**Exhibit 10(a)**

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of April 20, 2005

 

among

 

QUIXOTE CORPORATION

as Borrower

 

and

 

LASALLE BANK NATIONAL ASSOCIATION, as Lender

 

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TABLE OF CONTENTS

 
| **Section**       | ** **                                                                                          |   |   |
|-------------------|-----------------------------------------------------------------------------------------------------|--------|--------|
| ** **        | ** **                                                                                          |   |   |
| ARTICLE I:   | DEFINITIONS                                                                                         |   |
| 1.1               | Certain Defined Terms                                                                               |   |
| 1.2               | References                                                                                          |   |
|              |                                                                                                |   |
| ARTICLE II:  | REVOLVING LOAN AND TERM LOAN FACILITIES                                                             |   |
| 2.1               | Revolving Loans.                                                                                    |   |
| 2.2               | Rate Options for all Advances; Maximum  Interest Periods                                            |   |
| 2.3               | Optional Payments; Mandatory  Prepayments/Repayments.                                               |   |
| 2.4               | Reduction of Commitments                                                                            |   |
| 2.5               | Method of Borrowing                                                                                 |   |
| 2.6               | Method of Selecting Types and Interest  Periods for Advances                                        |   |
| 2.7               | Minimum Amount of Each Advance                                                                      |   |
| 2.8               | Method of Selecting Types, and Interest  Periods for Conversion and Continuation of Advances.       |   |
| 2.9               | Default  Rate                                                                                       |   |
| 2.10              | Method of Payment                                                                                   |   |
| 2.11              | Evidence of Debt.                                                                                   |   |
| 2.12              | Telephonic Notices                                                                                  |   |
| 2.13              | Promise to Pay; Interest and Facility Fees; Interest Payment Dates;  Interest and Fee Basis; Taxes. |   |
| 2.14              | Lending Installation                                                                                |   |
| 2.15              | Termination Date                                                                                    |   |
| 2.16              | Judgment Currency                                                                                   |   |
| 2.17              | Security of Obligations                                                                             |   |
|              |                                                                                                |   |
| ARTICLE III: | THE LETTER OF CREDIT FACILITY                                                                       |   |
| 3.1               | Obligation to Issue Letters of Credit                                                               |   |
| 3.2               | Transitional Letters of Credit                                                                      |   |
| 3.3               | Types and Amounts                                                                                   |   |
| 3.4               | Conditions                                                                                          |   |
| 3.5               | Procedure for Issuance of Letters of  Credit.                                                       |   |
| 3.6               | Reimbursement Obligation                                                                            |   |
| 3.7               | Letter of Credit Fees                                                                               |   |
| 3.8               | Indemnification; Exoneration.                                                                       |   |
|              |                                                                                                |   |
| ARTICLE IV:  | CHANGE IN CIRCUMSTANCES                                                                             |   |
| 4.1               | Yield Protection                                                                                    |   |
| 4.2               | Changes in Capital Adequacy Regulations                                                             |   |
| 4.3               | Availability of Types of Advances                                                                   |   |
| 4.4               | Funding Indemnification                                                                             |   |
| 4.5               | Lender Statements; Survival of Indemnity                                                            |   |

 

ii

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| ARTICLE V:    | CONDITIONS  PRECEDENT                                               |   |
|--------------------|---------------------------------------------------------------------|--------|
| 5.1                | Initial Advances and Letters of Credit                              |   |
| 5.2                | Each Advance and Letter of Credit                                   |   |
|               |                                                                |   |
| ARTICLE VI:   | REPRESENTATIONS AND WARRANTIES                                      |   |
| 6.1                | Organization; Corporate Powers                                      |   |
| 6.2                | Authority; Enforceability.                                          |   |
| 6.3                | No Conflict; Governmental Consents                                  |   |
| 6.4                | Financial Statements                                                |   |
| 6.5                | No Material Adverse Change                                          |   |
| 6.6                | Taxes                                                               |   |
| 6.7                | Litigation; Loss Contingencies and  Violations                      |   |
| 6.8                | Subsidiaries                                                        |   |
| 6.9                | ERISA                                                               |   |
| 6.10               | Accuracy of Information                                             |   |
| 6.11               | Securities Activities                                               |   |
| 6.12               | Material Agreements.                                                |   |
| 6.13               | Compliance with Laws                                                |   |
| 6.14               | Assets and Properties                                               |   |
| 6.15               | Statutory Indebtedness Restrictions                                 |   |
| 6.16               | Labor Matters                                                       |   |
| 6.17               | Environmental Matters.                                              |   |
| 6.18               | Insurance                                                           |   |
| 6.19               | Use of Proceeds                                                     |   |
| 6.20               | Solvency                                                            |   |
|               |                                                                |   |
| ARTICLE VII:  | COVENANTS                                                           |   |
| 7.1                | Reporting                                                           |   |
| 7.2                | Affirmative Covenants.                                              |   |
| 7.3                | Negative Covenants.                                                 |   |
| 7.4                | Financial Covenants                                                 |   |
|               |                                                                |   |
| ARTICLE VIII: | DEFAULTS                                                            |   |
| 8.1                | Defaults                                                            |   |
|               |                                                                |   |
| ARTICLE IX:   | ACCELERATION, DEFAULTING LENDERS; WAIVERS,  AMENDMENTS AND REMEDIES |   |
| 9.1                | Termination of Revolving Loan Commitments;  Acceleration            |   |
| 9.2                | Preservation of Rights                                              |   |
| 9.3                | Amendments                                                          |   |
|               |                                                                |   |
| ARTICE X:     | GENERAL PROVISIONS                                                  |   |
| 10.1               | Survival  of Representations                                        |   |
| 10.2               | Governmental  Regulation                                            |   |
| 10.3               | Headings                                                            |   |
| 10.4               | Entire Agreement                                                    |   |

 

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| 10.5               | Several Obligations; Benefits of this  Agreement         |   |
|--------------------|----------------------------------------------------------|--------|
| 10.6               | Expenses; Indemnification.                               |   |
| 10.7               | Numbers of Documents                                     |   |
| 10.8               | Confidentiality                                          |   |
| 10.9               | Severability of Provisions                               |   |
| 10.10              | Nonliability of Lenders                                  |   |
| 10.11              | GOVERNING LAW                                            |   |
| 10.12              | CONSENT TO JURISDICTION; SERVICE OF PROCESS: JURY TRIAL. |   |
| 10.13              | Subordination of Intercompany Indebtedness               |   |
| 10.14              | Assignability                                            |   |
| 10.15              | Customer Identification-U.S. Patriot Act  Notice         |   |
|               |                                                     |   |
| ARTICLE XI:   | SETOFF, RATABLE PAYMENTS                                 |   |
| 11.1               | Setoff                                                   |   |
| 11.2               | Application of Payments                                  |   |
|               |                                                     |   |
| ARTICLE XII:  | NOTICES                                                  |   |
| 12.1               | Giving Notice                                            |   |
| 12.2               | Change of  Address                                       |   |
|               |                                                     |   |
| ARTICLE XIII: | COUNTERPARTS                                             |   |

 

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EXHIBITS AND SCHEDULES

 

Exhibits

 
| EXHIBIT A                   |   | — |   | Form of  Borrowing/Election Notice (Section 2.2, Section 2.7 and  Section 2.9)      |
|----------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------|
|                             |   |   |   |                                                                                                    |
| EXHIBIT B                   |   | — |   | Form of  Request for Letter of Credit (Section 3.4)                                           |
|                             |   |   |   |                                                                                                    |
| EXHIBIT C                   |   | — |   | Form of  Borrower’s Counsel’s Opinion (Section 5.1)                                 |
|                             |   |   |   |                                                                                                    |
| EXHIBIT D                   |   | — |   | Preliminary  Closing Checklist (Section 5.1)                                                       |
|                             |   |   |   |                                                                                                    |
| EXHIBIT E-1                 |   | — |   | Form of  Officer’s Certificate (Sections 5.1 and 7.1(A)(iv))                                  |
|                             |   |   |   |                                                                                                    |
| EXHIBIT E-2                 |   | — |   | Secretary’s  Certificate (Borrower)                                                                |
|                             |   |   |   |                                                                                                    |
| EXHIBIT E-3                 |   | — |   | Secretary’s  Certificate (Subsidiary Guarantors)                                                   |
|                             |   |   |   |                                                                                                    |
| EXHIBIT F-1                 |   | — |   | Forms of  Compliance Certificate (Pre and Post Collateral                                               |
|  F-2                        |   |   |   | Release  Date) (Sections 5.2 and 7.1 (A)(iii))                                                          |
|                             |   |   |   |                                                                                                    |
| EXHIBIT G                   |   | — |   | Revolving Loan Note (Section 2.11(D))                                                              |
|                             |   |   |   |                                                                                                    |
| EXHIBIT H                   |   | — |   | Officer’s  Certificate-Confirmation of Subordination Agreement (US Traffic)  (Section 5.1(5)) |
|                             |   |   |   |                                                                                                    |
| EXHIBIT I                   |   | — |   | Assignment  and Assumption Agreement (California Deed of Trust)                                         |
|                             |   |   |   |                                                                                                    |
| EXHIBIT J                   |   | — |   | Assignment  and Assumption Agreement (Pennsylvania Mortgage)                                            |
|                             |   |   |   |                                                                                                    |
| EXHIBIT K                   |   | — |   | Assignment  and Assumption Agreement (Alabama Mortgage)                                                 |
|                             |   |   |   |                                                                                                    |
| EXHIBIT L                   |   | — |   | Mortgage and  Security Agreement (Indiana)                                                              |
|                             |   |   |   |                                                                                                    |
| EXHIBIT M                   |   | — |   | Assignment  and Assumption Agreement (Security Agreement)                                               |
|                             |   |   |   |                                                                                                    |
| EXHIBIT N                   |   | — |   | Assignment  and Assumption Agreement (Trademark Security Agreement)                                     |
|                             |   |   |   |                                                                                                    |
| EXHIBIT O                   |   | — |   | Assignment  and Assumption Agreement (Patent Security Agreement)                                        |
|                             |   |   |   |                                                                                                    |
| EXHIBIT P-1,  P-2, P-3, P-4 |   | — |   | Assignment  and Assumption Agreement (Subsidiary Stock Pledge Agreement)                                |

 

v

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|                             |   |   |   |                                                               |
|----------------------------------|--------|--------|--------|--------------------------------------------------------------------|
|                             |   |   |   |                                                               |
| EXHIBIT Q                   |   | — |   | Borrowing  Base Certificate                                        |
|                             |   |   |   |                                                               |
| EXHIBIT R                   |   | — |   | Reaffirmation  and Amendment of California Deed of Trust           |
|                             |   |   |   |                                                               |
| EXHIBIT S                   |   | — |   | Reaffirmation  and Amendment of Pennsylvania Mortgage              |
|                             |   |   |   |                                                               |
| EXHIBIT T                   |   | — |   | Reaffirmation  and Amendment of Alabama Mortgage                   |
|                             |   |   |   |                                                               |
| EXHIBIT U                   |   | — |   | Reaffirmation and Amendment of Security  Agreement                 |
|                             |   |   |   |                                                               |
| EXHIBIT V                   |   | — |   | Reaffirmation and Amendment of Trademark  Security Agreement       |
|                             |   |   |   |                                                               |
| EXHIBIT W                   |   | — |   | Reaffirmation and Amendment of Patent  Security Agreement          |
|                             |   |   |   |                                                               |
| EXHIBIT X-1,  X-2, X-3, X-4 |   | — |   | Reaffirmation  and Amendment of Subsidiary Stock Pledge Agreements |
|                             |   |   |   |                                                               |
| EXHIBIT Y                   |   | — |   | Collateral  Assignment (Lease)                                     |
|                             |   |   |   |                                                               |
| EXHIBIT Z                   |   | — |   | Subsidiary  Guaranty                                               |
|  Z-1                        |   |   |   | Reaffirmation  and Amendment of Subsidiary Guaranty                |
|                             |   |   |   |                                                               |
| Schedules                        |
|                             |   |   |   |                                                               |
| Schedule 1.  1.1            |   | — |   | Permitted  Existing Indebtedness (Definitions)                     |
|                             |   |   |   |                                                               |
| Schedule 1.1.2              |   | — |   | Permitted  Existing Investments (Definitions)                      |
|                             |   |   |   |                                                               |
| Schedule 1.1.3              |   | — |   | Permitted  Existing Liens (Definitions)                            |
|                             |   |   |   |                                                               |
| Schedule 1.1.4              |   | — |   | Permitted  Existing Contingent Obligations (Definitions)           |
|                             |   |   |   |                                                               |
| Schedule 3.2                |   | — |   | Transitional  Letters of Credit (Section 3.2)                 |
|                             |   |   |   |                                                               |
| Schedule 6.3                |   | — |   | Conflicts:  Governmental Consents (Section 6.3)               |
|                             |   |   |   |                                                               |
| Schedule 6.7                |   | — |   | Litigation                                                         |
|                             |   |   |   |                                                               |
| Schedule 6.8                |   | — |   | Subsidiaries  (Section 6.8)                                   |
|                             |   |   |   |                                                               |
| Schedule 6.9                |   | — |   | ERISA  (Section 6.9)                                          |
|                             |   |   |   |                                                               |
| Schedule 6.17               |   | — |   | Environmental  Matters (Section 6.17)                         |

 

vi

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AMENDED AND RESTATED CREDIT AGREEMENT

 

This Amendedand Restated CREDIT AGREEMENT, dated as of April 20, 2005, is entered intoby and among QUIXOTE CORPORATION, a Delaware corporation, as Borrower (the “Borrower”),and LASALLE BANK NATIONAL ASSOCIATION, a national banking association, asLender (the “Lender”). The parties hereto agree as follows:

 

RECITALS:

 

A.                                   TheBorrower, the Lender and certain other banks, (“Existing Lenders”) entered intothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004; and by a Fourth Amendment dated as of February 9, 2005 (“ExistingCredit Agreement”), pursuant to which Existing Credit Agreement the ExistingLenders have made, (i) Revolving Loans to the Borrower evidenced bycertain Revolving Notes, dated as of September 10, 2004, in the maximumaggregate principal amount of Thirty Eight Million Dollars and 00/100($38,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Revolving Notes”) and (ii) Term Loans to theBorrower evidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

B.                                     TheBorrower, as of February 9, 2005, issued $40,000,000 in aggregateprincipal amount of 7% Convertible Senior Subordinated Notes, due February 15,2025 (the “New Subordinated Notes”), the proceeds of which New SubordinatedNotes (i) repaid in full Borrower’s obligations on the Term Loans andNotes and terminated the Existing Lender Term Loan Commitment as defined in theExisting Credit Agreement and (ii) repaid a portion of the outstandingRevolving Loans.

 

C.                                     TheLender and Borrower have agreed to amend and restate the terms of the ExistingCredit Agreement, and the Borrower has requested and the Lender has agreed thatLender, individually on its own, continue the Revolving Loan Commitment underthe Existing Credit Agreement consisting of a Revolving Credit Commitment inthe amount of $30,000,000 (with a sublimit for the issuance of Letters ofCredit in the amount of $10,000,000).

 

D.                                    TheExisting Lenders (other than Lender) have agreed to sell to Lender theiroutstanding pro rata share of the Revolving Loans and to assign their rightsand obligations to the Lender.

 

E.                                      Nothingin this Agreement or in any of the other Loan Documents shall be deemed toconstitute a novation or to have extinguished or discharged the indebtednessand obligations under the Existing Credit Agreement and the documents executedand delivered in connection therewith all of which, except as provided herein,continue under and shall be governed by this Agreement and the other LoanDocuments.

 

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ARTICLE I:  DEFINITIONS

#  

## 1.1                                 CertainDefined Terms.  The followingterms used in this Agreement shall have the following meanings, applicable bothto the singular and the plural forms of the terms defined.

##  

As used inthis Agreement:

 

“AccountingChanges” is defined in Section 10.9 hereof.

 

“Accounts”means and includes all of the Borrower’s and each Subsidiary’s presentlyexisting and hereafter arising or acquired accounts, accounts receivable, andall present and future rights of the Borrower or such Subsidiary to payment forgoods sold or leased or for services rendered (except those evidenced byinstruments or chattel paper), whether or not they have been earned byperformance, and all rights in any merchandise or goods which any of the samemay represent, and all rights, title, security and guarantees with respect toeach of the foregoing, including, without limitation, any right of stoppage intransit.

 

“Acquisition”means any transaction, or any series of related transactions, consummated on orafter the date of this Agreement, by which the Borrower or any of itsSubsidiaries (other than transactions involving solely the Borrower and itsSubsidiaries) (i) acquires any going business or all or substantially allof the assets of any firm, corporation or division thereof, whether throughpurchase of assets, merger or otherwise or (ii) directly or indirectlyacquires (in one transaction or as the most recent transaction in a series oftransactions) at least a majority (in number of votes) of the securities of acorporation which have ordinary voting power for the election of directors(other than securities having such power only by reason of the happening of acontingency) or a majority (by percentage of voting power) of the outstandingEquity Interests of another Person.

 

“AdministrativeAgent” shall mean the Northern Trust Company as Administrative Agent forthe benefit of the Existing Lenders under the Existing Credit Agreement.

 

“Affiliate”of any Person means any other Person directly or indirectly controlling,controlled by or under common control with such Person. A Person shall bedeemed to control another Person if the controlling Person is the “beneficialowner” (as defined in Rule 13d-3 under the Securities Exchange Actof 1934) of greater than or equal to twenty percent (20%) or more of any classof voting securities (or other voting interests) of the controlled Person orpossesses, directly or indirectly, the power to direct or cause the directionof the management or policies of the controlled Person, whether throughownership of Capital Stock, by contract or otherwise.

 

“Agreement”means this Amended and Restated Credit Agreement, as it may be amended,restated or otherwise modified and in effect from time to time.

 

“Alabama LeaseholdMortgage” shall mean the Leasehold Mortgage and Security Agreement, datedas of June 30, 2004 between Energy Absorption Systems LLC and the

 

2

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AdministrativeAgent pursuant to which Energy Absorption Systems LLC granted a lien to theAdministrative Agent in its leasehold interest in the Alabama Property.

 

“AlabamaProperty” shall mean that property, as described in the Alabama LeaseholdMortgage, the lien on which has been granted to the Administrative Agent andassigned, pursuant to the terms hereof, to Lender by the Administrative Agent.

 

“AlternateBase Rate” means, for any day, a fluctuating rate of interest per annumequal to the higher of (i) the Prime Rate for such day and (ii) thesum of (a) the Federal Funds Effective Rate for such day and (b) one-halfof one percent (0.50%) per annum.

 

“ApplicableABR Margin” means, as at any date of determination, the rate per annum thenapplicable to Floating Rate Loans determined in accordance with the provisionsof Section 2.14(D)(ii) hereof.

 

“ApplicableEurodollar Margin” means, as at any date of determination, the rate perannum then applicable to Eurodollar Rate Loans determined in accordance withthe provisions of Section 2.14(D)(ii) hereof.

 

“ApplicableCommitment Fee Percentage” means, as at any date of determination, the rateper annum then applicable in the determination of the amount payable under Section 2.14(C)(i) hereofdetermined in accordance with the provisions of Section 2.14(D)(ii) hereof.

 

“ApplicableL/C Fee Percentage” means, as at any date of determination, a rate perannum used to calculate Letter of Credit fees equal to the ApplicableEurodollar Margin then in effect.

 

“Asset Sale”means, with respect to any Person, the sale, lease, conveyance, disposition orother transfer by such Person of any of its assets (including by way of asale-leaseback transaction, and including the sale or other transfer of any ofthe Equity Interests of any Subsidiary of such Person) to any Person other thanthe Borrower or any of its Subsidiaries other than (i) the sale ofinventory in the ordinary course of business, and (ii) the sale or otherdisposition of any obsolete, excess, damaged or worn-out equipment disposed ofin the ordinary course of business and (ii) assignments and licenses ofintellectual property of the Borrower and its Subsidiaries in the ordinarycourse of business.

 

“AuthorizedOfficer” means any of the President, Chief Executive Officer, ChiefFinancial Officer or Treasurer of the Borrower, acting singly.

 

“BenefitPlan” means a defined benefit plan as defined in Section 3(35) ofERISA (other than a Multiemployer Plan) in respect of which the Borrower or anyother member of the Controlled Group is, or within the immediately precedingsix (6) years was, an “employer” as defined in Section 3(5) ofERISA.

 

“Borrower”means Quixote Corporation, together with its successors and permitted assigns,including a debtor-in-possession on behalf of the Borrower.

 

3

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“Borrowing Base Amount” shall mean:

 

(a)                                  anamount equal to 85% of the net amount (after deduction of such reserves and allowancesas the Lender deems proper and necessary) of the Eligible Accounts; plus

 

(b)                                 thelesser of (i) an amount equal to 50% of the lower of cost or market value(after deduction of such reserves and allowances as the Lender deems proper andnecessary) of the Eligible Inventory, or (ii) Ten Million Dollars and00/100 ($10,000,000); plus

 

(c)                                  thelesser of (i) 80% of the orderly liquidation value of machinery andequipment of Borrower and its Subsidiaries, plus 75% of the fair market value(as evidenced by an appraisal acceptable to Lender) of the real property ofBorrower and Subsidiaries as pledged hereunder, or (ii) Ten Million SevenHundred Thirty-Seven Thousand Seven Hundred Dollars and 00/100 ($10,737,700),reducing, beginning May 1, 2005, on the first day of each month after theClosing Date by an amount equal to $75,000 per month.

 

“BorrowingDate” means a date on which a Revolving Loan is made hereunder.

 

“Borrowing/ElectionNotice” is defined in Section 2.8 hereof.

 

“BusinessDay” means:

 

(a)                                  forthe purpose of determining the Eurodollar Rate, a day other than a Saturday orSunday on which banks are open for the transaction of domestic and foreignexchange business in London, England;

 

(b)                                 forthe purpose of any payment to be made in Dollars, a day other than a Saturdayor Sunday on which banks are open in Chicago, Illinois, and New York,New York for the conduct of substantially all of their commercial lendingactivities, including the transaction of domestic and foreign exchangebusiness, interbank wire transfers can be made on the Fedwire system, anddealings in Dollars are carried on in the London interbank markets; and

 

(c)                                  forany other purpose, means a day other than a Saturday or Sunday on which banksare open in Chicago, Illinois, and New York, New York for the conductof substantially all of their commercial lending activities, including thetransaction of domestic and foreign exchange business, and interbank wiretransfers can be made on the Fedwire system.

 

“CaliforniaDeed of Trust” shall mean the California Deed of Trust, Assignment ofRents,Security Agreement and Fixture Filing, dated September 10, 2004,granted by Energy Absorption Systems, Inc. to the Administrative Agent andassigned to the Lender by the Administrative Agent.

 

“CaliforniaProperty” shall mean that property as described in and granted ascollateral pursuant to the California Deed of Trust.

 

4

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“CapitalExpenditures” shall mean, with respect to any Person, all expenditures bysuch Person which are required to be capitalized in accordance with GAAP,provided capital expenditures relating solely to Acquisitions effected by anasset purchase agreement shall be excluded.

 

“CapitalStock” means (i) in the case of a corporation, corporate stock, (ii) inthe case of an association or business entity, any and all shares, interests,participations, rights or other equivalents (however designated) of corporatestock, (iii) in the case of a limited liability company, membershipinterests, (iv) in the case of a partnership, partnership interests(whether general or limited) and (v) any other interest or participationthat confers on a Person the right to receive a share of the profits and lossesof, or distributions of assets of, the issuing Person; provided, however,that “Capital Stock” shall not include any debt securities convertible intoequity securities prior to such conversion.

 

“CapitalizedLease” of a Person means any lease of property by such Person as lesseewhich would be capitalized on a balance sheet of such Person prepared inaccordance with GAAP.

 

“CapitalizedLease Obligations” of a Person means the amount of the obligations of suchPerson under Capitalized Leases which would be capitalized on a balance sheetof such Person prepared in accordance with GAAP.

 

“CashEquivalents” means (i) marketable direct obligations issued orunconditionally guaranteed by the governments of the United States and backedby the full faith and credit of the United States government; (ii) domesticand Eurocurrency certificates of deposit and time deposits, bankers’acceptances and floating rate certificates of deposit issued by any commercialbank organized under the laws of the United States, any state thereof, theDistrict of Columbia, any foreign bank, or its branches or agencies, thelong-term indebtedness of which institution at the time of acquisition is ratedBBB (or better) by S&P or Fitch or Baa (or better) by Moody’s, and whichcertificates of deposit and time deposits are fully protected against currencyfluctuations for any such deposits with a term of more than ninety (90) days; (iii) sharesof 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(i.e., securities rated BBB (or better) by S&P or Fitch or Baa (or better)by Moody’s: and (iv) commercial paper of United States and foreign banksand bank holding companies and their subsidiaries and United States and foreignfinance, commercial industrial or utility companies which, at the time ofacquisition, are rated A-2 (or better) by S&P, P-2 (or better)by Moody’s, or F-2 (or better) by Fitch; provided that thematurities of such Cash Equivalents shall not exceed three hundred sixty-five(365) days from the date of acquisition thereof.

 

“Change”is defined in Section 4.2 hereof.

 

“Change ofControl” means an event or series of events by which:

 

(a)                                  any“person” or “group” (as such terms are used in Sections 13(d) and 14(d) ofthe Securities Exchange Act of 1934), becomes the “beneficial owner” (asdefined in Rules 13d-3 and 13d-5 under the Securities ExchangeAct of 1934, provided

 

5

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that a personshall be deemed to have “beneficial ownership” of all securities that suchperson has the right to acquire, whether such right is exercisable immediatelyor only after the passage of time), directly or indirectly, of thirtypercent (30%) or more of the combined voting power of the Borrower’soutstanding Capital Stock ordinarily having the right to vote at an election ofdirectors; or

 

(b) the majority of the board of directors of the Borrower failsto consist of Continuing Directors; or

 

(c) the Borrower consolidates with or merges into another corporationor conveys, transfers or leases all or substantially all of its property to anyPerson, in either event pursuant to a transaction in which the outstandingCapital Stock of the Borrower is reclassified or changed into or exchanged forcash, securities or other property.

 

“ClosingDate” means April 20, 2005.

 

“Code”means the Internal Revenue Code of 1986, as amended, reformed or otherwisemodified from time to time.

 

“Collateral”shall mean (i) the Collateral, as defined in the Security Agreement, (ii) theAlabama Property in which Energy Absorption LLC granted a mortgage, securityinterest and lien under the Alabama Leasehold Mortgage, (iii) theCalifornia Property on which Energy Absorption Systems Inc. granted a mortgagepursuant to the California Deed of Trust, (iv) the Pennsylvania Propertyon which Nu-Metrics, Inc. granted a mortgage pursuant to the PennsylvaniaMortgage, (v) the Intellectual Property Collateral; (vi) the stock ofeach Subsidiary Guarantor pledged by Borrower pursuant to the Subsidiary StockPledge Agreements and (vii) the Indiana Property on which Spin CastPlastics, Inc. granted a mortgage pursuant to the Indiana Mortgage.

 

“CollateralAssignment (Lease)” shall mean the Collateral Assignment of the Option toPurchase Rights under Lease Agreement, between the Borrower, Energy AbsorptionSystems (AL) LLC and the Lender as acknowledged by the Development Board, ashereinafter executed by the parties, in the form of Exhibit Y attachedhereto.

 

“CollateralDocuments” shall mean (i) the Security Agreement; (ii) AlabamaLeasehold Mortgage, (iii) California Deed of Trust; (iv) PennsylvaniaMortgage; (v) Indiana Mortgage; (vi) Patent Security Agreement; (vii) TrademarkSecurity Agreement; (ix) Subsidiary Stock Pledge Agreements and (x) theCollateral Assignment (Lease), as the same may be amended, restated, reaffirmedor modified from time to time.

 

“CollateralRelease Date” shall mean that date on which the Lender pursuant to Section 7.1(J)hereof delivers to Borrower notice of its acceptance of Borrower’s compliancewith the Release Covenants and of its agreement to release its lien against theCollateral.

 

“Commission”means the Securities and Exchange Commission of the United States of Americaand any Person succeeding to the functions thereof.

 

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“ConsolidatedInterest Expense” means the interest expense of the Borrower and itsSubsidiaries calculated on a consolidated basis (determined, subject to theforegoing parenthetical, in accordance with GAAP).

 

“ConsolidatedNet Worth” means, at a particular date, all amounts which would be includedunder shareholders’ equity (including capital stock, additional paid-in capitaland retained earnings) on the consolidated balance sheet for the Borrower andits consolidated Subsidiaries determined in accordance with GAAP.

 

“Contaminant”means any pollutant, hazardous substance, toxic substance, hazardous waste,special waste, petroleum or petroleum-derived substance, asbestos,polychlorinated biphenyls (“PCBs”), or any constituent of any such substance,and includes but is not limited to these terms as defined in Environmental,Health or Safety Requirements of Law.

 

“ContingentObligation”, as applied to any Person, means any Contractual Obligation,contingent or otherwise, of that Person with respect to any Indebtedness ofanother or other obligation or liability of another, including, withoutlimitation, any such Indebtedness, obligation or liability of another directlyor indirectly guaranteed, endorsed (otherwise than for collection or deposit inthe ordinary course of business), co-made or discounted or sold with recourseby that Person, or in respect of which that Person is otherwise directly orindirectly liable, including Contractual Obligations (contingent or otherwise)arising through any agreement to purchase, repurchase, or otherwise acquiresuch Indebtedness, obligation or liability or any security therefor, or toprovide funds for the payment or discharge thereof (whether in the form ofloans, advances, stock purchases, capital contributions or otherwise), or tomaintain solvency, assets, level of income, or other financial condition, or tomake payment other than for value received. The amount of any Contingent Obligation shall be equal to the presentvalue of the portion of the obligation so guaranteed or otherwise supported, inthe case of known recurring obligations, and the maximum reasonably anticipatedliability in respect of the portion of the obligation so guaranteed orotherwise supported assuming such Person is required to perform thereunder, inall other cases.

 

“ContinuingDirector” means, with respect to the Borrower as of any date ofdetermination, any member of the board of directors of the Borrower who (a) wasa member of such board of directors on the date of this Agreement, or (b) wasnominated for election or elected to such board of directors with the approvalof the Continuing Directors who were members of such board at the time of suchnomination or election.

 

“ContractualObligation”, as applied to any Person, means any provision of any equity ordebt securities issued by that Person or any indenture, mortgage, CaliforniaDeed of Trust, security agreement, pledge agreement, guaranty, contract,undertaking, agreement or instrument, in any case in writing, to which thatPerson is a party or by which it or any of its properties is bound, or to whichit or any of its properties is subject.

 

“ControlledGroup” means the group consisting of (i) any corporation which is amember of the same controlled group of corporations (within the meaning of Section 414(b) ofthe Code) as the Borrower; (ii) a partnership or other trade or business(whether or not incorporated) which is under common control (within the meaningof Section 414(c) of the

 

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Code) with theBorrower; and (iii) a member of the same affiliated service group (withinthe meaning of Section 414(m) of the Code) as the Borrower, anycorporation described in clause (i) above or any partnership or trade orbusiness described in clause (ii) above.

 

“CustomaryPermitted Liens” means:

 

(i)                                     Liens(other than Environmental Liens and Liens in favor of the PBGC) with respect tothe payment of taxes, assessments or governmental charges in all cases whichare not yet due and payable or (if foreclosure, distraint, sale or othersimilar proceedings shall not have been commenced or any such proceeding afterbeing commenced is stayed) which are being contested in good faith byappropriate proceedings properly instituted and diligently conducted and withrespect to which adequate reserves or other appropriate provisions are beingmaintained, which reserves and provisions shall be maintained in accordancewith generally accepted accounting principles as in effect from time to time,if and to the extent that such GAAP so require;

 

(ii)                                  statutoryLiens of landlords and Liens of suppliers, mechanics, carriers, materialmen,warehousemen or workmen and other similar Liens imposed by law created in theordinary course of business for amounts not yet due or which are beingcontested in good faith by appropriate proceedings properly instituted anddiligently conducted and with respect to which adequate reserves or otherappropriate provisions are being maintained, which reserves and provisionsshall be maintained in accordance with generally accepted accounting principlesas may be in effect from time to time, if and to the extent that such generallyaccepted accounting principles so require;

 

(iii)                               Liens(other than Environmental Liens and Liens in favor of the IRS or the PBGC)incurred or deposits made in the ordinary course of business in connection withworkers’ compensation, unemployment insurance or other types of social securitybenefits or to secure the performance of bids, tenders, sales, contracts (otherthan for the repayment of borrowed money), surety, appeal and performancebonds; provided that (A) all such Liens do not in the aggregate materiallydetract from the value of the Borrower’s or such Subsidiary’s assets orproperty taken as a whole or materially impair the use thereof in the operationof the businesses taken as a whole and (B) all Liens securing bonds tostay judgments or in connection with appeals do not secure at any time anaggregate amount exceeding $1,000,000;

 

(iv)                              Liensarising with respect to zoning restrictions, easements, encroachments,licenses, reservations, covenants, rights-of-way, utility easements, buildingrestrictions and other similar charges, restrictions or encumbrances on the useof real property which do not in any case materially detract from the value ofthe property subject thereto or materially interfere with the ordinary use oroccupancy of the real property or with the ordinary conduct of the business ofthe Borrower or any of its Subsidiaries;

 

(v)                                 Liensof attachment or judgment with respect to judgments, writs or warrants ofattachment, or similar process against the Borrower or any of its Subsidiarieswhich do not constitute a Default under Section 8.1(H) hereof;

 

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(vi)                              anyinterest or title of the lessor in the property subject to any operating leaseentered into by the Borrower or any of its Subsidiaries in the ordinary courseof business; and

 

(vii)                           financingstatements of a lessor’s rights in and to the property leased to the Borroweror one of the Subsidiaries relating to leases permitted by this Agreement.

 

“Default”means an event described in Article VIII hereof.

 

“DevelopmentBoard” shall mean The Industrial Development Board of the City of PellCity.

 

“DisqualifiedStock” means any Capital Stock that, by its terms (or by the terms of anysecurity into which it is convertible or for which it is exchangeable), or uponthe happening of any event, matures or is mandatorily redeemable, pursuant to asinking fund obligation or otherwise, or redeemable at the option of the holderthereof, in whole or in part, on or prior to the date that is ninety-one (9l)days after the Revolving Loan Termination Date.

 

“DOL” meansthe United States Department of Labor and any Person succeeding to thefunctions thereof.

 

“Dollar”and “$” means dollars in the lawful currency of the United States ofAmerica.

 

“DollarAmount” of any currency at any date shall mean (i) the amount of suchcurrency if such currency is Dollars or (ii) the Equivalent Amount ofDollars if such currency is any currency other than Dollars.

 

“DomesticIncorporated Subsidiary” means a Subsidiary of the Borrower organized underthe laws of a jurisdiction located in the United States of America.

 

“EBITDA”means, for any period, on a consolidated basis for the Borrower and itsSubsidiaries, the sum of the amounts for such period, without duplication, of (i) NetIncome, plus (ii) Interest Expense to the extent deducted incomputing Net Income, plus (iii) charges against income forforeign, federal, state and local taxes to the extent deducted in computing NetIncome, plus (iv) depreciation expense to the extent deducted incomputing Net Income, plus (v) amortization expense, including,without limitation, amortization of goodwill and other intangible assets to theextent deducted in computing Net Income, plus (vi) any unusualnon-cash charges to the extent deducted in computing Net Income, plus (vii) non-cashstock based compensation expense to the extent deducted in computing Net Incomeand minus (viii) any unusual non-cash gains to the extent added incomputing Net Income.

 

“Eligible Accounts” shall mean those Accounts of the Borrower orany Subsidiary which meet the following requirements:

 

(a)                                  aregenuine in all respects and have arisen in the ordinary course of the Borrower’sbusiness from (i) the performance of services by the Borrower or theapplicable

 

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Subsidiary, which services have been fully performed, acknowledged andaccepted by the Account Debtor or (ii) the sale, license, assignment orlease of Goods by the Borrower, including C.O.D. sales, which Goods have beencompleted in accordance with the Account Debtor’s specifications (if any) anddelivered to and accepted by the Account Debtor, and the Borrower haspossession of, or has delivered to the Lender at the Lender’s request, shippingand delivery receipts evidencing such shipment;

 

(b)                                 itis subject to a perfected, first priority Lien in favor of the Lender and isnot subject to any other assignment, claim or Lien;

 

(c)                                  itis the valid, legally enforceable and unconditional obligation of the AccountDebtor with respect thereto, and is not subject to the fulfillment of anycondition whatsoever or any counterclaim, credit (except as provided in subsection (h) ofthis definition), trade or volume discount, allowance, discount, rebate oradjustment by the Account Debtor with respect thereto, or to any claim by suchAccount Debtor denying liability thereunder in whole or in part and the AccountDebtor has not refused to accept and/or has not returned or offered to returnany of the Goods or services which are the subject of such Account;

 

(d)                                 theAccount Debtor with respect thereto is a resident or citizen of, and is locatedwithin, the United States, unless the sale of goods or services giving rise tosuch Account is on letter of credit, banker’s acceptance or other creditsupport terms reasonably satisfactory to the Lender;

 

(e)                                  itis not an Account arising from a “sale on approval”, “sale or return”, “consignment”,“guaranteed sale” or “bill and hold”, or are subject to any other repurchase orreturn agreement;

 

(f)                                    itis not an Account with respect to which possession and/or control of the goodssold giving rise thereto is held, maintained or retained by the Borrower or anySubsidiary (or by any agent or custodian of the Borrower or any Subsidiary) forthe account of, or subject to, further and/or future direction from the AccountDebtor with respect thereto;

 

(g)                                 ithas not arisen out of contracts with the United States or any department,agency or instrumentality thereof, unless the Borrower has assigned its rightto payment of such Account to the Bank pursuant to the Assignment of Claims Actof 1940, and evidence (satisfactory to the Lender) of such assignment has beendelivered to the Lender;

 

(h)                                 ifthe Borrower maintains a credit limit for an Account Debtor, the aggregatedollar amount of Accounts due from such Account Debtor, including such Account,does not exceed such credit limit;

 

(i)                                     ifthe Account is evidence by chattel paper or an instrument, the originals ofsuch chattel paper or instrument shall have been endorsed and/or assigned anddelivered to the bank or, in the case of electronic chattel paper, shall be inthe control of the Lender, in each case in a manner satisfactory to the Lender;

 

(j)                                     suchAccount is evidenced by an invoice delivered to the related Account Debtor andis not more than (i) sixty 60 days (except in the case of EnergyAbsorptions Systems,

 

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Inc., ninety (90) days), past the due date thereof, or (ii) ninety(90) days past the original invoice date thereof, in each case according to theoriginal terms of sale;

 

(k)                                  itis not an Account with respect to an Account Debtor that is located in anyjurisdiction which has adopted a statute or other requirement with respect towhich any Person that obtains business from within such jurisdiction must filea notice of business activities report or make any other required filings in atimely manner in order to enforce its claims in such jurisdiction’s courtsunless (i) such notice of business activities report has been duly andtimely filed or the borrower or the applicable Subsidiary is exempt from filingsuch report and has provided the bank with satisfactory evidence of suchexemption or (ii) the failure to make such filings may be curedretroactively by the Borrower or the applicable Subsidiary for a nominal fee;

 

(l)                                     theAccount Debtor with respect thereto is not the Borrower or an Affiliate of theBorrower;

 

(m)                               suchAccount does not arise out of a contract or order which, by its terms, forbidsor makes void or unenforceable the assignment thereof by the Borrower or anySubsidiary to the Bank and is not unassignable to the Bank for any otherreason;

 

(n)                                 thereis no bankruptcy, insolvency or liquidation proceeding pending by or againstthe Account Debtor with respect thereto, nor has the Account Debtor suspendedbusiness, made a general assignment for the benefit of creditors or failed topay its debts generally as they come due, and/or no condition or event hasoccurred having a material adverse effect on the Account Debtor which would requirethe Accounts of such Account Debtor to be deemed uncollectible in accordancewith GAAP;

 

(o)                                 itis not owed by an Account Debtor with respect to which twenty five percent(25%) or more of the aggregate amount of outstanding Accounts owed at such timeby such Account Debtor is classified as ineligible under clause (j) of thisdefinition;

 

(p)                                 ifthe aggregate amount of all Accounts owed by the Account Debtor thereon exceedstwenty five percent (25%) of the aggregate amount of all Accounts at such time,then all Accounts owed by such Account Debtor in excess of such amount shall bedeemed ineligible; and

 

(q)                                 itdoes not violate the negative covenants and does satisfy the affirmativecovenants of the Borrower contained in this Agreement, and it is otherwise notunacceptable to the Lender for any other reason.

 

An Account which is at any time an Eligible Account, but whichsubsequently fails to meet any of the foregoing requirements, shall forthwithcease to be an Eligible Account. Further, with respect to any Account, if the Lender at any timehereafter determines in its discretion that the prospect of payment orperformance by the Account Debtor with respect thereto is materially impairedfor any reason whatsoever, such Account shall cease to be an Eligible Accountafter notice of such determination is given to the Borrower.

 

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“Eligible Inventory” shall mean all Inventory of the Borrower orany Subsidiary which meets each of the following requirements:

 

(a)                                  itis subject to a perfected, first priority Lien in favor of the Lender and isnot subject to any other assignment, claim or Lien;

 

(b)                                 itis salable and not slow-moving, obsolete or discontinued, as determined in thesole and absolute discretion of the Lender;

 

(c)                                  itis in the possession and control of the Borrower or any Subsidiary and it isstored and held in facilities owned by the Borrower or any Subsidiary or, ifsuch facilities are not so owned, the Lender is in possession of a CollateralAccess Agreement with respect thereto;

 

(d)                                 isnot Inventory produced in violation of the Fair Labor Standards Act and/orsubject to the so-called “hot goods” provisions contained in Title 29 U.S.C.215(a); and

 

(e)                                  itis not subject to any agreement or license which would restrict the Bank’sability to sell or otherwise dispose of such Inventory;

 

(f)                                    itis located in the United States or in any territory or possession of the UnitedStates that has adopted Article 9 of the Uniform Commercial Code;

 

(g)                                 itis not “in transit” to the Borrower or any Subsidiary or held by the Borroweror any Subsidiary on consignment;

 

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

 

(i)                                     itis not supply items, packaging or any other similar materials;

 

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

 

(k)                                  itdoes not breach any of the representations, warranties or covenants pertainingto Inventory set forth in the Loan Documents; and

 

(l)                                     theLender shall not have determined in its reasonable discretion that it isunacceptable due to age, type, category, quality, quantity and/or any otherreason whatsoever.

 

Inventory which is at any time Eligible Inventory but whichsubsequently fails to meet any one of the foregoing requirements, shallforthwith cease to be Eligible Inventory.

 

“Energy Absorption LLC” shall mean Energy Absorption Systems(AL) LLC, a Delaware limited liability company.

 

“EnvironmentalHealth or Safety Requirements of Law” means all Requirements of Law derivedfrom or relating to foreign, federal, state and local laws or regulationsrelating to or addressing pollution or protection of the environment, orprotection of worker health or safety,

 

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including, butnot limited to, the Comprehensive Environmental Response, Compensation andLiability Act, 42 U.S.C. § 9601 etseq., the OccupationalSafety and Health Act of 1970, 29 U.S.C. § 651 etseq.,and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 etseq., in each case including any amendments thereto, any successorstatutes, and any regulations or guidance promulgated thereunder, and any stateor local equivalent thereof.

 

“EnvironmentalLien” means a lien in favor of any Governmental Authority for (a) anyliability under Environmental, Health or Safety Requirements of Law, or (b) damagesarising from, or costs incurred by such Governmental Authority in response to,a Release or threatened Release of a Contaminant into the environment.

 

“EnvironmentalProperty Transfer Act” means any applicable requirement of law thatconditions, restricts, prohibits or requires any notification or disclosuretriggered by the closure of any property or the transfer, sale or lease of anyproperty or deed or title for any property for environmental reasons,including, but not limited to, any so-called “Industrial Site Recovery Act” or “ResponsibleProperty Transfer Act.”

 

“EquityInterests” means Capital Stock and all warrants, options or other rights toacquire Capital Stock (but excluding any debt security that is convertibleinto, or exchangeable for, Capital Stock).

 

“ERISA”means the Employee Retirement Income Security Act of 1974, as amended from timeto time including (unless the context otherwise requires) any rules orregulations promulgated thereunder.

 

“EurodollarBase Rate” means a rate of interest equal to (a) the per annum rate ofinterest at which United States dollar deposits for a period equal to therelevant Interest Period are offered in the London Interbank Eurodollar marketat 11:00 a.m. (London time) two Business days prior to the commencement ofsuch Interest Period (or three Business Days prior to the commencement of suchInterest Period if banks in London, England were not open and dealing inoffshore United States dollars on such second preceding Business Day), asdisplayed in the *Bloomberg Financial Markets*system(or other authoritative source selected by the Bank in its sole discretion),divided by (b) a number determined by subtracting from 1.00 the thenstated maximum reserve percentage for determining reserves to be maintained bymember banks of the Federal Reserve System for Eurocurrency funding orliabilities as defined in Regulation D (or any successor category ofliabilities under Regulation D), or as LIBOR is otherwise determined by theBank in its sole and absolute discretion. The Bank’s determination of LIBOR shall be conclusive absent manifesterror.

 

“EurodollarPayment Office” of the Lender shall mean any agency, branch or Affiliate ofthe Lender, specified as the “Eurodollar Payment Office” on Exhibit Ahereto or such other agency, branch, Affiliate or correspondence bank of theLender, as it may from time to time specify to the Borrower and each Lender asits Eurodollar Payment Office.

 

“EurodollarRate” means, with respect to a Eurodollar Rate Loan for the relevantInterest Period, the Eurodollar Base Rate applicable to such Interest Periodplus the Applicable Eurodollar Margin then in effect.

