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 **TABLE OF CONTENTS**               Page          1. AMOUNT AND TERMS OF CREDIT  1            1.1 Credit Facilities  1   1.2 Letters of Credit  5   1.3 Prepayments  5   1.4 Use of Proceeds  7   1.5 Interest and Applicable Margins  7   1.6 Eligible Accounts  11   1.7 Eligible Inventory  14   1.8 Cash Management Systems  16   1.9 Fees  16   1.10 Receipt of Payments  16   1.11 Application and Allocation of Payments  16   1.12 Loan Account and Accounting  17   1.13 Indemnity  17   1.14 Access  19   1.15 Taxes  19   1.16 Capital Adequacy; Increased Costs; Illegality  20   1.17 Single Loan  22          2. CONDITIONS PRECEDENT  22            2.1 Conditions to Effectiveness  22   2.2 Further Conditions to Each Loan  22          3. REPRESENTATIONS AND WARRANTIES  23            3.1 Corporate Existence; Compliance with Law  23   3.2 Executive Offices, Collateral Locations, FEIN  24   3.3 Corporate Power, Authorization, Enforceable Obligations  24   3.4 Financial Statements and Projections  24   3.5 Material Adverse Effect  25   3.6 Ownership of Property; Liens  25   3.7 Labor Matters  26   3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness  26   3.9 Government Regulation  27   3.10 Margin Regulations  27   3.11 Taxes  27   3.12 ERISA  27   3.13 No Litigation  28   3.14 Brokers  29   3.15 Intellectual Property  29   3.16 Full Disclosure  29 
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               Page            3.17 Environmental Matters  29   3.18 Insurance  30   3.19 Deposit and Disbursement Accounts  30   3.20 Government Contracts  30   3.21 Customer and Trade Relations  30   3.22 Bonding; Licenses  31   3.23 Solvency  31   3.24 Status of Holdings  31   3.25 Inactive Subsidiaries  31   3.26 Motor Vehicles  31   3.27 Vacant Land Lease  31          4. FINANCIAL STATEMENTS AND INFORMATION  31            4.1 Reports and Notices  31   4.2 Communication with Accountants  32          5. AFFIRMATIVE COVENANTS  32            5.1 Maintenance of Existence and Conduct of Business  32   5.2 Payment of Charges  32   5.3 Books and Records  33   5.4 Insurance; Damage to or Destruction of Collateral  33   5.5 Compliance with Laws  35   5.6 Supplemental Disclosure  35   5.7 Intellectual Property  35   5.8 Environmental Matters  35   5.9 Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases  36   5.10 [Intentionally Omitted]  37   5.11 Post-Closing Matters  37   5.12 Further Assurances  37          6. NEGATIVE COVENANTS  37            6.1 Mergers, Subsidiaries, Etc.  37   6.2 Investments; Loans and Advances  40   6.3 Indebtedness  41   6.4 Employee Loans and Affiliate Transactions  43   6.5 Capital Structure and Business  44   6.6 Guaranteed Indebtedness  44   6.7 Liens  44   6.8 Sale of Stock and Assets  45   6.9 ERISA  46   6.10 Financial Covenants  46   6.11 Hazardous Materials  46   6.12 Sale-Leasebacks  46   6.13 Restricted Payments  46   6.14 Change of Corporate Name or Location; Change of Fiscal Year  47   6.15 No Impairment of Intercompany Transfers  47 
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               Page            6.16 **[**Intentionally Omitted**]**  48   6.17 Holdings  48  6.18 Inactive Subsidiaries  48   6.19 Vacant Land Lease  48          7. TERM  48            7.1 Termination  48   7.2 Survival of Obligations Upon Termination of Financing Arrangements  48          8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES  48            8.1 Events of Default  48   8.2 Remedies  50   8.3 Waivers by Credit Parties  51          9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT  51            9.1 Assignment and Participations  51   9.2 Appointment of Agent  54   9.3 Agent's Reliance, Etc.  55   9.4 GE Capital and Affiliates  55   9.5 Lender Credit Decision  55   9.6 Indemnification  56   9.7 Successor Agent  56   9.8 Setoff and Sharing of Payments  56   9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert  57          10. SUCCESSORS AND ASSIGNS  60            10.1 Successors and Assigns  60          11. MISCELLANEOUS  61            11.1 Complete Agreement; Modification of Agreement  61   11.2 Amendments and Waivers  61   11.3 Fees and Expenses  63   11.4 No Waiver  64   11.5 Remedies  64   11.6 Severability  64   11.7 Conflict of Terms  65   11.8 Confidentiality  65   11.9 GOVERNING LAW  65   11.10 Notices  66   11.11 Section Titles  68   11.12 Counterparts  68   11.13 WAIVER OF JURY TRIAL  68   11.14 Press Releases and Related Matters  69   11.15 Reinstatement  69   11.16 Advice of Counsel  69   11.17 No Strict Construction  69 
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               Page            11.18 Patriot Act Notice  69          12. RESTATEMENT OF ORIGINAL CREDIT AGREEMENT  69 
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**INDEX OF APPENDICES**     Annex A (Recitals) - DefinitionsAnnex B (Section 1.2) - Letters of CreditAnnex C (Section 1.8) - Cash Management SystemAnnex D (Section 2.1(a)) - Closing ChecklistAnnex E (Section 4.1(a)) - Financial Statements and Projections — ReportingAnnex F (Section 4.1(b)) - Collateral ReportsAnnex G (Section 6.10) - Financial CovenantsAnnex H (Section 9.9(a)) - Lenders’ Wire Transfer InformationAnnex I (Section 11.10) - Notice AddressesAnnex J (from Annex A-Commitments definition) - Commitments as of Closing Date     Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit AdvanceExhibit 1.1(a)(ii) - Form of Revolving NoteExhibit 1.1(c)(ii) - Form of Swing Line NoteExhibit 1.5(e) - Form of Notice of Conversion/ContinuationExhibit 4.1(b) - Form of Borrowing Base CertificateExhibit 9.1(a) - Form of Assignment AgreementExhibit B-1 - Application for Standby Letter of CreditExhibit B-2 - Application for Documentary Letter of Credit     Schedule 1.1 - Agent’s RepresentativesDisclosure Schedule 3.1 - Type of Entity; State of OrganizationDisclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEINDisclosure Schedule 3.4(a) - Financial StatementsDisclosure Schedule 3.6 - Real Estate and LeasesDisclosure Schedule 3.7 - Labor MattersDisclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding StockDisclosure Schedule 3.11 - Tax MattersDisclosure Schedule 3.12 - ERISA PlansDisclosure Schedule 3.13 - LitigationDisclosure Schedule 3.14 - BrokersDisclosure Schedule 3.15 - Intellectual PropertyDisclosure Schedule 3.17 - Hazardous MaterialsDisclosure Schedule 3.18 - InsuranceDisclosure Schedule 3.19 - Deposit and Disbursement AccountsDisclosure Schedule 3.20 - Government ContractsDisclosure Schedule 3.22 - Bonds; Patent, Trademark LicensesDisclosure Schedule 5.1 - Trade NamesDisclosure Schedule 6.3 - IndebtednessDisclosure Schedule 6.4(a) - Transactions with AffiliatesDisclosure Schedule 6.7 - Existing Liens v
 

 
          This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of June2, 2010 among INSTEEL WIRE PRODUCTS COMPANY, a North Carolina corporation (“Borrower”); theother Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation(in its individual capacity, “GE Capital”), for itself, as Lender, and as Agent forLenders, and the other Lenders signatory hereto from time to time.RECITALS          WHEREAS, parties hereto are parties to a Credit Agreement, dated as of June 2, 2004 (the“Original Credit Agreement”), as amended and restated pursuant to that certain Amended andRestated Credit Agreement dated January 12, 2006 (as amended and restated and as otherwise amended,restated, supplemented or otherwise modified prior to the date hereof, the “First A&R CreditAgreement”); and          WHEREAS, pursuant to and upon the terms and conditions set forth in the Agreement, each of theparties hereto wishes to and agrees to amend and restate the First A&R Credit Agreement on theterms and conditions set forth herein; and          WHEREAS, Borrower has agreed to secure and continue to secure all of its obligations under theLoan Documents by granting and continuing to grant to Agent, for the benefit of Agent and Lenders,a security interest in and lien upon certain of its existing and after-acquired personal property;and          WHEREAS, Insteel Industries, Inc., a North Carolina corporation (“Holdings”) iswilling to guarantee and continue to guarantee all of the obligations of Borrower to Agent andLenders under the Loan Documents and to pledge and continue to pledge to Agent, for the benefit ofAgent and Lenders, all of the Stock of Borrower to secure such guaranty; and          WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them inAnnex A and, for purposes of this Agreement and the other Loan Documents, the rules ofconstruction set forth in Annex A shall govern. All Annexes, Disclosure Schedules,Exhibits and other attachments (collectively, “Appendices”) hereto, or expressly identifiedto this Agreement, are incorporated herein by reference, and taken together with this Agreement,shall constitute but a single agreement. These Recitals shall be construed as part of theAgreement.          NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinaftercontained, and for other good and valuable consideration, the parties hereto agree to amend andrestate the Original Credit Agreement (including all Schedules, Annexes and Exhibits thereto) inits entirety to read as follows:**1. AMOUNT AND TERMS OF CREDIT**          1.1 Credit Facilities.          (a) Revolving Credit Facility.
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               (i) Subject to the terms and conditions hereof, each Revolving Lender agrees to makeavailable to Borrower from time to time until the Commitment Termination Date its Pro RataShare of advances (each, a “Revolving Credit Advance”). The Pro Rata Share of theRevolving Loan of any Revolving Lender shall not at any time exceed its separate RevolvingLoan Commitment. The obligations of each Revolving Lender hereunder shall be several andnot joint. Until the Commitment Termination Date, Borrower may from time to time borrow,repay and reborrow under this Section 1.1(a); *provided*, that the amount of anyRevolving Credit Advance to be made at any time shall not exceed Borrowing Availability atsuch time. Borrowing Availability may be further reduced by Reserves imposed by Agent inits Permitted Discretion. Each Revolving Credit Advance shall be made on notice byBorrower to one of the representatives of Agent identified in Schedule 1.1 at theaddress specified therein. Any such notice must be given no later than (1) 11:00 a.m.(Chicago time) on the Business Day of the proposed Revolving Credit Advance, in the case ofan Index Rate Loan, or (2) 11:00 a.m. (Chicago time) on the date which is three (3)Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan.Each such notice (a “Notice of Revolving Credit Advance”) must be given in writing(by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),and shall include the information required in such Exhibit and such other information asmay be required by Agent. If Borrower desires to have the Revolving Credit Advances bearinterest by reference to a LIBOR Rate, it must comply with Section 1.5(e).               (ii) Except as provided in Section 1.12, Borrower shall execute and deliver toeach Revolving Lender a note to evidence the Revolving Loan Commitment of that RevolvingLender. Each note shall be in the principal amount of the Revolving Loan Commitment of theapplicable Revolving Lender, dated the Closing Date and substantially in the form ofExhibit 1.1(a)(ii) (each a “Revolving Note” and, collectively, the“Revolving Notes”). Each Revolving Note shall represent the obligation of Borrowerto pay the amount of Revolving Lender’s Revolving Loan Commitment or, if less, suchRevolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all RevolvingCredit Advances to Borrower together with interest thereon as prescribed in Section1.5. The entire unpaid balance of the Revolving Loan and all other non-contingentObligations shall be immediately due and payable in full in immediately available funds onthe Commitment Termination Date.               (iii) Any provision of this Agreement to the contrary notwithstanding, at the requestof Borrower, in its discretion Agent may (but shall have absolutely no obligation to), makeRevolving Credit Advances to Borrower on behalf of Revolving Lenders in amounts that causethe outstanding balance of the aggregate Revolving Loan to exceed the Borrowing Base (lessthe Swing Line Loan) (any such excess Revolving Credit Advances are herein referred tocollectively as “Overadvances”); *provided*, that (A) no such event or occurrenceshall cause or constitute a waiver of Agent’s, the Swing Line Lender’s or RevolvingLenders’ right to refuse to make any further Overadvances, Swing Line Advances or RevolvingCredit Advances, or incur any Letter of Credit Obligations, as the case may be, at any timethat an Overadvance exists, and (B) no Overadvance shall result in a Default or Event ofDefault due to Borrower’s failure to comply with Section 1.3(b)(i) for so long asAgent permits such Overadvance
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to remain outstanding, but solely with respect to the amount of such Overadvance. Inaddition, Overadvances may be made even if the conditions to lending set forth inSection 2 have not been met. All Overadvances shall constitute Index Rate Loans,shall bear interest at the Default Rate and shall be payable on the earlier of demand orthe Commitment Termination Date. Except as otherwise provided in Section 1.11(b),the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed$5,000,000 at any time, shall not cause the Revolving Loan to exceed the Maximum Amount,and may be revoked prospectively by a written notice to Agent signed by the RequisiteLenders.          (b) [Intentionally Omitted]          (c) Swing Line Facility.               (i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice ofRevolving Credit Advance. Subject to the terms and conditions hereof, the Swing LineLender may, in its discretion, make available from time to time until the CommitmentTermination Date advances (each, a “Swing Line Advance”) in accordance with anysuch notice. The provisions of this Section 1.1(c) shall not relieve RevolvingLenders of their obligations to make Revolving Credit Advances under Section1.1(a); *provided*, that if the Swing Line Lender makes a Swing Line Advance pursuant toany such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advancethat otherwise may be made by Revolving Credit Lenders pursuant to such notice. Theaggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesserof (A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and (except forOveradvances) the Borrowing Base, in each case, less the outstanding balance of theRevolving Loan at such time (“Swing Line Availability”). Until the CommitmentTermination Date, Borrower may from time to time borrow, repay and reborrow under thisSection 1.1(c). Each Swing Line Advance shall be made pursuant to a Notice ofRevolving Credit advance delivered by Borrower to Agent in accordance with Section1.1(a). Any such notice must be given no later than 11:00 a.m. (Chicago time) on theBusiness Day of the proposed Swing Line Advance. The Swing Line Lender shall,notwithstanding the failure of any condition precedent set forth in Sections 2.2,be entitled to fund that Swing Line Advance, and to have each Revolving Lender makeRevolving Credit Advances in accordance with Section 1.1(c)(iii) or purchaseparticipating interests in accordance with Section 1.1(c)(iv). Notwithstandingany other provision of this Agreement or the other Loan Documents, the Swing Line Loanshall constitute an Index Rate Loan. Borrower shall repay the aggregate outstandingprincipal amount of the Swing Line Loan upon demand therefor by Agent.               (ii) Borrower shall execute and deliver to the Swing Line Lender a promissory note toevidence the Swing Line Commitment. Such note shall be in the principal amount of theSwing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially inthe form of Exhibit 1.1(c)(ii) (the “Swing Line Note”). The Swing Line Noteshall represent the obligation of Borrower to pay the amount of the Swing Line Commitmentor, if less, the aggregate unpaid principal amount of all Swing Line Advances made toBorrower together with interest thereon as
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prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loanand all other non-contingent Obligations shall be immediately due and payable in full inimmediately available funds on the Commitment Termination Date if not sooner paid in full.               (iii) If no Revolving Lender is a Non-Funding Lender, the Swing Line Lender, at anytime and from time to time no less frequently than once weekly, shall on behalf of Borrower(and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)request each Revolving Lender (including the Swing Line Lender) to make a Revolving CreditAdvance to Borrower (which shall be an Index Rate Loan) in an amount equal to thatRevolving Lender’s Pro Rata Share of the principal amount of the Swing Line Loan (the“Refunded Swing Line Loan”) outstanding on the date such notice is given. Unlessany of the events described in Sections 8.1(h) or 8.1(i) has occurred (in whichevent the procedures of Section 1.1(c)(iv) shall apply) and regardless of whetherthe conditions precedent set forth in this Agreement to the making of a Revolving CreditAdvance are then satisfied, each Revolving Lender shall disburse directly to Agent, its ProRata Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior to 2:00p.m. (Chicago time), in immediately available funds on the Business Day next succeeding thedate that notice is given. The proceeds of those Revolving Credit Advances shall beimmediately paid to the Swing Line Lender and applied to repay the Refunded Swing LineLoan. If any Revolving Lender is a Non-Funding Lender, that Non-Funding Lender’sreimbursement obligations with respect to the Swing Line Loans shall be allocated to andassumed by the other Revolving Lenders pro rata in accordance with their Pro Rata Share(calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and eachother Revolving Lender’s Pro Rata Share had been increased proportionately). If anyRevolving Lender is a Non-Funding Lender, upon receipt of the request described above, eachRevolving Lender that is not a Non-Funding Lender will be obligated to disburse to Agentits Pro Rata Share (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced tozero and each other Revolving Lender’s Pro Rata Share had been increased proportionately)of the Refunded Swing Line Loan; *provided*that no Revolving Lender shall be required tofund any amount which would result in the sum of its outstanding Revolving Loans,outstanding Letter of Credit Obligations (increased as described in clause (a) ofAnnex B), the amount of its participation in Swing Line Loans and its pro ratashare of unparticipated amounts in Swing Line Loans (increased as described above) toexceed its Revolving Loan Commitment.               (iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuantto Section 1.1(c)(iii), one of the events described in Sections 8.1(h) or8.1(i) has occurred, then, subject to the provisions of Section 1.1(c)(v)below, each Revolving Lender shall, on the date such Revolving Credit Advance was to havebeen made for the benefit of Borrower, purchase from the Swing Line Lender an undividedparticipation interest in the Swing Line Loan in an amount equal to its Pro Rata Share ofsuch Swing Line Loan. Upon request, each Revolving Lender shall promptly transfer to theSwing Line Lender, in immediately available funds, the amount of its participationinterest.
