exv10w1



 





Exhibit 10.1




 


THIRD AMENDED AND RESTATED LOAN AGREEMENT




AMONG
 CRAFTMADE INTERNATIONAL, INC.,




THE FROST NATIONAL BANK,




As Administrative Agent,




AND




THE OTHER LENDERS PARTY HERETO




December 31, 2007




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE I	 	DEFINITIONS	 	 	1	 
	 
	 	1.1	 	Definitions	 	 	1	 
	 
	 	1.2	 	Additional Definitions	 	 	14	 
	 
	 	1.3	 	Construction	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	LOANS	 	 	15	 
	 
	 	2.1	 	Revolving Loans	 	 	15	 
	 
	 	2.2	 	Borrowings	 	 	16	 
	 
	 	2.3	 	Repayment	 	 	16	 
	 
	 	2.4	 	Voluntary Prepayments	 	 	16	 
	 
	 	2.5	 	Mandatory Prepayments	 	 	16	 
	 
	 	2.6	 	Termination and Reduction of Commitments	 	 	16	 
	 
	 	2.7	 	Interest on Loans Generally	 	 	16	 
	 
	 	2.8	 	Computations	 	 	17	 
	 
	 	2.9	 	Interest After an Event of Default	 	 	17	 
	 
	 	2.10	 	Payments Generally	 	 	17	 
	 
	 	2.11	 	Sharing of Payments	 	 	19	 
	 
	 	2.12	 	Booking the Loans	 	 	19	 
	 
	 	2.13	 	Collateral	 	 	19	 
	 
	 	2.14	 	Commitment Fee	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	20	 
	 
	 	3.1	 	Taxes	 	 	20	 
	 
	 	3.2	 	Illegality	 	 	21	 
	 
	 	3.3	 	Inability to Determine Rates	 	 	22	 
	 
	 	3.4	 	Increased Cost and Reduced Return; Capital Adequacy; Reserves on	 	 	 	 
	 
	 	 	 	LIBOR Rate Loans	 	 	22	 
	 
	 	3.5	 	Matters Applicable to all Requests for Compensation	 	 	23	 
	 
	 	3.6	 	Replacement of Lenders	 	 	23	 
	 
	 	3.7	 	Survival	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	CONDITIONS PRECEDENT	 	 	24	 
	 
	 	4.1	 	Conditions Precedent to Initial Revolving Loan	 	 	24	 
	 
	 	4.2	 	Conditions Precedent to all Revolving Loans	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	AFFIRMATIVE COVENANTS	 	 	26	 
	 
	 	5.1	 	General Covenants	 	 	26	 
	 
	 	5.2	 	Accounts, Reports and Other Information	 	 	27	 
	 
	 	5.3	 	Inspection	 	 	28	 
	 
	 	5.4	 	Compliance with ERISA	 	 	29	 
	 
	 	5.5	 	Maintenance of Priority of Bank Liens	 	 	29	 
	 
	 	5.6	 	Indemnity	 	 	29	 
	 
	 	5.7	 	Use of Proceeds	 	 	30	 






 









 






	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	NEGATIVE COVENANTS	 	 	30	 
	 
	 	6.1	 	Nature of Business	 	 	30	 
	 
	 	6.2	 	Liquidations, Mergers, Consolidations	 	 	30	 
	 
	 	6.3	 	Disposition of Assets	 	 	30	 
	 
	 	6.4	 	Liens	 	 	31	 
	 
	 	6.5	 	Debt	 	 	31	 
	 
	 	6.6	 	Change in Management	 	 	31	 
	 
	 	6.7	 	Loans	 	 	31	 
	 
	 	6.8	 	Transactions with Affiliates	 	 	31	 
	 
	 	6.9	 	Burdensome Agreements	 	 	31	 
	 
	 	6.10	 	Acquisition of Assets	 	 	31	 
	 
	 	6.11	 	Loans and Investments	 	 	32	 
	 
	 	6.12	 	ERISA	 	 	32	 
	 
	 	6.13	 	Assignment	 	 	32	 
	 
	 	6.14	 	Business	 	 	32	 
	 
	 	6.15	 	Stock Repurchases	 	 	32	 
	 
	 	6.16	 	Debt to Worth Ratio	 	 	33	 
	 
	 	6.17	 	Fixed Charge Coverage Ratio	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	REPRESENTATIONS AND WARRANTIES	 	 	33	 
	 
	 	7.1	 	Organization and Qualification	 	 	33	 
	 
	 	7.2	 	Financial Statements	 	 	33	 
	 
	 	7.3	 	Compliance With Laws and Other Matters	 	 	34	 
	 
	 	7.4	 	Litigation	 	 	34	 
	 
	 	7.5	 	Title to Properties	 	 	34	 
	 
	 	7.6	 	Authorization; Validity	 	 	34	 
	 
	 	7.7	 	Taxes	 	 	34	 
	 
	 	7.8	 	Use of Proceeds	 	 	34	 
	 
	 	7.9	 	Possession of Franchises, Licenses, Etc	 	 	35	 
	 
	 	7.10	 	Leases	 	 	35	 
	 
	 	7.11	 	Disclosure	 	 	35	 
	 
	 	7.12	 	ERISA	 	 	35	 
	 
	 	7.13	 	Regulatory Acts	 	 	35	 
	 
	 	7.14	 	Solvency	 	 	35	 
	 
	 	7.15	 	Environmental Matters	 	 	36	 
	 
	 	7.16	 	Survival of Representations and Warranties, Etc	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	EVENTS OF DEFAULT	 	 	36	 
	 
	 	8.1	 	Default	 	 	36	 
	 
	 	8.2	 	Remedies	 	 	38	 
	 
	 	8.3	 	Application of Funds	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX	 	ADMINISTRATIVE AGENT	 	 	39	 
	 
	 	9.1	 	Appointment and Authorization of Administrative Agent	 	 	39	 
	 
	 	9.2	 	Delegation of Duties	 	 	40	 
	 
	 	9.3	 	Liability of Administrative Agent	 	 	40	 
	 
	 	9.4	 	Reliance by Administrative Agent	 	 	40	 
	 
	 	9.5	 	Notice of Default	 	 	41	 






ii









 






	 	 	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.6	 	Credit Decision; Disclosure of Information by Administrative Agent	 	 	41	 
	 
	 	9.7	 	Indemnification of Administrative Agent	 	 	41	 
	 
	 	9.8	 	Administrative Agent in its Individual Capacity	 	 	42	 
	 
	 	9.9	 	Successor Administrative Agent	 	 	42	 
	 
	 	9.10	 	Administrative Agent May File Proofs of Claim	 	 	43	 
	 
	 	9.11	 	Collateral Matters	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X	 	MISCELLANEOUS	 	 	44	 
	 
	 	10.1	 	Notices	 	 	44	 
	 
	 	10.2	 	Expenses	 	 	44	 
	 
	 	10.3	 	Waivers	 	 	44	 
	 
	 	10.4	 	Determinations by Administrative Agent and Lenders	 	 	45	 
	 
	 	10.5	 	Set-Off	 	 	45	 
	 
	 	10.6	 	Assignment	 	 	45	 
	 
	 	10.7	 	Amendment and Waiver	 	 	47	 
	 
	 	10.8	 	Confidentiality	 	 	47	 
	 
	 	10.9	 	Counterparts	 	 	48	 
	 
	 	10.10	 	Severability	 	 	48	 
	 
	 	10.11	 	Interest and Charges	 	 	48	 
	 
	 	10.12	 	Replacement of Lenders	 	 	49	 
	 
	 	10.13	 	Exception to Covenants	 	 	49	 
	 
	 	10.14	 	USA Patriot Act Notice	 	 	49	 
	 
	 	10.15	 	Amendment and Restatement of Existing Loan Agreement	 	 	50	 
	 
	 	10.16	 	GOVERNING LAW	 	 	50	 
	 
	 	10.17	 	WAIVER OF JURY TRIAL	 	 	50	 
	 
	 	10.18	 	ENTIRE AGREEMENT	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	SIGNATURES	 	 	 	 	S-l	 






iii









 






EXHIBITS




	 	 	 
	Exhibit A

	 	Revolving Note
	Exhibit B

	 	Revolving Loan Notice
	Exhibit C

	 	Security Agreement — Borrower
	Exhibit D

	 	Security Agreement — Subsidiary
	Exhibit E

	 	Compliance Certificate
	Exhibit F

	 	Notice of Final Agreement
	Exhibit G

	 	Assignment Agreement
	Exhibit H

	 	Guaranty Agreement
	Exhibit I

	 	Borrowing Base Certificate
	 
	 	 
	Schedule 2.1

	 	Commitments; Pro Rata Shares
	Schedule 6.4

	 	Existing Liens
	Schedule 6.5

	 	Existing Debt
	Schedule 6.11

	 	Existing Investments
	Schedule 7.1

	 	Subsidiaries
	Schedule 7.4

	 	Existing Litigation
	Schedule 10.1

	 	Notice Addresses







iv











 





THIRD AMENDED AND RESTATED LOAN AGREEMENT




     THIS THIRD AMENDED AND RESTATED LOAN AGREEMENT is dated as of December 31, 2007 (this
agreement, together with all amendments and restatements, this “Agreement”), among CRAFTMADE
INTERNATIONAL, INC., a Delaware corporation (“Borrower”), THE FROST NATIONAL BANK, as
Administrative Agent, and each lender from time to time party hereto (singly, a “Lender” and
collectively, the “Lenders”).



BACKGROUND




     A. Borrower and The Frost National Bank (“Frost”) are parties to that certain Second
Amended and Restated Loan Agreement, dated as of September ___, 2006, which amended and
restated that certain Amended and Restated Loan Agreement, dated as of October 31, 2005 (said
Second Amended and Restated Loan Agreement, as amended through the date hereof, the “Existing Loan
Agreement”).



     B. Borrower has requested (a) that Frost increase the commitment under the Existing
Loan Agreement to $50,000,000, subject to Frost obtaining commitments from other banks for
$30,000,000, and (b) certain other changes to the covenants and terms set forth in the
Existing
Loan Agreement.



     C. It is the intent of the parties hereto (a) that this Agreement does not constitute a
novation of rights, obligations and liabilities of the respective parties existing under the
Existing
Loan Agreement and the other Loan Documents (as defined in the Existing Loan Agreement) or
evidence payment of all or any such obligations and liabilities, and such rights, obligations
and
liabilities shall continue and remain outstanding and (b) that this Agreement amend and
restate in
its entirety the Existing Loan Agreement.



AGREEMENT




     In consideration of the mutual covenants and agreements contained herein, and other good and
valuable consideration, receipt of which is acknowledged by the parties hereto, the parties hereto
agree that the Existing Loan Agreement is hereby amended and restated in its entirety as follows:



ARTICLE I




DEFINITIONS




     1.1 Definitions. For purposes of this Agreement:



     “Administrative Agent” means Frost in its capacity as administrative agent under any of the
Loan Documents, or any successor administrative agent.



     “Administrative Agent’s Office” means Administrative Agent’s address and, as appropriate,
account as set forth on Schedule 10.1, or such other address or account as Administrative
Agent may from time to time notify Borrower and Lenders.



 









 





     “Affiliate” means any Person that directly, or indirectly, through one or more
intermediaries, Controls or is Controlled By or is Under Common Control with any other Person.



     “Aggregate Commitments#148; means the sum of all Commitments of all Lenders.



     “Agreement Date” means the date of this Agreement.



     “Applicable Law” means (a) in respect of any Person, all provisions of Laws and orders of
Governmental Authorities applicable to such Person and its properties, including, without limiting
the foregoing, all orders and decrees of all Governmental Authorities and arbitrators in
proceedings or actions to which the Person in question is a party, and (b) in respect of contracts
relating to interest or finance charges that are made or performed in the State of Texas,
“Applicable Law” means the Laws of the United States of America, including without limitation 12
U.S.C. §§85 and 86, and any other statute of the United States of America now or at any time
hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the
Laws of the State of Texas, and any other Laws of the State of Texas now or at any time hereafter
prescribing maximum rates of interest on loans and extensions of credit.



     “Applicable Margin” means a per annum percentage equal to 1.50.



     “Assignment Agreement” means an Assignment Agreement substantially in the form of Exhibit
G.



     “Attorney Costs” means and includes all fees, expenses and disbursements of any law firm or
other external counsel and, without duplication, the allocated cost of internal legal services and
all expenses and disbursements of internal counsel.



     “Auditors” means independent certified public accountants selected by Borrower and reasonably
acceptable to Administrative Agent and Required Lenders.



     “Authorized Signatory” means such senior personnel of Borrower, any Subsidiary of Borrower or
an Obligor as may be duly authorized and designated in writing by Borrower, such Subsidiary or
such Obligor to execute documents, agreements and instruments on behalf of Borrower, such
Subsidiary or such Obligor.



     “Bank Liens” means Liens in favor of Administrative Agent or any Lender securing all or any
of the Obligations, including, but not limited to, rights in any Collateral created in favor of
Administrative Agent or any Lender, whether by mortgage, pledge, hypothecation, assignment,
transfer, or other granting or creation of Liens.



     “Borrowing Base” means, as of any date, an amount equal to the sum of (a) 80% of aggregate
Eligible Accounts on such date, and (b) 55% of aggregate Eligible Inventory on such date;
provided, however, the outstanding amount advanced against Eligible Inventory at
any time shall not exceed 50% of the total outstanding Revolving Loans.



     “Borrowing Base Certificate” means the Borrowing Base Certificate, duly completed and
executed by the chief executive officer, the chief financial officer, or another senior financial
officer of Borrower, substantially in the form of Exhibit I.



2









 





     “Business Day” means any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the state where
Administrative Agent’s office is located and, if such day relates to any LIBOR Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between banks in the
applicable offshore Dollar interbank market.



     “Capital Leases” means capital leases and subleases, as defined in the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 13, dated November 1976, as
amended.



     “CM Real Estate” means CM Real Estate, LLC, a Texas limited liability company, and
wholly-owned direct Subsidiary of Borrower.



     “Code” means the Uniform Commercial Code as in effect in Texas.



     “Collateral” means any assets of any Person in which at any time Administrative Agent shall
be granted a Bank Lien to secure the Obligations.



     “Commitment” means each Lender’s obligation to make Revolving Loans to Borrower pursuant to
Section 2.1, in the aggregate principal amount not to exceed the amount set forth on
Schedule 2.1 or in the most recent Assignment Agreement to which such Lender is a party.



     “Commitment Letter” means that certain commitment letter, dated December 6, 2007, from Frost
to Borrower.



     “Compliance Certificate” means a compliance certificate, substantially in the form of
Exhibit E.



     “Contingent Debt” means, for any Person:




     (a) guarantees, endorsements (other than endorsements of negotiable instruments for
collection in the ordinary course of business) and other contingent liabilities (whether
direct or indirect) in connection with the obligations of any other Person;




     (b) obligations under any contract providing for the making of loans, advances or
capital contributions to any other Person, or for the purchase of any property from any
other Person, in each case in order to enable such other Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay Debts, Dividends
or expenses;




     (c) obligations under any contract to rent or lease (as lessee) any real or personal
property (other than operating leases) if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or requires that
the lessee purchase or otherwise acquire securities or obligations of the lessor;



3









 






     (d) obligations in respect of letters of credit; and




     (e) obligations under any other contract which, in economic effect, is substantially
equivalent to a guaranty, including but not limited to “keep well” or “capital maintenance”
agreements.



