on the business, condition (financial or otherwise), operation,
performance or properties of Borrowers and their Subsidiaries taken as a whole,
(b) a material adverse effect on the rights and remedies of Administrative
Agent, Canadian Agent, or Lenders under the Loan Documents, or (c) the
material impairment of the ability of Borrowers or any of their Subsidiaries to
perform their obligations hereunder or under any other Loan Document.


“Maximum Rate” – as defined in
Section 2.1.3(a) of the Agreement.


“Money Borrowed” - means, without duplication,
(a) Indebtedness arising from the lending of money by any Person to any
Borrower or any of its Subsidiaries; (b) Indebtedness, whether or not in
any such case arising from the lending by any Person of money to any Borrower
or any of its Subsidiaries, (i) which is represented by notes payable or
drafts accepted that evidence extensions of credit, (ii) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property; (c) Indebtedness that constitutes a Capitalized Lease
Obligation; (d) reimbursement obligations with respect to letters of
credit or guaranties of letters of credit and (e) Indebtedness of any
Borrower or any of its Subsidiaries under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (a)
through (c) hereof, if owed directly by such Borrower or any of its
Subsidiaries.  Money Borrowed shall not
include trade payables or accrued expenses.


“Mortgages” - all mortgages, deeds of trust and
comparable documents now or at any time hereafter securing the whole or any
part of the Obligations.


“Multiemployer Plan” - has the meaning set
forth in Section 4001(a)(3) of ERISA.


“Notes” – the Revolving Notes and the Domestic
Term Notes.


“Notice of Canadian Revolving Loan Refunding” –
as defined in Section 3.2.6 of the Agreement.


“Obligations” – the Canadian Obligations and
the Domestic Obligations, collectively.


“Organizational I.D. Number” – with respect to
any Borrower or any Subsidiary of any Borrower, the organizational
identification number assigned to such Borrower or such Subsidiary by the
applicable governmental unit or agency of the jurisdiction of organization of
such Borrower or such Subsidiary.



 A-24
 









“Other Agreements” - any and all agreements,
instruments and documents (other than the Agreement and the Security
Documents), heretofore, now or hereafter executed by any Borrower, any
Subsidiary of any Borrower or any other third party and delivered to
Administrative Agent, Canadian Agent, or any Lender in respect of the
transactions contemplated by the Agreement, in each case either as originally
executed or as the same may from time to time be supplemented, modified,
amended, restated, extended or supplanted.


“Overadvance” – as defined in Section 10.1.1 of
the Agreement.


“Owned Properties” – as defined in
Section 7.1.26(a) of the Agreement.


“Participant” – as defined in Section 11.9.2 of the Agreement.


“Patriot Act” - the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).


“PBGC” – the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.


“PCBs” – as defined in the definition of “Hazardous
Materials”.


“Permitted Intercompany Loans” – collectively,
(a) any intercompany loans in existence on the Closing Date and identified on Schedule
8.2.3(b), (b) intercompany loans and advances made by any Borrower to
another Borrower or any Subsidiary of any Borrower or by any Subsidiary to any
Borrower, provided that (i) each Borrower and each Subsidiary shall
record all such intercompany transactions on its books and records in a manner
reasonably satisfactory to Administrative Agent, (ii) the obligations of any
recipient of any such intercompany loans or advances which is a Borrower or
Subsidiary which has guarantied any of the Obligations shall be subordinated to
the applicable Obligations of such Borrower or such guarantied Obligations in a
manner reasonably satisfactory to Agents, (iii) at the time any such
intercompany loan or advance is made and after giving effect thereto, the
applicable Borrower or Subsidiary making the loan or advance shall be Solvent
and the applicable recipient of the proceeds of the intercompany loan or
advance shall not have suffered a Bankruptcy Event, (iv) no Default or Event of
Default would occur and be continuing after giving effect to any such proposed
intercompany loan or advance, (v) all such intercompany loans or advances shall
at all times be unsecured, (vi) Administrative Agent shall not have reasonably
determined that any such intercompany loan could result in any material adverse
legal consequences to any Administrative Agent or any Lender or could have any
material adverse effect whatsoever on the enforceability of any of the Loan
Documents, (vii) no such intercompany loan or advance shall be illegal or
otherwise violate any law applicable to Borrowers and their Subsidiaries,
(viii) the aggregate principal amount of all such outstanding loans and advances
described in this clause (b) which are made by Canadian Borrower to
Domestic Borrower shall not exceed $1,500,000 at any time, (ix) the aggregate
principal amount of all such outstanding loans and advances described in this
clause (b) which are made by Borrowers to any of the Channell Australia
Entities shall not exceed (A) $0 if Aggregate Availability is less than
$2,000,000 as of such date of determination, (B)