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               (v) Each Revolving Lender’s obligation to make Revolving Credit Advances in accordancewith Section 1.1(c)(iii) and to purchase participation interests in accordance withSection 1.1(c)(iv) shall be absolute and unconditional and shall not be affected byany circumstance, including (A) any setoff, counterclaim, recoupment, defense or otherright that such Revolving Lender may have against the Swing Line Lender, Borrower or anyother Person for any reason whatsoever; (B) the occurrence or continuance of any Default orEvent of Default; (C) any inability of Borrower to satisfy the conditions precedent toborrowing set forth in this Agreement at any time or (D) any other circumstance, happeningor event whatsoever, whether or not similar to any of the foregoing. If any RevolvingLender does not make available to Agent or the Swing Line Lender, as applicable, theamount required pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case may be,the Swing Line Lender shall be entitled to recover such amount on demand from suchRevolving Lender, together with interest thereon for each day from the date of non-paymentuntil such amount is paid in full at the Federal Funds Rate for the first two Business Daysand at the Index Rate thereafter.          (d) Reliance on Notices. Agent shall be entitled to rely upon, and shall be fullyprotected in relying upon, any Notice of Revolving Credit Advance, Notice ofConversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume thateach Person executing and delivering any notice in accordance herewith was duly authorized, unlessthe responsible individual acting thereon for Agent has actual knowledge to the contrary, and Agentmay, without incurring any liability hereunder, rely and act upon any notice, document andinformation (including those transmitted by Electronic Transmission) and any telephone message orconversation, in each case believed by it to be genuine and transmitted, signed or otherwiseauthenticated by the appropriate parties.          1.2 Letters of Credit. Subject to and in accordance with the terms andconditions contained herein and in Annex B, Borrower shall have the right torequest, and Revolving Lenders agree to incur, or purchase participations in, Letter ofCredit Obligations in respect of Borrower.          1.3 Prepayments.          (a) Voluntary Prepayments; Reductions in Revolving Loan Commitments. Borrower may atany time on at least five (5) days’ prior written notice to Agent permanently reduce (but notterminate) the Revolving Loan Commitment; *provided*, that (A) any such reductions shall be in aminimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of such amount, and (B)after giving effect to such reductions, Borrower shall comply with Section 1.3(b)(i).Borrower may at any time on at least ten (10) days’ prior written notice to Agent terminate theRevolving Loan Commitment, *provided*that upon such termination all Loans and other Obligationsshall be immediately due and payable in full and all Letter of Credit Obligations shall be cashcollateralized or otherwise satisfied in accordance with Annex B hereto. Any voluntaryprepayment and any reduction or termination of the Revolving Loan Commitment must be accompanied bypayment of the Fee required by Section 1.9(c), if any, plus the payment of any LIBOR fundingbreakage costs in accordance with Section 1.13(b). Upon any such reduction or terminationof the Revolving Loan Commitment, Borrower’s right to
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request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred onits behalf, or request Swing Line Advances, shall simultaneously be permanently reduced orterminated, as the case may be; *provided*, that a permanent reduction of the Revolving LoanCommitment shall not require a corresponding pro rata reduction in the L/C Sublimit. Each noticeof partial prepayment shall designate the Loan or other Obligations to which such prepayment is tobe applied.          (b) Mandatory Prepayments.               (i) If at any time the outstanding balances of the Revolving Loan and the Swing LineLoan exceed the lesser of (A) the Maximum Amount and (B) the Borrowing Base, Borrower shallimmediately repay the aggregate outstanding Revolving Credit Advances to the extentrequired to eliminate such excess. If any such excess remains after repayment in full ofthe aggregate outstanding Revolving Credit Advances, Borrower shall provide cash collateralfor the Letter of Credit Obligations in the manner set forth in Annex B to theextent required to eliminate such excess. Notwithstanding the foregoing, any Overadvancemade pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section1.1(a)(iii).               (ii) Promptly upon receipt by any Credit Party of any cash proceeds of any assetdisposition, Borrower shall prepay the Loans in an amount equal to all such proceeds, netof (A) commissions and other reasonable and customary transaction costs, fees and expensesproperly attributable to such transaction and payable by Borrower in connection therewith(in each case, paid to non-Affiliates), (B) sale or transfer taxes, (C) amounts payable toholders of senior Liens on such asset (to the extent such Liens are permitted underSection 6.7), if any, and (D) an appropriate reserve for income taxes in accordancewith GAAP in connection therewith (all such proceeds net of amounts described in clauses(A), (B), (C) and (D) being the “Net Asset Disposition Proceeds”). Any suchprepayment shall be applied in accordance with Section 1.3(c). The following shallnot be subject to mandatory prepayment under this clause (ii): (1) proceeds ofsales of Inventory in the ordinary course of business; (2) so long as no Event of Defaulthas occurred and is continuing and Liquidity is at least $10,000,000, Net Asset DispositionProceeds of any sale or dispositions of assets other than Collateral and (3) assetdisposition proceeds that are reinvested in Equipment, Fixtures or Real Estate within onehundred and eighty (180) days following receipt thereof; *provided*, that Borrower notifiesAgent of its intent to reinvest at the time such proceeds are received and when suchreinvestment occurs.               (iii) The Borrower shall repay to the Lenders in full on the date specified inclause (a) of the definition of the term “Commitment Termination Date” theaggregate principal amount of the Revolving Loans and Swing Line Loans outstanding on suchdate.               (iv) Following the occurrence and during the continuance of an Event of Default, anyproceeds of Keyman Life Insurance (whether such proceeds arise by reason of death benefit,at maturity, surrendering the policy and receiving the surrender value thereof (unless uponsuch receipt of such surrender value, Keyman Life
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Insurance is purchased which has a death benefit that is not less than the death benefit ofthe Keyman Life Insurance which was surrendered) or otherwise) shall be immediatelyused to prepay the Obligations in an amount equal to such proceeds, which shall be appliedin accordance with Section 1.11.          (c) Application of Certain Mandatory Prepayments. Any prepayments made by Borrowerwith respect to any or all Obligations pursuant toSections 1.3(b)(ii) or (b)(iv)above and any prepayments from insurance or condemnation proceeds in accordance with Section5.4(c) shall be applied as follows: first, to Fees and reimbursable expenses of Agentthen due and payable pursuant to any of the Loan Documents; second, to interest then dueand payable on the Swing Line Loan; third to the principal balance of the Swing Line Loanuntil the same has been repaid in full; fourth, to interest then due and payable on theRevolving Credit Advances; fifth, to the outstanding principal balance of Revolving CreditAdvances until the same has been paid in full; and sixth, if Borrower is required toprovide cash collateral for any Letter of Credit Obligations pursuant to this Agreement, includingSection 8.2, to provide cash collateral for any Letter of Credit Obligations in the mannerset forth in Annex B, until all such Letter of Credit Obligations have been fully cashcollateralized in the manner set forth in Annex B. To the extent permitted by theforegoing sentence, amounts prepaid shall be applied first to any Index Rate Loans then outstandingand then to outstanding LIBOR Loans with the shortest LIBOR Periods remaining. Neither theRevolving Loan Commitment nor the Swing Line Commitment shall be permanently reduced by the amountof any such prepayments.          (d) No Implied Consent. Nothing in this Section 1.3 shall be construed toconstitute Agent’s or any Lender’s consent to any transaction that is not permitted by otherprovisions of this Agreement or the other Loan Documents.          1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Loans solelyfor the Refinancing (and to pay any related transaction expenses) and to pay transactionexpenses in connection with this Agreement, and for the financing of Borrower’s ordinaryworking capital and general corporate needs. Borrower shall only request a Revolving CreditAdvance to the extent that the proceeds thereof are reasonably anticipated by Borrower tobe used and expended within three Business days of such Revolving Credit Advance.          1.5 Interest and Applicable Margins.          (a) Borrower shall pay interest to Agent, for the ratable benefit of Lenders in accordancewith the various Loans being made by each Lender, in arrears on each applicable Interest PaymentDate, at the Index Rate plus the Applicable Revolver Index Margin per annum or, at theelection of Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Marginper annum.     (A) As of the First A&R Closing Date, the Applicable Margins were as follows:
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     Applicable Revolver Index Margin  0.00%Applicable Revolver LIBOR Margin  1.25%Applicable L/C Margin  1.25%Applicable Unused Line Fee Margin  0.375%At all times from and after the First A&R Closing Date until (but excluding) theClosing Date, the Applicable Margins shall be adjusted by reference to the followinggrids:     **Level of****If Reference Availability is:** **Applicable Margins:**>$35,000,000 Level I> $25,000,000, but ≤$35,000,000 Level II> $15,000,000, but ≤$25,000,000 Level III≤$15,000,000 Level IV                   **Applicable Margins**  **Level I** **Level II** **Level III** **Level IV**Applicable RevolverIndex Margin  0.00%  0.00%  0.25%  0.50%Applicable RevolverLIBOR Margin  1.25%  1.50%  1.75%  2.00%Applicable L/C Margin  1.25%  1.50%  1.75%  2.00%Applicable Unused LineFee Margin  0.375%  0.375%  0.25%  0.25%Adjustments in the Applicable Margins commencing with the Fiscal Quarter ending onor about December 31, 2005 shall be implemented quarterly on a prospective basis,commencing on the first day of the calendar month that begins after the date ofdelivery to Lenders of the Compliance Certificate delivered to Agent and Lenderspursuant to paragraph (b) of Annex E with respect to a FiscalQuarter evidencing the need for an adjustment. Concurrently with the delivery ofsuch Compliance Certificate, Borrower shall deliver to Agent and Lenders acertificate, signed by its chief financial officer, setting forth in reasonabledetail the basis for the continuance of, or any change in, the Applicable Margins.Failure to timely deliver such Compliance Certificate shall, in addition to anyother remedy provided for in this Agreement, result in an increase in the
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Applicable Margins to the highest level set forth in the foregoing grid, until thedate of the delivery of a Compliance Certificate demonstrating that such an increaseis not required. If an Event of Default has occurred and is continuing at the timeany reduction in the Applicable Margins is to be implemented, that reduction shallbe deferred until the date on which such Event of Default is waived or cured.(B) As of the Closing Date, the Applicable Margins are as follows:     Applicable Revolver Index Margin  0.75%Applicable Revolver LIBOR Margin  2.25%Applicable L/C Margin  2.25%Applicable Unused Line Fee Margin  0.50%After the Closing Date, the Applicable Margins (other than Applicable Unused LineFee Margin) shall be adjusted by reference to the following grids:     **Level of**  **Applicable Margins (other than****If Reference Availability is:** **Applicable Unused Line Fee Margin):**>$30,000,000 Level I> $10,000,000, but ≤$30,000,000 Level II≤$10,000,000 Level III               **Applicable Margins  (other than**  **Applicable Unused Line Fee Margin)**  **Level I** **Level II** **Level III**Applicable RevolverIndex Margin  0.75%  1.00%  1.50%Applicable Revolver LIBORMargin  2.25%  2.50%  3.00%Applicable L/C Margin  2.25%  2.50%  3.00%Adjustments in the Applicable Margins (other than Applicable Unused Line Fee Margin)commencing with the Fiscal Quarter ending on or about July 3, 2010 shall beimplemented quarterly on a prospective basis, commencing on the first day of thecalendar month that begins after the date of delivery to Lenders of the
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Compliance Certificate delivered to Agent and Lenders pursuant to paragraph(b) of Annex E with respect to a Fiscal Quarter evidencing the need foran adjustment. Concurrently with the delivery of such Compliance Certificate,Borrower shall deliver to Agent and Lenders a certificate, signed by its chieffinancial officer, setting forth in reasonable detail the basis for the continuanceof, or any change in, the Applicable Margins. Failure to timely deliver suchCompliance Certificate shall, in addition to any other remedy provided for in thisAgreement, result in an increase in the Applicable Margins (other than ApplicableUnused Line Fee Margin) to the highest level set forth in the foregoing grid, untilthe date of the delivery of a Compliance Certificate demonstrating that such anincrease is not required. If an Event of Default has occurred and is continuing atthe time any reduction in the Applicable Margins is to be implemented, thatreduction shall be deferred until the date on which such Event of Default is waivedor cured.After the Closing Date, the Applicable Unused Line Fee Margin shall be adjusted asfollows: (i) if the average of the daily closing balances of the Revolving Loan andthe Swing Line Loan outstanding during the period for which the Fee underSection 1.9(b) is due is equal to or greater than 50% of the average MaximumAmount during such period, the Applicable Unused Line Fee Margin for such periodshall be equal to 0.375% per annum and (ii) if the average of the daily closingbalances of the Revolving Loan and the Swing Line Loan outstanding during the periodfor which the Fee under Section 1.9(b) is due is less than 50% of theaverage Maximum Amount for such period, the Applicable Unused Line Fee Margin forsuch period shall be equal to 0.50% per annum.          (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, thematurity thereof will be extended to the next succeeding Business Day (except as set forth in thedefinition of LIBOR Period) and, with respect to payments of principal, interest thereon shall bepayable at the then applicable rate during such extension.          (c) All computations of Fees calculated on a per annum basis and interest shall be made byAgent on the basis of a 360-day year, in each case for the actual number of days occurring in theperiod for which such interest and Fees are payable. The Index Rate is a floating rate determinedfor each day. Each determination by Agent of interest rates and Fees hereunder shall bepresumptive evidence of the correctness of such rates and Fees.          (d) So long as an Event of Default has occurred and is continuing under Section 8.1(a),(h) or (i), or so long as any other Event of Default has occurred and is continuing and at theelection of Agent (or upon the written request of Requisite Lenders) confirmed by written noticefrom Agent to Borrower, the interest rates applicable to the Loans and the Letter of Credit Feesshall be increased to the rate per annum which is determined by adding two percent (2.0%) per annumto the Applicable Margin then in effect for such Loans (plus the LIBOR Rate or Index Rate, as thecase may be) or to the rate of such Fees otherwise applicable hereunder unless Agent or RequisiteLenders elect to impose a smaller increase (the “Default Rate”), and all outstandingObligations shall bear interest at the Default Rate applicable to such Obligations. Interest andLetter of Credit Fees at the Default Rate shall be payable upon demand
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and shall accrue from the initial date of such Event of Default until that Event of Default iscured or waived.          (e) Subject to the conditions precedent set forth in Section 2.2, Borrower shall havethe option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convertat any time all or any part of outstanding Loans (other than the Swing Line Loan) from Index RateLoans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment ofLIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior tothe expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of anyLoan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBORPeriod and the succeeding LIBOR Period of that continued Loan shall commence on the first day afterthe last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans havingthe same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must bein a minimum amount of $2,000,000 and integral multiples of $1,000,000 in excess of such amount.Any such election must be made by 11:00 a.m. (Chicago time) on the Third Business Day prior to (1)the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of eachLIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on whichBorrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated byBorrower in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m.(Chicago time) on the Third Business Day prior to the end of the LIBOR Period with respect thereto(or if a Default or an Event of Default has occurred and is continuing or the additional conditionsprecedent set forth in Section 2.2 shall not have been satisfied), that LIBOR Loan shall beconverted to an Index Rate Loan at the end of its LIBOR Period. Borrower must make such electionby notice to Agent in writing, including by Electronic Transmission. In the case of any conversionor continuation, such election must be made pursuant to a written notice (a “Notice ofConversion/Continuation”) in the form of Exhibit 1.5(e).          (f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a courtof competent jurisdiction determines in a final order that the rate of interest payable hereunderexceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”),then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payablehereunder shall be equal to the Maximum Lawful Rate; *provided*, *however*, that if at any timethereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowershall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the totalinterest received by Agent, on behalf of Lenders, is equal to the total interest that would havebeen received had the interest rate payable hereunder been (but for the operation of thisparagraph) the interest rate payable since the Closing Date as otherwise provided in thisAgreement. In no event shall the total interest received by any Lender pursuant to the termshereof exceed the amount that such Lender could lawfully have received had the interest duehereunder been calculated for the full term hereof at the Maximum Lawful Rate.          1.6 Eligible Accounts. All of the Accounts owned by Borrower and reflected inthe most recent Borrowing Base Certificate delivered by Borrower to Agent shall be“Eligible Accounts” for purposes of this Agreement, except any Account to which anyof the exclusionary criteria set forth below applies. Agent shall have the right toestablish, modify or eliminate Reserves against Eligible Accounts from time to time inits Permitted Discretion. In
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addition, Agent reserves the right, at any time and fromtime to time after the Closing Date, to adjust any of the criteria set forth below and toestablish new criteria, and to adjust advance rates with respect to Eligible Accounts, inits Permitted Discretion, subject to the approval of Supermajority Revolving Lenders in thecase of adjustments or new criteria or changes in advance rates which have the effect ofmaking more credit available. Eligible Accounts shall not include any Account of Borrower,without duplication:          (a) that does not arise from the sale of goods or the performance of services by Borrower inthe ordinary course of its business;          (b) (i) upon which Borrower’s right to receive payment is not absolute or is contingent uponthe fulfillment of any condition whatsoever or (ii) as to which Borrower is not able to bring suitor otherwise enforce its remedies against the Account Debtor through judicial process, or (iii) ifthe Account represents a progress billing consisting of an invoice for goods sold or used orservices rendered pursuant to a contract under which the Account Debtor’s obligation to pay thatinvoice is subject to Borrower’s completion of further performance under such contract or issubject to the equitable lien of a surety bond issuer;          (c) to the extent that any defense, counterclaim, contra, setoff or dispute is asserted as tosuch Account but only to the extent of any such defense, counterclaim, contra, setoff or dispute;          (d) that is not a true and correct statement of bona fide indebtedness incurred in the amountof the Account for merchandise sold to or services rendered and accepted by the applicable AccountDebtor;          (e) with respect to which an invoice, in form and substance consistent with Borrower’scustomary billing practices, has not been sent to the applicable Account Debtor;          (f) that (i) is not owned by Borrower or (ii) is subject to any Lien of any other Person,other than Liens in favor of Agent, on behalf of itself and Lenders;          (g) that arises from a sale to any director, officer, other employee or Affiliate of anyCredit Party, or to any entity that has any common officer or director with any Credit Party (otherthan those sales to an Affiliate (determined solely for the purposes of this clause (g), asif the phrase “5% or more” set forth in clause (a) of the definition of the term of“Affiliate” was the phrase “15% or less” and without giving effect to clauses (b),(c) and (d) of such definition) of any Credit Party so long as such sales are on anarms-length basis and in the ordinary course of such Credit Party’s business);          (h) that is the obligation of an Account Debtor that is the United States government or apolitical subdivision thereof, or any state, county or municipality or department, agency orinstrumentality thereof unless Agent, in its sole discretion, has agreed to the contrary in writingand Borrower, if necessary or desirable, has complied with respect to such obligation with theFederal Assignment of Claims Act of 1940, or any applicable state, county or municipal lawrestricting the assignment thereof with respect to such obligation;
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          (i) that is the obligation of an Account Debtor located in a foreign country other than Canadaunless payment thereof is assured by a letter of credit assigned and delivered to Agent, reasonablysatisfactory to Agent as to form, amount and issuer;          (j) to the extent Borrower or any Subsidiary thereof is liable for goods sold or servicesrendered by the applicable Account Debtor to Borrower or any Subsidiary thereof but only to theextent of the potential offset;          (k) that arises with respect to goods that are delivered on a cash-on-delivery basis or placedon consignment, guaranteed sale or other terms by reason of which the payment by the Account Debtoris or may be conditional;          (l) the Account is not paid within the earlier of: sixty (60) days following its due date orone hundred twenty (120) days following its original invoice date;          (m) as to which:               (i) the Account Debtor obligated upon such Account suspends business, makes a generalassignment for the benefit of creditors or fails to pay its debts generally as they comedue; or               (ii) a petition is filed by or against any Account Debtor obligated upon such Accountunder any bankruptcy law or any other federal, state or foreign (including any provincial)receivership, insolvency relief or other law or laws for the relief of debtors;          (n) that is the obligation of an Account Debtor for which fifty percent (50%) or more of theDollar amount of all Accounts owing by that Account Debtor are ineligible under the other criteriaset forth in this Section 1.6 (l)(i);          (o) as to which Agent’s Lien thereon, on behalf of itself and Lenders, is not a first priorityperfected Lien;          (p) as to which any of the representations or warranties in the Loan Documents are untrue inany material respect;          (q) that is a Bill-and-Hold Account to the extent that the book value thereof, when added tothe book value of all other Bill-and-Hold Accounts, exceeds 60% of the aggregate book value of allBill-and-Hold Accounts, *provided*, *however*, that the aggregate amount of Borrowing Availabilityattributable to Bill-and-Hold Accounts which are not excluded from being Eligible Accounts pursuantto this clause (q) and which otherwise constitute and are deemed to be “Eligible Accounts”in accordance with this Section 1.6 shall not exceed $3,000,000 at any time;          (r) to the extent such Account is evidenced by a judgment, Instrument or Chattel Paper;
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          (s) to the extent such Account exceeds any credit limit established by Agent, in its PermittedDiscretion; *provided*, that Agent shall notify Borrower of Agent’s proposed credit limit or anamendment of the existing credit limit, as the case may be, prior to Agent’s establishment oramendment thereof and Agent and Borrower shall mutually agree on such credit limit; *provided*,*further*, that if no agreement is reached within ten (10) Business Days of the date of the proposalof such credit limit or amendment thereof by the Agent, the Agent’s proposed credit limit oramendment thereof shall be deemed to be established and in effect for purposes of this clause(r);          (t) to the extent that such Account, together with all other Accounts owing to such AccountDebtor and its Affiliates as of any date of determination exceed 15% of all Eligible Accounts; or          (u) that is payable in any currency other than Dollars.          If Agent deems any Account ineligible in its Permitted Discretion based on a new criterionother than the criteria set forth above, then Agent shall give Borrower at least three (3) BusinessDays’ prior notice (oral or written or by Electronic Transmission) thereof unless an Event ofDefault exists, in which case no notice shall be required.          1.7 Eligible Inventory. All of the inventory owned by the Borrower and reflected inthe most recent Borrowing Base Certificate delivered by Borrower to Agent shall be “EligibleInventory” for purposes of this Agreement, except any Inventory to which any of theexclusionary criteria set forth below applies. Agent shall have the right to establish, modify, oreliminate Reserves against Eligible Inventory from time to time in its Permitted Discretion. Inaddition, Agent reserves the right, at any time and from time to time after the Closing Date, toadjust any of the criteria set forth below and to establish new criteria and to adjust advancerates with respect to Eligible Inventory in its reasonable credit judgment, subject to the approvalof Supermajority Revolving Lenders in the case of adjustments or new criteria or changes in advancerates which have the effect of making more credit available. Eligible Inventory shall not includeany Inventory of Borrower that, without duplication:          (a) is not owned by Borrower free and clear of all Liens and rights of any other Person(including the rights of a purchaser that has made progress payments and the rights of a suretythat has issued a bond to assure Borrower’s performance with respect to that Inventory), except theLiens in favor of Agent, on behalf of itself and Lenders and except for Liens described inclause (d) of the definition of the term “Permitted Encumbrances” (subject to Reserves inthe Permitted Discretion of the Agent);          (b) (i) is not located on premises owned, leased or rented by Borrower and set forth inDisclosure Schedule (3.2) or (ii) is stored at a leased location, unless (x) a reasonablysatisfactory landlord waiver has been delivered to Agent or (y) Rent Reserves have been establishedwith respect thereto, (iii) is stored with a bailee or warehouseman unless a reasonablysatisfactory, acknowledged Bailee Letter has been received by Agent and, if required by Agent,Reserves reasonably satisfactory to Agent have been established with respect to all past-dueamounts owing to any such bailee or warehouseman, or (iv) is located at an owned location subjectto a mortgage in favor of a lender other than Agent, unless a reasonably satisfactory
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mortgagee waiver or a collateral access agreement referred to in Section 6.3(a)(ix) hasbeen delivered to Agent, or (v) is located at any site if the aggregate book value of Inventory atany such location is less than $100,000;          (c) is placed on consignment or is in transit, except for Inventory in transit betweendomestic locations (including leased locations and domestic port locations with respect to which aBailee Letter has been delivered to Agent) of Credit Parties as to which Agent’s Liens have beenperfected at origin and destination;          (d) is covered by a negotiable document of title, unless such document has been delivered toAgent with all necessary endorsements, free and clear of all Liens except those in favor of Agentand Lenders;          (e) obsolete, slow moving (in excess of one year’s supply), unsalable, shopworn, seconds,damaged or unfit for sale;          (f) consists of display items or packing or shipping materials, manufacturing supplies, storesor replacement parts;          (g) consists of goods which have been returned by the buyer unless such returned goods havebeen inspected by Borrower and determined to be free of defect or damage and have been returned tofinished goods Inventory for sale;          (h) is not of a type held for sale in the ordinary course of Borrower’s business;          (i) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders;          (j) breaches any of the representations or warranties pertaining to Inventory set forth in theLoan Documents in any material respect;          (k) consists of any costs associated with “freight-in” charges, except those charges that arecustomary in, and consistent with, Borrower’s historical accounting practices;          (l) consists of Hazardous Materials or goods that can be transported or sold only withlicenses that are not readily available;          (m) is not covered by casualty insurance reasonably acceptable to Agent; or          (n) is subject to any patent or trademark license requiring the payment of royalties or feesor requiring the consent of the licensor for a sale thereof by Agent.          If Agent deems any Inventory ineligible in its Permitted Discretion based on a new criterionother than the criteria set forth above, then Agent shall give Borrower at least three (3) BusinessDays’ prior notice (oral or written or by Electronic Transmission) thereof unless an Event ofDefault exists, in which case no notice shall be required.
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          1.8 Cash Management Systems. On or prior to the Closing Date, Borrower andHoldings will establish and will maintain until the Termination Date, the cash managementsystems described in Annex C (the “Cash Management Systems”).          1.9 Fees.          (a) Borrower shall pay to GE Capital, individually, the Fees specified in the GE Capital FeeLetter.          (b) As additional compensation for the Revolving Lenders, Borrower shall pay to Agent, for theratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to theCommitment Termination Date and on the Commitment Termination Date, a Fee for Borrower’s non use ofavailable funds in an amount equal to the Applicable Unused Line Fee Margin per annum (calculatedon the basis of a 360 day year for actual days elapsed) multipliedby thedifference between (x) the average daily Maximum Amount (as it may be reduced from time to time)during the preceding calendar month and (y) the average of the daily closing balances of theRevolving Loan and the Swing Line Loan outstanding during the preceding calendar month,provided, that in no event shall the amount computed pursuant to clause (x) and clause (y)be less then zero. For purposes of this Section 1.9(b), the Revolving Loan Commitment ofany Non-Funding Lender shall be deemed to be zero.          (c) [Intentionally Omitted].          (d) Borrower shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter ofCredit Fee as provided in Annex B.          1.10 Receipt of Payments. Borrower shall make each payment under thisAgreement not later than 2:00 p.m. (New York time) on the day when due in immediatelyavailable funds in Dollars to the Collection Account. For purposes of computing interestand Fees and determining Borrowing Availability as of any date, all payments shall bedeemed received on the first Business Day following the Business Day on which immediatelyavailable funds therefor are received in the Collection Account prior to 2:00 p.m. (NewYork time). Payments received after 2:00 p.m. (New York time) on any Business Day or on aday that is not a Business Day shall be deemed to have been received on the followingBusiness Day.          1.11 Application and Allocation of Payments.          (a) So long as no Event of Default has occurred and is continuing, (i) payments consisting ofproceeds of Accounts received in the ordinary course of business shall be applied, first, to theSwing Line Loan and, second, to the Revolving Loan; (ii) payments matching specific scheduledpayments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shallbe applied in accordance with the provisions of Section 1.3(a); and (iv) mandatoryprepayments shall be applied as set forth in Section 1.3(c). All payments and prepaymentsapplied to a particular Loan shall be applied ratably to the portion thereof held by each Lender asdetermined by its Pro Rata Share. As to any other payment, and as to all payments made when anEvent of Default has occurred and is continuing or following the Commitment Termination Date,Borrower hereby irrevocably waives the right to direct the application of any and all paymentsreceived from or on behalf of Borrower, and Borrower
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hereby irrevocably agrees that Agent shall have the continuing exclusive right to apply anyand all such payments against the Obligations as Agent may deem advisable notwithstanding anyprevious entry by Agent in the Loan Account or any other books and records. In the absence of aspecific determination by Agent with respect thereto, payments shall be applied to amounts then dueand payable in the following order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2) tointerest on the Swing Line Loan; (3) to principal payments on the Swing Line Loan; (4) to intereston the other Loans ratably in proportion to the interest accrued as to each Loan; (5) to principalpayments on the other Loans and any Obligations under any Secured Rate Contract and to providecash collateral for Letter of Credit Obligations in the manner described in Annex B,ratably to the aggregate, combined principal balance of the other Loans and outstanding Letter ofCredit Obligations; and (6) to all other Obligations including expenses of Lenders to the extentreimbursable under Section 11.3.          (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loanbalance on behalf of Borrower and cause to be paid all Fees, expenses, Charges, costs(including insurance premiums in accordance with Section 5.4(a)) and interest andprincipal, other than principal of the Revolving Loan, owing by Borrower under thisAgreement or any of the other Loan Documents if and to the extent Borrower fails to paypromptly any such amounts as and when due, even if the amount of such charges would exceedBorrowing Availability at such time. At Agent’s option and to the extent permitted by law,any charges so made shall constitute part of the Revolving Loan hereunder.          1.12 Loan Account and Accounting. Agent shall maintain a loan account (the“Loan Account”) on its books to record: all Advances, all payments made byBorrower, and all other debits and credits as provided in this Agreement with respect tothe Loans or any other Obligations. All entries in the Loan Account shall be made inaccordance with Agent’s customary accounting practices as in effect from time to time. Thebalance in the Loan Account, as recorded on Agent’s most recent printout or other writtenstatement, shall, absent manifest error, be presumptive evidence of the amounts due andowing to Agent and Lenders by Borrower; *provided*, that any failure to so record or anyerror in so recording shall not limit or otherwise affect Borrower’s duty to pay theObligations. Agent shall render to Borrower a monthly accounting of transactions withrespect to the Loans setting forth the balance of the Loan Account for the immediatelypreceding month. Unless Borrower notifies Agent in writing of any objection to any suchaccounting (specifically describing the basis for such objection), within thirty (30) daysafter the date thereof, each and every such accounting shall be presumptive evidence of allmatters reflected therein. Only those items expressly objected to in such notice shall bedeemed to be disputed by Borrower. Notwithstanding any provision herein contained to thecontrary, any Lender may elect (which election may be revoked) to dispense with theissuance of Notes to that Lender and may rely on the Loan Account as evidence of the amountof Obligations from time to time owing to it.          1.13 Indemnity.          (a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify andhold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’srespective officers, directors, employees, attorneys, agents and representatives (each, an“Indemnified Person”), from and against any and all suits, actions, proceedings,claims,
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damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursementsand other costs of investigation or defense, including those incurred upon any appeal) that may beinstituted or asserted against or incurred by any such Indemnified Person as the result of credithaving been extended, suspended or terminated under this Agreement and the other Loan Documents andthe administration of such credit, and in connection with or arising out of the transactionscontemplated hereunder and thereunder and any actions or failures to act in connection therewith,including any and all Environmental Liabilities and in connection with any agreement or contractualobligation entered into in connection with any E-Systems or other Electronic Transmissions andlegal costs and expenses arising out of or incurred in connection with disputes between or amongany parties to any of the Loan Documents (collectively, “Indemnified Liabilities”);*provided*, that no such Credit Party shall be liable for any indemnification to an IndemnifiedPerson to the extent that any such suit, action, proceeding, claim, damage, loss, liability orexpense results from that Indemnified Person’s gross negligence or willful misconduct. NOINDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANYSUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMSDERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICHMAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOANDOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.          (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period(whether that repayment is made pursuant to any provision of this Agreement or any other LoanDocument or occurs as a result of acceleration, by operation of law or otherwise); (ii) Borrowershall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii)Borrower shall refuse to accept any borrowing of, or shall request a termination of any borrowing,conversion into or continuation of LIBOR Loans after Borrower has given notice requesting the samein accordance herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan afterBorrower has given a notice thereof in accordance herewith, then Borrower shall indemnify and holdharmless each Lender from and against all losses, costs and expenses resulting from or arising fromany of the foregoing. Such indemnification shall include any loss (including loss of margin) orexpense arising from the reemployment of funds obtained by it or from fees payable to terminatedeposits from which such funds were obtained. For the purpose of calculating amounts payable to aLender under this subsection, each Lender shall be deemed to have actually funded its relevantLIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equalto the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;*provided*, that each Lender may fund each of its LIBOR Loans in any manner it sees fit, and theforegoing assumption shall be utilized only for the calculation of amounts payable under thissubsection. This covenant shall survive the termination of this Agreement and the payment of theNotes and all other amounts payable hereunder. As promptly as practicable under the circumstances,each Lender shall provide Borrower with its written calculation of all amounts payable pursuant tothis Section 1.13(b), and such calculation shall be binding on the parties hereto unlessBorrower shall object in writing within ten (10) Business Days of receipt thereof, specifying thebasis for such objection in detail.