     “Control” or “Controlled By” or “Under Common Control” means possession, directly or
indirectly, of power to direct or cause the direction of management or policies (whether through
ownership of voting securities, by contract or otherwise); provided that, in any event any Person
which beneficially owns, directly or indirectly, 10% or more (in number of votes) of the
securities having ordinary voting power for the election of directors of a corporation or managers
of a limited liability company or other governance board of an entity shall be conclusively
presumed to control such corporation or limited liability company.



     “Debt” means, at any time, for any Person, (a) Capital Leases, (b) Contingent Debt, (c) debt
created, issued, incurred or assumed for money borrowed or for the deferred purchase price of
property purchased, (d) all debt, obligations and liabilities secured by any Lien upon any
property owned by such Person, even though it has not assumed or become liable for the payment of
same, and (e) liabilities in respect of unfunded vested benefits under any Plans.



     “Debt to Worth Ratio” means, as of any date of determination, for Borrower and its
Subsidiaries on a consolidated basis determined in accordance with GAAP, the ratio of (a) total
liabilities (excluding any Subordinated Debt) as of such date to (b) Tangible Net Worth as of such
date.



     “Debtor Relief Laws” means any applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, fraudulent conveyance, reorganization or similar debtor
relief Laws affecting the rights of creditors generally from time to time in effect.



     “Default” means any of the events specified in Section 8.1 that would, with the
giving of notice or the passage of time, become an Event of Default.



     “Default Rate” means a simple per annum interest rate equal to the lesser of (a) the LIBOR
Rate in effect at such time, plus 6.50%, and (b) the Highest Lawful Rate.



     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of a Revolving
Loan required to be funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within one Business Day of the date
when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become
the subject of a proceeding under Debtor Relief Law.



     “Disposition” and “Dispose” mean any sale, lease, abandonment, transfer, disposal, exchange
or other transfer of any ownership or leasehold interest in or control of any asset.



     “Dividends” means, with respect to any Person, any dividend on any class of its capital stock
or other equity interest now or hereafter outstanding, any distribution of cash or property to
owners of any shares of such stock or other equity interest.



4









 





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



     “Eligible Accounts” means, at any time, an amount equal to the aggregate net invoice or ledger
amount owing on all trade accounts receivable of Borrower and any other Obligor for goods sold or
leased or services rendered in the ordinary course of business, in which the Administrative Agent
has a perfected, first priority Lien, after deducting (without duplication): (i) each such account
that is unpaid 60 days or more after the original invoice date thereof, or, in the case of Lowe’s,
90 days or more after the original invoice date thereof, or in the case of Woodard, 60 days or more
after the due date set forth in the original invoice thereof or 180 days or more after the original
invoice date thereof, (ii) the amount of all discounts, allowances, rebates, credits and
adjustments to such accounts, (iii) the amount of all contra accounts, setoffs, defenses or
counterclaims asserted by or available to the account debtors, (iv) all accounts with respect to
which good are placed on consignment or subject to a guaranteed sale or other terms by reason of
which payment by the account debtor may be conditional, (v) all accounts with respect to which a
payment and/or performance bond has been furnished and that portion of any account for or
representing retainage, if any, until all prerequisites to the immediately payment of retainage
have been satisfied, (vi) all accounts owing by account debtors for which there has been instituted
a proceeding in bankruptcy or reorganization under any Debtor Relief Laws, (vii) all accounts owing
by any Affiliates, (viii) all accounts in which the account debtor is the United States or any
department, agency or instrumentality of the United States, except to the extent an Assignment of
Claims Act and other applicable laws has been received by Administrative Agent, (ix) all accounts
due by any account debtor whose principal place of business is located outside the Untied States of
America and its territories, (x) all accounts subject to any provision prohibiting assignment or
requiring notice of or consent to such assignment, (xi) that portion of all account balances owing
by any single account debtor which exceeds 25% of the aggregate of all accounts otherwise deemed
eligible hereunder which are owing by all account debtors, other than Lowe’s, (xii) all accounts
subject to a landlord’s Lien, whether contractual, statutory or otherwise, and (xiii) any other
accounts deemed unacceptable by Administrative Agent in its sole and absolute discretion;
provided, however, if more than 20% of the then balance owing by any single account
debtor does not qualify as an Eligible Account under the foregoing provisions, then the aggregate
amount of all accounts owing by such account debtor shall be excluded from Eligible Accounts.



     “Eligible Inventory’’’ means as of any date, the aggregate value of all inventory of raw
materials and finished goods (excluding work in progress and packaging materials, supplies and any
advertising costs capitalized into inventory) then owned by Borrower and any other Obligor and
held for sale, lease or other disposition in the ordinary course of its business, in which
Administrative Agent has a first priority lien, excluding (i) inventory which is damaged,
defective, obsolete or otherwise unsaleable in the ordinary course of business, (ii) inventory
which has been returned or rejected due to being determined as being unsaleable, and (iii)
inventory subject to any consignment arrangement with any other person or entity. For purposes of
this definition, Eligible Inventory shall be valued at the lower of cost (excluding the cost of
labor) or market value.



     “Elitex” means the Elitex Development, Ltd., a Hong Kong company, and wholly-owned direct
Subsidiary of Trade Source International, Inc.



5









 





     “Environment” means ambient air, surface water and groundwater (including potable water,
navigable water and wetlands), the land surface or subsurface strata, real property improvements
or as otherwise defined in any Environmental Law.



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



     “Environmental Law” means any and all applicable domestic Laws, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the Environment, preservation or reclamation of natural resources, the
management, Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et
seq. (collectively “CERCLA”), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et
seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
§§ 1251 et seq., the Clean Air Act of 1970, 42 U.S.C. §§ 7401 et seq., as amended, the Toxic
Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq., the Occupational Safety and Health Act
of 1970, as amended by 29 U.S.C. §§ 651 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et seq., the Safe Drinking Water Act of 1974, as amended by 42
U.S.C. §§ 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et seq.,
and any similar or implementing Law.



     “Environmental Permit” means any permit, approval, authorization, certificate, license,
variance, filing or permission required by or from any Governmental Authority pursuant to any
Environmental Law.



     “ERISA” means the Employee Retirement Income Security Act of 1974.



     “Event of Default” means any of the events specified in Section 8.1, provided there
has been satisfied any requirement in connection with such event for the giving of notice, or the
lapse of time, or the happening of any further specified condition, event or act.



     “Existing Debt” means the Debt of Borrower and its Subsidiaries existing on the Agreement
Date, which is described on Schedule 6.5, including renewals (but not increases) thereof.



6









 





     “Existing Investments” means the Investments of Borrower and its Subsidiaries existing on the
Agreement Date, which are described on Schedule 6.11.



     “Existing Liens” means Liens against assets of Borrower and its Subsidiaries existing on the
Agreement Date, which are described on Schedule 6.4.



     “Existing Litigation” means the Litigation involving or otherwise affecting Borrower and its
Subsidiaries existing on the Agreement Date, which is described on Schedule 7.4.



     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the
Business Day next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1 %) charged to Frost
on such day on such transactions as determined by Administrative Agent.



     “Financial Statements” includes, but is not limited to, balance sheets, profit and loss
statements, reconciliations of capital and surplus and/or partnership capital accounts, as
appropriate, and statements of changes in financial position or cash flow, prepared in comparative
form with respect to the corresponding period of the preceding fiscal year and prepared in
accordance with GAAP.



     “Fixed Charge Coverage Ratio” means, as of the end of any fiscal quarter for Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP and calculated for the
four fiscal quarters ending on such date of calculation, the ratio of (a) net income after taxes,
plus depreciation, amortization, other non-cash charges and interest expense, plus
net cash proceeds received by Borrower from issuances of its capital stock, minus non-cash
credits, minus Stock Repurchases, minus Dividends, minus capital
expenditures, in each case for such four fiscal quarter period to (b) interest expense and current
portion of long-term debt, in each case for such four fiscal quarter period.



     “Foreign Subsidiary” means Elitex, TSI Prime Asia and any other direct or indirect Subsidiary
of Borrower that is not organized under the laws of any political subdivision of the United
States.



     “Frost” means The Frost National Bank and its successors.



     “GAAP” means generally accepted accounting principles applied on a consistent basis, set
forth in the Opinions of the Accounting Principles Board of the American Institute of Certified
Public Accountants and/or in statements of the Financial Accounting Standards Board, which are
applicable in the circumstances as of the date in question, and the requisite that such principles
be applied on a consistent basis shall mean that the accounting principles observed in a current
period are comparable in all material respects to those applied in a preceding period.



7









 





     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court,
administrative Governmental Authority, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining
to government.



     “Guarantor” means each Subsidiary (whether now or hereafter existing) of Borrower other than
CM Real Estate (so long as (a) CM Real Estate engages in no business or activity other than the
ownership, operation, leasing and maintenance of the real property located at 650 South Royal
Lane, Coppell, Texas and activities related thereto and (b) Borrower remains its sole member) and
any Foreign Subsidiary.



     “Guaranty” means a Guaranty Agreement, substantially in the form of Exhibit H, duly
executed by each Guarantor.



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



     “Highest Lawful Rate” means at the particular time in question the maximum rate of interest
which, under Applicable Law, any Lender is then permitted to charge on the Obligations. If the
maximum rate of interest which, under Applicable Law, any Lender is permitted to charge on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the effective time of each
change in the Highest Lawful Rate without notice to Borrower. For purposes of determining the
Highest Lawful Rate under Applicable Law, the indicated rate ceiling shall be the lesser of (a)(i)
the “weekly ceiling”, as that expression is defined in Section 303.003 of the Texas Finance Code,
as amended, or (ii) if available in accordance with the terms thereof and at Administrative Agent’s
option after notice to Borrower and otherwise in accordance with the terms of Section 303.103 of
the Texas Finance Code, as amended, the “annualized ceiling” and (b)(i) if the amount outstanding
under this Agreement is less than $250,000, 24% per annum, or (ii) if the amount under this
Agreement is equal to or greater than $250,000, 28% per annum.



     “Investment” means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or acquisition of all or substantially all of
the assets of any Person, (b) any direct or indirect purchase or other acquisition of, or a
beneficial interest in, any equity interest or other securities of any other Person, or (c) any
direct or indirect loan, advance, or capital contribution to or investment in any other Person,
including without limitation the incurrence or sufferance of Debt or accounts receivable of any
other Person that are not current assets or do not arise from Dispositions to that other Person in
the ordinary course of business.



     “Investment Grade Securities” means and includes (a) securities that are direct obligations
of the United States of America, the payment of which is backed by the full faith and



8









 




credit of the United States of America, (b) debt securities or debt instruments with a rating of A
or higher by S&P, A2 or higher by Moody’s, Class (1) or higher by NAIC or the equivalent of such
rating by S&P, Moody’s or NAIC, or if none of S&P, Moody’s and NAIC shall then exist, the
equivalent of such rating by any other nationally recognized securities rating agency, but
excluding any debt securities or instruments constituting loans or advances among Borrower and its
wholly-owned Subsidiaries, and (c) any fund investing exclusively in investments of the type
described in clauses (a) and (b), which funds may also hold immaterial amounts of cash
pending investment and/or distribution.




     “Laws” means, collectively, all international, foreign, Federal, state and local
constitutions, statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the enforcement, interpretation
or administration thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each
case whether or not having the force of law.



     “LIBOR Rate” means, for any date, the Wall Street Journal London Interbank Offered Rate (as
defined below) in effect on the 1 st day of each calendar month and which will apply from the
first day of the then current calendar month to the last day of the then current calendar month.



     “LIBOR Rate Loan” means a Revolving Loan when it bears interest at a rate based on the LIBOR
Rate.



     “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
(including any agreement to give or not to give any of the foregoing), any conditional sale or
other title retention agreement, any financing or other lease in the nature thereof, and the
filing of or agreement to give any financing statement or other similar form of public notice
under the Laws of any jurisdiction.



     “Litigation” means any proceeding, claim, lawsuit and/or investigation conducted or
threatened by or before any Governmental Authority, including, but not limited to, proceedings,
claims, lawsuits, and/or investigations under or pursuant to any environmental, occupational,
safety and health, antitrust, unfair competition, securities, Tax, or other Law, or under or
pursuant to any contract, agreement or other instrument.



     “Loan Documents” means this Agreement, the Notes, the Security Documents, the Guaranties, and
all other documents and instruments executed and delivered to Administrative Agent and any Lender
by any Obligor or any other Person in connection with this Agreement.



     “Material Adverse Change or Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent),
condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken
as a whole; (b) a material impairment of the ability of any Obligor to perform its obligations
under any Loan Document to which it is a party; or (c) an adverse effect on any Lien granted
pursuant to a Security Agreement.




9











 





     “Maximum Amount” means the maximum amount of interest which, under Applicable Law, any Lender
is permitted to charge on the Obligations.



     “Moody’s” means Moody’s Investors Service, Inc.



     “Notice of Final Agreement” means the Arbitration and Notice of Final Agreement,
substantially in the form of Exhibit F.



     “Obligations” means all obligations, indebtedness and liabilities under the Loan Documents now
or hereafter owing by Borrower or any other Person to or for the benefit of Administrative Agent
and Lenders, whether joint or several, fixed or contingent, including principal, interest, expenses
of collection and foreclosure and attorneys’ fees that Borrower is responsible for pursuant to
Section 10.2. Without limiting the generality of the foregoing, “Obligations” includes
interest, fees and other amounts that would accrue after the commencement by or against Borrower,
any Affiliate thereof or any other Person (other than Administrative Agent, any Lender or any
Participant) of any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest, fees and other amounts are allowed claims in
such proceeding.



     “Obligor” means Borrower, each Guarantor and each other Person liable for performance of any
of the Obligations or the property of which secures the performance of any of the Obligations.



     “Off-Balance Sheet Liabilities” means, with respect to any Person as of any date of
determination thereof, without duplication and to the extent not included as a liability on the
consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with
respect to any asset securitization transaction (including any accounts receivable purchase
facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred and
(ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar obligation of
such Person or any of its Subsidiaries in respect of assets transferred or payments made in
respect thereof, other than limited recourse provisions that are customary for transactions of
such type and that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors of the assets so
transferred nor (y) impair the characterization of the transaction as a true sale under applicable
Laws (including Debtor Relief Laws); (b)the monetary obligations under any financing lease or
so-called “synthetic,” tax retention or off-balance sheet lease transaction which, upon the
application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be
characterized as indebtedness; (c) the monetary obligations under any sale and leaseback
transaction which does not create a liability on the consolidated balance sheet of such Person and
its Subsidiaries; or (d) any other monetary obligation arising with respect to any other
transaction which (i) upon the application of any Debtor Relief Law to such Person or any of its
Subsidiaries, would be characterized as indebtedness or (ii) is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the consolidated balance
sheet of such Person and its Subsidiaries (for purposes of this clause (d), any
transaction structured to provide tax deductibility as interest expense of any Dividend, coupon or
other periodic payment will be deemed to be the functional equivalent of a borrowing).



10









 





     “Outstanding Amount” means, as of any date of determining, the aggregate outstanding
principal amount of all Revolving Loans, after giving effect to any Revolving Borrowing and any
principal payment of Revolving Loans occurring on such date.