 A-25
 









$2,000,000 for all times
when Availability is equal to $2,000,000 as of such date of determination, and
(C) for all times that Aggregate Availability is greater than $2,000,000, the
amount of Aggregate Availability as of such date of determination, but not to
exceed $4,000,000 at any time, and (x) other than as provided for in clauses (b)(viii)
and (b)(ix) the aggregate principal amount of all such outstanding loans
and advances described in this clause (b) which are made by Borrowers to
all Subsidiaries shall not exceed $250,000 at any time, and (c) intercompany
loans and advances made by any Channell Australia Entity to another Borrower or
Subsidiary.


“Permitted Liens” - any Lien of a kind
specified in Section 8.2.5 of the Agreement.


“Permitted Purchase Money Indebtedness” -
Purchase Money Indebtedness of Borrowers permitted pursuant to Section 8.2.3(g)
hereof.


“Person” - an individual, partnership,
corporation, limited liability company, joint stock company, land trust,
business trust, or unincorporated organization, or a government or agency or
political subdivision thereof.


“Plan” – in the case of Domestic Borrower or a
Domestic Subsidiary, an employee benefit plan (as defined in Section 3(3)
of ERISA) subject to ERISA which any Borrower or any ERISA Affiliate sponsors
or maintains or to which any Borrower or any ERISA Affiliate makes, is making,
or is obligated to make contributions or otherwise has any liability.


“PPSA” – the Personal Property Security Act
(Ontario) as in effect from time to time; provided that in the event that, by
reason of mandatory provisions of law, the validity, perfection and effect of
perfection or non-perfection of a security interest or other applicable Lien is
governed by other personal property security laws, the term “PPSA” means such
other personal property security laws, including, without limitation, the Civil
Code of Quebec.


“Preferential Creditors” – as to UK Guarantors,
holders of “preferential debts” as interpreted in Section 386 of the
Insolvency Act 1986 of England and Wales and listed in Schedule 6 of that
Act.


“Prior Claims” – all Liens created by applicable
law (in contrast with Liens voluntarily granted) which rank or are capable of
ranking prior or pari passu with Canadian Agent’s or Administrative Agent’s, as
applicable, Lien (or the applicable equivalent of such Liens) against all or
part of the Canadian Collateral or the UK Collateral, as applicable, including
for amounts owing for vacation pay, employee deductions and contributions,
goods and services taxes, sales taxes, realty taxes, business taxes, workers’
compensation, pension plan or fund obligations and overdue rents (to the
extent, in the case of rents, that such rents are not already the subject of a
reserve).



 A-26
 









“Projections” – Borrowers’ forecasted
Consolidated and consolidating (a) balance sheets, (b) profit and
loss statements, (c) cash flow statements and (d) capitalization
statements, all prepared on a consistent basis with the historical financial
statements of Borrowers and their Subsidiaries, together with appropriate
supporting details and a statement of underlying assumptions.


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


“Purchase Money Indebtedness” - means and
includes (a) Indebtedness (other than the Obligations) for the payment of
all or any part of the purchase price of any fixed assets, (b) any
Indebtedness (other than the Obligations) incurred at the time of or within 10
days prior to or after the acquisition of any fixed assets for the purpose of
financing all or any part of the purchase price thereof, and (c) any
renewals, extensions or refinancings thereof, but not any increases in the
principal amounts thereof outstanding at the time.


“Purchase Money Lien” - a Lien upon fixed
assets which secures Purchase Money Indebtedness, but only if such Lien shall
at all times be confined solely to the fixed assets the purchase price of which
was financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.


“RBC Account” – the
account maintained at The Royal Bank of Canada of Canadian Borrower, Account
Number 1068840, Account Transit Number 00002.