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          1.14 Access. Each Credit Party that is a party hereto shall, during normalbusiness hours, from time to time upon two (2) Business Days’ prior notice as frequently asAgent reasonably determines to be appropriate: (a) provide Agent and any of its officers,employees and agents access to its properties, facilities, advisors, officers and employeesof each Credit Party and to the Collateral, (b) permit Agent, and any of its officers,employees and agents, to inspect, audit and make extracts from any Credit Party’s books andrecords, and (c) permit Agent, and its officers, employees and agents, to inspect, review,evaluate and conduct field examinations, audits, test verifications and counts of theAccounts, Inventory and other Collateral of any Credit Party; *provided*, that the CreditParties shall only be obligated to reimburse Agent for the expenses for one such fieldexamination, audit and inspection per year and for one additional field examination, auditand inspection per year if such additional field examination, audit and inspection iscommenced after Borrowing Availability is less than $15,000,000 or for more frequent fieldexaminations, audits and inspections while an Event of Default has occurred and iscontinuing. If an Event of Default has occurred and is continuing, each such Credit Partyshall provide such access to Agent and to each Lender at all times and without advancenotice. Each Credit Party shall make available to Agent and its counsel reasonablypromptly originals or copies of all books and records that Agent may reasonably request.Each Credit Party shall deliver any document or instrument necessary for Agent, as it mayfrom time to time request, to obtain records from any service bureau or other Person thatmaintains records for such Credit Party, and shall maintain duplicate records or supportingdocumentation on media, including computer tapes and discs owned by such Credit Party.Agent will give Lenders at least five (5) Business Days’ prior written notice of regularlyscheduled audits. Representatives of other Lenders may accompany Agent’s representativeson regularly scheduled audits at no charge to Borrower.          1.15 Taxes.          (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordancewith this Section 1.15, free and clear of and without deduction for any and all present orfuture Taxes. If Borrower shall be required by law to deduct any Taxes from or in respect of anysum payable hereunder or under the Notes, (i) the sum payable shall be increased as much as shallbe necessary so that after making all required deductions (including deductions applicable toadditional sums payable under this Section 1.15) Agent or Lenders, as applicable, receivean amount equal to the sum they would have received had no such deductions been made, (ii) Borrowershall make such deductions, and (iii) Borrower shall pay the full amount deducted to the relevanttaxing or other authority in accordance with applicable law. Within thirty (30) days after thedate of any payment of Taxes, Borrower shall furnish to Agent the original or a certified copy of areceipt evidencing payment thereof.          (b) Each Credit Party that is a signatory hereto shall indemnify and, within ten (10) days ofdemand therefor, pay Agent and each Lender for the full amount of Taxes (including any Taxesimposed by any jurisdiction on amounts payable under this Section 1.15) paid by Agent orsuch Lender, as appropriate, and any liability (including penalties, interest and expenses) arisingtherefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted.
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          (c) Each Lender organized under the laws of a jurisdiction outside the United States (a“Foreign Lender”) as to which payments to be made under this Agreement or under the Notesare exempt from United States withholding tax under an applicable statute or tax treaty shallprovide to Borrower and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN orother applicable form, certificate or document prescribed by the IRS or the United Statescertifying as to such Foreign Lender’s entitlement to such exemption (a “Certificate ofExemption”). Any foreign Person that seeks to become a Lender under this Agreement shallprovide a Certificate of Exemption to Borrower and Agent prior to becoming a Lender hereunder. Noforeign Person may become a Lender hereunder if such Person fails to deliver a Certificate ofExemption in advance of becoming a Lender.          1.16 Capital Adequacy; Increased Costs; Illegality.          (a) If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline ororder regarding capital adequacy, reserve requirements or similar requirements or compliance by anyLender with any request or directive regarding capital adequacy, reserve requirements or similarrequirements (whether or not having the force of law), in each case, adopted after the ClosingDate, from any central bank or other Governmental Authority increases or would have the effect ofincreasing the amount of capital, reserves or other funds required to be maintained by such Lenderand thereby reducing the rate of return on such Lender’s capital as a consequence of itsobligations hereunder, then Borrower shall from time to time upon demand by such Lender (with acopy of such demand to Agent) pay to Agent, for the account of such Lender, additional amountssufficient to compensate such Lender for such reduction; *provided*, that the Borrower shall not berequired to compensate any Lender pursuant to this Section 1.16(a) for any such reductionincurred more than 180 days prior to the date of such Lender made such demand for compensationtherefor; *provided*, *further*, that if the circumstance giving rise to such reduction is retroactive,then the 180-day period referred to above shall be extended to include the period of retroactiveeffect thereof. A certificate as to the amount of that reduction and showing the basis of thecomputation thereof submitted by such Lender to Borrower and to Agent shall be presumptive evidenceof the matters set forth therein.          (b) If, due to either (i) the introduction of or any change in any law or regulation (or anychange in the interpretation thereof) or (ii) the compliance with any guideline or request from anycentral bank or other Governmental Authority (whether or not having the force of law), in each caseadopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeingto make or making, funding or maintaining any Loan, then Borrower shall from time to time, upondemand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of suchLender additional amounts sufficient to compensate such Lender for such increased cost; *provided*,that the Borrower shall not be required to compensate any Lender pursuant to this Section1.16(b) for any such increased cost incurred more than 180 days prior to the date of suchLender made such demand for compensation therefor; *provided*, *further*, that if the circumstancegiving rise to such increased cost is retroactive, then the 180-day period referred to above shallbe extended to include the period of retroactive effect thereof. A certificate as to the amount ofsuch increased cost, submitted to Borrower and to Agent by such Lender, shall be presumptiveevidence of the matters set forth therein. Each Lender agrees that, as promptly as practicableafter it becomes aware of any circumstances referred to above which would result in any suchincreased cost, the affected Lender shall, to the extent not inconsistent
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with such Lender’s internal policies of general application, use reasonable commercial effortsto minimize costs and expenses incurred by it and payable to it by Borrower pursuant to thisSection 1.16(b).          (c) Notwithstanding anything to the contrary contained herein, if the introduction of or anychange in any law or regulation (or any change in the interpretation thereof) shall make itunlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, forany Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then,unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at anotherbranch or office of that Lender without, in that Lender’s reasonable opinion, materially adverselyaffecting it or its Loans or the income obtained therefrom, on notice thereof and demand thereforby such Lender to Borrower through Agent, (i) the obligation of such Lender to agree to make or tomake or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower shallforthwith prepay in full all outstanding LIBOR Loans owing to such Lender, together with interestaccrued thereon, unless Borrower, within five (5) Business Days after the delivery of suchnotice and demand, converts all LIBOR Loans into Index Rate Loans.          (d) Within thirty (30) days after receipt by Borrower of written notice and demand from anyLender (an “Affected Lender”) for payment of additional amounts or increased costs asprovided in Sections 1.15(a), 1.16(a) or 1.16(b) and with respect to a Lender that is aNon-Funding Lender, Borrower may, at its option, notify Agent and such Affected Lender (or suchNon-Funding Lender) of its intention to replace the Affected Lender (or such Non-Funding Lender).So long as no Default or Event of Default has occurred and is continuing, Borrower, with theconsent of Agent, may obtain, at Borrower’s expense, a replacement Lender (“ReplacementLender”) for the Affected Lender (or such Non-Funding Lender), which Replacement Lender must bereasonably satisfactory to Agent. Notwithstanding the foregoing, with respect to a Lender that isa Non-Funding Lender or an Impacted Lender, Agent may, but shall not be obligated to, obtain aReplacement Lender and execute an Assignment on behalf of such Non-Funding Lender or ImpactedLender at any time with three (3) Business Days’ prior notice to such Lender (unless notice is notpracticable under the circumstances) and cause such Lender’s Loans and Commitments to be sold andassigned, in whole or in part, at par. If Borrower obtains a Replacement Lender within ninety (90)days following written notice to such Affected Lender (or such Non-Funding Lender) of its intentionto do so, the Affected Lender (or such Non-Funding Lender) must sell and assign its Loans andCommitments to such Replacement Lender for an amount equal to the principal balance of all Loansheld by the Affected Lender (or such Non-Funding Lender) and all accrued interest and Fees withrespect thereto through the date of such sale and such assignment shall not require the payment ofan assignment fee to Agent; *provided*, that, in the case of an Affected Lender, Borrower shall havereimbursed such Affected Lender for the additional amounts or increased costs that it is entitledto receive under this Agreement through the date of such sale and assignment. In the event that areplaced Lender does not execute an Assignment Agreement pursuant to Section 9.1 withinfive (5) Business Days after receipt by such replaced Lender of notice of replacement pursuant tothis Section 1.16(d) and presentation to such replaced Lender of an Assignment Agreementevidencing an assignment pursuant to this Section 1.16(d), the Borrower shall be entitled(but not obligated) to execute such an Assignment Agreement on behalf of such replaced Lender, andany such Assignment Agreement so executed by the Borrower, the Replacement Lender and Agent,
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shall be effective for purposes of this 1.16(d) and Section 9.1.Notwithstanding the foregoing, Borrower shall not have the right to obtain a Replacement Lender foran Affected Lender if the Affected Lender rescinds its demand for increased costs or additionalamounts within 15 days following its receipt of Borrower’s notice of intention to replace suchAffected Lender. Furthermore, if Borrower gives written notice to an Affected Lender of itsintention to replace and does not so replace such Affected Lender within ninety (90) days afterdelivery of such written notice, Borrower’s rights under this Section 1.16(d) shallterminate with respect to such Affected Lender and Borrower shall promptly pay all increased costsor additional amounts demanded by such Affected Lender pursuant to Sections 1.15(a), 1.16(a)and 1.16(b).          1.17 Single Loan. All Loans to Borrower and all of the other Obligations ofBorrower arising under this Agreement and the other Loan Documents shall constitute onegeneral obligation of Borrower secured, until the Termination Date, by all of theCollateral.**2. CONDITIONS PRECEDENT**          2.1 Conditions to Effectiveness. This Agreement shall be effective upon thesatisfaction of the following conditions in a manner reasonably satisfactory to Agent, orwaived in writing by Agent and Requisite Lenders:          (a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof shallhave been duly executed by, and delivered to, Borrower, each other Credit Party, Agent and Lenders;and Agent shall have received such documents, instruments, agreements and legal opinions as Agentshall reasonably request in connection with the transactions contemplated by this Agreement and theother Loan Documents, including all those listed in the Closing Checklist attached hereto asAnnex D, each in form and substance reasonably satisfactory to Agent.          (b) Approvals. Agent shall have received (i) satisfactory evidence that the CreditParties have obtained all required consents and approvals of all Persons including all requisiteGovernmental Authorities, to the execution, delivery and performance of this Agreement and theother Loan Documents and the consummation of the Related Transactions or (ii) an officer’scertificate in form and substance reasonably satisfactory to Agent affirming that no such consentsor approvals are required.          (c) Payment of Fees. Borrower shall have paid the Fees required to be paid on theClosing Date in the respective amounts specified in Section 1.9 (including the Feesspecified in the GE Capital Fee Letter), and shall have reimbursed Agent for all fees, costs andexpenses of closing presented as of the Closing Date.          2.2 Further Conditions to Each Loan. Except as otherwise expressly providedherein (including, without limitation, Section 1.1(a)(iii)), no Lender shall beobligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or incur anyLetter of Credit Obligation, if, as of the date thereof:          (a) any representation or warranty by any Credit Party contained herein or in any other LoanDocument to which a Credit Party is a party is untrue or incorrect in any material
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respect (without duplication of any materiality qualifier contained therein) as of such dateas determined by Agent or Requisite Lenders, except to the extent that such representation orwarranty expressly relates to an earlier date and except for changes therein expressly permitted orexpressly contemplated by this Agreement, and Agent or Requisite Lenders have determined not tomake such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of CreditObligation as a result of the fact that such warranty or representation is untrue or incorrect;          (b) (i) any Default or Event of Default has occurred and is continuing or would result aftergiving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent orRequisite Lenders shall have determined not to make any Advance, convert or continue any Loan as aLIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event ofDefault; or          (c) after giving effect to any Advance (or the incurrence of any Letter of CreditObligations), the outstanding principal amount of the Revolving Loan would exceed the lesser of theBorrowing Base and the Maximum Amount, in each case, less the then outstanding principal amount ofthe Swing Line Loan.The request and acceptance by Borrower of the proceeds of any Advance, the incurrence of any Letterof Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shallbe deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrower thatthe conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation byBorrower of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders,pursuant to the Collateral Documents.**3. REPRESENTATIONS AND WARRANTIES**          To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the CreditParties executing this Agreement, jointly and severally, make the following representations andwarranties to Agent and each Lender with respect to all Credit Parties, each and all of which shallsurvive the execution and delivery of this Agreement.          3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is acorporation, limited liability company or limited partnership duly organized, validlyexisting and in good standing under the laws of its respective jurisdiction ofincorporation or organization set forth in Disclosure Schedule (3.1); (b) is dulyqualified to conduct business and is in good standing in each other jurisdiction where itsownership or lease of property or the conduct of its business requires such qualification,except where the failure to be so qualified would not result in exposure to losses orliabilities which could reasonably be expected to have a Material Adverse Effect; (c) hasthe requisite power and authority and the legal right to own, pledge, mortgage or otherwiseencumber and operate its properties, to lease the property it operates under lease and toconduct its business; (d) subject to specific representations regarding Environmental Laws,has all material licenses, permits, consents or approvals from or by, and has made allmaterial filings with, and has given all notices to, all Governmental Authorities havingjurisdiction, to the extent required for such ownership, operation and conduct; (e) is incompliance in all material respects with its charter and bylaws or partnership or operating
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agreement, as applicable; and (f) subject to specific representations set forth hereinregarding ERISA, Environmental Laws, tax and other laws, is in compliance with allapplicable provisions of law, except where the failure to comply, individually or in theaggregate, could not reasonably be expected to have a Material Adverse Effect.          3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date,each Credit Party’s name as it appears in official filings in its state of incorporation ororganization, state of incorporation or organization, organization type, organizationnumber, if any, issued by its state incorporation or organization, and the current locationof each Credit Party’s chief executive office and the warehouses and premises at which anyCollateral is located as of the Closing Date are set forth in Disclosure Schedule(3.2). In addition, Disclosure Schedule (3.2) sets forth the locations ofwarehouses and premises at which any Collateral has been located at any time within four(4) months preceding the Closing Date. In addition, Disclosure Schedule (3.2)lists the federal employer identification number of each Credit Party.          3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,delivery and performance by each Credit Party of the Loan Documents to which it is a partyand the creation of all Liens provided for therein: (a) are within such Person’s power; (b)have been duly authorized by all necessary corporate, limited liability company or limitedpartnership action; (c) do not contravene any provision of such Person’s charter, bylaws orpartnership or operating agreement as applicable; (d) do not violate any law or regulation,or any order or decree of any court or Governmental Authority in any material respect; (e)do not conflict with or result in the material breach or termination of, constitute adefault under or accelerate or permit the acceleration of any performance required by, anyindenture, mortgage, deed of trust, lease, agreement or other instrument to which suchPerson is a party or by which such Person or any of its property is bound; (f) do notresult in the creation or imposition of any Lien upon any of the property of such Personother than those in favor of Agent, on behalf of itself and Lenders, pursuant to the LoanDocuments; and (g) do not require the consent or approval of any Governmental Authority orany other Person, except those referred to in Section 2.1(c), all of which willhave been duly obtained, made or complied with prior to the Closing Date. Each of the LoanDocuments shall be duly executed and delivered by each Credit Party that is a party theretoand each such Loan Document shall constitute a legal, valid and binding obligation of suchCredit Party enforceable against it in accordance with its terms, except as enforceabilitymay be limited by applicable bankruptcy, insolvency, or similar laws affecting theenforcement of creditors’ rights generally or by equitable principles relating toenforceability.          3.4 Financial Statements and Projections. Except for the Projections, allFinancial Statements concerning Holdings and its Subsidiaries that are referred to belowhave been prepared in accordance with GAAP consistently applied throughout the periodscovered and present fairly in all material respects the financial position of the Personscovered thereby as at the dates thereof and the results of their operations and cash flowsfor the periods then ended.          (a) Financial Statements. The following Financial Statements attached hereto asDisclosure Schedule (3.4(a)) have been delivered to the Agent prior to the Closing Date:               (i) **[**Intentionally Omitted**]**
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               (ii) The audited consolidated balance sheet at October 2, 2004 and the related statements ofincome and cash flows of Holdings and its Subsidiaries for the Fiscal Year then ended certified byGrant Thornton LLP.               (iii) The audited consolidated balance sheet at September 27, 2003 and the related statementsof income and cash flows of Holdings and its Subsidiaries for the Fiscal Year then ended, certifiedby Grant Thornton LLP.               (iv) The audited consolidated balance sheet at October 1, 2005 and the relatedstatement(s) of income and cash flows of Holdings and its Subsidiaries for the Fiscal Yearthen ended, certified by Grant Thornton, LLP.               (v) The audited consolidated balance sheet at October 3, 2009, and the relatedstatement(s) of income and cash flows of Holdings and its Subsidiaries for the Fiscal Yearthen ended, certified by Grant Thornton, LLP.          3.5 Material Adverse Effect. Between October 3, 2009 and the Closing Date,(a) no Credit Party has incurred any obligations, contingent or noncontingent liabilities,liabilities for Charges, long-term leases or unusual forward or long-term commitments thatare not reflected in the Projections and that, alone or in the aggregate, could reasonablybe expected to have a Material Adverse Effect, (b) no contract, lease or other agreement orinstrument has been entered into by any Credit Party or has become binding upon any CreditParty’s assets and no law or regulation applicable to any Credit Party has been adoptedthat has had or could reasonably be expected to have a Material Adverse Effect, and (c) noCredit Party is in default and to the best of Borrower’s knowledge no third party is indefault under any material contract, lease or other agreement or instrument, that alone orin the aggregate could reasonably be expected to have a Material Adverse Effect. SinceOctober 3, 2009 no event has occurred, that alone or together with other events, couldreasonably be expected to have a Material Adverse Effect.          3.6 Ownership of Property; Liens. As of the Closing Date, the real estate(“Real Estate”) listed in Disclosure Schedule (3.6) constitutes all of thereal property owned, leased, subleased, or used by any Credit Party. Each Credit Partyowns good and marketable fee simple title to all of its owned Real Estate and valid andmarketable leasehold interests in all of its leased Real Estate (in each case subject toLiens permitted under Section 6.7), and copies of all such leases or a summary ofterms thereof have been delivered to Agent. Disclosure Schedule (3.6) furtherdescribes any Real Estate with respect to which any Credit Party is a lessor, sublessor orassignor as of the Closing Date. Each Credit Party also has good and marketable title to,or valid leasehold interests in, all of its personal property and assets (subject to Lienspermitted under Section 6.7). As of the Closing Date, none of the properties andassets of any Credit Party are subject to any Liens other than Liens permitted underSection 6.7, and there are no facts, circumstances or conditions known to anyCredit Party that may result in any Liens (including Liens arising under EnvironmentalLaws) other than Liens permitted under Section 6.7. Except as could not reasonably beexpected to have a Material Adverse Effect, each Credit Party has received all deeds,assignments, waivers, consents, nondisturbance and attornment or similar agreements, billsof sale and other documents, and has duly effected all recordings, filings and otheractions necessary to establish, protect and perfect
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such Credit Party’s right, title and interest in and to all such Real Estate and otherproperties and assets. Disclosure Schedule (3.6) also describes any purchase options,rights of first refusal or other similar contractual rights pertaining to any Real Estate as of theClosing Date. As of the Closing Date, no portion of any Credit Party’s Real Estate has sufferedany material damage by fire or other casualty loss that has not heretofore been repaired andrestored in all material respects to its original condition or otherwise remedied. As of theClosing Date, all material permits required to have been issued or appropriate to enable the RealEstate to be lawfully occupied and used for all of the purposes for which it is currently occupiedand used have been lawfully issued and are in full force and effect.          3.7 Labor Matters. Except as set forth on Disclosure Schedule (3.7), as ofthe Closing Date: (a) no strikes or other material labor disputes against any Credit Party arepending or, to any Credit Party’s knowledge, threatened; (b) hours worked by and payment made toemployees of each Credit Party comply in all material respects with the Fair Labor Standards Actand each other federal, state, local or foreign law applicable to such matters; (c) all paymentsdue from any Credit Party for employee health and welfare insurance have been paid or accrued as aliability on the books of such Credit Party; (d) no Credit Party is a party to or bound by anycollective bargaining agreement, management agreement, consulting agreement, employment agreement,bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan,agreement or arrangement (and true and complete copies of any agreements described onDisclosure Schedule (3.7) have been filed with the Securities and Exchange Commission inthe filings of Holdings on or before the Closing Date or otherwise delivered to Agent); (e) thereis no organizing activity involving any Credit Party pending or, to any Credit Party’s knowledge,threatened by any labor union or group of employees; (f) there are no representation proceedingspending or, to any Credit Party’s knowledge, threatened with the National Labor Relations Board,and no labor organization or group of employees of any Credit Party has made a pending demand forrecognition; and (g) there are no material complaints or charges against any Credit Party pendingor, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority orarbitrator based on, arising out of, in connection with, or otherwise relating to the employment ortermination of employment by any Credit Party of any individual.          3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Exceptas set forth in Disclosure Schedule (3.8), as of the Closing Date, no Credit Party has anySubsidiaries, is engaged in any joint venture or partnership with any other Person, or is (exceptfor those holders of the issued and outstanding Stock of Holdings that constitute Affiliates ofHoldings) an Affiliate of any other Person of the type described in clause (a) or(b) of the definition of the term “Affiliate”. Except for Holdings, all of the issued andoutstanding Stock of each Credit Party is owned by each of the Stockholders and in the amounts setforth in Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule(3.8), there are no outstanding rights to purchase, options, warrants or similar rights oragreements pursuant to which any Credit Party may be required to issue, sell, repurchase or redeemany of its Stock or other equity securities or any Stock or other equity securities of itsSubsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as ofthe Closing Date (except for the Obligations) is described in Section 6.3 (includingDisclosure Schedule (6.3)).