     “Payment Date” means the first Business Day of each calendar month during the term of this
Agreement.



     “PBGC” means the Pension Benefit Guaranty Corporation established under ERISA.



     “Permitted Acquisition” means the acquisition of all or substantially all of the assets or
equity of another Person, so long as in each case (a) the prior written consent of all Lenders is
obtained with respect thereto, and (b) each acquired entity executes and delivers, or causes to be
executed and delivered, each of the documents described in Section 6.10.



     “Permitted Debt” means (a) Existing Debt, (b) the Obligations, (c) trade accounts payable and
other similar obligations incurred in the ordinary course of business, and (d) purchase money Debt
not to exceed $1,500,000 in aggregate amount outstanding at any time.



     “Permitted Investments” means (a) Investment Grade Securities, (b) Existing Investments, (c)
travel advances to employees in the ordinary course of business, (d) equity contributions made by
Borrower or Subsidiaries of Borrower in existing Subsidiaries of Borrower that are either
Guarantors, if such equity contribution results in an increase in shareholders’ or members’ equity
of such Subsidiary receiving such equity contribution, and (e) other Investments of Borrower and
its Subsidiaries that do not, as at any date of determination, exceed in the aggregate $500,000
(the value of each such Investment to be the greater of (1) the then current market value of such
Investment, and (2) the purchase price of such Investment).



     “Permitted Liens” means (a) Bank Liens, (b) pledges or deposits made to secure payment of
workmen’s compensation, or to participate in any fund in connection with workmen’s compensation,
unemployment insurance, pensions, or other social security programs (excluding any Liens in
respect of ERISA), (c) good-faith pledges or deposits made to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money), or leases, or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance, or other similar bonds in the
ordinary course of business, (d) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which impair the use of such property by
any Obligor or any of its Subsidiaries in the operation of its business in any manner which would
have a Material Adverse Effect, (e) the following, if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings for which Borrower has
established adequate reserves and so long as levy and execution thereon have been stayed and
continue to be stayed: claims and Liens for Taxes due and payable; claims and Liens upon, and
defects of title to, real or personal property or other legal process prior to adjudication of a
dispute on the merits, including mechanic’s and materialmen’s Liens; and adverse judgments on
appeal, (f) set-off, charge-back and other rights of depository and collection banks and other
financial institutions with respect to money or instruments of Borrower or its Subsidiaries on
depository with or in possession of such institutions, (g) Liens arising under Capital Leases and
purchase money Debt permitted under this Agreement, and (h) Existing Liens.



11









 





     “Person” means and includes an individual, a partnership, a joint venture, a limited
liability company, a corporation, a trust, an unincorporated organization, and a government or any
department, Governmental Authority, agency or political subdivision thereof.



     “Plan” means any plan subject to Title IV of ERISA and maintained for employees of any
Obligor or any of its Subsidiaries, or of any member of a controlled group of corporations, as the
term “controlled group of corporations” is defined in Section 1563 of the Internal Revenue Code of
1986, as amended, of which any Obligor or any of its Subsidiaries is a part.



     “Prime Rate” means for any day a per annum rate of interest equal to the “prime rate,” as
published in the “Money Rates” column of The Wall Street Journal, from time to time, or if
for any reason such rate is no longer available, the rate established by Frost as its prime rate.
The Prime Rate shall change effective as of the date of any change as published in The Wall
Street Journal, or as established by Frost, as appropriate. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to any customer of any
Lender.



     “Prime Rate Loan” means a Revolving Loan when it bears interest at a rate based on the Prime
Rate.



     “Principal Office” means the principal office of a Lender specified on Schedule
10.1.



     “Pro Rata Share” means, with respect to each Lender at any time, a fraction (expressed as a
percentage, carried out to the ninth decimal place), the numerator of which is the amount of the
Commitment of such Lender at such time and the denominator of which is the amount of the Aggregate
Commitments at such time; provided that if the Commitment of each Lender has been
terminated pursuant to either Section 2.6 or 8.2, then the Pro Rata Share of each Lender
shall be determined based on the Pro Rata Share of such Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant to the terms
hereof. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on
Schedule 2.1 or in the most recent Assignment Agreement to which such Lender is a party.



     “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating
of any Hazardous Material in, into, onto or through the Environment.



     “Remedial Action” means (a) “remedial action” as such term is defined in CERCLA, 42 U.S.C.
Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily
undertaken to: (i) cleanup, remove, treat, abate or in any other way address any Hazardous
Material in the Environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the Environment; or (iii) perform studies and investigations in
connection with, or as a precondition to, (i) or (ii) above.



     “Reportable Event” means a reportable event as defined in Section 4043(b) of Title IV of ERISA
or PBGC regulations issued thereunder, other than a reportable event not subject to Section 4043’s
notification requirements pursuant to PGBC’s regulations.



12









 





     “Required Lenders” means, as of any date of determination, Lenders having 100% of the
Aggregate Commitments or, if the commitment of each Lender to make its Pro Rata Share of Revolving
Loans has been terminated pursuant to Sections 2.6 or 8.2, at least two Lenders holding in
the aggregate 100% of the Total Outstandings; provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded
for purposes of making a determination of Required Lenders.



     “Revolving Borrowing” means a borrowing by Borrower of Revolving Loans made by a Lender
pursuant to Section 2.1.



     “Revolving Loan Maturity Date” means the first to occur of (a) the Termination Date,
(b) the date the Aggregate Commitments are terminated pursuant to either Section 2.6 or
8.2, or
(c) the date the Obligations are accelerated.



     “Revolving Loan Notice” means a notice of a Revolving Borrowing request pursuant to
Section 2.2(a), substantially in the form of Exhibit B.



     “Revolving Note” means the promissory note made by Borrower in favor of a Lender evidencing
the Revolving Loans made by such Lender, substantially in the form of Exhibit A.



     “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., a New York
corporation.



     “Security Agreements” means the Security Agreement executed by Borrower substantially in the
form of Exhibit C, and each Security Agreement executed by each Guarantor, in
substantially the form of Exhibit D.



     “Security Documents” means, collectively, the Security Agreements and any and all other
documents, instruments, financing statements, public notices and the like executed and delivered
in connection with any of the Bank Liens or the Collateral.



     “Senior Management” means each of James Ridings, Brad Heimann, and Marcus Scrudder.



     “Solvent” means, with respect to any Person, that the fair value of the assets of such Person
(both at fair valuation and at present fair saleable value) is, on the date of determination,
greater than the total amount of liabilities (including contingent and unliquidated liabilities)
of such Person as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not have unreasonably
small capital with which to carry on its business. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability discounted to present value at
rates believed to be reasonable by such Person.



     “Special Counsel” means the law firm of Winstead PC, or such other legal counsel as
Administrative Agent may select.



13









 





     “Stock Repurchases” means, with respect to any Person, any retirement, redemption, purchase,
repurchase or other acquisition, directly or indirectly, of any shares of any class of its capital
stock or other equity interest now or hereafter outstanding.



     “Subordinated Debt” means any indebtedness of Borrower or its Subsidiaries which shall have
been and continues to be validly and effectively subordinated to the Obligations pursuant to a
written agreement in form and substance acceptable to Administrative Agent.



     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is otherwise
Controlled, directly or indirectly through one or more intermediaries, or both, by such Person.



     “Tangible Net Worth” means, as of any date of determination, for Borrower and its
Subsidiaries on a consolidated basis determined in accordance with GAAP, an amount equal to total
assets (excluding intangible assets) as of such date less total liabilities (excluding
Subordinated Debt) as of such date.



     “Taxes” means all taxes, assessments, fees or other charges from time to time or at any time
imposed by any Laws or by any Governmental Authority.



     “Termination Date” means December 31, 2009.



     “TSI Prime Asia” means TSI Prime Asia Limited, a wholly-owned direct Subsidiary of
Elitex.



     “Wall Street Journal London Interbank Offered Rate” means the London Interbank Offered Rate
(LIBOR) for one month quoted in the most recently published issue of The Wall Street
Journal in the “Money Rates” column, as adjusted from time to time in Lender’s reasonable
discretion for then applicable reserve requirements, deposit insurance assessment rates and other
regulatory costs. If the Wall Street Journal London Interbank Offered Rate ceases to be made
available by the publisher, or any successor to the publisher of The Wall Street Journal,
the interest rate will be determined by using a comparable index as determined by Lender in its
sole discretion. If more than one Wall Street Journal London Interbank Offered Rate for one month
is quoted, the higher rate shall apply. The Wall Street Journal London Interbank Offered Rate is a
reference rate and does not necessarily represent the lowest or best rate actually charged to any
customer.



     “Woodard’ means Woodard-CM, LLC, a Delaware limited liability company.



     1.2 Additional Definitions. The following additional terms have the meaning specified in the
indicated Section or other provision of this Agreement:



	 	 	 
	Term	 	Section/Provision
	 
	 	 
	Agent-Related Person

	 	Section 9.3






14









 






	 	 	 
	Term	 	Section/Provision
	 
	 	 
	Agreement

	 	Introductory Paragraph
	Assignee

	 	Section 10.6(c)
	Borrower

	 	Introductory Paragraph
	Compensation Period

	 	Section 2.10(e)
	Eurocurrency liabilities

	 	Section 3.4(c)
	Existing Loan Agreement

	 	Background Paragraph
	Indemnified Matters

	 	Section 5.6
	Indemnified Taxes

	 	Section 3.1(a)
	Indemnitees

	 	Section 5.6
	Lender

	 	Introductory Paragraph
	Participant

	 	Section 10.6(b)
	Participation

	 	Section 10.6(b)
	Properties

	 	Section 7.16(a)
	Revolving Loans

	 	Section 2.1(a)






     1.3 Construction. Unless otherwise expressly provided in this Agreement or the context
requires otherwise, (a) the singular shall include the plural, and vice versa, (b) words of a
gender include the other gender, (c) all accounting and financial terms shall be construed in
accordance with GAAP, (d) all references to time are San Antonio time, (e) monetary references are
to Dollars, (f) all references to “Articles,” “Sections,” “Exhibits,” and “Schedules” are to the
Articles, Sections, Exhibits, and Schedules of and to this Agreement, (g) headings used in this
Agreement and each other Loan Document are for convenience only and shall not be used in connection
with the interpretation of any provision hereof or thereof, (h) references to any Person include
that Person’s heirs, personal representatives, successors, and permitted assigns, that Person as a
debtor-in possession, and any receiver, trustee, liquidator, conservator, custodian, or similar
party appointed for such Person or all or substantially all of its assets, (i) references to any
Law include every amendment or restatement to it, rule and regulation adopted under it, and
successor or replacement for it, and (j) references to a particular Loan Document include each
amendment, modification, or supplement to or restatement of it made in accordance with this
Agreement and such Loan Document.



ARTICLE II




LOANS




     2.1 Revolving Loans. Subject to the terms and conditions of this Agreement, each Lender
severally agrees to make loans (each such loan, a “Revolving Loan”), to Borrower from time to
time on any Business Day during the period from the Agreement Date to the Revolving Loan Maturity
Date, in an aggregate amount not to exceed at any time outstanding such Lender’s Commitment;
provided, however, that after giving effect to any Revolving Borrowing,



          (a) such Lender’s Pro Rata Share of the Outstanding Amount shall not exceed such Lender’s
Commitment, and




          (b) the Outstanding Amount shall not exceed the lesser of (A) the Borrowing Base and (B) the
Aggregate Commitments.





15









 







Prior to the Revolving Loan Maturity Date, Borrower may borrow, repay and reborrow Revolving
Loans, all in accordance with this Agreement.




     2.2 Borrowings.



          (a) Revolving Borrowings. Each Revolving Borrowing shall be made upon Borrower’s
irrevocable notice to Administrative Agent, which may be given by telephone. Each such notice must
be received by Administrative Agent not later than 2:00 p.m. one Business Day prior to the
requested date of any Revolving Borrowing. Each such telephonic notice must be confirmed promptly
by delivery to Administrative Agent of a written Revolving Loan Notice appropriately completed and
signed by an Authorized Signatory of Borrower. Each Revolving Loan Notice (whether telephonic or
written) shall specify (i) the requested date of the Revolving Borrowing, as the case may be (which
shall be a Business Day), (ii) the principal amount of the Revolving Loan to be borrowed, and (iii)
the intended use of the proceeds of such Revolving Borrowing.




          (b) Funding. Upon satisfaction of the applicable conditions set forth in Article
V, Administrative Agent shall make the proceeds of each Revolving Borrowing available to
Borrower by crediting the account of Borrower on the books of Administrative Agent with the amount
of such funds.




     2.3 Repayment. The principal amount of all Revolving Loans, together with all accrued and
unpaid interest, shall be due and payable on the Revolving Loan Maturity Date.



     2.4 Voluntary Prepayments. Borrower may at any time or from time to time voluntarily prepay
the Revolving Loans in whole or in part without premium or penalty.



     2.5 Mandatory Prepayments. On any date that the Outstanding Amount exceeds the lesser of (a)
Aggregate Commitments and (b) the Borrowing Base, Borrower shall prepay the Revolving Loans in an
amount equal to such excess. Each mandatory prepayment shall be accompanied by all accrued
interest thereon.



     2.6 Termination and Reduction of Commitments.



          (a) Borrower shall have the right to terminate or reduce the Aggregate Commitments at any
time. Each reduction shall be in the minimum amount of $500,000 and a whole multiple of $100,000
in excess thereof.




          (b) On the Termination Date, the Aggregate Commitments shall automatically reduce to zero and
terminate.




          (c) Borrower shall not have any right to rescind any termination or reduction. Once
terminated or reduced, the Aggregate Commitments may not be reinstated.




     2.7 Interest on Loans Generally.



          (a) Subject to the provisions of Section 2.7(b) and Section 2.9, each Loan
shall bear interest on the outstanding principal amount thereof from the applicable borrowing




16









 







date or such other date on which it becomes a LIBOR Rate Loan (as applicable) to but not including
the date on which another interest rate becomes applicable to it pursuant to the terms of this
Agreement at a rate per annum equal to the lesser of (i) the Highest Lawful Rate and (ii) the LIBOR
Rate plus the Applicable Margin.




          (b) Subject to the provisions of Section 2.9, if at any time Administrative Agent has
notified Borrower that the provisions of Sections 3.2 or 3.3 apply, each Loan shall bear
interest on the outstanding principal amount thereof from the date on which Administrative Agent
determines or is notified that the provisions of Sections 3.2 or 3.3 apply to and
including the date on which Administrative Agent notifies Borrower that the provisions of
Sections 3.2 and 3.3 no longer apply at a rate per annum equal to the lesser of
(i) the Highest Lawful Rate and (ii) the Prime Rate less 0.75% (but in no event shall the rate in
this clause (ii) be less than 4.0% per annum at any time). Borrower may not elect that any
Revolving Loan be a Prime Rate Loan unless Administrative Agent has notified Borrower that the
provisions of Sections 3.2 or 3.3 apply.




          (c) Interest on the Revolving Loans shall be due and payable in arrears on each Payment Date
and at such other times as may be specified herein. Interest hereunder shall be due and payable in
accordance with the terms hereof before and after judgment, and before and after the commencement
of any proceeding under any Debtor Relief Law.