“Reference Banks” – with respect to LIBOR, the
principal London offices of Barclays Bank PLC, The Royal Bank of Scotland and
HSBC or such other banks as may be appointed by Bank of America (acting on the
instructions of the Majority Lenders) in consultation with the Borrower
Representative.


“Release” - any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injection, escaping, leaching,
dumping, disposing, or depositing, or threat thereof, of any Hazardous Material
in, into, onto or through the environment.


“Reportable Event” - any of the events set
forth in Section 4043(b) of ERISA.


“Reserve Percentage” - the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve System
against “Eurocurrency Liabilities” as defined in Regulation D.


“Reserves” – as defined in Section 1.1.4 of the
Agreement.


“Restricted Investment” - any investment made
in cash or by delivery of Property to any Person, whether by acquisition of
stock, Indebtedness for Money Borrowed or other obligation or Security, or by
loan, advance or capital contribution, or otherwise, or in any Property except
the following:


(a)           Permitted
Intercompany Loans and any other investments by any Borrower or any Subsidiary, to the
extent existing on the Closing Date, in one or more Subsidiaries of any
Borrower or any Subsidiary;



 A-27
 









(b)           Property to be used in the ordinary
course of business;


(c)           Current Assets arising from the sale of
goods and services in the ordinary course of business of Borrowers or any of
their Subsidiaries;


(d)           investments in direct obligations of the
United States of America, or any agency thereof or obligations guaranteed by
the United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;


(e)           investments in certificates of deposit
maturing within one year from the date of acquisition and fully insured by the
Federal Deposit Insurance Corporation;


(f)            investments in commercial paper given the
highest rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof;


(g)           investments in money market, mutual or
similar funds having assets in excess of $100,000,000 and the investments of
which are limited to investment grade securities;


(h)           investments existing on the date hereof
and listed on Schedule 8.2.13 hereto;


(i)            written agreements between any Borrower
and one or more financial institutions providing for “swap”, “cap”, “collar” or
other interest rate protection with respect to Indebtedness for Money Borrowed;
and


(j)            investments otherwise expressly permitted
pursuant to the Agreement.


“Restricted Subsidiary” – as of any date of
determination, a Subsidiary of Domestic Borrower which (a) possesses less
than 2.5% of Consolidated assets of Domestic Borrower, determined in accordance
with GAAP and does not own any material Intellectual Property, or (b) a Foreign
Subsidiary which the Majority Lenders have agreed, in writing, prior to such
date, to classify as a “Restricted Subsidiary” because of “deemed dividend”
concerns with respect to such Foreign Subsidiary under United States tax laws; provided,
however, that the term “Restricted Subsidiary” shall not include
Canadian Borrower or UK Guarantors.  As
of the Closing Date, the Subsidiaries listed on Schedule 7.1.4B hereto are the
sole Restricted Subsidiaries.


“Revolving Credit Loans” – collectively, the
Domestic Revolving Credit Loans and Canadian Revolving Credit Loans made by any
Lender pursuant to Section 1.1 of the Agreement.



 A-28
 









“Revolving Credit Maximum Amount” -
$12,500,000, as such amount may be reduced from time to time pursuant to the
terms of this Agreement.


“Revolving Notes” - the secured promissory
notes to be executed by Borrowers in favor of each Lender to evidence the
Revolving Credit Loans, which shall be in the form of Exhibit 1.2
to the Agreement, together with any replacement or successor notes therefor.


“Security” - all shares of stock, partnership
interests, membership interests, membership units or other ownership interests
in any other Person and all warrants, options or other rights to acquire the
same.


“Security Documents” - the Guaranty Agreements,
the Guaranty Security Agreements, the Mortgages and all other instruments and
agreements now or at any time hereafter securing the whole or any part of the
Obligations, in each case either as originally executed or as the same may from
time to time be supplemented, modified, amended, restated, extended or
supplanted.