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          3.9 Government Regulation. No Credit Party is an “investment company” or an“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” assuch terms are defined in the Investment Company Act of 1940. No Credit Party is subject toregulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or anyother federal or state statute that restricts or limits its ability to incur Indebtedness or toperform its obligations hereunder. The making of the Loans by Lenders to Borrower, the incurrenceof the Letter of Credit Obligations on behalf of Borrower, the application of the proceeds thereofand repayment thereof and the consummation of the Related Transactions will not violate anyprovision of any such statute or any rule, regulation or order issued by the Securities andExchange Commission.          3.10 Margin Regulations. No Credit Party is engaged, nor will it engage, principallyor as one of its important activities, in the business of extending credit for the purpose of“purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of theFederal Reserve Board as now and from time to time hereafter in effect (such securities beingreferred to herein as “Margin Stock”). No Credit Party owns any Margin Stock, and none ofthe proceeds of the Loans or other extensions of credit under this Agreement will be used, directlyor indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose ofreducing or retiring any Indebtedness that was originally incurred to purchase or carry any MarginStock or for any other purpose that might cause any of the Loans or other extensions of creditunder this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U orX of the Federal Reserve Board. No Credit Party will take or permit to be taken any action thatmight cause any Loan Document to violate any regulation of the Federal Reserve Board.          3.11 Taxes. All Federal and other material tax returns, reports and statements,including information returns, required by any Governmental Authority to be filed by any CreditParty have been filed with the appropriate Governmental Authority, and all Charges have been paidprior to the date on which any fine, penalty, interest or late charge may be added thereto fornonpayment thereof, excluding Charges or other amounts being contested in accordance withSection 5.2(b). Proper and accurate amounts have been withheld by each Credit Party fromits respective employees for all periods in full and complete compliance with all applicablefederal, state, local and foreign laws and such withholdings have been timely paid to therespective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of theClosing Date those taxable years for which any Credit Party’s tax returns are currently beingaudited by the IRS or any other applicable Governmental Authority and any assessments or threatenedassessments in connection with such audit, or otherwise currently outstanding. Except as describedin Disclosure Schedule (3.11), as of the Closing Date, no Credit Party has executed orfiled with the IRS or any other Governmental Authority any agreement or other document extending,or having the effect of extending, the period for assessment or collection of any Charges. None ofthe Credit Parties and their respective predecessors are liable for any Charges: (a) under anyagreement (including any tax sharing agreements) or (b) to each Credit Party’s knowledge, as atransferee. As of the Closing Date, no Credit Party has agreed or been requested to make anyadjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, whichwould reasonably be expected to have a Material Adverse Effect.          3.12 ERISA.
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          (a) Disclosure Schedule (3.12) lists as of the Closing Date, all Plans and separatelyidentifies all Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and WelfarePlans, including all Retiree Welfare Plans. Copies of all such listed Plans, together with a copyof the latest form IRS/DOL 5500-series for each such Plan will be delivered to Agent upon Agent’srequest. Except with respect to Multiemployer Plans, each Qualified Plan has been determined bythe IRS to qualify under Section 401 of the IRC, and the trusts created thereunder have beendetermined to be exempt from tax under the provisions of Section 501 of the IRC. Each Plan is incompliance in all material respects with the applicable provisions of ERISA and the IRC, includingthe timely filing of all reports required under the IRC or ERISA, including the statement requiredby 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed to make anymaterial contribution or pay any material amount due as required by either Section 412 of the IRCor Section 302 of ERISA or the terms of any such Plan. Neither any Credit Party nor ERISAAffiliate has engaged in a “prohibited transaction,” as defined in Section 406 of ERISA and Section4975 of the IRC, in connection with any Plan, that would subject any Credit Party to a material taxon prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.          (b) Except for those that would not reasonably be expected to result in the imposition of aLien on any asset of a Credit Party with respect to any Title IV Plan or have a Material AdverseEffect: (i) no Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event orevent described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or isreasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party,threatened material claims (other than claims for benefits in the normal course), sanctions,actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsorof any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incurany material liability as a result of a complete or partial withdrawal from a Multiemployer Plan;(v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has beenterminated, whether or not in a “standard termination” as that term is used in Section 4041 ofERISA, nor has any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any timewithin the past five years) with material Unfunded Pension Liabilities been transferred outside ofthe “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party orERISA Affiliate; (vi) except in the case of any ESOP, 401k or as set forth on DisclosureSchedule (3.12), Stock of all Credit Parties and their ERISA Affiliates makes up, in theaggregate, no more than 10% of fair market value of the assets of any Plan measured on the basis offair market value as of the latest valuation date of any Plan; and (vii) no liability under anyTitle IV Plan has been satisfied with the purchase of a contract from an insurance company that isnot rated AAA by the Standard & Poor’s Corporation or an equivalent rating by another nationallyrecognized rating agency.          3.13 No Litigation. No action, claim, lawsuit, demand, investigation or proceeding isnow pending or, to the knowledge of any Credit Party, threatened against any Credit Party, beforeany Governmental Authority or before any arbitrator or panel of arbitrators (collectively,“Litigation”), (a) that challenges any Credit Party’s right or power to enter into orperform any of its obligations under the Loan Documents to which it is a party, or the validity orenforceability of any Loan Document or any action taken thereunder, or (b) that has a reasonablerisk of being determined adversely to any Credit Party and that, if so determined, could reasonablybe expected to have a Material Adverse Effect. Except as set forth on Disclosure
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Schedule (3.13), as of the Closing Date there is no Litigation pending orthreatened that seeks damages in excess of $250,000 or injunctive relief against, oralleges criminal misconduct of, any Credit Party.          3.14 Brokers. Except as set forth on Disclosure Schedule (3.14), no broker orfinder acting on behalf of any Credit Party or Affiliate thereof brought about the obtaining,making or closing of the Loans or the Related Transactions, and no Credit Party or Affiliatethereof has any obligation to any Person in respect of any finder’s or brokerage fees in connectiontherewith.          3.15 Intellectual Property. As of the Closing Date, each Credit Party owns or hasrights to use all Intellectual Property necessary to continue to conduct its business as nowconducted by it or presently proposed to be conducted by it except for such Intellectual Propertythe failure of which to own or license would not reasonably be expected to have, eitherindividually or in the aggregate, a Material Adverse Effect, and each Patent, Trademark, Copyrightand License is listed, together with application or registration numbers, as applicable, inDisclosure Schedule (3.15). Each Credit Party conducts its business and affairs withoutinfringement of or interference with any Intellectual Property of any other Person in any materialrespect. Except as set forth in Disclosure Schedule (3.15), no Credit Party is aware ofany material infringement claim by any other Person with respect to any Intellectual Property.          3.16 Full Disclosure. No information contained in this Agreement, any of the otherLoan Documents, any Projections (subject to the remaining provisions of this Section 3.16),Financial Statements or Collateral Reports or other written reports from time to time prepared byany Credit Party and delivered hereunder or any written statement prepared by any Credit Party andfurnished by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of thisAgreement contains or will contain any untrue statement of a material fact or omits or will omit tostate a material fact necessary to make the statements contained herein or therein not misleadingin light of the circumstances under which they were made. Projections from time to time deliveredhereunder are or will be based upon the estimates and assumptions stated therein, all of whichBorrower believed at the time of delivery to be reasonable and fair in light of current conditionsand current facts known to Borrower as of such delivery date, and reflect Borrower’s good faith andreasonable estimates of the future financial performance of Borrower and of the other informationprojected therein for the period set forth therein. Such Projections are not a guaranty of futureperformance and actual results may differ from those set forth in such Projections. The Liensgranted to Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents will at alltimes be fully perfected first priority Liens in and to the Collateral described therein, subject,as to priority, only to Permitted Encumbrances.          3.17 Environmental Matters.          (a) Except as set forth in Disclosure Schedule (3.17), as of the Closing Date: (i) theReal Estate is free of contamination from any Hazardous Material except for such contamination thatwould not adversely impact the value or marketability of such Real Estate and that would not resultin Environmental Liabilities that could reasonably be expected to exceed $2,000,000; (ii) no CreditParty has caused or suffered to occur any material Release of
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Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) theCredit Parties are and have been in compliance with all Environmental Laws, except for suchnoncompliance that would not result in Environmental Liabilities which could reasonably be expectedto exceed $2,000,000; (iv) the Credit Parties have obtained, and are in compliance with, allEnvironmental Permits required by Environmental Laws for the operations of their respectivebusinesses as presently conducted or as proposed to be conducted, except where the failure to soobtain or comply with such Environmental Permits would not result in Environmental Liabilities thatcould reasonably be expected to exceed $2,000,000, and all such Environmental Permits are valid,uncontested and in good standing; (v) no Credit Party is involved in operations or knows of anyfacts, circumstances or conditions, including any Releases of Hazardous Materials, that are likelyto result in any Environmental Liabilities of such Credit Party which could reasonably be expectedto exceed $2,000,000; (vi) there is no Litigation arising under or related to any EnvironmentalLaws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs orexpenses in excess of $2,000,000 or injunctive relief against, or that alleges criminal misconductby, any Credit Party; (vii) no notice has been received by any Credit Party identifying it as a“potentially responsible party” or requesting information under CERCLA or analogous state statutes,and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions thatmay result in any Credit Party being identified as a “potentially responsible party” under CERCLAor analogous state statutes; and (viii) the Credit Parties have provided to Agent copies of allexisting environmental reports, reviews and audits and all written information pertaining to actualor potential Environmental Liabilities, in each case to the extent such reports, reviews, auditsand documents are in Credit Parties’ possession, custody, or control.          (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has notever been, in control of any of the Real Estate or any Credit Party’s affairs, and (ii) does nothave the capacity through the provisions of the Loan Documents or otherwise to influence any CreditParty’s conduct with respect to the ownership, operation or management of any of its Real Estate orcompliance with Environmental Laws or Environmental Permits.          3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies ofany nature maintained, as of the Closing Date, for current occurrences by each Credit Party, aswell as a summary of the terms of each such policy.          3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists allbanks and other financial institutions at which any Credit Party maintains deposit or otheraccounts as of the Closing Date, including any Disbursement Accounts, and such Schedule correctlyidentifies the name, address and telephone number of each depository, the name in which the accountis held, a description of the purpose of the account, and the complete account number therefor.          3.20 Government Contracts. Except as set forth in Disclosure Schedule (3.20),as of the Closing Date, no Credit Party is a party to any contract or agreement with anyGovernmental Authority and no Credit Party’s Accounts are subject to the Federal Assignment ofClaims Act (31 U.S.C. Section 3727) or any similar state or local law.          3.21 Customer and Trade Relations. As of the Closing Date, there exists no actual or,to the knowledge of any Credit Party, threatened termination or cancellation
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of, or any material adverse modification or change in: the business relationship of any CreditParty with any customer or group of customers whose purchases during the preceding 12 months causedthem to be ranked among the ten largest customers of such Credit Party; or the businessrelationship of any Credit Party with any supplier essential to its operations.          3.22 Bonding; Licenses. Except as set forth on Disclosure Schedule (3.22), asof the Closing Date, no Credit Party is a party to or bound by any surety bond agreement or bondingrequirement with respect to products or services sold by it or any trademark or patent licenseagreement with respect to products sold by it.          3.23 Solvency. Both before and after giving effect to (a) the Loans and Letter ofCredit Obligations to be made or incurred on the Closing Date or such other date as Loans andLetter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of theproceeds of such Loans pursuant to the instructions of Borrower, (c) the Refinancing and theconsummation of the other Related Transactions and (d) the payment and accrual of all transactioncosts in connection with the foregoing, each Credit Party is and will be Solvent.          3.24 Status of Holdings. Prior to the Original Closing Date, Holdings will not haveengaged in any business or incurred any Indebtedness or any other liabilities (except in connectionwith its corporate formation, the Prior Lender Obligations under and as defined in the OriginalCredit Agreement, the Related Transactions Documents and this Agreement).          3.25 Inactive Subsidiaries. No Inactive Subsidiary (a) has any assets with a net bookvalue in excess of $500,000, (b) has any material liabilities or (c) is engaged in any trade orbusiness.          3.26 Motor Vehicles**. [**Intentionally Omitted**]**          3.27 Vacant Land Lease**.**No Collateral is stored or located on the property that issubject to the Vacant Land Lease.**4. FINANCIAL STATEMENTS AND INFORMATION**          4.1 Reports and Notices.          (a) Each Credit Party executing this Agreement hereby agrees that from and after the ClosingDate and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, asrequired, the Financial Statements, notices, Projections and other information at the times, to thePersons and in the manner set forth in Annex E.          (b) Each Credit Party executing this Agreement hereby agrees that from and after the ClosingDate and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, asrequired, the various Collateral Reports (including Borrowing Base Certificates in the form ofExhibit 4.1(b)) at the times, to the Persons and in the manner set forth in AnnexF.
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          4.2 Communication with Accountants. Each Credit Party executing this Agreementauthorizes Agent and each Lender, so long as an Event of Default has occurred and is continuing, tocommunicate directly with its independent certified public accountants, including Grant ThorntonLLP, and authorizes and shall instruct those accountants and advisors to communicate to Agent andeach Lender information relating to any Credit Party with respect to the business, results ofoperations and financial condition of any Credit Party; *provided*, that Agent shall give arepresentative of the Borrower reasonable opportunity to participate in such communications.**5. AFFIRMATIVE COVENANTS**          Each Credit Party executing this Agreement jointly and severally agrees as to all CreditParties that from and after the date hereof and until the Termination Date:          5.1 Maintenance of Existence and Conduct of Business . Each Credit Party shall:          (a) do or cause to be done all things necessary to preserve and keep in full force andeffect its corporate existence, except, with respect to the Borrower’s Subsidiaries, inconnection with transactions permitted by Section 6.1;          (b) do or cause to be done all things necessary to preserve and keep in full force and effectits material rights and franchises; continue to conduct its business substantially as now conductedor as otherwise permitted hereunder, except in connection with transactions permitted bySection 6.1 and sales of assets permitted by Section 6.8 and except as would notreasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect;and          (c) at all times maintain, preserve and protect all of its assets and properties used oruseful in the conduct of its business, and keep the same in good repair, working order andcondition in all material respects (taking into consideration ordinary wear and tear) (except forReal Estate Held for Sale, which will be maintained adequately in order to preserve the value andmarketability of such real estate) and from time to time make, or cause to be made, all necessaryor appropriate repairs, replacements and improvements thereto consistent with industry practices;and transact business only in such corporate and trade names as are set forth in DisclosureSchedule (5.1), except in each case where the failure to do so would not reasonably be expectedto have, either individually or in the aggregate, a Material Adverse Effect.          5.2 Payment of Charges.          (a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause tobe paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it,its income and profits, or any of its property (real, personal or mixed) and all Charges withrespect to tax, social security and unemployment withholding with respect to its employees, (ii)lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage orrental charges payable to warehousemen and bailees, in each case, before any thereof shall becomepast due, except in the case of clauses (ii) and (iii) where the failure to pay ordischarge such Charges would not result in aggregate liabilities in excess of $1,000,000.
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          (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity oramount of any Charges, Taxes or claims described in Section 5.2(a); *provided*, that (i)adequate reserves with respect to such contest are maintained on the books of such Credit Party, inaccordance with and to the extent required under GAAP; (ii) no Lien shall be imposed to securepayment of such Charges (other than Charges permitted under clauses (ii) and (iii)of Section 5.2(a)) that is superior to any of the Liens securing payment of the Obligationsand such contest is maintained and prosecuted continuously and with diligence by appropriateproceedings which stay the enforcement of any Lien, (iii) if any Collateral becomes subject toforfeiture or loss as a result of such contest, such forfeiture or loss of Collateral shall notconstitute an Event of Default under Section 8.1(g), and (iv) such Credit Party shallpromptly pay or discharge such contested Charges, Taxes or claims and all additional charges,interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptableto Agent of such compliance, payment or discharge, if such contest is terminated or discontinuedadversely to such Credit Party or the conditions set forth in this Section 5.2(b) are nolonger met.          5.3 Books and Records. Each Credit Party shall keep adequate books and records withrespect to its business activities in which proper entries, reflecting all financial transactions,are made in accordance with GAAP and on a basis consistent with the Financial Statements (takinginto account any Accounting Changes in accordance with and pursuant to the provisions of AnnexG) that are referenced on Disclosure Schedule (3.4(a)).          5.4 Insurance; Damage to or Destruction of Collateral.          (a) The Credit Parties shall, at their sole cost and expense, maintain the policies ofinsurance described on Disclosure Schedule (3.18) and Keyman Life Insurance as in effect onthe Closing Date or otherwise of a nature and providing such coverage as is sufficient and as iscustomarily carried by businesses of the size and character of the business of the Credit Partiesand with financially sound and reputable insurers. Such policies of insurance (or the loss payableand additional insured endorsements delivered to Agent) shall contain provisions pursuant to whichthe insurer agrees to provide thirty (30) days prior written notice to Agent in the event of anynon-renewal, cancellation or amendment of any such insurance policy. If any Credit Party at anytime or times hereafter shall fail to obtain or maintain any of the policies of insurance requiredabove or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain andmaintain such policies of insurance and pay such premiums and take any other action with respectthereto that Agent deems advisable. Agent shall have no obligation to obtain insurance for anyCredit Party or pay any premiums therefor. By doing so, Agent shall not be deemed to have waivedany Default or Event of Default arising from any Credit Party’s failure to maintain such insuranceor pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, courtcosts and other charges related thereto, shall be payable on demand by Borrower to Agent and shallbe additional Obligations hereunder secured by the Collateral.          (b) Agent reserves the right at any time upon any material adverse change in any CreditParty’s risk profile (including any change in the product mix maintained by any Credit Party or anylaws affecting the potential liability of such Credit Party) to require additional forms and limitsof insurance to, in Agent’s reasonable opinion, adequately protect both Agent’s and Lenders’interests in all or any portion of the Collateral and to ensure that each
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Credit Party is protected by insurance in amounts and with coverage customary for itsindustry. If reasonably requested by Agent, each Credit Party shall deliver to Agent from time totime a report of a reputable insurance broker reasonably satisfactory to Agent, with respect to itsinsurance policies.          (c) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory toAgent, endorsements to (i) all “All Risk” and business interruption insurance naming Agent, onbehalf of itself and Lenders, as loss payee, and (ii) all general liability and other liabilitypolicies naming Agent, on behalf of itself and Lenders, as additional insured. Each Credit Partyirrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designatedby Agent), so long as any Default or Event of Default has occurred and is continuing or theanticipated insurance proceeds exceed $4,000,000, as each Credit Party’s true and lawful agent andattorney-in-fact for the purpose of making, settling and adjusting claims relating to theCollateral under such “All Risk” policies of insurance, endorsing the name of each Credit Party onany check or other item of payment for the proceeds of such “All Risk” policies of insurance andfor making all determinations and decisions with respect to such “All Risk” policies of insurance.Agent shall have no duty to exercise any rights or powers granted to it pursuant to the foregoingpower-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or destruction to theCollateral in the amount of $500,000 or more, whether or not covered by insurance. After deductingfrom such proceeds (i) the expenses incurred by Agent in the collection or handling thereof, and(ii) amounts required to be paid to creditors (other than Lenders) holding Liens permitted underSection 6.7, Agent may, at its option, apply such proceeds to the reduction of the Obligations inaccordance with Section 1.3(c), *provided*, that in the case of insurance proceeds pertainingto any Credit Party other than Borrower, such insurance proceeds shall be applied to the Loansowing by Borrower, or permit or require each Credit Party to use such money, or any part thereof,to replace, repair, restore or rebuild the Collateral in a diligent and expeditious manner withmaterials and workmanship of substantially the same quality as existed before the loss, damage ordestruction. Notwithstanding the foregoing, if the casualty giving rise to such insurance proceedscould not reasonably be expected to have a Material Adverse Effect and such insurance proceeds donot exceed $1,000,000 in the aggregate, Agent shall permit the applicable Credit Party to replace,restore, repair or rebuild the property; *provided*, that if such Credit Party has not completed orentered into binding agreements to complete such replacement, restoration, repair or rebuildingwithin 90 days of such casualty, Agent may apply such insurance proceeds to the Obligations inaccordance with this Section and Section 1.3(c); *provided*, further that in the case ofinsurance proceeds pertaining to any Credit Party other than Borrower, such insurance proceedsshall be applied to the Loans owing by Borrower. All insurance proceeds that are to be madeavailable to Borrower to replace, repair, restore or rebuild the Collateral shall be applied byAgent to reduce the outstanding principal balance of the Revolving Loan (which application shallnot result in a permanent reduction of the Revolving Loan Commitment) and upon such application,Agent shall establish a Reserve against the Borrowing Base in an amount equal to the amount of suchproceeds so applied. All insurance proceeds made available to any Credit Party that is not aBorrower to replace, repair, restore or rebuild Collateral shall be deposited in a cash collateralaccount. Thereafter, such funds shall be made available to such Credit Party to provide funds toreplace, repair, restore or rebuild the Collateral as follows: (i) Borrower shall request aRevolving Credit Advance or release from the cash collateral account be made to such Credit Partyin the amount requested to be released; (ii) so long as the conditions set forth in Section2.2
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have been met, Revolving Lenders shall make such Revolving Credit Advance or Agent shallrelease funds from the cash collateral account; and (iii) in the case of insurance proceeds appliedagainst the Revolving Loan, the Reserve established with respect to such insurance proceeds shallbe reduced by the amount of such Revolving Credit Advance. To the extent not used to replace,repair, restore or rebuild the Collateral, such insurance proceeds (excluding any amounts requiredto be paid to creditors (other than Lenders) holding Liens permitted under Section 6.7)shall be applied in accordance with Section 1.3(c); *provided*, that in the case of insuranceproceeds pertaining to any Credit Party other than Borrower, such insurance proceeds shall beapplied to the Loans owing by Borrower. Nothing herein shall be deemed to prohibit Borrower fromnaming any other creditor who holds a Lien permitted under Section 6.7 as a loss payee oradditional insured, directing any insurer to pay proceeds of any insurance policy to such creditoror granting such creditor rights consistent with those granted to Agent hereunder in respect of anyinsurance maintained with respect to the property or assets subject to such Lien.          5.5 Compliance with Laws. Each Credit Party shall comply with all federal, state,local and foreign laws and regulations applicable to it, including ERISA, labor laws, andEnvironmental Laws and Environmental Permits, except to the extent that the failure to comply,individually or in the aggregate, could not reasonably be expected to have a Material AdverseEffect.          5.6 Supplemental Disclosure. From time to time as may be reasonably requested byAgent (which request will not be made more frequently than once each year absent the occurrence andcontinuance of an Event of Default) or at Credit Parties’ election, the Credit Parties shallsupplement each Disclosure Schedule hereto, or any representation herein or in any other LoanDocument, with respect to any matter hereafter arising that, if existing or occurring at the dateof this Agreement, would have been required to be set forth or described in such DisclosureSchedule or as an exception to such representation or that is necessary to correct any informationin such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, inthe case of any supplements to any Disclosure Schedule, such Disclosure Schedule shall beappropriately marked to show the changes made therein); *provided*that (a) no such supplement to anysuch Disclosure Schedule or representation shall amend, supplement or otherwise modify anyDisclosure Schedule or representation, or be or be deemed a waiver of any Default or Event ofDefault resulting from the matters disclosed therein, except as consented to by Agent and RequisiteLenders in writing, and (b) no supplement shall be required or permitted as to representations andwarranties that relate solely to the Closing Date.          5.7 Intellectual Property. Each Credit Party will conduct its business and affairswithout infringement of or interference with any Intellectual Property of any other Person in anymaterial respect and shall comply in all material respects with the terms of its Licenses.          5.8 Environmental Matters. Each Credit Party shall and shall cause each Person withinits control to: (a) conduct its operations and keep and maintain its Real Estate in compliance withall Environmental Laws and Environmental Permits other than noncompliance that could not reasonablybe expected to have a Material Adverse Effect; (b) except as could not reasonably be expected tohave a Material Adverse Effect, implement any and all investigation, remediation, removal andresponse actions that are appropriate or necessary
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to comply with Environmental Laws and Environmental Permits pertaining to the presence, generation,treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in,under, above, to, from or about any of its Real Estate; (c) notify Agent promptly after such CreditParty becomes aware of any violation of Environmental Laws or Environmental Permits or any Releaseon, at, in, under, above, to, from or about any Real Estate that, in each case, is reasonablylikely to result in Environmental Liabilities in excess of $2,000,000; and (d) promptly forward toAgent a copy of any order, notice, request for information or any communication or report receivedby such Credit Party in connection with any such violation or Release or any other matter relatingto any Environmental Laws or Environmental Permits that could reasonably be expected to result inEnvironmental Liabilities in excess of $2,000,000 in each case whether or not the EnvironmentalProtection Agency or any Governmental Authority has taken or threatened any action in connectionwith any such violation, Release or other matter.          5.9 Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real EstatePurchases. Each Credit Party shall use commercially reasonable efforts to obtain a landlord’sagreement, mortgagee agreement or Bailee Letter, as applicable, from the lessor of each leasedproperty (other than property leased to Borrower by Snead Family I, L.L.C., a Virginia limitedliability company pursuant to that Lease dated June 24, 1996 (as in effect on the date hereof, the“Vacant Land Lease” as long as (i) such property remains subject to the Vacant Land Leaseand (ii) no Collateral is stored or located on such property), mortgagee of owned property orbailee with respect to any warehouse, processor or converter facility or other location whereCollateral is stored or located, which agreement or letter shall contain a waiver or subordinationof all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral atthat location, and shall otherwise be reasonably satisfactory in form and substance to Agent. Withrespect to such locations or warehouse space leased or owned as of the Original Closing Date andthereafter, if Agent has not received a landlord or mortgagee agreement or Bailee Letter as of theOriginal Closing Date (or, if later, as of the date such location is acquired or leased),Borrower’s Eligible Inventory at that location shall, in Agent’s discretion, be excluded from theBorrowing Base or be subject to Rent Reserves or such other Reserves referenced in Section1.7(b)(iii). After the Original Closing Date, no real property or warehouse space shall beleased by any Credit Party and no Inventory shall be shipped to a processor or converter underarrangements established after the Closing Date without (i) a 30 days’ prior written notice toAgent describing and identifying such real properties, warehouses, processors and converters, asthe case may be, if the book value of all Inventory at all such other real estate properties andwarehouses, including, without limitation, the book value of all Inventory shipped or to be shippedto all such processors and converters, is less than $10,000,000 in the aggregate and (ii) the priorwritten consent of Agent (which consent, in Agent’s discretion, may be conditioned upon theexclusion from the Borrowing Base of Eligible Inventory at that location or the establishment ofReserves acceptable to Agent) and unless and until a satisfactory landlord agreement or BaileeLetter, as appropriate, shall first have been obtained with respect to such location, if the bookvalue of all Inventory at all such other real estate properties and warehouses, including, withoutlimitation, the book value of all Inventory shipped or to be shipped to all such processors andconverters, is $10,000,000 or more in the aggregate. Each Credit Party shall timely and fully payand perform its obligations in all material respects under all leases and other agreements withrespect to each leased location or public warehouse where any Collateral is or may be located.