     2.8 Computations. Subject to Section 10.11, interest on the Revolving Loans, fees and
any other amounts due hereunder shall be calculated on the basis of actual days elapsed over a
year of 360 days. Nothing herein shall be deemed to obligate any Lender to obtain the funds for
its portion of any Revolving Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for its portion of any
Revolving Loan in any particular place or manner.



     2.9 Interest After an Event of Default, (a) If an Event of Default exists (other than an
Event of Default specified in Section 8.1(d) or (e)), at the option of Required Lenders,
and (b) after an Event of Default specified in Section 8.1(d) or (e) and during any
continuance thereof, automatically and without any action by any Lender or Administrative Agent,
the Obligations shall bear interest at a rate per annum equal to the lesser (i) the Default Rate
and (ii) the Highest Lawful Rate. Such interest shall be payable on the earlier of demand or the
Termination Date and shall accrue until the earlier of (a) waiver or cure (to the satisfaction of
Required Lenders) of the applicable Event of Default, (b) agreement by Required Lenders to rescind
the charging of interest at the Default Rate, or (c) payment in full of the Obligations. Neither
Lenders nor Administrative Agent shall be required to accelerate the maturity of any Revolving
Loan, to exercise any other rights or remedies under the Loan Documents, or to give notice to
Borrower of the decision to charge interest at the Default Rate. Administrative Agent will
undertake to notify Borrower, after the effective date, of the decision to charge interest at the
Default Rate.



     2.10 Payments Generally, (a) Each payment (including prepayments) by Borrower of the
principal of or interest on the Loans and any other amount owed under this Agreement or any other
Loan Document shall be made not later than 2:00 p.m. on the date specified for payment under this
Agreement to Administrative Agent at Administrative Agent’s Office, in Dollars constituting
immediately available funds. Administrative Agent will promptly distribute to each



17









 




Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like
funds as received by wire transfer to such Lender’s Principal Office. All payments received by
Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue.




          (b) If any payment under this Agreement or any other Loan Document shall be specified to be
made upon a day which is not a Business Day, it shall be made on the next succeeding day which is
a Business Day. Any extension of time shall in such case be included in computing interest and
fees, if any, in connection with such payment.




          (c) Borrower agrees to pay principal, interest, fees and all other amounts due under the Loan
Documents without deduction for set-off or counterclaim or any deduction whatsoever.




          (d) If some but less than all amounts due from Borrower are received by Administrative Agent,
Administrative Agent shall apply such amounts in the following order of priority: (i) to the
payment of Administrative Agent’s expenses incurred on behalf of Lenders under the Loan Documents
then due and payable, if any; (ii) to the payment of all other fees under the Loan Documents then
due and payable; (iii) to the payment of interest then due and payable on the Revolving Loans
(applied as provided in Section 8.3); (iv) to the payment of all other amounts not
otherwise referred to in this Section 2.10(d) then due and payable under the Loan
Documents; and (v) to the payment of principal then due and payable on the Loan (applied as
provided in Section 8.3).




          (e) Unless Borrower or any Lender has notified Administrative Agent, prior to the date any
payment is required to be made by it to Administrative Agent hereunder, that Borrower or such
Lender, as the case may be, will not make such payment, Administrative Agent may assume that
Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not
be so required to), in reliance thereon, make available a corresponding amount to the Person
entitled thereto. If and to the extent that such payment was not in fact made to Administrative
Agent in immediately available funds, then:





          (i) if Borrower failed to make such payment, each Lender shall forthwith on demand
repay to Administrative Agent the portion of such assumed payment that was made available
to such Lender in immediately available funds, together with interest thereon in respect of
each day from and including the date such amount was made available by Administrative Agent
to such Lender to the date such amount is repaid to Administrative Agent in immediately
available funds at the Federal Funds Rate from time to time in effect; and




          (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand
pay to Administrative Agent the amount thereof in immediately available funds, together
with interest thereon for the period from the date such amount was made available by
Administrative Agent to Borrower to the date such amount is recovered by Administrative
Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from
time to time in effect. If such Lender does not pay such amount forthwith upon
Administrative Agent’s demand therefor, Administrative



18









 







Agent may make a demand therefor upon Borrower, and Borrower shall pay such amount to
Administrative Agent, together with interest thereon for the Compensation Period at a rate
per annum equal to the interest rate then applicable to Revolving Loans as provided in
Section 2.7 or 2.9 Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which Administrative Agent
or Borrower may have against any Lender as a result of any default by such Lender
hereunder.



     A notice of Administrative Agent to any Lender or Borrower with respect to any amount owing
under this Section 2.10(e) shall be conclusive, absent manifest error.



          (f) If any Lender makes available to Administrative Agent funds for its Pro Rata Share of a
Revolving Loan and such funds are not made available to Borrower by Administrative Agent because
the conditions set forth in Article IV are not satisfied or waived in accordance with the
terms hereof, Administrative Agent shall return such funds (in like funds as received from such
Lender) to such Lender, without interest.




          (g) The obligation of a Lender hereunder to make its Pro Rata Share of each Revolving Loan are
several and not joint. The failure of any Lender to fond its Pro Rata Share of any Revolving Loan
shall not relieve any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to fund its Pro Rata Share of any
Revolving Loan.




     2.11 Sharing of Payments. Any Lender obtaining a payment (whether voluntary or involuntary,
due to the exercise of any right of set-off, or otherwise) on account of any in excess of its Pro
Rata Share, as applicable, of all payments made by Borrower with respect to such Revolving Loan
shall purchase from each other Lender such participation in such Revolving Loan as shall be
necessary to cause such purchasing Lender to share the excess payment pro rata according to the
respective Pro Rata Shares, with each other Lender; provided, however, that if all
or any portion of such excess payment is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and the purchase price restored to the extent of such recovery, but
without interest. Borrower agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.11, to the fullest extent permitted by Law, may exercise all of
its rights of payment (including the right of set-off) with respect to such participation as fully
as if such Lender were the direct creditor of Borrower in the amount of such participation.



     2.12 Booking the Loans. Any Lender may make, carry or transfer its Pro Rata Share of each
Revolving Loan at, to or for the account of any of its branch offices or the office of any
Affiliate.



     2.13 Collateral. Payment of the Obligations is secured on the Agreement Date by (a) a
perfected first priority security interest in current and future accounts and inventory (and
related assets) of Borrower and all of its Subsidiaries, and (b) Guaranties of the Obligations by
each Guarantor. Borrower shall cause each Subsidiary of Borrower created or acquired after the
Agreement Date to execute and deliver to Administrative Agent a Guaranty, Security Agreement and
such other documents as are required to grant to and perfect the Lien granted pursuant to such
Security Agreement.



19









 





     2.14 Commitment Fee. Borrower shall pay to Administrative Agent for the account of each Lender
in accordance with its Pro Rata Share a per annum commitment fee equal to 0.25% times the
actual daily amount by which the Aggregate Commitments exceed the Outstanding Amount. The
commitment fee shall accrue at all times from the Agreement Date to the Revolving Loan Maturity
Date, including at any time during which one or more of the conditions contained in Article
IV is not met, and shall be due and payable monthly in arrears on each Payment Date, commencing
with the first such date after the Agreement Date and on the Revolving Loan Maturity Date.



ARTICLE III




TAXES, YIELD PROTECTION AND ILLEGALITY




     3.1 Taxes.



          (a) Except as provided in this Section 3.1, any and all payments by Borrower to or
for the account of Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future income, stamp or other Taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, now or
hereafter imposed, and all liabilities with respect thereto, excluding, in the case of
Administrative Agent, any Lender, or its Principal Office, applicable lending office, or any
branch or Affiliate thereof, Taxes imposed on or measured by its net income (including net income
Taxes imposed by means of a backup withholding tax) franchise Taxes, branch Taxes, Taxes on doing
business or Taxes measured by or imposed upon the overall capital or net worth of Administrative
Agent or such Lender or its Principal Office, applicable lending office, or any branch or
Affiliate thereof, in each case imposed: (i) by the jurisdiction under the Laws of which
Administrative Agent or such Lender or its Principal Office, applicable lending office, branch or
Affiliate is organized or is located, or in which the principal executive office of Administrative
Agent or such Lender is located, or any nation within which such jurisdiction is located or any
political subdivision thereof, or (ii) by reason of any present or former connection between the
jurisdiction imposing such Tax and Administrative Agent or such Lender or its applicable lending
office, branch or Affiliate other than a connection arising solely from Administrative Agent or
such Lender having executed, delivered or performed its obligation under, or received payment
under or enforced this Agreement the Laws of such jurisdiction (all such Taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being
hereinafter referred to as “Indemnified Taxes”). If Borrower shall be required by any Laws to
deduct any Indemnified Taxes from or in respect of any sum payable under any Loan Document to
Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary to yield
to Administrative Agent or such Lender an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the
full amount deducted to the relevant taxation authority or other Governmental Authority in
accordance with Applicable Laws, and (iv) promptly (but in no event later than thirty days) after
the date of such payment, Borrower shall furnish to Administrative Agent (which shall forward the
same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.




20









 








          (b) In addition, Borrower shall pay any and all present or future stamp, court or documentary
taxes and any other excise or property taxes or charges or similar levies which arise from any
payment made under any Loan Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other
Taxes”),




          (c) If Borrower shall be required to deduct or pay any Indemnified Taxes or Other Taxes from
or in respect of any sum payable under any Loan Document to Administrative Agent or any Lender,
Borrower shall also pay to Administrative Agent (its account and for the account of such Lender),
at the time interest on the Obligations is paid, such additional amount that Administrative Agent
or such Lender specifies as necessary to preserve the after-tax yield (after factoring in all
Taxes, including Taxes imposed on or measured by net income) Administrative Agent or such Lender
would have received if such Indemnified Taxes or Other Taxes had not been imposed.




          (d) BORROWER SHALL INDEMNIFY ADMINISTRATIVE AGENT AND EACH LENDER FOR (i) THE FULL AMOUNT OF
INDEMNIFIED TAXES AND OTHER TAXES (INCLUDING ANY INDEMNIFIED TAXES OR OTHER TAXES IMPOSED OR
ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION) PAID BY ADMINISTRATIVE
AGENT AND SUCH LENDER, (ii) AMOUNTS PAYABLE UNDER SECTION 3.1(c) AND (iii) ANY LIABILITY
(INCLUDING PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, IN EACH
CASE WHETHER OR NOT SUCH INDEMNIFIED TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY IMPOSED OR
ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY. PAYMENT UNDER THIS SECTION 3.1(d) SHALL
BE MADE WITHIN THIRTY DAYS AFTER THE DATE ADMINISTRATIVE AGENT OR ANY LENDER MAKES A DEMAND
THEREFOR.




          (e) If Administrative Agent or any Lender determines, in its reasonable discretion, that it
has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified
by Borrower or with respect to which Borrower has paid additional amounts pursuant to this
Section, it shall pay to Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by Borrower under this Section
with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of Administrative Agent or such Lender, as the case may be, and without
interest (other than any interest paid by the relevant Governmental Authority with respect to such
refund), provided that Borrower, upon the request of Administrative Agent, such Lender,
agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to Administrative Agent or such Lender in the
event Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This Section shall not be construed to require Administrative Agent or any
Lender to make available its tax returns (or any other information relating to its taxes that it
deems confidential) to Borrower or any other Person.




     3.2 Illegality. If any Lender determines that any change in Law on or after the
Agreement Date has made it unlawful, or that any Governmental Authority on or after the



21









 




Agreement Date has asserted that it is unlawful, for any Lender or its applicable lending office
to make, maintain or fund LIBOR Rate Loans, or materially restricts the authority of such Lender
to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar market, or
to determine or charge interest rates based upon LIBOR, then, on notice thereof by such Lender to
Administrative Agent (who shall notify Borrower thereof), any obligation of such Lender to make or
maintain LIBOR Rate Loans shall be suspended until each Lender notifies Administrative Agent (who
shall notify Borrower thereof) that the circumstances giving rise to such determination no longer
exist. Upon the date of such notice, all LIBOR Rate Loans of all Lenders shall convert to Prime
Rate Loans. Each Lender agrees to designate a different lending office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise
be materially disadvantageous to such Lender.




     3.3 Inability to Determine Rates. If (a) Administrative Agent reasonably determines in
connection with any request for or maintenance of a LIBOR Rate Loan or any determination of the
LIBOR Rate that (i) Dollar deposits are not being offered to banks in the applicable offshore
Dollar market for the applicable amount and applicable term, or (ii) adequate and reasonable means
do not exist for determining the LIBOR Rate, or (b) any Lender notifies Administrative Agent that
the LIBOR Rate for such LIBOR Rate Loan does not adequately and fairly reflect the cost to such
Lender of funding or maintaining such LIBOR Rate Loan, Administrative Agent will promptly notify
Borrower and all Lenders. Thereafter, the obligation of all Lenders to make or maintain LIBOR Rate
Loans shall be suspended until each Lender notifies Administrative Agent that such Lender revokes
such notice. Upon the date of such notice, all LIBOR Rate Loans of all Lenders shall convert to
Prime Rate Loans.



     3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on LIBOR Rate Loans.



          (a) If any Lender in good faith determines that as a result of the introduction of or any
change in or in the interpretation of any Law on or after the Agreement Date, or such Lender’s
compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make
or making, funding or maintaining LIBOR Rate Loans, or a reduction in the amount received or
receivable by such Lender in connection with any of the foregoing (excluding for purposes of this
Section 3.4(a) any such increased costs or reduction in amount resulting from (i)
Indemnified Taxes or Other Taxes (as to which Section 3.1 shall govern), (ii) changes in
the basis of taxation of overall net income or overall gross income by the United States or any
foreign jurisdiction or any political subdivision of either thereof under the Laws of which such
Lender is organized or has its Principal Office or applicable lending office, and (iii) reserve
requirements contemplated by Section 3.4(c)), then from time to time within five Business
Days after demand of such Lender (with a copy of such document to Administrative Agent), Borrower
shall pay to such Lender such additional amounts as will compensate such Lender for such increased
cost or reduction.




          (b) If any Lender in good faith determines that the introduction of any Law regarding capital
adequacy or any change therein or in the interpretation thereof on or after the Agreement Date, or
compliance by such Lender (or its lending office) therewith, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender with respect to
this Agreement as a consequence of such Lender’s obligations hereunder




22









 







(taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to
time within five Business Days after demand of such Lender (with a copy of such demand to
Administrative Agent), Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.




          (c) Borrower shall pay to each Lender, as long as such Lender shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional costs on the unpaid principal amount of each LIBOR Rate Loan equal to
the actual costs of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall constitute prima facie evidence as to the facts
thereof), which shall be due and payable on each date on which interest is payable on such Loan,
provided Borrower shall have received at least fifteen days’ prior notice (with a copy of
such notice to Administrative Agent) of such additional interest from such Lender. If such Lender
fails to give notice fifteen days prior to the relevant Payment Date, such additional interest
shall be due and payable fifteen
days from receipt of such notice.




          (d) If any Lender claims any additional amounts payable pursuant to this Section 3.4,
it shall use its reasonable best efforts (consistent with its internal policy and legal and
regulatory restrictions) to change the jurisdiction of its applicable lending office, if the
making of such a change would avoid the need for, or reduce the amount of, any such additional
amounts which may thereafter accrue and would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender.