 

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“EurodollarRate Advance” means an Advance which bears interest at the Eurodollar Rate.

 

“EurodollarRate Loan” means a Loan made pursuant to Section 2.1 whichbears interest at the Eurodollar Rate.

 

“ExistingCredit Agreement” has the meaning assigned to suchterm in Section A of the “Recitals” section of this Agreement.

 

“FederalFunds Effective Rate” means, for any day, an interest rate per annum equalto the weighted average of the rates on overnight Federal funds transactionswith members of the Federal Reserve System arranged by Federal funds brokers onsuch day, as published for such day (or, if such day is not a Business Day, forthe immediately preceding Business Day) by the Federal Reserve Bank ofNew York, or, if such rate is not so published for any day which is aBusiness Day, the average of the quotations at approximately 10:00 a.m.(Chicago time) on such day on such transactions received by the Lender fromthree (3) Federal funds brokers of recognized standing selected bythe Lender in its sole discretion.

 

“Fitch”means Fitch Investors Service, L.P., together with its successors and assigns.

 

“Fixed-RateLoan” means any Eurodollar Rate Loan bearing a fixed rate of interest forthe applicable Interest Period.

 

“FloatingRate” means, for any day for any Loan, a rate per annum equal to theAlternate Base Rate for such day, changing when and as the Alternate Base Ratechanges, plus the Applicable ABR Margin then in effect.

 

“FloatingRate Advance” means an Advance which bears interest at the Floating Rate.

 

“FloatingRate Loan” means a Loan, or portion thereof, which bears interest at theFloating Rate.

 

“GAAP”shall mean generally accepted accounting principles, using the accrual basis ofaccounting and consistently applied with prior periods, provided, however, thatGAAP with respect to any interim financial statements or reports shall bedeemed subject to fiscal year-end adjustments and footnotes made in accordancewith GAAP.

 

“GovernmentalActs” is defined in Section 3.10(A) hereof.

 

“GovernmentalAuthority” means any nation or government, any federal, state, local orother political subdivision thereof and any entity exercising executive,legislative, judicial, regulatory or administrative authority or functions ofor pertaining to government, including any authority or otherquasi-governmental entity established to perform any of such functions.

 

“HedgingAgreements” is defined in Section 7.3(M) hereof.

 

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“HedgingArrangements” is defined in the definition of “Hedging Obligations” below.

 

“HedgingObligations” of a Person means any and all obligations of such Person,whether absolute or contingent and howsoever and whensoever created, arising, evidencedor acquired (including all renewals, extensions and modifications thereof andsubstitutions therefor), under (i) any and all agreements, devices orarrangements designed to protect at least one of the parties thereto from thefluctuations of interest rates, commodity prices, exchange rates or forwardrates applicable to such party’s assets, liabilities or exchange transactions,including, but not limited to, dollar-denominated or cross-currency interestrate exchange agreements, forward currency exchange agreements, interest ratecap or collar protection agreements, forward rate currency or interest rateoptions, puts and warrants or any similar derivative transactions (“HedgingArrangements”), and (ii) any and all cancellations, buy backs,reversals, terminations or assignments of any of the foregoing.

 

“Indebtedness”of a Person means, without duplication, such Person’s (i) obligations forborrowed money, including, without limitation, subordinated indebtedness, (ii) obligationsrepresenting the deferred purchase price of property or services (other thanaccounts payable arising in the ordinary course of such person’s businesspayable on terms customary in the trade and other than earn-outs or othersimilar forms of contingent purchase prices), (iii) obligations, whetheror not assumed, secured by Liens on or payable out of the proceeds orproduction from property or assets now or hereafter owned or acquired by suchPerson, (iv) obligations which are evidenced by notes, acceptances, orother instruments, (v) Capitalized Lease Obligations, (vi) ContingentObligations with respect to the Indebtedness of other Persons, (vii) obligationswith respect to letters of credit, (viii) Off-Balance Sheet Liabilities, (ix) DisqualifiedStock, and (x) Hedging Obligations. The amount of Indebtedness of any Person at any date shall be withoutduplication (i) the outstanding balance at such date of all unconditionalobligations as described above and the maximum liability of any such ContingentObligations at such date and (ii) in the case of Indebtedness of otherssecured by a Lien to which the property or assets owned or held by such Personis subject, the lesser of the fair market value at such date of any assetsubject to a Lien securing the Indebtedness of others and the amount of theIndebtedness secured.

 

“IndemnifiedMatters” is defined in Section 10.7(B) hereof.

 

“Indemnitees”is defined in Section 10.7(B) hereof.

 

“IndianaMortgage” shall mean the mortgage, dated as of the date hereof, granted bySpin-Cast Plastics, Inc. to Lender in the Indiana Property.

 

“IndianaProperty” shall mean that property as described in and granted ascollateral pursuant to the Indiana Mortgage.

 

“IntellectualProperty Collateral” shall mean (i) the Collateral, as defined in thePatent Security Agreement and (ii) the Collateral as defined in theTrademark Security Agreement.

 

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“InterestExpense” means, without duplication, for any period, the total interestexpense of the Borrower and its consolidated Subsidiaries, whether paid oraccrued (including the interest component of Capitalized Leases, commitment andletter of credit fees, Off-Balance Sheet Liabilities and net payments orreceipts (if any) pursuant to Hedging Arrangements relating to interest rateprotection), all as determined in conformity with GAAP.

 

“InterestPeriod” means, with respect to a Eurodollar Rate Loan, a period ofone (1), two (2), three (3) or six (6) months,commencing on a Business Day selected by the Borrower on which a EurodollarRate Advance is made to the Borrower pursuant to this Agreement.  Such Interest Period shall end on (butexclude) the day which corresponds numerically to such date one (1),two (2), three (3) or six (6) months thereafter; provided,however, that if there is no such numerically corresponding day in suchnext, second, third or sixth succeeding month, such Interest Period shall endon the last Business Day of such next, second, third or sixth succeedingmonth.  If an Interest Period wouldotherwise end on a day which is not a Business Day, such Interest Period shallend on the next succeeding Business Day, provided, however, thatif said next succeeding Business Day falls in a new calendar month, suchInterest Period shall end on the immediately preceding Business Day.

 

“Investment”means, with respect to any Person, (i) any purchase or other acquisitionby that Person of any Indebtedness, Equity Interests or other securities, or ofa beneficial interest in any Indebtedness, Equity Interests or othersecurities, issued by any other Person, (ii) any purchase by that Personof all or substantially all of the assets of a business (whether of a division,branch, unit operation, or otherwise) conducted by another Person, and (iii) anyloan, advance (other than deposits with financial institutions, prepaidexpenses, accounts receivable, advances to employees and similar items made orincurred in the ordinary course of business) or capital contribution by thatPerson to any other Person, including all Indebtedness to such Person arisingfrom a sale of property by such Person other than in the ordinary course of itsbusiness.

 

“IRS”means the Internal Revenue Service and any Person succeeding to the functionsthereof.

 

“LastTwelve-Month Period” means, with respect to any fiscal quarter, thepreceding four-fiscal quarter periods ending on the last day of such fiscalquarter.

 

“L/CDocuments” is defined in Section 3.4 hereof.

 

“L/C Draft”means a draft drawn on Lender pursuant to a Letter of Credit.

 

“L/CInterest” shall have the meaning ascribed to such term in Section 3.6hereof.

 

“L/CObligations” means, without duplication, an amount equal to the sum of (i) theaggregate of the Dollar Amount then available for drawing under each of theLetters of Credit and (ii) the aggregate outstanding Dollar Amount of allReimbursement Obligations at such time.

 

“Lease”shall mean the Supplemental Lease Agreement, dated as of March 1, 1995between the Development Board and Energy Absorption Systems, Inc. (“EAS”),as

 

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assigned toand assumed by Energy Absorption LLC pursuant to the Assignment and Assumptionof Lease Agreement, dated as of December 31, 2002 between EnergyAbsorption LLC and EAS.

 

“Lender”means LaSalle Bank National Association and its respective successors andassigns.

 

“LendingInstallation” means, with respect to the Lender, any office, branch,subsidiary or affiliate of the Lender.

 

“Letters ofCredit” means the standby letters of credit (i) to be issued by theLender, as Lender pursuant to Section 3.1 hereof or (ii) deemedissued by the Lender pursuant to Section 3.2 hereof.

 

“Lien”means any lien (statutory or other), mortgage, pledge, hypothecation,assignment, deposit arrangement, encumbrance or preference, priority orsecurity agreement or preferential arrangement of any kind or nature whatsoever(including, without limitation, the interest of a vendor or lessor under anyconditional sale, Capitalized Lease or other title retention agreement).

 

“Loan(s)”means, any Advance made pursuant to Section 2.1 hereof, asapplicable, and collectively, all Revolving Loans, whether made or continued asor converted to Floating Rate Loans or Fixed-Rate Loans.

 

“LoanDocuments” means this Agreement, any promissory notes executed pursuant to Section 2.12(D),the Subsidiary Guaranty, the Collateral Documents and all other documents.instruments, notes and agreements executed in connection therewith orcontemplated thereby, as the same may be amended, restated or otherwisemodified and in effect from time to time.

 

“MarginStock” shall have the meaning ascribed to such term in Regulation U.

 

“MaterialAdverse Effect” means a material adverse effect upon (a) the business,financial condition, operations, affairs, assets, or properties of theBorrower, or the Borrower and its Subsidiaries, taken as a whole, (b) theability of the Borrower or any of its Subsidiaries to perform its obligationsunder the Loan Documents in any material respect, or (c) the ability of theLenders or the Lender to enforce in any material respect the Obligations.

 

“MaximumLetter of Credit Obligation” shall mean an aggregate amount of L/CObligations not to exceed Ten Million Dollars and 00/100 ($10,000,000).

 

“Moody’s”means Moody’s Investors Service. Inc., together with its successors andassigns.

 

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“MultiemployerPlan” means a “Multiemployer Plan” as defined in Section 4001(a)(3) ofERISA which is, or within the immediately preceding six (6) yearswas, contributed to by either the Borrower or any member of the ControlledGroup.

 

“Net CashProceeds” shall mean the gross cash proceeds (including any cash receivedby way of deferred payment pursuant to a promissory note, receivable or otherwise,but only as, when and to the extent actually received) received from suchevent, net of transaction costs (including, as applicable, any underwriting,brokerage or other customary commissions and legal, advisory, accounting,investment banking and other fees and expenses associated therewith) receivedfrom any such event.

 

“Net Income”means, for any period, the net income (or loss) after taxes of the Borrower andits Subsidiaries on a consolidated basis for such period taken as a singleaccounting period determined in conformity with GAAP.

 

“NetRecovery Event Proceeds” shall mean, with respect to any Recovery Event,the cash proceeds (net of costs and taxes incurred in connection with suchRecovery Event) received by the respective Person in connection with suchRecovery Event.

 

“Net SaleProceeds” shall mean for any sale of assets, the gross cash proceeds(including any cash received by way of deferred payment pursuant to apromissory note, receivable or otherwise, but only as, when and to the extent actuallyreceived) received from any sale of assets, net of (i) transaction costs(including, without limitation, any underwriting, brokerage or other customaryselling commissions and legal, advisory, accounting, investment banking andother fees and expenses, including title and recording expenses, associatedtherewith), (ii) payments of unassumed liabilities relating to the assetssold at the time of, or within 180 days after, the date of such sale, (iii) theamount of such gross cash proceeds required to be used to repay anyIndebtedness which is secured by the respective assets which were sold, and (iv) theestimated marginal increase in income taxes which will be payable by theBorrower’s consolidated group with respect to the fiscal year (for U.S. federalincome tax purposes) in which the sale occurs as a result of such sale; butexcluding any portion of any such gross cash proceeds which the Borrowerdetermines in good faith should be reserved for post-closing adjustments (tothe extent the Borrower delivers to the Lenders a certificate signed by anAuthorized Representative as to such determination), it being understood andagreed that on the day that all such post-closing adjustments have beendetermined (which shall not be later than one year following the date of therespective asset sale), the amount (if any) by which the reserved amount inrespect of such sale or disposition exceeds the actual post-closing adjustmentspaid by the Borrower or any of its Subsidiaries shall constitute Net Sale Proceedson such date received by the Borrower and/or any of its Subsidiaries from suchsale, lease, transfer or other disposition.

 

“NewSubordinated Debt” shall mean the indebtedness evidenced by the NewSubordinated Notes.

 

“NewSubordinated Notes” shall have the meaning assigned to that term in RecitalB of this Agreement.

 

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“Non-ERISACommitments” means:

 

(i)                                     eachpension, medical, dental, life. accident insurance, disability, groupinsurance, sick leave, profit sharing, deferred compensation, bonus, stockoption, stock purchase, retirement, savings, severance, stock ownership,performance, incentive, hospitalization or other insurance, or other welfare,benefit or fringe benefit plan, policy, trust, understanding or arrangement ofany kind; and

 

(ii)                                  eachemployee collective bargaining agreement and each agreement, understanding orarrangement of any kind, with or for the benefit of any present or priorofficer, director, employee or consultant (including, without limitation, eachemployment. compensation, deterred compensation, severance or consultingagreement or arrangement and any agreement or arrangement associated with achange in ownership of the Borrower or any member of the Controlled Group);

 

to which theBorrower or any member of the Controlled Group is a party or with respect towhich the Borrower or any member of the Controlled Group is or will be requiredto make any payment other than any Plans.

 

“Note”means the Revolving Loan Note.

 

“Obligations”means all Loans, L/C Obligations, advances, debts, liabilities, obligations,covenants and duties owing by the Borrower or any of its Subsidiaries to theLender, or any Indemnitee, of any kind or nature, present or future, arisingunder this Agreement, the L/C Documents, the Subsidiary Guaranty, or any otherLoan Document, whether or not evidenced by any note, guaranty or otherinstrument, whether or not for the payment of money, whether arising by reasonof an extension of credit, loan, guaranty, indemnification, or in any othermanner, whether direct or indirect (including those acquired by assignment),absolute or contingent, due or to become due, now existing or hereafter arisingand however acquired.  The term includes,without limitation, all Hedging Obligations owing under Hedging Agreements tothe Lender or any Affiliate of the Lender, all interest, charges, expenses,fees, attorneys’ fees and disbursements, paralegals’ fees (in each case whetheror not allowed), and any other sum chargeable to the Borrower or any of itsSubsidiaries under this Agreement or any other Loan Document.

 

“Off-BalanceSheet Liabilities” of a person means (a) any repurchase obligations orliabilities of such Person or any of its Subsidiaries with respect toReceivables or notes receivable sold by such Person or any of its Subsidiaries,(b) any liabilities of such Person or any of its Subsidiaries under anysale and leaseback transactions, (c) any liabilities of such Person or anyof its Subsidiaries under any financing lease or so-called “synthetic” leasetransaction, or (d) any obligations of such Person or any of itsSubsidiaries arising with respect to any other transaction which is thefunctional equivalent of or takes the place of borrowing, but which, in each ofthe cases of the foregoing clauses (a) through (d), does notconstitute a liability on the consolidated balance sheets of such Person andits Subsidiaries, provided that operating leases and royalty agreements shallnot be considered as an Off Balance Sheet Liability.

 

“OtherTaxes” is defined in Section 2.14(E)(ii) hereof.

 

“Participants”is defined in Section 13.2(A) hereof.

 

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“PatentExpenditures” shall mean expenditures of a Person relating to itsobtaining, acquiring, maintaining and defending patents.

 

“PatentSecurity Agreement” shall mean the Patent Security Agreement, dated as of September 10,2004 between Energy Absorption Systems, Inc. and the Administrative Agent.

 

“PaymentDate” means the last Business Day of each March, June, September and December andthe Termination Date.

 

“PBGC”means the Pension Benefit Guaranty Corporation. or any successor thereto.

 

“PennsylvaniaMortgage” shall mean the Open End Mortgage, dated as of September 10,2004, granted by Nu-Metrics, Inc. to the Administrative Agent on thePennsylvania Property and assigned to the Lender by the Administrative Agent.

 

“PennsylvaniaProperty” shall mean that property as described in and granted ascollateral pursuant to the Pennsylvania Mortgage.

 

“PermittedAcquisition” is defined in Section 7.3(G) hereof.

 

“PermittedExisting Contingent Obligations” means the Contingent Obligations of theBorrower and its Subsidiaries identified as such on Schedule 1.1.4to this Agreement.

 

“PermittedExisting Indebtedness” means the Indebtedness of the Borrower and itsSubsidiaries identified as such on Schedule 1.1.1 to thisAgreement.

 

“PermittedExisting Investments” means the Investments of the Borrower and itsSubsidiaries identified as such on Schedule 1.1.2 to thisAgreement.

 

“PermittedExisting Liens” means the Liens on assets of the Borrower and itsSubsidiaries identified as such on Schedule 1.1.3 to thisAgreement.

 

“PermittedRefinancing Indebtedness” means any replacement, renewal, refinancing orextension of any Indebtedness permitted by this Agreement that (i) doesnot exceed the aggregate principal amount (plus accrued interest and anyapplicable premium and associated fees and expenses) of the Indebtedness beingreplaced, renewed, refinanced or extended, (ii) does not have a WeightedAverage Life to Maturity at the time of such replacement, renewal, refinancingor extension that is less than the Weighted Average Life to Maturity of theIndebtedness being replaced, renewed, refinanced or extended, (iii) doesnot rank at the time of such replacement, renewal, refinancing or extensionsenior to the Indebtedness being replaced, renewed, refinanced or extended, and(iv) does not contain terms (including, without limitation, terms relatingto security, amortization, interest rate, premiums, fees, covenants,subordination, event of default and remedies) materially less favorable to theBorrower than those applicable to the Indebtedness being replaced, renewed,refinanced or extended.

 

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“Person”means any individual, corporation, firm, enterprise, partnership, trust.incorporated or unincorporated association, joint venture, joint stock company,limited liability company or other entity of any kind, or any government orpolitical subdivision or any agency, department or instrumentality thereof:

 

“Plan”means an employee benefit plan defined in Section 3(3) of ERISA inrespect of which the Borrower or any member of the Controlled Group is, orwithin the immediately preceding six (6) years was, an “employer” asdefined in Section 3(5) of ERISA.

 

“PledgeAgreement” shall mean the Pledge Agreement, dated as of June 30, 2004,between Borrower and the Administrative Agent.

 

“Prime Rate”means a rate per annum equal to the prime rate of interest announced from timeto time by the Lender or its parent (which is not necessarily the lowest ratecharged to any customer), changing when and as said prime rate changes.

 

“RateOption” means the Eurodollar Rate or the Floating Rate, as applicable.

 

“RecoveryEvent” shall mean the receipt by Borrower or any of its Subsidiaries of anyinsurance or condemnation proceeds in excess of $2,000,000 payable (i) byreason of theft, physical destruction or damage or any other similar event withrespect to any properties or assets of Borrower or any of its Subsidiaries(whether under any policy of insurance required to be maintained under Section 7.2(E) orotherwise), and (ii) by reason of any condemnation, taking seizing orsimilar event with respect to any properties or assets of Borrower or any ofits Subsidiaries.

 

“Register”is defined in Section 13.3(D) hereof.

 

“Regulation T”means Regulation T of the Board of Governors of the Federal Reserve Systemas from time to time in effect and any successor or other regulation orofficial interpretation of said Board of Governors relating to the extension ofcredit by and to brokers and dealers of securities for the purpose ofpurchasing or carrying margin stock (as defined therein).

 

“Regulation U”means Regulation U of the Board of Governors of the Federal Reserve Systemas from time to time in effect and any successor or other regulation orofficial interpretation of said Board of Governors relating to the extension ofcredit by banks, non-banks and non-broker lenders for the purpose of purchasingor carrying Margin Stock applicable to member banks of the Federal ReserveSystem.

 

“Regulation X”means Regulation X of the Board of Governors of the Federal Reserve Systemas from time to time in effect and any successor or other regulation orofficial interpretation of said Board of Governors relating to the extension ofcredit by foreign lenders for the purpose of purchasing or carrying marginstock (as defined therein).

 

“ReimbursementObligation” is defined in Section 3.6 hereof.

 

“Release”means any release, spill, emission, leaking, pumping, injection, deposit,disposal, discharge, dispersal, leaching or migration into the indoor oroutdoor environment,

 

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including themovement of Contaminants through or in the air, soil, surface water orgroundwater.

 

“ReleaseCovenants” shall mean, with respect to the Lender’s release of its Liensagainst the Collateral, Borrower’s compliance with the following covenants: (a) Lendershall have received Borrower’s audited fiscal year 2006 financial statementswhich demonstrate net income of $1 or greater and (b) Senior LeverageRatio (defined in Section 7.4(A)) is less than or equal to 2.75:1.0 on atrailing twelve month basis for a minimum of 2 consecutive fiscal quarters and (c) FixedCharge Coverage Ratio (defined in Section 7.4(D)) is greater than or equalto 1.2:1.0 on a trailing twelve month basis for a minimum of 2 consecutivefiscal quarters and (d) Total Leverage Ratio (defined in Section 7.4(E))is less than or equal to 4.50:1.0 on a trailing twelve month basis for aminimum of 2 consecutive fiscal quarters provided the first quarter applicablefor calculation of the Release Covenants shall be no earlier than the fiscalquarter ending March 31, 2006.

 

“ReportableEvent” means a reportable event as defined in Section 4043 of ERISAand the regulations issued under such section, with respect to a Plan,excluding, however, such events as to which the PBGC by regulation waived therequirement of Section 4043(a) of ERISA that it be notified withinthirty (30) days after such event occurs.

 

“Requestfor Letter of Credit” is defined in Section 3.4(A) hereof.

 

“Requirementsof Law” means, as to any Person, the charter and by-laws or otherorganizational or governing documents of such Person, and any law, rule orregulation, or determination of an arbitrator or a court or other GovernmentalAuthority, in each case applicable to or binding upon such Person or any of itsproperty or to which such Person or any of its property is subject including,without limitation, the Securities Act, the Securities Exchange Act of 1934,Regulations T, U and X, ERISA, the Fair Labor Standards Act, the WorkerAdjustment and Retraining Notification Act, Americans with Disabilities Act of1990, and any certificate of occupancy, zoning ordinance, building,environmental or land use requirement or permit or environmental, labor,employment, occupational safety or health law, rule or regulation,including Environmental, Health or Safety Requirements of Law.

 

“Reserves”shall mean the maximum reserve requirement, as prescribed by the Board ofGovernors of the Federal Reserve System (or any successor) with respect to “Eurocurrencyliabilities” or in respect of any other category of liabilities which includesdeposits by reference to which the interest rate on Eurodollar Rate Loans isdetermined or category of extensions of credit or other assets which includesloans by a non-United States office of any Lender to United States residents.

 

“RestrictedPayment” means (i) any dividend or other distribution, direct orindirect, on account of any Equity Interests of the Borrower now or hereafteroutstanding, except a dividend payable solely in the Borrower’s Capital Stock(other than Disqualified Stock) or in options, warrants or other rights topurchase such Capital Stock, (ii) any redemption, retirement, purchase orother acquisition for value, direct or indirect, of any Equity Interests of theBorrower or any of its Subsidiaries now or hereafter outstanding, other than inexchange for, or out of the proceeds of, the substantially concurrent sale(other than to a Subsidiary of the Borrower) of

 

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other EquityInterests of the Borrower (other than Disqualified Stock), (iii) anyredemption, purchase, retirement, defeasance, prepayment or other acquisitionfor value, direct or indirect, of any Indebtedness subordinated to theObligations, and (iv) any payment of a claim for the rescission of thepurchase or sale of, or for material damages arising from the purchase or saleof, any Indebtedness (other than the Obligations) or any Equity Interests ofthe Borrower, or any of its Subsidiaries, or of a claim for reimbursement,indemnification or contribution arising out of or related to any such claim fordamages or rescission.

 

“RevolvingCredit Obligations” means, at any particular time, the sum of (i) theoutstanding principal amount of the Revolving Loans at such time and (ii) theamount of the outstanding L/C Obligations.

 

“RevolvingLoan” is defined in Section 2.1 hereof.

 

“RevolvingLoan Availability” shall mean at any time, the lesser of (a) theRevolving Loan Commitment less the Revolving Credit Obligations, or,prior to the Collateral Release Date, (b) the Borrowing Base Amount lessthe Revolving Credit Obligations outstanding at such time, less $8,000,000through June 30, 2006, and, thereafter, less $5,000,000.00.

 

“RevolvingLoan Commitment” means the obligation of the Lender to make Revolving Loansand to issue Letters of Credit in an aggregate amount not exceeding ThirtyMillion Dollars and 00/100 ($30,000,000) as such amount may be modified fromtime to time pursuant to the terms of this Agreement.

 

“RevolvingLoan Note” means the Revolving Loan Note in the form of Exhibit Gattached hereto.

 

“RevolvingLoan Termination Date” means February 1, 2008.

 

“Risk-BasedCapital Guidelines” is defined in Section 4.2 hereof.

 

“S&P”means Standard and Poor’s Ratings Group, a division of The McGraw-HillCompanies, together with its successors and assigns.

 

“SecuritiesAct” means the Securities Act of 1933, as amended from time to time.

 

“SecurityAgreement” shall mean the Security Agreement, dated as of June 30,2004, between the Borrower, each Subsidiary Guarantor and the AdministrativeAgent as assigned to Lender by the Administrative Agent.

 

“SeniorLeverage Ratio” shall have the meaning assigned to such term in Section 7.4A.

 

“SignificantDomestic Incorporated Subsidiary” means any Domestic IncorporatedSubsidiary whose assets or sales represent more than 10% of the Borrower’s andits Subsidiaries’ Consolidated Assets or consolidated sales, with anydetermination of Consolidated Assets and consolidated sales based upon amountsshown in the Borrower’s most recently delivered annual consolidated financialstatements.

 

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“SignificantForeign Subsidiary” means a Subsidiary of the Borrower that is not aDomestic Incorporated Subsidiary and whose assets represent more than 3% of theBorrower’s and its Subsidiaries’ Consolidated Assets, with such determinationof Consolidated Assets based upon amounts shown in the Borrower’s most recentlydelivered annual consolidated financial statements.

 

“SingleEmployer Plan” means a Plan maintained by the Borrower or any member of theControlled Group for employees of the Borrower or any member of the ControlledGroup.

 

“SubordinatedDebt” shall mean the (i) Subordinated Debt (U.S. Traffic) and (ii) theNew Subordinated Debt.

 

“SubordinatedDebt(U.S. Traffic)” means the indebtedness evidenced by SubordinatedPromissory Note, dated May 16, 2003 of Green Light Acquisition Companypayable in the principal amount of $5,000,000 to the order of U.S. TrafficCorporation and Myers/Nuart Electrical Products, Inc. delivered pursuantto the terms of the Asset Purchase Agreement, dated as of May 16, 2003.

 

“Subsidiary”of a Person means (i) any corporation more than fifty percent (50%)of the outstanding securities having ordinary voting power of which shall atthe time be owned or controlled, directly or indirectly, by such Person or byone or more of its Subsidiaries or by such Person and one or more of itsSubsidiaries, or (ii) any partnership, limited liability company,association, joint venture or similar business organization more than fiftypercent (50%) of the ownership interests having ordinary voting power ofwhich shall at the time be so owned or controlled.  Unless otherwise expressly provided, allreferences herein to a “Subsidiary” means a Subsidiary of the Borrower.

 

“SubsidiaryGuarantors” means (i) all of the Borrower’s Significant DomesticIncorporated Subsidiaries as of the Closing Date; (ii) all new SignificantDomestic Incorporated Subsidiaries or other Subsidiaries designated by Borrowerwhich become Subsidiary Guarantors in accordance with Section 7.2(K),together with their respective successors and assigns; and (iii) Spin-CastPlastics, Inc.

 

“SubsidiaryGuaranty” means that certain Guaranty, dated as of May 16, 2003, inform and substance substantially similar to Exhibit Z hereto,executed by the Subsidiary Guarantors in favor of the Lender, for the benefitof Lender as reaffirmed and amended under Section 7.1(L) of this Agreementand by that Reaffirmation and Amendment of Subsidiary Guaranty, dated as of thedate hereof, (as it may be amended, modified, supplemented and/or restated(including to add new Subsidiary Guarantors), and as in effect from time totime), unconditionally guaranteeing all of the indebtedness, obligations andliabilities of the Borrower arising under or in connection with the LoanDocuments.

 

“SubsidiaryStock Pledge Agreements” shall mean collectively theSubsidiary Stock Pledge Agreement (Quixote); the Subsidiary Stock PledgeAgreement (Quixote Transportation Safety, Inc.), the Subsidiary StockPledge Agreement (Transafe Corporation); and the Subsidiary Stock PledgeAgreement (Energy Absorption Systems, Inc.)

 

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“SubsidiaryStock Pledge Agreement (Quixote)” shall mean the Subsidiary Stock PledgeAgreement, dated as of September 10, 2004 between Borrower and theAdministrative Agent, as assigned to the Lender by Administrative Agent.

 

“SubsidiaryStock Pledge Agreement (Quixote Transportation Safety, Inc.)” shallmean the Subsidiary Stock Pledge Agreement, dated as of September 10, 2004between Quixote Transportation Safety, Inc. and the Administrative Agent,as assigned to the Lender by Administrative Agent.

 

“SubsidiaryStock Pledge Agreement (Transafe Corporation)” shall mean the SubsidiaryStock Pledge Agreement, dated as of September 10, 2004 between TransafeCorporation and the Administrative Agent, as assigned to the Lender byAdministrative Agent.

 

“SubsidiaryStock Pledge Agreement (Energy Absorption Systems, Inc.)” shall meanthe Subsidiary Stock Pledge Agreement, dated as of September 10, 2004between Energy Absorption Systems, Inc. and the Administrative Agent, asassigned to the Lender by Administrative Agent.

 

“Taxes”is defined in Section 2.14(E)(i) hereof.

 

“TerminationDate” means the earlier of (a) the Revolving Loan Termination Date, (b) thedate of termination in whole of the Revolving Loan Commitment pursuant to Section 2.4hereof or pursuant to Section 9.1 hereof.

 

“TerminationEvent” means (i) a Reportable Event with respect to any Benefit Plan; (ii) thewithdrawal of the Borrower or any member of the Controlled Group from a BenefitPlan during a plan year in which the Borrower or such Controlled Group memberwas a “substantial employer” as defined in Section 4001(a)(2) ofERISA with respect to such Plan; (iii) the imposition of an obligationunder Section 4041 of ERISA to provide affected parties written notice ofintent to terminate a Benefit Plan in a distress termination described in Section 4041(c) ofERISA; (iv) the institution by the PBGC of proceedings to terminate orappoint a trustee to administer a Benefit Plan; (v) any event or conditionwhich would constitute grounds under Section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer, any BenefitPlan; or (vi) the partial or complete withdrawal of the Borrower or anymember of the Controlled Group from a Multiemployer Plan.

 

“TotalLeverage Ratio” is defined in Section 7.4(E) hereof.

 

“TrademarkSecurity Agreement” shall mean the Trademark Security Agreement, dated asof September 10, 2004 between Energy Absorption Systems, Inc. and theAdministrative Agent, as assigned to the Lender by Administrative Agent.

 

“Type”means, with respect to any Loan, its nature as a Floating Rate Loan or a Fixed-Rate Loan.

 

“UnfundedLiabilities” means (i) in the case of Single Employer Plans, theamount (if any) by which the present value of all vested nonforfeitablebenefits under all Single Employer Plans exceeds the fair market value of allsuch Plan assets allocable to such benefits,

 

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all determinedas of the then most recent valuation date for such Plans, and (ii) in thecase of Multiemployer Plans, the withdrawal liability that would be incurred bythe Controlled Group if all members of the Controlled Group completely withdrewfrom all Multiemployer Plans.

 

“UnmaturedDefault” means an event which, but for the lapse of time or the giving ofnotice, or both. would constitute a Default.

 

“UCC”shall mean the Uniform Commercial Code in effect in the State of Illinois fromtime to time.

 

“U.S.Traffic “ means Borrower’s indirect wholly-owned Subsidiary, U.S. TrafficCorporation.

 

“WeightedAverage Life to Maturity” means when applied to any Indebtedness at anydate, the number of years obtained by dividing (i) the sum of the productsobtained by multiplying (a) the amount of each then remaining installment,sinking fund, serial maturity or other required payments of principal,including payment at final maturity, in respect thereof, by (b) the numberof years (calculated to the nearest one-twelfth) that will elapse between suchdate and the making of such payment, by (ii) the then outstandingprincipal amount of such Indebtedness.

 

The foregoingdefinitions shall be equally applicable to both the singular and plural formsof the defined terms.  Any accountingterms used in this Agreement which are not specifically defined herein shallhave the meanings customarily given them in accordance with generally acceptedaccounting principles as in effect from time to time.

 

## 1.2                                 References.  Any references to Subsidiaries of theBorrower set forth herein with respect to representations and warranties whichdeal with historical matters shall be deemed to include the Borrower and itsSubsidiaries and shall not in any way be construed as consent by the Lender orany Lender to the establishment, maintenance or acquisition of any Subsidiary,except as may otherwise be permitted hereunder.

##  

1.3                                 OtherTerms Defined in UCC.  Allother capitalized words and phrases used herein and not otherwise specificallydefined shall have the respective meanings assigned to such terms in the UCC,as amended from time to time, to the extent the same are used or definedherein.

 

# ARTICLE II:  REVOLVING LOAN AND TERM LOAN FACILITIES

#  

## 2.1                                 RevolvingLoans.

##  

### (A)                              Uponthe satisfaction of the conditions precedent set forth in Sections 5.1and 5.2, from and including the Closing Date and prior to theTermination Date, Lender agrees, on the terms and conditions set forth in thisAgreement, to make revolving loans to the Borrower from time to time, inDollars either as Floating Rate Loans or Fixed-Rate Loans in a Dollar Amount asthe Borrower may from time to time request, (each individually, a “RevolvingLoan” and, collectively, the “Revolving Loans”); provided, however,(i) at no time shall the Dollar Amount of the Revolving Credit Obligationsexceed the Revolving Loan Availability, or (ii)

 

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### shall theproceeds of any Revolving Loan made by Lender be used to make any payment(other than for accrued interest) redemption, repurchase, retirement,defeasance or other acquisition for value of any Borrower SubordinatedDebt.  The Revolving Loans shall be usedby the Borrower for the purpose of refinancing existing debt and for workingcapital and general corporate purposes. Subject to the terms of this Agreement, the Borrower may borrow, repayand reborrow Revolving Loans at any time prior to the Termination Date.  The Revolving Loans made on the Closing Dateor on or before the third (3rd) Business Day thereafter shall initially beFloating Rate Loans and thereafter may be continued as Floating Rate Loans orconverted into Eurodollar Rate Loans in the manner provided in Section 2.8and subject to the other conditions and existing limitations therein set forthand set forth in this Article II and set forth in the definition ofInterest Period.  Revolving Loans madeafter the third (3rd) Business Day after the Closing Date shall be, at theoption of the Borrower, selected in accordance with Section 2.8,either Floating Rate Loans or Eurodollar Rate Loans.  On the Revolving Loan Termination Date, theBorrower shall repay in full the outstanding principal balance of the RevolvingLoans.

###  

### (B)                                Borrowing/ElectionNotice.  In accordance with Section 2.12,the Borrower may telephonically request Advances hereunder.  If a telephonic request is not made withrespect to any Advance in accordance with Section 2.12, then theBorrower shall deliver to the Lender a Borrowing/Election Notice, signed by it,in accordance with the terms of Section 2.6, in order to requestsuch Advance.

###  

### (C)                                Makingof Revolving Loans.  Promptly afterreceipt of the Borrowing/Election Notice under Section 2.6 or atelephonic request in accordance with Section 2.12 in respect ofRevolving Loans the Lender will promptly make the funds available to theBorrower at the Lender’s office in Chicago, Illinois or the Lender’s EurodollarPayment Office on the applicable Borrowing Date and shall disburse suchproceeds in accordance with the Borrower’s disbursement instructions set forthin such Borrowing/Election Notice.

###  

## 2.2                                 RateOptions for all Advances; Maximum Interest Periods.  The Revolving Loans may be Floating RateAdvances or Eurodollar Rate Advances, or a combination thereof, selected by theBorrower in accordance with Section 2.9.  The Borrower may select, in accordance with Section 2.9,Rate Options and Interest Periods applicable to portions of the Loans; providedthat there shall be no more than five (5) Interest Periods in effectwith respect to all of the Loans at any time.

##  

## 2.3                                 OptionalPayments; Mandatory Prepayments/Repayments.

##  

### (A)                              OptionalPayments.  The Borrower may from timeto time and at any time upon at least one (1 ) Business Day’s priorwritten notice repay or prepay, without penalty or premium all or any part ofoutstanding Floating Rate Advances in an aggregate minimum amount of $250,000and in integral multiples of $100,000 in excess thereof.  Eurodollar Rate Advances may be voluntarilyrepaid or prepaid prior to the last day of the applicable Interest Period,subject to the indemnification provisions contained in Section 4.4in an aggregate minimum amount of $250,000 and in integral multiples of$100,000 in excess thereof, provided, that the Borrower may not so prepayEurodollar Rate Advances unless it shall have provided at least three (3) BusinessDays’ prior written notice to the Lender of such prepayment.

 

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### (B)                                MandatoryPrepayments of Revolving Loans.

###  

#### (i)                                     Ifat any time and for any reason the Revolving Credit Obligations are greaterthan the Revolving Loan Availability the Borrower shall immediately make amandatory prepayment of the respective Obligations in an amount equal to suchexcess.

####  

(ii)                                  Inaddition to any other mandatory repayments pursuant to this Section 2.3,on each date after the date of this Agreement on which borrower or anySubsidiary receives proceeds from the following transactions, Borrower shallmake the following mandatory prepayments, except as otherwise provided below torepay the outstanding principal amount of Revolving Loans (with no requiredreduction to the Total Revolving Loan Commitment).

 

(w)                               anamount equal to 80% of the Net Sale Proceeds of any Asset Sale shall be appliedto repayment of the outstanding principal amount of the Revolving Loans subjectto an allowance for like-kind exchanges in an aggregate amount not to exceed$1,000,000 in any fiscal year;

 

(x)                                   anamount equal to 100% of Net Recovery Event Proceeds received from any RecoveryEvent, provided that so long as no Event of Default then exists, such NetRecovery Event Proceeds shall not be required to be so applied on such date tothe extent that Borrower has delivered a certificate to the Lender on or priorto such date stating that such proceeds shall be used (or contractuallycommitted to be used) within 180 days following the date of receipt of such NetRecovery Event Proceeds from such Recovery Event to replace or restore anyproperties or assets in respect of which such Net Recovery Event Proceeds werepaid (which certificate shall set forth the estimates of the proceeds to be soexpended), and provided further, that if all or any portion of such NetRecovery Event Proceeds are not so used (or contractually committed to be used)within such 180-day period, such remaining portion shall be applied as amandatory repayment as provided above (without giving effect to the immediatelypreceding proviso);

 

(y)                                 anamount equal to 60% of the net proceeds received from any issuance of capitalstock or any equity interests by Borrower; and

 

(z)                                   anamount equal to 100% of the net proceeds received from the incurrence ofIndebtedness (other than Indebtedness permitted to be incurred pursuant to Section 7.3(A) ofthis Agreement.

 

## 2.4                                 Reductionof Commitments.  The Borrowermay permanently reduce the Revolving Loan Commitment in whole, or in part anaggregate minimum amount of $5,000,000 with respect thereto and integralmultiples of $1,000,000 in excess of that amount with respect thereto (unlessthe Revolving Loan Commitment is reduced in whole), upon at least three (3) BusinessDay’s prior written notice to the Lender, which notice shall specify the amountof any such reduction; provided, however, that the amount of theRevolving Loan Commitment may not be reduced below the aggregate principalDollar Amount of the outstanding Revolving Credit Obligations.  All accrued facility fees shall be payable onthe effective date of any termination of the obligations of the Lender to makeLoans hereunder.

 

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## 2.5                                 Methodof Borrowing.  Not later than3:00 p.m. (Chicago time) on each Borrowing Date, Lender shall makeavailable its Revolving Loan in immediately available funds in Dollars to theBorrower at the Lender’s address or its Eurodollar Payment Office.

##  

## 2.6                                 Methodof Selecting Types and Interest Periods for Advances.  The Borrower shall select the Type of Advanceand, in the case of each Eurodollar Rate Advance, the Interest Periodapplicable to each Advance from time to time. The Borrower shall give the Lender irrevocable notice in substantiallythe form of Exhibit A hereto (a “Borrowing Election Notice”)not later than 12:00 noon (Chicago time) (a) on the Borrowing Date ofeach Floating Rate Advance, and (b) three (3) Business Daysbefore the Borrowing Date for each Eurodollar Rate Advance specifying: (i) theBorrowing Date (which shall be a Business Day) of such Advance; (ii) theaggregate amount of such Advance; (iii) the Type of Advance selected; and (iv) inthe case of each Eurodollar Rate Advance, the Interest Period applicablethereto.  Each Floating Rate Advance andall Obligations other than Loans shall bear interest from and including thedate of the making of such Advance, in the case of Loans, and the date suchObligation is due and owing in the case of such other Obligations, to (but notincluding) the date of repayment thereof at the Floating Rate changing when andas such Floating Rate changes.  Changesin the rate of interest on that portion of any Advance maintained as a FloatingRate Loan will take effect simultaneously with each change in the AlternateBase Rate.  Each Eurodollar Rate Advanceshall bear interest from and including the first day of the Interest Periodapplicable thereto to (but not including) the last day of such Interest Periodat the interest rate determined as applicable to such Eurodollar Rate Advance.

##  

## 2.7                                 MinimumAmount of Each Advance.  EachAdvance (other than an Advance to repay a Reimbursement Obligation) shall be inthe minimum amount of $250,000 and in multiples of $100,000 if in excessthereof; provided, however, that any Floating Rate Advance may bein the amount of the unused Revolving Loan Availability.

##  

## 2.8                                 Methodof Selecting Types, and Interest Periods for Conversion andContinuation of Advances.

##  

### (A)                              Rightto Convert.  The Borrower may electfrom time to time. subject to the provisions of Section 2.3 andthis Section 2.9, to convert all or any part of a Loan of any Typeinto any other Type or Types of Loan; provided that any conversion of anyEurodollar Rate Advance shall be made on, and only on, the last day of theInterest Period applicable thereto.

###  

### (B)                                AutomaticConversion and Continuation. Floating Rate Loans shall continue as Floating Rate Loans unless anduntil such Floating Rate Loans are converted into Eurodollar Rate Loans.  Eurodollar Rate Loans shall continue asEurodollar Rate Loans until the end of the then applicable Interest Periodtherefor, at which time such Eurodollar Rate Loans shall be automaticallyconverted into Floating Rate Loans unless the Borrower shall have given theLender notice in accordance with Section 2.9(D) requestingthat, at the end of such Interest Period, such Eurodollar Rate Loans continue asa Eurodollar Rate Loan.

###  

### (C)                                NoConversion Post-Default; Limited Conversion Post-Unmatured Default.  Notwithstanding anything to the contrarycontained in Section 2.9(A) or Section 2.9(B),(x) no Loan may be converted into or continued as a Eurodollar Rate Loan(except with the

 

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### consent of theLender) when any Default has occurred and is continuing and (y) no Loanmay be converted into or continued as a Eurodollar Rate Loan with an InterestPeriod greater than one month (except with the consent of the Lender) when anyUnmatured Default has occurred and is continuing.

###  

### (D)                               Borrowing/ElectionNotice.  The Borrower shall give theLender an irrevocable Borrowing/Election Notice of each conversion of a FloatingRate Loan into a Eurodollar Rate Loan or continuation of a Eurodollar Rate Loannot later than 12:00 noon (Chicago time) three (3) Business Daysprior to the date of the requested conversion or continuation, with respect toany Loan to be converted or continued as a Eurodollar Rate Loan specifying: (i) therequested date (which shall be a Business Day) of such conversion orcontinuation; (ii) the amount and Type of the Loan to be converted orcontinued; and (iii) the amount of Eurodollar Rate Loan(s) into which suchLoan is to be converted or continued, and the duration of the Interest Periodapplicable thereto.

###  

## 2.9                                 DefaultRate.  After the occurrenceand during the continuance of a Default, at the option of the Lender, theinterest rate(s) applicable to the Obligations shall be equal to the FloatingRate hereunder plus two percent (2.0%) per annum, and the Letter ofCredit fee described in Section 3.8(A) shall be equal to thethen Applicable LC Fee Percentage plus two percent (2.0%) perannum.

##  

## 2.10                           Methodof Payment.  (a) Allpayments of principal, interest, fees, commissions and L/C Obligationshereunder shall be made, without setoff, deduction or counterclaim (unlessindicated otherwise in Section 2.14(E)), in immediately availablefunds to the Lender (i) at the Lender’s address specified pursuant to Article XIVwith respect to Advances or other Obligations at any other Lending Installationof the Lender specified in writing by the Lender to the Borrower, by 12:00 p.m.(Chicago time) on the date when due. Each Advance shall be repaid or prepaid in the Dollar Amount borrowedand interest payable thereon shall also be paid in such currency.  Any payment owing by the Borrower to Lendershall be deemed to have been paid to Lender by the Borrower upon the Lender’sreceipt of such payment from the Borrower. The Borrower authorizes the Lender to charge the account of the Borrowermaintained with Lender for each payment of principal, interest, fees,commissions and L/C Obligations as it becomes due hereunder.