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          5.10 [Intentionally Omitted].          5.11 Post-Closing Matters          (a) On or prior to July 30, 2010, Credit Parties shall deliver to Agent a Control Letterrelating to the account numbered 26031120, which shall be in form and substance satisfactory toAgent.          (b) On or prior to June 11, 2010, Credit Parties shall deliver or cause to be delivered toAgent a satisfactory evidence that the insurance policies required by Section 5.4 are infull force and effect, together with appropriate evidence showing loss payable and/or additionalinsured clauses or endorsements, in favor of Agent, on behalf of Lenders, which shall be in formand substance satisfactory to Agent.          5.12 Further Assurances.          (a) Each Credit Party executing this Agreement agrees that it shall and shall cause each otherCredit Party to, at such Credit Party’s expense and upon the reasonable request of Agent, dulyexecute and deliver, or cause to be duly executed and delivered, to Agent such further instrumentsand do and cause to be done such further acts as may be necessary or proper in the reasonableopinion of Agent to carry out more effectively the provisions and purposes of this Agreement andeach Loan Document.          (b) Each Credit Party shall (i) cause each Person, upon its becoming a Domestic Subsidiary ofsuch Credit Party (provided that this shall not be construed to constitute consent by any of theLenders to any transaction not expressly permitted by the terms of this Agreement), promptly toguaranty the Obligations and to grant to Agent, for the benefit of Agent and Lenders, a securityinterest in the personal property (other than real property, Equipment and Fixtures) of suchDomestic Subsidiary to secure the Obligations and (ii) pledge, or cause to be pledged, to Agent,for the benefit of Agent and Lenders, all of the Stock of such Domestic Subsidiary to secure theObligations. Each Credit Party shall pledge, or cause to be pledged, to Agent, for the benefit ofAgent and Lenders, 66% of the outstanding voting Stock and 100% of the outstanding nonvoting Stockof any person upon its becoming a first tier Foreign Subsidiary of any Credit Party. Thedocumentation for such guaranty, security and pledge shall be substantially similar to the LoanDocuments executed concurrently herewith with such modifications as are reasonably requested byAgent.**6. NEGATIVE COVENANTS**          Each Credit Party executing this Agreement jointly and severally agrees as to all CreditParties that from and after the date hereof until the Termination Date:          6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or indirectly, byoperation of law or otherwise, (a) form or acquire any Subsidiary other than the formation oracquisition of a Subsidiary that constitutes a Permitted Acquisition, or (b) merge with,consolidate with, or convey, transfer, lease or otherwise dispose of, or acquire all orsubstantially all of the assets or Stock of, or otherwise combine with or acquire, any Person,except upon not less than five (5) Business Days prior written notice to Agent, (A) any
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Subsidiary of the Borrower may merge with, or dissolve or liquidate into, the Borrower or awholly-owned Subsidiary of the Borrower which is a Domestic Subsidiary, *provided*that the Borroweror such wholly-owned Subsidiary which is a Domestic Subsidiary shall be the continuing or survivingentity and all actions required to maintain perfected Liens on the Stock of the surviving entityand other Collateral in favor of Agent shall have been completed and (B) any Inactive Subsidiarymay dissolve, liquidate or wind up its affairs. Notwithstanding the foregoing, Borrower (orHoldings, so long as contemporaneously therewith, all assets so acquired are transferred toBorrower), may acquire all or substantially all of the assets, which assets are located in theUnited States, or Stock of any Person organized under the laws of any State in the United States orthe District of Columbia (the “Target”) (in each case, a “Permitted Acquisition”)subject to the satisfaction of each of the following conditions:               (i) Agent shall receive written notice of such proposed Permitted Acquisition at least fifteen(15) Business Days prior to the consummation of such proposed Permitted Acquisition (or such lesserperiod as agreed by the Agent in its sole discretion), which notice shall include a reasonablydetailed description of such proposed Permitted Acquisition;               (ii) such Permitted Acquisition shall only comprise a business, or those assets of a business,of the type engaged in by Borrower as of the Closing Date or a business reasonably related thereto,and which business would not subject Agent or any Lender to regulatory or third party approvalsthat would be reasonably likely to have an adverse effect on Agent’s or any Lender’s exercise ofits rights and remedies under this Agreement or any other Loan Documents other than approvalsapplicable to the exercise of such rights and remedies with respect to Borrower prior to suchPermitted Acquisition;               (iii) such Permitted Acquisition shall be consensual and shall have been approved by theTarget’s board of directors or selling shareholders or equivalent body;               (iv) the business and assets acquired in such Permitted Acquisition shall be free and clear ofall Liens (other than Liens permitted by Section 6.7);               (v) at or prior to the closing of any Permitted Acquisition, Agent will be granted a firstpriority perfected Lien (subject to Liens permitted under Section 6.7) in all assets (otherthan any real property, Equipment or Fixtures) acquired pursuant thereto or in the assets (otherthan any real property, Equipment or Fixtures) and Stock of the Target, any Person upon becoming aSubsidiary of a Credit Party pursuant to any Permitted Acquisition shall guarantee the Obligationsand join this Agreement as a Credit Party, and Holdings and Borrower and the Target shall haveexecuted such documents and taken such actions as may be required by Agent in connection therewith;               (vi) concurrently with delivery of the notice referred to in clause (i) above,Borrower shall have delivered to Agent, in form and substance reasonably satisfactory to Agent:          (A) Audited financial statements of the Target (or, if not available,other financial information reasonably satisfactory to Agent);
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          (B) a pro forma consolidated balance sheet, income statement and cashflow statement of Holdings, its Subsidiaries and the business andoperations being acquired (“Acquisition Pro Forma”) and either:                         (I) such Acquisition Pro Forma shall reflect that (x) Liquidity is at least $10,000,000immediately prior to and after giving effect to such Permitted Acquisition and all Loans funded inconnection therewith, if any, and (y) on a pro forma basis, Holdings and its Subsidiaries wouldhave on a consolidated basis a Fixed Charge Coverage Ratio of not less than 1.00 : 1.00 for thefour quarter period reflected in the Compliance Certificate most recently delivered to Agentpursuant to Annex E prior to the consummation of such Permitted Acquisition (calculated asif such Permitted Acquisition and all Loans funded in connection therewith had been made on thefirst day of such period); or                         (II) no Revolving Credit Advances shall be outstanding immediately prior to such PermittedAcquisition, on the date of such Acquisition or immediately after giving effect to such PermittedAcquisition;          (C) projections covering the one (1) year period commencing on theanticipated date of such Permitted Acquisition and otherwise prepared inaccordance with the Projections and based upon historical financial data ofa recent date reasonably satisfactory to Agent, taking into account suchPermitted Acquisition;          (D) a certificate of the chief financial officer of Holdings andBorrower to the effect that: (x) Borrower (after taking into considerationall rights of contribution and indemnity Borrower has against Holdings andeach other Subsidiary of Holdings) will be Solvent upon the consummation ofthe Permitted Acquisition and (y) the Acquisition Pro Forma fairly presentsthe financial condition of Holdings and Borrower (on a consolidated basis)as of the date thereof after giving effect to the Permitted Acquisition; and          (E) if requested by Agent, the Credit Parties shall deliver writteninformation relating to their due diligence investigation with respect tothe Target and such Permitted Acquisition; *provided*, that if such writteninformation is subject to confidentiality restrictions, Agent shall enterinto a confidentiality agreement which is in form and substance reasonablysatisfactory to Agent (and, if applicable, the Target);               (vii) on or prior to the date of such Permitted Acquisition, Agent shall have receivedcopies of the acquisition agreement and related agreements and instruments, and allopinions, certificates, lien search results and other documents and information reasonablyrequested by Agent, including those specified in the last sentence of Section 5.9;and
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               (viii) no Default or Event of Default shall then exist or would exist immediatelyafter giving effect thereto.Notwithstanding the foregoing, the Accounts and Inventory of the Target shall not be included inEligible Accounts and Eligible Inventory until field examinations and appraisals of Target and/orits assets have been satisfactorily completed (and with respect to such Accounts and Inventory ofthe Target, Agent shall have the right to adjust the criteria of Eligible Accounts and EligibleInventory, adjust advance rates and establish Reserves in its Permitted Discretion); it beingunderstood and agreed that, if Borrower requests such field examination and appraisal, Agent agreesto use reasonable efforts to have such field examination and appraisal completed (in each case,with Borrower’s cooperation with appraisers, Agent and its agents in an effort to facilitate andpromptly conclude any such field examination and appraisal) within the time period that iscustomary and reasonable for completion of such field examination and appraisal; *provided*thatfield examinations and appraisals in connection with Permitted Acquisitions shall not count againstthe limited number of field examinations or appraisals for which expense reimbursement may besought.          6.2 Investments; Loans and Advances. Except as otherwise expressly permitted by thisSection 6, no Credit Party shall make or permit to exist any investment in, or make, accrueor permit to exist loans or advances of money to, any Person, through the direct or indirectlending of money, holding of securities or otherwise, except that: (a) Credit Parties may holdinvestments comprised of accounts payable or notes payable, chattel paper or stock or othersecurities acquired pursuant to negotiated agreements with respect to settlement of an AccountDebtor’s delinquent Accounts in the ordinary course of business, consistent with past practices, orin connection with the bankruptcy or reorganization of suppliers or customers; (b) each CreditParty may maintain its existing investments in its Subsidiaries as of the Closing Date; (c) so longas (x) no Default or Event of Default has occurred and is continuing and (y) Liquidity immediatelyprior to making an investment pursuant to this clause (c) is at least $10,000,000, Borrowermay make investments, subject to Control Letters in favor of Agent for the benefit of Lenders, in(i) marketable direct obligations issued or unconditionally guaranteed by the United States ofAmerica or any agency thereof maturing within one year from the date of acquisition thereof, (ii)commercial paper maturing no more than one year from the date of creation thereof and currentlyhaving the highest rating obtainable from at least two of the following: Standard & Poor’s RatingsGroup, Moody’s Investors Service, Inc. and Fitch Investors Services and issued by any Personorganized under the laws of any state of the United States, (iii) certificates of deposit maturingno more than one year from the date of creation thereof issued by commercial banks incorporatedunder the laws of the United States of America, each having combined capital, surplus and undividedprofits of not less than $300,000,000 and having a senior unsecured rating of “A” or better by anationally recognized rating agency (an “A Rated Bank”), (iv) time deposits maturing nomore than thirty (30) days from the date of creation thereof with A Rated Banks and (v) any mutualfund that has substantially all of its assets invested continuously in one or more of theinvestments described in clauses (i) through (iv) above, (d) so long as (x) no Default orEvent of Default has occurred and is continuing, (y) the outstanding Revolving Loan balance doesnot exceed $5,000,000 and (z) Liquidity is at least $15,000,000, Borrower may make investments intaxable or tax-free money market mutual funds that (i) comply with the criteria set forth inSecurities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, and (ii) areeither rated A by Standard & Poor’s Ratings Group and A by Moody’s Investors
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Service, Inc. or have portfolio assets of at least $2,000,000,000, (e) Credit Parties mayendorse negotiable instructions held for collection in the ordinary course of business, (f) CreditParties may extend trade credit to customers in the ordinary course of business and consistent withpast practices, (g) Credit Parties may prepay expenses in the ordinary course of business andconsistent with past practices, (h) Credit Parties may make deposits representing purchase pricefor asset purchases permitted hereunder, (i) Credit Parties may deposit cash with banks or otherdepository institutions in the course of establishing and maintaining the Cash Management Systemsdescribed on Annex C, (j) Credit Parties may receive investments as the non-cash portion ofconsideration received in connection with transactions permitted pursuant to Section 6.8,and (k) Credit Parties may make other investments not exceeding $5,000,000 in the aggregate at anytime outstanding. For the avoidance of doubt, nothing in this Section 6.2 shall prohibitany Credit Parties from making any investment, loans or advances permitted under Section 6.1,6.3, 6.4, 6.6 or 6.13 or pledges or deposits permitted under Section 6.7.          6.3 Indebtedness.          (a) No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except(without duplication) (i) Indebtedness secured by purchase money security interests and CapitalLeases permitted in Section 6.7(c) and refinancings thereof or amendments or modificationsthereof that do not have the effect of increasing the principal amount thereof (except, in the caseof refinancing, by an amount equal to unpaid interest and premium thereon and reasonable fees andexpenses incurred in connection with such refinancing) or changing the amortization thereof (otherthan to extend the same); (ii) the Loans and the other Obligations; (iii) unfunded pension fund andother employee benefit plan obligations and liabilities to the extent they are permitted to remainunfunded under applicable law; (iv) existing Indebtedness described in Disclosure Schedule(6.3) and refinancings thereof or amendments or modifications thereof that do not have theeffect of increasing the principal amount thereof (except, in the case of refinancing, by an amountequal to unpaid interest and premium thereon and reasonable fees and expenses incurred inconnection with such refinancing) or changing the amortization thereof (other than to extend thesame) and that are otherwise on terms and conditions (other than any increase in pricing due tothen prevailing market conditions at the time of such refinancing) no less favorable to the CreditParties, taken as a whole, than the terms of the Indebtedness being refinanced, amended ormodified; (v) Indebtedness consisting of intercompany loans and advances made by Borrower to anyother Credit Party that is a Guarantor (other than Holdings and a Guarantor that is an InactiveSubsidiary) or by any such Guarantor (other than Holdings and a Guarantor that is an InactiveSubsidiary) to Borrower**;***provided*, that: (A) such intercompany Indebtedness is evidenced by asubordinated demand note (collectively, the “Intercompany Notes”) executed and delivered byBorrower to each such Guarantor, and by each such Guarantor to Borrower (including, withoutlimitation, the Intercompany Note executed and delivered on the Original Closing Date), whichIntercompany Notes shall be pledged (and in the case of the Intercompany Note dated as of theOriginal Closing Date, have been pledged) and delivered to Agent pursuant to the applicable PledgeAgreement or Security Agreement as additional collateral security for the Obligations; (B) Borrowershall accurately record all intercompany transactions on its books and records; (C) the obligationsof Borrower under any such Intercompany Notes shall be subordinated to the Obligations of Borrowerhereunder in a manner reasonably satisfactory to Agent; (D) at the time any such intercompany loanor advance is made by Borrower and after giving effect thereto, Borrower shall be Solvent; (E) noDefault or
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Event of Default would occur and be continuing after giving effect to any such proposedintercompany loan; and (F) the aggregate amount of all such intercompany loans shall not exceed anaggregate principal amount of $5,000,000 at any one time outstanding; (vi) amounts owing byBorrower to Holdings as a result of taxes paid or owing by Holdings to Governmental Authorities asa result of the assets or operations of Borrower as long as all such amounts are evidenced byIntercompany Notes, (vii) loans made by Borrower to Holdings to the extent necessary to permitHoldings to (I) pay operating expenses incurred in the ordinary course of business consistent withpast practices as in existence on the Original Closing Date (as long as (A) Holdings promptly uponits receipt thereof uses the proceeds of such loans to pay such operating expenses, B) such loansare repaid or reduced to zero by crediting such operating expenses of Holdings against such loanswithin twelve (12) months of the date made and (C) such loans are evidenced by Intercompany Notes)and (II) pay Dividends to the extent permitted by Section 6.13(d) or make Stock Repurchasespermitted by Section 6.13(e) (as long as (A) Holdings promptly upon its receipt thereofuses the proceeds of such loans to pay such Dividends or make such Stock Repurchases and (B) suchloans are evidenced by Intercompany Notes); (viii) Indebtedness owing by Holdings to Borrower in anaggregate principal amount not to exceed $8,000,000 arising as a result of the Refinancing underand as defined in the Original Credit Agreement, including a payment, on the Original Closing Date,on a guaranty by Borrower of Prior Lender Obligations under and as defined in the Original CreditAgreement; (ix) Indebtedness in an aggregate principal amount at any time outstanding not to exceed$35,000,000 secured by Liens permitted by Section 6.7(d) as long as, in each case, suchIndebtedness has terms that are consistent with the terms of similar financings in then prevailingmarket conditions and Agent shall have received such access agreements or mortgagee waivers, all inform and substance satisfactory to Agent, in its sole discretion, as Agent may request inconnection with such Indebtedness, and refinancings thereof with the proceeds of other Indebtednesssecured by Liens permitted by Section 6.7(d) as long as, in each case, (x) the aggregateamount of such refinancing Indebtedness, when taken together with the aggregate amount of all otherIndebtedness incurred in reliance on this Section 6.3(a)(ix), does not exceed $35,000,000in an aggregate principal amount at any time outstanding, (y) such refinancing Indebtedness hasterms that are consistent with the terms of similar financings in then prevailing market conditionsand (z) Agent shall have received such access agreements or mortgagee waivers, all in form andsubstance satisfactory to Agent, in its sole discretion, as Agent may request in connection withsuch refinancing Indebtedness; (x) unsecured Subordinated Debt in an aggregate principal amount atany time outstanding not to exceed $30,000,000, and any refinancing of such Subordinated Debt withthe proceeds of other unsecured Subordinated Debt as long as the aggregate amount of suchrefinancing Subordinated Debt, when together with the aggregate amount of all other SubordinatedDebt incurred in reliance on this Section 6.3(a)(x), does not exceed $30,000,000 in anaggregate principal amount at any time outstanding; (xi) unsecured Indebtedness incurred pursuantto Rate Contracts entered into by the Borrower or any of its Subsidiaries in the ordinary course oftheir business for bona fide hedging purposes and not for speculation; (xii) Indebtedness inrespect of deposits held under forward purchasing arrangements entered into with customers in theordinary course of business for bona fide hedging purposes and not for speculation in an aggregateoutstanding amount not to exceed $1,000,000; (xiii) Indebtedness in respect of performance, bid,surety, appeal or similar bonds or completion or performance guarantees or in respect of workers’compensation claims or self-insurance obligations, in each case in the ordinary course of businessconsistent with past
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practices in an aggregate outstanding. amount not to exceed $2,000,000; (xiv) customaryindemnification, reimbursement or similar obligations and warranties under leases and othercontracts in the ordinary course of business consistent with past practices; (xv) Indebtednessarising from the honoring by a bank or other financial institution of a check, draft or similarinstrument drawn against insufficient funds in the ordinary course of business, so long as suchIndebtedness is extinguished within five (5) Business Days after its incurrence; and (xvi) otherunsecured Indebtedness not to exceed $10,000,000 in the aggregate at any time outstanding, anyrefinancing of such unsecured Indebtedness with the proceeds of other unsecured Indebtedness aslong as the aggregate amount of such refinancing unsecured Indebtedness, when together with theaggregate amount of all other unsecured Indebtedness incurred in reliance on this Section6.3(a)(xvi), does not exceed $10,000,000 at any time outstanding.          (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease orprepay any principal of, premium, if any, interest or other amount payable in respect of anyIndebtedness prior to its scheduled maturity, other than (i) the Obligations; (ii) Indebtednessother than the Obligations secured by a Lien permitted under Section 6.7 if the assetsecuring such Indebtedness has been sold or otherwise disposed of in accordance with Sections6.8(b) or 6.8(c); (iii) Indebtedness (A) permitted by Section 6.3(a)(i) uponany refinancing thereof in accordance with Section 6.3(a)(i), (B) permitted by Section6.3(a)(iv) upon any refinancing thereof in accordance with Section 6.3(a)(iv), (C)permitted by Section 6.3(a)(ix) upon any refinancing thereof in accordance with Section6.3(a)(ix), (D) permitted by Section 6.3(a)(x) upon any refinancing thereof inaccordance with Section 6.3(a)(x) and (D) permitted by Section 6.3(a)(xvi) upon anyrefinancing thereof in accordance with Section 6.3(a)(xvi); (iv) Indebtedness permitted bySections 6.3(a)(i)*,*6.3(a)(iv), 6.3(a)(ix) or 6.3(a)(xvi) as long as (A) BorrowingAvailability is at least $10,000,000 immediately after giving effect to the proposed purchase,redemption, defeasance or prepayment and Revolving Credit Advances, if any, used to fund suchpurchase, redemption, defeasance or prepayment and (B) no Default or Event of Default has occurredand is continuing or would result after giving effect to any such purchase, redemption, defeasanceor prepayment and Revolving Credit Advances, if any, used to fund such purchase, redemption,defeasance or prepayment; and (v) as otherwise permitted in Section 6.13.          6.4 Employee Loans and Affiliate Transactions.          (a) No Credit Party shall enter into or be a party to any transaction with any other CreditParty or any Affiliate thereof except:               (i) as expressly permitted by this Agreement;               (ii) in the ordinary course of and pursuant to the reasonable requirements of suchCredit Party’s business and upon fair and reasonable terms that are no less favorable tosuch Credit Party than would be obtained in a comparable arm’s length transaction with aPerson not an Affiliate of such Credit Party; or               (iii) transactions or payments pursuant to any employee, officer or directorcompensation or benefit plans or other compensation arrangements entered into in theordinary course of business and consistent with past practices.