     3.5 Matters Applicable to all Requests for Compensation. Any demand or notice delivered by
Administrative Agent or any Lender to Borrower claiming compensation under this Article III
shall be in writing and shall certify (a) that one of the events described in this Article
III has occurred, describing in reasonable detail the nature of such event and (b) as to the
amount or amounts for which Administrative Agent or such Lender seeks compensation hereunder,
setting forth in reasonable detail the basis for and calculations of such compensation. Such
certification shall be conclusive in the absence of manifest error. In determining such amount,
Administrative Agent or such Lender may use any
reasonable averaging and attribution methods.



     3.6 Replacement of Lenders. If any Lender requests compensation under Section 3.4, or
if Borrower is required to pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 3.1, Borrower may replace such Lender in
accordance with Section 10.12.



     3.7 Survival. All of Borrower’s obligations under this Article III shall survive
termination of the Aggregate Commitments and payment in full of all Obligations.



23









 





ARTICLE IV




CONDITIONS PRECEDENT




     4.1 Conditions Precedent to Initial Revolving Loan. The obligation of each Lender to make its
Pro Rata Share of the initial Revolving Loan is subject to (i) receipt by Administrative Agent of
the following items which are to be delivered, in form and substance reasonably satisfactory to
Administrative Agent and each Lender and (ii) satisfaction of the following conditions, in form
and substance reasonably satisfactory to Administrative Agent and each Lender:



          (a) Borrower Certificate. A certificate of officers acceptable to Administrative Agent
of Borrower certifying as to (i) the incumbency of the officers signing such certificate and the
Loan Documents to which it is a party, (ii) an original certified copy of its Certificate of
Incorporation, certified as true, complete and correct as of a date not more than ten days prior to
the Agreement Date by the appropriate authority of the State of Delaware, (iii) a copy of its
By-Laws, as in effect on the Agreement Date, (iv) a copy of the resolutions of its Board of
Directors authorizing it to execute, deliver and perform the Loan Documents to which it is a party,
(v) an original certificate of good standing and existence issued by the appropriate authority of
the State of Delaware (certified as of a date not more than ten days prior to the Agreement Date),
(vi) the accuracy of the representations and warranties in the Loan Documents, (vii) no Default or
Event of Default exists, and (viii) no Material Adverse Change having occurred.




          (b) Obligor Certificate. A certificate of officers acceptable to Administrative Agent
of each Obligor (other than Borrower) certifying as to (i) the incumbency of the officers signing
such certificate and the Loan Documents to which it is a party, (ii) if a corporation, an original
certified copy of its Articles of Incorporation or Certificate of Incorporation, as applicable,
certified as true, complete and correct as of a date not more than ten days prior to the Agreement
Date by the appropriate authority of its state of incorporation, (iii) if a limited liability
company, an original certified copy of its Articles of Organizations (or similar organization and
governance document), certified as true, complete and correct as of a date not more than ten days
prior to the Agreement Date by the appropriate authority of its state of organization, (iv) if a
limited partnership, an original certified copy of its Certificate of Limited Partnership (or
similar organization or governance document), certified as true, complete and correct as of a date
not more than ten days prior to the Agreement Date by the appropriate authority of its
jurisdiction of organization, (v) if a corporation, a copy of its By-Laws, as in effect on the
Agreement Date, (vi) if a limited liability company, a copy of its operating agreement (or similar
organization and governance document), as in effect on the Agreement Date, (vii) if a limited
partnership, a copy of its partnership agreement (or similar organization or governance document),
as in effect on the Agreement Date, (viii) a copy of the resolutions of the appropriate governance
board authorizing it to execute, deliver and perform the Loan Documents to which it is a party,
and (ix) an original certificate of good standing and existence issued by the appropriate
authority of its state of organization (certified as of a date not more than ten days prior to the
Agreement Date).





24











 





          (c) Notes. Duly executed Revolving Notes, payable to the order of each Lender and in
an amount equal to such Lender’s Commitment.




          (d) Security Agreements. The duly executed and completed Security Agreements,
executed by Borrower and each Subsidiary, dated as of the Agreement Date, granting to
Administrative Agent, for the benefit of Lenders, a first priority Lien in the Collateral set
forth therein.




          (e) Guaranties. A duly executed Guaranty for each Guarantor.




          (f) Expenses. Reimbursement for Special Counsel’s reasonable fees and expenses
rendered through the date hereof.




          (g) UCC and Lien Searches. Searches of the Uniform Commercial Code, Tax lien and
other records as Administrative Agent may require.




          (h) Opinions of Borrower’s and Obligors’ Counsel. Opinions of counsel to Borrower and
each other Obligor addressed to Administrative Agent and Lenders dated the Agreement Date and
covering such matters incident to the transactions contemplated hereby as Administrative Agent or
Special Counsel may reasonably request.




          (i) Compliance Certificate. A Compliance Certificate, dated the Agreement Date and
signed by an Authorized Signatory of Borrower, confirming compliance with the financial covenants
set forth therein as of the most recent determination date.




          (j) Final Agreement Notice. The Final Agreement Notice executed by all parties
thereto.




          (k) Other Documents. In form and substance satisfactory to Administrative Agent and
Special Counsel, such other documents, instruments and certificates as Administrative Agent and
any Lender may reasonably require in connection with the transactions contemplated hereby.




          (1) Payment of Fees. Payment by Borrower to Administrative Agent and Lenders of all
fees agreed to be paid by Borrower with respect to this Agreement set forth in the Commitment
Letter.




     4.2 Conditions Precedent to all Revolving Loans. The obligation of each Lender to make its
Pro Rata Share of each Revolving Loan (including the initial Loan) is subject to fulfillment of
the following conditions immediately prior to or contemporaneously with each such Revolving Loan:



          (a) Representations and Warranties. All of the representations and warranties of
Borrower, each of its Subsidiaries and each other Obligor under this Agreement and each other Loan
Document, which, pursuant to Section 7.16, are made at and as of the time of each Revolving
Loan, shall be true and correct when made, except to the extent applicable to a specific date, both
before and after giving effect to the application of the proceeds of such Revolving Loan.









25









 








          (b) No Default or Event of Default. There shall not exist a Default or Event of
Default.




          (c) Material Adverse Change. There shall have occurred no change in the business,
assets, operations, prospects or conditions (financial or otherwise) of Borrower, any other
Obligor, or any Subsidiary of Borrower since June 30, 2007, which caused or could reasonably be
expected to cause a Material Adverse Effect.




ARTICLE V




AFFIRMATIVE COVENANTS




     From the date hereof and so long as this Agreement is in effect and until payment in full of
the Obligations, the termination of the Aggregate Commitments, and the performance of all other
obligations of each Obligor under this Agreement and each other Loan Document, Borrower will, and
will cause each of its Subsidiaries to:



     5.1 General Covenants.



          (a) Payment of Taxes and Claims. Pay and discharge all lawful Taxes imposed upon its
income or profits or upon any of its property before the same shall be in default, and all lawful
claims for labor, rentals, materials and supplies which, if unpaid, might become a Lien upon its
property or any part thereof; provided, however, that it shall not be required to
pay or discharge any such Tax, assessment or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and adequate book reserves shall be established
with respect thereto, and it shall pay such Tax, charge or claim before any property subject
thereto shall be sold to satisfy a Lien.




          (b) Maintenance of Existence. Do all things necessary to preserve and keep in full
force and effect it as a corporation, limited liability company or partnership, as appropriate.




          (c) Preservation of Property. Keep its properties which are necessary to continue
business, whether owned in fee or otherwise, or leased, in good operating condition, ordinary wear
and tear excepted, and comply with all material leases to which it is a party or under which it
occupies or uses property so as to prevent any material loss or forfeiture thereunder.




          (d) Insurance. Maintain in force with financially sound and reputable insurers,
policies with respect to its property and business against such casualties and contingencies
(including public liability, larceny, embezzlement or other criminal misappropriation insurance)
and in such amounts as is customary in the case of entities engaged in the same or similar lines
of business of comparable size and financial strength and as deemed necessary or required by
Administrative Agent.




          (e) Compliance with Applicable Laws. Comply in all material respects with the
requirements of all applicable Laws and orders of any Governmental Authority, except where
contested in good faith and by proper proceedings or where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect, and obtain and maintain all material




26









 




licenses, permits, franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business.




     5.2 Accounts, Reports and Other Information. Maintain a system of accounting in accordance
with GAAP, consistently applied, and furnish, or cause to be furnished, to Administrative Agent
and each Lender the following:



          (a) Interim Financial Statements. As soon as available, and in any event within
forty-five (45) days after the end of each quarter of each fiscal year of Borrower, a balance
sheet and income statement of Borrower as of the end of such fiscal quarter, all in form and
substance and in reasonable detail satisfactory to Administrative Agent and duly certified
(subject to year-end review adjustments) by the President and/or Chief Financial Officer of
Borrower (i) as being true and correct in all material respects to the best of his or her
knowledge and (ii) as having been prepared in accordance with GAAP, consistently applied.




          (b) Annual Financial Statements. As soon as available and in any event within ninety
(90) days after the end of each fiscal year of Borrower, a balance sheet and income statement of
Borrower as of the end of such fiscal year, in each case audited and unqualified by Auditors.




          (c) Compliance Certificate. A certificate signed by the Chief Financial Officer of
Borrower within forty-five (45) days after the end of each quarter of each fiscal year of Borrower
stating that Borrower is in full compliance with all of its obligations under this Loan Agreement
and all other Loan Documents and is not in default of any term or provisions hereof or thereof,
and demonstrating compliance with all financial ratios and covenants set forth in Sections
6.16 and 6.17 of this Agreement.




          (d) Borrowing Base Certificate. A Borrowing Base Certificate signed by the Chief
Financial Officer of Borrower within thirty (30) days after the end of each month of each fiscal
year, in form and detail satisfactory to Administrative Agent.




          (e) Accounts Aging. An account receivable aging report within thirty (30) days after
the end of each month of each fiscal year, in form and detail satisfactory to Administrative
Agent.




          (f) 10K Filings. Borrower’s annual 10K filing with the Securities and Exchange
Commission within fifteen (15) days after such filing.




          (g) 10Q Filings. Borrower’s quarterly 10Q filing with the Securities and Exchange
Commission within forty-five (45) days after the end of each quarter of each fiscal year of
Borrower.




          (h) Other Reports. Promptly upon request by Administrative Agent, a copy of (i) such
financial statements, reports, notices or proxy statements sent by it to stockholders requested by
Administrative Agent, (ii) such regular or periodic reports and any registration statements,
prospectuses and written communications in respect thereof filed by it with any state insurance
department, any securities exchange, or with the Securities Exchange Commission or








27









 







any successor agency requested by Administrative Agent, and (iii) all press releases concerning
it.




          (i) Notice of Default. Promptly upon the happening of any condition or event which
constitutes an Event of Default or Default, a written notice specifying the nature and period of
existence thereof and what action it is taking and propose to take with respect thereto.




          (j) Notice of Litigation. Promptly upon becoming aware of the existence of any
Litigation before any Governmental Authority, arbitrator or mediator (but no later than 10 days
after the filing thereof) involving it, which could reasonably be expected to involve its payment
of $200,000 or more.




          (k) Notice of Claimed Default. Promptly upon becoming aware that the holder of any
note or any evidence of indebtedness or other security or payee of any obligation in an amount of
$200,000 or more has given notice or taken any action with respect to a claimed default or event
of default thereunder, a written notice specifying the notice given or action taken by such holder
and the nature of the claimed default or event of default thereunder and what action it is taking
or proposes to take with respect thereto.




          (l) Notice from Governmental Authority. Promptly upon receipt thereof, information
with respect to and copies of any notices received from any Governmental Authority relating to an
order, ruling, statute or other Law or information which could reasonably be expected to have a
Material Adverse Effect.




          (m) Auditors’ Reports. Promptly upon receipt thereof, a copy of (i) each other report
or “management letter” submitted to Borrower or any of its Subsidiaries by Auditors in connection
with any annual, interim or special audit made by them of the books of Borrower or such Subsidiary
and (ii) each report submitted to Borrower or any of its Subsidiaries by any Auditors to the
extent that such report, in the good faith opinion of Borrower or such Subsidiary, identifies a
condition, situation or event that has or is reasonably likely to have a Material Adverse Effect.




          (n) Additional Information. Such other additional financial information as may be
reasonably requested from time to time by Administrative Agent, including but not limited to
operating statements on any assets listed on Borrower’s financial statements.




     5.3 Inspection. (a) If no Event of Default exists, upon three Business Day’s prior notice, and
as often as may be reasonably requested, and (b) if an Event of Default exists, upon request by
Administrative Agent, permit Administrative Agent or any representatives of Administrative Agent to
visit and inspect any of its properties, to examine all books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss the affairs, finances and
accounts with its officers, employees and auditors (and by this provision Borrower authorizes
Auditors to discuss with Administrative Agent and its representatives the finances and affairs of
Borrower and its Subsidiaries, provided Borrower receives advance notice of any such discussions
with the Auditors and has an opportunity to participate in such discussions). All costs and
expenses of Administrative Agent related to (a) the first such inspection during each fiscal year
conducted when no Event of Default exists, and (b) each such



28









 




inspection conducted when an Event of Default exists, shall be a part of the Obligations and paid
by Borrower to Administrative Agent within ten days after demand by Administrative Agent.




     5.4 Compliance with ERISA. Comply with ERISA in all material respects, and (a) at all times
make contributions within the time limits imposed by Law to meet the minimum funding standards set
forth in ERISA with respect to any Plan; (b) notify Administrative Agent as soon as reasonably
practicable of any fact which it knows or should know, including but not limited to any Reportable
Event, arising in connection with any Plan which could reasonably be expected to result in
termination thereof by the PBGC or for the appointment by a Governmental Authority of a trustee to
administer the Plan; and (c) furnish to Administrative Agent upon such request such additional
information concerning any Plan as Administrative Agent may reasonably request.



     5.5 Maintenance of Priority of Bank Liens. Upon the request of Administrative Agent from time
to time, it shall perform such acts and duly authorize, execute, acknowledge, deliver, file, and
record such additional assignments, pledge agreements, security agreements and other agreements,
documents, instruments, and certificates as Administrative Agent may deem necessary or appropriate
in order to perfect and maintain the Bank Liens in favor of Administrative Agent and preserve and
protect the rights of Administrative Agent and Lenders in respect of the Collateral.



     5.6 Indemnity. BORROWER SHALL DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS ADMINISTRATIVE
AGENT AND EACH LENDER, THEIR RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH
AFFILIATES’) OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND CONSULTANTS
(INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR ATTEMPTED
SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY,
“INDEMNITEES”) FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE ATTORNEY COSTS OF COUNSEL FOR SUCH INDEMNITEES IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH
INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER BASED ON ANY FEDERAL,
STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT
OR OTHERWISE, ARISING FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF BORROWER OR
ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR
FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF BORROWER OR ANY OF ITS SUBSIDIARIES), IN ANY MANNER
RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR
TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING



29









 




OR ATTENDANT THERETO, THE MAKING OR ANY PARTICIPATION IN LOANS,
INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART,
OF ANY NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER
THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST A
LENDER AND NOT BORROWER), OR THE USE OR INTENDED USE OF THE
PROCEEDS OF ANY REVOLVING LOAN HEREUNDER, OR IN CONNECTION
WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY,
BUT EXCLUDING ANY CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE,
AS DETERMINED IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION (COLLECTIVELY, “INDEMNIFIED MATTERS”). IN
ADDITION, BORROWER SHALL PERIODICALLY, UPON REQUEST, REIMBURSE
EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER ACTUAL
EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION AND
PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION
OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH BORROWER MAY
OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF BORROWER, ADMINISTRATIVE AGENT, EACH LENDER, AND ALL OTHER INDEMNITEES. THIS
SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.