##  

## 2.11                           Evidenceof Debt.

##  

### (A)                              Notes.  All Loans by Lender shall be evidenced by asingle promissory note of the Borrower. On the Closing Date, the Borrower shall deliver to the Lender aRevolving Note, dated such date (together with all other promissory notesaccepted in substitution, renewal, or replacement therefor (including pursuantto Section 2.13),  a “Note”), in the form of Exhibit G hereto, with appropriate insertions andpayable on its face to the order of such Lender on the Revolving Loan TerminationDate in the principal sum of the Revolving Loan Commitment, subject, however,to the limitation that the principal amount payable thereunder shall not at anytime exceed the then unpaid principal amount of all Loans made by such Lender.  The Borrower hereby irrevocably authorizesLender to make or cause to be made, at or about the time of each Revolving Loanmade by it, an appropriate notation on the grid attached to the Revolving Notepayable to the order of Lender, reflecting the unpaid principal amount of allLoans made by

 

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### Lender.  Lender agrees to make or cause to be made, ator about the time of receipt of any payment of any principal of a Note payableto its order, an appropriate notation on the grid attached to such RevolvingNote reflecting such payment.  Theaggregate unpaid amount of Loans set forth on the grid attached to the Noteshall be conclusive evidence (absent manifest error) of the principal amountowing and unpaid on such Note.  The failureso to record any such Loan or payment, or any error in so recording any suchLoan or repayment, shall not, however, limit or otherwise affect theobligations of the Borrower hereunder or under the Note to repay the principalamount of the Loans together with all interest accruing thereon.

###  

### (B)                                Register.  The Register maintained by the Lenderpursuant to Section 13.3(D) shall include a control account inwhich account shall be recorded (i) the date and the amount of each Loanmade hereunder, the Type thereof and the Interest Period, if any, applicablethereto, (ii) the amount of any principal or interest due and payable orto become due and payable from the Borrower to Lender hereunder, (iii) theamount of any sum received by the Lender hereunder and (iv) all otherappropriate debits and credits as provided in this Agreement, including,without limitation, all fees, charges, expenses and interest.

###  

### (C)                                Entriesin Register.  The entries made in theRegister maintained pursuant to subsections (B) of this Section shallbe conclusive and binding for all purposes, absent manifest error, grossnegligence or willful misconduct, unless the Borrower objects to informationcontained in the Loan Accounts or the Register within forty-five (45) daysof the Borrower’s receipt of such information; provided that the failure ofLender to maintain such accounts or any error therein shall not in any manneraffect the obligation of the Borrower to repay the Loans in accordance with theterms of this Agreement.

###  

## 2.12                           TelephonicNotices.  The Borrowerauthorizes the Lender to extend Advances, effect selections of Types ofAdvances and to transfer funds based on telephonic notices made by any personor persons the Lender in good faith believes to be acting on behalf of the Borrower.  The Borrower agrees to deliver promptly tothe Lender a written confirmation, signed by an Authorized Officer (or suchother officer designated in writing to the Lender by an Authorized Officer solong as such other officer is also permitted to make such delivery under theBorrower’s organizational documents), if such confirmation is requested by theLender of each telephonic notice.  If thewritten confirmation differs in any material respect from the action taken bythe Lender, the records of the Lender shall govern absent manifest error, grossnegligence or willful misconduct.  Incase of disagreement concerning such notices, if the Lender has recordedtelephonic borrowing notices, such recordings will be made available to theBorrower upon the Borrower’s request therefor.

##  

## 2.13                           Promiseto Pay; Interest and Facility Fees; Interest Payment Dates;Interest and Fee Basis; Taxes.

##  

### (A)                              Promiseto Pay.  The Borrower unconditionallypromises to pay when due the principal amount of each Loan incurred by it andall other Obligations incurred by it, and to pay all unpaid interest accruedthereon, in accordance with the terms of this Agreement and the other LoanDocuments.

 

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### (B)                                InterestPayment Dates.  Interest accrued oneach Floating Rate Loan shall be payable on each Payment Date, commencing withthe first such date to occur after the date hereof, upon any prepayment whetherby acceleration or otherwise, and at the Revolving Loan Termination Date(whether by acceleration or otherwise). Interest accrued on each Fixed-Rate Loan shall be payable on the lastday of its applicable Interest Period, on any date on which such Fixed-RateLoan is prepaid, whether by acceleration or otherwise, and at maturity.  Interest accrued on each Fixed-Rate Loanhaving an Interest Period longer than three months shall also be payable on thelast day of each three-month interval during such Interest Period.  Interest accrued on the principal balance ofall other Obligations shall be payable in arrears (i) on each PaymentDate, commencing on the first such Payment Date following the incurrence ofsuch Obligations, (ii) upon repayment thereof in full or in part, and (iii) ifnot theretofore paid in full, at the time such other Obligations become due andpayable (whether by acceleration or otherwise).

###  

### (C)                                Fees.

###  

#### (i)                                     TheBorrower shall pay to the Lender from and after the date of this Agreementuntil the date on which the Revolving Loan Commitment shall be terminated inwhole, a commitment fee accruing at the rate of the then Applicable CommitmentFee Percentage, on the amount of the unused Revolving Loan Commitment in effecton the date of such payment.  All suchcommitment fees payable under this clause (C)(i) shall be payablequarterly in arrears on each Payment Date occurring after the date of thisAgreement, and, in addition, on the date on which the Revolving Loan Commitmentshall be terminated in whole.

####  

#### (ii)                                  TheBorrower agrees to pay, on the Closing Date, to the Lender an upfront closingfee pursuant to the terms of the Lender’s Commitment Letter, dated March 16,2005.

####  

### (D)                               Interestand Fee Basis; Applicable Eurodollar Margin; Applicable ABR Margin; ApplicableL/C Fee Percentage and Applicable Commitment Fee Percentage.

###  

#### (i)                                     Intereston all Eurodollar Rate Loans and on all fees shall be calculated for actualdays elapsed on the basis of a 360-day year.  Interest on all Floating Rate Loans shall becalculated for actual days elapsed on the basis of a 365-day year, orwhen appropriate 366-day year. Interest shall be payable for the day an Obligation is incurred but notfor the day of any payment on the amount paid if payment is received prior to2:00 p.m. (local time) at the place of payment.  If any payment of principal of or interest ona Loan or any payment of any other Obligations shall become due on a day whichis not a Business Day, such payment shall be made on the next succeedingBusiness Day and, in the case of a principal payment, such extension of timeshall be included in computing interest, fees and commissions in connectionwith such payment.

####  

#### (ii)                                  TheApplicable Eurodollar Margin, Applicable ABR Margin, Applicable Commitment FeePercentage and Applicable L/C Fee Percentage shall be determined on the basisof the then applicable Senior Leverage Ratio as described in this Section 2.13(D)(ii),from time to time by reference to the following table: 

 

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| **Applicable  Margin**                     | ** ** | **Level I  Status  Senior  Leverage  Ratio is  less than or  equal to 1.5** | ** ** | **Level II  Status  Senior  Leverage  Ratio  is greater than  1.5 to 1.0 and  less than or  equal to 2.0** | ** ** | **Level III  Status  Senior  Leverage  Ratio  is greater than  2.0 to 1.0 and  less than or  equal to 2.50** | ** ** | **Level IV  Status  Senior  Leverage  Ratio is  greater than  2.50 and less  than or equal  to 3.00** | ** ** | **Level V  Status  Senior  Leverage  Ratio is  greater than  3.00** | ** ** |
|--------------------------------------------|------------|----------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| *Eurodollar Margin and L/C Fee Percentage* | * *   | *1.50*                                                                           | *%*        | *1.75*                                                                                                     | *%*        | *2.00*                                                                                                       | *%*        | *2.25*                                                                                                | *%*        | *2.50*                                                              | *%*        |
| *ABR Margin*                               | * *   | *0*                                                                              | *%*        | *0*                                                                                                        | *%*        | *0*                                                                                                          | *%*        | *0*                                                                                                   | *%*        | *0*                                                                 | *%*        |
| *Commitment Fee Percentage*                | * *   | *0.25*                                                                           | *%*        | *0.25*                                                                                                     | *%*        | *0.25*                                                                                                       | *%*        | *.375*                                                                                                | *%*        | *.375*                                                              | *%*        |

 

For purposes of this Section 2.13(D)(ii), the SeniorLeverage Ratio shall be calculated as provided in Section 7.4(A).  Upon receipt of the financial statementsdelivered pursuant to Sections 7.1(A)(i) and (ii), asapplicable, the Applicable Eurodollar Margin, the Applicable ABR Margin, theApplicable Commitment Fee Percentage and Applicable L/C Fee Percentage shall beadjusted, such adjustment being effective five (5) Business Daysfollowing the day such financial statements and compliance certificates aredelivered pursuant to Section 7.1(A); provided, that if theBorrower shall not have timely delivered its financial statements andcompliance certificates in accordance with the applicable provisions of Section 7.1(A),and such failure continues for five (5) days after notice from theLender to the Borrower, then, at the discretion of the Lender, commencing onthe date upon which such financial statements and compliance certificatesshould have been delivered and continuing until five (5) days aftersuch financial statements and compliance certificates are actually delivered,it shall be assumed for purposes of determining the Applicable EurodollarMargin, the Applicable ABR Margin, Applicable L/C Fee Percentage and ApplicableCommitment Fee Percentage that the Senior Leverage Ratio was greater than 3.0to 1.0 and Level V pricing shall be applicable.

 

#### (iii)                               Notwithstandinganything herein to the contrary, from the Closing Date through thefifth (5th) Business Day following the day financial statements aredelivered pursuant to Section 7.1(A) for the fiscal yearending June 30, 2006, the Applicable Eurodollar Margin, the Applicable ABRMargin, the Applicable L/C Percentage and the Applicable Commitment FeePercentage shall be determined based upon a Senior Leverage Ratio equal toLevel IV status.

 

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### (E)                                 Taxes.

###  

#### (i)                                     Anyand all payments by the Borrower hereunder (whether in respect of principal,interest, fees or otherwise) shall be made free and clear of and withoutdeduction for any and all present or future taxes, levies, imposts, deductions,charges or withholdings or any interest, penalties or liabilities with respectthereto imposed by any Governmental Authority including those arising after thedate hereof as a result of the adoption of or any change in any law, treaty,rule, regulation, guideline or determination of a Governmental Authority or anychange in the interpretation or application thereof by a Governmental Authoritybut excluding, in the case of each Lender and the Lender, such taxes (includingincome taxes, franchise taxes and branch profit taxes) as are imposed on ormeasured by Lender’s net income or similar taxes imposed by the United Statesof America or any Governmental Authority of the jurisdiction under the laws ofwhich Lender is organized or maintains a Lending Installation (all suchnon-excluded taxes, levies, imposts, deductions, charges, withholdings, andliabilities which the Lender or a Lender determines to be applicable to thisAgreement, the other Loan Documents, the Revolving Loan Commitments, the Loansor the Letters of Credit being hereinafter referred to as “Taxes”).  If the Borrower or the Lender shall berequired by law to deduct or withhold any Taxes from or in respect of any sumpayable hereunder or under the other Loan Documents to Lender (i) the sumpayable shall be increased as may be necessary so that after making allrequired deductions or withholdings (including deductions or withholdingsapplicable to additional sums payable under this Section 2.14(E))Lender receives an amount equal to the sum it would have received had no suchdeductions or withholdings been made, (ii) the Borrower shall make suchdeductions or withholdings, and (iii) the Borrower shall pay the fullamount deducted or withheld to the relevant taxation authority or otherauthority in accordance with applicable law. If any Tax, including, without limitation, any withholding tax, of theUnited States of America or any other Governmental Authority shall be or becomeapplicable (y) after the date of this Agreement, to such payments by theBorrower made to the Lending Installation or any other office that Lender mayclaim as its Lending Installation, or (z) after Lender’s selection anddesignation of any other Lending Installation, such payments made to such otherLending Installation, Lender shall use reasonable efforts to make, fund andmaintain its Loans through another Lending Installation of Lender in anotherjurisdiction so as to reduce the Borrower’s liability hereunder, if the making,tending or maintenance of such Loans through such other Lending Installation ofLender does not, in the reasonable judgment of such Lender, otherwise adverselyand materially affect such Loans, or obligations under the Revolving LoanCommitments of such Lender.

####  

#### (ii)                                  Inaddition, the Borrower agrees to pay any present or future stamp or documentarytaxes or any other excise or property taxes, charges, or similar levies whicharise from any payment made hereunder, from the issuance of Letters of Credithereunder, or from the execution, delivery or registration of, or otherwisewith respect to, this Agreement, the other Loan Documents, the Revolving LoanCommitments, the Loans or the Letters of Credit (hereinafter referred to as “OtherTaxes”).

####  

#### (iii)                               TheBorrower indemnifies Lender for the full amount of Taxes and Other Taxes(including, without limitation, any Taxes or Other Taxes imposed by anyGovernmental Authority on amounts payable under this Section 2.14(E))paid by Lender

 

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#### or the Lenderand any liability (including penalties, interest, and expenses) arisingtherefrom or with respect thereto, whether or not such Taxes or Other Taxeswere correctly or legally asserted.  Thisindemnification shall be made within thirty (30) days after the dateLender makes written demand therefor.  Acertificate as to any additional amount payable to Lender under this Section 2.14(E) submittedto the Borrower by Lender shall show in reasonable detail the amount payableand the calculations used to determine such amount and shall, absent manifesterror, be final, conclusive and binding upon all parties hereto.  With respect to such deduction or withholdingfor or on account of any Taxes and to confirm that all such Taxes have beenpaid to the appropriate Governmental Authorities, the Borrower shall promptly(and in any event not later than thirty (30) days after receipt) furnishto Lender certificates, receipts and other documents as may be required (in thejudgment of Lender to establish any tax credit to which Lender may beentitled.  In the event Lender receivesany such tax credit, Lender shall pay to the Borrower such amount (if any) notexceeding the increased amount paid by the Borrower to, or on behalf of, Lenderthat is allocable to such increased amount. Lender requesting compensation under this Section 2.14(E) shalluse its reasonable efforts to notify the Borrower in writing of the eventgiving rise to such demand for compensation not more than ninety (90) daysfollowing the date upon which the responsible account officer for the Lenderknows of such event.  Such written demandshall be rebuttably presumed correct for all purposes.  If Lender demands compensation under this Section 2.14(E) morethan ninety (90) days following the date upon which a responsible accountofficer for Lender knows that Taxes or Other Taxes have begun to accrue withrespect to which Lender is entitled to compensation under this Section 2.14(E),then any Taxes or Other Taxes attributable to the period prior to theninety (90) day period immediately preceding the date on which Lenderprovided such notice and demand for compensation shall be excluded from theindemnity obligations of the Borrower under this Section 2.14(E).

####  

#### (iv)                              Withinthirty (30) days after the date of any payment of Taxes or Other Taxes bythe Borrower, the Borrower shall furnish to the Lender the original or acertified copy of a receipt evidencing payment thereof.

####  

#### (v)                                 Withoutprejudice to the survival of any other agreement of the Borrower hereunder, theagreements and obligations of the Borrower contained in this Section 2.14(E) shallsurvive the payment in full of all Obligations hereunder, the termination ofthe Letters of Credit and the termination of this Agreement for a period of oneyear.

####  

#### (vi)                              Uponthe request, and at the expense of the Borrower, the Lender to which theBorrower is required to pay any additional amount pursuant to this Section 2.14(E),shall reasonably afford the Borrower the opportunity to contest, and shallreasonably cooperate with the Borrower in contesting, the imposition of any Taxgiving rise to such payment; provided, that (i) Lender shall not berequired to afford the Borrower the opportunity to so contest unless theBorrower shall have confirmed in writing to Lender its obligation to pay suchamounts pursuant to this Agreement; and (ii) the Borrower shall reimburseLender for its attorneys’ and accountants’ fees and disbursements incurred inso cooperating with the Borrower in contesting the imposition

 

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#### of such Tax; provided,however, that notwithstanding the foregoing, Lender shall not berequired to afford the Borrower the opportunity to contest, or cooperate withthe Borrower in contesting, the imposition of any Taxes, if Lender in goodfaith determines that to do so would have an adverse effect on it.

####  

## 2.14                           LendingInstallations.  Lender maybook its Loans or Letters of Credit at any Lending Installation selected byLender and may change its Lending Installation from time to time uponreasonable written notice thereof to the Borrower.  All terms of this Agreement shall apply toany such Lending Installation.  Lendermay, by written or facsimile notice to the Borrower, designate a LendingInstallation through which Loans will be made by it and for whose account Loanpayments and/or payments of L/C Obligations are to be made.

##  

## 2.15                           TerminationDate.  This Agreement shall beeffective until the Termination Date. Notwithstanding the termination of this Agreement, until (A) all ofthe Obligations (other than contingent indemnity obligations) shall have beenfully paid and satisfied in cash, (B) all financing arrangements among theBorrower and the Lender pursuant to this Agreement shall have been terminatedand (C) all of the Letters of Credit shall have expired, been canceled,terminated or cash collateralized in accordance with Section 3.11,all of the rights and remedies under this Agreement and the other LoanDocuments shall survive.

##  

## 2.16                           JudgmentCurrency.  If, for thepurposes of obtaining judgment in any court, it is necessary to convert a sumdue from the Borrower hereunder in the currency expressed to be payable herein(the “specified currency”) into another currency, the parties heretoagree, to the fullest extent that they may effectively do so, that the rate ofexchange used shall be that at which in accordance with normal bankingprocedures the Lender could purchase the specified currency with such othercurrency at the Lender’s main office in Chicago, Illinois on the Business Daypreceding that on which the final, non-appealable judgment is given.  The obligations of the Borrower in respect ofany sum due to any Lender hereunder shall, notwithstanding any judgment in acurrency other than the specified currency, be discharged only to the extentthat on the Business Day following receipt by such Lender of any sum adjudgedto be so due in such other currency such Lender may in accordance with normal,reasonable banking procedures purchase the specified currency with such othercurrency.  If the amount of the specifiedcurrency so purchased is less than the sum originally due to Lender in thespecified currency, the Borrower agrees, to the fullest extent that it mayeffectively do so, as a separate obligation and notwithstanding any suchjudgment, to indemnify Lender against such loss, and if the amount of thespecified currency so purchased exceeds the sum originally due to Lender in thespecified currency, Lender agrees to remit such excess to the Borrower.

##  

## 2.17                           Securityof Obligations.  As securityfor the payment of the Obligations, and each Guarantor’s Obligation under itsSubsidiary Guaranty, the Borrower and each Guarantor, pursuant to the terms ofthe Security Agreement, Collateral Assignment, Alabama Leasehold Mortgage, theSubsidiary Stock Pledge Agreements, Trademark Security Agreement, PatentSecurity Agreement, Indiana Mortgage, Pennsylvania Mortgage and California Deedof Trust, as applicable, do hereby reaffirm its pledge, assignment, transferand delivery to the Lender and grant to the Lender a continuing andunconditional security interest in and to the Collateral as definedherein.  The Lender and the Borroweragree that the Lender shall release its security interest and liens in theCollateral upon Borrower’s delivery and Lender’s

 

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## acceptance, ofBorrower’s notice of its satisfaction of and compliance with the Release Covenants,in the form required bySection 7.1(J).

##  

# ARTICLE III:  THE LETTER OF CREDIT FACILITY

#  

## 3.1                                 Obligationto Issue Letters of Credit. Subject to the terms and conditions of this Agreement and in relianceupon the representations, warranties and covenants of the Borrower herein setforth, Lender hereby agrees to issue for the account of the Borrower throughsuch Lender’s branches as it and the Borrower may jointly agree, one or moreLetters of Credit denominated in Dollars in accordance with this Article III,from time to time during the period, commencing on the Closing Date and endingon the Business Day prior to the Termination Date.

##  

## 3.2                                 TransitionalLetters of Credit.  Schedule 3.2contains a schedule of certain letters of credit issued for the account ofthe Borrower prior to the Closing Date. Subject to the satisfaction of the conditions contained in Sections 5.1and 5.2, from and after the Closing Date such letters of credit shall bedeemed to be Letters of Credit issued pursuant to this Article III.

##  

## 3.3                                 Typesand Amounts.  Lender shallhave no obligation to and shall not:

##  

### (A)                              issue(or amend) any Letter of Credit if on the date of issuance (or amendment),before or after giving effect to the Letter of Credit requested hereunder, (i) theDollar Amount of the Revolving Credit Obligations at such time would exceed theRevolving Loan Commitment at such time, or (ii) the aggregate outstandingDollar Amount of the L/C Obligations would exceed the maximum Letter of CreditObligation; or

###  

### (B)                                issue(or amend) any Letter of Credit which has an expiration date later than thedate which is the earlier of (x) one (1) year after the date ofissuance thereof or (y) five (5) Business Days immediatelypreceding the Revolving Credit Termination Date; provided, that anyLetter of Credit with a one-year term may provide for the renewal thereof foradditional one-year periods (which in no event shall extend beyond the datereferred to in clause (y) above.

###  

## 3.4                                 Conditions.  In addition to being subject to thesatisfaction of the conditions contained in Sections 5.1 and 5.2,the obligation of the Lender to issue any Letter of Credit is subject to thesatisfaction in full of the following conditions:

##  

### (A)                              theBorrower shall have delivered to the Lender at such times and in such manner asLender may reasonably prescribe, a request for issuance of such Letter ofCredit in substantially the form of Exhibit B hereto (each suchrequest a “Request For Letter of Credit”), duly executed applicationsfor such Letter of Credit and such letter of credit agreement as required byLender, and such other documents, instructions and agreements as may berequired pursuant to the terms thereof (all such applications, documents,instructions, and agreements being referred to herein as the “L/C Documents”)to which L/C Documents Borrower agrees to be bound, (provided in the event ofany conflict in terms between this Agreement and the L/C Documents, thisAgreement’s terms shall govern) and the proposed Letter of Credit shall bereasonably satisfactory to Lender as to form and content; and

 

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### (B)                                asof the date of issuance no order, judgment or decree of any court, arbitratoror Governmental Authority shall purport by its terms to enjoin or restrain theapplicable Lender from issuing such Letter of Credit and no law, rule orregulation applicable to such Lender and no request or directive (whether ornot having the force of law) from a Governmental Authority with jurisdictionover Lender shall prohibit or request that Lender refrain from the issuance ofLetters of Credit generally or the issuance of that Letter of Credit.

###  

### (C)                                Inthe event of any conflict between the terms of this Agreement and the terms ofany application for a Letter of Credit, the terms of this Agreement shallcontrol.

###  

## 3.5                                 Procedurefor Issuance of Letters of Credit.

##  

### (A)                              Subjectto the terms and conditions of this Article III and provided thatthe applicable conditions set forth in Sections 5.1 and 5.2hereof have been satisfied, the Lender shall, on the requested date, issue aLetter of Credit on behalf of the Borrower in accordance with Lender’s usualand customary business practices and, in this connection,  Lender may, assume that the applicableconditions set forth in Section 5.2 hereof have been satisfiedunless Lender has knowledge that the applicable conditions have not been met.

###  

### (B)                                Lendershall not extend or amend any Letter of Credit unless the requirements of this Section 3.5are met as though a new Letter of Credit was being requested and issued.

###  

## 3.6                                 ReimbursementObligation.  The Borroweragrees unconditionally, irrevocably and absolutely to pay immediately to theLender, the amount of each advance drawn under or pursuant to a Letter ofCredit or an L/C Draft related thereto (such obligation of the Borrower toreimburse the Lender for an advance made under a Letter of Credit or L/C Draftbeing hereinafter referred to as a “Reimbursement Obligation” withrespect to such Letter of Credit or L/C Draft), each such reimbursement to bemade by the Borrower no later than the Business Day on which the Lender makespayment of each such L/C Draft or, if the Borrower shall have received noticeof a Reimbursement Obligation later than 11:00 a.m. (Chicago time), on anyBusiness Day or on a day which is not a Business Day, no later than 11:00 a.m.(Chicago time), on the immediately following Business Day or, in the case ofany other draw on a Letter of Credit, the date specified in the demand ofLender.  If the Borrower at any time failsto repay a Reimbursement Obligation pursuant to this Section 3.7,the Borrower shall be deemed to have elected to borrow a Revolving Loan fromthe Lender, as of the date of the advance giving rise to the ReimbursementObligation, equal in amount to the Dollar Amount of the unpaid ReimbursementObligation.  Such Revolving Loan shall bemade as of the date of the payment giving rise to such ReimbursementObligation, automatically, without notice and without any requirement tosatisfy the conditions precedent otherwise applicable to an Advance ofRevolving Loans.  Such Revolving Loansshall constitute a Floating Rate Advance, the proceeds of which Advance shallbe used to repay such Reimbursement Obligation. If, for any reason, the Borrower fails to repay a ReimbursementObligation on the day such Reimbursement Obligation arises and, for any reason,the Lender is unable to make or has no obligation to make Revolving Loan, thensuch Reimbursement Obligation shall bear interest from and after such day, untilpaid in full, at the interest rate applicable to a Floating Rate Advance plustwo percent (2.0%) per annum.

 

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## 3.7                                 Letterof Credit Fees.  The Borroweragrees to pay:

##  

### (A)                              quarterly,in arrears, to the Lender a letter of credit fee at a rate per annum equal tothe Applicable Eurodollar Margin in effect on the average daily outstandingDollar Amount available for drawing under each standby Letter of Credit;

###  

### (B)                                quarterly,in arrears, to the Lender, a letter of credit fronting fee equal to 0.125% perannum on the average daily outstanding face amount available for drawing undereach standby Letter of Credit issued by Lender; and

###  

### (C)                                tothe Lender, all customary fees and other issuance, amendment. cancellation,document examination, negotiation, transfer and presentment expenses andrelated charges in connection with the issuance, amendment, cancellation,presentation of L/C Drafts, negotiation, transfer and the like customarilycharged by such Lender with respect to standby Letters of Credit, payable atthe time of invoice of such amounts.

###  

## 3.8                                 Indemnification;Exoneration.

##  

### (A)                              Inaddition to amounts payable as elsewhere provided in this Article III,the Borrower hereby agrees to protect, indemnify, pay and save harmless theLender from and against any and all liabilities and costs which the Lender mayincur or be subject to as a consequence, direct or indirect, of (i) theissuance of any Letter of Credit other than to the extent resulting from itsgross negligence or willful misconduct, as determined by the final judgment ofa court of competent jurisdiction, or (ii) the failure of the Lender tohonor a drawing under a Letter of Credit as a result of any act or omission,whether rightful or wrongful, of any present or future de jure or de factoGovernmental Authority (all such acts or omissions herein called “GovernmentalActs”).

###  

### (B)                                Asamong the Borrower and the Lender, the Borrower assumes all risks of the actsand omissions of, or misuse of such Letter of Credit by, the beneficiary of anyLetter of Credit.  In furtherance and notin limitation of the foregoing, subject to the provisions of the Letter ofCredit applications and Letter of Credit reimbursement agreements executed bythe Borrower at the time of request for any Letter of Credit, the Lender shallnot be responsible (in the absence of gross negligence or willful misconduct inconnection therewith, as determined by the final judgment of a court ofcompetent jurisdiction):  (i) forthe form, validity, sufficiency, accuracy, genuineness or legal effect of anydocument submitted by any party in connection with the application for andissuance of a Letter of Credit, even if it should in fact prove to be in any orall respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) forthe validity or sufficiency of any instrument transferring or assigning orpurporting to transfer or assign a Letter of Credit or the rights or benefitsthereunder or proceeds thereof, in whole or in part, which may prove to beinvalid or ineffective for any reason; (iii) for failure of thebeneficiary of a Letter of Credit to comply duly with conditions required inorder to draw upon such Letter of Credit; (iv) for errors, omissions,interruptions or delays in transmission or delivery of any messages, by mail,cable, telegraph, telex, or other similar form of teletransmission orotherwise; (v) for errors in interpretation of technical trade terms; (vi) forany loss or delay in the transmission or otherwise of any document required inorder to make a drawing under any Letter of Credit or of the proceeds thereof; (vii) forthe misapplication by the beneficiary of a Letter of Credit of the

 

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### proceeds ofany drawing under such Letter of Credit; and (viii) for any consequencesarising from causes beyond the control of the Lender, including, withoutlimitation, any Governmental Acts.  Noneof the above shall affect, impair, or prevent the vesting of any Lender’srights or powers under this Section 3.9.

###  

### (C)                                Infurtherance and extension and not in limitation of the specific provisionshereinabove set forth, any action taken or omitted by Lender under or inconnection with the Letters of Credit or any related certificates shall not, inthe absence of gross negligence or willful misconduct, as determined by thefinal judgment of a court of competent jurisdiction, put the Lender under anyresulting liability to the Borrower or relieve the Borrower of any of itsobligations hereunder to any such Person.

###  

### (D)                               Withoutprejudice to the survival of any other agreement of the Borrower hereunder, theagreements and obligations of the Borrower contained in this Section 3.9shall survive the payment in full of principal and interest hereunder, thetermination of the Letters of Credit and the termination of this Agreement.

###  

### (E)                                 CashCollateral.  Notwithstanding anythingto the contrary herein or in any application for a Letter of Credit, followingthe occurrence and during the continuance of a Default or upon payout ortermination of this Agreement in full in cash, the Borrower shall, on theBusiness Day that it receives Lender’s demand, deliver to the Lender, cash, orother collateral of a type satisfactory to the Lender, having a value, asdetermined by Lender, equal to one hundred five percent (105%) of theaggregate Dollar Amount of the outstanding L/C Obligations.  Any such collateral shall be held by theLender in a separate account appropriately designated as a cash collateralaccount in relation to this Agreement and the Letters of Credit and retained bythe Lender as collateral security for the Borrower’s obligations in respect ofthis Agreement and each of the Letters of Credit.  Such amounts shall be applied to reimbursethe Lender for drawings or payments under or pursuant to Letters of Credit, orif no such reimbursement is required, to payment of such of the otherObligations as the Lender shall determine. Amounts remaining in any cash collateral account established pursuant tothis Section 3.9 which are not to be applied to reimburse Lenderfor amounts actually paid or to be paid by Lender in respect of a Letter ofCredit. shall be returned to the Borrower within one (1) Business Day(after deduction of the Lender’s expenses incurred in connection with such cashcollateral account).

###  

# ARTICLE IV:  CHANGE IN CIRCUMSTANCES

#  

## 4.1                                 YieldProtection.  If any law or anygovernmental or quasi-governmental rule, regulation, policy, guideline ordirective (whether or not having the force of law) adopted after the date theLender became a party to this Agreement and having general applicability to allbanks within the jurisdiction in which Lender operates (excluding, for theavoidance of doubt, the effect of and phasing in of capital requirements or otherregulations or guidelines passed prior to the date of this Agreement), or anyinterpretation or application thereof by any Governmental Authority chargedwith the interpretation or application thereof, or the compliance of any Lendertherewith,

##  

###### (A)                              subjectsLender or any applicable Lending Installation to any tax, duty, charge orwithholding on or from payments due from the Borrower (excluding taxation of

 

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###### the overall net income of Lender or taxationof a similar basis, which are governed by Section 2.13(E), andexcluding any other taxes for which Lender has been reimbursed by theBorrower), or changes the basis of taxation of payments to Lender in respect ofits Revolving Loan Commitment, Loans, the Letters of Credit or other amountsdue it hereunder, or

######  

###### (B)                                imposesor increases or deems applicable any reserve, assessment, insurance charge,special deposit or similar requirement against assets of, deposits with or forthe account of, or credit extended by, Lender or any applicable LendingInstallation (other than reserves and assessments taken into account indetermining the interest rate applicable to Eurodollar Rate Loans) with respectto its Revolving Loan Commitment, the Loans, or the Letters of Credit, or

######  

###### (C)                                imposesany other condition the result of which is to increase the cost to Lender orany applicable Lending Installation of making, funding or maintaining itsRevolving Loan Commitment, the Loans, or the Letters of Credit or reduces anyamount receivable by Lender or any applicable Lending Installation inconnection with Loans or Letters of Credit, or requires Lender or anyapplicable Lending Installation to make any payment calculated by reference tothe amount of its Revolving Loan Commitment, the Loans or the L/C Interestsheld or interest received by it or by reference to the Letters of Credit, by anamount deemed material by Lender;

######  

### and the resultof any of the foregoing is to increase the cost to Lender of making, renewingor maintaining its Revolving Loan Commitment, Loans, L/C Interests, or Lettersof Credit or to reduce any amount received under this Agreement, then, withinfifteen (15) days after receipt by the Borrower of written demand byLender pursuant to Section 4.5, the Borrower shall pay Lender thatportion of such increased expense incurred or reduction in an amount receivedwhich such Lender determines is attributable to making, funding and maintainingits Loans, L/C Interests, Letters of Credit, and its Revolving Loan Commitment;provided, however, that the Borrower shall not be required to payany additional amounts pursuant to this Section 4.1 incurred morethan 90 days prior to the date of the relevant Lender’s demand therefor.

###  

## 4.2                                 Changesin Capital Adequacy Regulations. If Lender determines (i) the amount of capital required to bemaintained by Lender, any Lending Installation of such Lender or anycorporation controlling such Lender is increased as a result of a “Change” (asdefined below), and (ii) such increase in capital will result in anincrease in the cost to Lender of maintaining its Revolving Loan Commitment,the Loans, L/C Interests, the Letters of Credit or its obligation to make Loanshereunder, then, within fifteen (15) days after receipt by the Borrower ofwritten demand by Lender pursuant to Section 4.5, the Borrowershall pay Lender the amount necessary to compensate for any shortfall in therate of return on the portion of such increased capital which Lender determinesis attributable to this Agreement, its Loans, its L/C Interests, the Letters ofCredit or its obligation to make Loans hereunder (after taking into accountsuch Lender’s policies as to capital adequacy); provided, however,that the Borrower shall not be required to pay any additional amounts pursuantto this Section 4.2 incurred more than 90 days prior to thedate of Lender’s demand therefor.  “Change”means (i) any change after the date the Lender became a party to thisAgreement in the “Risk-Based Capital Guidelines” (as defined below) excluding,for the avoidance of doubt, the effect of any phasing

 

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## in of suchRisk-Based Capital Guidelines or any other capital requirements passed prior tothe date hereof, or (ii) any adoption of or change in any other law,governmental or quasi- governmental rule, regulation, policy, guideline,interpretation, or directive (whether or not having the force of law) after thedate the Lender became a party to this Agreement and having generalapplicability to all banks and financial institutions within the jurisdictionin which Lender operates which affects the amount of capital required orexpected to be maintained by Lender or any Lending Installation or anycorporation controlling any Lender.  “Risk-Based Capital Guidelines” means (i) the risk-based capital guidelinesin effect in the United States on the date the Lender became a party to thisAgreement, including transition rules, and (ii) the corresponding capitalregulations promulgated by regulatory authorities outside the United Statesimplementing the July 1988 report of the Basle Committee on BankingRegulation and Supervisory Practices Entitled “International Convergence ofCapital Measurements and Capital Standards,” including transition rules, and anyamendments to such regulations adopted prior to the date the Lender became aparty to this Agreement.

##  

## 4.3                                 Availabilityof Types of Advances.  If (i) Lenderdetermines, in the exercise of its business judgment, that maintenance of itsFixed-Rate Rate Loans at a suitable Lending Installation would violate anyapplicable law, rule, regulation or directive, whether or not having the forceof law, or (ii) the Lender determines that (x) deposits of a type,currency or maturity appropriate to match fund Fixed-Rate Loans are notavailable or (y) the interest rate applicable to Fixed-Rate Loans does notaccurately reflect the cost of making or maintaining such an Advance, then theLender shall suspend the availability of the affected Type of Advance and, inthe case of any occurrence set forth in clause (i), require anyAdvances of the affected Type to be repaid or converted into another Type.

##  

## 4.4                                 FundingIndemnification.  Subject to Section 2.3(B),if any payment of a Fixed-Rate Loan occurs on a date which is not the last dayof the applicable Interest Period, whether because of acceleration, prepayment,or otherwise, or a Fixed-Rate Loan is not made on the date specified by theBorrower for any reason other than default by the Lender, the Borrower shallindemnify Lender for any loss or cost incurred by it resulting therefrom,including, without limitation, any loss or cost in liquidating or employingdeposits acquired to fund or maintain the Fixed-Rate Loan.

##  

## 4.5                                 LenderStatements; Survival of Indemnity.  If reasonably possible, Lender shalldesignate an alternate Lending Installation with respect to its Fixed-RateLoans to reduce any liability of the Borrower to Lender under Section 2.14(E) orSections 4.1 and 4.2 or to avoid the unavailability of aType of Advance under Section 4.3, so long as such designation isnot materially disadvantageous, in the judgment of the Lender, to suchLender.  Any demand for compensationpursuant to Section 2.14(E) or this Article IVshall be in writing and shall state the amount due, if any, under Section 2.14(E),4.1, 4.2, or 4.4 and shall set forth in reasonable detailthe calculations upon which Lender determined such amount and shall be final,conclusive, and binding on the Borrower in the absence of manifest error.  Determination of amounts payable under suchSections in connection with a Fixed-Rate Loan shall be calculated as thoughLender funded its Fixed-Rate Loan through the purchase of a deposit of thetype, currency and maturity corresponding to the deposit used as a reference indetermining the Eurodollar Rate applicable to such Loan, whether in fact thatis the case or not.  The obligations

 

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## of theBorrower under Sections 2.14(E), 4.1, 4.2, or 4.4shall survive payment of the Obligations and termination of this Agreement.

##  

# ARTICLE V:  CONDITIONS PRECEDENT

#  

## 5.1                                 InitialAdvances and Letters of Credit.  The Lender shall not be required to make theLoans as of the Closing Date or issue any Letters of Credit unless the Borrowerhas furnished to the Lender each of the following, all in form and substancesatisfactory to the Lender:

##  

##### (1)                                  TheAmended and Restated Credit Agreement, duly executed by Borrower, eachSubsidiary Guarantor and Lender;

#####  

##### (2)                                  RevolvingLoan Note, payable to Lender’s order in the amount of the Revolving LoanCommitment;

#####  

##### (3)                                  Secretary’sCertificate of Borrower, in the form of Exhibit  E-2,together with (i) copies of the Certificate of Incorporation (or othercomparable constituent document) of Borrower, together with all amendments, (ii) acertificate of good standing, both certified by the appropriate governmentalofficer in its jurisdiction of organization, (iii) copies, certified bythe Secretary of Borrower, of its By-Laws (or other comparable governing document)and of its Board of Directors’ resolutions (and resolutions of other bodies, ifany are deemed necessary by counsel for Lender) authorizing the execution ofthe Loan Documents and (iv) an incumbency certificate, executed by theSecretary, which shall identify by name and title and bear the signature of theofficers of the Borrower authorized to sign the Loan Documents and to makeborrowings hereunder, upon which certificate the Lender shall be entitled torely until informed of any change in writing by the Borrower;

#####  

##### (4)                                  Secretary’sCertificate of each Subsidiary Guarantor, in the form of Exhibit  E-3,together with (i) copies of the Certificate of Incorporation (or othercomparable constituent document) of each Subsidiary Guarantor, together with allamendments, (ii) a certificate of good standing, both certified by theappropriate governmental officer in its jurisdiction of organization, (iii) copies,certified by the Secretary of each Subsidiary Guarantor, of its By-Laws (orother comparable governing document) and of its Board of Directors’ resolutions(and resolutions of other bodies, if any are deemed necessary by counsel forLender) authorizing the execution of the Loan Documents and (iv) anincumbency certificate, executed by the Secretary, which shall identify by nameand title and bear the signature of the officers of such Subsidiary Guarantorauthorized to sign the Loan Documents and to make borrowings hereunder, uponwhich certificate the Lenders shall be entitled to rely until informed of anychange in writing by such Subsidiary Guarantor;

#####  

##### (5)                                  AnOfficer’s Certificate of Borrower, in the form of Exhibit H attachedhereto, confirming the fact that the Subordination Agreement executed

 

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##### by U.S. Traffic Corporation and Myers/NuartElectrical Products, Inc., in favor of the Administrative Agent for thebenefit of the Existing Lenders; has not been amended, revised or terminated.

#####  

##### (6)                                  Reaffirmationof Subsidiary Guaranty evidenced by Section 7.2(L) of this Agreementexecuted by each Significant Domestic Incorporated Subsidiary, any Subsidiarydesignated as a Subsidiary Guarantor by Borrower and the Lender including,without limitation, Spin-Cast Plastics, Inc.;

#####  

##### (7)                                  AnOfficer’s Certificate, in the form of Exhibit E-1, signed bythe chief financial officer of the Borrower, stating that on the date of thisAgreement all the representations in this Agreement are true and correct in allmaterial respects (unless such representation and warranty is made as of aspecific date, in which case, such representation and warranty shall be true inall material respects as of such date), and no material adverse change, orDefault or Unmatured Default has occurred and is continuing;

#####  

##### (8)                                  Documentation,in form and substance reasonably satisfactory to the Lender, evidenced by anAssignment Agreement of each Existing Lender, including the AdministrativeAgent, under the Existing Credit Agreement assigning to Lender of all of theirrights and obligations thereunder;

#####  

##### (9)                                  Resignationletter of The Northern Trust Company, as Administrative Agent under theExisting Credit Agreement;

#####  

##### (10)                            Evidence,satisfactory to the Lender, that the Borrower has paid to the Lender, the feespayable pursuant to Section 2.13 and 3.7 hereof;

#####  

##### (11)                            Thewritten opinions of Joan Riley, Borrower’s General Counsel and Holland andKnight LLP, as Borrower’s counsel, addressed to the Lender in form andsubstance acceptable to the Lender and its counsel, with respect to (withoutlimitation) the due authorization, execution and enforceability of thisAgreement and the other Loan Documents by Borrower and each SubsidiaryGuarantor, as applicable;

#####  

##### (12)                            Assignmentand Assumption Agreement (California Deed of Trust), in the form of Exhibit Iattached hereto.

#####  

##### (13)                            Assignmentand Assumption Agreement (Pennsylvania Mortgage), in the form of Exhibit Jattached hereto.

#####  

##### (14)                            Assignmentand Assumption Agreement (Alabama Mortgage), in the form of Exhibit Kattached hereto.

#####  

##### (15)                            Assignmentand Assumption Agreement (Patent Security Agreement), in the form of Exhibit Oattached hereto.

 

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##### (16)                            Assignmentand Assumption Agreement (Trademark Security Agreement), in the form of Exhibit Nattached hereto.

#####  

##### (17)                            IndianaMortgage in the form of Exhibit L, attached hereto.

#####  

##### (18)                            Assignmentand Assumption Agreement (Security Agreement), in the form of Exhibit Mattached hereto.

#####  

##### (19)                            Assignmentand Assumption Agreement for each of the Subsidiary Stock Pledge Agreements, inthe form of Exhibits P-1, P-2, P-3, and P-4.

#####  

##### (20)                            IndianaFlood Zone Determinations.  FloodZone determinations for the Indiana Property, in form and substance acceptableto the Lender.

#####  

##### (21)                            TitleInsurance.  With respect to theIndiana Property, a mortgagee title insurance policy, current ALTA loan policyform, without survey exception, mechanics’ lien exception or exception forparties in possession, issued by a title insurance company satisfactory to theLender (the “Title Insurance Company”), in amounts with respect to theIndiana Property acceptable to the Lender and naming the Lender as the insuredand insuring the Indiana Mortgage to be a valid first, prior and paramount lienupon the Indiana Property subject only to the permitted exceptions describedtherein and to customary exceptions for pending disbursements and completion ofimprovements (“Title Insurance Policy”). The Title Insurance Policy must specifically ensure for claims andquestions related to such matters as Lender may require to the extent availablein the State.

#####  

##### (22)                            Searches.  A report from the Title Insurance Company orthe appropriate filing officers of the state and county in which the IndianaProperty is located, indicating that no judgments, tax or other liens, securityinterests, leases of personalty, financing statements or other encumbrances(other than permitted exceptions and liens and security interests in favor ofLender are of record or on file encumbering any portion of the IndianaProperty, and reports from the appropriate filing offices of the State in whichthe Borrower or Subsidiary Guarantor resides, that there are no judgments, taxliens, pending litigation or bankruptcy actions outstanding with respect toBorrower or any Subsidiary Guarantor.

#####  

##### (23)                            Appraisal.  With respect to the Indiana Property anappraisal of such Property, satisfactory to the Lender as to the methodologyand as to results.

 

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##### (24)                            EnvironmentalAudit .  An environmental auditreport relating to the Indiana Property satisfactory to the Lender as to themethodology and results.

#####  

##### (25)                            Reaffirmationand Amendment of California Deed of Trust, in the form of Exhibit Rattached hereto.

#####  

##### (26)                            Reaffirmationand Amendment of Pennsylvania Mortgage, in the form of Exhibit S attachedhereto.

#####  

##### (27)                            Reaffirmationand Amendment of Leasehold Mortgage, in the form of Exhibit T attachedhereto.

#####  

##### (28)                            Reaffirmationand Amendment of Security Agreement, in the form of Exhibit U attachedhereto.

#####  

##### (29)                            Reaffirmationand Amendment of Trademark Security Agreement, in the from of Exhibit Vattached hereto.

#####  

##### (30)                            Reaffirmationand Amendment of Patent Security Agreement, in the from of Exhibit Wattached hereto.

#####  

##### (31)                            Reaffirmationand Amendment of each Subsidiary Stock Pledge Agreement, in the forms ofExhibitsX-1, X-2. X-3 and X-4 attached hereto.

#####  

##### (32)                            Reaffirmationand Amendment of Subsidiary Guaranty in the form of Exhibit Z-1attached hereto.

#####  

##### (33)                            Suchother documents as the Lender or any Lender or its counsel may have reasonablyrequested, including, without limitation, each other document reflected on theList of Closing Documents attached as Exhibit D to this Agreement.

#####  

(34)                            Asa condition subsequent, within ninety (90) days of the date of this Agreement,Collateral Assignment (Lease), in the form of Exhibit Y attached hereto.

 

## 5.2                                 EachAdvance and Letter of Credit. The Lender shall not be required to make any Advance, or issue anyLetter of Credit, unless on the applicable Borrowing Date, or in the case of aLetter of Credit, the date on which the Letter of Credit is to be issued:

##  

### (A)                              Thereexists no Default or Unmatured Default;

###  

### (B)                                Therepresentations and warranties contained in Article VI are true andcorrect in all material respects as of such Borrowing Date (unless suchrepresentation and

 

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### warranty ismade as of a specific date, in which case, such representation and warrantyshall be true in all material respects as of such date); and

###  

### (C)                                TheRevolving Credit Obligations do not, and after making such proposed Advance orissuing such Letter of Credit would not, exceed the Revolving Loan Commitment.