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All such transactions involving payment in excess of $250,000 existing as of the datehereof are described in Disclosure Schedule (6.4(a)).          (b) No Credit Party shall enter into any lending or borrowing transaction with any employeesof any Credit Party, except loans to its respective employees on an arm’s-length basis in theordinary course of business consistent with past practices for travel and entertainment expenses,relocation costs and similar purposes up to a maximum of $10,000 to any employee and up to amaximum of $500,000 in the aggregate at any one time outstanding.          6.5 Capital Structure and Business. If all or part of a Credit Party’s Stock ispledged to Agent, that Credit Party shall not issue additional Stock unless such Stock is pledgedto Agent as security for the Obligations. No Credit Party shall amend its charter or bylaws in amanner that would adversely affect Agent’s or Lenders’ interest under the Loan Documents or suchCredit Party’s duty or ability to repay the Obligations. No Credit Party shall engage in anybusiness other than the businesses currently engaged in by it or businesses reasonably relatedthereto.          6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume or permit toexist any Guaranteed Indebtedness except (a) by endorsement of instruments or items of payment fordeposit to the general account of any Credit Party, and (b) for Guaranteed Indebtedness incurredfor the benefit of any other Credit Party if the primary obligation is expressly permitted by thisAgreement.          6.7 Liens. No Credit Party shall create, incur, assume or permit to exist any Lien onor with respect to its Accounts or any of its other properties or assets (whether now owned orhereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in existence on the datehereof and summarized on Disclosure Schedule (6.7) securing Indebtedness outstanding onsuch date and permitted by Section 6.3(a)(iv), including replacement Liens on the propertycurrently subject to such Liens securing Indebtedness permitted by Section 6.3(a)(iv); (c)Liens created after the date hereof by conditional sale or other title retention agreements(including Capital Leases) or in connection with purchase money Indebtedness with respect toEquipment and Fixtures acquired by any Credit Party in the ordinary course of business (*provided*,that such Liens attach only to the assets subject to such agreement or purchase money debt (and theproceeds and products thereof) and such Indebtedness is incurred within twenty (20) days followingsuch purchase and does not exceed 100% of the purchase price of the subject assets) or isrefinanced, amended or modified in accordance with Section 6.3(a)(i); (d) Liens createdafter the Closing Date on any real property, Equipment or Fixtures (other than Liens permitted bySection 6.7(c)) owned or acquired by any Credit Party securing Indebtedness permitted bySection 6.3(a)(ix) as long as Agent shall have received such access agreements or mortgageewaivers, all in form and substance satisfactory to Agent, in its sole discretion, as Agent mayrequest in connection with such Indebtedness; (e) Liens (including the right of set-off) in favorof a bank or other depository institution arising as a matter of law encumbering deposits; (f)Liens arising out of consignment or similar arrangements for the sale of goods entered into in theordinary course of business; (g) any interest or title of a lessor or sublessor under any leaseentered into by a Credit Party as a lessee or sublessee; (h) Liens in favor of collecting banksarising by operation of law under Section 4-210 of the Code or, with respect to collecting bankslocated in the State of New York, under 4-208 of the Code; (i) Liens
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in favor of customs and revenue authorities arising as a matter of law which secure payment ofcustoms duties in connection with the importation of goods in the ordinary course of business and(j) Liens other than Liens on Collateral not otherwise permitted under this Section 6.7securing obligations of the Credit Parties that do not exceed $1,000,000 in the aggregate at anytime. In addition, no Credit Party shall become a party to any agreement, note, indenture orinstrument, or take any other action, that would prohibit or otherwise restrict the creation of aLien on any of its properties or other assets which are of the type that constitutes Collateral infavor of Agent, on behalf of itself and Lenders, as additional collateral for the Obligations;except for (x) prohibitions or restrictions on the creation of Liens on cash deposits pledged inthe ordinary course of business to the extent such pledges are permitted by this Agreement *provided*that any such prohibition or restriction relates only to the creation of Liens on the cash depositsthat are pledged; (y) customary restrictions on the creation of Liens on the property permitted byto be disposed under Section 6.8(b) or 6.8(c) contained in any agreement relatingto the disposition of such property pending the consummation of such disposition, so long as suchrestrictions on the creation of Liens apply only to such property to be disposed of and (z)customary provisions in contracts restricting the assignment thereof to the extent such restrictionconstitutes a restriction on creation of Liens; and it also being understood and agreed that anyprohibition or restriction on the creation of Liens contained in the notes, indentures orinstruments governing Liens permitted pursuant to Section 6.7(c) and Section 6.7(d)shall relate only to the asset or assets subject to such permitted Liens and shall not relate toany asset or assets constituting Collateral.          6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey, assign orotherwise dispose of any of its properties or other assets, including the Stock of any of itsSubsidiaries (whether in a public or a private offering or otherwise) or any of its Accounts, otherthan (a) the sale of Inventory in the ordinary course of business, (b) the sale or otherdisposition by a Credit Party in the ordinary course of such Credit Parties’ business to any Personother than an Affiliate of a Credit Party of obsolete, worn-out or surplus Inventory or ofobsolete, worn-out, surplus or idle Equipment or Fixtures, (c) dispositions (other than of (i) theStock of any Subsidiary of any Credit Party or (ii) any Accounts of any Credit Party) not otherwisepermitted under this Section 6.8 which are made for fair market value; *provided*, that (i)at the time of any disposition, no Event of Default shall exist or shall result from suchdisposition, (ii) not less than 75% of the aggregate sales price from such disposition shall bepaid in cash, and (iii) the aggregate fair market value of all assets so sold by the Credit Partiesand their Subsidiaries, together, shall not exceed in any Fiscal Year $15,000,000**,**(d) the sale ofReal Estate located at 1351 Belman Rd., Fredericksburg, Virginia, (the “Real Estate Held forSale”), (e) dispositions of cash and investments permitted by Section 6.2(c) or6.2(d), (f) non-exclusive licenses and sublicenses granted by a Credit Party and leases orsubleases (by a Credit Party as lessor or sublessor) to third parties in the ordinary course ofCredit Parties’ business not interfering with the business of the Credit Parties or any of theirSubsidiaries, (g) Restricted Payments permitted under Section 6.13, (h) dispositions ofpast due Accounts in connection with the collection or compromise thereof; *provided*, that theAccount Debtor is financially troubled or distressed; *provided*, *further*, that after the occurrenceand during the continuance of an Event of Default, such disposition shall only be made upon theprior written consent of Agent, (i) as long as no Default or Event of Default has occurred and iscontinuing or would result after giving effect thereto, the surrender or waiver of contractualrights or settlement, release or surrender of any contract, tort or other litigation claims in theordinary course of business, (j)
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abandonment, cancellation or other disposition of Intellectual Property (which such CreditParty reasonably in good faith determines is not useful to its business) in the ordinary course ofbusiness and which does not materially interfere with the ordinary conduct of the business of anyCredit Party, (k) mergers and consolidations permitted by Section 6.1, (l) dissolutions,liquidations or other discontinuance of existence of a Subsidiary of the Borrower permitted bySection 6.1, (m) the granting of consensual Liens permitted under Section 6.7, and(n) the sale of Stock in an Inactive Subsidiary.          6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate to,cause or permit to occur (i) an event that could result in the imposition of a Lien on any asset ofa Credit Party with respect to any Title IV Plan or Multiemployer Plan or (ii) an ERISA Event tothe extent such ERISA Event would reasonably be expected to have a Material Adverse Effect. NoCredit Party shall cause or suffer to exist any event that could result in the imposition of a Lienwith respect to any Plan.          6.10 Financial Covenants. Borrower shall not breach or fail to comply with any of theFinancial Covenants.          6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of anyHazardous Material on, at, in, under, above, to, from or about any of the Real Estate where suchRelease would (a) violate in any respect, or form the basis for any Environmental Liabilitiesunder, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the valueor marketability of any of the Real Estate or any of the Collateral, other than such violations orEnvironmental Liabilities that could not reasonably be expected to have create liabilities inexcess of $2,000,000.          6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback, syntheticlease or similar transaction involving any of its assets, except for a sale and subsequentleaseback of a portion of the Real Estate located at: 825 North Lane Avenue, Jacksonville, DuvallCounty, Florida.          6.13 Restricted Payments. No Credit Party shall make any Restricted Payment, except(a) intercompany loans and advances between Borrower and Guarantors to the extent permitted bySection 6.3, and payments with respect thereto, (b) dividends and distributions by anywholly-owned Subsidiary of the Borrower paid to the Borrower or any wholly-owned Subsidiary of theBorrower, (c) employee loans permitted under Section 6.4(b), (d) Borrower may pay cashdividends in respect of its Stock to Holdings which Holdings promptly upon its receipt thereof usesto make cash dividends in respect of its Stock (and Holdings is permitted to pay such cashdividends in respect of its Stock) (“Dividends”) as long as (A) Liquidity is at least$10,000,000 immediately after giving effect to the proposed Dividend and Revolving Credit Advances,if any, used to fund such Dividend and (B) no Default or Event of Default has occurred and iscontinuing or would result after giving effect to any such Dividend and Revolving Credit Advances,if any, used to fund such Dividend, (e) Borrower may pay cash dividends in respect of its Stock toHoldings which Holdings promptly upon its receipt thereof uses to redeem, purchase, repurchase orretire, or obtain the surrender of, any outstanding Stock in Holdings, or any outstanding warrants,options or other rights to acquire such Stock (and Holdings is permitted to redeem, purchase,repurchase or retire, or obtain the surrender of,
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any outstanding Stock in Holdings, or any outstanding warrants, options or other rights to acquiresuch Stock) (“Stock Repurchase”) as long as (A) Liquidity is at least $10,000,000immediately after giving effect to the proposed Stock Repurchase and Revolving Credit Advances, ifany, used to fund such Stock Repurchase, and (B) no Default or Event of Default has occurred and iscontinuing or would result after giving effect to any such Stock Repurchase and Revolving CreditAdvances, if any, used to fund such Stock Repurchase), (f) any Credit Party may declare and makedividend payments or other distributions payable solely in its Stock or Stock Equivalents, (g) inthe event the Borrower files a consolidated, combined, unitary or similar type income tax returnwith Holdings, the Borrower may make distributions to Holdings to permit Holdings to pay federaland state income taxes then due and payable, franchise taxes and other similar licensing expensesincurred in the ordinary course of business provided, that the amount of such distribution shallnot be greater than the amount of such taxes or expenses that would have been due and payable bythe Borrower and its relevant Subsidiaries had the Borrower not filed a consolidated, combined,unitary or similar type return with Holdings, (h) the Credit Parties may make payments on theSubordinated Debt to the extent permitted under the applicable subordination agreement between theholders of such Subordinated Debt and Agent and (i) the Borrower and Holdings may make RestrictedPayments not otherwise permitted hereunder to the extent required to be made pursuant to and inaccordance with the terms any stock option plans or other benefit plans for management andemployees of the Borrower and its Subsidiaries in the ordinary course of business and consistentwith past practices.          6.14 Change of Corporate Name or Location; Change of Fiscal Year. No Credit Partyshall (a) change its name as it appears in official filings in the state of its incorporation orother organization, (b) change its chief executive office, principal place of business, corporateoffices or warehouses or locations at which Collateral is held or stored, or the location of itsrecords concerning the Collateral, (c) change the type of entity that it is, (d) change itsorganization identification number, if any, issued by its state of incorporation or otherorganization, or (e) change its state of incorporation or organization, in each case without atleast thirty (30) days prior written notice to Agent and after Agent’s written acknowledgment thatany reasonable action requested by Agent in connection therewith, including to continue theperfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has beencompleted or taken (which written acknowledgment the Agent shall give reasonably promptly aftersuch actions have been completed or taken), and *provided*, that any such new location shall be inthe continental United States. No Credit Party shall change its Fiscal Year without ninety (90)days’ advance written notice to Agent. Nothing in this Section 6.14 shall prohibit anyliquidation, dissolution or other discontinuance of the existence of a Subsidiary of the Borrowerpermitted under Section 6.1.          6.15 No Impairment of Intercompany Transfers. No Credit Party shall directly orindirectly enter into or become bound by any agreement, instrument, indenture or other obligation(other than this Agreement and the other Loan Documents) that could directly or indirectlyrestrict, prohibit or require the consent of any Person with respect to the payment of dividends ordistributions or the making or repayment of intercompany loans by a Subsidiary of Borrower toBorrower except customary conditions and restrictions contained in agreements relating to a sale ordisposition of a Subsidiary permitted hereunder, *provided*that such restrictions and conditionsapply only to such Subsidiary to be sold or disposed of.
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          6.16 **[**Intentionally Omitted**]**.          6.17 Holdings. At all times after the Original Closing Date, Holdings shall not engage in any trade orbusiness, or own any assets (other than (i) assets which it owns as of the Closing Date and (ii)other assets as long as the fair market value of all such assets does not exceed $1,000,000 in theaggregate at any time) or incur any Indebtedness or Guaranteed Indebtedness (other than theObligations) and intercompany Indebtedness permitted by Section 6.3(a)(vii).          6.18 Inactive Subsidiaries. No Inactive Subsidiary shall (a) acquire any assets, (b) incur any liabilities (whether toan Affiliate or otherwise) other than for franchise taxes, maintenance fees and other de minimusexpenses or (c) engage in any active trade or business.          6.19 Vacant Land LeaseNo Credit Party shall store or maintain, or permit to be stored or maintained, any Collateralon the property that is subject to the Vacant Land Lease.**7. TERM**          7.1 Termination. The financing arrangements contemplated hereby shall be in effect until the CommitmentTermination Date, and the Loans and all other Obligations shall be automatically due and payable infull on such date.          7.2 Survival of Obligations Upon Termination of Financing Arrangements. Except as otherwise expressly provided for in the Loan Documents, no termination orcancellation (regardless of cause or procedure) of any financing arrangement under this Agreementshall in any way affect or impair the obligations, duties and liabilities of the Credit Parties orthe rights of Agent and Lenders relating to any unpaid portion of the Loans or any otherObligations, due or not due, liquidated, contingent or unliquidated or any transaction or eventoccurring prior to such termination, or any transaction or event, the performance of which isrequired after the Commitment Termination Date. Except as otherwise expressly provided herein orin any other Loan Document, all undertakings, agreements, covenants, warranties and representationsof or binding upon the Credit Parties, and all rights of Agent and each Lender, all as contained inthe Loan Documents, shall not terminate or expire, but rather shall survive any such termination orcancellation and shall continue in full force and effect until the Termination Date; *provided*, thatthe provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,and the indemnities contained in the Loan Documents shall survive the Termination Date.**8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES**          8.1 Events of Default. The occurrence of any one or more of the following events (regardless of the reasontherefor) shall constitute an “Event of Default” hereunder:          (a) Borrower (i) fails to make any payment of principal of the Loans or any of the otherObligations when due and payable, (ii) fails to make any payment of interest on, or
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Fees owing inrespect of, the Loans or any of the other Obligations within three (3) days after the same is dueand payable or (iii) fails to pay or reimburse Agent or Lenders for any expense reimbursablehereunder or under any other Loan Document within ten (10) days following Agent’s demand for suchreimbursement or payment of expenses.          (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions ofSections 1.4, 1.8, 5.4(a), 5.11 or 6, or any of theprovisions set forth in Annexes C or G, respectively.          (c) Borrower fails or neglects to perform, keep or observe any of the provisions ofSection 4.1 or any provisions set forth in Annexes E or F, respectively, and thesame shall remain unremedied for three (3) Business Days or more.          (d) Any Credit Party fails or neglects to perform, keep or observe any other provision of thisAgreement or of any of the other Loan Documents (other than any provision embodied in or covered byany other clause of this Section 8.1) and the same shall remain unremedied for thirty (30)days or more.          (e) A default or breach occurs under any other agreement, document or instrument to which anyCredit Party is a party that is not cured within any applicable grace period therefor, and suchdefault or breach (i) involves the failure to make any payment when due in respect of anyIndebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excessof $10,000,000 in the aggregate (including (x) undrawn committed or available amounts and (y)amounts owing to all creditors under any combined or syndicated credit arrangements), or (ii)causes, or permits any holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause(after giving effect to any applicable grace or notice period), Indebtedness or GuaranteedIndebtedness or a portion thereof in excess of $10,000,000 in the aggregate to become due prior toits stated maturity or prior to its regularly scheduled dates of payment, or cash collateral to bedemanded in respect thereof, in each case, regardless of whether such default is waived, or suchright is exercised, by such holder or trustee.          (f) Any information contained in any Borrowing Base Certificate is untrue or incorrect in anyrespect (other than (i) immaterial errors not exceeding the greater of (1) $1,000,000 or (2) 2.5%of the Borrowing Availability as such Borrowing Availability is calculated after giving effect tothe correction of such errors and (ii) errors understating the amount of the Borrowing Base), orany representation or warranty herein or in any Loan Document or in any written statement, report,financial statement or certificate (other than a Borrowing Base Certificate) made or delivered toAgent or any Lender by any Credit Party is untrue or incorrect in any material respect as of thedate when made or deemed made.          (g) Any Collateral with a fair market value of the greater of (1) $500,000 and (2) 2.5% of theBorrowing Availability or more are attached, seized, levied upon or subjected to a writ or distresswarrant, or come within the possession of any receiver, trustee, custodian or assignee for thebenefit of creditors of any Credit Party and such condition continues for thirty (30) days or more.
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          (h) A case or proceeding is commenced against any Credit Party seeking a decree or order inrespect of such Credit Party (i) under the Bankruptcy Code or any other applicable federal, stateor foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator,assignee, trustee or sequestrator (or similar official) for such Credit Party or for anysubstantial part of any such Credit Party’s assets, or (iii) ordering the winding-up or liquidationof the affairs of such Credit Party, and such case or proceeding shall remain undismissed orunstayed for sixty (60) days or more or a decree or order granting the relief sought in such caseor proceeding is granted by a court of competent jurisdiction.          (i) Any Credit Party (i) files a petition seeking relief under the Bankruptcy Code or anyother applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to orfails to contest in a timely and appropriate manner to the institution of proceedings thereunder orto the filing of any such petition or to the appointment of or taking possession by a custodian,receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Partyor for any substantial part of any such Credit Party’s assets, (iii) makes an assignment for thebenefit of creditors, or (iv) takes any action in furtherance of any of the foregoing, or (v)admits in writing its inability to, or is generally unable to, pay its debts as such debts becomedue.          (j) A final judgment or judgments for the payment of money in excess of $2,000,000 in theaggregate at any time are outstanding against one or more of the Credit Parties (excluding amountscovered by insurance to the extent the relevant independent third party insurer has not deniedcoverage therefor), and the same are not, within thirty (30) days after the entry thereof,discharged or execution thereof stayed or bonded pending appeal, or such judgments are notdischarged prior to the expiration of any such stay.          (k) Any material provision of any Loan Document for any reason ceases to be valid, binding andenforceable in accordance with its terms (or any Credit Party shall challenge the enforceability ofany Loan Document or shall assert in writing, or engage in any action or inaction based on any suchassertion, that any provision of any of the Loan Documents has ceased to be or otherwise is notvalid, binding and enforceable in accordance with its terms), or any Lien created under any LoanDocument ceases to be a valid and perfected first priority Lien (except as otherwise permittedherein or therein) in any of the Collateral purported to be covered thereby.          (l) Any Change of Control occurs.          8.2 Remedies.          (a) If any Event of Default has occurred and is continuing, Agent may (and at the writtenrequest of the Requisite Lenders shall), without notice, suspend the Revolving Loanfacility with respect to additional Advances and/or the incurrence of additional Letter ofCredit Obligations, whereupon any additional Advances and additional Letter of Credit Obligationsshall be made or incurred in Agent’s sole discretion (or in the sole discretion of the RequisiteLenders, if such suspension occurred at their direction) so long as such Default or Event ofDefault is continuing. If any Event of Default has occurred and is continuing, Agent may (and atthe written request of Requisite Lenders shall), without notice except as otherwise expressly
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provided herein, increase the rate of interest applicable to the Loans and the Letter of CreditFees to the Default Rate.          (b) If any Event of Default has occurred and is continuing, Agent may (and at the writtenrequest of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facilitywith respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii)reduce the Revolving Loan Commitment from time to time; (iii) declare all or any portion of theObligations, including all or any portion of any Loan to be forthwith due and payable, and requirethat the Letter of Credit Obligations be cash collateralized in the manner set forth in AnnexB, all without presentment, demand, protest or further notice of any kind, all of which areexpressly waived by Borrower and each other Credit Party; or (iv) exercise any rights and remediesprovided to Agent under the Loan Documents or at law or equity, including all remedies providedunder the Code; *provided*, that upon the occurrence of an Event of Default specified in Sections8.1(h) or (i), the Commitments shall be immediately terminated and all of the Obligations,including the Revolving Loan, shall become immediately due and payable without declaration, noticeor demand by any Person.          8.3 Waivers by Credit Parties. Except as otherwise provided for in this Agreement or by applicable law, each Credit Partywaives: (a) presentment, demand and protest and notice of presentment, dishonor, notice of intentto accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise,settlement, extension or renewal of any or all commercial paper, accounts, contract rights,documents, instruments, chattel paper and guaranties at any time held by Agent on which any CreditParty may in any way be liable, and hereby ratifies and confirms whatever Agent may do in thisregard, (b) all rights to notice and a hearing prior to Agent’s taking possession or control of, orto Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might berequired by any court prior to allowing Agent to exercise any of its remedies, and (c) the benefitof all valuation, appraisal, marshaling and exemption laws.**9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT**          9.1 Assignment and Participations.          (a) Subject to the terms of this Section 9.1, any Lender may make an assignment to aQualified Assignee or to any other Person acceptable to Agent of, or sale of participations in, atany time or times, the Loan Documents, Loans, Letter of Credit Obligations and any Commitment orany portion thereof or interest therein, including any Lender’s rights, title, interests, remedies,powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of Agent(which consent shall not be unreasonably withheld or delayed with respect to a Qualified Assignee)and the execution of an assignment agreement (an “AssignmentAgreement” substantially in the form attached hereto as Exhibit 9.1(a) andotherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent andBorrower, which shall not to be unreasonably withheld or delayed; *provided*, *however*, thatassignments by Non-Funding Lenders shall be subject to Agent’s prior written consent in allinstances in the sole discretion of Agent; (ii) be conditioned on such assignee Lender representingto the assigning Lender and Agent that it is purchasing the applicable Loans to be assigned to itfor its own account, for investment purposes and not with a view to the distribution
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thereof; (iii)after giving effect to any such partial assignment, the assignee Lender shall have Commitments inan amount at least equal to $10,000,000 and the assigning Lender shall have retained Commitments inan amount at least equal to $10,000,000; (iv) include a payment to Agent of an assignment fee of$3,500, and (v) so long as no Event of Default has occurred and is continuing, require the consentof the Borrower, which shall not be unreasonably withheld or delayed and shall be deemed granted ifnot objected to within ten (10) Business Days following notice thereof to Borrower (it beingunderstood and agreed that, so long as no Event of Default has occurred and is continuing, theBorrower may withhold its consent to an assignment by a Lender if the Borrower demonstrates to thesatisfaction of the Agent, in its sole discretion, that the assignee is a direct businesscompetitor (or an Affiliate thereof) of the Borrower within ten (10) Business Days following noticeof such assignment to Borrower). In the case of an assignment by a Lender under this Section9.1, the assignee shall have, to the extent of such assignment, the same rights, benefits andobligations as all other Lenders hereunder. The assigning Lender shall be relieved of itsobligations hereunder with respect to its Commitments or assigned portion thereof from and afterthe date of such assignment. Borrower hereby acknowledges and agrees that any assignment shallgive rise to a direct obligation of Borrower to the assignee and that the assignee shall beconsidered to be a “Lender”. In all instances, each Lender’s liability to make Loans hereundershall be several and not joint and shall be limited to such Lender’s Pro Rata Share of theapplicable Commitment. In the event Agent or any Lender assigns or otherwise transfers all or anypart of the Obligations, Agent or any such Lender shall so notify Borrower and Borrower shall, uponthe request of Agent or such Lender, execute new Notes in exchange for the Notes, if any, beingassigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender mayat any time pledge the Obligations held by it and such Lender’s rights under this Agreement and theother Loan Documents to a Federal Reserve Bank, and any lender that is an investment fund mayassign the Obligations held by it and such Lender’s rights under this Agreement and the other LoanDocuments to another investment fund managed by the same investment advisor; *provided*, that no suchpledge to a Federal Reserve Bank shall release such Lender from such Lender’s obligations hereunderor under any other Loan Document.          (b) Any participation by a Lender of all or any part of its Commitments shall be made with theunderstanding that all amounts payable by Borrower hereunder shall be determined as if that Lenderhad not sold such participation, and that the holder of any such participation shall not beentitled to require such Lender to take or omit to take any action hereunder except actionsdirectly affecting (i) any reduction in the principal amount of, or interest rate or Fees payablewith respect to, any Loan in which such holder participates, (ii) any extension of the scheduledamortization of the principal amount of any Loan in which such holder participates or the finalmaturity date thereof, and (iii) any release of all or substantially all of the Collateral (otherthan in accordance with the terms of this Agreement, the Collateral Documents or the other LoanDocuments). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8 subject toclause (f) of this Section 9.1, Borrower acknowledges and agrees that aparticipation shall give rise to a direct obligation of Borrower to the participant and theparticipant shall be considered to be a “Lender”. Except as set forth in the preceding sentenceneither Borrower nor any other Credit Party shall have any obligation or duty to any participant.Neither Agent nor any Lender (other than the Lender selling a participation) shall have any duty toany participant and may continue to deal solely with the Lender selling a participation as if nosuch sale had occurred.