     5.7 Use of Proceeds. Borrower shall use the proceeds of the Revolving Loans (a) to provide
working capital to Borrower and Guarantors, and (b) to make Permitted Acquisitions.



ARTICLE VI




NEGATIVE COVENANTS




     From the date hereof and so long as this Agreement is in effect and until payment in full of
the Obligations, the termination of the Aggregate Commitments, and the performance of all other
obligations of each Obligor under this Agreement and each other Loan Document, Borrower shall not,
and shall not permit any of its Subsidiaries to:



     6.1 Nature of Business. Make any material change in the nature of its business as carried on
as of the Agreement Date.



     6.2 Liquidations, Mergers, Consolidations. Liquidate, merge or consolidate with or into any
other entity



     6.3 Disposition of Assets. Dispose of any of its assets or properties, other than in the
ordinary course of business or sales of worn, damaged or obsolete equipment.



30









 





     6.4 Liens. Create or incur any lien or encumbrance on any of its assets, other than Permitted
Liens.



     6.5 Debt. Create, incur or assume any Debt, other than Permitted Debt.



     6.6 Change in Management. Permit a change in two or more of the individual Persons comprising
Senior Management.



     6.7 Loans. Make any loans or advances to any Person except for (i) loans to Obligors, and
(ii) loans to officers and directors of Borrower not to exceed $100,000.00 in the aggregate at any
one time.



     6.8 Transactions with Affiliates. Except for transactions among Obligors, enter into any
transaction, including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate of Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower’s business and upon fair and reasonable terms
no less favorable to Borrower than would be obtained in a comparable arm’s-length transaction with
a Person not an Affiliate of Borrower.



     6.9 Burdensome Agreements. Enter into any agreement (other than this Agreement or any other
Loan Document) that limits the ability (a) of any Subsidiary to pay Dividends to Borrower or to
otherwise transfer property to Borrower, (b) of any Subsidiary to guarantee the Obligations or (c)
of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of
such Person.



     6.10 Acquisition of Assets. Acquire any assets, property or business of any Person, except in
the ordinary course of business, or participate in any joint venture, or create or acquire any
Subsidiary, except Permitted Acquisitions, provided and if such Permitted Acquisition results in a
new Subsidiary, such new Subsidiary delivers to Administrative Agent (in such number of
counterparts as Administrative Agent may reasonably require) the following:



          (a) A certificate of officers acceptable to Administrative Agent of such Subsidiary certifying
as to (i) the incumbency of the officers signing such certificate and the Loan Documents to which
it is a party, (ii) if a corporation, an original certified copy of its Articles of Incorporation
or Certificate of Incorporation, as applicable, certified as true, complete and correct by the
appropriate authority of its state of incorporation as of a date not more than ten days prior to
the date such certificate is delivered to Administrative Agent, (iii) if a limited liability
company, an original certified copy of its Articles of Organizations (or similar organization and
governance document), certified as true, complete and correct by the appropriate authority of its
state of organization as of a date not more than ten days prior to the date such certificate is
delivered to Administrative Agent, (iv) if a corporation, a copy of its By-Laws, as in effect on
the date such certificate is delivered to Administrative Agent, (v) if a limited liability company,
a copy of its operating agreement (or similar organization and governance document), as in effect
on the date such certificate is delivered to Administrative Agent, (vi) a copy of the resolutions
of the appropriate governance board authorizing it to execute, deliver and perform the Loan
Documents to which it is a party, and (vii) an original certificate of good standing and existence
issued by the appropriate authority of its state of









31









 







organization (certified as of a date not more than ten days prior to the date such certificate is
delivered to Administrative Agent).




          (b) The duly executed and completed Security Agreement of such Subsidiary, granting to
Administrative Agent, for the benefit of Lenders, a first priority Lien in the Collateral set
forth therein.




          (c) The duly executed Guaranty of such Subsidiary.




          (d) Reimbursement of Administrative Agent’s reasonable expenses related to the formation of
such new Subsidiary, including Special Counsel’s reasonable fees and expenses.




          (e) Searches of the Uniform Commercial Code, Tax lien and other records as Administrative
Agent may require.




          (f) Opinions of counsel to Borrower and such Subsidiary addressed to Administrative Agent and
Lenders and covering such matters incident to such new Subsidiary and the Loan Documents as
Administrative Agent or Special Counsel may reasonably request.




          (g) A Notice of Final Agreement executed by such Subsidiary.




          (h) In form and substance satisfactory to Administrative Agent and Special Counsel, such
other documents, instruments and certificates as Administrative Agent and any Lender may
reasonably require in connection with the formation of such new Subsidiary.




     By signing this Agreement, Lenders are hereby deemed to have consented to the acquisition by
Borrower and/or Woodard of substantially all of the assets of Woodard, LLC, a Delaware limited
liability company, pursuant to the terms of that certain Asset Purchase Agreement, dated as of
December 18, 2007, among Woodard, LLC, Henry Crown and Company and Borrower, as it may be amended
or modified pursuant to terms reasonably acceptable to Administrative Agent.



     6.11 Loans and Investments. Make any Investment except (a) Permitted Investments, and (b)
acquisitions permitted by Section 6.10.



     6.12 ERISA. Make funding contributions with respect to any Plan that are less than the
minimum required by ERISA or the regulations thereunder, or permit any Plan ever to be subject to
involuntary termination proceeding by the PBGC pursuant to ERISA § 4042(a).



     6.13 Assignment. Directly or indirectly, assign or transfer, or attempt to do so, any rights,
duties or obligations under the Loan Documents.



     6.14 Business. Engage in any material line or lines of business activity or any businesses not
engaged in on the Agreement Date.



     6.15 Stock Repurchases. Make any Stock Repurchases, except that if no Default or Event of
Default exists or would result after giving effect thereto, Borrower may repurchase up



32









 




to 200,000 shares of its capital stock authorized by its Board of Directors as of the Agreement
Date.




     6.16 Debt to Worth Ratio. Permit the Debt to Worth Ratio to be greater than (a) 2.50 to 1.00
at the end of any first, second or fourth fiscal quarter of Borrower or (b) 3.25 to 1.00 at the
end of any third fiscal quarter of Borrower.



     6.17 Fixed Charge Coverage Ratio. Permit, as of the end of any fiscal quarter, the Fixed
Charge Coverage Ratio to be less than 1.25 to 1.00.



ARTICLE VII




REPRESENTATIONS AND WARRANTIES




     Borrower represents, warrants, and covenants, to Administrative Agent and each Lender, as
follows:



     7.1 Organization and Qualification. Borrower and each of its Subsidiaries (a) is a
corporation, limited liability company or limited partnership duly organized, validly existing, and
in good standing under the Laws of its jurisdiction of organization; (b) is duly licensed and in
good standing as a foreign corporation, limited liability company or limited partnership in each
jurisdiction in which the nature of the business transacted or the property owned is such as to
require licensing as such; and (c) possesses all requisite corporate, limited liability company or
limited partnership, respectively, power, authority and legal right, to execute, deliver and comply
with the terms of the Loan Documents to be executed by it, all of which have been duly authorized
and approved by all necessary corporate, limited liability company or limited partnership action
and for which no approval or consent of any Governmental Authority which has not been obtained is
required. No proceeding is pending for the forfeiture of any Borrower’s or any such Subsidiary’s
organization documents or its dissolution. The issued and outstanding capital stock, limited
liability company interest and partnership interest of Borrower and each of its Subsidiaries is
duly authorized validly issued, fully paid and nonassessable, and free of the preemptive rights of
shareholders. Schedule 7.1 sets forth the respective jurisdiction of organization and
percentage ownership as of the Agreement Date of each of Borrower’s direct and indirect
Subsidiaries. Borrower has no direct or indirect Subsidiary other than those set forth on
Schedule 7.1.



     7.2 Financial Statements. The Financial Statements heretofore furnished to Administrative
Agent and Lenders prior to the Agreement Date are complete and correct in all material respects
and prepared in accordance with GAAP, and fairly present the financial condition of the Persons
described therein as of the dates indicated and for the periods involved. There are no Contingent
Debts, liabilities for Taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, any of which are material in amount in
relation to the financial condition of Borrower or any of its Subsidiaries, except for Existing
Debt. Neither the Borrower nor any of its Subsidiaries has any Off-Balance Sheet liabilities.
Since the date of the most recent financial statements delivered pursuant to Section
5.2(a) or (b), as applicable, there has been no Material Adverse Change.




33











 





     7.3 Compliance With Laws and Other Matters. The execution, delivery and performance and
compliance with the terms of the Loan Documents will not cause Borrower or any of its Subsidiaries
to be, (a) in violation of its corporate charter or bylaws, certificate of organization, operating
agreement, certificate of limited partnership, partnership agreement or other organization and
governance document, (b) in violation of any Law in any respect which could have any Material
Adverse Effect, or (c) in default (nor has any event occurred which, with notice or lapse of time
or both, could constitute a default) under any material agreement (including any agreement related
to any Debt or such Person).



     7.4 Litigation. There is no Litigation pending against or, to the knowledge of Borrower,
threatened against or affecting any Borrower or any of its Subsidiaries or their respective assets
or properties which involves the probability of any final judgment or liability which may result in
a Material Adverse Change. Schedule 7.4 is a complete and correct description of all
Existing Litigation. There are no outstanding or unpaid final judgments against Borrower or any of
its Subsidiaries.



     7.5 Title to Properties. Borrower and each of its Subsidiaries has (a) full corporate,
limited liability or partnership, respectively, power, authority and legal right to own and
operate the properties which it now owns, and to carry on the lines of business in which it is now
engaged, and (b) good and marketable title to its owned properties, subject to no Lien of any
kind, except Permitted Liens.



     7.6 Authorization; Validity. The Board of Directors, managers, partners or other appropriate
governance board of each Obligor has duly authorized the execution and delivery of the Loan
Documents to which such Obligor is a party and the performance of their respective terms. No
consent of the stockholders, members, partners or other equityholders of any Obligor is required
as a prerequisite to the validity and enforceability of any Loan Document. Each Obligor has full
corporate, limited liability or partnership, respectively, power, authority and legal right to
execute and deliver and to perform and observe the provisions of all Loan Documents to which such
Obligor is a party. Each of the Loan Documents is the legal, valid and binding obligation of each
Obligor which is a party thereto, enforceable in accordance with its respective terms, subject as
to enforcement of remedies to any Debtor Relief Laws.



     7.7 Taxes. Borrower and each of its Subsidiaries have filed all federal and state and all
other material income Tax returns which are required to be filed by such Person and has paid all
Taxes as shown on said returns, and all Taxes due and payable without returns and all assessments
received to the extent that such Taxes or assessments have become due and payable. All Tax
liabilities of Borrower and each of its Subsidiaries are adequately provided for on the books of
such Person, including interest and penalties. No income Tax liability of a material nature has
been asserted by taxing authorities for Taxes in excess of those already paid, except such Taxes
being contested in good faith by appropriate proceedings.



     7.8 Use of Proceeds. No Obligor is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin stock.



34









 




None of the assets of any Obligor are margin stock. No Obligor nor any agent acting on its behalf
has taken or will take any action which might cause this Agreement or any of the Loan Documents to
violate any regulation of the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in
effect.




     7.9 Possession of Franchises, Licenses, Etc. Borrower and each of its Subsidiaries possesses
all franchises, certificates, licenses, permits and other authorizations from all Governmental
Authorities, free from burdensome restrictions, that (a) are necessary for the ownership,
maintenance and operation of its properties and assets, and (b) the loss of possession of which
could reasonably be expected to have a Material Adverse Effect, and such Person is not in
violation of any thereof.



     7.10 Leases. Borrower and each of its Subsidiaries enjoys peaceful and undisturbed possession
of all leases necessary for the operation of its properties and assets the loss of possession of
which could reasonably be expected to have a Material Adverse Effect. All such leases are valid
and subsisting and are in full force and effect.



     7.11 Disclosure. Neither this Agreement nor any other document, certificate or statement
furnished to Administrative Agent or any Lender by or on behalf of Borrower or any of its
Subsidiaries in connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein and therein not
misleading. There is no fact known to Borrower or any of its Subsidiaries and not known to the
public generally which reasonably may be expected to materially adversely affect its assets or in
the future may reasonably be expected (so far as such Borrower or each of its Subsidiaries can now
foresee) to result in a Material Adverse Effect, which has not been set forth in this Agreement or
in the documents, certificates and statements furnished to Administrative Agent or any Lender by
or on behalf of Borrower or any of its Subsidiaries prior to the date hereof in connection with
the transactions contemplated hereby.



     7.12 ERISA. Neither Borrower nor any of its Subsidiaries has (a) incurred any material
accumulated funding deficiency within the meaning of ERISA, or (b) incurred any material liability
to the PBGC in connection with any Plan established or maintained by it. No Reportable Event has
occurred with respect to any Plan which could reasonably be expected to result in a Material
Adverse Change.



     7.13 Regulatory Acts. Borrower and each of its Subsidiaries is an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, or is subject to regulation under
any other Law (other than Regulation X of the Board of Governors of the Federal Reserve System)
which regulates the incurring by Borrower or any of its Subsidiaries of debt, including, but not
limited to, Laws regulating common or contract carriers or the sale of electricity, gas, steam,
water, or other public utility services.



     7.14 Solvency. Borrower and each of its Subsidiaries is, and Borrower and its Subsidiaries on
a consolidated basis are, Solvent.



35









 





     7.15 Environmental Matters. Except as could not reasonably be expected to result in a
Material Adverse Change or Effect:



          (a) The properties owned, operated or leased by Borrower and each of its Subsidiaries (the
“Properties”) do not contain any Hazardous Materials in amounts or concentrations which (i)
constitute a violation of, or (ii) could reasonably be expected to give rise to liability under,
Environmental Laws;




          (b) All Environmental Permits have been obtained and are in effect with respect to the
Properties and operations of Borrower and each of its Subsidiaries, and the Properties and all
operations of each Obligor are in material compliance therewith;




          (c) Neither Borrower nor any of its Subsidiaries has received any written notice of an
Environmental Claim in connection with the Properties or the operations of Borrower or any of its
Subsidiaries, nor does Borrower or any of its Subsidiaries have knowledge that any such written
notice will be received or is being threatened;




          (d) Neither Borrower nor any of its Subsidiaries has actual knowledge of any liabilities
related to Hazardous Materials Borrower or any of its Subsidiaries has retained or assumed, in
whole or in part, contractually;




          (e) To Borrower’s knowledge, Hazardous Materials have not been transported from the
Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or
under any of the Properties in a manner that could reasonably be expected to give rise to
liability under any Environmental Law; and




          (f) Neither Borrower nor any of its Subsidiaries has actual knowledge that Borrower or any of
its Subsidiaries has retained or assumed any liability contractually, with respect to the
generation, treatment, storage or disposal of Hazardous Materials.