###  

Each Borrowing/Election Notice with respect to each such Advance andLoan and the letter of credit application with respect to each Letter of Creditshall constitute a representation and warranty by the Borrower that theconditions contained in Sections 5.2(A), (B) and (C) havebeen satisfied.

 

# ARTICLE VI:  REPRESENTATIONS AND WARRANTIES

#  

In order to induce the Lender to enter into this Agreement and to makethe Loans and the other financial accommodations to the Borrower and to issuethe Letters of Credit described herein, the Borrower represents and warrants asfollows to Lender as of the Closing Date, giving effect to the consummation ofthe transactions contemplated by the Loan Documents on the Closing Date, andthereafter on each date as required by Section 5.2:

 

## 6.1                                 Organization;Corporate Powers.  TheBorrower (i) is a corporation duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization, (ii) isduly qualified to do business as a foreign entity and is in good standing underthe laws of each jurisdiction in which failure to be so qualified and in goodstanding would reasonably be expected to have a Material Adverse Effect, and (iii) hasall requisite power and authority to own, operate and encumber its property andto conduct its business as presently conducted and as proposed to be conducted.

##  

## 6.2                                 Authority;Enforceability.

##  

### (A)                              Eachof the Borrower and its Subsidiaries has the requisite power and authority toexecute, deliver and perform each of the Loan Documents which have beenexecuted by it as required by this Agreement and the other Loan Documents.

###  

### (B)                                Theexecution, delivery, and performance, of each of the Loan Documents which havebeen executed as required by this Agreement, the other Loan Documents orotherwise to which the Borrower or any of its Subsidiaries is party, and theconsummation of the transactions contemplated thereby, have been dulyauthorized by all requisite corporate, acts (including any required shareholderapproval) of the Borrower or such Subsidiary, as applicable.

###  

### (C)                                Eachof the Loan Documents to which the Borrower is a party has been duly executedand delivered by it and constitutes its legal, valid and binding obligation,enforceable against it in accordance with its terms (except as enforceabilitymay be limited by bankruptcy, insolvency, or similar laws affecting theenforcement of creditors’ rights generally and general equitable principles).

###  

## 6.3                                 NoConflict; Governmental Consents.  The execution, delivery and performance ofeach of the Loan Documents to which the Borrower is a party do not and will not(i) conflict with the certificate or articles of incorporation (or otherapplicable constituent

 

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## documents) ofthe Borrower, (ii) conflict with, result in a breach of or constitute(with or without notice or lapse of time or both) a default under anyRequirement of Law (including, without limitation, any Environmental PropertyTransfer Act) or Contractual Obligation of the Borrower, or require terminationof any Contractual Obligation, except such breach, default or termination whichindividually or in the aggregate could not reasonably be expected to have aMaterial Adverse Effect, or (iii) result in or require the creation orimposition of any Lien whatsoever upon any of the property or assets of theBorrower, other than Liens permitted or created by the Loan Documents.  Except as set forth on Schedule 6.3to this Agreement, the execution, delivery and performance of each of the LoanDocuments to which the Borrower is a party do not and will not require anyregistration with, consent or approval of or notice to, or other action to,with or by any Governmental Authority, including under any EnvironmentalProperty Transfer Act, except filings, consents or notices which have beenmade, obtained or given, or which, if not made, obtained or given, individuallyor in the aggregate could not reasonably be expected to have a Material AdverseEffect.

##  

## 6.4                                 FinancialStatements.  The consolidatedfinancial statements of the Borrower and its Subsidiaries at and for the yearended June 30, 2004 and quarterly and monthly statements through February 28,2005 have been delivered to the Lender and were prepared in accordance withgenerally accepted accounting principles in effect on the date such statementswere prepared and fairly present the consolidated financial condition andoperation of the Borrower and its Subsidiaries at June 30, 2004 or for theapplicable date or period and the consolidated results of their operations forthe period then ended.

##  

## 6.5                                 NoMaterial Adverse Change. Since June 30, 2004, except as disclosed (x) in any of the Borrower’sForm 10-Q, 10-K, or 8-K filings with the Commissionsubsequent to June 30, 2004 but prior to the Closing Date, or (y) in anyletter or confidential offering memorandum delivered by the Borrower to theLender prior to the Closing Date, there has occurred no change in the business,properties, financial condition, performance, or results of operations of theBorrower, or the Borrower and its Subsidiaries taken as a whole, or any otherevent which has had or would reasonably be expected to have a Material AdverseEffect.

##  

## 6.6                                 Taxes.  Each of the Borrower and its Subsidiaries hasfiled or caused to be filed all federal, state and local tax returns which arerequired to be filed by it and, except for taxes and assessments beingcontested in good faith and reserved for in accordance with generally acceptedaccounting principles as in effect from time to time (if and to the extent sorequired), have paid or caused to be paid all taxes as shown on said returns onany assessment received by it, to the extent that such taxes have becomedue.  The Borrower has no knowledge ofany proposed tax assessment against the Borrower or any of its Subsidiariesthat will have or could reasonably be expected to have a Material AdverseEffect.

##  

## 6.7                                 Litigation;Loss Contingencies and Violations. Except as disclosed on Schedule 6.7, there is no action, suit,proceeding, arbitration or, to the Borrower’s knowledge, investigation beforeor by any Governmental Authority or private arbitrator pending or, to theBorrower’s knowledge, threatened in writing against the Borrower, any of itsSubsidiaries or any property of any of them which could reasonably be expectedto have a Material Adverse Effect.

 

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## 6.8                                 Subsidiaries.  Schedule 6.8 to this Agreement(as updated from time to time by the Borrower after the formation, acquisitionor dissolution of any Subsidiary (i) contains a description of thecorporate structure of the Borrower, its Subsidiaries and any other Person inwhich the Borrower or any of its Subsidiaries holds an Equity Interest; and (ii) accuratelysets forth (A) the correct legal name and the jurisdiction oforganization, (B) a listing of all of the Borrower’s or any DomesticIncorporated Subsidiary’s Significant Domestic Incorporated Subsidiaries, (C) theauthorized, issued and outstanding shares of each class of Capital Stock ofeach of the Borrower’s Subsidiaries and the owners of such shares, and (D) asummary of the direct and indirect partnership, joint venture, or other EquityInterests, if any, which the Borrower and each Subsidiary of the Borrower holdsin any Person that is not a corporation. Except as disclosed on Schedule 6.8, none of the issued andoutstanding Capital Stock of the Borrower or any of the Borrower’s Subsidiariesis subject to any vesting, redemption, or repurchase agreement, and there areno warrants or options outstanding with respect to such Capital Stock.  The outstanding Capital Stock of each of theBorrower’s Subsidiaries is duly authorized, validly issued, fully paid andnonassessable and is not Margin Stock.

##  

## 6.9                                 ERISA.  Except as disclosed on Schedule 6.9,no Benefit Plan has incurred any material accumulated funding deficiency (asdefined in Sections 302(a)(2) of ERISA and 412(a) of the Code)whether or not waived.  Neither theBorrower nor any member of the Controlled Group has incurred any materialliability to the PBGC which remains outstanding other than the payment ofpremiums.  As of the last day of the mostrecent prior plan year, the market value of assets under each Benefit Plan,other than any Multiemployer Plan, was not by a material amount less than thepresent value of benefit liabilities thereunder (determined in accordance withthe actuarial valuation assumptions described therein).  Neither the Borrower nor any member of theControlled Group has (i) failed to make a required contribution or paymentto a Multiemployer Plan of a material amount or (ii) incurred a materialcomplete or partial withdrawal under Section 4203 or Section 4205 ofERISA from a Multiemployer Plan.  Neitherthe Borrower nor any member of the Controlled Group has failed to make aninstallment or any other payment of a material amount required under Section 412of the Code on or before the due date for such installment or otherpayment.  There have been no and there isno prohibited transaction described in Sections 406 of ERISA or 4975 ofthe Code with respect to any Plan for which a statutory or administrativeexemption does not exist which could reasonably be expected to subject theBorrower or any of is Subsidiaries to material liability.  Neither the Borrower nor any member of theControlled Group has taken or failed to take any action which would constituteor result in a Termination Event, which action or inaction could reasonably beexpected to subject the Borrower or any of its Subsidiaries to materialliability.  Neither the Borrower nor anymember of the Controlled Group is subject to any material liability under, orhas any potential material liability under, Section 4063, 4064, 4069, 4204or 4212(c) of ERISA.  For purposesof this Section 6.9, “material” means any amount, noncompliance orother basis for liability which could reasonably be expected to subject theBorrower or any of its Subsidiaries to liability, individually or in theaggregate with each other basis for liability under this Section 6.9,in excess of $3,000,000.

##  

## 6.10                           Accuracyof Information.  Theinformation, exhibits and reports furnished by the Borrower and any of itsSubsidiaries, or by the Borrower on behalf of any of its Subsidiaries, to theLender in connection with the negotiation of, or compliance with, the Loan

 

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## Documents, therepresentations and warranties of the Borrower and its Subsidiaries containedin the Loan Documents, and all certificates and documents delivered to theLender pursuant to the terms thereof (excluding any forecasts and projectionsof financial information and results submitted to Lender as works in process oras materials not otherwise required to be submitted to the Commission), takenas a whole, do not contain as of the date thereof any untrue statement of amaterial fact or omit to state a material fact necessary in order to make thestatements contained herein or therein, in light of the circumstances underwhich they were made, not misleading in any material respect.

##  

## 6.11                           SecuritiesActivities.  Neither theBorrower nor any of its Subsidiaries is engaged in the business of extendingcredit for the purpose of purchasing or carrying Margin Stock.

##  

## 6.12                           MaterialAgreements.

##  

(a)                                  Neitherthe Borrower nor any Subsidiary is a party to or subject to any ContractualObligation, which, as of such date, individually or in the aggregate couldreasonably be expected to have a Material Adverse Effect.

 

(b)                                 Nomember of the senior management of either the Borrower or any of itsSubsidiaries has received written notice that (i) it is in default in theperformance, observance or fulfillment of any of the obligations, covenants orconditions contained in any Contractual Obligation to which it is a party, or (ii) anycondition exists which, with the giving of notice or the lapse of time or both,would constitute a default with respect to any such Contractual Obligation, ineach case, which default has, or if not remedied within any applicable graceperiod could reasonably be likely to have, a Material Adverse Effect.

 

## 6.13                           Compliancewith Laws.  The Borrower andits Subsidiaries are in compliance with all Requirements of Law applicable tothem and their respective businesses, in each case where the failure to socomply individually or in the aggregate would reasonably be expected to have aMaterial Adverse Effect.

##  

## 6.14                           Assetsand Properties.  Each of theBorrower and its Subsidiaries has good and sufficient title to all of itsmaterial real and personal properties owned by it or a valid leasehold interestin all of its leased assets (except insofar as marketability may be limited byany laws or regulations of any Governmental Authority affecting such assets),and all such assets and property are free and clear of all Liens, except Lienspermitted under Section 7.3(C), and except for those defects intitle and Liens that, individually or in the aggregate, would not have aMaterial Adverse Effect.

##  

## 6.15                           StatutoryIndebtedness Restrictions. Neither the Borrower nor any of its Subsidiaries is subject toregulation under the Public Utility Holding Company Act of 1935, the FederalPower Act, or the Investment Company Act of 1940, or any other foreign, federalor state statute or regulation which limits its ability to incur indebtednessor its ability to consummate the transactions contemplated hereby.

##  

## 6.16                           LaborMatters.  To the knowledge ofthe Borrower, no attempt to organize the employees of the Borrower or any ofits Subsidiaries, and no labor disputes, strikes or

 

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## walkoutsaffecting the operations of the Borrower or any of its Subsidiaries, ispending, or, to the Borrower’s or such Subsidiaries’ knowledge, threatened,planned or contemplated which would reasonably be expected to have a MaterialAdverse Effect.

##  

## 6.17                           EnvironmentalMatters.

##  

### (A)                              Exceptas disclosed on Schedule 6.17 to this Agreement:

###  

#### (i)                                     theoperations of the Borrower and its Subsidiaries comply in all material respectswith Environmental, Health or Safety Requirements of Law;

####  

#### (ii)                                  theBorrower and its Subsidiaries have all permits, licenses or other authorizationsrequired under Environmental, Health or Safety Requirements of Law and are inmaterial compliance with such permits;

####  

#### (iii)                               neitherthe Borrower, any of its Subsidiaries nor any of their respective presentproperty or operations, or, to the Borrower’s or any of its Subsidiaries’knowledge, any of their respective past property or operations, are subject toor the subject of, any investigation known to the Borrower or any of itsSubsidiaries, any judicial or administrative proceeding, order, judgment, decree,settlement or other agreement respecting: (A) any material violation ofEnvironmental, Health or Safety Requirements of Law; (B) any remedialaction; or (C) any material claims or liabilities arising from the Releaseor threatened Release of a Contaminant into the environment;

####  

#### (iv)                              thereis not now, nor to the Borrower’s or any of its Subsidiaries’ knowledge hasthere ever been, on or in the property of the Borrower or any of itsSubsidiaries any landfill, waste pile, underground storage tanks, abovegroundstorage tanks, surface impoundment or hazardous waste storage facility of anykind, any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrictransformers or other equipment, or any asbestos containing material; and

####  

#### (v)                                 tothe knowledge of the Borrower or any of its Subsidiaries, neither the Borrowernor any of its Subsidiaries has any material Contingent Obligation inconnection with any Release or threatened Release of a Contaminant into theenvironment.

####  

### (B)                                Forpurposes of this Section 6.17 “material” means any noncompliance orbasis for liability which could reasonably be likely to subject the Borrower orany of its Subsidiaries to liability, individually or in the aggregate, inexcess of $3,000,000.

###  

## 6.18                           Insurance.  The Borrower maintains, and has caused eachSubsidiary to maintain, with financially sound and reputable insurancecompanies, insurance on all of its property in such amounts, subject todeductibles and self-insurance retentions, and covering such properties andrisks, as is consistent with sound and customary business practices forcompanies in lines of business similar to the Borrower and its Subsidiaries.

##  

## 6.19                           Useof Proceeds.  All proceeds ofthe Revolving Loan shall be used for working capital refinancing of existingindebtedness and general corporate purposes.

 

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##  

## 6.20                           Solvency.  The Borrower (i) is currently, and aftergiving effect to the transactions contemplated by this Agreement, the Notes andthe other Loan Documents, will be able to pay its debts as they come due andwill not incur debts beyond its ability to pay such debts as they mature orcome due, (ii) has capital sufficient to carry on its business and anybusiness in which it intends or is about to engage, and (iii) ownsproperty and assets having a value (as a going concern) in excess of itsliabilities and debts.  No transfer ofproperty is being made and no Obligation is being incurred in connection withthe transactions contemplated by this Agreement with the intent to hinder,delay or defraud either present or future creditors of the Borrower or anyAffiliates of the Borrower.

##  

# ARTICLE VII:  COVENANTS

 

The Borrower covenants and agrees that solong as any Commitment is outstanding and thereafter until payment in full ofall of the Obligations (other than contingent indemnity obligations) andtermination of all Letters of Credit (or cash collateralization thereof inaccordance with Section 3.11), unless the Lender shall otherwisegive prior written consent:

 

## 7.1                                 Reporting.  The Borrower shall:

##  

### (A)                              Financial Reporting.  Furnish to the Lender:

###  

#### (i)                                     QuarterlyReports.  As soon as practicable, andin any event no later than the earlier to occur of (x) the fifty second (52nd)day after the end of each of the first three fiscal quarters of each fiscalyear of the Borrower, and (y) the tenth (10th) day after the date on which anyof the following items are required to be delivered to the Commission, theconsolidated and consolidating balance sheet of the Borrower and itsSubsidiaries as at the end of such period and the related statement ofconsolidated and consolidating earnings of the Borrower and its Subsidiariesfor such fiscal quarter and the related statements of consolidated earnings andconsolidated cash flows of the Borrower and its Subsidiaries for the periodfrom the beginning of the then current fiscal year to the end of such fiscalquarter, certified by the chief financial officer of the Borrower on behalf ofthe Borrower as fairly presenting in all material respects the consolidatedfinancial position of the Borrower and its Subsidiaries as at the datesindicated and the results of their operations and cash flows for the periodsindicated in accordance with generally accepted accounting principles as ineffect from time to time, subject to normal year-end audit adjustments and theabsence of footnotes.  With respect toany fiscal quarter, if all of the foregoing information is fairly, accuratelyand completely set forth in the Borrower’s Form 10-Q filing with theCommission for such fiscal quarter, the Borrower may deliver such Form 10-Qfiling in lieu of a separate report setting forth such information:  provided, however, that theBorrower must comply with the foregoing timing requirements for such deliverywhether constituting a Form 10-Q filing or another report and mustdeliver any corresponding compliance certificates hereunder when due.

####  

#### (ii)                                  AnnualReports.  As soon as practicable, andin any event no later than the earlier to occur of (x) the ninetieth (90th) dayafter the end of each fiscal year of the Borrower, and (y) the tenth (10th) dayafter the date on which any of the following items are required to be deliveredto the Commission, (a) the audited consolidated and

 

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#### unauditedconsolidating balance sheet of the Borrower and its Subsidiaries as at the endof such fiscal year and the related statements of consolidated earnings,consolidated shareholders’ equity and consolidated cash flows of the Borrowerand its Subsidiaries for such fiscal year, and in comparative form thecorresponding figures for the previous fiscal year in form and substancesufficient to calculate the financial covenants set forth in Section 7.4,and (b) an audit report on the items listed in clause (a) hereof(with the exception of the unaudited consolidating balance sheet) ofindependent certified public accountants of recognized national standing, whichaudit report shall be unqualified and shall state that such financialstatements fairly present the consolidated financial position of the Borrowerand its Subsidiaries as at the dates indicated and the results of theiroperations and cash flows for the periods indicated in conformity withgenerally accepted accounting principles as in effect from time to time andthat the examination by such accountants in connection with such consolidatedfinancial statements has been made in accordance with generally acceptedauditing standards.  The deliveries madepursuant to this clause (ii) shall be accompanied by a certificateof such accountants that, in the course of their examination necessary fortheir certification of the foregoing, they have obtained no knowledge of anyDefault or Unmatured Default under Section 7.4, or if, in theopinion of such accountants, any Default or Unmatured Default shall exist underSection 7.4, stating the nature and status thereof.  With respect to any fiscal year, if all ofthe foregoing information is fairly, accurately and completely set forth in theBorrower’s Form 10-K filing with the Commission for such fiscalyear, the Borrower may deliver such Form 10-K filing in lieu of aseparate report setting forth such information, together with the accountant’scertificate described in the prior sentence (which is not part of the Form 10-K);provided, however, that the Borrower must comply with the timingrequirements for such delivery whether constituting a Form 10-Kfiling or another report and must deliver any corresponding compliancecertificates hereunder when due.

####  

#### (iii)                               MonthlyReports.  As soon as practicable, andin any event, no later than the 30 calendar days after the end of each month,the consolidated and consolidating financial statement of Borrower and itsSubsidiaries at the end of such period, including balance sheet, statement ofincome and such other information (including non-financial information) as theLender may request, in reasonable detail, prepared by the Borrower.

####  

#### (iv)                              Officer’sCertificate.  Together with eachdelivery of any financial statement (a) pursuant to clauses (i) and(ii) of this Section 7.1(A), an Officer’s Certificateof the Borrower, substantially in the form of Exhibit E-1attached hereto and made a part hereof, stating that (x) the representationsand warranties of the Borrower contained in Article VI hereof shallhave been true and correct in all material respects (unless such representationor warranty is made as of a specific date, in which case, such representationand warranty shall be true in all material respects as of such date) at alltimes during the period covered by such financial statements and as of the dateof such Officer’s Certificate, (y) as of the date of such Officer’s Certificateno Default or Unmatured Default exists, or if any Default or Unmatured Defaultexists, stating the nature and status thereof and (z) the Borrower, theBorrower’s chief executive officer, and the Borrower’s chief financial officerare in compliance with all requirements of Section 302 and Section 906of the Sarbanes-Oxley Act of 2002 and all rules and regulations

 

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#### relatedthereto (or such other officers as may be required from time to timethereunder), and (b) pursuant to clauses (i) and (ii) ofthis Section 7.1(A), a compliance certificate, substantially in theform of, prior to the Collateral Release Date Exhibit F-1 or Exhibit F-2,as applicable, attached hereto and made a part hereof, signed by theBorrower’s chief financial officer, (1) demonstrating compliance, whenapplicable, with the provisions of Sections 7.3(A) through (N)and Section 7.4, and (2) calculating the Senior Leverage Ratiofor purposes of determining the then Applicable Eurodollar Margin, theApplicable ABR Margin, the Applicable L/C Fee Percentage and ApplicableCommitment Fee Percentage.

####  

#### (v)                                 BorrowingBase Certificate.  The Borrowershall, within thirty (30) days after the end of each month, until theCollateral Release Date, deliver to the Lender a Borrowing Base Certificate inthe form of Exhibit Q, attached hereto certified as accurate by theBorrower and acceptable to the Lender in its sole and absolute discretion;provided that this requirement shall expire upon Lender’s acceptance ofBorrower’s Certificate of Compliance with the Release Covenants delivered inaccordance with Section 7.1(J).

####  

#### (vi)                              AgedAccounts Schedule.  The Borrower shall,within thirty(30) days after the end of each month, deliver to the Lender anaged schedule of the Accounts of the Borrower, listing the name and amountdue from each Account Debtor and showing the aggregate amounts due from (a) 0-30days, (b) 31-60 days, (c) 61-90 days and (d) morethan 90 days, and certified as accurate by the Borrower.

####  

#### (vii)                           InventoryReports.  The Borrower shall, withinthirty (30) days after the end of each month, deliver to the Lender aninventory report, certified as accurate by the borrower, and within such timeas the Bank may specify, such other schedules and reports as the Bank mayrequire.

####  

#### (viii)                        CovenantCompliance Report.  Subject to therequirements of Section 7.1(iii), the Borrower shall, within forty-five(45) days after the end of each quarter and seventy-five (75) days after eachfiscal yearend, deliver to the Lender a computation in such detail as the Bankshall specify, showing compliance by the Borrower with the financial covenantsset forth in Section 7.4, and certified as accurate by the Borrower, whichreport shall be in the form of with Exhibit F-1 or Exhibit F-2,as applicable.

####  

#### (ix)                                Budget.  No later than August 31 of each fiscalyear (or earlier if possible), a budget in the form satisfactory to the Lender(including budgeted statements of income and sources and uses of cash) preparedby the Borrower for that fiscal year, commencing as of July 1 of thatyear, prepared in summary form, in each case, on a consolidated basis, for theBorrower and its Subsidiaries.

####  

(x)                                   FieldAudits.  The Borrower and itsSubsidiaries shall allow the Lender, at Borrower’s sole expense, once eachyear, or upon the occurrence of an Event of Default, at any time to conduct afield examination, and also to engage appraisers, on as frequent a basis, toconduct an appraisal of the Collateral consisting of machinery,

 

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equipment and real property and Borrower’sand its Subsidiaries’ business operations at such locations as Lender deemsappropriate, the result of which must be satisfactory to the Lender in its soleand absolute discretion.

 

### (B)                                Notice of Default.  Promptly upon any of the chief executiveofficer, chief financial officer, or treasurer of the Borrower obtainingknowledge (i) of any condition or event which constitutes a Default orUnmatured Default, or becoming aware that Lender has given any written noticeto any Authorized Officer with respect to a claimed Default or UnmaturedDefault under this Agreement, or (ii) that any Person has given anywritten notice to any Authorized Officer of the Borrower or any Subsidiary ofthe Borrower or taken any other action with respect to a claimed default orevent or condition of the type referred to in Section 8.1(E), theBorrower shall deliver to the Lenders an Officer’s Certificate specifying (a) thenature and period of existence of any such claimed default.  Default, Unmatured Default, condition orevent, (b) the notice given or action taken by such Person in connectiontherewith, and (c) what action the Borrower has taken, is taking andproposes to take with respect thereto.

###  

### (C)                                Lawsuits.  (i) Promptly upon the Borrower’s chiefexecutive officer, chief financial officer, or treasurer obtaining knowledge ofthe institution of, or written threat of, any action, suit, proceeding,governmental investigation or arbitration, by or before any GovernmentalAuthority, against or affecting the Borrower or any of its Subsidiaries or anyproperty of the Borrower or any of its Subsidiaries not previously disclosedpursuant to Section 6.7, which action, suit, proceeding,governmental investigation or arbitration exposes, or in the case of multipleactions, suits, proceedings, governmental investigations or arbitrationsarising out of the same general allegations or circumstances which expose, inthe Borrower’s reasonable judgment, the Borrower or any of its Subsidiaries toliability in an amount aggregating $3,000,000 or more (exclusive of claimscovered by insurance policies of the Borrower or any of its Subsidiaries unlessthe insurers of such claims have disclaimed coverage or reserved the right todisclaim coverage on such claims and exclusive of claims covered by theindemnity of a financially responsible indemnitor in favor of the Borrower orany of its Subsidiaries unless the indemnitor has disclaimed or reserved theright to disclaim coverage thereof), give written notice thereof to the Lenderand in the case of any litigation described in Section 8.1(E) aquarterly written status report of such litigation, and provide such otherinformation as may be reasonably available to enable Lender to evaluate suchmatters; and (ii) in addition to the requirements set forth in clause (i) ofthis Section 7.1(C), upon request of the Lender (which requestshall be made no more than once a quarter), promptly give written notice of thestatus of any action, suit, proceeding, governmental investigation orarbitration covered by a report delivered pursuant to clause (i) above andprovide such other information as may be reasonably available to it that wouldnot jeopardize any attorney-client privilege by disclosure to the Lender toenable Lender and its counsel to evaluate such matters.

###  

### (D)                               ERISA Notices.  Deliver or cause to be delivered to theLender, at the Borrower’s expense, the following information and notices assoon as reasonably possible, and in any event:

###  

#### (i)                                     withinten (10) Business Days after any member of the Controlled Group obtainsknowledge that a Termination Event has occurred which could reasonably

 

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#### be expected tosubject the Borrower or its Subsidiaries to liability individually or in theaggregate in excess of $3,000,000, a written statement of the chief financialofficer of the Borrower describing such Termination Event and the action, ifany, which the member of the Controlled Group has taken, is taking or proposesto take with respect thereto, and when known, any action taken or threatened bythe IRS, DOL or PBGC with respect thereto;

####  

#### (ii)                                  withinten (10) Business Days after the filing of any funding waiver request withthe IRS, a copy of such funding waiver request and thereafter allcommunications received by the Borrower or a member of the Controlled Groupwith respect to such request within ten (10) Business Days suchcommunication is received;

####  

#### (iii)                               withinten (10) Business Days after the Borrower or any member or the ControlledGroup knows or has reason to know that (a) a Multiemployer Plan has beenterminated, (b) the administrator or plan sponsor of a Multiemployer Planintends to terminate a Multiemployer Plan, or (c) the PBGC has institutedor will institute proceedings under Section 4042 of ERISA to terminate aMultiemployer Plan, a notice describing such matter; and

####  

#### (iv)                              withinten (10) Business Days after the Borrower or any member of the ControlledGroup fails to make a required installment or any other required payment to aBenefit Plan which could result in the imposition of a lien under Section 412(a) ofthe Code, a notice thereof.

####  

For purposes of this Section 7.1 (D), the Borrower and anymember of the Controlled Group shall be deemed to know all facts known by theadministrator of any Plan of which the Borrower or any member of the ControlledGroup is the plan sponsor.

 

### (E)                                 Labor Matters.  Notify the Lender in writing, promptly uponan Authorized Officer of the Borrower learning of (i) any material labordispute to which the Borrower or any of its Subsidiaries may become a party,including, without limitation, any strikes, lockouts or other disputes relatingto such Persons’ plants and other facilities, which dispute would reasonably beexpected to have a Material Adverse Effect and (ii) any Worker Adjustmentand Retraining Notification Act liability incurred with respect to the closingof any plant or other facility of the Borrower or any of its Subsidiaries whichwould reasonably be expected to have a Material Adverse Effect.

###  

### (F)                                 Other Indebtedness.  Deliver to the Lender (i) a copy of eachregular report, notice or communication regarding potential or actual defaults(including any accompanying officer’s certificate) delivered by or on behalf ofthe Borrower to the holders of funded Indebtedness with an aggregateoutstanding principal amount in excess of $2,000,000 pursuant to the terms of the agreements governing suchIndebtedness, such delivery to be made at the same time and by the same meansas such notice of default is delivered to such holders, and (ii) a copy ofeach notice or other communication received by the Borrower from the holders offunded Indebtedness with an aggregate outstanding principal amount in excess of$2,000,000 regarding potential or actual defaults pursuant to the terms of suchIndebtedness, such delivery to be made promptly after such notice or othercommunication is received by the Borrower.

 

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### (G)                                Other Reports.  Deliver or cause to be delivered to theLender copies of (i) all financial statements, reports and notices, ifany, sent by the Borrower to its securities holders or filed with theCommission by the Borrower, and (ii) all notifications received from theCommission by the Borrower or its Subsidiaries pursuant to the SecuritiesExchange Act of 1934 and the rules promulgated thereunder.  The Borrower shall include the Lender on itsstandard distribution lists for all press releases made available generally bythe Borrower to the public concerning material developments in the business ofthe Borrower or any such Subsidiary.

###  

### (H)                               Environmental Notices.  As soon as possible and in any event withintwenty (20) days after receipt by the Borrower, deliver or cause to bedelivered a copy of (i) any notice or claim to the effect that theBorrower or any of its Subsidiaries is or may be liable to any Person as aresult of the Release by the Borrower, any of its Subsidiaries, or any otherPerson of any Contaminant into the environment, and (ii) any noticealleging any violation of any Environmental, Health or Safety Requirements ofLaw by the Borrower or any of its Subsidiaries if, in either case, such noticeor claim relates to an event which could reasonably be expected to subject theBorrower and each of its Subsidiaries to liability individually or in theaggregate in excess of $3,000,000.

###  

### (I)                                    Other Information.  Promptly upon receiving a request thereforfrom the Lender, prepare and deliver to Lender such other information withrespect to the Borrower, any of its Subsidiaries, as from time to time may bereasonably requested by the Lender.

###  

(J)                                   Noticeof Satisfaction of and Compliance with Release Covenants.  If Borrower satisfies and is otherwise incompliance with the Release Covenants, it shall furnish to Lender a compliancecertificate in the form of Exhibit F-1 or Exhibit F-2,as applicable, to the Credit Agreement signed by the Borrower’s Chief FinancialOfficer demonstrating compliance with the Release Covenants.  The Lender shall promptly review suchcompliance certificate for acceptability and notify Borrower of its acceptanceor rejection thereof, as applicable.  Inthe event of Lender’s acceptance of such certificate, Lender shall promptlydeliver, at the request of Borrower, all documentation reasonably necessary torelease the security interest and liens of the Collateral.

 

## 7.2                                 Affirmative Covenants.

##  

### (A)                              Corporate Existence,Etc.  Except as permitted pursuant toSection 7.3(I), the Borrower shall, and shall cause each of itsSubsidiaries to, at all times maintain its valid existence and (to the extentsuch concept applies to such entity) in good standing as a corporation,partnership or limited liability company in its jurisdiction of incorporationor organization, as the case may be, and preserve and keep, or cause to bepreserved and kept, in full force and effect its rights and franchises materialto its businesses, unless, in the good faith judgment of the Borrower, thefailure to preserve any such rights or franchises would not reasonably beexpected to have a Material Adverse Effect.

###  

### (B)                                Corporate Powers;Conduct of Business.  The Borrowershall, and shall cause each of its Subsidiaries to, qualify and remainqualified to do business in each jurisdiction in which the nature of itsbusiness requires it to be so qualified and where the failure to be soqualified will have or would reasonably be expected to have a Material AdverseEffect.

 

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### (C)                                Compliance withLaws, Etc.  The Borrower shall, andshall cause its Subsidiaries to, (a) comply with all Requirements of Law(including, without limitation, Section 302 and Section 906 of theSarbanes-Oxley Act of 2002) and all restrictive covenants affecting such Personor the business, properties, assets or operations of such Person, and (b) obtainas needed all permits necessary for its operations and maintain such permits ingood standing, unless failure to comply with such Requirements of Law or suchcovenants or to obtain or maintain such permits would not reasonably beexpected to have a Material Adverse Effect.

###  

### (D)                               Payment of Taxes andClaims; Tax Consolidation.  TheBorrower shall pay, and cause each of its Subsidiaries to pay, (i) allmaterial taxes, assessments and other governmental charges imposed upon it oron any of its properties or assets or in respect of any of its franchises,business, income or property before any penalty accrues thereon, and (ii) allclaims (including, without limitation, claims for labor, services, materialsand supplies) for sums which have become due and payable and which by law haveor may become a Lien (other than a Lien permitted by Section 7.3(C))upon any of the Borrower’s or such Subsidiary’s property or assets, prior tothe time when any penalty or fine shall be incurred with respect thereto;provided, however, that no such taxes, assessments and governmental chargesreferred to in clause (i) above or claims referred to in clause (ii) above(and interest, penalties or fines relating thereto) need be paid if (x) beingcontested in good faith by appropriate proceedings diligently instituted andconducted and if such reserve or other appropriate provision, if any, as shallbe required in conformity with generally accepted accounting principles as ineffect from time to time shall have been made therefor, or (y) the nonpaymentof all such taxes, assessments and other governmental charges would notreasonably be expected to have a Material Adverse Effect.

###  

### (E)                                 Insurance.  The Borrower shall maintain for itself andits Subsidiaries, or shall cause each of its Subsidiaries to maintain in fullforce and effect, such insurance policies and programs as reflect coverage thatis reasonably consistent with prudent industry practice for companies operatingin the same or similar locations.

###  

### (F)                                 Inspection ofProperty; Books and Records; Discussions. The Borrower shall permit and cause each of the Borrower’s Subsidiariesto permit, the Lender or any authorized representative(s) designated by theLender to visit and inspect any of the properties of the Borrower or any of itsSubsidiaries, to examine, audit, check and make copies of their respectivefinancial and accounting records, books, journals, orders, receipts and anycorrespondence and other data relating to their respective businesses or thetransactions contemplated hereby (including, without limitation, in connectionwith environmental compliance, hazard or liability), and to discuss theiraffairs, finances and accounts with their officers, all upon reasonable noticeand at such reasonable times during normal business hours, as often as may bereasonably requested.  The Borrower shallkeep and maintain, in all material respects, proper books of record and accounton a consolidated basis in which entries in conformity with GAAP shall be madeof all dealings and transactions in relation to their respective businesses andactivities.  The Borrower shall causeeach of its Subsidiaries to keep and maintain, in all material respects, properbooks of record and account.  If aDefault has occurred and is continuing, the Borrower, upon the Lender’srequest, shall provide copies of such records to the Lender or itsrepresentatives.

 

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### (G)                                ERISA Compliance.  The Borrower shall, and shall cause each ofits Subsidiaries to, maintain and operate all Plans to comply in all materialrespects with the provisions of ERISA and shall operate all Plans and Non-ERISACommitments to comply in all material respects with the applicable provisionsof the Code, all other applicable laws, and the regulations and interpretationsthereunder and the respective requirements of the governing documents for suchPlans and Non-ERISA Commitments, unless the failure to maintain, operate andcomply with the foregoing, as applicable, would not reasonably be expected tosubject Borrower or its Subsidiaries to a liability in excess of $3,000,000.

###  

### (H)                               Maintenance ofProperty.  The Borrower shall causeall material property used in the conduct of its business or the business ofany Subsidiary to be maintained and kept in adequate condition, repair andworking order and supplied with all necessary equipment and shall cause to bemade all necessary repairs, renewals, replacements, betterments andimprovements thereof, all as in the judgment of the Borrower may be necessaryso that the business carried on in connection therewith may be properlyconducted at all times; provided, however, that nothing in this Section 7.2(H) shallprevent the Borrower from discontinuing the operation or maintenance of any ofsuch property if such discontinuance is, in the judgment of the Borrower,desirable in the conduct of its business or the business of any Subsidiary.

###  

### (I)                                    EnvironmentalCompliance.  The Borrower and itsSubsidiaries shall comply with all Environmental, Health or Safety Requirementsof Law, except where noncompliance will not have or is not reasonably likely tosubject the Borrower or any of its Subsidiaries to liability, individually orin the aggregate, in excess of $3,000,000.

###  

### (J)                                   Use of Proceeds.  The Borrower shall use the proceeds of theRevolving Loans for the refinancing of existing debt and for working capitaland general corporate purposes of the Borrower and its Subsidiaries.  The Borrower will not, nor will it permit anySubsidiary to, use any of the proceeds of the Loans to purchase or carry anyMargin Stock.

###  

### (K)                               Subsidiary Guarantees.  The Borrower will, including in connectionwith a Permitted Acquisition, (a) cause each Significant DomesticIncorporated Subsidiary or Significant Foreign Incorporated Subsidiary toexecute the Subsidiary Guaranty (and from and after the Closing Date cause eachSignificant Domestic Incorporated Subsidiary or Significant ForeignIncorporated Subsidiary or any other Subsidiary designated a SubsidiaryGuarantor by Borrower, to execute and deliver to the Lender, as promptly aspossible, but in any event within sixty (60) days after becoming a SignificantDomestic Incorporated Subsidiary or Significant Foreign Incorporated Subsidiaryof the Borrower or being designated a Subsidiary Guarantor by Borrower, asapplicable, an executed Supplement to become a Subsidiary Guarantor under theSubsidiary Guaranty in the form of Annex I to Exhibit Z attachedhereto (whereupon such Subsidiary shall become a “Subsidiary Guarantor” underthis Agreement)), and (b) deliver and cause each such Subsidiary todeliver corporate resolutions, opinions of counsel, and such other corporatedocumentation as the Lender may reasonably request, all in form and substancereasonably satisfactory to the Lender; provided, however, thatupon the Borrower’s written request of and certification to the Lender that aDomestic Incorporated Subsidiary or Significant Foreign Incorporated Subsidiaryis no longer a Significant Domestic Incorporated Subsidiary or SignificantForeign Incorporated Subsidiary or that a designated Subsidiary Guarantor is nolonger designated as a Subsidiary Guarantor, the Lender shall release suchDomestic 

 

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### Incorporated Subsidiary, Significant Foreign Incorporated Subsidiary ordesignated Subsidiary from its duties and obligations under the SubsidiaryGuaranty; provided, further, that if such Domestic IncorporatedSubsidiary or Significant Foreign Incorporated Subsidiary subsequentlyqualifies as a Significant Domestic Incorporated Subsidiary or SignificantForeign Incorporated Subsidiary, it shall be required to re-execute theSubsidiary Guaranty.  Notwithstanding theabove to the contrary, with respect to a Significant Foreign IncorporatedSubsidiary (or a Subsidiary that is not a Domestic Incorporated Subsidiary butis designated as a Subsidiary Guarantor), Borrower may deliver, in lieu of aSubsidiary Guaranty, a pledge agreement, in form and substance acceptable tothe Lender, pledging no more than sixty-five percent (65%) of the voting stockof such Subsidiary to the Lender.

###  

(L)                                 Reaffirmationof Subsidiary Guaranty.  Each of theGuarantors including, without limitation, Spin-Cast Plastics, Inc. herebyexpressly (a) consents to the execution by the Borrower and the Lender ofthis Agreement, (b) acknowledge that the “Guaranteed Obligations” (asdefined in the Subsidiary Guaranty) includes all of the obligations andliabilities owing from the Borrower to the Lender under and pursuant to thisAgreement, as amended from time to time, including, but not limited to, theobligations of the Borrower to Lender as evidenced by the Revolving Loan Notes,as modified, extended and/or replaced from time to time, (c) reaffirms,assumes and binds itself in all respects to all of the obligations,liabilities, duties, covenants, terms and conditions that are contained in theSubsidiary Guaranty, (d) agrees that all such obligations and liabilitiesunder the Subsidiary Guaranty shall continue in full force and effect and shallnot be discharged, limited, impaired or affected in any manner whatsoever,except as expressly provided in the Subsidiary Guaranty, (e) representsand warrants that each of the representations and warranties made by suchGuarantor in any of the documents executed in connection with the Loans remaintrue and correct as of the date hereof, in each case as amended by theinformation provided in any report or notice delivered by the Borrower to theLender pursuant to Section 7.1 of the Credit Agreement, and (f) representsand warrants that the organization documents, borrowing resolutions andincumbency certificates of such Guarantor have not been changed or amendedsince the most recent date that certified copies thereof were delivered to theLender.  Spin-Cast Plastics, Inc.hereby agrees to become a party to and a Subsidiary Guarantor under theSubsidiary Guaranty and a Debtor under the Security Agreement and be bound byand obligated respectively as a Subsidiary Guarantor and Debtorthereunder.  This Reaffirmation and anAmendment to the Subsidiary Guaranty shall be evidenced by the Reaffirmationand Amendment of Subsidiary Guaranty in the form of Exhibit Z-1attached hereto.

 

(M)                            Pledgeof Stock of Spin-Cast Plastics, Inc. Energy Absorption Systems, Inc.agrees to pledge to the Lender the capital stock of Spin-Cast Plastics, Inc.,pursuant to the terms of the Subsidiary Stock Pledge Agreement (EnergyAbsorption Systems, Inc.), as amended by the Reaffirmation and Amendmentthereof, dated as of the date hereof.

 

## 7.3                                 Negative Covenants.

##  

### (A)                              Indebtedness.  Neither the Borrower nor any of itsSubsidiaries shall directly or indirectly create, incur, assume or otherwisebecome or remain directly or indirectly liable with respect to anyIndebtedness, except:

###  

#### (i)                                     theObligations;

 

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#### (ii)                                  PermittedExisting Indebtedness and Permitted Refinancing Indebtedness;

####  

#### (iii)                               Indebtednessin respect of obligations secured by Customary Permitted Liens;

####  

#### (iv)                              Indebtednessconstituting Contingent Obligations permitted by Section 7.3(E);

####  

#### (v)                                 Indebtednessarising from intercompany loans and advances to any Subsidiary, other than to aSignificant Domestic Incorporated Subsidiary or to any Subsidiary which hasexecuted and delivered to the Lender, a Subsidiary Guaranty, in an aggregateprincipal amount not to exceed a Dollar Amount equal to $3,000,000 at any time;provided, that such intercompany loans and advances shall be subject tothe subordination provisions of Section 10.14 of this Agreement andSection 6 of the Subsidiary Guaranty;

####  

#### (vi)                              Indebtednessin respect of Hedging Obligations permitted under Section 7.3(M);

####  

#### (vii)                           Indebtednesswith respect to surety, appeal and performance bonds obtained by the Borroweror any of its Subsidiaries in the ordinary course of business;

####  

#### (viii)                        Indebtednessconsisting of the Subordinated Debt; and

####  

#### (ix)                                securedor unsecured purchase money Indebtedness (including Capitalized Leases)incurred by the Borrower or any of its Subsidiaries to finance the acquisitionof assets used in its business, if (1) at the time of such incurrence noDefault or Unmatured Default has occurred and is continuing or would resultfrom such incurrence, (2) such Indebtedness does not exceed the lower ofthe fair market value or the cost of the applicable assets on the dateacquired, (3) such Indebtedness does not exceed $5,000,000 in theaggregate outstanding at any time, and (4) any Lien securing suchIndebtedness is permitted under Section 7.3(C).

####  

### (B)                                Sales of Assets.  Neither the Borrower nor any of itsSubsidiaries shall consummate any Asset Sale, except:

###  

#### (i)                                     transfersof assets between the Borrower and any wholly-owned Subsidiary of the Borroweror between wholly-owned Subsidiaries of the Borrower not otherwise prohibitedby this Agreement;

####  

#### (ii)                                  salesof inventory and licenses of intellectual property, each in the ordinary courseof business;

####  

#### (iii)                               thedisposition in the ordinary course of business of equipment that is obsolete,excess, or no longer used or useful in the Borrower’s or any Subsidiary’sbusiness;

 

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#### (iv)                              sales,assignments, transfers, leases, conveyances or other dispositions of otherassets if such transaction (a) is for not less than fair market value (asdetermined in good faith by the Borrower’s management or board of directors)and (b) when combined with all such other transactions (each suchtransaction being valued at book value) during the then current fiscal year,represents the disposition of assets with an aggregate book value not greaterthan 10% of the aggregate book value of Consolidated Assets as of the end ofthe immediately preceding fiscal year. If the proceeds resulting from an Asset Sale are used by the Borrower orthe applicable Subsidiary within 180 days of the date on which such proceedsarose to acquire property of a similar nature to be used in the Borrower’s orsuch Subsidiary’s ordinary course of business, then, only for purposes ofdetermining compliance with this Section 7.3(B)(iv), such AssetSale shall not be included in such determination.

####  

### (C)                                Liens.  Neither the Borrower nor any of itsSubsidiaries shall directly or indirectly create, incur, assume or permit toexist any Lien on or with respect to any of their respective property or assetsexcept:

###  

#### (i)                                     Lienscreated by the Loan Documents or otherwise securing the Obligations;

####  

#### (ii)                                  PermittedExisting Liens;

####  

#### (iii)                               CustomaryPermitted Liens;

####  

#### (iv)                              purchasemoney Liens (including the interest of a lessor under a Capitalized Lease andLiens to which any property is subject at the time of the Borrower’sacquisition thereof) securing Indebtedness permitted pursuant to Section 7.3(A)(ix);provided that such Liens shall not apply to any property of the Borroweror its Subsidiaries other than that purchased or subject to such CapitalizedLease;

####  

#### (v)                                 Lienswith respect to property acquired by the Borrower or any of its Subsidiariesafter the Closing Date (and not created in contemplation of such acquisition)pursuant to a Permitted Acquisition; provided, that such Liens shallextend only to the property so acquired;

####  

#### (vi)                              Lienssecuring the non-delinquent performance of surety, appeal and performance bondsobtained by the Borrower or any Subsidiary in the ordinary course of business;and

####  

#### (vii)                           otherLiens securing Indebtedness not to exceed $3,000,000 in the aggregate.

####  

In addition,neither the Borrower nor any of its Subsidiaries shall become a party to anyagreement, note, indenture or other instrument, or take any other action, whichwould prohibit the creation of a Lien on any of its properties or other assetsin favor of the Lender, as collateral for the Obligations.