“Solvent” - as to any Person, such Person (a)
organized under the laws of any state of the United States of America,
(i) owns Property whose fair saleable value is greater than the amount
required to pay all of such Person’s Indebtedness (including contingent debts
discounted based on the likelihood of their having to be paid), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage,
(b) organized under the laws of the United Kingdom, that at the time of
determination such Person is not unable to pay its debts as they fall due
within the meaning of Section 123 of the Insolvency Act of 1986, and
(c) with respect to any Person on a particular date, (i) the property
of such Person is sufficient, if disposed of at a fairly conducted sale under
legal process, to enable payment of all its obligations, due and accruing due,
(ii) the property of such Person is, at a fair valuation, greater than the
total amount of liabilities, including contingent liabilities, of such Person,
and (iii) such Person has not ceased paying its current obligations in the
ordinary course of business as they generally become due.


“Sterling” – the lawful currency of Great
Britain.


“Sterling Equivalent” – at any time, as to any
amount denominated in U.S. Dollars, the equivalent amount in Sterling
determined by Administrative Agent at such time on the basis of the spot rate
for the purchase by Administrative Agent of such U.S. Dollars, as applicable,
with Sterling through a foreign exchange trading office selected by
Administrative Agent or such other rate which Administrative Agent may select
based on reasonable commercial practices.


“Subject UK Leaseholds” - the leaseholds held
by the indicated party in the following real Property locations in the United
Kingdom: (i) 18 Hardwicke Grange, Warrington (leased to Egerton) and (ii) 2nd
Floor Bayheath House, Fairway, Petts Wood Kent (leased to CLU).



 A-29
 









“Subordinated Debt” – Indebtedness of any
Borrower or any Subsidiary of any Borrower that is subordinated to the
Obligations in a manner satisfactory to Agents, and contains terms, including
without limitation, payment terms, satisfactory to Agents.  For the avoidance of doubt, the Channell
Bushman Credit Facility shall not constitute Subordinated Debt.


“Subsidiary” - any Person of which another
Person owns, directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.


“Term” - as defined in Section 4.1 of the
Agreement.


“Total Credit Facility” - $20,000,000, as may
be reduced from time to time pursuant to the terms hereof.


“Transferee” — as defined in
Section 2.13.1 of the Agreement.


“Type of Organization” – with respect to any
Borrower or any Subsidiary of any Borrower, the kind or type of entity by which
such Borrower or such Subsidiary is organized, such as a corporation or limited
liability company.


“UCC” – the Uniform Commercial Code as in
effect in the State of California on the date of this Agreement, as the UCC may
be amended or otherwise modified.


“UK Borrowing Base” - “UK Borrowing Base” - as
at any date of determination thereof, the Dollar Equivalent of an amount equal
to 85% of the net amount of Eligible Accounts of UK Guarantors outstanding at
such date.  The advance rate set forth
above may be adjusted downward by Administrative Agent as Administrative Agent
shall deem necessary or appropriate in its reasonable credit judgment,
including, without limitation, adjustments with respect to Prior Claims.  For purposes hereof, the net amount of
Eligible Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which may, at UK
Administrative Agent’s option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with such
Accounts at such time.


“UK Collateral” - all of the Property and
interests in Property of any UK Guarantor that now or hereafter secures the
payment and performance of any of the Domestic Obligations, and all other
Property and interest in Property of any Person that is identified in a Loan
Document as “UK Collateral”.


“UK Guarantors” – collectively, CLU, CCEL and
Egerton.


“UK Guaranty” - the continuing guaranty
agreement executed by the UK Guarantors, in form and substance satisfactory to
Administrative Agent.



 A-30
 









“UK Loss” - for any period, without
duplication, the difference between (a)(i) net income (or loss) of UK
Guarantors, plus (ii) UK Guarantors’ interest expense for that period,
including without limitation any rent payable with respect to Capitalized Lease
Obligations which should, in accordance with GAAP, be treated as interest
expense, to the extent paid during that period in cash, plus
(iii) the aggregate amount of federal, state and provincial income taxes
on or measured by such net income to the extent paid or accrued for that
period, plus (iv) the depreciation and amortization expense of UK
Guarantors for that period, plus (v) the non-cash expenses of UK
Guarantors for that period, minus (vi) any non-cash income for that
period, in each case determined in accordance with GAAP, consistently applied minus
(b) Capital Expenditures of UK Guarantors for that period.


“Unused Line Fee” – as defined in
Section 2.5 of the Agreement.