     7.16 Survival of Representations and Warranties, Etc. All representations and
warranties made under this Agreement and the other Loan Documents shall be deemed to be
made at and as of the Agreement Date and at and as of the date of the making of each
Revolving
Loan, and each shall be true and correct in all material respects when made, except to the
extent
applicable to a specific date. All such representations and warranties shall survive, and not
be
waived by, the execution hereof by Administrative Agent and Lenders, any investigation or
inquiry by Administrative Agent or any Lender, or by the making of any Revolving Loan under
this Agreement.



ARTICLE VIII




EVENTS OF DEFAULT




     8.1 Default. The term “Event of Default” as used herein, means the occurrence and continuance
of any one or more of the following events (including the passage of time, if any, specified
therefor):



36









 





          (a) Revolving Loans. The failure or refusal of Borrower to pay any part of the
principal of or interest on any Revolving Loan or of Borrower on or before the date such payment is
due;




          (b) Other Obligations. The failure or refusal of Borrower to pay any part of the
Obligations (other than as referenced in Section 8.1(a)) on or before the date such payment
is due and such failure shall continue for three days after such payment was due;




          (c) Covenants. (i) The failure or refusal of any Obligor to perform, observe and
comply with any covenant, agreement or condition contained in Article VI or Sections
5.1(b), 5.2, 5.4 or 5.5 or (ii) the failure or refusal of any Obligor to
perform, observe and comply with any other covenant, agreement or condition in this Agreement or
any other Loan Document (other than covenants to pay the Obligations and those referenced in
clause (i) immediately preceding) and the continuation of such failure or refusal for fifteen
days;




          (d) Voluntary Debtor Relief. Any Obligor or any of its Subsidiaries shall (i) execute
an assignment for the benefit of creditors, or (ii) admit in writing its inability, or be
generally unable, to pay its debts generally as they become due, or (iii) voluntarily seek the
benefit or benefits of any Debtor Relief Law, or (iv) voluntarily become a party to any proceeding
provided for by any Debtor Relief Law that would suspend or otherwise affect any of the rights of
Administrative Agent or any Lender granted in the Loan Documents;




          (e) Involuntary Proceedings. Any Obligor or any of its Subsidiaries shall
involuntarily (i) have an order, judgment or decree entered against it or a material portion
of its
property by any Governmental Authority pursuant to any Debtor Relief Law that would suspend
or otherwise affect any of the rights granted to Administrative Agent or any Lender in any of
the
Loan Documents, or (ii) have a petition filed against it or a material portion of its
property
seeking the benefit or benefits provided for by any Debtor Relief Law that would suspend or
otherwise affect any of the rights granted to Administrative Agent or any Lender in any of
the
Loan Documents, and the failure to have such order, judgment, decree or petition dismissed
within sixty days after the filing or entry thereof;




          (f) Judgments. Any Obligor or any of its Subsidiaries shall have rendered against it
a money judgment in an aggregate uninsured amount in excess of $250,000 for which such Person has
not set aside appropriate reserves, and the same shall remain in effect and unstayed for a period
of thirty consecutive days;




          (g) Other Debt. (i) Any Obligor or any of its Subsidiaries shall default (A) in the
payment of principal of or interest on any Debt in an aggregate amount, together with all other
Debt in which a default exists, in excess of $50,000, or (B) in the performance of any other
covenant, term or condition contained in any agreement with respect to such Debt (if such default
shall occur and be continuing beyond any grace period with respect to such payment or
performance), if the effect of such default is to cause or permit the holder or holders of such
Debt (or any trustee on their behalf) to cause such Debt to become due, prepaid, redeemed or
purchased prior to its date of maturity; or (ii) any event shall occur which either causes or
permits the holder or holders of such Debt (or any trustee on their behalf) to cause such Debt to
become due, prepaid, redeemed or purchased prior to its date of maturity;



37









 







          (h) Misrepresentation. Any statement, representation or warranty in the Loan
Documents or in any writing ever delivered to Administrative Agent or any Lender pursuant to the
Loan Documents proves to be incorrect in any material respect where made;




          (i) ERISA. Any Reportable Event under any Plan, or the appointment by an appropriate
Governmental Authority of a trustee to administer any Plan, or the termination of any Plan within
the meaning of Title IV of ERISA, or any material accumulated funding deficiency within the meaning
of ERISA under any Plan, or the institution of proceedings by the PBGC to terminate any Plan or to
appoint a trustee to administer any Plan, and any of such events could reasonably be expected to
result in a Material Adverse Change; or




          (j) Loan Documents. This Agreement, any Note, any Guaranty, any Security Agreement,
any document evidencing or intended to perfect any Lien granted pursuant to any Loan Document or
any other material agreement related to this Agreement shall, at any time after its execution and
delivery and for any reason, cease to be in full force and effect in or be declared to be null and
void (other than in accordance with the terms hereof or thereof) or the validity or enforceability
thereof be contested by any Person party thereto (other than Administrative Agent or any Lender)
or any Person (other than Administrative Agent or any Lender) shall deny in writing that it has
any liability or any further liability or obligations under any Loan Document to which it is a
party; or any Security Document shall for any reason (other than pursuant to the terms thereof)
cease to create a valid and perfected first priority Lien in any Collateral.




     8.2 Remedies. If an Event of Default exists:



          (a) With the exception of an Event of Default specified in Section 8.1(d) or
(e), Required Lenders may terminate each Lender’s Commitment and/or declare the principal
of and interest on the Revolving Loans and Obligations and other amounts owed under the Loan
Documents to be forthwith due and payable without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, anything in the Loan Documents to the contrary
notwithstanding.




          (b) Upon the occurrence of an Event of Default specified in Section 8.1(d) or (e),
the principal of and interest on the Revolving Loans and Obligations and other amounts and under
the Loan Documents shall thereupon and concurrently therewith become due and payable and the
Aggregate Commitments shall forthwith terminate, all without any action by Administrative Agent or
any Lender or any holders of the Notes and without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in the Loan Documents to the contrary
notwithstanding.




          (c) Required Lenders may request that Administrative Agent and Lenders exercise all of the
post-default rights granted to them under the Loan Documents or under Law.




          (d) The rights and remedies of Administrative Agent and Lenders hereunder shall be
cumulative, and not exclusive.



     8.3 Application of Funds. After the exercise of remedies provided for in Section 8.2
(or after the Revolving Loans and other Obligations have automatically become immediately due



38









 




and payable), any amounts received on account of the Obligations shall be applied by
Administrative Agent and Lenders in the following order:




          (a) First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs payable under Section 10.2 and amounts payable under Article III) payable under the Loan Documents to
Administrative Agent in its capacity as such;




          (b) Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to Lenders (including
Attorney Costs payable under Section 10.2 and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second payable to
them;




          (c) Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Revolving Loans, ratably among Lenders in proportion to the respective
amounts described in this clause Third payable to them;




          (d) Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Revolving Loans, ratably among Lenders in proportion to the respective amounts
described in this clause Fourth held by them;




          (e) Fifth, to all other Obligations; and




          (f) Last, to the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to Borrower or as otherwise required by Law;




ARTICLE IX




ADMINISTRATIVE AGENT




     9.1 Appointment and Authorization of Administrative Agent. Each Lender hereby irrevocably
appoints, designates and authorizes Administrative Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere herein or in any other Loan Document, Administrative
Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor
shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or
Participant, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against
Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the
term “agent” herein and in the other Loan Documents with reference to Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and
is intended to create or reflect only an administrative relationship between independent
contracting parties.



39









 





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



     9.3 Liability of Administrative Agent. Neither Frost nor any Person under the Control of Frost
or any Person having Control of Frost nor any of their respective equityholders, directors,
officers, employees or agents (each, an “Agent-Related Person”) shall (a) be liable for any action
taken or omitted to be taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct in connection with its duties expressly set forth herein), or (b)be responsible
in any manner to any Lender or Participant for any recital, statement, representation or warranty
made by any Obligor or any officer thereof, contained herein or in any other Loan Document, or in
any certificate, report, statement or other document referred to or provided for in, or received by
Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for any failure of any Obligor or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to
any Lender or Participant to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Obligor or any Affiliate thereof.



     9.4 Reliance by Administrative Agent.



          (a) Administrative Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel to any Obligor), independent accountants and other experts
selected by Administrative Agent. Administrative Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first receive such advice or
concurrence of Required Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of Required Lenders
(or such greater number of Lenders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be binding upon all Lenders.




          (b) For purposes of determining compliance with the conditions specified in Article
IV, each Lender that has signed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required thereunder



40









 






to be consented to or approved by or acceptable or satisfactory to a Lender unless Administrative
Agent shall have received notice from such Lender prior to the Agreement Date specifying its
objection thereto.




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



     9.6 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender
acknowledges that no Agent-Related Person has made any representation or warranty to it, and that
no act by Administrative Agent hereafter taken, including any consent to and acceptance of any
assignment or review of the affairs of any Obligor or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any Lender as to any
matter, including whether Agent-Related Persons have disclosed material information in their
possession. Each Lender represents to Administrative Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of any Obligor and its Subsidiaries,
and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder.
Each Lender also represents that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Administrative Agent herein, Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial and other condition
or creditworthiness of any Obligor or any of its Affiliates which may come into the possession of
any Agent-Related Person.



     9.7 Indemnification of Administrative Agent. Whether or not the transactions contemplated
hereby are consummated, Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of any Obligor and without limiting the obligation of any
Obligor to do so), based on their Pro Rata Share, and hold harmless each Agent-Related Person from
and against any and all Indemnified Liabilities incurred by it;



41









 





provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a
final, nonappealable judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct; provided,
however, that no action taken in
accordance with the directions of Required Lenders shall be deemed to constitute gross negligence
or willful misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by Administrative Agent in connection
with the preparation, execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Administrative Agent is not reimbursed
for such expenses by or on behalf of Borrower. The undertaking in this Section shall
survive termination of the Aggregate Commitments, the payment of all other Obligations and the
resignation of Administrative Agent.



     9.8 Administrative Agent in its Individual Capacity. Frost and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory, underwriting or other
business with each Obligor and its respective Affiliates as though Frost were not Administrative
Agent and without notice to or consent of Lenders. Lenders acknowledge that, pursuant to such
activities, Frost or its Affiliates may receive information regarding any Obligor or its
Affiliates (including information that may be subject to confidentiality obligations in favor of
such Obligor or such Affiliate) and acknowledge that Administrative Agent shall be under no
obligation to provide such information to them. With respect to its interest in the Revolving
Loans, Frost shall have the same rights and powers under this Agreement as any other Lender and
may exercise such rights and powers as though it were not Administrative Agent, and the terms
“Lender” and “Lenders” include Frost in its individual capacity.



     9.9 Successor Administrative Agent. Administrative Agent may resign as Administrative Agent
upon 30 days’ notice to Lenders. If Administrative Agent resigns under this Agreement, Required
Lenders shall appoint from among Lenders a successor administrative agent for Lenders, which
successor administrative agent shall be consented to by Borrower at all times other than during the
existence of a Default (which consent of Borrower shall not be unreasonably withheld or delayed).
If no successor administrative agent is appointed prior to the effective date of the resignation of
Administrative Agent, Administrative Agent may appoint, after consulting with Lenders and Borrower,
a successor administrative agent from among Lenders. Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such successor administrative agent
shall succeed to all the rights; powers and duties of the retiring Administrative Agent and the
term “Administrative Agent” shall mean such successor administrative agent. After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this
Article IX and Sections 5.6 and 10.2 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
If no successor administrative agent has accepted appointment as Administrative Agent by the date
which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders
shall perform all of the duties of




42












 




Administrative Agent hereunder until such time, if any, as Required Lenders appoint a successor
agent as provided for above (except that in the case of any collateral security held by
Administrative Agent on behalf of Lenders under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed).




     9.10 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding
pursuant to any Debtor Relief Law or other judicial proceeding relative to any Obligor or entity
the equity or debt of which secures performance of the Obligations, Administrative Agent
(irrespective of whether the principal of any Revolving Loan or any other Obligation shall then be
due and payable as herein expressed or by declaration or otherwise and irrespective of whether
Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise



          (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Revolving Loans and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have the claims of
Lenders and Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders and Administrative Agent and their respective agents and
counsel and all other amounts due Lenders and Administrative Agent under Sections 5.6 and
10.2) allowed in such judicial proceeding; and




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



and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to
Administrative Agent and, in the event that Administrative Agent shall consent to the making of
such payments directly to Lenders, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and its agents and
counsel, and any other amounts due Administrative Agent under
Sections 5.6 and 10.2.




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



     9.11 Collateral Matters. Lenders irrevocably authorize Administrative Agent, at its option
and in its discretion, to release any Lien on any property granted to or held by Administrative
Agent under any Loan Document (x) upon termination of the Aggregate Commitments and payment in
full of all Obligations (other than contingent indemnification obligations), (y) that is sold or
to be sold as part of or in connection with any sale permitted hereunder or under any other Loan
Document, or (z) subject to Section 9.7, if approved, authorized or ratified in writing by
the Required Lenders.



43









 





     Upon request by Administrative Agent at any time, Required Lenders will confirm in writing
Administrative Agent’s authority to release or subordinate its interest in particular types or
items of property pursuant to this Section 9.11.



ARTICLE X




MISCELLANEOUS




     10.1 Notices.



          (a) All notices and other communications under this Agreement (except in those cases where
giving notice by telephone is expressly permitted) shall be in writing and shall be deemed to have
been given on the date personally delivered or sent by telecopy (answerback received), or three
days after deposit in the mail, designated as certified mail, return receipt requested,
postage-prepaid, or one day after being entrusted to a reputable commercial overnight delivery
service, addressed to the party to which such notice is directed at its address determined as
provided in this Section. All notices and other communications under this Agreement shall
be given if to Borrower, at the address specified on Schedule 10.1, if Administrative
Agent, at the address specified on Schedule 10.1, and if to any Lender, at the address
specified on Schedule 10.1.




          (b) Any party hereto may change the address to which notices shall be directed by giving ten
days’ written notice of such change to the other parties.




     10.2 Expenses. Borrower shall promptly pay:



          (a) all reasonable out-of-pocket expenses and reasonable Attorney Costs of Administrative
Agent in connection with the preparation, negotiation, execution and delivery of this Agreement
and the other Loan Documents, the transactions contemplated hereunder
and thereunder, and the
making of the Revolving Loans hereunder;




          (b) all reasonable out-of-pocket expenses and reasonable Attorney Costs of Administrative
Agent in connection with the preparation, negotiation, execution and delivery of any waiver,
amendment or consent by Lenders or Required Lenders, as appropriate, relating to this Agreement or
the other Loan Documents; and




          (c) all costs, out-of-pocket expenses and Attorney Costs of Administrative Agent and each
Lender incurred for enforcement, collection, restructuring, refinancing and “work-out”, or
otherwise incurred in obtaining performance under the Loan Documents, and all costs and
out-of-pocket expenses of collection if default is made in the payment of the Revolving Notes or
other Obligations which in each case shall include without limitation fees and expenses of
consultants, counsel for Administrative Agent, and administrative fees for Administrative Agent.