 

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### (D)                               Investments.  Except to the extent permitted pursuant toparagraph (G) below, neither the Borrower nor any of its Subsidiariesshall directly or indirectly make or own any Investment except:

###  

#### (i)                                     Investmentsin cash and Cash Equivalents;

####  

#### (ii)                                  PermittedExisting Investments;

####  

#### (iii)                               Investmentsin trade receivables or received in connection with the bankruptcy or reorganizationof suppliers and customers and in settlement of delinquent obligations of, andother disputes with, customers and suppliers arising in the ordinary course ofbusiness;

####  

#### (iv)                              Investmentsconsisting of deposit accounts maintained by the Borrower and its Subsidiaries;

####  

#### (v)                                 Investmentsin any Subsidiary Guarantor;

####  

#### (vi)                              Investmentsconstituting Permitted Acquisitions;

####  

#### (vii)                           Investmentsconstituting Indebtedness permitted by Section 7.3(A), ContingentObligations permitted by Section 7.3(E) or Restricted Paymentspermitted by Section 7.3(F);

####  

#### (viii)                        Investmentsconsisting of any right of the Borrower or its wholly-owned DomesticIncorporated Subsidiaries to payment for goods sold or for services rendered,whether or not it has been earned by performance;

####  

#### (ix)                                Investmentsin addition to those referred to elsewhere in this Section 7.3(D) inan aggregate amount not to exceed $3,000,000 at any time outstanding.

####  

### (E)                                 ContingentObligations.  Neither the Borrowernor any of its Subsidiaries shall directly or indirectly create or become or beliable with respect to any Contingent Obligation, except:  (i) recourse obligations resulting fromendorsement of negotiable instruments for collection in the ordinary course ofbusiness; (ii) Permitted Existing Contingent Obligations; (iii) obligations,warranties, guarantees and indemnities, not relating to Indebtedness of anyPerson, which have been or are undertaken or made in the ordinary course ofbusiness and not for the benefit of or in favor of an Affiliate of the Borroweror such Subsidiary; (iv) Contingent Obligations with respect to surety,appeal and performance bonds obtained by the Borrower or any Subsidiary in theordinary course of business; (v) Contingent Obligations of the SubsidiaryGuarantors under the Subsidiary Guaranty; (vi) obligations arising underor related to the Loan Documents; (vii) Contingent Obligations in respectof representations and warranties customarily given in respect of Asset Salesotherwise permitted hereunder; and (viii) Contingent Obligations, in anaggregate amount not to exceed $3,000,000, arising as a result of the guarantyof any Indebtedness not described in clauses (i) through (ix) hereofand otherwise permitted under Section 7.3(A).

 

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### (F)                                 Restricted Payments.  The Borrower shall not declare or make anyRestricted Payment if either a Default or an Unmatured Default shall haveoccurred and be continuing at the date of declaration or payment thereof orwould result therefrom provided Borrower shall not make, without the priorwritten consent of the Lender, any Restricted Payment with the proceeds of anyRevolving Loan to any Subordinated Debt of Borrower as defined under subsection (iii) ofthe definition of “Restricted Payment” in Section 1.1 of the Agreement(other than for accrued interest).

###  

### (G)                                Conduct of Business;Subsidiaries; Acquisitions.  Neitherthe Borrower nor any of its Subsidiaries shall engage in any business otherthan the businesses engaged in by the Borrower on the date hereof and anybusiness or activities which are reasonably similar, related or incidentalthereto or logical extensions thereof. The Borrower shall not create, acquire or capitalize any Subsidiary afterthe date hereof unless (i) no Default or Unmatured Default which is notbeing cured shall have occurred and be continuing or would result therefrom; (ii) aftersuch creation, acquisition or capitalization, all of the representations andwarranties contained herein shall be true and correct in all material respects(unless such representation and warranty is made as of a specific date, inwhich case, such representation or warranty shall be true in all materialrespects as of such date); and (iii) after such creation, acquisition orcapitalization the Borrower shall be in compliance with the terms of Section 7.2(K)and Section 7.3(L).  TheBorrower shall not make any Acquisitions without approval by the Lender priorto the Collateral Release Date provided thereafter, that Borrower shall notneed the approval of the Lender to make Permitted Acquisitions (as definedbelow) of up to (x) $5,000,000 in aggregate purchase price in the first twelvemonth period immediately following the Collateral Release Date, (ii) $10,000,000in aggregate purchase price thereafter. For purposes of this Agreement, Permitted Acquisitions are Acquisitionsmeeting the following requirements or otherwise approved by the Lenders:

###  

#### (i)                                     noDefault or Unmatured Default shall have occurred and be continuing or wouldresult from such Acquisition or the incurrence of any Indebtedness inconnection therewith;

####  

#### (ii)                                  thepurchase is consummated pursuant to a negotiated acquisition agreement on anon-hostile basis;

####  

#### (iii)                               theBorrower shall deliver to the Lender a certificate from one of the AuthorizedOfficers, demonstrating to the reasonable satisfaction of the Lender that aftergiving effect to such Acquisition and the incurrence of any Indebtednesspermitted by Section 7.3(A) in connection therewith, on a proforma basis using, for any Acquisition, historical financial statements,as if the Acquisition and such incurrence of Indebtedness had occurred on thefirst day of the twelve-month period ending on the last day of the Borrower’smost recently completed fiscal quarter, the Borrower would have been incompliance with the financial covenants in Section 7.4 applicable onsuch date and not otherwise in Default;

####  

#### (iv)                              aftergiving effect to such Acquisition, Borrower must demonstrate pro formacompliance with all financial covenants under Section 7.4 applicable onsuch date hereof; and

 

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#### (v)                                 thebusinesses being acquired shall be reasonably similar, related or incidentalto, or a logical extension of, the businesses or activities engaged in by theBorrower on the Closing Date.

####  

### (H)                               Transactions withAffiliates.  Neither the Borrower norany of its Subsidiaries shall directly or indirectly enter into or permit toexist any transaction (including, without limitation, the purchase, sale, leaseor exchange of any property or the rendering of any service) with any Affiliateof the Borrower, on terms that are (a) not authorized by the Board ofDirectors or (b) less favorable to the Borrower or any of itsSubsidiaries, as applicable, than those that might be obtained in an arm’slength transaction at the time from Persons who are not such an Affiliate,except for (i) Restricted Payments permitted by Section 7.3(F),(ii) Investments permitted by Section 7.3(D), (iii) transactionsin the ordinary course of business and pursuant to the reasonable requirementsof the Borrower’s or such Subsidiary’s business and (iv) loans andadvances to employees in the ordinary course of business  in an aggregate amount not to exceed$500,000.

###  

### (I)                                    Restriction on FundamentalChanges.  Neither the Borrower norany of its Subsidiaries shall enter into any merger or consolidation, orliquidate, wind-up or dissolve (or suffer any liquidation or dissolution), orconvey, lease, sell, transfer or otherwise dispose of, in one transaction orseries of transactions, all or substantially all of the Borrower’s consolidatedbusiness or property, whether now or hereafter acquired, except (i) transactionspermitted under Sections 7.3(B). 7.3(D) or 7.3(G) and,(ii) a Subsidiary of the Borrower may be merged into or consolidated withthe Borrower (in which case the Borrower shall be the surviving corporation) orany wholly-owned Domestic Incorporated Subsidiary of the Borrower, and (iii) anyliquidation of any Subsidiary of the Borrower into the Borrower or anotherSubsidiary of the Borrower, as applicable.

###  

### (J)                                   MarginRegulations.  Neither the Borrowernor any of its Subsidiaries, shall use all or any portion of the proceeds ofany credit extended under this Agreement to purchase or carry Margin Stock.

###  

### (K)                               ERISA.  The Borrower shall not:

###  

#### (i)                                     permitto exist any accumulated funding deficiency (as defined in Sections 302 ofERISA and 412 of the Code), with respect to any Benefit Plan, whether or notwaived;

####  

#### (ii)                                  terminate,or permit any Controlled Group member to terminate, any Benefit Plan whichwould result in liability of the Borrower or any Controlled Group member underTitle IV of ERISA; or

####  

#### (iii)                               fail,or permit any Controlled Group member to fail, to pay any required installmentor any other payment required under Section 412 of the Code on or beforethe due date for such installment or other payment;

####  

except where such transactions, events, circumstances, or failures arenot, individually or in the aggregate, reasonably expected to result inliability individually or in the aggregate in excess of $3,000,000.

 

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### (L)                                 DomesticIncorporated Subsidiary Covenants. The Borrower will not, and will not permit any Domestic Incorporated Subsidiaryto, create or otherwise cause to become effective any consensual encumbrance orrestriction of any kind on the ability of any Domestic Incorporated Subsidiaryto pay dividends or make any other distribution on its stock, or make any otherRestricted Payment, pay any Indebtedness or other Obligation owed to theBorrower or any other Domestic Incorporated Subsidiary, make loans or advancesor other Investments in the Borrower or any other Domestic IncorporatedSubsidiary, or sell, transfer or otherwise convey any of its property to theBorrower or any other Domestic Incorporated Subsidiary other than pursuant to (i) applicablelaw, (ii) this Agreement or the other Loan Documents or (iii) restrictionsimposed by the holder of a Lien permitted by Section 7.3(C).

###  

### (M)                            Hedging Obligations.  The Borrower shall not and shall not permitany of its Subsidiaries to enter into any interest rate, commodity or foreigncurrency exchange, swap, collar, cap or similar agreements evidencing HedgingObligations, other than interest rate, foreign currency or commodity exchange,swap, collar, cap or similar agreements entered into by the Borrower or suchSubsidiary pursuant to which the Borrower or such Subsidiary has hedged itsreasonably estimated interest rate, foreign currency or commodity exposure,which are non-speculative in nature. Such permitted hedging agreements shall be entered into by the Borroweronly with Lender or any affiliate of the Lender and are herein referred to as “HedgingAgreements.”

###  

### (N)                               Issuance ofDisqualified Stock.  From and afterthe Closing Date, neither the Borrower, nor any of its Subsidiaries shall issueany Disqualified Stock unless after giving effect to the next sentence, suchDisqualified Stock and Indebtedness is issued in accordance with the terms ofthis Agreement.  All issued andoutstanding Disqualified Stock shall be treated as Indebtedness for allpurposes of this Agreement (and as funded Indebtedness for purposes of Section 7.1(F)),and the amount of such deemed Indebtedness shall be the aggregate amount of theliquidation preference of such Disqualified Stock.

###  

(O)                               BankingRelationship.  Borrower covenants andagrees at all times during the term of this Agreement, to utilize the Lender asits primary bank of account and depository for all financial services,including all receipts, disbursements, cash management and related servicesexcept Borrower may maintain operating accounts with financial institutionsother than the Lender with aggregate balances not to exceed $2,000,000.

 

## 7.4                                 Financial Covenants.  The Borrower shall comply with the following:

##  

### (A)                              Maximum SeniorLeverage Ratio.  Prior to and afterthe Collateral Release Date, the Borrower and its consolidated Subsidiariesshall not permit the ratio (the “Senior Leverage Ratio”) of (i) totalSenior Indebtedness (including the Letters of Credit) of the Borrower and itsconsolidated Subsidiaries to (ii) EBITDA to be greater than 2.75 to 1.00on a trailing twelve month basis, beginning with the Fiscal Quarter ending June 30,2006, and for each fiscal quarter thereafter. The Senior Leverage Ratio shall be calculated, in each case, determinedas of the last day of each applicable Fiscal Quarter of the Borrower based upon(a) for Indebtedness, Indebtedness as of the last day of each such fiscalquarter; and (b) for

 

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### EBITDA, the actual amount for the Last Twelve-Month Period.  “Senior Indebtedness” shall mean allIndebtedness of Borrower and its Subsidiaries other than the Subordinated Debt.

###  

### (B)                                Minimum ConsolidatedNet Worth.  After the CollateralRelease Date, the Borrower shall not permit its Consolidated Net Worth at anytime to be less than the sum of 85% of its Base Net Worth as of the CollateralRelease Date, plus 50% of Borrower’s positive Consolidated Net Income for eachfiscal year thereafter.  “Base Net Worth”shall mean Borrower’s book Net Worth as of the Collateral Release Date.  With Lender’s written approval, certain noncash items may be excluded from this Net Worth Test computation.

###  

### (C)                                Minimum ExcessCollateral Availability.  Prior tothe Collateral Release Date, the Borrower and its consolidated Subsidiariesshall maintain at all times minimum excess availability under the BorrowingBase Amount through June 30, 2006, of not less than $8,000,000, andthereafter of not less than $5,000,000.

###  

### (D)                               Fixed Charge CoverageRatio.  After the Collateral ReleaseDate, the Borrower and its consolidated Subsidiaries shall not permit the ratio(“Fixed Charge Coverage Ratio”), for any period, of (i) EBITDA, minusCapital Expenditures and Patent Expenditures to (ii) the sum of cashInterest Expense, plus scheduled payments of the principal portion of all otherIndebtedness for borrowed money for such period (excluding payments on theRevolving Loans), plus dividends and distributions paid for such period, andtaxes paid for such period, as measured on a trailing twelve month basis, ofnot less than 1.20 to 1.00 for each of the fiscal quarters thereafter. Forpurposes of this Agreement, “Patent Expenditures” shall mean expenditures of aPerson relating to its obtaining, acquiring and defending patents.

###  

(E)                                 MaximumTotal Leverage Ratio.  At all times,after the Collateral Release Date, the Borrower and its consolidatedSubsidiaries shall not permit the ratio (“Total Leverage Ratio”) of (i) totalIndebtedness (including Letters of Credit) to (ii) EBITDA, to be greaterthan 4.5 to 1.0 on a trailing twelve month basis for each fiscal quarterthereafter.

 

ARTICLE VIII:  DEFAULTS

#  

## 8.1                                 Defaults.  Each of the following occurrences shallconstitute a Default under this Agreement:

##  

### (A)                              Failure to MakePayments When Due.  The Borrowershall (i) fail to pay when due any of the Obligations consisting ofprincipal with respect to the Loans or Reimbursement Obligations and suchfailure shall remain unremedied for a period of three (3) days or (ii) shallfail to pay within five (5) Business Days of the date when due any of theother Obligations under this Agreement or the other Loan Documents.

###  

### (B)                                Breach of CertainCovenants.  The Borrower shall failduly and punctually to perform or observe any agreement, covenant or obligationbinding on the Borrower under:

###  

#### (i)                                     Sections7.1 or 7.2 and such failure shall continue unremedied for fifteen (15) days, or

####  

#### (ii)                                  Sections7.3 or 7.4.

 

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### (C)                                Breach ofRepresentation or Warranty.  Anyrepresentation or warranty made or deemed made by the Borrower to the Lender orby the Borrower or any of its Subsidiaries in any of the other Loan Documentsor in any statement or certificate at any time given by any such Personpursuant to any of the Loan Documents shall be false or misleading in anymaterial respect on the date as of which made (or deemed made).

###  

### (D)                               Other Defaults.  The Borrower shall default in the performanceof or compliance with any term contained in this Agreement (other than ascovered by paragraphs (A) or (B) of this Section 8.1), orthe Borrower or any of its Subsidiaries shall default in the performance of orcompliance with any term contained in any of the other Loan Documents, and suchdefault shall continue for thirty (30) days after the occurrence thereof.

###  

### (E)                                 Default as to OtherIndebtedness.  The Borrower or any ofits Subsidiaries shall fail to make any payment when due (whether by scheduledmaturity, required prepayment, acceleration, demand or otherwise) with respectto any Indebtedness (other than Indebtedness hereunder, but including, withoutlimitation, Disqualified Stock), beyond any period of grace provided withrespect thereto, which individually or together with other such Indebtedness asto which any such failure exists has an aggregate outstanding principal amountin excess of [$2,000,000]; or any breach, default or event of default shall occur,or any other condition shall exist under any instrument, agreement or indenturepertaining to any such Indebtedness having such aggregate outstanding principalamount, beyond any period of grace, if any, provided with respect thereto, ifthe effect thereof is to cause an acceleration, mandatory redemption, arequirement that the Borrower offer to purchase such Indebtedness or otherrequired repurchase of such Indebtedness, or permit the holder(s) of suchIndebtedness to accelerate the maturity of any such Indebtedness; or require aredemption or other repurchase of such Indebtedness or any such Indebtednessshall be otherwise declared to be due and payable (by, acceleration orotherwise) or required to be prepaid, redeemed or otherwise repurchased by theBorrower or any of its Subsidiaries (other than by a regularly scheduledrequired prepayment) prior to the stated maturity thereof; provided howeverthat it shall not be a Default under this Section 8.1(E) with respectto any Indebtedness the principal amount of which is $5,000,000 or less, if andso long as the Borrower or its Subsidiary, as applicable, is in good faithcontesting (i) the occurrence of any asserted failure, breach, default,event of default, or other acceleration, redemption, prepayment or repurchaseevent or (ii) its obligations to pay such Indebtedness.

###  

### (F)                                 InvoluntaryBankruptcy; Appointment of Receiver, Etc.

###  

#### (i)                                     Aninvoluntary case shall be commenced against the Borrower, any of the Borrower’sDomestic Incorporated Subsidiaries, or any of the Borrower’s SignificantForeign Subsidiaries and the petition shall not be dismissed, stayed, bonded ordischarged within sixty (60) days after commencement of the case: or a courthaving jurisdiction in the premises shall enter a decree or order for relief inrespect of the Borrower, any of the Borrower’s Domestic IncorporatedSubsidiaries, or any of the Borrower’s Significant Foreign Subsidiaries in aninvoluntary case, under any applicable bankruptcy, insolvency or other similarlaw now or hereinafter in effect: or any other similar relief shall be grantedunder any applicable federal, state, local or foreign law.

 

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#### (ii)                                  Adecree or order of a court having jurisdiction in the premises for the appointmentof a receiver, liquidator, sequestrator, trustee, custodian or other officerhaving similar powers over the Borrower, any of the Borrower’s DomesticIncorporated Subsidiaries or any of the Borrower’s Significant ForeignSubsidiaries or over all or a substantial part of the property of the Borrower,any of the Borrower’s Domestic Incorporated Subsidiaries or any of the Borrower’sSignificant Foreign Subsidiaries shall be entered; or an interim receiver,trustee or other custodian of the Borrower, any of the Borrower’s DomesticIncorporated Subsidiaries or any of the Borrower’s Significant ForeignSubsidiaries or of all or a substantial part of the property of the Borrower,any of the Borrower’s Domestic Incorporated Subsidiaries or any of the Borrower’sSignificant Foreign Subsidiaries shall be appointed or a warrant of attachment,execution or similar process against any substantial part of the property ofthe Borrower, any of the Borrower’s Domestic Incorporated Subsidiaries or anyof the Borrower’s Significant Foreign Subsidiaries shall be issued and any suchevent shall not be stayed, dismissed, bonded or discharged within sixty (60)days after entry, appointment or issuance.

####  

### (G)                                VoluntaryBankruptcy: Appointment of Receiver, Etc. The Borrower, any of the Borrower’s Domestic Incorporated Subsidiariesor any of the Borrower’s Significant Foreign Subsidiaries shall (i) commencea voluntary case under any applicable bankruptcy, insolvency or other similarlaw now or hereafter in effect, (ii) consent to the entry of an order forrelief in an involuntary case, or to the conversion of an involuntary case to avoluntary case, under any such law. (iii) consent to the appointment of ortaking possession by a receiver, trustee or other custodian for all or asubstantial part of its property, (iv) make any assignment for the benefitof creditors or (v) take any corporate action to authorize any of theforegoing.

###  

### (H)                               Judgments andAttachments.  Any money judgment(s)(other than a money judgment covered by insurance as to which the applicableinsurance company has not disclaimed or reserved the right to disclaimcoverage), writ or warrant of attachment, or similar process against theBorrower or any of its Subsidiaries or any of their respective assets involvingin any single case or in the aggregate an amount in excess of $3,000,000 is orare entered and shall remain undischarged, unvacated, unbonded or unstayed fora period of sixty (60) days or in any event later than fifteen (15) days priorto the date of any proposed sale thereunder.

###  

### (I)                                    Dissolution.  Any order, judgment or decree shall beentered against the Borrower decreeing its involuntary dissolution or split upand such order shall remain undischarged and unstayed for a period in excess ofsixty (60) days or the Borrower shall otherwise dissolve or cease to existexcept as specifically permitted by this Agreement.

###  

### (J)                                   Loan Documents.  At any time, for any,’ reason, any LoanDocument that materially affects the ability of the Administration Agent or anyof the Lenders to enforce the Obligations ceases to be in full force and effector the Borrower or any of the Borrower’s Subsidiaries party thereto seek torepudiate their respective obligations thereunder.

###  

### (K)                               Termination Event.  Any Termination Event occurs which isreasonably likely to subject either the Borrower or any member of itsControlled Group to liability in excess of $3,000,000.

 

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### (L)                                 Waiver of MinimumFunding Standard.  If the planadministrator of any Plan applies under Section 412(d) of the Codefor a waiver of the minimum funding standards of Section 412(a) ofthe Code and any Lender believes the substantial business hardship upon whichthe application for the waiver is based could reasonably be expected to subjecteither the Borrower or any’ Controlled Group member to liability in excess of$3,000,000.

###  

### (M)                            Change of Control.  A Change of Control shall occur.

###  

### (N)                               Environmental Matters.  The Borrower or any of its Subsidiaries shallbe the subject of any proceeding or investigation pertaining to (i) theRelease by the Borrower or any of its Subsidiaries of any Contaminant into theenvironment, (ii) the liability of the Borrower or any of its Subsidiariesarising from the Release by any other Person of any Contaminant into theenvironment, or (iii) any violation of any Environmental, Health orSafety, Requirements of Law which by” the Borrower or any of its Subsidiaries,which, in any case, has or is reasonably likely to subject the Borrower toliability (which is not covered by undenied indemnification by a creditworthyindemnitor) in excess of $3,000,000.

###  

### (O)                               Subsidiary Guarantors’Revocation.  Any Subsidiary Guarantorof the Obligations shall terminate or revoke any of its obligations under theSubsidiary Guaranty or breach any of the material terms of the SubsidiaryGuaranty.

###  

A Default shall be deemed “continuing” until cured or until waived inwriting in accordance with Section 9.3.

 

ARTICLE IX:  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

#  

## 9.1                                 Terminationof Revolving Loan Commitments; Acceleration.  If any Default described in Section 8.1(F) or8.1(G) occurs with respect to the Borrower, the obligations of theLender to make Loans hereunder and to issue Letters of Credit hereunder shallautomatically terminate and the Obligations shall immediately become due andpayable without any election or action on the part of the Lender. If any otherDefault occurs, the Lender may terminate or suspend its obligations to makeLoans hereunder and to issue Letters of Credit hereunder, or declare theObligations to be due and payable, or both, whereupon the Obligations shallbecome immediately due and payable, without presentment, demand, protest ornotice of any kind, all of which the Borrower expressly waives.

##  

## 9.2                                 Preservation ofRights.  No delay or omissionof the Lender to exercise any right under the Loan Documents shall impair suchright or be construed to be a waiver of any Default or an acquiescence therein,and the making of a Loan or the issuance of a Letter of Credit notwithstandingthe existence of a Default or the inability of the Borrower to satisfy theconditions precedent to such Loan or issuance of such Letter of Credit shallnot constitute any waiver or acquiescence. Any single or partial exercise ofany such right shall not preclude other or further exercise thereof or theexercise of any other right, and no waiver, amendment or other variation of theterms, conditions or provisions of the Loan Documents whatsoever shall be validunless in writing signed by the Lender and then only to the extent in suchwriting specifically set forth. All remedies contained in the Loan Documents orby law afforded shall be

 

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## cumulative and all shall be available to the Lender until theObligations have been paid in full in cash.

##  

9.3                                 Amendments.  No amendment, modification, termination,discharge or waiver of any provision of this Agreement or of any of the LoanDocuments, or consent to any departure by the Borrower there from, shall be inwriting and signed by the Lender and then such waiver or consent shall beeffective only for the specific purpose for which given.

 

ARTICLE X:  GENERAL PROVISIONS

#  

## 10.1                           Survivalof Representations.  All representationsand warranties of the Borrower contained in this Agreement shall survivedelivery of this Agreement and the making of the Loans herein contemplated solong as any principal, accrued interest, fees, or any other amount due andpayable under any Loan Document is outstanding and unpaid (other thancontingent reimbursement and indemnification obligations) and so long as theCommitments have not been terminated.

##  

## 10.2                           GovernmentalRegulation.  Anything contained inthis Agreement to the contrary notwithstanding, Lender shall not be obligatedto extend credit to the Borrower in violation of any limitation or prohibitionprovided by any applicable statute or regulation.

##  

## 10.3                           Headings.  Section headings in the Loan Documentsare for convenience of reference only. and shall not govern the interpretationof any of the provisions of the Loan Documents.

##  

## 10.4                           Entire Agreement.  The Loan Documents embody the entireagreement and understanding among the Borrower and the Lender and supersede allprior agreements and understandings among the Borrower and the Lender relatingto the subject matter thereof.

##  

## 10.5                           Benefits of thisAgreement.  This Agreementshall not be construed so as to confer any right or benefit upon any Personother than the parties to this Agreement and their respective successors andassigns.

##  

## 10.6                           Expenses; Indemnification.

##  

### (A)                              Expenses.  The Borrower shall reimburse the Lender forany reasonable costs and out-of-pocket expenses (including reasonable attorneys’and paralegals’ fees and time charges of attorneys and paralegals for theLender which attorneys and paralegals may be employees of the Lender) paid orincurred by the Lender in connection with the preparation, negotiation,execution, delivery, syndication, review, amendment, modification, andadministration of the Loan Documents and in connection with the collection ofthe Obligations and enforcement of the Loan Documents.

###  

### (B)                                Indemnity.  The Borrower further agrees to defend,protect, indemnify, and hold harmless the Lender and each of its Affiliates,and Lender’s and its Affiliate’s respective officers, directors, trustees,investment advisors, employees, attorneys and agents (including, withoutlimitation, those retained in connection with the satisfaction or attemptedsatisfaction of any of the conditions set forth in Article V)(collectively, the “Indemnitees”), based upon its

 

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### obligations, from and against any and all liabilities, obligations,losses, damages, penalties, actions, judgments, suits, claims, costs, expensesof any kind or nature whatsoever (including, without limitation, the fees anddisbursements of counsel for such Indemnitees in connection with anyinvestigative, administrative or judicial proceeding, whether or not such Indemniteesshall be designated a party thereto), imposed on. incurred by, or assertedagainst such Indemnitees in any manner relating to or arising out of:

###  

#### (i)                                     thisAgreement or any of the other Loan Documents, or any act. event or transactionrelated or attendant thereto or to the making of the Loans, and the issuance ofand participation in Letters of Credit hereunder, the management of such Loansor Letters of Credit, the use or intended use of the proceeds of the Loans orLetters of Credit hereunder, or any of the other transactions contemplated bythe Loan Documents; or

####  

#### (ii)                                  anyliabilities, obligations, responsibilities, losses, damages, personal injury,death, punitive damages, economic damages, consequential damages, trebledamages, intentional, willful or wanton injury, damage or threat to theenvironment, natural resources or public health or welfare, costs and expenses(including, without limitation, attorney, expert and consulting fees and costsof investigation, feasibility or remedial action studies), fines, penalties andmonetary sanctions, interest, direct or indirect, known or unknown, absolute orcontingent, past, present or future relating to violation of any Environmental,Health or Safety Requirements of Law arising from or in connection with thepast, present or future operations of the Borrower, its Subsidiaries or any oftheir respective predecessors in interest, or, the past, present or futureenvironmental, health or safety condition of any respective property of theBorrower or its Subsidiaries, the presence of asbestos-containing materials atany respective property of the Borrower or its Subsidiaries or the Release orthreatened Release of any Contaminant into the environment (collectively, the “IndemnifiedMatters”);

####  

provided, however,the Borrower shall have no obligation to an Indemnitee hereunder with respectto Indemnified Matters to the extent caused by or resulting from the willfulmisconduct or gross negligence of such Indemnitee with respect to the LoanDocuments, as determined by the final non-appealable judgment of a court ofcompetent jurisdiction. If the undertaking to indemnify, pay and hold harmlessset forth in the preceding sentence may be unenforceable because it isviolative of any law or public policy, the Borrower shall contribute themaximum portion which it is permitted to pay and satisfy under applicable law,to the payment and satisfaction of all Indemnified Matters incurred by theIndemnitees.

 

### (C)                                Waiver of CertainClaims; Settlement of Claims.  TheBorrower further agrees to assert no claim against any of the Indemnitees onany theory of liability seeking consequential, special, indirect, exemplary orpunitive damages.  No settlement shall beentered into by the Borrower or any of its Subsidiaries with respect to anyclaim, litigation, arbitration or other proceeding relating to or arising outof the transactions evidenced by this Agreement, the other Loan Documentsunless such settlement releases all Indemnitees from any and all liability withrespect thereto.

 

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### (D)                               Survival ofAgreements.  The obligationsand agreements of the Borrower under this Section 10.7 shallsurvive the termination of this Agreement.

###  

## 10.7                           Numbers of Documents.  The Borrower will provide the Lender withsuch additional copies of  statements,notices, closing documents, and requests hereunder, as the Lender mayreasonably request.

##  

## 10.8                           Confidentiality.  Lender agrees to hold any confidentialinformation which it may receive from the Borrower pursuant to this Agreementin confidence, except for disclosure (i) to its Affiliates who areexpected to be involved in the evaluation of such information and who areadvised of the confidential nature of the information, (ii) to legalcounsel, accountants, and other professional advisors to Lender, (iii) toregulatory officials, (iv) to any Person as requested pursuant to or asrequired by law, regulation, or legal process, (v) to any Person inconnection with any legal proceeding to which such Lender is a party, (vi) tosuch Lender’s direct or indirect contractual counterparties in HedgingAgreements or to legal counsel, accountants and other professional advisors tosuch counterparties, (vii) permitted hereunder and (viii) to ratingagencies if requested or required by such agencies in connection with a ratingrelating to the Loans hereunder.

##  

## 10.9                           Severability ofProvisions.  Any provision inany Loan Document that is held to be inoperative, unenforceable, or invalid inany jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,or invalid without affecting the remaining provisions in that .jurisdiction orthe operation, enforceability, or validity of that provision in any otherjurisdiction, and to this end the provisions of all Loan Documents are declaredto be severable.

##  

## 10.10                     Nonliability of Lenders.  The relationship between the Borrower and theLender shall be solely that of borrower and lender.  The Lender shall not have any fiduciaryresponsibilities to the Borrower. The Lender does not undertake anyresponsibility to the Borrower to review or inform the Borrower of any matterin connection with any phase of the Borrower’s business or operations.

##  

## 10.11                     GOVERNING LAW.  ANY DISPUTE BETWEEN THE BORROWER AND THELENDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THERELATIONSHIP ESTABLISHED AMONG THE BORROWER AND THE LENDER IN CONNECTION WITH,THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING INCONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THEINTERNAL LAWS (INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ. BUTOTHERWISE WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OFILLINOIS.

##  

## 10.12                     CONSENT TO JURISDICTION; SERVICEOF PROCESS: JURY TRIAL.

##  

### (A)                              NON-EXCLUSIVEJURISDICTION.  THE BORROWER HEREBYIRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATESFEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN

 

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### ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOANDOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECTOF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURTAND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TOTHE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT ORTHAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGSAGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY THE BORROWERAGAINST THE LENDER OR ANY LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING,DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, ORCONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,ILLINOIS.

###  

### (B)                                SERVICE OF PROCESS.  THE BORROWER WAIVES PERSONAL SERVICE OF ANYPROCESS UPON IT AND IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANYWRITS, PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING BY THE MAILINGTHEREOF BY THE LENDER BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THEBORROWER ADDRESSED AS PROVIDED HEREIN. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF THELENDER TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNERPERMITTED BY APPLICABLE LAW.

###  

### (C)                                WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVESANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDINGIN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO ORINCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THISAGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVEREDIN CONNECTION HEREWITH.  EACH OF THE PARTIESHERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OFACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETOMAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANYCOURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OFTHEIR RIGHT TO TRIAL BY JURY.

###  

### (D)                               ADVICE OF COUNSEL.  EACH OF THE PARTIES REPRESENTS TO EACH OTHERPARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THEPROVISIONS OF SECTION 10.7 AND THIS SECTION 10.13, WITH ITS COUNSEL.

###  

## 10.13                     Subordinationof Intercompany Indebtedness. The Borrower agrees that any and all claims of the Borrower against anyof its Subsidiary Guarantors with respect to any indebtedness of any SubsidiaryGuarantor to the Borrower (“Intercompany Indebtedness”), any endorser,obligor or any other Subsidiary Guarantor of all or any part of theObligations, or 

 

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## against any of its properties, including, without limitation, claimsarising from liens or security interests upon property, shall be subordinateand subject in right of payment to the prior payment, in full and in cash, ofall Obligations: provided that, and not in contravention of theforegoing, so long as no Default has occurred and is continuing the Borrowermay make loans to and receive payments in the ordinary course with respect tosuch Intercompany Indebtedness from each such Subsidiary Guarantor to theextent permitted by the terms of this Agreement and the other Loan Documents.  Should any payment, distribution, security orinstrument or proceeds thereof be received by the Borrower upon or with respectto the Intercompany Indebtedness in contravention of this Agreement or the LoanDocuments or after the occurrence of a Default, including, without limitation,an event described in Section 8.1(F) or (G) prior to thesatisfaction of all of the Obligations (other than contingent indemnityobligations) and the termination of all financing arrangements pursuant to anyLoan Document or Hedging Agreement among the Borrower and the Lender (and itsAffiliates), the Borrower shall receive and hold the same in trust, as trustee,for the benefit of the holders of the Obligations and shall forthwith deliverthe same to the Lender, for the benefit of such Persons, in precisely the formreceived (except for the endorsement or assignment of the Borrower wherenecessary), for application to any of the Obligations, due or not due, and,until so delivered, the same shall be held in trust by the Borrower as the propertyof the holders of the Obligations.  Ifthe Borrower fails to make any such endorsement or assignment to the Lender,the Lender or any of its officers or employees are irrevocably authorized tomake the same.  The Borrower agrees thatuntil the Obligations involving the payment of monies (other than thecontingent indemnity obligations) have been paid in full (in cash) andsatisfied and all financing arrangements pursuant to any Loan Document orHedging Agreement among the Borrower and the Lenders (and its Affiliates) havebeen terminated, the Borrower will not assign or transfer to any Person (otherthan the Lender) any claim the Borrower has or may have against any SubsidiaryGuarantor.

##  

10.14                     Assignability.  The Lender may at any time assign the Lender rightsin this Agreement, the Note, the Obligations, or any part thereof and transferthe Lender’s rights in any or all of the Collateral, and the Lender thereaftershall be relieved from all liability with respect to such Collateral.  In addition, the Lender may at any time sellone or more participations in the Loans. The Borrower may not sell or assign this Agreement, or any otheragreement with the Lender or any portion thereof, either voluntarily or byoperation of law, without the prior written consent of the Lender.  This Agreement shall be binding upon theLender and the Borrower and their respective legal representatives andsuccessors.  All references herein to theBorrower shall be deemed to include any successors, whether immediate orremote.

 

10.15                     CustomerIdentification-USA Patriot Act Notice.  The Lender hereby notifies the Borrower thatpursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56,signed into law October 26, 2001) (the “Act”), and the Lender’s policiesand practices, the  Lender is required toobtain, verify and record certain information and documentation that identifiesthe Borrower, which information includes the name and address of the Borrowerand such other information that will allow the Lender to identify the Borrowerin accordance with the Act.

 

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ARTICLE XI:  SETOFF, RATABLE PAYMENTS

#  

## 11.1                           Setoff.  In addition to, and without limitationof, any rights of the Lender under applicable law, if any Default occurs and iscontinuing, any Indebtedness from Lender to the Borrower (including all accountbalances, whether provisional or final and whether or not collected oravailable) may be offset and applied toward the payment of the Obligationsowing to  Lender, whether or not theObligations, or any part hereof, shall then be due.  Notwithstanding the foregoing, at any timethat any Obligations are secured by real property located in California, Lendershall not exercise a right of setoff, banker’s lien or counterclaim or take anycourt or administrative action or institute any proceeding to enforce anyprovision of this Agreement or any Obligation that is not taken by the Lenderif such setoff or action or proceeding would or might (pursuant to the CollateralDocuments or the enforceability of the Obligations, and any attempted exerciseby any Lender of any such right shall be null and void.  This Section shall be solely for thebenefit of each of the Lender hereunder.

##  

## 11.2                           Application of Payments.  If the Borrower, prior to the occurrence of aDefault, has remitted a payment to the Lender without indicating the Obligationto be reduced thereby, or at any time after the occurrence of a Default,subject to the provisions of Section 9.2, the Lender shall applyall payments and prepayments in respect of any Obligations in the followingorder:

##  

### (A)                              first, to pay Obligationsin respect of any fees, expenses, reimbursements or indemnities then due to theLender;

###  

### (B)                                second, to pay interestdue in respect of Revolving Loans and L/C Obligations;

###  

### (C)                                third, to the paymentor prepayment of principal outstanding on Revolving Loans and ReimbursementObligations in such order as the Lender may determine in its sole discretion;

###  

### (D)                               fourth, to providerequired cash collateral, if required pursuant to Section 3.11; and

###  

### (E)                                 fifth, to the paymentof all other Obligations.

###  

### Unless otherwise designated (which designation shall only be applicableprior to the occurrence of a Default) by the Borrower, all principal paymentsin respect of Loans shall be applied first, to repay outstanding Floating RateLoans, and then to repay outstanding Eurodollar Rate Loans with thoseEurodollar Rate Loans which have earlier expiring Interest Periods being repaidprior to those which have later expiring Interest Periods.

###  

ARTICLE XII:  NOTICES

#  

## 12.1                           Giving Notice.  Except as otherwise permitted by Section 2.13with respect to Borrowing/Election Notices, all notices and othercommunications provided to any party hereto under this Agreement or any otherLoan Documents shall be in writing or by telex or by facsimile and addressed ordelivered to such party at its address set forth below its signature hereto orat such other address as may be designated by such party in a notice to theother parties. Any notice, if mailed and properly addressed with postageprepaid, shall be

 

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## deemed given when received; any notice, if transmitted by telex orfacsimile, shall be deemed given when transmitted (answer back confirmed in thecase of telexes).

##  

## 12.2                           Change of Address.  Each of the Borrower and the Lender maychange the address for service of notice upon it by a notice in writing to theother parties hereto, including, without limitation,  Lender.  Lender may change the address for service of notice upon it by a noticein writing to the Borrower and the Lender.

##  

ARTICLE XIII:  COUNTERPARTS

#  

This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one agreement,and any of the parties hereto may execute this Agreement by signing any suchcounterpart.  This Agreement shall beeffective when it has been executed by the Borrower.

 

The remainder of this page isintentionally blank.

 

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IN WITNESS WHEREOF, theBorrower and the Lender have executed this Agreement as of the date first abovewritten.

 
|   | QUIXOTE  CORPORATION,                                                         |
|--------|-------------------------------------------------------------------------------|
|   | as the  Borrower                                                              |
|   |                                                                          |
|   | By:                                                                           | /s/Daniel P.  Gorey |   |
|   | Name:                                                                         | Daniel P.  Gorey |
|   | Title:                                                                        | Vice  President, Chief Financial Officer & Treasurer |
|   |                                                                          |
|   | Address:                                                                      | Quixote  Corporation |
|   |                                                                          | Thirty Five  East Wacker Drive |
|   |                                                                          | Chicago,  Illinois 60601 |
|   | Attention:                                                                    | Daniel P.  Gorey |
|   |                                                                          |   |
|   | Telephone  No.:                                                               | (312) 467-6755 |
|   | Facsimile  No.:                                                               | (312) 467-0197 |
|   |                                                                          |
|   | QUIXOTE  TRANSPORTATION SAFETY, INC.                                          |
|   | TRANSAFE  CORPORATION                                                         |
|   | ENERGY  ABSORPTION SYSTEMS, INC.                                              |
|   | ENERGY  ABSORPTION SYSTEMS (AL) LLC                                           |
|   | SURFACE  SYSTEMS, INC.                                                        |
|   | NU-METRICS,  INC.                                                             |
|   | HIGHWAY  INFORMATION SYSTEMS, INC.                                            |
|   | U.S. TRAFFIC  CORPORATION                                                     |
|   | (formerly  known as Green Light Acquisition Corporation)                      |
|   | PEEK TRAFFIC  CORPORATION, (formerly known as Vision Acquisition Corporation) |
|   | SPIN-CAST  PLASTICS, INC., as Subsidiary Guarantors                           |
|   |                                                                          |
|   |                                                                          |
|   | By:                                                                           |   /s/Daniel  P. Gorey |   |
|   | Name:                                                                         | Daniel P.  Gorey |
|   | Title:                                                                        | Vice  President and Treasurer |
|   |                                                                          |
|   |                                                                          |
|   | LASALLE BANK  NATIONAL ASSOCIATION, as  Lender                                |
|   |                                                                          |
|   | By:                                                                           |   /s/Stephanie  Kline |   |
|   | Name:                                                                         | Stephanie  Kline |
|   | Title:                                                                        | Vice  President |
|   |                                                                          |
|   | Address:                                                                      | LaSalle Bank  National Association |
|   |                                                                          | 135 South  LaSalle Street |
|   |                                                                          | Chicago,  Illinois 60603 |
|   | Attention:                                                                    | Stephanie  Kline |
|   | Telephone  No.:                                                               | (312) 904-2771 |
|   | Facsimile  No.:                                                               | (312) 904-6546 |
|        |                                                                               |  |  |  |  |

 

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REVOLVING LOAN NOTE

 
| $30,000,000 |   | Chicago,  Illinois   |
|-------------|--------|----------------------|
|        |   | April 20,  2005 |

 

FOR VALUE RECEIVED, the undersigned, QUIXOTECORPORATION, a Delaware corporation (the “Borrower”), promises to pay to theorder of LaSalle Bank National Association and its registered assigns (the “Lender”),on February 1, 2008, the principal sum of Thirty Million Dollars, or, ifless, the aggregate unpaid principal amount of all Loans made by the Lender tothe Borrower from time to time pursuant to that certain Amended and RestatedCredit Agreement, dated as of April 20, 2005, between the Borrower andLender (amending and restating the terms of that Credit Agreement, dated as of May 16,2003, as amended) (together with all amendments, if any, from time to time madethereto, the “Credit Agreement”).

 

The Borrower agrees to pay interest on theprincipal hereof remaining from time to time unpaid in accordance with Section 2.13of the Credit Agreement.

 

All payments of principal of and interest onthis Note shall be payable in lawful currency of the United States of Americaat the Agent’s office at 135 South LaSalle Street, Chicago, Illinois 60603, inimmediately available funds.

 

This Note evidences indebtedness incurredunder, and is subject to the terms and provisions of, the Credit Agreement, towhich reference is made for a statement of those terms and provisions.  Should the indebtedness represented by thisNote or any part hereof be collected at law or in equity or in bankruptcy,receivership, or other court proceedings, or this Note be placed in the handsof attorneys for collection after maturity (by declaration or otherwise), theundersigned agrees to pay, in addition to principal and interest due andpayable hereon, reasonable attorneys’ and collection fees.

 
|   | QUIXOTE CORPORATION |
|--------|---------------------|
|   |                |
|   |                |
|   | By:                 | /s/Daniel P. Gorey |   |
|   | Name:               | Daniel P. Gorey |   |
|   | Title:              | Vice President, Chief Financial |   |
|   |                | Officer and Treasurer |   |

 

1

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Loans made by LASALLE BANK NATIONAL ASSOCIATION (the “Lender”) toQUIXOTE CORPORATION (the “Borrower”) under the Amended and Restated CreditAgreement, dated as of April 20, 2005, as amended, among the Borrower andLASALLE BANK NATIONAL ASSOCIATION, and payments of principal received on theNote to which this Grid is attached:

 
| **Date** | ** ** | **Amount of Loan** | ** ** | **Amount of  Principal Paid** | ** ** | **Unpaid  Principal  Balance** | ** ** | **Notation By** |
|----------|------------|--------------------|------------|-------------------------------|------------|--------------------------------|------------|-----------------|
|     |       |               |       |                          |       |                           |       |            |
|     |       |               |       |                          |       |                           |       |            |
|     |       |               |       |                          |       |                           |       |            |

 

2

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REAFFIRMATION AND AMENDMENT OF CALIFORNIA DEED OF TRUST

 

**This Reaffirmation and Amendment of California Deed of Trust (this“Reaffirmation”), dated and effective as of April 20, 2005, (the“Reaffirmation”) is executed between Energy Absorption Systems, Inc.,as  Grantor, (the “Grantor”) in favor ofLaSalle Bank National Association (“LaSalle”), and has reference to thefollowing facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and as AdministrativeAgent for certain Lenders (“Northern”), including without limitation, LaSalle(“Existing Lenders”) entered into and are parties to that certain CreditAgreement, dated as of May 16, 2003, as amended by a First Amendment,dated as of December 9, 2003; by a Second Amendment, dated as of June 30,2004; by a Third Amendment, dated as of September 10, 2004 and a FourthAmendment dated as of February 9, 2005 (“Existing Credit Agreement”),pursuant to which the Existing Lenders have made, (i) Revolving Loans tothe Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and

 

1

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Restated Credit Agreement, dated as of the date hereof (the “Amendedand Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent andits assignment of its pro rata share of the Revolving Loan Commitment andRevolving Loans under the Existing Credit Agreement, shall assign to LaSalleall of its right title and interest in certain Mortgaged Property, as defined,in and subject to the terms of that certain Deed of Trust, Assignment of Rents,Security Agreement and Fixture Filing Agreement, dated as of September 10,2004, between the Energy Absorption Systems, Inc., as Grantor, ChicagoTitle Insurance Company, as Trustee and Northern, as the Beneficiary, asdefined in the Existing Credit Agreement (the “ California Deed of Trust”).