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          (c) Except as expressly provided in this Section 9.1, no Lender shall, as betweenBorrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunderas a result of any sale, assignment, transfer or negotiation of, or granting of participation in,all or any part of the Loans, the Notes or other Obligations owed to such Lender.          (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sellassignments or participations under this Section 9.1 as reasonably required to enable theassigning or selling Lender to effect any such assignment or participation, including the executionand delivery of any and all agreements, notes and other documents and instruments as shall berequested and the preparation of informational materials for, and the participation of managementin meetings with, potential assignees or participants. Each Credit Party executing this Agreementshall certify the correctness, completeness and accuracy of all descriptions of the Credit Partiesand their respective affairs contained in any selling materials provided by it and all otherinformation provided by it and included in such materials, except that any Projections delivered byBorrower shall only be certified by Borrower as having been prepared by Borrower in compliance withthe representations contained in Section 3.4(c).          (e) A Lender may furnish any information concerning Credit Parties in the possession of suchLender from time to time to assignees and participants (including prospective assignees andparticipants); provided that such Lender shall obtain from assignees or participantsconfidentiality covenants substantially equivalent to those contained in Section 11.8.          (f) So long as no Event of Default has occurred and is continuing, no Lender shall assign orsell participations in any portion of its Loans or Commitments to a potential Lender orparticipant, if, as of the date of the proposed assignment or sale, the assignee Lender orparticipant would be subject to capital adequacy or similar requirements under Section1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR Loans underSection 1.16(c), or withholding taxes in accordance with Section 1.15(a).          (g) Notwithstanding anything to the contrary contained herein, any Lender (a “GrantingLender”), may grant to a special purpose funding vehicle (an “SPC”), identified as suchin writing by the Granting Lender to Agent and Borrower, the option to provide to Borrower all orany part of any Loans that such Granting Lender would otherwise be obligated to make to Borrowerpursuant to this Agreement; *provided*, that (i) nothing herein shall constitute a commitment by anySPC to make any Loan; and (ii) if an SPC elects not to exercise such option or otherwise fails toprovide all or any part of such Loan, the Granting Lender shall be obligated to make such Loanpursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize theCommitment of the Granting Lender to the same extent, and as if such Loan were made by suchGranting Lender. No SPC shall be liable for any indemnity or similar payment obligation under thisAgreement (all liability for which shall remain with the GrantingLender). Any SPC may (i) with notice to, but without the prior written consent of, Borrowerand Agent and without paying any processing fee therefor assign all or a portion of its interestsin any Loans to the Granting Lender or to any financial institutions (consented to by Borrower andAgent) providing liquidity and/or credit support to or for the account of such SPC to support thefunding or maintenance of Loans and (ii) disclose on a confidential basis any non-publicinformation relating to its Loans to any rating agency, commercial paper dealer or provider of anysurety, guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g) may
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not be amended without the prior written consent of each Granting Lender, all or any of whose Loansare being funded by an SPC at the time of such amendment. For the avoidance of doubt, the GrantingLender shall for all purposes, including without limitation, the approval of any amendment orwaiver of any provision of any Loan Document or the obligation to pay any amount otherwise payableby the Granting Lender under the Loan Documents, continue to be the Lender of record hereunder.          (h) Nothing contained in this Section 9 shall be construed to require the consent ofany party for the Swing Line Lender to make a Swing Lien Advance.          9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all Lenders as Agent under this Agreementand the other Loan Documents. The provisions of this Section 9.2 are solely for thebenefit of Agent and Lenders and no Credit Party nor any other Person shall have any rights as athird party beneficiary of any of the provisions hereof. In performing its functions and dutiesunder this Agreement and the other Loan Documents, Agent shall act solely as an agent of Lendersand does not assume and shall not be deemed to have assumed any obligation toward or relationshipof agency or trust with or for any Credit Party or any other Person. Agent shall have no duties orresponsibilities except for those expressly set forth in this Agreement and the other LoanDocuments. The duties of Agent shall be mechanical and administrative in nature and Agent shallnot have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise afiduciary relationship in respect of any Lender. Except as expressly set forth in this Agreementand the other Loan Documents, Agent shall not have any duty to disclose, and shall not be liablefor failure to disclose, any information relating to any Credit Party or any of their respectiveSubsidiaries or any Account Debtor that is communicated to or obtained by GE Capital or any of itsAffiliates in any capacity. Neither Agent nor any of its Affiliates nor any of their respectiveofficers, directors, employees, agents or representatives shall be liable to any Lender for anyaction taken or omitted to be taken by it hereunder or under any other Loan Document, or inconnection herewith or therewith, except for damages caused by its or their own gross negligence orwillful misconduct.          If Agent shall request instructions from Requisite Lenders, Supermajority Revolving Lenders orall affected Lenders with respect to any act or action (including failure to act) in connectionwith this Agreement or any other Loan Document, then Agent shall be entitled to refrain from suchact or taking such action unless and until Agent shall have received instructions from RequisiteLenders, Supermajority Revolving Lenders, or all affected Lenders, as the case may be, and Agentshall not incur liability to any Person by reason of so refraining. Agent shall be fully justifiedin failing or refusing to take any action hereunder or under any other Loan Document (a) if suchaction would, in the opinion of Agent, be contrary to law or theterms of this Agreement or any other Loan Document, (b) if such action would, in the opinionof Agent, expose Agent to Environmental Liabilities or (c) if Agent shall not first be indemnifiedto its satisfaction against any and all liability and expense which may be incurred by it by reasonof taking or continuing to take any such action. Without limiting the foregoing, no Lender shallhave any right of action whatsoever against Agent as a result of Agent acting or refraining fromacting hereunder or under any other Loan Document in accordance with the instructions of RequisiteLenders, Supermajority Revolving Lenders or all affected Lenders, as applicable.
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          9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of their respective directors, officers,agents or employees shall be liable for any action taken or omitted to be taken by it or them underor in connection with this Agreement or the other Loan Documents, except for damages caused by itsor their own gross negligence or willful misconduct. Without limiting the generality of theforegoing, Agent: (a) may treat the payee of any Note as the holder thereof until Agent receiveswritten notice of the assignment or transfer thereof signed by such payee and in form reasonablysatisfactory to Agent; (b) may consult with legal counsel, independent public accountants and otherexperts selected by it and shall not be liable for any action taken or omitted to be taken by it ingood faith in accordance with the advice of such counsel, accountants or experts; (c) makes nowarranty or representation to any Lender and shall not be responsible to any Lender for anystatements, warranties or representations made in or in connection with this Agreement or the otherLoan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance orobservance of any of the terms, covenants or conditions of this Agreement or the other LoanDocuments on the part of any Credit Party or to inspect the Collateral (including the books andrecords) of any Credit Party; (e) shall not be responsible to any Lender for the due execution,legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or theother Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and(f) shall incur no liability under or in respect of this Agreement or the other Loan Documents byacting upon any notice, consent, certificate or other instrument or writing (which may be bytelecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the properparty or parties.          9.4 GE Capital and Affiliates. With respect to its Commitments hereunder, GE Capital shall have the same rights and powersunder this Agreement and the other Loan Documents as any other Lender and may exercise the same asthough it were not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expresslyindicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lendmoney to, invest in, and generally engage in any kind of business with, any Credit Party, any oftheir Affiliates and any Person who may do business with or own securities of any Credit Party orany such Affiliate, all as if GE Capital were not Agent and without any duty to account therefor toLenders. GE Capital and its Affiliates may accept fees and other consideration from any CreditParty for services in connection with this Agreement or otherwise without having to account for thesame to Lenders. Each Lender acknowledges the potential conflict of interest between GE Capital asa Lender holding disproportionate interests in the Loans and GE Capital as Agent.          9.5 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon Agent or anyother Lender and based on the Financial Statements referred to in Section 3.4(a) and suchother documents and information as it has deemed appropriate, made its own credit and financialanalysis of the Credit Parties and its own decision to enter into this Agreement. Each Lender alsoacknowledges that it will, independently and without reliance upon Agent or any other Lender andbased on such documents and information as it shall deem appropriate at the time, continue to makeits own credit decisions in taking or not taking action under this Agreement. Each Lenderacknowledges the potential conflict of interest of each other Lender as a result of Lenders holdingdisproportionate interests in the Loans, and expressly consents to, and waives any claim basedupon, such conflict of interest.
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          9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by Credit Parties andwithout limiting the obligations of Credit Parties hereunder), ratably according to theirrespective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or naturewhatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to orarising out of this Agreement or any other Loan Document or any action taken or omitted to be takenby Agent in connection therewith; *provided*, that no Lender shall be liable for any portion of suchliabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses ordisbursements resulting from Agent’s gross negligence or willful misconduct. Without limiting theforegoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of anyout-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with thepreparation, execution, delivery, administration, modification, amendment or enforcement (whetherthrough negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights orresponsibilities under, this Agreement and each other Loan Document, to the extent that Agent isnot reimbursed for such expenses by Credit Parties.          9.7 Successor Agent. Agent may resign at any time by giving not less than thirty (30) days’ prior written noticethereof to Lenders and Borrower. Upon any such resignation, the Requisite Lenders shall have theright to appoint a successor Agent. If no successor Agent shall have been so appointed by theRequisite Lenders and shall have accepted such appointment within thirty (30) days after theresigning Agent’s giving notice of resignation, then the resigning Agent may, on behalf of Lenders,appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept suchappointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of acommercial bank or financial institution if such commercial bank or financial institution isorganized under the laws of the United States of America or of any State thereof and has a combinedcapital and surplus of at least $300,000,000. If no successor Agent has been appointed pursuant tothe foregoing, within thirty (30) days after the date such notice of resignation was given by theresigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafterperform all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appointa successor Agent as provided above. Any successor Agentappointed by Requisite Lenders hereunder shall be subject to the approval of Borrower, suchapproval not to be unreasonably withheld or delayed; *provided*that such approval shall not berequired if a Default or an Event of Default has occurred and is continuing. Upon the acceptanceof any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed toand become vested with all the rights, powers, privileges and duties of the resigning Agent. Uponthe earlier of the acceptance of any appointment as Agent hereunder by a successor Agent or theeffective date of the resigning Agent’s resignation, the resigning Agent shall be discharged fromits duties and obligations under this Agreement and the other Loan Documents, except that anyindemnity rights or other rights in favor of such resigning Agent shall continue. After anyresigning Agent’s resignation hereunder, the provisions of this Section 9 shall inure toits benefit as to any actions taken or omitted to be taken by it while it was acting as Agent underthis Agreement and the other Loan Documents.          9.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter granted under applicable law and not by way oflimitation of any such rights, upon the occurrence and during the continuance of any Event ofDefault and subject to Section 9.9(f),
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each Lender is hereby authorized at any time or fromtime to time, without prior notice to any Credit Party or to any Person other than Agent, any suchnotice being hereby expressly waived, to offset and to appropriate and to apply any and allbalances held by it at any of its offices for the account of Borrower or any Guarantor (regardlessof whether such balances are then due to Borrower or any Guarantor) and any other properties orassets at any time held or owing by that Lender or that holder to or for the credit or for theaccount of Borrower or any Guarantor against and on account of any of the Obligations that are notpaid when due; provided that the Lender exercising such offset rights shall give notice thereof tothe affected Credit Party promptly after exercising such rights. Any Lender exercising a right ofsetoff or otherwise receiving any payment on account of the Obligations in excess of its Pro RataShare thereof shall purchase for cash (and the other Lenders or holders shall sell) suchparticipations in each such other Lender’s or holder’s Pro Rata Share of the Obligations as wouldbe necessary to cause such Lender to share the amount so offset or otherwise received with eachother Lender or holder in accordance with their respective Pro Rata Shares, (other than offsetrights exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16). If aNon-Funding Lender or Impacted Lender receives any such payment as described in the previoussentence, such Lender shall turn over such payments to Agent in an amount that would satisfy thecash collateral requirements set forth in Section 9.9(a)(ii). Each Lender’s obligationunder this Section 9.8 shall be in addition to and not in limitation of its obligations topurchase a participation in an amount equal to its Pro Rata Share of the Swing Line Loans underSection 1.1. Borrower and each Guarantor agrees, to the fullest extent permitted by law,that (a) any Lender may exercise its right to offset with respect to amounts in excess of its ProRata Share of the Obligations and may sell participations in such amounts so offset to otherLenders and holders and (b) any Lender so purchasing a participation in the Loans made or otherObligations held by other Lenders or holders may exercise all rights of offset, bankers’ lien,counterclaim or similar rights with respect to such participation as fully as if such Lender orholder were a direct holder of the Loans and the other Obligations in the amount of suchparticipation. Notwithstanding the foregoing, if all or any portion of the offset amount orpayment otherwise received is thereafter recovered from the Lender that has exercised the right ofoffset, thepurchase of participations by that Lender shall be rescinded and the purchase price restoredwithout interest.          9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.          (a) Advances; Payments.               (i) Revolving Lenders shall refund or participate in the Swing Line Loan in accordance withclauses (iii) and (iv) of Section 1.1(c). If the Swing Line Lender declines tomake a Swing Line Loan or if Swing Line Availability is zero, Agent shall notify Revolving Lenders,promptly after receipt of a Notice of Revolving Advance and in any event prior to 1:00 p.m. (NewYork time) on the date such Notice of Revolving Advance is received, by telecopy, telephone orother similar form of transmission. Each Revolving Lender shall make the amount of such Lender’sPro Rata Share of such Revolving Credit Advance available to Agent in same day funds by wiretransfer to Agent’s account as set forth in Annex H not later than 3:00 p.m. (New Yorktime) on the requested funding date, in the case of an Index Rate Loan and not later than 11:00a.m. (New York time) on the requested funding date in the case of a LIBOR Loan. After receipt ofsuch wire transfers (or, in the Agent’s sole discretion, before
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receipt of such wire transfers),subject to the terms hereof, Agent shall make the requested Revolving Credit Advance to Borrower.All payments by each Revolving Lender shall be made without setoff, counterclaim or deduction ofany kind.               (ii) Not less than once during each calendar week or more frequently at Agent’s election(each, a “Settlement Date”), Agent shall advise each Lender by telephone, or telecopy ofthe amount of such Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit ofLenders with respect to each applicable Loan. Provided that each Lender has funded all paymentsand Revolving Credit Advances required to be made by it and purchased all participations requiredto be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date,Agent shall pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees paid byBorrower since the previous Settlement Date for the benefit of such Lender on the Loans held by it.To the extent that any Lender (a “Non-Funding Lender”) has failed to fund all suchpayments and Revolving Credit Advances or failed to fund the purchase of all such participations,Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s ProRata Share of all payments received from Borrower and hold, in a non-interest bearing account, allpayments received by Agent for the benefit of any Non-Funding Lender pursuant to this Agreement ascash collateral for any unfunded reimbursement obligations of such Non-Funding Lender until theObligations are paid in full in cash, all Letter of Credit Obligations have been discharged or cashcollateralized and all Commitments have been terminated, and upon such unfunded obligations owingby a Non-Funding Lender becoming due and payable, Agent shall be authorized to use such cashcollateral to make such payment on behalf of such Non-Funding Lender. Any amounts owing by aNon-Funding Lender to Agent which are not paid when due shall accrue interest at the interest rateapplicable during such period to Revolving Loans that are Index Rate Loans. Such payments shall bemade by wire transfer to such Lender’s account (as specified by such Lender in Annex H orthe applicable Assignment Agreement) not later than 1:00 p.m. (Chicago time) on the next BusinessDay following each Settlement Date.          (b)Availability of Lender’s Pro Rata Share. Agent may assume that eachRevolving Lender will make its Pro Rata Share of each Revolving Credit Advance available to Agenton each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such RevolvingLender when due, Agent will be entitled to recover such amount on demand from such Revolving Lenderwithout setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to pay theamount of its Pro Rata Share forthwith within five (5) Business Days following Agent’s demand,Agent shall promptly notify Borrower and Borrower shall immediately repay such amount to Agent.Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documentsshall be deemed to require Agent to advance funds on behalf of any Revolving Lender or to relieveany Revolving Lender from its obligation to fulfill its Commitments hereunder or to prejudice anyrights that Borrower may have against any Revolving Lender as a result of any default by suchRevolving Lender hereunder. To the extent that Agent advances funds to Borrower on behalf of anyRevolving Lender and is not reimbursed therefor on the same Business Day as such Advance is made,Agent shall be entitled to retain for its account all interest accrued on such Advance untilreimbursed by the applicable Revolving Lender.          (c) Return of Payments.
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               (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation thata related payment has been or will be received by Agent from Borrower and such related payment isnot received by Agent, then Agent will be entitled to recover such amount from such Lender ondemand without setoff, counterclaim or deduction of any kind.               (ii) If Agent determines at any time that any amount received by Agent under this Agreementmust be returned to Borrower or paid to any other Person pursuant to any insolvency law orotherwise, then, notwithstanding any other term or condition of this Agreement or any other LoanDocument, Agent will not be required to distribute any portion thereof to any Lender. In addition,each Lender will repay to Agent on demand any portion of such amount that Agent has distributed tosuch Lender, together with interest at such rate, if any, as Agent is required to pay to Borroweror such other Person, without setoff, counterclaim or deduction of any kind.          (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any RevolvingCredit Advance, pay any Letter of Credit Obligation or any other payment required by it hereunder,or to purchase any participation in any Swing Line Loan to be made or purchased by it on the datespecified therefor shall not relieve any other Lender (each such other Revolving Lender, an"Other Lender”) of its obligations to make such Revolving Credit Advance or purchase suchparticipation on such date, but neither Agent nor, other than as expressly set forth herein, anyOther Lender shall be responsible for the failure of any Non-Funding Lender to make an Advance,purchase a participation or make any other payment required hereunder. Notwithstanding anythingset forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rightsunder or with respect to any Loan Document or constitute a “Lender” or a “Revolving Lender” (or be(or be, or have its Loans and Commitments, included in the determination of “Requisite Lenders” or“Supermajority Revolving Lenders” or “Lenders directly affected” pursuant to Section 11.2)for any voting or consent rights under or with respect to any Loan Document. Moreover, for thepurposes of determining Requisite Lenders andSupermajority Revolving Lenders, the Loans and Commitments held by Non-Funding Lenders shallbe excluded from the total Loans and Commitments outstanding. At Borrower’s request, Agent or aPerson acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole discretion(but shall have no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lenderagrees that it shall, at Agent’s request, sell and assign to Agent or such Person, all of theCommitments of that Non-Funding Lender for an amount equal to the principal balance of all Loansheld by such Non-Funding Lender and all accrued interest and fees with respect thereto through thedate of sale, such purchase and sale to be consummated pursuant to an executed AssignmentAgreement. In addition, a Lender that is a Non-Funding Lender on account of its failure to fundpayments and Revolving Credit Advances described in Section 9.9(a)(ii) above or purchasesof participations described in Section 9.9(a)(ii) above shall not earn and shall not beentitled to receive, and the Borrower shall not be required to pay, such Lender’s portion of thefees payable pursuant to Section 1.9(b) during the time such Lender is a Non-FundingLender. In the event that any reallocation of Letter of Credit Obligations occurs pursuant toparagraph (b) of Annex C, during the period of time that such reallocation remains ineffect, the Letter of Credit Fee payable with respect to such reallocated portion shall be payableto (A) all Revolving Lenders based on their pro rata share of such reallocation or (B) to the L/CIssuer for any remaining portion not reallocated to any other Revolving Lenders.