“Voting Stock” - Securities of any class or
classes of a corporation, limited partnership or limited liability company or
any other entity the holders of which are ordinarily, in the absence of
contingencies, entitled to vote with respect to the election of corporate
directors (or Persons performing similar functions if the entity is not a
corporation).


“Withdrawal Liability” – the liability to a
Multiemployer Plan, as defined in Section 4201 of ERISA.


“yield maintenance fee” – as defined in
Section 3.2.5 of the Agreement.


Other Terms.  All other
terms contained in the Agreement shall have, when the context so indicates, the
meanings provided for by the UCC to the extent the same are used or defined
therein.


Certain Matters of Construction. 
The terms “herein”, “hereof” and “hereunder” and other words of similar
import refer to the Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to cover all
genders.  The section titles, table of
contents and list of exhibits appear as a matter of convenience only and shall
not affect the interpretation of the Agreement. 
All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations.  All references to any of the Loan Documents
shall include any and all modifications thereto and any and all extensions or
renewals thereof.  Any reference herein
to “Borrowers and their Subsidiaries” or the like shall refer solely to
Borrowers during such times, if any, as Borrowers do not have any Subsidiaries.



 A-31















LIST OF EXHIBITS
AND SCHEDULES


	
  Exhibit 1.2

  	
   

  	
  Form of Revolving Note

  
	
  Exhibit 1.3

  	
   

  	
  Form of Domestic Cap Ex Note

  
	
  Exhibit 1.4

  	
   

  	
  Form of Domestic Term Note

  
	
  Exhibit 8.1.3

  	
   

  	
  Compliance Certificate

  
	
  Exhibit 8.1.3(g)

  	
   

  	
  Statutory Payables Certificate

  
	
  Exhibit 8.1.4

  	
   

  	
  Borrowing Base Certificate

  
	
  Exhibit 8.3

  	
   

  	
  Financial Covenants

  
	
  Schedule 1.1

  	
   

  	
  Lender Commitments

  
	
  Schedule 1.1.3

  	
   

  	
  Existing Indebtedness to be Repaid with Loan
  Proceeds

  
	
  Schedule 6.1.1

  	
   

  	
  Business Locations

  
	
  Schedule 7.1.1

  	
   

  	
  Jurisdictions in which Borrowers and each Subsidiary
  are Authorized to do Business

  
	
  Schedule 7.1.4

  	
   

  	
  Capital Structure of Borrowers and each Subsidiary

  
	
  Schedule 7.1.4A

  	
   

  	
  Corporate Organization Chart

  
	
  Schedule 7.1.4B

  	
   

  	
  Closing Date Restricted Subsidiaries

  
	
  Schedule 7.1.5

  	
   

  	
  Names, State of Incorporation, Type of Organization
  and Organizational I.D. Number

  
	
  Schedule 7.1.12

  	
   

  	
  Solvency

  
	
  Schedule 7.1.13

  	
   

  	
  Surety Obligations

  
	
  Schedule 7.1.14

  	
   

  	
  Taxes

  
	
  Schedule 7.1.15

  	
   

  	
  Brokers’ Fees

  
	
  Schedule 7.1.16

  	
   

  	
  Patents, Trademarks, Copyrights and Licenses

  
	
  Schedule 7.1.18

  	
   

  	
  Compliance With Laws

  
	
  Schedule 7.1.20

  	
   

  	
  Litigation

  
	
  Schedule 7.1.22

  	
   

  	
  Capitalized and Operating Leases

  
	
  Schedule 7.1.23

  	
   

  	
  Pension Plans

  
	
  Schedule 7.1.25

  	
   

  	
  Labor Relations

  
	
  Schedule 8.2.3(b)

  	
   

  	
  Existing Indebtedness

  
	
  Schedule 8.2.3(i)

  	
   

  	
  Certain existing guaranties

  
	
  Schedule 8.2.4

  	
   

  	
  Affiliate Transactions

  
	
  Schedule 8.2.5

  	
   

  	
  Permitted Liens

  
	
  Schedule 8.2.9

  	
   

  	
  Operating Leases

  
	
  Schedule 8.2.13

  	
   

  	
  Restricted Investments