 

F.                                      LaSalle is willing to enter into thisReaffirmation only upon the condition that Grantor execute and deliver thisReaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, Grantor, Trustee andBeneficiary hereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toCalifornia Deed of Trust.  TheCalifornia Deed of Trust is hereby amended as follows:

 

(A)                              The “Recitals” Section ofthe California Deed of Trust is hereby amended and restated in its entirety toread as follows:

 

“A.                             Quixote Corporation (the“Borrower”), The Northern Trust Company (“Northern”), individually and asAdministrative Agent for certain Lenders, including without limitation, LaSalleBank National Association (“LaSalle”) (“Existing Lenders”), entered into andare parties to that certain Credit Agreement, dated as of May 16, 2003, asamended by a First Amendment, dated as of December 9, 2003; by a SecondAmendment, dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

2

----

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Grantor, asSubsidiary Guarantor executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured its obligations under thatSubsidiary Guaranty by granting a Mortgage on the California Property, pursuantto that certain California Deed of Trust, dated as of September 10, 2004,between Grantor and Northern, as Secured Party.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the California Deed of Trust and the Collateral pledgedthereunder.”

 

(B)                                All references in theCalifornia Deed of Trust (i) to the “Credit Agreement” shall hereinafterbe deemed to refer to the Amended and Restated Credit Agreement and (ii) tothe “Beneficiary” shall hereinafter be deemed to refer to LaSalle.

 

(C)                                Allreferences in the California Deed of Trust to the “Notes” shall hereinafterrefer to the “Revolving Note” in the Amended and Restated Credit Agreement.

 

3.                                       Reaffirmation of California Deed of Trust. Grantor hereby expressly reaffirms and assumes (on the same basis as setforth in the California Deed of Trust,

 

3

----

 

as hereby amended),  all of Grantor’s obligations and liabilitiesto LaSalle, as Beneficiary as set forth in the California Deed of Trust, andGrantor, agrees to be bound by and abide by and operate and perform under andpursuant to and comply fully with all of the terms, conditions, provisions,agreements, representations, undertakings, warranties, guarantees, indemnitiesand covenants contained in the California Deed of Trust, in so far as suchobligations and liabilities may be modified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon Grantor, LaSalle, andtheir individual successors and assigns.

 

4

----

 

IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **ENERGY ABSORPTION SYSTEMS, INC.,**  |                           |
|---------------------------------------|--------------------------------|
| **as Grantor**                        |                           |
| ** **                            |                           |
| ** **                            |                           |
| By:                                   |   /s/Daniel P. Gorey |   |   |
| Name:                                 | Daniel P. Gorey                |   |   |
| Title:                                | Vice President and Treasurer   |   |   |
|                                  |                           |
|                                  |                           |
| **LASALLE BANK NATIONAL**             |                           |
| ** ASSOCIATION, as Beneficiary** |                           |
| ** **                            |                           |
| By:                                   |   /s/Stephanie Kline |   |   |
| Name:                                 | Stephanie Kline                |   |   |
| Title:                                | Vice President                 |   |   |
|                                  |                           |
|                                  |                           |
| **CHICAGO TITLE INSURANCE COMPANY,**  |                           |
| **as Trustee**                        |                           |
| ** **                            |                           |
| By:                                   |                           |   |   |
| Name:                                 |                           |   |   |
| Title:                                |                           |   |   |

 

5

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Daniel P. Gorey,whose name as Vice President and Treasurer of Energy AbsorptionSystems, Inc., a Delaware corporation, is signed to theforegoing instrument and who is known to me, acknowledged before me on this daythat, being informed of the contents of the said instrument, he/she as suchofficer and with full authority, executed the same voluntarily for and as theact of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Charlotte M. Castine |
|-------------------|-------------------------------------|
|              | Notary  Public                      |
|              |                                |
|              | Print Name:                         | Charlotte M. Castine |
|              |                                |   |
|              | My Commission Expires:              | 01/05/09 |
|                   |                                     |  |  |

 

6

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Stephanie Kline,whose name as Vice President of LaSalle Bank National Association,an Illinois banking corporation, is signed to the foregoing instrumentand who is known to me, acknowledged before me on this day that, being informedof the contents of the said instrument, he/she as such officer and with fullauthority, executed the same voluntarily for and as the act of saidcorporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham            |
|-------------------|------------------------------------------------------------------------------------------------------|
|              | Notary  Public                                                                                       |
|              |                                                                                                 |
|              | Print Name:                                                                                          | Christina M. Canham |
|              |                                                                                                 |   |
|              | My Commission Expires:                                                                               | 01/05/09 |
|                   |                                                                                                      |  |  |

 

7

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REAFFIRMATION AND AMENDMENT OF PENNSYLVANIAMORTGAGE

 

**This Reaffirmation and Amendment of Pennsylvania Mortgage (this“Reaffirmation”), dated and effective as of April 20, 2005, (the“Reaffirmation”) is executed between Nu-Metrics, Inc. (the “Mortgagor”),in favor of LaSalle Bank National Association (“LaSalle”), and has reference tothe following facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and as AdministrativeAgent for certain Lenders (“Northern”), including without limitation, LaSalle(“Existing Lenders”) entered into and are parties to that certain CreditAgreement, dated as of May 16, 2003, as amended by a First Amendment,dated as of December 9, 2003; by a Second Amendment, dated as of June 30,2004; by a Third Amendment, dated as of September 10, 2004 and a FourthAmendment dated as of February 9, 2005 (“Existing Credit Agreement”),pursuant to which the Existing Lenders have made, (i) Revolving Loans tothe Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and

 

1

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Restated Credit Agreement, dated as of the date hereof (the “Amendedand Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent andits assignment of its pro rata share of the Revolving Loan Commitment andRevolving Loans under the Existing Credit Agreement, shall assign to LaSalleall of its right title and interest in certain Mortgaged Property, as defined,in and subject to the terms of that certain Open-End Mortgage, dated as of September 10,2004, between the Mortgagor, and Northern, as the Bank, as defined in theExisting Credit Agreement (the “ Pennsylvania Mortgage”).

 

F.                                      LaSalle is willing to enter into thisReaffirmation only upon the condition that Debtors execute and deliver thisReaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, Mortgagor andLaSalle hereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toPennsylvania Mortgage.  ThePennsylvania Mortgage is hereby amended as follows:

 

(A)                              The “Recitals” Section ofthe Pennsylvania Mortgage is hereby amended and restated in its entirety toread as follows:

 

“A.                             Quixote Corporation (the“Borrower”), The Northern Trust Company (“Northern”), individually and asAdministrative Agent for certain Lenders, including without limitation, LaSalleBank National Association (“LaSalle”) (“Existing Lenders”), entered into and areparties to that certain Credit Agreement, dated as of May 16, 2003, asamended by a First Amendment, dated as of December 9, 2003; by a SecondAmendment, dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

2

----

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Nu-Metrics, Inc.,as Subsidiary Guarantor, executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured their obligations under thatSubsidiary Guaranty by pledging certain Mortgaged Property, pursuant to thatcertain Pennsylvania Mortgage, dated as of September 10, 2004, betweenMortgagor and Northern, as Secured Party.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Pennsylvania Mortgage and the Collateral pledgedthereunder.”

 

(B)                                All references in thePennsylvania Mortgage (i) to the “Credit Agreement” shall hereinafter bedeemed to refer to the Amended and Restated Credit Agreement and (ii) tothe “Bank” shall hereinafter be deemed to refer to LaSalle.

 

(C)                                All references in thePennsylvania Mortgage to the “Loan Documents” shall hereinafter be deemed torefer to the definition of such term in the Amended and Restated CreditAgreement.

 

(D)                               The reference to“$58,000,000” in the “Granting Clause” is hereby deleted and “$30,000,000” issubstituted in lieu thereof.

 

3

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3.                                       Reaffirmation of Pennsylvania Mortgage. Mortgagor hereby expressly reaffirms and assumes (on the same basis asset forth in the Pennsylvania Mortgage, as hereby amended),  all of Mortgagor’s obligations and liabilitiesto LaSalle, as Bank as set forth in the Pennsylvania Mortgage, and theMortgagor agrees to be bound by and abide by and operate and perform under andpursuant to and comply fully with all of the terms, conditions, provisions,agreements, representations, undertakings, warranties, guarantees, indemnitiesand covenants contained in the Pennsylvania Mortgage, in so far as suchobligations and liabilities may be modified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, Mortgagor, its successors and assigns and be binding upon Mortgagor,LaSalle, and their individual successors and assigns.

 

4

----

 

IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **NU-METRICS, INC., as Mortgagor** |                         |
|------------------------------------|------------------------------|
| ** **                         |                         |
| By:                                | /s/Daniel P. Gorey           |   |   |
| Name:                              | Daniel P. Gorey              |   |   |
| Title:                             | Vice President and Treasurer |   |   |
|                               |                         |
| **LASALLE BANK NATIONAL**          |                         |
| ** ASSOCIATION, as Bank**     |                         |
| ** **                         |                         |
| By:                                | /s/Stephanie Kline           |   |   |
| Name:                              | Stephanie Kline              |   |   |
| Title:                             | Vice President               |   |   |

 

5

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Daniel P. Gorey,whose name as Vice President of Nu-Metrics, Inc., a Pennsylvaniacorporation, is signed to the foregoing instrument and who is known to me,acknowledged before me on this day that, being informed of the contents of thesaid instrument, he/she as such officer and with full authority, executed thesame voluntarily for and as the act of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Charlotte M. Castine |
|-------------------|-------------------------------------|
|              | Notary  Public                      |
|              |                                |
|              | Print Name:                         | Charlotte M. Castine |
|              |                                |   |
|              | My Commission Expires:              | 01/05/09 |
|                   |                                     |  |  |

 

6

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Stephanie Kline,whose name as Vice President of LaSalle Bank National Association,an Illinois banking corporation, is signed to the foregoing instrumentand who is known to me, acknowledged before me on this day that, being informedof the contents of the said instrument, he/she as such officer and with fullauthority, executed the same voluntarily for and as the act of saidcorporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham |
|-------------------|------------------------------------|
|              | Notary  Public                     |
|              |                               |
|              | Print Name:                        |   Christina M. Canham |
|              |                               |   |
|              | My Commission Expires:             | 01/05/09 |
|                   |                                    |  |  |

 

7

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REAFFIRMATION AND AMENDMENT OF ALABAMAMORTGAGE

 

**This Reaffirmation and Amendment of Alabama Mortgage (this“Reaffirmation”), dated and effective as of April 20, 2005, (the“Reaffirmation”) is executed between Energy Absorption Systems (AL) LLC, (the“Mortgagor”), in favor of LaSalle Bank National Association (“LaSalle”), andhas reference to the following facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (the “Existing Lenders”) entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and

 

1

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Restated Credit Agreement, dated as of the date hereof (the “Amendedand Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent andits assignment of its pro rata share of the Revolving Loan Commitment andRevolving Loans under the Existing Credit Agreement, shall assign to LaSalleall of its right title and interest in certain Mortgaged Property, as defined,in and subject to the terms of that certain Leasehold Mortgage and SecurityAgreement, dated as of September 10, 2004, between Mortgagor and Northern,as Agent, as defined in the Existing Credit Agreement (the “ AlabamaMortgage”).

 

F.                                      LaSalle is willing to enter into thisReaffirmation only upon the condition that Debtors execute and deliver thisReaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, Mortgagor andLaSalle hereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toAlabama Mortgage.  The AlabamaMortgage is hereby amended as follows:

 

(A)                              The “Recitals” Section ofthe Alabama Mortgage is hereby amended and restated in their entirety to readas follows:

 

“A.                             Quixote Corporation (the“Borrower”), The Northern Trust Company (“Northern”), individually and asAdministrative Agent for certain Lenders, including without limitation, LaSalleBank National Association (“LaSalle”) (“Existing Lenders”), entered into andare parties to that certain Credit Agreement, dated as of May 16, 2003, asamended by a First Amendment, dated as of December 9, 2003; by a SecondAmendment, dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

2

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B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Mortgagor, asSubsidiary Guarantor executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured its obligations under thatSubsidiary Guaranty by pledging certain Mortgaged Property, pursuant to thatcertain Alabama Mortgage, dated as of June 30, 2004, between Mortgagor andNorthern, as Agent.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Alabama Mortgage and the Collateral pledgedthereunder.”

 

(B)                                Allreferences in the Alabama Mortgage (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and Restated Credit Agreement and(ii) to the “Agent” shall hereinafter be deemed to refer to LaSalle.

 

(C)                                Allreferences in the Alabama Mortgage to the “Loan Documents” shall hereinafter bedeemed to refer to the definition of “Loan Documents” in the Amended andRestated Credit Agreement.

 

3.                                       Reaffirmation of Alabama Mortgage.  TheMortgagor hereby expressly reaffirms and assumes (on the same basis as setforth in the Alabama Mortgage, as hereby amended),  all of Mortgagor’s obligations andliabilities to LaSalle

 

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as set forth in the Alabama Mortgage, andMortgagor agrees to be bound by and abide by and operate and perform under andpursuant to and comply fully with all of the terms, conditions, provisions,agreements, representations, undertakings, warranties, guarantees, indemnitiesand covenants contained in the Alabama Mortgage, in so far as such obligationsand liabilities may be modified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon the Mortgagor, LaSalle,and their individual successors and assigns.

 

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

**ENERGY ABSORPTION SYSTEMS (AL) LLC,**

**As Mortgagor**

 

ENERGY ABSORPTION SYSTEMS, INC., As Sole

Managing Member

 
| By:                       |   /s/Daniel P. Gorey |   |   |
|---------------------------|--------------------------------|--------|--------|
| Name:                     | Daniel P. Gorey                |   |   |
| Title:                    | Vice President and Treasurer   |   |   |
|                      |                           |
|                      |                           |
| **LASALLE BANK NATIONAL** |                           |
| ** ASSOCIATION**     |                           |
|                      |                           |
| By:                       |   /s/Stephanie Kline |   |   |
| Name:                     | Stephanie Kline                |   |   |
| Title:                    | Vice President                 |   |   |

 

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Daniel P. Gorey,whose name as Vice President and Treasurer of Energy AbsorptionSystems, Inc., a Delaware corporation, is signed to theforegoing instrument and who is known to me, acknowledged before me on this daythat, being informed of the contents of the said instrument, he/she as suchofficer and with full authority, executed the same voluntarily for and as theact of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Charlotte M. Castine |
|-------------------|-------------------------------------|
|              | Notary  Public                      |
|              |                                |
|              | Print Name:                         | Charlotte M. Castine |
|              |                                |   |
|              | My Commission Expires:              | 01/05/09 |
|                   |                                     |  |  |

 

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| STATE OF ILLINOIS | ) |   |
|-------------------|---|--------|
|              | : |   |
| COOK COUNTY       | ) |   |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Stephanie Kline,whose name as Vice President of LaSalle Bank National Association,an Illinois banking corporation, is signed to the foregoing instrumentand who is known to me, acknowledged before me on this day that, being informedof the contents of the said instrument, he/she as such officer and with fullauthority, executed the same voluntarily for and as the act of saidcorporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham |
|-------------------|------------------------------------|
|              | Notary  Public                     |
|              |                               |
|              | Print Name:                        | Christina M. Canham |
|              |                               |   |
|              | My Commission Expires:             | 01/05/09 |
|                   |                                    |  |  |

 

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THIS INSTRUMENT PREPARED BYAND AFTER RECORDING RETURN TO:

Edward F. Dobbins

FISCHEL & KAHN, LTD.

190 S. LaSalle Street

Suite 2850

Chicago, Illinois  60603

(312) 726-0440

 

**MORTGAGE AND SECURITY AGREEMENT**

** **

THIS MORTGAGE AND SECURITY AGREEMENT (“**Mortgage**”),made as of April 20, 2005, is made and executed by Spin-Cast Plastics, Inc.,an Indiana corporation, having its principal offices at 3300 North KenmoreStreet, South Bend, Indiana 46628 (“**Mortgagor**”), infavor of LASALLE BANK NATIONAL ASSOCIATION, a national banking associationhaving an office at 135 South LaSalle Street, Chicago, Illinois 60603 (“**Lender**”).

 

**RECITALS**

 

I.                                         Lender hasagreed to make loans to Quixote Corporation, a Delaware corporation (“**Borrower**”) and extend other financial accommodations toBorrower in an aggregate principal amount of $30,000,000 (collectively, the “**Loans**”).  The Loansconsist of one or more revolving  loans(the “**Revolving Loan**”), the outstandingprincipal balance of which may increase or decrease from time to time, but atno time shall the outstanding principal balance of such Revolving Loan exceed $30,000,000**.**  Certain repaymentobligations of Borrower with respect to the Revolving Loan are evidenced by acertain Revolving Note, in the principal amount of $30,000,000 (said note,together with all allonges, amendments, supplements, modifications andreplacements thereof, being referred to in this Mortgage as the “**Revolving Note**”).  TheRevolving Note is sometimes referred to herein as the “**Note**.”  The terms of the Loans are governed by acertain Amended and Restated Credit and Security Agreement, **of even date herewith (amending and restating the terms of the CreditAgreement dated, as of May 16, 2003, as amended)** by and betweenBorrower and Lender (said Credit Agreement, together with all amendments,supplements, modifications and replacements thereof, being referred to in thisMortgage as the “**Loan Agreement**”).  The terms and provisions of the Note and theLoan Agreement are hereby incorporated by reference in this Mortgage.  Capitalized terms not otherwise defined inthis Mortgage shall have the meaning ascribed to them in the LoanAgreement.  As an inducement to Lender tomake the Loan, Mortgagor has executed and delivered to Lender the LoanAgreement, as a Subsidiary Guarantor thereunder, to evidence its becoming aSubsidiary Guarantor, as defined in the Loan Agreement, under that certainSubsidiary

 

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Guaranty(the “**Guaranty**”) of even date herewith,pursuant to which Mortgagor has agreed to guaranty all of the indebtedness andobligations of Borrower owed to Lender, including without limitation theobligations of Borrower with respect to the Loan.

 

II.**                                    **This Mortgageis given to secure a guaranty of one or more revolving loans and secures notonly present indebtedness but also future advances, whether such futureadvances are obligatory or are to be made at the option of Lender, or otherwise**as are to be made within five (5) years ofthe date hereof. **The amountof indebtedness secured hereby may increase or decrease from time to time;however the principal amount of such indebtedness shall not at one time exceedthe amount of $30,000,000 plus interest thereon, and other costs, amounts anddisbursements as provided herein and in the other Loan Instruments (hereinafterdefined).

 

**GRANTING CLAUSES**

 

To secure the obligations of Mortgagor under the Guarantyand the payment of all amounts due under and the performance and observance ofall covenants and conditions contained in this Mortgage, the Guaranty, the LoanAgreement, the Notes, any and all other mortgages, security agreements,assignments of leases and rents, guaranties, letters of credit and any otherdocuments and instruments now or hereafter executed by Mortgagor, Borrower orany party related thereto or affiliated therewith to evidence, secure orguarantee the payment of all or any portion of the indebtedness under the Notesor the Guaranty and any and all renewals, extensions, amendments andreplacements of this Mortgage, the Guaranty, the Loan Agreement, the Notes andany such other documents and instruments (the Guaranty, the Loan Agreement, theNotes, this Mortgage, such other mortgages, security agreements, assignments ofleases and rents, guaranties, letters of credit, and any other documents andinstruments now or hereafter executed and delivered in connection with theLoan, and any and all amendments, renewals, extensions and replacements hereofand thereof, being sometimes referred to collectively as the “**Loan Instruments**” and individually as a “**Loan Instrument**”) and to secure payment of any and all otherindebtedness and obligations of Mortgagor or Borrower or any party relatedthereto or affiliated therewith to Lender, whether now existing or hereaftercreated, absolute or contingent, direct or indirect, liquidated orunliquidated, or otherwise (all indebtedness and liabilities secured herebybeing hereinafter sometimes referred to as “**Mortgagor’sLiabilities,**” **provided that Mortgagor’sLiabilities shall, in no event, exceed $30,000,000)**, Mortgagor doeshereby convey, mortgage, warrant, assign, transfer, pledge and deliver toLender the following described property subject to the terms and conditionsherein:

 

(A)                              The landlocated at 3300 N. Kenmore Street, South Bend, St. Joseph County, Indiana, legally described in attached**Exhibit A** (“**Land**”);

 

(B)                                All thebuildings, structures, improvements and fixtures of every kind or nature now orhereafter situated on the Land; and, to the extent not owned by tenants of theMortgaged Property, all machinery, appliances, equipment, furniture and allother personal property of every kind or nature located in or on, or attachedto, or used or intended to be used in connection with, or with the operationof, the Land,

 

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buildings,structures, improvements or fixtures now or hereafter located or to be locatedon the Land, or in connection with any construction being conducted or whichmay be conducted thereon, and all extensions, additions, improvements,substitutions and replacements to any of the foregoing (“**Improvements**”);

 

(C)                                All buildingmaterials and goods which are procured or to be procured for use on or inconnection with the Improvements or the construction of additionalImprovements, whether or not such materials and goods have been delivered tothe Land (“**Materials**”);

 

(D)                               All plans,specifications, architectural renderings, drawings, licenses, permits, soiltest reports, other reports of examinations or analyses of the Land or theImprovements, contracts for services to be rendered to Mortgagor or otherwisein connection with the Improvements and all other property, contracts, reports,proposals and other materials now or hereafter existing in any way relating tothe Land or the Improvements or the construction of additional Improvements;

 

(E)                                 All easements,tenements, rights-of-way, vaults, gores of land, streets, ways, alleys,passages, sewer rights, water courses, water rights and powers andappurtenances in any way belonging, relating or appertaining to any of the Landor Improvements, or which hereafter shall in any way belong, relate or beappurtenant thereto, whether now owned or hereafter acquired (“**Appurtenances**”);

 

(F)                                 (i)                                     All judgments,insurance proceeds, awards of damages and settlements which may result from anydamage to all or any portion of the Land, Improvements or Appurtenances or anypart thereof or to any rights appurtenant thereto;

 

(ii)                                  Allcompensation, awards, damages, claims, rights of action and proceeds of or onaccount of (a) any damage or taking, pursuant to the power of eminentdomain, of the Land, Improvements, Appurtenances or Materials or any partthereof, (b) damage to all or any portion of the Land, Improvements orAppurtenances by reason of the taking, pursuant to the power of eminent domain,of all or any portion of the Land, Improvements, Appurtenances, Materials or ofother property, or (c) the alteration of the grade of any street orhighway on or about the Land, Improvements, Appurtenances, Materials or anypart thereof; and, except as otherwise provided herein, Lender is herebyauthorized to collect and receive said awards and proceeds and to give properreceipts and acquittances therefor and, except as otherwise provided herein, toapply the same toward the payment of the indebtedness and other sums securedhereby;

 

(iii)                               All contractrights, general intangibles, actions and rights in action, including, withoutlimitation, all rights to insurance proceeds and unearned premiums arising fromor relating to damage to the Land, Improvements, Appurtenances or Materials;and

 

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(iv)                              All proceeds,products, replacements, additions, substitutions, renewals and accessions ofand to the Land, Improvements, Appurtenances or Materials;

 

(G)                                All rentsissues, profits, income and other benefits now or hereafter arising from or inrespect of the Land, Improvements or Appurtenances (the “**Rents**”);it being intended that this Granting Clause shall constitute an absolute andpresent assignment of the Rents, subject, however, to the conditionalpermission given to Mortgagor to collect and use the Rents as provided in thisMortgage;

 

(H)                               Any and allleases, licenses and other occupancy agreements now or hereafter affecting theLand, Improvements, Appurtenances or Materials, together with all securitytherefor and guaranties thereof and all monies payable thereunder, and allbooks and records owned by Mortgagor which contain evidence of payments madeunder the leases and all security given therefor (collectively, the “**Leases**”), subject, however, to the conditional permissiongiven in this Mortgage to Mortgagor to collect the Rents arising under theLeases as provided in this Mortgage;

 

(I)                                    Any and allescrow accounts held by Lender or Lender’s agent pursuant to any provision ofthis Mortgage;

 

(J)                                   Any and allafter-acquired right, title or interest of Mortgagor in and to any of theproperty described in the preceding Granting Clauses; and

 

(K)                               The proceedsfrom the sale, transfer, pledge or other disposition of any or all of theproperty described in the preceding Granting Clauses;

 

All of the mortgaged property described in the GrantingClauses, together with all real and personal, tangible and intangible propertypledged in, or to which a security interest attaches pursuant to, any of theLoan Instruments is sometimes referred to collectively as the “**Mortgaged Property**.” The Rents and Leases are pledged on a parity with the Land andImprovements and not secondarily.

#  

**ARTICLE ONE**

**COVENANTSOF MORTGAGOR**

 

Mortgagor covenants and agrees with Lender as follows:

 

## **1.1.****                            Performanceunder Guaranty, Mortgage and Other Loan Instruments**.  Mortgagor shall perform, observe and complywith or cause to be performed, observed and complied with in a complete andtimely manner all provisions hereof and of the Guaranty, every other LoanInstrument and every instrument evidencing or securing Mortgagor’s Liabilitiesand will promptly pay or cause to be paid to Lender when due the principal withinterest thereon and all other sums required to be paid by 

 

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## Mortgagor pursuant to the Guaranty, this Mortgage, every other LoanInstrument and every other instrument evidencing or securing Mortgagor’sLiabilities.

##  

## **1.2.****                            GeneralCovenants and Representations**. Mortgagor covenants, represents and warrants that as of the date hereofand at all times thereafter during the term hereof: (a) Mortgagor is acorporation, duly organized, validly existing and in good standing under thelaws of the State of Indiana [and is in good standing under the laws of theState of Illinois;] (b) Mortgagor is seized of an indefeasible estate infee simple in that portion of the Mortgaged Property which is real property,and has good and absolute title to it and the balance of the Mortgaged Propertyfree and clear of all liens, security interests, charges and encumbrances whatsoeverexcept those expressly permitted in writing by Lender, if any (such liens,security interests, charges and encumbrances expressly permitted in writingbeing hereinafter referred to as the “**Permitted Encumbrances**”);(c) Mortgagor has good right, full power and lawful authority to mortgageand pledge the Mortgaged Property as provided herein; (d) upon theoccurrence of an Event of Default, Lender may at all times peaceably andquietly enter upon, hold, occupy and enjoy the Mortgaged Property in accordancewith the terms hereof; and (e) Mortgagor will maintain and preserve thelien of this Mortgage as a first and paramount lien on the Mortgaged Propertysubject only to the Permitted Encumbrances until Mortgagor’s Liabilities havebeen paid in full.

##  

## **1.3.****                      Compliancewith Laws and Other Restrictions**. Mortgagor covenants, represents andwarrants that the Land and the Improvements and the use thereof presentlycomply in all material respects with, and will during the full term of thisMortgage continue to comply in all material respects with, all applicablerestrictive covenants, zoning and subdivision ordinances and building codes,licenses, health and environmental laws and regulations and all otherapplicable laws, ordinances, rules and regulations.  If any federal, state or other governmentalbody or any court issues any notice or order to the effect that the MortgagedProperty or any part thereof is not in compliance with any such covenant,ordinance, code, law or regulation, Mortgagor will promptly provide Lender witha copy of such notice or order and will immediately commence and diligentlyperform all such actions as are necessary to comply therewith or otherwisecorrect such non-compliance.  Mortgagorshall not, without the prior written consent of Lender, petition for orotherwise seek any change in the zoning ordinances or other public or privaterestrictions applicable to the Mortgaged Property on the date hereof.

##  

## **1.4.Taxes and Other Charges**.

##  

### **1.4.1.****                  Taxes andAssessments**.  Mortgagor shall pay promptlywhen due all taxes, assessments, rates, dues, charges, fees, levies, fines,impositions, liabilities, obligations, liens and encumbrances of every kind andnature whatsoever now or hereafter imposed, levied or assessed upon or againstthe Mortgaged Property or any part thereof, or upon or against this Mortgage orMortgagor’s Liabilities or upon or against the interest of Lender in theMortgaged Property, as well as all taxes, assessments and other governmentalcharges levied and imposed by the United States of America or any state,county,

 

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### municipality or other taxing authority upon or in respect of theMortgaged Property or any part thereof; provided, however, that unlesscompliance with applicable laws requires that taxes, assessments or othercharges must be paid as a condition to protesting or contesting the amountthereof, Mortgagor may in good faith, by appropriate proceedings commencedwithin ninety (90) days of the due date of such amounts and thereafterdiligently pursued, contest the validity, applicability or amount of anyasserted tax, assessment or other charge and pending such contest Mortgagorshall not be deemed in default hereunder if on or before the due date of theasserted tax or assessment, Mortgagor shall first either (i) deposit withLender a bond or other security satisfactory to Lender in the amount of 150% ofthe amount of such tax or assessment or (ii) obtain an endorsement, inform and substance satisfactory to Lender, to the loan policy of titleinsurance issued to Lender insuring the lien of this Mortgage, insuring oversuch tax or assessment.  Mortgagor shallpay the disputed or contested tax, assessment or other charge and all interestand penalties due in respect thereof on or before the date any adjudication ofthe validity or amount thereof becomes final and in any event no less thanthirty (30) days prior to any forfeiture or sale of the Mortgaged Property byreason of such non-payment.  Upon Lender’srequest, Mortgagor will promptly file, if it has not theretofore filed, suchpetition, application or other instrument as is necessary to cause the Land andImprovements to be taxed as a separate parcel or parcels which include noproperty not a part of the Mortgaged Property.

###  

### **1.4.2.****                  Taxes AffectingLender’s Interest**.  If any state,federal, municipal or other governmental law, order, rule or regulation,which becomes effective subsequent to the date hereof, in any manner changes ormodifies existing laws governing the taxation of mortgages or debts secured bymortgages, or the manner of collecting taxes, so as to impose on Lender a taxby reason of its ownership of any or all of the Loan Instruments or measured bythe principal amount of the Notes, requires or has the practical effect ofrequiring Lender to pay any portion of the real estate taxes levied in respectof the Mortgaged Property to pay any tax levied in whole or in part insubstitution for real estate taxes or otherwise affects materially andadversely the rights of Lender in respect of the Notes, this Mortgage or theother Loan Instruments, Mortgagor’s Liabilities and all interest accruedthereon shall, upon thirty (30) days’ notice, become due and payable forthwithat the option of Lender, whether or not there shall have occurred an Event ofDefault, provided, however, that, if Mortgagor may, without violating orcausing a violation of such law, order, rule or regulation, pay such taxesor other sums as are necessary to eliminate such adverse effect upon the rightsof Lender and does pay such taxes or other sums when due, Lender may not electto declare due Mortgagor’s Liabilities by reason of the provisions of this Section 1.4.2.

###  

### **1.4.3.****                  Tax Escrow**.  If directed by Lender in writing, Mortgagorshall, in order to secure the performance and discharge of Mortgagor’sobligations under this Section 1.4, but not in lieu of such obligations,deposit with Lender on the first day of each calendar month throughout the termof the Loan,

 

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### deposits, in amounts set by Lender from time to time by written noticeto Mortgagor, in order to accumulate funds sufficient to permit Lender to payall annual ad valorem taxes, assessments and charges of the nature described inSection 1.4.1 at least thirty (30) days prior to the date or dates onwhich they shall become delinquent. Mortgagor hereby pledges to Lender, and grants to Lender a securityinterest in, any and all such deposits as security for the Loan.  The taxes, assessments and charges forpurposes of this Section 1.4.3 shall, if Lender so elects, include,without limitation, water and sewer rents. Mortgagor shall procure and deliver to Lender when issued all statementsor bills for such obligations.  Upondemand by Lender, Mortgagor shall deliver to Lender such additional monies asare required to satisfy any deficiencies in the amounts necessary to enableLender to pay such taxes, assessments and similar charges thirty (30) daysprior to the date they become delinquent. Lender shall pay such taxes, assessments and other charges as theybecome due to the extent of the funds on deposit with Lender from time to timeand provided Mortgagor has delivered to Lender the statements or billstherefor. In making any such payments, Lender shall be entitled to rely on anybill issued in respect of any such taxes, assessments or charges withoutinquiry into the validity, propriety or amount thereof and whether delivered toLender by Mortgagor or otherwise obtained by Lender.  Any deposits received pursuant to this Section 1.4.3shall not be, nor be deemed to be, trust funds, but may be commingled with thegeneral funds of Lender and Lender shall have no obligation to pay interest onamounts deposited with Lender pursuant to this Section 1.4.3.  If any Event of Default occurs, any part orall of the amounts then on deposit or thereafter deposited with Lender underthis Section 1.4.3 may at Lender’s option be applied to payment ofMortgagor’s Liabilities in such order as Lender may determine.

###  

### **1.4.4.****                  No CreditAgainst the Indebtedness Secured Hereby**. Mortgagor shall not claim, demandor be entitled to receive any credit against the amounts payable under theterms of the Guaranty or on any of Mortgagor’s Liabilities for any of thetaxes, assessments or similar impositions assessed against the MortgagedProperty or any part thereof or that are applicable to Mortgagor’s Liabilitiesor to Lender’s interest in the Mortgaged Property.

###  

## **1.5****                         Mechanic’sand Other Liens**.  Mortgagor shall notpermit or suffer any mechanic’s, laborer’s, materialman’s, statutory or otherlien or encumbrance (other than any lien for taxes and assessments not yet due)to be created upon or against the Mortgaged Property, provided, however, thatMortgagor may in good faith, by appropriate proceeding, contest the validity,applicability or amount of any asserted lien and, pending such contest,Mortgagor shall not be deemed to be in default hereunder if Mortgagor shallfirst obtain an endorsement, in form and substance satisfactory to Lender, tothe loan policy of title insurance issued to Lender insuring over such lien,or, if no such loan policy shall have been issued, then Mortgagor shall depositwith Lender a bond or other security satisfactory to Lender in the amount of150% of the amount of such lien. Mortgagor shall pay the disputed amount and all interest and penaltiesdue in respect thereof on or before the date any adjudication of the validityor amount thereof becomes final and, in any event, no less than thirty (30)days prior to any foreclosure sale of the Mortgaged

 

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## Property or the exercise of any other remedy by such claimant againstthe Mortgaged Property.

##  

## **1.6****                               Insuranceand Condemnation**.

##  

### **1.6.1.****                  Hazard Insurance**.  Mortgagor shall, at its sole cost andexpense, obtain for, deliver to, assign to and maintain for the benefit ofLender, until Mortgagor’s Liabilities are paid in full, policies of hazardinsurance, in an amount which shall be not less than 100% of the full insurablereplacement cost of the Mortgaged Property (except the Land), insuring on areplacement cost basis the Mortgaged Property with “causes of loss-specialform” coverage and insuring against such other hazards, casualties andcontingencies as Lender may require, including without limitation, if requestedby Lender, earthquake, and, if all or any part of the Mortgaged Property shallat any time be located within an area identified by the government of theUnited States or any agency thereof as having special flood hazards and forwhich flood insurance is available, flood. If any such policy shall contain a co-insurance clause it shall alsocontain an agreed amount or stipulated value endorsement.  All policies of hazard insurance shallcontain a “lender’s loss payable” endorsement and shall provide that no lossesshall be payable to any other parties without Lender’s prior writtenconsent.  The form of such policies, theamounts and the companies issuing them shall be acceptable to Lender.  Originals or certified copies of all policiesshall be delivered to and retained by Lender. Mortgagor shall pay on or before the due dates thereof premiums on allinsurance policies and on any renewals thereof. In the event of loss, Mortgagor will give immediate written notice toLender and Lender may make proof of loss if not made promptly by Mortgagor (forwhich purpose Mortgagor hereby irrevocably appoints Lender as itsattorney-in-fact).  In the event of theforeclosure of this Mortgage or any other transfer of title to the MortgagedProperty in full or partial satisfaction of Mortgagor’s Liabilities, all right,title and interest of Mortgagor in and to all insurance policies and renewalsthereof then in force shall pass to the purchaser or grantee.  All such policies shall provide that theyshall not be modified, cancelled or terminated without at least thirty (30)days’ prior written notice to Lender from the insurer.

###  

### **1.6.2.****                  Other Insurance**.  Mortgagor shall, at its sole cost andexpense, obtain for, deliver to, assign to and maintain for the benefit of,Lender, until Mortgagor’s Liabilities are paid for in full, (i) commercialgeneral liability insurance in such amounts as Lender may specify, togetherwith workers compensation and employer’s liability insurance, naming Lender asadditional insured, [(ii) a business interruption insurance policycovering loss of rents **[loss of income]**at a limit of 100%, in an amount not less than all rent and other chargespayable by the tenants of the Mortgaged Property **[gross income]**(based on a fully leased **[fully operational]building**) for a period of one (1) year, together with suchassignments of the proceeds of such policy as Lender may require,] (iii) boilerand machinery insurance, if requested by Lender, and (iv) such otherpolicies of insurance relating to the Mortgaged Property and the

 

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### use and operation thereof as Lender may require, including dramshop,all in form and amounts, and issued by such companies as are acceptable toLender.

###  

### **1.6.3.****                  Adjustment ofLoss**.  Lender is hereby authorizedand empowered, at its option, to adjust or compromise any loss of more than$250,000 under any insurance policies covering or relating to the MortgagedProperty and to collect and receive the proceeds from any such policy orpolicies (and deposit such proceeds as provided in Section 1.6.5).  Mortgagor hereby irrevocably appoints Lenderas its attorney-in-fact for the purposes set forth in the precedingsentence.  Each insurance company ishereby authorized and directed to make payment (i) of 100% of all suchlosses of more than said amount directly to Lender alone and (ii) of 100%of all such losses of said amount or less directly to Mortgagor alone, and inno case to Mortgagor and Lender jointly. After deducting from such insurance proceeds any expenses incurred byLender in the collection and settlement thereof, including without limitationattorneys’ and adjusters’ fees and charges, Lender shall apply the net proceedsas provided in Section 1.6.5. Lender shall not be responsible for any failure to collect any insuranceproceeds due under the terms of any policy regardless of the cause of suchfailure.

###  

### **1.6.4.****                  CondemnationAwards**.  Lender shall be entitled toall compensation, awards, damages, claims, rights of action and proceeds of, oron account of, (i) any damage or taking, pursuant to the power of eminentdomain, of the Mortgaged Property or any part thereof, (ii) damage to theMortgaged Property by reason of the taking, pursuant to the power of eminentdomain, of other property, or (iii) the alteration of the grade of anystreet or highway on or about the Mortgaged Property.  Lender is hereby authorized, at its option,to commence, appear in and prosecute in its own or Mortgagor’s name any actionor proceeding relating to any such compensation, awards, damages, claims,rights of action and proceeds and to settle or compromise any claim inconnection therewith.  Mortgagor herebyirrevocably appoints Lender as its attorney-in-fact for the purposes set forthin the preceding sentence.  Lender afterdeducting from such compensation, awards, damages, claims, rights of action andproceeds all its expenses, including attorneys’ fees, may apply such netproceeds (except as otherwise provided in Section 1.6.5 of this Mortgage)to payment of Mortgagor’s Liabilities in such order and manner as Lender mayelect.  Mortgagor agrees to execute suchfurther assignments of any compensation awards, damages, claims, rights ofaction and proceeds as Lender may require.

###  

### **1.6.5.****                  Repair; Proceedsof Casualty Insurance and Eminent Domain**. If all or any part of the Mortgaged Property shall be damaged ordestroyed by fire or other casualty or shall be damaged or taken through theexercise of the power of eminent domain or other cause described in Section 1.6.4,Mortgagor shall promptly and with all due diligence restore and repair theMortgaged Property whether or not the proceeds, award or other compensation aresufficient to pay the cost of such restoration or repair.  At Lender’s election, to

 

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### be exercised by written notice to Mortgagor within thirty (30) daysfollowing Lender’s unrestricted receipt in cash or the equivalent thereof ofsaid proceeds, award or other compensation, the entire amount of said proceeds,award or compensation shall either (i) be applied to Mortgagor’sLiabilities in such order and manner as Lender may elect or (ii) be madeavailable to Mortgagor on such terms and conditions as Lender may impose,including without limitation the terms and conditions set forth in this Section 1.6.5,for the purpose of financing the cost of restoration or repair with any excessto be applied to Mortgagor’s Liabilities. Notwithstanding any other provision of this Section 1.6.5, if anEvent of Default shall be existing at the time of such casualty, taking orother event or if an Event of Default occurs thereafter, Lender shall have theright to immediately apply all insurance proceeds, awards or compensation tothe payment of Mortgagor’s Liabilities in such order and manner as Lender maydetermine.  Lender shall have the rightat all times to apply such net proceeds to the cure of any Event of Default orthe performance of any obligations of Mortgagor under the Loan Instruments.

###  

### **1.6.6.****                  [Proceeds ofBusiness Interruption and Rental Insurance**. The net proceeds of business interruption and rental insurance shall bepaid to Lender for application first to Mortgagor’s Liabilities in such orderand manner as Lender may elect and then to the creation of reserves for futurepayments of Mortgagor’s Liabilities in such amounts as Lender deems necessarywith the balance to be remitted to Mortgagor subject to such controls as Lendermay deem necessary to assure that said balance is used to discharge accrued andto be accrued expenses of operation and maintenance of the Mortgaged Property.]

###  

### **1.6.7.****                  Renewal ofPolicies**.  At least thirty (30) daysprior to the expiration date of any policy evidencing insurance required underthis Section 1.6.7, a renewal thereof satisfactory to Lender shall bedelivered to Lender or substitution therefor, together with receipts or otherevidence of the payment of any premiums then due on such renewal policy orsubstitute policy.

###  

### **1.6.8.****                  Insurance Escrow**.  If directed by Lender in writing, Mortgagorshall, in order to secure the performance and discharge of Mortgagor’sobligations under this Section 1.6, but not in lieu of such obligations,deposit with Lender on the first day of each calendar month throughout the termof the Loan, a sum in an amount determined by Lender from time to time bywritten notice to Mortgagor, in order to accumulate funds sufficient to permitLender to pay all premiums payable in connection with the insurance requiredhereunder at least thirty (30) days prior to the date or dates on which theyshall become due.  Mortgagor herebypledges to Lender, and grants to Lender a security interest in, any and allsuch deposits as security for the Loan. Upon demand by Lender, Mortgagor shall deliver to Lender such additionalmonies as are required to satisfy any deficiencies in the amounts necessary toenable Lender to pay such premiums thirty (30) days prior to the date theyshall become due.  Any deposits receivedpursuant to this Section 1.6.8 shall not be, nor be deemed to be, trust

 

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### funds, but may be commingled with the general funds of Lender andLender shall have no obligation to pay interest on amounts deposited with Lenderpursuant to this Section 1.6.8.  Ifany Event of Default occurs, any part or all of the amounts then on deposit orthereafter deposited with Lender under this Section 1.6.8 may at Lender’soption be applied to payment of Mortgagor’s Liabilities in such order as Lendermay determine.

###  

## **1.7.****                      Non-Impairmentof Lender’s Rights**.  Nothingcontained in this Mortgage shall be deemed to limit or otherwise affect anyright or remedy of Lender under any provision of this Mortgage or of anystatute or rule of law to pay and, upon Mortgagor’s failure to pay thesame, Lender may pay any amount required to be paid by Mortgagor under Sections1.4, 1.5 and 1.6 and the amount so paid by Lender shall bear interest at theDefault Rate (as defined in the Notes), and, together with interest, shall beadded to Mortgagor’s Liabilities. Mortgagor shall pay to Lender on demand the amount so paid by Lender,together with all accrued and unpaid interest thereon.  The provisions of Section 1.4.3 aresolely for the added protection of Lender and entail no responsibility onLender’s part beyond the allowing of due credit as specifically providedtherein.  Upon assignment of thisMortgage, any funds on hand shall be turned over to the assignee and anyresponsibility of Lender with respect to such funds shall terminate.

##  

## **1.8.****                                  Careof the Mortgaged Property**.  Mortgagorshall preserve and maintain the Mortgaged Property in good and first classcondition and repair.  Mortgagor shallnot, without the prior written consent of Lender, permit, commit or suffer anywaste, impairment or deterioration of the Mortgaged Property or of any partthereof, and will not take any action which will increase the risk of fire orother hazard to the Mortgaged Property or to any part thereof.  Except as otherwise provided in thisMortgage, no new improvements shall be constructed on the Mortgaged Propertyand no part of the Mortgaged Property shall be removed, demolished or alteredin any material manner without the prior written consent of Lender.

##  

## **1.9.****                                  Transferor Encumbrance of the Mortgaged Property**. Mortgagor shall not permit orsuffer to occur any sale, assignment, conveyance, transfer, mortgage, lease(other than leases made in accordance with the provisions of this Mortgage) orencumbrance of, or any contract for any of the foregoing on an installmentbasis or otherwise pertaining to, the Mortgaged Property, any part thereof, anyinterest therein, the beneficial interest in Mortgagor or in any trust holdingtitle to the Mortgaged Property or any interest in a corporation, partnershipor other entity which owns all or part of the Mortgaged Property, whether byoperation of law or otherwise, without the prior written consent of Lenderhaving been obtained (i) to the sale, assignment, conveyance, mortgage,lease, option, encumbrance or other transfer and (ii) to the form andsubstance of any instrument evidencing or contracting for any such sale,assignment, conveyance, mortgage, lease, option, encumbrance or othertransfer.  Mortgagor shall not, withoutthe prior written consent of Lender, further assign or permit to be assignedthe rents from the Mortgaged Property, and any such assignment without theprior express written consent of Lender shall be null and void.