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          (e) Dissemination of Information. Agent shall use reasonable efforts to provideLenders with any notice of Default or Event of Default received by Agent from, or delivered byAgent to, any Credit Party, with notice of any Event of Default of which Agent has actually becomeaware and with notice of any action taken by Agent following any Event of Default; provided, thatAgent shall not be liable to any Lender for any failure to do so, except to the extent that suchfailure is attributable to Agent’s gross negligence or willful misconduct. Lenders acknowledgethat Borrower is required to provide Financial Statements and Collateral Reports to Lenders inaccordance with Annexes E and F hereto and agree that Agent shall have no duty toprovide the same to Lenders.          (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding,each Lender hereby agrees with each other Lender that no Lender shall take any action to protect orenforce its rights arising out of this Agreement or the Notes (including exercising any rights ofsetoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it beingthe intent of Lenders that any such action to protect or enforce rights under this Agreement andthe Notes shall be taken in concert and at the direction or with the consent of Agent or RequisiteLenders. With respect to any action by Agent to enforce the rights and remedies of Agent and theLenders under this Agreement and the other Loan Documents, each Lender hereby consents to thejurisdiction of the court in which such action is maintained, and agrees to deliver its Notes toAgent to the extent necessary to enforce the rights and remedies of Agent for the benefit of theLenders under the Mortgages in accordance with the provisions hereof.          (g) Procedures. Agent is hereby authorized by each Credit Party and each other Personto whom any Obligations are owed to establish procedures (and to amend such procedures from time totime) to facilitate administration and servicing of the Loans and other matters incidental thereto.Without limiting the generality of the foregoing, Agent is hereby authorized to establishprocedures to make available or deliver, or to accept, notices, documentsand similar items on, by posting to or submitting and/or completion on, E-Systems. Theposting, completion and/or submission by any Credit Party of any communication pursuant to anE-System shall constitute a representation and warranty by the Credit Parties that anyrepresentation, warranty, certification or other similar statement required by the Loan Documentsto be provided, given or made by a Credit Party in connection with any such communication is true,correct and complete except as expressly noted in such communication or E-System.**10. SUCCESSORS AND ASSIGNS**          10.1 Successors and Assigns. This Agreement and the other Loan Documents shall be binding on and shall inure to thebenefit of each Credit Party, Agent, Lenders and their respective successors and assigns(including, in the case of any Credit Party, a debtor-in-possession on behalf of such CreditParty), except as otherwise provided herein or therein. No Credit Party may assign, transfer,hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under anyof the other Loan Documents without the prior express written consent of Agent and Lenders. Anysuch purported assignment, transfer, hypothecation or other conveyance by any Credit Party withoutthe prior express written consent of Agent and Lenders shall be void. The terms and provisions ofthis Agreement are for the purpose of defining the relative rights and obligations of each CreditParty, Agent and Lenders
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with respect to the transactions contemplated hereby and no Person shallbe a third party beneficiary of any of the terms and provisions of this Agreement or any of theother Loan Documents.**11. MISCELLANEOUS**          11.1 Complete Agreement; Modification of Agreement. The Loan Documents constitute the complete agreement between the parties with respect to thesubject matter thereof and may not be modified, altered or amended except as set forth inSection 11.2. Any letter of interest, commitment letter, fee letter or confidentialityagreement, if any, between any Credit Party and Agent or any Lender or any of their respectiveAffiliates, predating this Agreement and relating to a financing of substantially similar form,purpose or effect shall be superseded by this Agreement. Notwithstanding the foregoing, the GECapital Fee Letter between Agent and Borrower shall survive the execution and delivery of thisAgreement and shall continue to be binding obligations of the parties.          11.2 Amendments and Waivers.          (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification,termination or waiver of any provision of this Agreement or any other Loan Document, or any consentto any departure by any Credit Party therefrom, shall in any event be effective unless the sameshall be in writing and signed by Agent and Borrower, and by Requisite Lenders, SupermajorityRevolving Lenders or all affected Lenders, as applicable. Except as set forth in clauses (b)and (c) below, all such amendments, modifications, terminations or waivers requiring theconsent of any Lenders shall require the written consent of Requisite Lenders.          (b) No amendment, modification, termination or waiver of or consent with respect to anyprovision of this Agreement that increases the percentage advance rates set forth in the definitionof the Borrowing Base, or that makes less restrictive the nondiscretionary criteria for exclusionfrom Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7, shall beeffective unless the same shall be in writing and signed by Agent, Supermajority Revolving Lendersand Borrower. No amendment, modification, termination or waiver of or consent with respect to anyprovision of this Agreement that waives compliance with the conditions precedent set forth inSection 2.2 to the making of any Loan or the incurrence of any Letter of Credit Obligationsshall be effective unless the same shall be in writing and signed by Agent, Requisite Lenders andBorrower. Notwithstanding anything contained in this Agreement to the contrary, no waiver orconsent with respect to any Default or any Event of Default shall be effective for purposes of theconditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations setforth in Section 2.2 unless the same shall be in writing and signed by Agent, RequisiteLenders and Borrower.          (c) No amendment, modification, termination or waiver shall, unless in writing and signed byAgent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’sCommitment (which action shall be deemed to directly affect all Lenders); (ii) reduce the principalof, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations ofany affected Lender; (iii) extend any scheduled payment date
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(other than payment dates of mandatoryprepayments under Section 1.3(b)(ii)-(iv)) or final maturity date of the principal amountof any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment ofinterest or Fees as to any affected Lender; (v) release any Guaranty or, except as otherwisepermitted herein or in the other Loan Documents, release, or permit any Credit Party to sell orotherwise dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate (whichaction shall be deemed to directly affect all Lenders); (vi) change the percentage of theCommitments or of the aggregate unpaid principal amount of the Loans that shall be required forLenders or any of them to take any action hereunder; and (vii) amend or waive this Section11.2 or the definitions of the terms “Requisite Lenders” or “Supermajority Revolving Lenders”insofar as such definitions affect the substance of this Section 11.2. Furthermore, noamendment, modification, termination or waiver affecting the rights or duties of Agent or L/CIssuer under this Agreement or any other Loan Document shall be effective unless in writing andsigned by Agent or L/C Issuer, as the case may be, in addition to Lenders required hereinabove totake such action. No amendment, modification or waiver of this Agreement or any Loan Documentaltering the ratable treatment of Obligations arising under Secured Rate Contracts resulting insuch Obligations being junior in right of payment to principal on the Loans or resulting inObligations owing to any Secured Swap Provider becoming unsecured (other than release of Liens inaccordance with the terms hereof), in each case in a manner adverse to any Secured Swap Provider,shall be effective without the written consent of GE Capital. Each amendment, modification,termination or waiver shall be effective only in the specific instance and for the specific purposefor which it was given. No amendment, modification, termination or waiver shall be required forAgent to take additional Collateral pursuant to any Loan Document. No amendment, modification,termination or waiver of any provision of any Note shall be effective without the writtenconcurrence of the holder of that Note. No notice to or demand on any Credit Party in any caseshall entitle such Credit Party or any other Credit Party to any other or further notice or demandin similar or other circumstances. Any amendment, modification, termination, waiver or consenteffected in accordance with thisSection 11.2 shall be binding upon each holder of the Notes at the time outstandingand each future holder of the Notes.          (d) If, in connection with any proposed amendment, modification, waiver or termination (a“Proposed Change”):               (i) requiring the consent of all affected Lenders, the consent of Requisite Lenders isobtained, but the consent of other Lenders whose consent is required is not obtained (anysuch Lender whose consent is not obtained as described in this clause (i) and inclause (ii) below being referred to as “Non Consenting Lender”);               (ii) requiring the consent of Supermajority Revolving Lenders, the consent ofRequisite Lenders is obtained, but the consent of Supermajority Revolving Lenders is notobtained; orthen, so long as Agent is not a Non Consenting Lender, at Borrower’s request Agent, or a Personreasonably acceptable to Agent, shall have the right with Agent’s consent and in Agent’s solediscretion (but shall have no obligation) to purchase from such Non Consenting Lenders, and suchNon Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent orsuch Person, all of the Commitments of such Non Consenting Lenders for an amount
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equal to theprincipal balance of all Loans held by the Non Consenting Lenders and all accrued interest and Feeswith respect thereto through the date of sale, such purchase and sale to be consummated pursuant toan executed Assignment Agreement.          (e) Upon payment in full in cash and performance of all of the Obligations (other thanindemnification Obligations), termination of the Commitments and a release of all claims againstAgent and Lenders, and so long as no suits, actions proceedings, or claims are pending orthreatened against any Indemnified Person asserting any damages, losses or liabilities that areIndemnified Liabilities, Agent shall deliver to Borrower termination statements, mortgage releasesand other documents necessary or appropriate to evidence the termination of the Liens securingpayment of the Obligations.          11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all fees, costs and expenses (including thereasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii)Agent (and, with respect to clauses (c) and (d) below, all Lenders) for all fees, costs andexpenses, including the reasonable fees, costs and expenses of counsel or other advisors (includingenvironmental and management consultants and appraisers) incurred in connection with thenegotiation, preparation and filing and/or recordation of the Loan Documents and incurred inconnection with:          (a) any amendment, modification or waiver of, or consent with respect to, or termination of,any of the Loan Documents or Related Transactions Documents or advice in connection with theadministration of the Loans made pursuant hereto or its rights hereunder or thereunder;          (b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent,any Lender, any Credit Party or any other Person and whether as a party, witness or otherwise) inany way relating to the Collateral, any of the Loan Documents or any other agreement to be executedor delivered in connection herewith or therewith, including any litigation, contest, dispute, suit,case, proceeding or action, and any appeal or review thereof, in connection with a case commencedby or against any or all of the Credit Parties or any other Person that may be obligated to Agentby virtue of the Loan Documents, including any such litigation, contest, dispute, suit, proceedingor action arising in connection with any work-out or restructuring of the Loans during the pendencyof one or more Events of Default; *provided*, that no Person shall be entitled to reimbursement underthis clause (c) in respect of any litigation, contest, dispute, suit, proceeding or actionto the extent any of the foregoing results from such Person’s gross negligence or willfulmisconduct;          (c) any attempt to enforce any remedies of Agent or any Lender against any or all of theCredit Parties or any other Person that may be obligated to Agent or any Lender by virtue of any ofthe Loan Documents, including any such attempt to enforce any such remedies in the course of anywork-out or restructuring of the Loans during the pendency of one or more Events of Default;*provided*, that in the case of reimbursement of counsel for Lenders other than Agent, suchreimbursement shall be limited to one counsel for all such Lenders;
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          (d) any workout or restructuring of the Loans during the pendency of one or more Events ofDefault; *provided*, that in the case of reimbursement of counsel for Lenders other than Agent, suchreimbursement shall be limited to one counsel for all such Lenders; and          (e) efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observeor assess any of the Credit Parties or their respective affairs, and (iii) verify, protect,evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral;including, as to each of clauses (a) through (e) above, all reasonable attorneys’ and otherprofessional and service providers’ fees arising from such services and other advice, assistance orother representation, including those in connection with any appellate proceedings, and allexpenses, costs, charges and other fees incurred by such counsel and others in connection with orrelating to any of the events or actions described in this Section 11.3, all of which shallbe payable, on demand, by Borrower to Agent. Without limiting the generality of the foregoing,such expenses, costs, charges and fees may include: fees, costs and expenses of accountants,environmental advisors, appraisers, investment bankers, management and other consultants andparalegals; court costs and expenses; photocopying and duplication expenses; court reporter fees,costs and expenses; long distance telephone charges; air express charges; telegram or telecopycharges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurredin connection with the performance of such legal or other advisory services.          11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to require strict performance by theCredit Parties of any provision of this Agreement or any other Loan Document shall not waive,affect or diminish any right of Agent or such Lender thereafter todemand strict compliance and performance herewith or therewith. Any suspension or waiver ofan Event of Default shall not suspend, waive or affect any other Event of Default whether the sameis prior or subsequent thereto and whether the same or of a different type. Subject to theprovisions of Section 11.2, none of the undertakings, agreements, warranties, covenants andrepresentations of any Credit Party contained in this Agreement or any of the other Loan Documentsand no Default or Event of Default by any Credit Party shall be deemed to have been suspended orwaived by Agent or any Lender, unless such waiver or suspension is by an instrument in writingsigned by an officer of or other authorized employee of Agent and the applicable required Lendersand directed to Borrower specifying such suspension or waiver.          11.5 Remedies. Agent’s and Lenders’ rights and remedies under this Agreement shall be cumulative andnonexclusive of any other rights and remedies that Agent or any Lender may have under any otheragreement, including the other Loan Documents, by operation of law or otherwise. Recourse to theCollateral shall not be required.          11.6 Severability. Wherever possible, each provision of this Agreement and the other Loan Documents shall beinterpreted in such a manner as to be effective and valid under applicable law, but if anyprovision of this Agreement or any other Loan Document shall be prohibited by or invalid underapplicable law, such provision shall be ineffective only to the extent of such prohibition orinvalidity, without invalidating the remainder of such provision or the remaining provisions ofthis Agreement or such other Loan Document.
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          11.7 Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents byspecific reference to the applicable provisions of this Agreement, if any provision contained inthis Agreement conflicts with any provision in any of the other Loan Documents, the provisioncontained in this Agreement shall govern and control.          11.8 Confidentiality. Agent and each Lender agree to use commercially reasonable efforts (equivalent to the effortsAgent or such Lender applies to maintain the confidentiality of its own confidential information)to maintain as confidential all confidential information provided to them by the Credit Parties anddesignated as confidential for a period of two (2) years following receipt thereof, except thatAgent and each Lender may disclose such information (a) to Persons employed or engaged by Agent orsuch Lender; (b) to any bona fide assignee or participant or potential assignee or participant thathas agreed to comply with the covenant contained in this Section 11.8 (and any such bonafide assignee or participant or potential assignee or participant may disclose such information toPersons employed or engaged by them as described in clause (a) above); (c) as required orrequested by any Governmental Authority or reasonably believed by Agent or such Lender to becompelled by any court decree, subpoena or legal or administrative order or process; (d) as, on theadvice of Agent’s or such Lender’s counsel, is required by law; (e) in connection with the exerciseof any right or remedy under the Loan Documents or in connectionwith any Litigation to which Agent or such Lender is a party; or (f) that ceases to be confidentialthrough no fault of Agent or any Lender.          11.9 GOVERNING LAW**. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THEOBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWSOF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANYAPPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THATTHE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVEEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES,AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTERARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;*****PROVIDED*****, THATAGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TOBE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND;*****PROVIDED*****,*****FURTHER*****THAT NOTHING IN THISAGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGALACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THEOBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTYEXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED INANY SUCH COURT, AND EACH CREDIT**
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**PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVEBASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR****FORUM****NON****CONVENIENS**AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS ISDEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCHSUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCHCREDIT PARTY AT THE ADDRESS SET FORTH IN **ANNEX I**OF THIS AGREEMENT AND THAT SERVICE SO MADESHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR THREE(3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.          11.10 Notices.          (a) Addresses. All notices and other communications required or expressly authorizedto be made by this Agreement shall be given in writing, unless otherwise expressly specifiedherein, and (i) addressed to the address set forth on the applicable signature page hereto, (ii)posted to Intralinks® (to the extent such system is available and set up by or at the direction ofAgent prior to posting) in an appropriate location by uploading such notice, demand, request,direction or other communication to www.intralinks.com, faxing it to 866-545-6600 with anappropriate bar-code fax coversheet or using such other means of posting to Intralinks® as may beavailable and reasonably acceptable to Agent prior to such posting, (iii) posted to any otherE-System approved by or set up by or at the direction of Agent or (iv) addressed to such otheraddress as shall be notified in writing (A) in the case of the Borrower, Agent and the Swing LineLender, to the other parties hereto and (B) in the case of all other parties, to the Borrower andAgent. Transmissions made by electronic mail or E-Fax to Agent shall be effective only (x) fornotices where such transmission is specifically authorized by this Agreement, (y) if suchtransmission is delivered in compliance with procedures of Agent applicable at the time andpreviously communicated to Borrower, and (z) if receipt of such transmission is acknowledged byAgent.          (b) Effectiveness.               (i) All communications described in clause (a) above and all other notices,demands, requests and other communications made in connection with this Agreement shall beeffective and be deemed to have been received (i) if delivered by hand, upon personaldelivery, (ii) if delivered by overnight courier service, one (1) Business Day afterdelivery to such courier service, (iii) if delivered by mail, three (3) Business Days afterdeposit in the mail, (iv) if delivered by facsimile (other than to post to an E-Systempursuant to clause (a)(ii) or (a)(iii) above), upon sender’s receipt ofconfirmation of proper transmission, and (v) if delivered by posting to any E-System, onthe later of the Business Day of such posting and the Business Day access to such postingis given to the recipient thereof in accordance with the standard procedures applicable tosuch E-System; provided, however, that no communications to Agent pursuant to Section1 shall be effective until received by Agent.
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               (ii) The posting, completion and/or submission by any Credit Party of anycommunication pursuant to an E-System shall constitute a representation and warranty by theCredit Parties that any representation, warranty, certification or other similar statementrequired by the Loan Documents to be provided, given or made by a Credit Party inconnection with any such communication is true, correct and complete except as expresslynoted in such communication or E-System.          (c) Each Lender shall notify Agent in writing of any changes in the address to which noticesto such Lender should be directed, of addresses of its Lending Office, of payment instructions inrespect of all payments to be made to it hereunder and of such other administrative information asAgent shall reasonably request.          (d) Electronic Transmissions               (i) Authorization. Subject to the provisions of clause (a) above,each of Agent, Lenders, each Credit Party and each of their Affiliates and each director,officer, employee, agent, trustee, representative, attorney, accountant and each insurance,environmental, legal, financial and other advisor and other consultants and their agents ofany of their Affiliates, is authorized (but not required) to transmit, post or otherwisemake or communicate, in its sole discretion, Electronic Transmissions in connection withany Loan Document and the transactions contemplated therein. Each Credit Party, Agent andeach Lender hereto acknowledges and agrees that the use of Electronic Transmissions is notnecessarily secure and that there are risks associated with such use, including risks ofinterception, disclosure and abuse and each indicates it assumes and accepts such risks byhereby authorizing the transmission of Electronic Transmissions.               (ii) Signatures. Subject to the provisions of clause (a) above,(i)(A) no posting to any E-System shall be denied legal effect merely because it is madeelectronically, (B) each E-Signature on any such posting shall be deemed sufficient tosatisfy any requirement for a “signature” and (C) each such posting shall be deemedsufficient to satisfy any requirement for a “writing”, in each case including pursuant toany Loan Document, any applicable provision of any UCC, the federal Uniform ElectronicTransactions Act, the Electronic Signatures in Global and National Commerce Act and anysubstantive or procedural Requirement of Law governing such subject matter, (ii) each suchposting that is not readily capable of bearing either a signature or a reproduction of asignature may be signed, and shall be deemed signed, by attaching to, or logicallyassociating with such posting, an E-Signature, upon which Agent, each Secured Party andeach Credit Party may rely and assume the authenticity thereof, (iii) each such postingcontaining a signature, a reproduction of a signature or an E-Signature shall, for allintents and purposes, have the same effect and weight as a signed paper original and (iv)each party hereto or beneficiary hereto agrees not to contest the validity orenforceability of any posting on any E-System or E-Signature on any such posting under theprovisions of any applicable Requirement of Law requiring certain documents to be inwriting or signed; provided, however, that nothing herein shall limit such party’s orbeneficiary’s right to contest whether any posting to any E-System or E-Signature has beenaltered after transmission.
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               (iii) Separate Agreements. All uses of an E-System shall be governed by andsubject to, in addition to this Section 11.10, the separate terms, conditions andprivacy policy posted or referenced in such E-System (or such terms, conditions and privacypolicy as may be updated from time to time, including on such E-System) and relatedagreements executed or contractual obligations entered into by Agent and Credit Parties inconnection with the use of such E-System.               (iv) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONSSHALL BE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF AGENT, ANY LENDER OR ANY OF THEIRRELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS ORELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NOWARRANTY OF ANYKIND IS MADE BY AGENT, ANY LENDER OR ANY OF THEIR RELATED PERSONS IN CONNECTION WITHANY E-SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY,FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROMVIRUSES OR OTHER CODE DEFECTS. Each of the Borrower, each other Credit Party executingthis Agreement and each Secured Party agrees that Agent has no responsibility formaintaining or providing any equipment, software, services or any testing required inconnection with any Electronic Transmission or otherwise required for any E-System.          11.11 Section Titles. The Section titles and Table of Contents contained in this Agreement are and shall bewithout substantive meaning or content of any kind whatsoever and are not a part of the agreementbetween the parties hereto.          11.12 Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shallcollectively and separately constitute one agreement.          11.13 WAIVER OF JURY TRIAL**. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLYAND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATEAND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTESBE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATIONOF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TOTRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDINGIN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTEDWITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THISAGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.**
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          11.14 Press Releases and Related Matters. Each Credit Party executing this Agreement agrees that neither it nor its Affiliates willin the future issue any press releases or other public disclosure using the name of GE Capital orits affiliates without at least two (2) Business Days’ prior notice to GE Capital and without theprior written consent of GE Capital unless (and only to the extent that) such Credit Party orAffiliate is required to do so under law (including as a requisite part of reports required to befiled with the Securities and Exchange Commission), and then, in any event, such Credit Party orAffiliate will consult with GE Capital before issuing such press release or other publicdisclosure. Each Credit Party consents to the publication by Agent or any Lender ofadvertising material relating to the financing transactions contemplated by this Agreement usingBorrower’s name, product photographs, logo or trademark. Agent or such Lender shall provide adraft of any advertising material to each Credit Party for review and comment prior to thepublication thereof. Agent reserves the right to provide to industry trade organizationsinformation necessary and customary for inclusion in league table measurements.          11.15 Reinstatement. This Agreement shall remain in full force and effect and continue to be effective shouldany petition be filed by or against any Credit Party for liquidation or reorganization, should anyCredit Party become insolvent or make an assignment for the benefit of any creditor or creditors orshould a receiver or trustee be appointed for all or any significant part of any Credit Party’sassets, and shall continue to be effective or to be reinstated, as the case may be, if at any timepayment and performance of the Obligations, or any part thereof, is, pursuant to applicable law,rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of theObligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all asthough such payment or performance had not been made. In the event that any payment, or any partthereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated anddeemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.          11.16 Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed thisAgreement and, specifically, the provisions of Sections 11.9 and 11.13, with its counsel.          11.17 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of thisAgreement. In the event an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the parties hereto and no presumption orburden of proof shall arise favoring or disfavoring any party by virtue of the authorship of anyprovisions of this Agreement.          11.18 Patriot Act Notice. Each Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby notifiesthe Borrower that, pursuant to Section 326 thereof, it is required to obtain, verify and recordinformation that identifies the Borrower, including the name and address of the Borrower and otherinformation allowing such Lender to identify the Borrower in accordance with such act.**12. RESTATEMENT OF ORIGINAL CREDIT AGREEMENT**
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          (a) The parties hereto agree that, on the Closing Date, the following transactions shall bedeemed to occur automatically, without further action by any party hereto:               (i) the Original Credit Agreement shall be deemed to be amended and restated in its entiretyin the form of this Agreement;               (ii) all Existing Obligations outstanding on the Closing Date shall, to the extent not paid onthe Closing Date, be deemed to be Obligations outstanding hereunder;               (iii) the guaranties and Collateral Documents, including the Liens created thereunder in favorof Agent for the benefit of Agent and Lenders or in favor of Agent and Lenders, as applicable, andsecuring payment of the Existing Obligations, as amended and restated on the Closing Date, shallremain in full force and effect with respect to the Obligations and are hereby reaffirmed; and               (iv) all references in the other Loan Documents to the Original Credit Agreement shall bedeemed to refer without further amendment to this Agreement.          (b) The parties acknowledge and agree that this Agreement and the other Loan Documents do notconstitute a novation, payment and reborrowing or termination of the Existing Obligations and thatall such Existing Obligations are in all respects continued and outstanding as Obligations underthis Agreement and the Notes with only the terms being modified from and after the Closing Date ofthis Agreement as provided in this Agreement, the Notes and the other Loan Documents.***[Signature Pages Follow]***
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     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.         BORROWER:         **INSTEEL WIRE PRODUCTS COMPANY**, a North********