     10.3 Waivers. The rights and remedies of Administrative Agent and Lenders under
this Agreement and the other Loan Documents shall be cumulative and not exclusive of any
rights or remedies which it would otherwise have. No failure or delay by Administrative Agent or any Lender in exercising any right shall operate as a waiver of such right. Any waiver
or



44









 




indulgence granted by Administrative Agent or any Lender shall not constitute a modification of any
Loan Document, except to the extent expressly provided in such written waiver or indulgence, or
constitute a course of dealing by Administrative Agent or any Lender at variance with the terms of
any Loan Document such as to require further notice by Administrative Agent or any Lender of
Administrative Agent’s or any Lender’s intent to require strict adherence to the terms of such Loan
Document in the future. Any such actions shall not in any way affect the ability of Administrative
Agent or any Lender, in its discretion, to exercise any rights available to them under this
Agreement, any other Loan Document or under any other agreement, whether or not Administrative
Agent or any Lender is a party thereto, relating to Borrower, its Subsidiaries or other Obligors.




     10.4 Determinations by Administrative Agent and Lenders. Any material determination required
or expressly permitted to be made by Administrative Agent or any Lender under this Agreement shall
be made in its reasonable judgment and in good faith, and shall when made, absent manifest error,
constitute prima facie evidence as to the accuracy thereof.



     10.5 Set-Off. In addition to any rights now or hereafter granted under Law and not by way of
limitation of any such rights, during the existence of an Event of Default, Administrative Agent
and each Lender and any subsequent holder of any Revolving Note or other Obligations, and any
assignee or participant in any Revolving Note or other Obligation is hereby authorized by Borrower
at any time or from time to time, without notice to Borrower or any other Person, any such notice
being hereby expressly waived, to set-off, appropriate and apply any deposits (general or special
(except trust and escrow accounts), time or demand, including without limitation Debt evidenced by
certificates of deposit, in each case whether matured or unmatured) and any other Debt at any time
held or owing by Administrative Agent, such Lender, or such holder to or for the credit or the
account of Borrower, against and on account of the Obligations and other liabilities of Borrower
to Administrative Agent, such Lender, or such holder, irrespective of whether or not (a)
Administrative Agent, such Lender, or such holder shall have made any demand hereunder, or (b)
Administrative Agent, such Lender, or such holder shall have declared the principal of and
interest on any Loan and other amounts due hereunder to be due and payable as permitted by
Section 8.2 and although such obligations and liabilities, or any of them, shall be
contingent or unmatured. Any sums obtained by Administrative Agent, any Lender, or any assignee,
participant or subsequent holder of any Revolving Note or other Obligation shall be subject to pro
rata treatment of the Obligations and other liabilities hereunder. Notwithstanding any provision
of any Loan Document to the contrary, no Lender may set-off against funds in any account
containing only funds held in trust by Borrower for the benefit of a third party and which account
Borrower has disclosed to Administrative Agent as being a trust account.



     10.6 Assignment.



          (a) Neither Borrower nor any other Obligor may assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior written consent of
Administrative Agent and Lenders.








45









 








          (b) With the prior written consent of Administrative Agent (which consent by Administrative
Agent shall not be unreasonably withheld), a Lender may at any time sell participations in all or
any part in its Commitment and/or the Revolving Loans (collectively, “Participations”) to any banks
or other financial institutions (“Participants”) provided that such Participation shall not confer
on any Person (other than the parties hereto) any right to vote on, approve or sign amendments or
waivers, or any other independent benefit or any legal or equitable right, remedy or other claim
under this Agreement or any other Loan Documents, other than the right to vote on, approve, or sign
amendments or waivers or consents with respect to items that would result in (i) (A) the extension
of the date of maturity of, or (B) the extension of the due date for any payment of principal,
interest or fees respecting, or (C) the reduction of the amount of any installment of principal or
interest on or the change or reduction of any mandatory reduction required hereunder, or (D) a
reduction of the rate of interest on, the Revolving Loans; or (ii) the release of security for the
Obligations (except pursuant to this Agreement). Notwithstanding the foregoing, Borrower agrees
that Participants shall be entitled to the benefits of Article VIII and Section
10.5 as though they were a Lender. To the fullest extent it may effectively do so under Law,
Borrower agrees that any Participant may exercise any and all rights of banker’s lien, set-off and
counterclaim with respect to its Participation as fully as if such Participant were the holder of
the Revolving Loans in the amount of its Participation.




          (c) Each Lender may assign to one or more financial institutions or funds organized under the
Laws of the United States, or any state thereof, or under the Laws of any other country that is a
member of the Organization for Economic Cooperation and Development, or a political subdivision of
any such country, which is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business (each, an “Assignee”) its rights and obligations
under this Agreement and the other Loan Documents; provided, however, that (i)
each such assignment (other than an assignment to a Lender) shall be subject to the prior written
consent of Administrative Agent (which consent by Administrative Agent shall not be unreasonably
withheld) and Borrower (which consent shall not be unreasonably withheld or delayed, and provided
further, no consent of Borrower shall be required if an Event of Default exists), (ii) the amount
of the Commitment and the Loans being assigned pursuant to each such assignment (determined as of
the date of the assignment with respect to such assignment) shall in no event be less than
$3,000,000, (iii) the applicable Lender, Administrative Agent and applicable Assignee shall
execute and deliver to Administrative Agent an Assignment Agreement, together with the Revolving
Notes subject to such assignment, and (iv) the Assignee or Lender executing the Assignment
Agreement as the case may be, shall deliver to Administrative Agent a processing fee of $2,500.
Upon such execution, delivery and acceptance from and after the effective date specified in each
Assignment Agreement, which effective date shall be at least three Business Days after the
execution thereof, (A) the Assignee hereunder shall be party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment Agreement, have the
rights and obligations of a Lender hereunder and (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish such rights and be released from such obligations under this Agreement.




          (d) Upon its receipt of an Assignment Agreement executed by a Lender and an Assignee, and any
Revolving Note subject to such assignment, Borrower shall, within ten days after its receipt of
such Assignment Agreement, at its own expense, execute and deliver to







46









 







Administrative Agent in exchange for the surrendered Revolving Note a new Revolving Note payable to
the order of such Assignee in an amount equal to the portion of the Revolving Loan assigned to it
pursuant to such Assignment Agreement and a new Revolving Note to the order of the assignor in an
amount equal to the portion of the Revolving Loan retained by it hereunder. Such new Revolving
Notes shall be in an aggregate principal amount equal to the principal amount of such surrendered
Revolving Note, shall be dated the effective date of such Assignment Agreement and shall otherwise
be in substantially the form of Exhibit G. Administrative Agent shall retain all restated
Revolving Notes (marked “Restated”) until final payment in full of all Obligations, termination of
the Aggregate Commitments.




          (e) Notwithstanding anything in this Section 10.6 to the contrary, each Lender may
assign and pledge all or any portion of its interest in the Loans and its Revolving Notes to any
Federal Reserve Bank as collateral security.




          (f) Except as specifically set forth in this Section 10.6, nothing in this
Agreement or any other Loan Documents, expressed or implied, is intended to or shall confer on any
Person other than the respective parties hereto and thereto and their successors and assignees
permitted hereunder and hereunder any benefit or any legal or equitable right, remedy or other
claim under this Agreement or any other Loan Documents.




          (g) Notwithstanding anything in this Section 10.6 to the contrary, no Assignee or
Participant shall be entitled to receive any greater payment under
Article III than the
assigning or participating Lender would have been entitled to receive with respect to the interest
assigned or participated to such Assignee or Participant.




     10.7 Amendment and Waiver. The provisions of this Agreement may not be amended, modified or
waived except by the written agreement of Borrower and Required Lenders; provided,
however, that no such amendment, modification or waiver shall
be made (a) without the
consent of all Lenders, if it would (i) increase the Pro Rata Share or Commitment of any Lender,
or (ii) extend the date of maturity of, extend the due date for any payment of principal or
interest on, reduce the amount of any installment of principal or interest on, or reduce the rate
of interest on, the Revolving Loans or other amount owing under any Loan Documents, or (iii)
release any security for the Obligations (except pursuant to this Agreement), or (iv) reduce the
fees payable hereunder, or (v) revise this Section 10.7, or (vi) waive the date for
payment of any of the Obligations, or (vii) amend the definition of Required Lenders; or (b)
without the consent of Administrative Lender, if it would alter the rights, duties or obligations
of Administrative Lender. Neither this Agreement nor any term hereof may be amended orally, nor
may any provision hereof be waived orally but only by an instrument in writing the parties
required by this Section 10.7. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or extended without the
consent of such Lender.



     10.8 Confidentiality. Administrative Agent and each Lender agree to maintain the
confidentiality of the Information, except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be



47









 




informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any Governmental Authority, (c) to the extent
required by Laws or by any subpoena or similar legal process, (d) to any other Lender, (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the
written consent of Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
Administrative Agent or any Lender on a nonconfidential basis from a source other than Borrower,
any of its Subsidiaries or any other Obligor. For purposes of this
Section, “Information”
means all information received from Borrower, any other Obligor or any Subsidiary of Borrower
relating to Borrower, any other Obligor or any Subsidiary of Borrower or any of their respective
businesses, other than any such information that is available to Administrative Agent or any Lender
on a nonconfidential basis prior to disclosure by Borrower, any other Obligor or any Subsidiary of
Borrower, provided that, in the case of information received from a Borrower, any other
Obligor or any Subsidiary of Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.




     10.9 Counterparts. This Agreement may be executed in any number of counterparts, including
via facsimile, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument.



     10.10 Severability. Any provision of this Agreement which is for any reason prohibited or
found or held invalid or unenforceable by any Governmental Authority shall be ineffective to the
extent of such prohibition or invalidity or unenforceability without invalidating the remaining
provisions hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.



     10.11 Interest and Charges. It is not the intention of any parties to this Agreement to make
an agreement in violation of the Laws of any applicable jurisdiction relating to usury. Regardless
of any provision in any Loan Document, neither Administrative Agent nor any Lender shall ever be
entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the
Maximum Amount. If Administrative Agent, any Lender, or any Participant ever receives, collects or
applies, as interest, any such excess, such amount which would be excessive interest shall be
deemed a partial repayment of principal by Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Amount, Borrower and
Administrative Agent and Lenders shall, to the maximum extent permitted under Applicable Law, (a)
characterize any non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate, allocate and
spread in equal parts, the total amount of interest throughout the entire contemplated term of the
Obligations so that the interest rate is uniform



48









 




throughout the entire term of the Obligations; provided, however, that if the
Obligations are paid and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds the Maximum
Amount, Administrative Agent and Lenders shall refund to Borrower the amount of such excess or
credit the amount of such excess against the total principal amount of the Obligations owing, and,
in such event, neither Administrative Agent nor any Lender shall be subject to any penalties
provided by any Laws for contracting for, charging or receiving interest in excess of the Maximum
Amount. This Section shall control every other provision of all agreements pertaining to
the transactions contemplated by or contained in the Loan Documents.




     10.12 Replacement of Lenders. If any Lender requests compensation under Section 3.4,
or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, then Borrower may,
at its sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender
to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.6), all of its interests, rights
and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such assignment),
provided that:



          (a) The assignee Lender shall have paid to Administrative Agent the assignment fee specified
in Section 10.6(c);




          (b) such Lender shall have received payment of an amount equal to the outstanding principal
of its Revolving Loans, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other amounts);




          (c) in the case of any such assignment resulting from a claim for compensation under
Section 3.4 or payments required to be made pursuant to Section 3.1, such
assignment will result in a reduction in such compensation or payments thereafter; and




          (d) such assignment does not conflict with Applicable Laws.




     A Lender shall not be required to make any such assignment or delegation if, prior thereto,
as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to
require such assignment and delegation cease to apply.



     10.13 Exception to Covenants. No Obligor shall be deemed to be permitted to take any action or
fail to take any action which is permitted as an exception to any of the covenants contained herein
or which is within the permissible limits of any of the covenants contained herein if such action
or omission would result in the breach of any other covenant contained herein.



     10.14 USA Patriot Act Notice. Administrative Agent and each Lender hereby notify Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub.L. 107-56 (signed into
law October 26, 2001)) (the “Act”), Administrative Agent and each Lender are



49









 




required to obtain, verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow Administrative
Agent and each Lender to identify Borrower in accordance with the Act.




     10.15 Amendment and Restatement of Existing Loan Agreement. Upon satisfaction of the
conditions set forth in Sections 4.1 and 4.2, this Agreement shall be deemed to amend and
restate the Existing Loan Agreement. In no event shall the Liens and Guaranties securing the
Existing Loan Agreement or the obligations thereunder be deemed affected hereby, it being the intent
and agreement of the Obligors that the Guaranties and the Liens on the Collateral granted to secure
the obligations in connection with the Existing Loan Agreement shall not be extinguished or
impaired and shall remain valid, binding and enforceable securing the obligations under the
Existing Credit Agreement, as amended and restated hereby.



     10.16
  GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER,
IT IS AGREED THAT THE PROVISIONS OF CHAPTER 346 OF THE TEXAS FINANCE CODE SHALL NOT APPLY TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS. THE LOAN DOCUMENTS ARE PERFORMABLE IN SAN ANTONIO, BEXAR
COUNTY, TEXAS, AND BORROWER, ADMINISTRATIVE AGENT AND LENDERS WAIVE THE RIGHT TO BE SUED
ELSEWHERE. BORROWER, ADMINISTRATIVE AGENT AND LENDERS AGREE THAT THE STATE AND FEDERAL COURTS OF
TEXAS LOCATED IN SAN ANTONIO, TEXAS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.



     10.17
 WAIVER OF JURY TRIAL. EACH OF BORROWER, ADMINISTRATIVE AGENT AND LENDERS HEREBY
KNOWINGLY VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDERS ENTERING
INTO THIS AGREEMENT AND MAKING ANY LOANS.



     10.18
ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.



The Remainder of This Page Is Intentionally Left Blank.







50









 








     IN WITNESS WHEREOF, this Agreement is executed as of the date first set forth above.




	 	 	 	 	 
	 	BORROWER: CRAFTMADE INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Brad Dale Heimann
 	 
	 	 	Name:  	Brad Dale Heimann 	 
	 	 	Title:  	President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	ADMINISTRATIVE AGENT: THE FROST NATIONAL BANK,

as Administrative Agent

 	 
	 	By:  	/s/ D. Michael Randall
 	 
	 	 	Name:  	D. Michael Randall 	 
	 	 	Title:  	Senior Vice President 	 
	 



	 	 	 	 	 
	 	LENDERS: THE FROST NATIONAL BANK

 	 
	 	By:  	/s/ D. Michael Randall
 	 
	 	 	Name:  	D. Michael Randall  	 
	 	 	Title:  	Senior Vice President 	 
	 




 









 





	 	 	 	 	 
	 	WHITNEY NATIONAL BANK

 	 
	 	By:  	/s/ Kevin P. Rafferty
 	 
	 	 	Name:  	Kevin P. Rafferty 	 
	 	 	Title:  	Senior Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	COMMERCE BANK, N.A.

 	 
	 	By:  	/s/ Joe McCaddon
 	 
	 	 	Name:  	Joe McCaddon 	 
	 	 	Title:  	Senior Vice  President