 

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## Mortgagoragrees that in the event the ownership of the Mortgaged Property, any interesttherein or any part thereof becomes vested in a person other than Mortgagor,Lender may, without notice to Mortgagor, deal in any way with such successor orsuccessors in interest with reference to this Mortgage, the Notes, the LoanInstruments and Mortgagor’s Liabilities without in any way vitiating ordischarging Mortgagor’s liability hereunder or Mortgagor’s Liabilities.  No sale of the Mortgaged Property, no forbearanceto any person with respect to this Mortgage, and no extension to any person ofthe time for payment of the Notes or any other Mortgagor’s Liabilities given byLender shall operate to release, discharge, modify, change or affect theoriginal liability of Mortgagor, either in whole or in part, except to theextent specifically agreed in writing by Lender.

##  

## **1.10.       FurtherAssurances**.  Atany time and from time to time, upon Lender’s request, Mortgagor shall make,execute and deliver, or cause to be made, executed and delivered, to Lender,and where appropriate shall cause to be recorded, registered or filed, and fromtime to time thereafter to be re-recorded, re-registered and refiled at suchtime and in such offices and places as shall be deemed desirable by Lender, anyand all such further mortgages, security agreements, financing statements,instruments of further assurance, certificates and other documents as Lendermay consider necessary or desirable in order to effectuate or perfect, or tocontinue and preserve the obligations under, the Guaranty, this Mortgage, anyother Loan Instrument and any instrument evidencing or securing Mortgagor’sLiabilities, and the lien of this Mortgage as a lien upon all of the MortgagedProperty, whether now owned or hereafter acquired by Mortgagor, and unto alland every person or persons deriving any estate, right, title or interest underthis Mortgage.  Upon any failure byMortgagor to do so, Lender may make, execute, record, register, file,re-record, re-register or re-file any and all such mortgages, instruments,certificates and documents for and in the name of Mortgagor, and Mortgagorhereby irrevocably appoints Lender the agent and attorney-in-fact of Mortgagorto do so.

##  

## **1.11.       SecurityAgreement and Financing Statements**.

##  

#### (a)           Mortgagor (as debtor) hereby grantsto Lender (as creditor and secured party) a security interest under the UniformCommercial Code in all fixtures, machinery, appliances, equipment, furnitureand personal property of every nature whatsoever constituting part of theMortgaged Property.  Mortgagor shallexecute any and all documents, including without limitation financingstatements pursuant to the Uniform Commercial Code, as Lender may request topreserve, maintain and perfect the priority of the first lien and securityinterest created hereby on property which may be deemed personal property orfixtures, and shall pay to Lender on demand any expenses incurred by Lender inconnection with the preparation, execution and filing of any such documents.  Mortgagor hereby authorizes and empowersLender and irrevocably appoints Lender the agent and attorney-in-fact ofMortgagor to execute and file, on Mortgagor’s behalf, all financing statementsand refilings and continuations thereof as Lender

 

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#### deemsnecessary or advisable to create, preserve and protect such lien.  When and if Mortgagor and Lender shallrespectively become the debtor and secured party in any Uniform Commercial Codefinancing statement affecting the Mortgaged Property (or Lender takespossession of personal property delivered by Mortgagor where possession is themeans of perfection of the security interest), then, at Lender’s sole election,this Mortgage shall be deemed a security agreement as defined in such UniformCommercial Code, and the remedies for any violation of the covenants, terms andconditions of the agreements herein contained shall be as prescribed herein orby general law, or, as to such part of the security which is also reflected insuch financing statement, by the specific statutory consequences now orhereafter enacted and specified in the Uniform Commercial Code.

####  

#### (b)           Without limitation of the foregoing,if an Event of Default occurs, Lender shall be entitled immediately to exerciseall remedies available to it under the Uniform Commercial Code and this Section 1.11.  Mortgagor shall, in such event and if Lenderso requests, assemble the tangible personal property at Mortgagor’s expense, ata convenient place designated by Lender. Lender may publicly or privately sell or otherwise dispose of suchfixtures, machinery, appliances, equipment, furniture and personal propertyupon such terms and in such manner as Lender may require.  Mortgagor shall pay all expenses incurred byLender in the collection of such indebtedness, including attorneys’ fees andlegal expenses, and in the repair of any real estate or other property to whichany of the tangible personal property may be affixed.  If any notification of intended dispositionof any of the personal property is required by law, such notification shall bedeemed reasonable and proper if given at least ten (10) days before suchdisposition.  Any proceeds of thedisposition of any of the personal property may be applied by Lender to thepayment of the reasonable expenses of retaking, holding, preparing for sale andselling the personal property, including attorneys’ fees and legal expenses,and any balance of such proceeds may be applied by Lender toward the payment ofsuch of Mortgagor’s Liabilities, and in such order of application, as Lendermay from time to time elect.  If an Eventof Default occurs, Lender shall have the right to exercise and shallautomatically succeed to all rights of Mortgagor with respect to intangiblepersonal property subject to the security interest granted herein.  Any party to any contract subject to thesecurity interest granted herein shall be entitled to rely on the rights ofLender without the necessity of any further notice or action by Mortgagor.  Lender shall not by reason of this Mortgageor the exercise of any right granted hereby be obligated to perform anyobligation of Mortgagor with respect to any portion of the personal propertynor

 

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#### shallLender be responsible for any act committed by Mortgagor, or any breach orfailure to perform by Mortgagor with respect to any portion of the personalproperty.

####  

#### (c)           Mortgagor and Lender agree that thefiling of a financing statement in the records normally having to do withpersonal property shall never be construed as in any way derogating from orimpairing the express declaration and intention of the parties hereto,hereinabove stated, that everything used in connection with the production of incomefrom the Mortgaged Property and/or adapted for use therein and/or which isdescribed or reflected in this Mortgage is, and at all times and for allpurposes and in all proceedings, legal or equitable, shall be regarded as partof the real estate encumbered by this Mortgage irrespective of whether (i) anysuch item is physically attached to the Land or Improvements, (ii) serialnumbers are used for the better identification of certain equipment itemscapable of being thus identified in a recital contained herein or in any listfiled with Lender, or (iii) any such item is referred to or reflected inany such financing statement so filed at any time.  Similarly, the mention in any such financingstatement of (1) rights in or to the proceeds of any fire and/or hazardinsurance policy, or (2) any award in eminent domain proceedings for ataking or for loss of value, or (3) Mortgagor’s interest as lessor in anypresent or future lease or rights to income growing out of the use and/oroccupancy of the Mortgaged Property, whether pursuant to lease or otherwise,shall never be construed as in any way altering any of the rights of Lender asdetermined by this instrument or adversely affecting the priority of Lender’slien granted hereby or by any other recorded document.  Any such mention in any such financingstatement is declared to be for the protection of Lender in the event any courtor judge shall at any time hold with respect to clauses (1), (2) or (3) above,that notice of Lender’s priority of interest, to be effective against aparticular class of persons, including, but not limited to, the federalgovernment and any subdivisions or entity of the federal government, must befiled in the Uniform Commercial Code records.

####  

## **1.12.       Assignment of Rents**.

##  

#### (a)           The assignment of rents, income andother benefits contained in Section (G) of the Granting Clauses ofthis Mortgage shall be fully operative without any further action on the partof either party, and, specifically, Lender shall be entitled, at its option,upon the occurrence of an Event of Default hereunder, to all rents, income andother benefits from the Mortgaged Property, whether or not Lender takespossession of such property.  Mortgagorhereby

 

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#### further grantsto Lender the right effective upon the occurrence of an Event of Default to doany or all of the following, at Lender’s option:  (i) enter upon and take possession ofthe Mortgaged Property for the purpose of collecting the rents, income andother benefits; (ii) dispossess by the usual summary proceedings anytenant defaulting in the payment thereof to Lender; (iii) lease theMortgaged Property or any part thereof; (iv) repair, restore and improvethe Mortgaged Property; and (v) apply the rents, income and otherbenefits, after payment of certain expenses and capital expenditures relatingto the Mortgaged Property, on account of Mortgagor’s Liabilities in such orderand manner as Lender may elect.  Suchassignment and grant shall continue in effect until Mortgagor’s Liabilities arepaid in full, the execution of this Mortgage constituting and evidencing theirrevocable consent of Mortgagor to the entry upon and taking possession of theMortgaged Property by Lender pursuant to such grant, whether or not foreclosureproceedings have been instituted. Neither the exercise of any rights under this section by Lender northe application of any such rents, income or other benefits to payment ofMortgagor’s Liabilities shall cure or waive any Event of Default or noticeprovided for hereunder, or invalidate any act done pursuant hereto or pursuantto any such notice, but shall be cumulative of all other rights andremedies.  Notwithstanding the foregoing,so long as no Event of Default has occurred or is continuing, Mortgagor shallhave the right and authority to continue to collect the rents, income and otherbenefits from the Mortgaged Property as they become due and payable but notmore than thirty (30) days prior to the due date thereof.  The existence or exercise of such right ofMortgagor to collect said rents, income and other benefits shall not operate tosubordinate this assignment to any subsequent assignment of said rents, incomeor other benefits, in whole or in part, by Mortgagor, and any such subsequentassignment by Mortgagor shall be subject to the rights of Lender hereunder.

####  

#### (b)           Mortgagor shall not permit any rentunder any lease of the Mortgaged Property to be collected more than thirty (30)days in advance of the due date thereof and, upon any receiver, Lender, anyoneclaiming by, through or under Lender or any purchaser at a foreclosure salecoming into possession of the Mortgaged Property, no tenant shall be givencredit for any rent paid more than thirty (30) days in advance of the due datethereof.  Mortgagor shall act promptly toenforce all available remedies against any delinquent lessee so as to protectthe interest of the lessor under the leases and to preserve the value of theMortgaged Property.

####  

## **1.13.       After-AcquiredProperty**.  Tothe extent permitted by, and subject to, applicable law, the lien of thisMortgage, including without limitation the security interest

 

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## created under Section 1.11,shall automatically attach, without further act, to all property hereafteracquired by Mortgagor located in or on, or attached to, or used or intended tobe used in connection with, or with the operation of, the Mortgaged Property orany part thereof.

##  

## **1.14.       LeasesAffecting Mortgaged Property**.

##  

#### (a)           Mortgagor shall comply with andperform in a complete and timely manner all of its obligations as landlordunder all leases affecting the Mortgaged Property or any part thereof.  Mortgagor shall give notice to Lender of anydefault by the landlord under any lease affecting the Mortgaged Propertypromptly upon the occurrence of such default, but, in any event, in such timeto afford Lender an opportunity to cure any such default prior to the tenanthaving any right to terminate the lease. Each of the leases shall contain a provision requiring the tenant tonotify Lender of any default by landlord and granting an opportunity for areasonable time after such notice to cure such default prior to any rightaccruing to the tenant to terminate such lease. Mortgagor, if requested by Lender, shall furnish promptly to Lender (i) originalor certified copies of all such leases now existing or hereafter created, asamended from time to time, and (ii) a current rent roll in formsatisfactory to Lender.  Lender shallhave the right to notify at any time and from time to time any tenant of theMortgaged Property of any provision of this Mortgage.

####  

#### (b)           The assignment contained in Section (H) ofthe Granting Clauses shall not be deemed to impose upon Lender any of theobligations or duties of the landlord or Mortgagor provided in any lease.

####  

## **1.15.       Managementof Mortgaged Property**. Mortgagor shall cause the Mortgaged Property to be managed at all timesin accordance with sound business practice.

##  

## **1.16.       Executionof Leases**.  Mortgagorshall not permit any leases to be made of the Mortgaged Property or existingleases to be modified, terminated, extended or renewed without the priorwritten consent of Lender.

##  

## **1.17        Expenses**.  Mortgagor shall pay when due and payable, andotherwise on demand made by Lender, all appraisal fees, recording fees, taxes,brokerage fees and commissions, abstract fees, title insurance fees, escrowfees, attorneys’ fees, court costs, documentary and expert evidence, fees ofinspecting architects and engineers, and all other costs and expenses of everycharacter which have been incurred or which may hereafter be incurred by Lenderin connection with any of the following:

 

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#### (a)           Any court or administrative proceedinginvolving Mortgagor, the Mortgaged Property or the Loan Instruments to whichLender is made a party or is subject to subpoena by reason of its being aholder of any of the Loan Instruments, including without limitation bankruptcy,insolvency, reorganization, probate, eminent domain, condemnation, buildingcode and zoning proceedings;

####  

#### (b)           Any court or administrativeproceeding or other action undertaken by Lender to enforce any remedy or tocollect any indebtedness due under this Mortgage or any of the other LoanInstruments following a default thereunder, including without limitation aforeclosure of this mortgage or a public or private sale under the UniformCommercial Code;

####  

#### (c)           Any remedy exercised by Lenderfollowing an Event of Default including foreclosure of this Mortgage andactions in connection with taking possession of the Mortgaged Property orcollecting rents assigned hereby;

####  

#### (d)           Any activity in connection with anyrequest by Mortgagor or anyone acting on behalf of Mortgagor that Lender consentto a proposed action which, pursuant to this Mortgage or any of the other LoanInstruments may be undertaken or consummated only with the prior consent ofLender, whether or not such consent is granted; or

####  

#### (e)           Any negotiation undertaken between Lenderand Mortgagor or anyone acting on behalf of Mortgagor pertaining to theexistence or cure of any default under or the modification or extension of anyof the Loan Instruments.

####  

If Mortgagor fails to pay said costs and expenses as aboveprovided, Lender may elect, but shall not be obligated, to pay the costs andexpenses described in this Section 1.17, and if Lender does so elect, thenthe amounts paid by Lender shall bear interest at the Default Rate and,together with interest, shall be added to Mortgagor’s Liabilities.  Mortgagor will, upon demand by Lender,reimburse Lender for all such expenses, together with all accrued and unpaidinterest thereon.  In the event offoreclosure hereof, Lender shall be entitled to add to the indebtedness foundto be due by the court a reasonable estimate of such expenses to be incurredafter entry of the decree of foreclosure. To the extent permitted by law, Mortgagor agrees to hold harmless Lenderagainst and from, and reimburse it for, all claims, demands, liabilities,losses, damages, judgments, penalties, costs and expenses, including withoutlimitation attorneys’ fees, which may be imposed upon, asserted against, orincurred or paid by it by reason of or in connection with any bodily injury ordeath or property damage occurring in or upon or in the vicinity of theMortgaged Property through any cause whatsoever, or asserted against it onaccount of any act performed or omitted to be performed hereunder, or onaccount of any transaction

 

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arising out ofor in any way connected with the Mortgaged Property, this Mortgage, the otherLoan Instruments or any of Mortgagor’s Liabilities.

 

## **1.18        Lender’s Performance of Mortgagor’sObligations**.

##  

#### (a)           If Mortgagor fails to pay any tax,assessment, encumbrance or other imposition, or to furnish insurance hereunder,or to perform any other covenant, condition or term in this Mortgage, theGuaranty or any other Loan Instrument, Lender may, but shall not be obligatedto, pay, obtain or perform the same.  Allpayments made, whether such payments are regular or accelerated payments, andcosts and expenses incurred or paid by Lender in connection therewith shall bedue and payable immediately.  The amountsso incurred or paid by Lender shall bear interest at the Default Rate and,together with interest, shall be added to Mortgagor’s Liabilities.  Lender is hereby empowered to enter and toauthorize others to enter upon the Mortgaged Property or any part thereof forthe purpose of performing or observing any covenant, condition or term thatMortgagor has failed to perform or observe, without thereby becoming liable toMortgagor or any person in possession holding under Mortgagor.  Performance or payment by Lender of anyobligation of Mortgagor shall not relieve Mortgagor of such obligation or ofthe consequences of having failed to perform or pay the same and shall noteffect the cure of any Event of Default.

####  

#### (b)           Without limitation of the foregoing,unless Mortgagor provides Lender with evidence of the insurance coveragerequired by this Mortgage, Lender may purchase insurance at Mortgagors’ expenseto protect Lender’s interests in the Mortgaged Property.  This insurance may, but need not, protectMortgagor’s interest.  The coverage thatLender purchases may not pay any claim that Mortgagor may make or any claimthat is made against Mortgagor in connection with the Mortgaged Property.  Mortgagor may later cancel any insurancepurchased by Lender, but only after providing Lender with evidence thatMortgagor has obtained insurance as required by this Mortgage.  If Lender purchases insurance for theMortgaged Property, Mortgagor will be responsible for the costs of suchinsurance, including interest and any other charges that may be imposed in connectionwith the placement of such insurance, until the effective date of thecancellation or expiration of such insurance. Without limitation of any other provision of this Mortgage, the cost ofsuch insurance shall be added to the indebtedness secured hereby.  The cost of the insurance may be more thanthe cost of insurance Mortgagor may be able to obtain on its own.

 

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## **1.19.       Paymentof Superior Liens**. To the extent that Lender, after the date hereof, pays any sum due underany provision of law or instrument or document creating any lien superior orequal in priority in whole or in part to the lien of this Mortgage, Lendershall have and be entitled to a lien on the premises equal in parity with that discharged,and Lender shall be subrogated to and receive and enjoy all rights and lienspossessed, held or enjoyed by, the holder of such lien, which shall remain inexistence and benefit Lender to secure the Guaranty, and all obligations andliabilities secured hereby.  Lender shallbe subrogated, notwithstanding their release of record, to mortgages, trustdeeds, superior titles, vendors’ liens, mechanics’ and materialmen’s liens,charges, encumbrances, rights and equities on the Mortgaged Property to the extentthat any obligation under any thereof is paid or discharged with proceeds ofdisbursements or advances subject to the Guaranty or other indebtedness securedhereby.

##  

## **1.20.       Useof the Mortgaged Property**.  Mortgagor shall not suffer or permit the MortgagedProperty, or any portion thereof, to be used for anypurpose other than for the purposes for which it is currently being used and,without limitation of the foregoing, Mortgagor shall not use or permit the useof the Mortgaged Property or any portion thereof for any unlawful purpose.

##  

## **1.21.       LitigationInvolving Mortgaged Property**.  Mortgagor shall promptly notify Lender of anylitigation, administrative procedure or proposed legislative action initiatedagainst Mortgagor or the Mortgaged Property or in which the Mortgaged Propertyis directly or indirectly affected including any proceedings which seek to (i) enforceany lien against the Mortgaged Property, (ii) correct, change or prohibitany existing condition, feature or use of the Mortgaged Property, (iii) condemnor demolish the Mortgaged Property, (iv) take, by the power of eminentdomain, any portion of the Mortgaged Property or any property which woulddamage the Mortgaged Property, (v) modify the zoning applicable to theMortgaged Property, or (vi) otherwise adversely affect the MortgagedProperty.  Mortgagor shall initiate orappear in any legal action or other appropriate proceedings when necessary toprotect the Mortgaged Property from damage. Mortgagor shall, upon written request of Lender, represent and defendthe interests of Lender in any proceedings described in this Section 1.21or, at Lender’s election, pay the fees and expenses of any counsel retained byLender to represent the interest of Lender in any such proceedings, in whichevent such fees and expenses shall be added to Mortgagor’s Liabilities andshall bear interest at the Default Rate.

##  

## **1.22.       Environmental Matters.**

##  

#### (a)           Mortgagor represents and warrantsthat Mortgagor has not generated, used, stored, treated, transported, manufactured,handled, produced or disposed of any Hazardous Materials (as defined in theLoan Agreement), on or off the Mortgaged Property in any manner which at anytime violates any Environmental Law (as defined in the Loan Agreement) or anylicense, permit, certificate, approval or similar authorization thereunder andthe operations of the Mortgagor comply in all material respects with allEnvironmental Laws and all licenses, permits, certificates, approvals andsimilar authorizations thereunder; (ii) there has been

 

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#### noinvestigation, proceeding, complaint, order, directive, claim, citation ornotice by any governmental authority or any other Person, nor is any pending orto the best of the Mortgagor’s knowledge threatened, and Mortgagor shallimmediately notify Lender upon becoming aware of any such investigation,proceeding, complaint, order, directive, claim, citation or notice and takeprompt and appropriate actions to respond thereto, with respect to any non-compliancewith or violation of the requirements of any Environmental Law by Mortgagor orthe release, spill or discharge, threatened or actual, of any HazardousMaterials or the generation, use, storage, treatment, transportation,manufacture, handling, production or disposal of any Hazardous Materials or anyother environmental, health or safety matter, which affects Mortgagor or itsbusiness, operations or assets or any properties at which Mortgagor hastransported, stored or disposed of any Hazardous Materials; (iii) Mortgagorhas no material liability (contingent or otherwise) in connection with arelease, spill or discharge, threatened or actual, of any Hazardous Materialsor the generation, use, storage, treatment, transportation, manufacture, handling,production or disposal of any Hazardous Materials; and (iv) withoutlimiting the generality of the foregoing, Mortgagor shall, following thedetermination by Lender that there is non-compliance, or any condition whichrequires any action by or on behalf of Mortgagor in order to avoid anynon-compliance, with any Environmental Law, at Mortgagor’s expense, cause anindependent environmental engineer acceptable to Lender to conduct such testsof the relevant site(s) as are appropriate and prepare and deliver a reportsetting forth the result of such tests, a proposed plan for remediation and anestimate of the costs thereof; and

####  

#### (b)           Mortgagor agrees to defend (withcounsel satisfactory to Lender), protect, indemnify and hold harmless Lender,each affiliate or subsidiary of Lender, and each of their respective officers,directors, employees, attorneys and agents (each an “**IndemnifiedParty**”) from and against any and all liabilities, obligations,losses, damages, penalties, actions, judgments, suits, claims, costs, expensesand disbursements of any kind or nature (including, without limitation, thedisbursements and the reasonable fees of counsel for each Indemnified Party inconnection with any investigative, administrative or judicial proceeding,whether or not the Indemnified Party shall be designated a party thereto),which may be imposed on, incurred by, or asserted against, any IndemnifiedParty (whether direct, indirect or consequential and whether based on anyfederal, state or local laws or regulations, including, without limitation,securities laws and regulations, Environmental Laws and commercial laws andregulations, under common law or in equity, or based on contract or otherwise)in any

 

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#### mannerrelating to or arising out of this Mortgage or any other Loan Instrument, orany act, event or transaction related or attendant thereto, the making orissuance and the management of the Loans or the use or intended use of theproceeds of the Loans; provided, however, that Mortgagor shall not have anyobligation hereunder to any Indemnified Party with respect to matters caused byor resulting from the willful misconduct or gross negligence of suchIndemnified Party, further provided, that with respect to matters asserted bythe Mortgagor, Mortgagor shall not have any obligations hereunder to anyIndemnified Party in the event the Mortgagor has obtained a final nonappealablejudgment in its favor.  To the extentthat the undertaking to indemnify set forth in the preceding sentence may beunenforceable because it is violative of any law or public policy, Mortgagorshall satisfy such undertaking to the maximum extent permitted by applicablelaw.  Any liability, obligation, loss,damage, penalty, cost or expense covered by this indemnity shall be paid toeach Indemnified Party on demand, and, failing prompt payment, shall, togetherwith interest thereon at the highest rate then applicable to Loans hereunderfrom the date incurred by each Indemnified Party until paid by Mortgagor, beadded to the Mortgagor’s Liabilities and be secured by the MortgagedProperty.  The provisions of thisparagraph shall survive the satisfaction and payment of the other Mortgagor’sLiabilities and the release of this Mortgage.

####  

**ARTICLE TWO**

** **

**DEFAULTS**

** **

## **2.1.         Eventof Default**.  Theterm “**Event of Default**,” wherever used inthis Mortgage, shall mean any one or more of the following events:

##  

#### (a)           The failure by Mortgagor:  (i) to pay or deposit when due anydeposit for taxes and assessments due hereunder or any other sums to be paid byMortgagor hereunder or under the Guaranty; or (ii) to keep, perform, orobserve any covenant, condition or agreement contained in Sections 1.4.1,1.6.1, 1.6.2, 1.9 or 1.20 hereof; or (iii) to keep, perform or observe anyother covenant, condition or agreement on the part of Mortgagor in thisMortgage.

####  

#### (b)           The occurrence of an “Event ofDefault” under and as defined in the Guaranty, the Loan Agreement or any of theother Loan Instruments.

####  

#### (c)           The untruth of any warranty orrepresentation made herein.

 

21

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#### (d)           An uninsured loss, damage,destruction or taking by eminent domain or other condemnation proceedings ofany part of the Mortgaged Property.

####  

**ARTICLE THREE**

**REMEDIES**

** **

## **3.1.         Accelerationof Maturity**.  Ifan Event of Default shall have occurred, Lender may declare Mortgagor’sLiabilities to be immediately due and payable, and upon such declarationMortgagor’s Liabilities shall immediately become and be due and payable withoutfurther demand or notice.  The foregoingshall not be in limitation of any provision contained in any other LoanInstrument, including without limitation any such provision pursuant to whichMortgagor’s Liabilities become immediately due and payable without action orelection by Lender.

##  

## **3.2.         Lender’sPower of Enforcement**. If an Event of Default shall have occurred, Lender may, either with orwithout entry or taking possession as provided in this Mortgage or otherwise,and without regard to whether or not Mortgagor’s Liabilities shall have beenaccelerated, and without prejudice to the right of Lender thereafter to bringan action of foreclosure or any other action for any default existing at thetime such earlier action was commenced or arising thereafter, proceed by anyappropriate action or proceeding:  (a) toenforce satisfaction of the Guaranty and/or any other of Mortgagor’sLiabilities or the performance of any term hereof or any of the other LoanInstruments; (b) to foreclose this Mortgage and to have sold, as anentirety or in separate lots or parcels, the Mortgaged Property; and (c) topursue any other remedy available to it. Lender may take action either by such proceedings or by the exercise ofits powers with respect to entry or taking possession, or both, as Lender maydetermine.  Without limitation of theforegoing, if an Event of Default shall have occurred, as an alternative to theright of foreclosure for the full indebtedness evidenced by the Guaranty andthe interest accrued thereon and any other Mortgagor’s Liabilities, afteracceleration thereof, Lender shall have the right to institute partialforeclosure proceedings with respect to the portion of Mortgagor’s Liabilitiesso in default, as if under a full foreclosure, and without declaring all ofMortgagor’s Liabilities to be immediately due and payable (such proceedingsbeing referred to herein as “**partial foreclosure**”),and provided that, if Lender has not elected to accelerate all of Mortgagor’sLiabilities and a foreclosure sale is made because of default in payment ofonly a part of Mortgagor’s Liabilities, such sale may be made subject to thecontinuing lien of this Mortgage for the unmatured part of Mortgagor’sLiabilities.  Any sale pursuant to apartial foreclosure, if so made, shall not in any manner affect the unmaturedportion of Mortgagor’s Liabilities, but as to such unmatured portion, thisMortgage and the lien thereof shall remain in full force and effect just asthough no foreclosure sale had been made. Notwithstanding the filing of any partial foreclosure or entry of adecree of sale therein, Lender may elect, at any time prior to a foreclosuresale pursuant to such decree, to discontinue such partial foreclosure and toaccelerate Mortgagor’s Liabilities by reason of any Event of Default upon whichsuch partial foreclosure was predicated or by reason of any other defaults, andproceed with full

 

22

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## foreclosure proceedings.  Lender may proceed with one or more partial foreclosureswithout exhausting its right to proceed with a full or partial foreclosure salefor any unmatured portion of Mortgagor’s Liabilities, it being the purpose topermit, from time to time a partial foreclosure sale for any matured portion ofMortgagor’s Liabilities without exhausting the power to foreclose and to sellthe Mortgaged Property pursuant to any partial foreclosure in respect of anyother portion of Mortgagor’s Liabilities, whether matured at the time orsubsequently maturing, and without exhausting at any time the right ofacceleration and the right to proceed with a full foreclosure.

##  

## **3.3.         Lender’s Right to Enterand Take Possession, Operate and Apply Income**.

##  

#### (a)           If an Event of Default shall haveoccurred, (i) Mortgagor, upon demand of Lender, shall forthwith surrenderto Lender the actual possession of the Mortgaged Property, and to the extentpermitted by law, Lender itself, or by such officers or agents as it mayappoint, is hereby expressly authorized to enter and take possession of all orany portion of the Mortgaged Property and may exclude Mortgagor and the agentsand employees of Mortgagor wholly therefrom and shall have joint access withMortgagor to the books, papers and accounts of Mortgagor; and (ii) notwithstandingthe provisions of any lease or other agreement to the contrary, Mortgagor shallpay monthly in advance to Lender, on Lender’s entry into possession, or to anyreceiver appointed to collect the rents, income and other benefits of theMortgaged Property, the fair and reasonable rental value for the use andoccupation of such part of the Mortgaged Property as may be in possession ofMortgagor, or any entity affiliated with or controlled by Mortgagor, and upondefault in any such payment Mortgagor shall vacate and surrender possession ofsuch part of the Mortgaged Property to Lender or to such receiver, and indefault thereof Mortgagor may be evicted by summary proceedings or otherwise.

####  

#### (b)           If Mortgagor shall for any reasonfail to surrender or deliver the Mortgaged Property or any part thereof afterLender’s demand, Lender may obtain a judgment or decree conferring on Lenderthe right to immediate possession or requiring Mortgagor to deliver immediatepossession of all or part of the Mortgaged Property to Lender, to the entry ofwhich judgment or decree Mortgagor hereby specifically consents.  Mortgagor shall pay to Lender, upon demand,all costs and expenses of obtaining such judgment or decree and reasonablecompensation to Lender, its attorneys and agents, and all such costs, expensesand compensation shall, until paid, be secured by the lien of this Mortgage.

####  

#### (c)           Upon everysuch entering upon or taking of possession, Lender, to the extent permitted bylaw, may hold, store, use,

 

23

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#### operate,manage and control the Mortgaged Property and conduct the business thereof,and, from time to time:

####  

##### (i)            performsuch construction, make all necessary and proper maintenance, repairs,renewals, replacements, additions and improvements thereto and thereon, andpurchase or otherwise acquire additional fixtures and personal property;

#####  

##### (ii)           insure or keep the Mortgaged Property insured;

#####  

##### (ii)           manage and operate the MortgagedProperty and exercise all the rights and powers of Mortgagor, on its behalf orotherwise, with respect to the same;

#####  

##### (iv)          enterinto agreements with others to exercise the powers herein granted Lender, allas Lender from time to time may determine; and Lender may collect and receiveall the rents, income and other benefits of the Mortgaged Property, includingthose past due as well as those accruing thereafter; and shall apply the moniesso received by Lender, in such order and manner as Lender may determine, to (1) thepayment of amounts due under the Guaranty or pursuant to this Mortgage or toany other Mortgagor’s Liabilities, (2) deposits for taxes and assessments,(3) the payment or creation of reserves for payment of insurance, taxes,assessments and other proper charges or liens or encumbrances upon theMortgaged Property or any part thereof, and (4) the compensation, expensesand disbursements of the agents, attorneys and other representatives of Lender;and

#####  

##### (v)           exercise such remedies as are available to Lender under theLoan Instruments or at law or in equity.

#####  

Lendershall surrender possession of the Mortgaged Property to Mortgagor only when allMortgagor’s Liabilities shall have been paid in fulland all other defaults have been cured. However, the same right to take possession shall exist if any subsequentEvent of Default shall occur.

 

## **3.4.         Leases**.  Lender is authorized to foreclose thisMortgage subject to the rights, if any, of any or all tenants of the MortgagedProperty, even if the rights of any such tenants are or would be subordinate tothe lien of this Mortgage.  Lender mayelect to foreclose the rights of some subordinate tenants while foreclosingsubject to the rights of other subordinate tenants.

##  

## **3.5.         Purchaseby Lender**.  Uponany foreclosure sale, Lender may bid for and purchase all or any portion of theMortgaged Property and, upon compliance with the terms of the sale, may hold,retain and possess and dispose of such property in its own absolute rightwithout further accountability.

 

24

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## **3.6.         Applicationof Foreclosure Sale Proceeds**.  The proceeds of any foreclosure sale of theMortgaged Property or any part thereof received by Lender shall be applied byLender to the indebtedness secured hereby in such order and manner as Lendermay elect.

##  

## **3.7.         Applicationof Indebtedness Toward Purchase Price**.Upon any foreclosure sale, Lender may apply any or all of the indebtedness andother sums due to Lender under the Guaranty, this Mortgage or any other LoanInstrument to the price paid by Lender at the foreclosure sale.

##  

## **3.8.         Waiverof Appraisement, Valuation, Stay, Extension and Redemption Laws**.  Mortgagor hereby waives any and all rights ofredemption.  Mortgagor further agrees, tothe full extent permitted by law, that in case of an Event of Default, neitherMortgagor nor anyone claiming through or under it will set up, claim or seek totake advantage of any reinstatement, appraisement, valuation, stay or extensionlaws now or hereafter in force, or take any other action which would prevent orhinder the enforcement or foreclosure of this Mortgage or the absolute sale ofthe Mortgaged Property or the final and absolute putting into possessionthereof, immediately after such sale, of the purchaser thereat.  Mortgagor, for itself and all who may at anytime claim through or under it, hereby waives, to the full extent that it maylawfully so do, the benefit of all such laws, and any and all right to have theassets comprising the Mortgaged Property marshalled upon any foreclosure of thelien hereof and agrees that Lender or any court having jurisdiction toforeclose such lien may sell the Mortgaged Property in part or as an entirety.

##  

## **3.9.         Receiver- Lender in Possession**.  If an Event of Default shall have occurred,Lender, to the extent permitted by law and without regard to the value of theMortgaged Property or the adequacy of the security for the indebtedness andother sums secured hereby, shall be entitled as a matter of right and withoutany additional showing or proof, at Lender’s election, to either the appointmentby the court of a receiver (without the necessity of Lender posting a bond) toenter upon and take possession of the Mortgaged Property and to collect allrents, income and other benefits thereof and apply the same as the court maydirect or to be placed by the court into possession of the Mortgaged Propertyas mortgagee in possession with the same power herein granted to a receiver andwith all other rights and privileges of a mortgagee in possession underlaw.  The right to enter and take possessionof and to manage and operate the Mortgaged Property, and to collect all rents,income and other benefits thereof, whether by a receiver or otherwise, shall becumulative to any other right or remedy hereunder or afforded by law and may beexercised concurrently therewith or independently thereof.  Lender shall be liable to account only forsuch rents, income and other benefits actually received by Lender, whetherreceived pursuant to this Section 3.9 or Section 3.3.  Notwithstanding the appointment of anyreceiver or other custodian, Lender shall be entitled as pledgee to thepossession and control of any cash, deposits or instruments at the time heldby, or payable or deliverable under the terms of this Mortgage to Lender.

 

25

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## **3.10.       Mortgagorto Pay Mortgagor’s Liabilities in Event of Default; Application of Monies byLender**.

##  

#### (a)           Upon occurrence of an Event ofDefault, Lender shall be entitled to sue for and to recover judgment againstMortgagor for Mortgagor’s Liabilities due and unpaid together with costs andexpenses, including, without limitation, the reasonable compensation, expensesand disbursements of Lender’s agents, attorneys and other representatives,either before, after or during the pendency of any proceedings for theenforcement of this Mortgage; and the right of Lender to recover such judgmentshall not be affected by any taking of possession or foreclosure salehereunder, or by the exercise of any other right, power or remedy for the enforcementof the terms of this Mortgage, or the foreclosure of the lien hereof.

####  

#### (b)           In case of a foreclosure sale of allor any part of the Mortgaged Property and of the application of the proceeds ofsale to the payment of Mortgagor’s Liabilities, Lender shall be entitled toenforce all other rights and remedies under the Loan Instruments.

####  

#### (c)           Mortgagor hereby agrees, to theextent permitted by law, that no recovery of any judgment by Lender under anyof the Loan Instruments, and no attachment or levy of execution upon any of theMortgaged Property or any other property of Mortgagor, shall (except asotherwise provided by law) in any way affect the lien of this Mortgage upon theMortgaged Property or any part thereof or any lien, rights, powers or remedies ofLender hereunder, but such lien, rights, powers and remedies shall continueunimpaired as before until Mortgagor’s Liabilities are paid in full.

####  

#### (d)           Any monies collected or received byLender under this Section 3.12 shall be applied to the payment of compensation,expenses and disbursements of the agents, attorneys and other representativesof Lender, and the balance remaining shall be applied to the payment ofMortgagor’s Liabilities, in such order and manner as Lender may elect, and anysurplus, after payment of all Mortgagor’s Liabilities, shall be paid toMortgagor.

####  

## **3.11.       Delayor Omission**.  Nodelay or omission of Lender in the exercise of any right, power or remedyaccruing upon any Event of Default shall exhaust or impair any such right,power or remedy, or be construed to waive any such Event of Default or toconstitute acquiescence therein.  Everyright, power and remedy given to Lender may be exercised from time to time andas often as may be deemed expedient by Lender.

##  

## **3.12.       Waiverof Default**.  Nowaiver of any Event of Default hereunder shall extend to or affect anysubsequent or any other Event of Default then existing, or impair any rights,powers or remedies in respect thereof.

 

26

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## **3.13.       RemediesCumulative**.  Noright, power or remedy conferred upon or reserved to Lender by the Guaranty,this Mortgage or any other Loan Instrument or any instrument evidencing orsecuring Mortgagor’s Liabilities is exclusive of any other right, power orremedy, but each and every such right, power and remedy shall be cumulative andconcurrent and shall be in addition to any other right, power and remedy givenhereunder or under the Guaranty or any other Loan Instrument or any instrumentevidencing or securing Mortgagor’s Liabilities, or now or hereafter existing atlaw, in equity or by statute.

##  

**ARTICLE FOUR**

** **

**MISCELLANEOUS PROVISIONS**

** **

## **4.1          Heirs,Successors and Assigns Included in Parties**. WheneverMortgagor or Lender is named or referred to herein, heirs and successors andassigns of such person or entity shall be included, and all covenants andagreements contained in this Mortgage shall bind the successors and assigns ofMortgagor, including any subsequent owner of all or any part of the MortgagedProperty and inure to the benefit of the successors and assigns of Lender.  This Section 4.1 shall not be construedto permit an assignment, transfer, conveyance, encumbrance or other dispositionotherwise prohibited by this Mortgage.

##  

## **4.2.         Notices**.  All notices, requests, reports, demands orother instruments required or contemplated to be given or furnished under thisMortgage to Mortgagor or Lender shall be directed to Mortgagor or Lender as thecase may be at the following addresses:

##  

| If to Lender:    | LaSalle Bank National Association |
|------------------|-----------------------------------|
|             | 135 South LaSalle Street          |
|             | Chicago, Illinois 60603-4105      |
|             | Attention: Stephanie Kline        |
|             |                              |
| If to Mortgagor: | 3300 N. Kenmore Street            |   |
|             | South Bend, Indiana 46628         |   |
|             |                              |   |
|             | Attention:                        |   |
|                  |                                   |  |  |  |  |

 

Any suchnotices, requests, reports, demands or other instruments shall be (i) personallydelivered to the offices set forth above, in which case they shall be deemeddelivered on the date of delivery to said offices, (ii) sent by certifiedmail, return receipt requested, in which case they shall be deemed deliveredthree (3) business days after deposit in the U.S. mail, postage prepaid,or (iii) sent by air courier (Federal Express or like service), in whichcase they shall be deemed delivered on the date of actual delivery.  Either party may change the address to whichany such notice, report, demand or other instrument is to be delivered byfurnishing written notice of such change to the other party in compliance withthe foregoing provisions.

 

27

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## **4.3.         Headings**.  The headings of the articles, sections,paragraphs and subdivisions of this Mortgage are for convenience only, are notto be considered a part hereof, and shall not limit, expand or otherwise affectany of the terms hereof.

##  

## **4.4.         InvalidProvisions**.  Inthe event that any of the covenants, agreements, terms or provisions containedin the Guaranty, the Notes, this Mortgage or in any other Loan Instrument shallbe invalid, illegal or unenforceable in any respect, the validity of theremaining covenants, agreements, terms or provisions contained herein or in theGuaranty, the Notes or in any other Loan Instrument (or the application of thecovenant, agreement, term held to be invalid, illegal or unenforceable, topersons or circumstances other than those in respect of which it is invalid,illegal or unenforceable) shall be in no way affected, prejudiced or disturbedthereby.

##  

## **4.5.         Changes**.  Neither this Mortgage nor any term hereof maybe released, changed, waived, discharged or terminated orally, or by any actionor inaction, but only by an instrument in writing signed by the party againstwhich enforcement of the release, change, waiver, discharge or termination issought.  To the extent permitted by law,any agreement hereafter made by Mortgagor and Lender relating to this Mortgageshall be superior to the rights of the holder of any intervening lien orencumbrance.  Any holder of a lien orencumbrance junior to the lien of this Mortgage shall take its lien subject tothe right of Lender to amend, modify or supplement this Mortgage, the Guarantyor any of the other Loan Instruments, to extend the maturity of Mortgagor’sLiabilities or any portion thereof, to vary the rate of interest chargeableunder the Notes and to increase the amount of the indebtedness secured hereby,in each and every case without obtaining the consent of the holder of suchjunior lien and without the lien of this Mortgage losing its priority over therights of any such junior lien.

##  

## **4.6.         GoverningLaw**.  ThisMortgage shall be construed, interpreted, enforced and governed by and inaccordance with the laws of the State of Illinois **except thatthe internal laws of the State where the Mortgaged Property is located shallgovern with respect to the validity, creation, perfection, priority and enforcementof the liens and security interests created hereby.**

##  

## **4.7.         RequiredNotices**. Mortgagor shall notify Lender promptly of the occurrence of any of thefollowing: (i) receipt of notice from any governmental authority relatingto the violation of any rule, regulation, law or ordinance, the enforcement ofwhich would materially and adversely affect the Mortgaged Property; (ii) materialdefault by any tenant in the performance of its obligations under any lease ofall or any portion of the Mortgaged Property or receipt of any notice from anysuch tenant claiming that a default by landlord in the performance of itsobligations under any such lease has occurred; or (iii) commencement ofany judicial or administrative proceedings by or against or otherwise adverselyaffecting Mortgagor or the Mortgaged Property.

##  

## **4.8.         FutureAdvances**.  ThisMortgage is given to secure a guaranty of not only existing indebtedness, butalso future advances (whether such advances are obligatory or are to be made atthe option of Lender, or otherwise) made by Lender under the Notes, to the sameextent as if such future advances were made on the date of the

 

28

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## execution of this Mortgage.  The total amount of principal indebtednessthat may be so secured may decrease or increase from time to time, but allprincipal indebtedness secured hereby shall, in no event, exceed $ 30,000,000.

##  

## **4.9.         Release**.  Upon full payment and satisfaction ofMortgagor’s Liabilities, Lender shall issue to Mortgagor an appropriate releasedeed in recordable form.

##  

## **4.10.       Attorneys’Fees**.  Wheneverreference is made herein to the payment or reimbursement of attorneys’ fees,such fees shall be deemed to include compensation to staff counsel, if any, ofLender in addition to the fees of any other attorneys engaged by Lender.  All attorneys’ fees incurred by Lender inconnection with the foreclosure of this Mortgage shall be recoverable inforeclosure.

##  

## **4.11.       Compliancewith Mortgage Foreclosure Law**. In the event that anyprovision in this Mortgage shall be inconsistent with any applicable statutoryprovision governing the creation, perfection or enforcement of mortgages, suchprovisions shall take precedence over the provisions of this Mortgage, butshall not invalidate or render unenforceable any other provision of thisMortgage that can be construed in a manner consistent with suchprovisions.  If any provision of thisMortgage shall grant to Lender any rights or remedies upon default of Mortgagorwhich are more limited than the rights that would otherwise be vested in Lenderunder applicable law in the absence of said provision, Lender shall be vestedwith such rights applicable law to the full extent permitted by law.

##  

## **4.12.       WAIVEROF TRIAL BY JURY**. TO INDUCE LENDER TO MAKE THE LOAN, MORTGAGOR HEREBY KNOWINGLY,VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL RIGHTS WHICHMORTGAGOR MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDINGS INWHICH MORTGAGOR AND LENDER ARE ADVERSE PARTIES, IN CONNECTION WITH THE NOTES,THIS MORTGAGE OR ANY OF THE OTHER LOAN INSTRUMENTS.

##  

## **4.13.       CONSENTTO JURISDICTION, SERVICE OF PROCESS**.  TO INDUCE LENDER TO MAKE THE LOAN, MORTGAGORHEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY AGREES THAT ALLACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT OF THE NOTES, THIS MORTGAGEOR ANY OF THE OTHER LOAN INSTRUMENTS SHALL BE INSTITUTED AND LITIGATED ONLY INCOURTS HAVING SITUS IN THE CITY OF CHICAGO, ILLINOIS, AND MORTGAGOR HEREBYCONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURTLOCATED AND HAVING SITUS IN SAID CITY OF CHICAGO, AND WAIVES ANY OBJECTIONBASED ON FORUM NON CONVENIENS.  MORTGAGORHEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES PERSONALSERVICE OF ANY AND ALL PROCESS, AND CONSENTS THAT, AT LENDER’S OPTION, ALL SUCHSERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPTREQUESTED, DIRECTED TO MORTGAGOR AT THE ADDRESS FOR MORTGAGOR INDICATED IN SECTION 4.2ABOVE.

 

29

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INWITNESS WHEREOF, Mortgagor has caused this instrument to be executed by itsduly authorized officers as of the day and year first above written.

 

 
|    | MORTGAGOR:                                        |
|---------|---------------------------------------------------|
|    |                                              |
|    | SPIN-CAST PLASTICS, INC., an Indiana  corporation |
|    |                                              |
|    | By:                                               |   /s/Daniel P. Gorey |   |
|    | Name:                                             | Daniel P. Gorey |   |
|    | Title:                                            | Vice President and Treasurer |   |
|    |                                              |
|    | LENDER:                                           |
|    |                                              |
| ATTEST: | LASALLE BANK NATIONAL  ASSOCIATION                |
|    |                                              |
|    | By:                                               |   /s/Stephanie Kline |   |
| By      |   /s/Edward F. Dobbins                       |   | Name: | Stephanie Kline |   |
| Its     | Attorney                                          |   | Title: | Vice President |   |
|         |                                                   |  |  |  |  |  |  |

 

30

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**ACKNOWLEDGMENT**

 
| STATE OF ILLINOIS |   | )    |
|-------------------|--------|------|
|              |   | ) SS |
| COUNTY OF COOK    |   | )    |

 

I, theundersigned, a Notary Public in and for and residing in said County and State,DO HEREBY CERTIFY THAT Daniel P. Gorey, Vice President and Treasurer ofSPIN-CAST PLASTICS, INC., an Indiana corporation, personally known to me to bethe same persons whose names are subscribed to the foregoing instrument appearedbefore me this day in person and acknowledged that they signed and deliveredsaid instrument as their own free and voluntary act and as the free andvoluntary act of said corporation for the uses and purposes therein set forth.

 

GIVEN under my hand andnotarial seal this 20th day of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Charlotte M. Castine |                 |
|-------------------|--------------------------------|----------------------|
|              | Notary Public                  |                 |
|              |                           |
|              | Print Name:                    | Charlotte M. Castine |   |
|              |                           |                 |   |
|              | My Commission Expires:         | 01/05/09             |   |
|                   |                                |                      |  |  |

 

31

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| STATE OF ILLINOIS |   | ) |
|-------------------|--------|---|
|              |   | : |
| COOK COUNTY       |   | ) |

 

I, theundersigned authority, a Notary Public in and for said County in said State,hereby certify that Stephanie Kline, whose name as Vice Presidentof LaSalle Bank National Association, an Illinois bankingcorporation, is signed to the foregoing instrument and who is known to me,acknowledged before me on this day that, being informed of the contents of thesaid instrument, he/she as such officer and with full authority, executed thesame voluntarily for and as the act of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham |                |
|-------------------|------------------------------------|---------------------|
|              | Notary Public                      |
|              |                               |
|              | Print Name:                        | Christina M. Canham |   |
|              |                               |                |   |
|              | My Commission Expires:             | 01/05/09            |   |
|                   |                                    |                     |  |  |

 

32

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EXHIBIT A - LEGAL DESCRIPTION

 

A tract of land in part of Township 38 North, Range 2 County, Indiana,described the Northeast Quarter of Section 28, East, City of South Bend, St. Joseph 

as follows:

 

COMMENCING at the Northeast corner of Section 28; thence South 89°48’ O5” West, 966.00 feet along the North line of said Section 28; thenceSouth 00° 00’ 23” West 40.00 feet to the South boundary of Cleveland Road;thence South 89° 48’ 05” West, 289.00 feet along said South boundary; thenceSouth 44° 54’ 14” West, 14.17 feet to the East boundary of Kenmore Street;thence South 00° 00’ 23” West, 146.76 feet along said East boundary; thence alongsaid East boundary, Southeasterly 294.37 feet along an arc to the left, havinga radius of 1869.86 feet, subtended by a long chord, having a bearing of South04° 30’ 13” East, and a length of 294,07 feet to the point of beginning of thisdescription; thence North 89° 48’ 05” East 581.88 feet; thence South 00° 00’ 23”West, 472.86 feet; thence South 89° 58’ 56” West, 498.99 feet to said Eastboundary of Kenmore Street; thence North 09° 59’ 37” West, 445.88 feet alongsaid East boundary; thence Northwesterly 31.98 feet along an arc to the right, havinga radius of 1869.86 feet and subtended by a long chord, having a bearing ofNorth 09° 30’15” West, and a length of 31.98 feet to the place of beginning.

 

Subject to legal highways.

 

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REAFFIRMATION AND AMENDMENT OFSECURITY AGREEMENT

 

**ThisReaffirmation and Amendment of Security Agreement (this “Reaffirmation”), datedand effective as of April 20, 2005, (the “Reaffirmation”) is executedbetween Quixote Corporation, Quixote Transportation Safety, Inc., TransafeCorporation, Energy Absorption Systems, Inc., Energy Absorption Systems(AL) LLC, Surface Systems, Inc., Nu-Metrics, Inc., HighwayInformation Systems, Inc., U.S. Traffic Corporation (formerly known asGreen Light Acquisition Corporation), Peek Traffic Corporation, (formerly knownas Vision Acquisition Corporation) Spin-Cast Plastics, Inc., as Debtors(each “Debtor” and collectively the “Debtor”) in favor of LaSalle Bank NationalAssociation (“LaSalle”), and has reference to the following facts andcircumstances:**

 

**RECITALS**

 

A.            Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated asof June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.            The Borrower, as of February 9,2005, issued $40,000,000 Convertible Senior Subordinated Notes, due February 15,2025 (the “New Subordinated Notes”), the proceeds of which New SubordinatedNotes (i) repaid in full Borrowers’ obligations on the Term Loans and TermNotes and terminated the Existing Lender’s Term Loan Commitment as defined inthe Existing Credit Agreement and (ii) repaid a portion of the outstandingRevolving Loans thereunder.

 

C.            Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving

 

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Loans and to assign to LaSalle their rights and obligations under theExisting Credit Agreement.

 

D.            LaSalle and Borrowerhave agreed to amend and restate the terms of the Existing Credit Agreement, asamended by that Amended and Restated Credit Agreement, dated as of the datehereof (the “Amended and Restated Credit Agreement”).

 

E.             Northern, as Agentfor the Existing Lenders to the Existing Credit Agreement, effective upon itsresignation as Agent and its assignment of its pro rata share of the RevolvingLoan Commitment and Revolving Loans under the Existing Credit Agreement, shallassign to LaSalle all of its right title and interest in certain Collateral, asdefined, in and subject to the terms of that certain Security Agreement, datedas of June 30, 2004, between the Borrower and the Subsidiary Guarantors,as Debtor, and Northern, as the secured party, as defined in the ExistingCredit Agreement; (the “ Security Agreement”).

 

F.             LaSalle is willingto enter into this Reaffirmation only upon the condition that Debtors executeand deliver this Reaffirmation in favor of LaSalle.

 

**NOW,THEREFORE, in consideration of the foregoing, each Debtor hereby agrees asfollows:**

 

1.             The Recitals to this Reaffirmationare hereby incorporated herein by this reference thereto.

 

2.             Amendment toSecurity Agreement.  The SecurityAgreement is hereby amended as follows:

 

(A)          The “Whereas”sections of the Security Agreement are hereby amended and restated in theirentirety to read as follows:

 

“A.          Quixote Corporation(the “Borrower”), The Northern Trust Company (“Northern”), individually and asAdministrative Agent for certain Lenders, including without limitation, LaSalleBank National Association (“LaSalle”) (“Existing Lenders”), entered into andare parties to that certain Credit Agreement, dated as of May 16, 2003, asamended by a First Amendment, dated as of December 9, 2003; by a SecondAmendment, dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes,

 

2

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dated as of May 16, 2003, in the aggregate original principalamount of Twenty Million Dollars and 00/100 ($20,000,000), executed by theBorrower and made payable pro rata to the order of the Existing Lenders (the “TermNotes”).

 

B.            The Borrower, as of February 9,2005, issued $40,000,000 Convertible Senior Subordinated Notes, due February 15,2025 (the “New Subordinated Notes”), the proceeds of which New SubordinatedNotes (i) repaid in full Borrowers’ obligations on the Term Loans and TermNotes and terminated the Existing Lender’s Term Loan Commitment as defined inthe Existing Credit Agreement and (ii) repaid a portion of the outstandingRevolving Loans thereunder.

 

C.            The Debtors, as SubsidiaryGuarantors executed that Subsidiary Guaranty, dated as of May 16, 2003, asamended, (the “Subsidiary Guaranty”) in favor of Northern for the benefit ofthe Existing Lenders and secured their obligations under that SubsidiaryGuaranty Borrower secured its obligations under the Existing Credit Agreementby pledging certain Collateral, pursuant to that certain Security Agreementdated as of June 30, 2004, between Borrower, Debtors and Northern, asSecured Party.

 

D.            Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.             LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof, (the “Amended and Restated CreditAgreement”) consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.             Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Security Agreement and the Collateral pledgedthereunder.”

 

(B)           All references inthe Security Agreement to the “Credit Agreement” shall hereinafter be deemed torefer to the Amended and Restated Credit Agreement.

 

(C)           All references in the SecurityAgreement to the “Related Documents” shall hereinafter have the meaningassigned to the definition of “Loan Documents” in the Amended and RestatedCredit Agreement.

 

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3.             The Borrower andeach Debtor hereby expressly reaffirms and assumes and Spin-Cast Plastics, Inc.grants a security interest to LaSalle in the Collateral as defined in theSecurity Agreement, and assumes (on the same basis as set forth in the SecurityAgreement, as hereby amended),  all ofDebtors’ obligations and liabilities to Bank as set forth in the SecurityAgreement, and the Borrower, each Debtor, including Spin-Cast Plastics, Inc.,agrees to be bound by and abide by and operate and perform under and pursuantto and comply fully with all of the terms, conditions, provisions, agreements, representations,undertakings, warranties, guarantees, indemnities and covenants contained inthe Security Agreement, in so far as such obligations and liabilities may bemodified by this Reaffirmation.

 

4.             This Reaffirmationshall inure to the benefit of Bank, its successors and assigns and be bindingupon each Junior Creditor, and their individual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has been executed and delivered asof the day and year first written above.

 

 

**QUIXOTE CORPORATION**

**QUIXOTE TRANSPORTATION SAFETY, INC.**

**TRANSAFE CORPORATION**

**ENERGY ABSORPTION SYSTEMS, INC.**

**ENERGY ABSORPTION SYSTEMS (AL) LLC**

**SURFACE SYSTEMS, INC.**

**NU-METRICS, INC.**

**HIGHWAY INFORMATION SYSTEMS, INC.**

**U.S. TRAFFIC CORPORATION (formerly known as**

**Green Light Acquisition Corporation)**

**PEEK TRAFFIC CORPORATION, (formerly known as**

**Vision Acquisition Corporation)**

**SPIN-CAST PLASTICS, INC., as Subsidiary Guarantors and Debtors**

 
| By:    |   /s/Daniel P. Gorey    |   |
|--------|------------------------------|--------|
| Name:  | Daniel P. Gorey              |   |
| Title: | Vice President and Treasurer |   |

 

 

**LASALLE BANK NATIONAL**

** ASSOCIATION**

 
| By:    |   /s/Stephanie Kline |   |
|--------|---------------------------|--------|
| Name:  | Stephanie Kline           |   |
| Title: | Vice President            |   |

 

5

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REAFFIRMATION AND AMENDMENT OFTRADEMARK SECURITY AGREEMENT

 

**ThisReaffirmation and Amendment of Trademark Security Agreement (this “Reaffirmation”),dated and effective as of April 20, 2005, (the “Reaffirmation”) isexecuted between Energy Absorption Systems, Inc., as Pledgor (the “Pledgor”)  in favor of LaSalle Bank National Association(“LaSalle”), and has reference to the following facts and circumstances:**

 

**RECITALS**

 

A.            Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated as ofJune 30, 2004; by a Third Amendment, dated as of September 10, 2004and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.            The Borrower, as of February 9,2005, issued $40,000,000 Convertible Senior Subordinated Notes, due February 15,2025 (the “New Subordinated Notes”), the proceeds of which New SubordinatedNotes (i) repaid in full Borrowers’ obligations on the Term Loans and TermNotes and terminated the Existing Lender’s Term Loan Commitment as defined inthe Existing Credit Agreement and (ii) repaid a portion of the outstandingRevolving Loans thereunder.

 

C.            Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

D.            LaSalle and Borrowerhave agreed to amend and restate the terms of the Existing Credit Agreement, asamended by that Amended and

 

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Restated Credit Agreement, dated as of the date hereof (the “Amendedand Restated Credit Agreement”).

 

E.             Northern, as Agentfor the Existing Lenders to the Existing Credit Agreement, effective upon itsresignation as Agent and its assignment of its pro rata share of the RevolvingLoan Commitment and Revolving Loans under the Existing Credit Agreement, shallassign to LaSalle all of its right title and interest in certain Trademarks, asdefined, in and subject to the terms of that certain Trademark SecurityAgreement, dated as of September 10, 2004, between the Pledgor andNorthern, as the Pledgee, as defined in the Existing Credit Agreement (the “Trademark Security Agreement”).

 

F.             LaSalle is willingto enter into this Reaffirmation only upon the condition that Debtors executeand deliver this Reaffirmation in favor of LaSalle.

 

**NOW,THEREFORE, in consideration of the foregoing, Pledgor and LaSalle hereby agreeas follows:**

 

1.             The Recitals to this Reaffirmationare hereby incorporated herein by this reference thereto.

 

2.             Amendment toTrademark Security Agreement.  TheTrademark Security Agreement is hereby amended as follows:

 

(A)          The “Whereas”sections of the Trademark Security Agreement are hereby amended and restated intheir entirety to read as follows:

 

“A.          Quixote Corporation(the “Borrower”), The Northern Trust Company (“Northern”), individually and asAdministrative Agent for certain Lenders, including without limitation, LaSalleBank National Association (“LaSalle”) (“Existing Lenders”), entered into andare parties to that certain Credit Agreement, dated as of May 16, 2003, asamended by a First Amendment, dated as of December 9, 2003; by a SecondAmendment, dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

2

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B.            The Borrower, as of February 9,2005, issued $40,000,000 Convertible Senior Subordinated Notes, due February 15,2025 (the “New Subordinated Notes”), the proceeds of which New SubordinatedNotes (i) repaid in full Borrowers’ obligations on the Term Loans and TermNotes and terminated the Existing Lender’s Term Loan Commitment as defined inthe Existing Credit Agreement and (ii) repaid a portion of the outstandingRevolving Loans thereunder.

 

C.            Pledgor, asSubsidiary Guarantor, executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured its obligations under thatSubsidiary Guaranty by pledging certain Trademarks, pursuant to that certainTrademark Security Agreement dated as of September 10, 2004, betweenDebtors and Northern, as Secured Party.

 

D.            Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.             LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.             Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Trademark Security Agreement and the Collateralpledged thereunder.”

 

(B)           All references inthe Trademark Security Agreement (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and Restated Credit Agreement and(ii) to the “Pledgee” shall hereinafter be deemed to refer to LaSalle.

 

(C)           All references in the TrademarkSecurity Agreement to the “Loan Documents” shall hereinafter be deemed to referto the definition of “Loan Documents” in the Amended and Restated CreditAgreement.

 

3.             Reaffirmation ofTrademark Security Agreement. Pledgor hereby expressly reaffirms and assumes (on the same basis as setforth in the Trademark Security Agreement, as hereby amended),  all of Pledgor’s obligations and liabilitiesto

 

3

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LaSalle, as Pledgee, as set forth in the Trademark Security Agreement,and the Pledgor agrees to be bound by and abide by and operate and performunder and pursuant to and comply fully with all of the terms, conditions,provisions, agreements, representations, undertakings, warranties, guarantees,indemnities and covenants contained in the Trademark Security Agreement, in sofar as such obligations and liabilities may be modified by this Reaffirmation.

 

4.             This Reaffirmationshall inure to the benefit of Bank, its successors and assigns and be bindingupon Pledgor, LaSalle, and their individual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has been executed and delivered asof the day and year first written above.

 

 

**ENERGY ABSORPTION SYSTEMS, INC.,**

**as****Pledgor**

 
| By:    |   /s/Daniel P. Gorey    |   |
|--------|------------------------------|--------|
| Name:  | Daniel P. Gorey              |   |
| Title: | Vice President and Treasurer |   |

 

 

**LASALLE BANK NATIONAL**

**  ASSOCIATION, as Pledgee**

 
| By:    |   /s/Stephanie Kline |   |
|--------|---------------------------|--------|
| Name:  | Stephanie Kline           |   |
| Title: | Vice President            |   |

 

5

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| STATE OF ILLINOIS |   | )      |
|-------------------|--------|--------|
|              |   | :      |
| COOK COUNTY       |   | )      |
|              |   |   |

 

I, the undersigned authority, a Notary Public in and for said County insaid State, hereby certify that Daniel P. Gorey, whose name as VicePresident and Treasurer of Energy Absorption Systems, Inc., a Delawarecorporation, is signed to the foregoing instrument and who is known to me,acknowledged before me on this day that, being informed of the contents of thesaid instrument, he/she as such officer and with full authority, executed thesame voluntarily for and as the act of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] | /s/Charlotte M. Castine |                 |
|-------------------|-------------------------|----------------------|
|              | Notary Public           |                 |
|              |                    |
|              | Print Name:             | Charlotte M. Castine |   |
|              |                    |                 |   |
|              | My Commission Expires:  | 01/05/09             |   |
|                   |                         |                      |  |  |

 

6

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| STATE OF ILLINOIS |   | ) |
|-------------------|--------|---|
|              |   | : |
| COOK COUNTY       |   | ) |

 

I, theundersigned authority, a Notary Public in and for said County in said State,hereby certify that Stephanie Kline, whose name as Vice Presidentof LaSalle Bank National Association, an Illinois bankingcorporation, is signed to the foregoing instrument and who is known to me,acknowledged before me on this day that, being informed of the contents of thesaid instrument, he/she as such officer and with full authority, executed thesame voluntarily for and as the act of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham |                |
|-------------------|-------------------------------|---------------------|
|              | Notary Public                 |
|              |                          |
|              | Print Name:                   | Christina M. Canham |   |
|              |                          |                |   |
|              | My Commission Expires:        | 01/05/09            |   |
|                   |                               |                     |  |  |

 

7

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REAFFIRMATION AND AMENDMENT OF PATENTSECURITY AGREEMENT

 

**This Reaffirmation and Amendment of Patent Security Agreement (this “Reaffirmation”),dated and effective as of April 20, 2005, (the “Reaffirmation”) isexecuted between Energy Absorption Systems Inc., as the Pledgor (the Pledgor”),in favor of LaSalle Bank National Association (“LaSalle”), and has reference tothe following facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and as AdministrativeAgent for certain Lenders (“Northern”), including without limitation, LaSalle (“ExistingLenders”) entered into and are parties to that certain Credit Agreement, datedas of May 16, 2003, as amended by a First Amendment, dated as of December 9,2003; by a Second Amendment, dated as of June 30, 2004; by a ThirdAmendment, dated as of September 10, 2004 and a Fourth Amendment dated asof February 9, 2005 (“Existing Credit Agreement”), pursuant to which theExisting Lenders have made, (i) Revolving Loans to the Borrower evidencedby certain Revolving Notes, dated as of September 10, 2004, in the maximumaggregate principal amount of Thirty Eight Million Dollars and 00/100($38,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Revolving Notes”) and (ii) Term Loans to theBorrower evidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and 

 

1

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Restated Credit Agreement, dated as of the date hereof (the “Amendedand Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent andits assignment of its pro rata share of the Revolving Loan Commitment andRevolving Loans under the Existing Credit Agreement, shall assign to LaSalleall of its right, title and interest as Pledgee in certain Patents, as defined,in and subject to the terms of that certain Patent Security Agreement, dated asof September 10, 2004, between the Pledgor and Northern, as the securedparty, as defined in the Existing Credit Agreement (the “Patent SecurityAgreement”).

 

F.                                      LaSalle is willing to enter into this Reaffirmationonly upon the condition that Debtors execute and deliver this Reaffirmation infavor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, Pledgor and LaSallehereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toPatent Security Agreement.  ThePatent Security Agreement is hereby amended as follows:

 

(A)                              The “Whereas” sections ofthe Patent Security Agreement are hereby amended and restated in their entiretyto read as follows:

 

“A.                             Quixote Corporation (the “Borrower”),The Northern Trust Company (“Northern”), individually and as AdministrativeAgent for certain Lenders, including without limitation, LaSalle Bank NationalAssociation (“LaSalle”) (“Existing Lenders”), entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

2

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B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Pledgor, asSubsidiary Guarantor, executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured its obligations under thatSubsidiary Guaranty by pledging certain Patents, pursuant to that certainPatent Security Agreement dated as of September 10, 2004, between Pledgorsand Northern, as Pledgee.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Patent Security Agreement and the Collateralpledged thereunder.”

 

(B)                                All references in thePatent Security Agreement to the “Credit Agreement” shall hereinafter be deemedto refer to the Amended and Restated Credit Agreement.

 

(C)                                All references in thePatent Security Agreement to the “Loan Documents” shall hereinafter be deemedto refer to the definition of “Loan Documents” in the Amended and RestatedCredit Agreement.

 

3.                                       Reaffirmation of Patent Security Agreement. Pledgor hereby expressly reaffirms and assumes (on the same basis as setforth in the Patent Security Agreement, as hereby amended),  all of Pledgor’s obligations and liabilitiesto LaSalle, as Pledgee, as set forth in the Patent Security Agreement, and thePledgor agrees to be 

 

3

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bound by and abide by and operate and perform under and pursuant to andcomply fully with all of the terms, conditions, provisions, agreements,representations, undertakings, warranties, guarantees, indemnities andcovenants contained in the Patent Security Agreement, in so far as suchobligations and liabilities may be modified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon Pledgor, LaSalle, andtheir individual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **ENERGY ABSORPTION SYSTEMS, INC.,  as Pledgor**       |                           |
|--------------------------------------------------------|--------------------------------|
|                                                   |                           |
|                                                   |                           |
| By:                                                    |   /s/Daniel P. Gorey |   |   |
| Name:                                                  | Daniel P. Gorey                |   |   |
| Title:                                                 | Vice President and Treasurer   |   |   |
|                                                   |                           |
|                                                   |                           |
| **LASALLE BANK NATIONAL ASSOCIATION, as Pledgee** |                           |
|                                                   |                           |
| By:                                                    |   /s/Stephanie Kline |   |   |
| Name:                                                  | Stephanie Kline                |   |   |
| Title:                                                 | Vice President                 |   |   |

 

5

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| STATE OF ILLINOIS |   | ) |
|-------------------|--------|---|
|              |   | : |
| COOK COUNTY       |   | ) |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Daniel P. Gorey,whose name as Vice President and Treasurer of Energy AbsorptionSystems, Inc., a Delaware corporation, is signed to theforegoing instrument and who is known to me, acknowledged before me on this daythat, being informed of the contents of the said instrument, he/she as suchofficer and with full authority, executed the same voluntarily for and as theact of said corporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 

 
| [ NOTARIAL SEAL ] |   /s/Charlotte M. Castine |                 |
|-------------------|-------------------------------------|----------------------|
|              | Notary  Public                      |
|              |                                |
|              | Print Name:                         | Charlotte M. Castine |   |
|              |                                |
|              | My Commission Expires:              | 01/05/09             |   |
|                   |                                     |                      |  |  |  |

 

6

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| STATE OF ILLINOIS |   | ) |
|-------------------|--------|---|
|              |   | : |
| COOK COUNTY       |   | ) |

 

I, the undersigned authority, a Notary Publicin and for said County in said State, hereby certify that Stephanie Kline,whose name as Vice President of LaSalle Bank National Association,an Illinois banking corporation, is signed to the foregoing instrumentand who is known to me, acknowledged before me on this day that, being informedof the contents of the said instrument, he/she as such officer and with fullauthority, executed the same voluntarily for and as the act of saidcorporation.

 

GIVEN under my hand and seal, this 20thday of April, 2005.

 
| [ NOTARIAL SEAL ] |   /s/Christina M. Canham |                |
|-------------------|------------------------------------|---------------------|
|              | Notary  Public                     |
|              |                               |
|              | Print Name:                        | Christina M. Canham |   |
|              |                               |
|              | My Commission Expires:             | 01/05/09            |   |
|                   |                                    |                     |  |  |

 

7

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REAFFIRMATION AND AMENDMENT OF SUBSIDIARYSTOCK PLEDGE AGREEMENT(QUIXOTE CORPORATION)

 

**This Reaffirmation and Amendment of Subsidiary Stock Pledge Agreement(this “Reaffirmation”), dated and effective as of April 20, 2005, (the “Reaffirmation”)is executed between Quixote Corporation (the “Borrower”) in favor of LaSalleBank National Association (“LaSalle”), and has reference to the following factsand circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated asof June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

1

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D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and Restated Credit Agreement, dated asof the date hereof (the “Amended and Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent and itsassignment of its pro rata share of the Revolving Loan Commitment and RevolvingLoans under the Existing Credit Agreement, shall assign to LaSalle all of itsright title and interest in certain Collateral, as defined, in and subject tothe terms of that certain Subsidiary Stock Pledge Agreement, dated as of September 10,2004, between the Borrower, as Debtor, and Northern, as the secured party, asdefined in the Existing Credit Agreement; (the “ Subsidiary Stock PledgeAgreement”).

 

F.                                      LaSalle is willing to enter into thisReaffirmation only upon the condition that Debtors execute and deliver thisReaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, the Borrower andLaSalle hereby agrees as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toSubsidiary Stock Pledge Agreement. The Subsidiary Stock Pledge Agreement is hereby amended as follows:

 

(A)                              The “Whereas” sections ofthe Subsidiary Stock Pledge Agreement is hereby amended and restated in theirentirety to read as follows:

 

“A.                             Quixote Corporation (the “Borrower”),The Northern Trust Company (“Northern”), individually and as AdministrativeAgent for certain Lenders, including without limitation, LaSalle Bank NationalAssociation (“LaSalle”) (“Existing Lenders”), entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty 

 

2

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Million Dollars and 00/100 ($20,000,000), executed by the Borrower andmade payable pro rata to the order of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     The Borrowersecured its obligations under the Existing Credit Agreement by pledging certainCollateral, pursuant to this Subsidiary Stock Pledge Agreement dated as of September 10,2004, between Borrower and Northern, as Secured Party.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Subsidiary Stock Pledge Agreement and theCollateral pledged thereunder.”

 

(B)                                All references in theSubsidiary Stock Pledge Agreement (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and Restated Credit Agreement and(ii) to the “Secured Party” shall hereinafter be deemed to refer toLaSalle.

 

(C)                                All references in theSubsidiary Stock Pledge Agreement to the “Related Documents” shall hereinafterhave the meaning assigned to the definition of “Loan Documents” in the Amendedand Restated Credit Agreement.

 

3.                                       The Borrower hereby expressly reaffirms andassumes (on the same basis as set forth in the Subsidiary Stock PledgeAgreement, as hereby 

 

3

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amended),  all of Debtors’obligations and liabilities to Secured Party as set forth in the SubsidiaryStock Pledge Agreement, and the Borrower agrees to be bound by and abide by andoperate and perform under and pursuant to and comply fully with all of theterms, conditions, provisions, agreements, representations, undertakings,warranties, guarantees, indemnities and covenants contained in the SubsidiaryStock Pledge Agreement, in so far as such obligations and liabilities may bemodified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon Borrower, LaSalle, andtheir individual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **QUIXOTE CORPORATION, as Debtor**                               |                           |
|------------------------------------------------------------------|--------------------------------|
|                                                             |                           |
|                                                             |                           |
| By:                                                              |   /s/Daniel P. Gorey |   |   |
| Name:                                                            | Daniel P. Gorey                |   |   |
| Title:                                                           | Vice President and Treasurer   |   |   |
|                                                             |                           |
|                                                             |                           |
| **LASALLE BANK NATIONAL**** ASSOCIATION, as Secured Party** |                           |
|                                                             |                           |
| By:                                                              |   /s/Stephanie Kline |   |   |
| Name:                                                            | Stephanie Kline                |   |   |
| Title:                                                           | Vice President                 |   |   |

 

5

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REAFFIRMATIONAND AMENDMENT OF SUBSIDIARYSTOCK PLEDGE AGREEMENT(QUIXOTE TRANSPORTATION SAFETY, INC.)

 

**This Reaffirmation and Amendment of Subsidiary Stock Pledge Agreement(this “Reaffirmation”), dated and effective as of April 20, 2005 (the “Reaffirmation”),is executed between Quixote Transportation Safety, Inc. (“QTS”) in favorof LaSalle Bank National Association (“LaSalle”), and has reference to thefollowing facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated asof June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

1

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D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and Restated Credit Agreement, dated asof the date hereof (the “Amended and Restated Credit Agreement”).

 

E.                                      Northern, as Agent for the Existing Lendersto the Existing Credit Agreement, effective upon its resignation as Agent andits assignment of its pro rata share of the Revolving Loan Commitment andRevolving Loans under the Existing Credit Agreement, shall assign to LaSalleall of its right title and interest in certain Collateral, as defined, in andsubject to the terms of that certain Subsidiary Stock Pledge Agreement, datedas of September 10, 2004, between QTS, as Debtor, and Northern, as thesecured party, as defined in the Existing Credit Agreement (the “ SubsidiaryStock Pledge Agreement”).

 

F.                                      LaSalle is willing to enter into thisReaffirmation only upon the condition that Debtors execute and deliver thisReaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, QTS and LaSallehereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toSubsidiary Stock Pledge Agreement. The Subsidiary Stock Pledge Agreement is hereby amended as follows:

 

(A)                              The “Whereas” Section ofthe Subsidiary Stock Pledge Agreement is hereby amended and restated in theirentirety to read as follows:

 

“A.                             Quixote Corporation (the “Borrower”),The Northern Trust Company (“Northern”), individually and as AdministrativeAgent for certain Lenders, including without limitation, LaSalle Bank NationalAssociation (“LaSalle”) (“Existing Lenders”), entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty 

 

2

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Million Dollars and 00/100 ($20,000,000), executed by the Borrower andmade payable pro rata to the order of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     QTS, as SubsidiaryGuarantor executed that Subsidiary Guaranty, dated as of May 16, 2003, asamended, (the “Subsidiary Guaranty”) in favor of Northern for the benefit ofthe Existing Lenders and secured its obligations under that Subsidiary Guarantyby pledging certain Collateral, pursuant to this Subsidiary Stock PledgeAgreement dated as of September, 10 2004, between QTS and Northern, as SecuredParty.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Subsidiary Stock Pledge Agreement and theCollateral pledged thereunder.”

 

(B)                                All references in theSubsidiary Stock Pledge Agreement (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and Restated Credit Agreement and(ii) to the “Secured Party” shall hereinafter be deemed to refer toLaSalle.

 

(C)                                All references in theSubsidiary Stock Pledge Agreement to the “Related Documents” shall hereinafterhave the meaning assigned to the definition of “Loan Documents” in the Amendedand Restated Credit Agreement.

 

3

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3.                                       QTS hereby expressly reaffirms and assumes(on the same basis as set forth in the Subsidiary Stock Pledge Agreement, ashereby amended),  all of Debtors’obligations and liabilities to Secured Party as set forth in the SubsidiaryStock Pledge Agreement, and QTS agrees to be bound by and abide by and operateand perform under and pursuant to and comply fully with all of the terms,conditions, provisions, agreements, representations, undertakings, warranties,guarantees, indemnities and covenants contained in the Subsidiary Stock PledgeAgreement, in so far as such obligations and liabilities may be modified bythis Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon QTS, LaSalle, and theirindividual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **QUIXOTE TRANSPORATION SAFETY, INC.,  as Debtor**           |                           |
|--------------------------------------------------------------|--------------------------------|
|                                                         |                           |
|                                                         |                           |
| By:                                                          |   /s/Daniel P. Gorey |   |   |
| Name:                                                        | Daniel P. Gorey                |   |   |
| Title:                                                       | Vice President and Treasurer   |   |   |
|                                                         |                           |
|                                                         |                           |
| **LASALLE BANK NATIONAL ASSOCIATION, as Secured Party** |                           |
|                                                         |                           |
| By:                                                          |   /s/Stephanie Kline |   |   |
| Name:                                                        | Stephanie Kline                |   |   |
| Title:                                                       | Vice President                 |   |   |

 

5

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REAFFIRMATIONAND AMENDMENT OF SUBSIDIARYSTOCK PLEDGE AGREEMENT(TRANSAFE CORPORATION)

 

**This Reaffirmation and Amendment of Subsidiary Stock Pledge Agreement(this “Reaffirmation”), dated and effective as of April 20, 2005 (the “Reaffirmation”),is executed between Transafe Corporation (“Transafe”) in favor of LaSalle BankNational Association (“LaSalle”), and has reference to the following facts andcircumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated asof June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

1

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D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and Restated Credit Agreement, dated asof the date hereof (the “Amended and Restated Credit Agreement”).

 

E.                                      Northern, asAgent for the Existing Lenders to the Existing Credit Agreement, effective uponits resignation as Agent and its assignment of its pro rata share of theRevolving Loan Commitment and Revolving Loans under the Existing CreditAgreement, shall assign to LaSalle all of its right title and interest incertain Collateral, as defined, in and subject to the terms of that certainSubsidiary Stock Pledge Agreement, dated as of September 10, 2004, betweenTransafe, as Debtor; and Northern, as the secured party, as defined in theExisting Credit Agreement (the “ Subsidiary Stock Pledge Agreement”).

 

F.                                      LaSalle iswilling to enter into this Reaffirmation only upon the condition that Debtorsexecute and deliver this Reaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, Transafe and LaSallehereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toSubsidiary Stock Pledge Agreement. The Subsidiary Stock Pledge Agreement is hereby amended as follows:

 

(A)                              The “Whereas” Section ofthe Subsidiary Stock Pledge Agreement is hereby amended and restated in theirentirety to read as follows:

 

“A.                             Quixote Corporation (the “Borrower”),The Northern Trust Company (“Northern”), individually and as AdministrativeAgent for certain Lenders, including without limitation, LaSalle Bank NationalAssociation (“LaSalle”) (“Existing Lenders”), entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty 

 

2

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Million Dollars and 00/100 ($20,000,000), executed by the Borrower andmade payable pro rata to the order of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Transafe, asSubsidiary Guarantor executed that Subsidiary Guaranty, dated as of May 16,2003, as amended (the “Subsidiary Guaranty”), in favor of Northern for thebenefit of the Existing Lenders and secured its obligations under thatSubsidiary Guaranty by pledging certain Collateral, pursuant to this SubsidiaryStock Pledge Agreement dated as of September 10, 2004, between Transafeand Northern, as Secured Party.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof (the “Amended and Restated CreditAgreement”), consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Subsidiary Stock Pledge Agreement and the Collateralpledged thereunder.”

 

(B)                                All references in theSubsidiary Stock Pledge Agreement (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and Restated Credit Agreement and(ii) to the “Secured Party” shall hereinafter be deemed to refer toLaSalle.

 

(C)                                All references in theSubsidiary Stock Pledge Agreement to the “Related Documents” shall hereinafterhave the meaning assigned to the definition of “Loan Documents” in the Amendedand Restated Credit Agreement.

 

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3.                                       Transafe hereby expressly reaffirms andassumes (on the same basis as set forth in the Subsidiary Stock PledgeAgreement, as hereby amended),  all ofDebtors’ obligations and liabilities to Secured Party as set forth in theSubsidiary Stock Pledge Agreement, and Transafe agrees to be bound by and abideby and operate and perform under and pursuant to and comply fully with all ofthe terms, conditions, provisions, agreements, representations, undertakings,warranties, guarantees, indemnities and covenants contained in the SubsidiaryStock Pledge Agreement, in so far as such obligations and liabilities may bemodified by this Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon Transafe, LaSalle, andtheir individual successors and assigns.

 

4

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **TRANSAFE CORPORATION, as Debtor**                           |                           |
|---------------------------------------------------------------|--------------------------------|
|                                                          |                           |
|                                                          |                           |
| By:                                                           |   /s/Daniel P. Gorey |   |   |
| Name:                                                         | Daniel P. Gorey                |   |   |
| Title:                                                        | Vice President and Treasurer   |   |   |
|                                                          |                           |
|                                                          |                           |
| **LASALLE BANK NATIONAL  ASSOCIATION, as Secured Party** |                           |
|                                                          |                           |
| By:                                                           |   /s/Stephanie Kline |   |   |
| Name:                                                         | Stephanie Kline                |   |   |
| Title:                                                        | Vice President                 |   |   |

 

5

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REAFFIRMATIONAND AMENDMENT OF SUBSIDIARYSTOCK PLEDGE AGREEMENT(ENERGY ABSORPTION SYSTEMS, INC.)

 

**This Reaffirmation and Amendment of Subsidiary Stock Pledge Agreement(this “Reaffirmation”), dated and effective as of April 20, 2005 (the “Reaffirmation”),is executed between Energy Absorption Systems, Inc. (“EAS”) in favor ofLaSalle Bank National Association (“LaSalle”), and has reference to thefollowing facts and circumstances:**

 

**RECITALS**

 

A.                                   Quixote Corporation(the “Borrower”), The Northern Trust Company, individually and asAdministrative Agent for certain Lenders (“Northern”), including withoutlimitation, LaSalle (“Existing Lenders”) entered into and are parties to thatcertain Credit Agreement, dated as of May 16, 2003, as amended by a FirstAmendment, dated as of December 9, 2003; by a Second Amendment, dated asof June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which the Existing Lenders have made, (i) RevolvingLoans to the Borrower evidenced by certain Revolving Notes, dated as of September 10,2004, in the maximum aggregate principal amount of Thirty Eight Million Dollarsand 00/100 ($38,000,000), executed by the Borrower and made payable pro rata tothe order of the Existing Lenders (the “Revolving Notes”) and (ii) TermLoans to the Borrower evidenced by certain Term Notes, dated as of May 16,2003, in the aggregate original principal amount of Twenty Million Dollars and00/100 ($20,000,000), executed by the Borrower and made payable pro rata to theorder of the Existing Lenders (the “Term Notes”).

 

B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     Northern hasagreed to resign as Administrative Agent under the Existing Credit Agreementand the Existing Lenders (including Northern) have agreed to sell to LaSalletheir outstanding pro rata share of the Revolving Loans and to assign toLaSalle their rights and obligations under the Existing Credit Agreement.

 

1

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D.                                    LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, as amended by that Amended and Restated Credit Agreement, dated asof the date hereof (the “Amended and Restated Credit Agreement”).

 

E.                                      Northern, asAgent for the Existing Lenders to the Existing Credit Agreement, effective uponits resignation as Agent and its assignment of its pro rata share of theRevolving Loan Commitment and Revolving Loans under the Existing CreditAgreement, shall assign to LaSalle all of its right title and interest incertain Collateral, as defined, in and subject to the terms of that certainSubsidiary Stock Pledge Agreement, dated as of September 10, 2004, betweenEAS, as Debtor, and Northern, as the secured party, as defined in the ExistingCredit Agreement (the “ Subsidiary Stock Pledge Agreement”).

 

F.                                      LaSalle iswilling to enter into this Reaffirmation only upon the condition that Debtorsexecute and deliver this Reaffirmation in favor of LaSalle.

 

**NOW, THEREFORE, in consideration of the foregoing, EAS and LaSallehereby agree as follows:**

 

1.                                       The Recitals to this Reaffirmation are herebyincorporated herein by this reference thereto.

 

2.                                       Amendment toSubsidiary Stock Pledge Agreement. The Subsidiary Stock Pledge Agreement is hereby amended as follows:

 

(A)                              The “Whereas” Section ofthe Subsidiary Stock Pledge Agreement is hereby amended and restated in theirentirety to read as follows:

 

“A.                             Quixote Corporation (the “Borrower”),The Northern Trust Company (“Northern”), individually and as AdministrativeAgent for certain Lenders, including without limitation, LaSalle Bank NationalAssociation (“LaSalle”) (“Existing Lenders”), entered into and are parties tothat certain Credit Agreement, dated as of May 16, 2003, as amended by aFirst Amendment, dated as of December 9, 2003; by a Second Amendment,dated as of June 30, 2004; by a Third Amendment, dated as of September 10,2004 and a Fourth Amendment dated as of February 9, 2005 (“Existing CreditAgreement”), pursuant to which existing Credit Agreement the Existing Lendershave made, (i) Revolving Loans to the Borrower evidenced by certainRevolving Notes, dated as of September 10, 2004, in the maximum aggregateprincipal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),executed by the Borrower and made payable pro rata to the order of the ExistingLenders (the “Revolving Notes”) and (ii) Term Loans to the Borrowerevidenced by certain Term Notes, dated as of May 16, 2003, in theaggregate original principal amount of Twenty Million Dollars and 00/100($20,000,000), executed by the Borrower and made payable pro rata to the orderof the Existing Lenders (the “Term Notes”).

 

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B.                                     The Borrower, asof February 9, 2005, issued $40,000,000 Convertible Senior SubordinatedNotes, due February 15, 2025 (the “New Subordinated Notes”), the proceedsof which New Subordinated Notes (i) repaid in full Borrowers’ obligationson the Term Loans and Term Notes and terminated the Existing Lender’s Term LoanCommitment as defined in the Existing Credit Agreement and (ii) repaid aportion of the outstanding Revolving Loans thereunder.

 

C.                                     EAS, as SubsidiaryGuarantor executed that Subsidiary Guaranty, dated as of May 16, 2003, asamended, (the “Subsidiary Guaranty”) in favor of Northern for the benefit ofthe Existing Lenders and secured its obligations under that Subsidiary Guarantyby pledging certain Collateral, pursuant to this Subsidiary Stock PledgeAgreement dated as of September 10, 2004, between EAS and Northern, asSecured Party.

 

D.                                    Northern has agreedto resign as Administrative Agent under the Existing Credit Agreement and theExisting Lenders (including Northern) have agreed to sell to LaSalle theiroutstanding pro rata share of the Revolving Loans and to assign to LaSalletheir rights and obligations under the Existing Credit Agreement.

 

E.                                      LaSalle andBorrower have agreed to amend and restate the terms of the Existing CreditAgreement, and the Borrower has requested and LaSalle, has agreed that LaSalle,individually on its own, continue the Revolving Loan Commitment under theExisting Credit Agreement, as amended by an Amended and Restated CreditAgreement, dated as of the date hereof, (the “Amended and Restated CreditAgreement”) consisting of LaSalle’s Revolving Credit Commitment in the amountof $30,000,000 with a sublimit for the issuance of Letters of Credit in theamount of $10,000,000.

 

F.                                      Northern, subjectto the conditions described in Recitals D and E hereof, has agreed to assign toLaSalle its interest in the Subsidiary Stock Pledge Agreement and theCollateral pledged thereunder.”

 

(B)                                EAS hereby grants acontinuing security interest in all of the outstanding common stock ofSpin-Cast Plastics, Inc., as described in Exhibit A attached hereto,which stock shall constitute “Collateral” for purposes of and be entitled tothe benefits of this Agreement.  Exhibit Aattached hereto shall replace and be substituted for Exhibit A to theSubsidiary Stock Pledge Agreement, and all references therein to Exhibit Ashall be deemed references to the Exhibit A in the form attached hereto.

 

(C)                                All references in theSubsidiary Stock Pledge Agreement (i) to the “Credit Agreement” shallhereinafter be deemed to refer to the Amended and 

 

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Restated Credit Agreement and (ii) to the “Secured Party” shallhereinafter be deemed to refer to LaSalle.

 

(D)                               All references in theSubsidiary Stock Pledge Agreement to the “Related Documents” shall hereinafterhave the meaning assigned to the definition of “Loan Documents” in the Amendedand Restated Credit Agreement.

 

3.                                       EAS hereby expressly reaffirms and assumes(on the same basis as set forth in the Subsidiary Stock Pledge Agreement, ashereby amended),  all of Debtors’obligations and liabilities to Secured Party as set forth in the SubsidiaryStock Pledge Agreement, and EAS agrees to be bound by and abide by and operateand perform under and pursuant to and comply fully with all of the terms,conditions, provisions, agreements, representations, undertakings, warranties,guarantees, indemnities and covenants contained in the Subsidiary Stock PledgeAgreement, in so far as such obligations and liabilities may be modified bythis Reaffirmation.

 

4.                                       This Reaffirmation shall inure to the benefitof Bank, its successors and assigns and be binding upon EAS, LaSalle, and theirindividual successors and assigns.

 

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IN WITNESS WHEREOF, this instrument has beenexecuted and delivered as of the day and year first written above.

 

 
| **ENERGY ABSORPTION SYSTEMS, INC.,  as Debtor**               |                           |
|---------------------------------------------------------------|--------------------------------|
|                                                          |                           |
|                                                          |                           |
| By:                                                           |   /s/Daniel P. Gorey |   |   |
| Name:                                                         | Daniel P. Gorey                |   |   |
| Title:                                                        | Vice President and Treasurer   |   |   |
|                                                          |                           |
|                                                          |                           |
| **LASALLE BANK NATIONAL  ASSOCIATION, as Secured Party** |                           |
|                                                          |                           |
| By:                                                           |   /s/Stephanie Kline |   |   |
| Name:                                                         | Stephanie Kline                |   |   |
| Title:                                                        | Vice President                 |   |   |

 

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EXHIBIT A TOSUBSIDIARY STOCK PLEDGE AGREEMENT EXECUTEDBY ENERGY ABSORPTION SYSTEMS, INC. (“ Pledgor”)IN FAVOR OF THE NORTHERN TRUST COMPANY,AS AGENT FOR THE LENDERS (“Secured Party”)13.1                           THISEXHIBIT A CONSISTS OF 1 PAGELISTING OF PLEDGED SECURITIES

 
| **OWNER**                                                                                                                                              | ** ** | **ISSUER**                    | ** ** | **STOCK CERTIFICATE  NO./SHARES OF COMMON  STOCK** | ** ** | **AUTHORIZED  SHARES/OUTSTANDING** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------|------------|----------------------------------------------------|------------|------------------------------------|
| 1.               Energy  Absorption  Systems, Inc.  (sole managing  member) |       | Energy Absorption Systems LLC |       | #1/100% Membership Interest                        |       | N/A                                |
|                                                                                                                                                   |       |                          |       |                                               |       |                               |
| 2.               Energy  Absorption Systems, Inc.                           |       | Spin-Cast Plastics, Inc. |       | #8 1/699.67 Shares                                 |       | 1000/699.67                        |

 

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