**Exhibit 10.f**

 

**Execution Version**

 

 

** **

**CREDIT AGREEMENT**

 

**dated as of April 16,2009**

 

**among**

 

**CONTINENTAL MATERIALS CORPORATION,**

**as the Company,**

 

**THE VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,**

**as Lenders,**

 

**and**

 

**THE PRIVATEBANK AND TRUST COMPANY,**

**as Administrative Agent and Arranger**

 

 

 

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| SECTION 1 |   | DEFINITIONS                                                                        |                                                            | 1      |
|----------------|--------|------------------------------------------------------------------------------------|-----------------------------------------------------------------|--------|
| 1.1            |   | Definitions                                                                        |                                                            | 1      |
| 1.2            |   | Other Interpretive Provisions                                                      |                                                            | 22     |
|           |   |                                                                               |                                                            |   |
| SECTION 2 |   | COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION  AND LETTER OF CREDIT PROCEDURES |                                                            | 23     |
| 2.1            |   | Commitments                                                                        |                                                            | 23     |
|           |   | 2.1.1                                                                              | Revolving Loan Commitment                                       |   | 23 |
|           |   | 2.1.2                                                                              | Term Loan Commitment                                            |   | 23 |
|           |   | 2.1.3                                                                              | L/C Commitment                                                  |   | 23 |
| 2.2            |   | Loan Procedures                                                                    |                                                            | 24     |
|           |   | 2.2.1                                                                              | Various Types of Loans                                          |   | 24 |
|           |   | 2.2.2                                                                              | Borrowing Procedures                                            |   | 24 |
|           |   | 2.2.3                                                                              | Conversion and Continuation Procedures                          |   | 24 |
| 2.3            |   | Letter of Credit Procedures                                                        |                                                            | 25     |
|           |   | 2.3.1                                                                              | L/C Applications                                                |   | 25 |
|           |   | 2.3.2                                                                              | Participations in Letters of Credit                             |   | 26 |
|           |   | 2.3.3                                                                              | Reimbursement Obligations                                       |   | 26 |
|           |   | 2.3.4                                                                              | Funding by Lenders to Issuing Lender                            |   | 27 |
| 2.4            |   | Commitments Several                                                                |                                                            | 28     |
| 2.5            |   | Certain Conditions                                                                 |                                                            | 28     |
|           |   |                                                                               |                                                            |   |
| SECTION 3 |   | EVIDENCING OF LOANS                                                                |                                                            | 28     |
| 3.1            |   | Notes                                                                              |                                                            | 28     |
| 3.2            |   | Recordkeeping                                                                      |                                                            | 28     |
|           |   |                                                                               |                                                            |   |
| SECTION 4 |   | INTEREST                                                                           |                                                            | 29     |
| 4.1            |   | Interest Rates                                                                     |                                                            | 29     |
| 4.2            |   | Interest Payment Dates                                                             |                                                            | 29     |
| 4.3            |   | Setting and Notice of LIBOR Rates                                                  |                                                            | 29     |
| 4.4            |   | Computation of Interest                                                            |                                                            | 29     |
|           |   |                                                                               |                                                            |   |
| SECTION 5 |   | FEES                                                                               |                                                            | 29     |
| 5.1            |   | Non-Use Fee                                                                        |                                                            | 29     |
| 5.2            |   | Letter of Credit Fees                                                              |                                                            | 30     |
| 5.3            |   | Administrative Agent’s Fees                                                   |                                                            | 30     |
|           |   |                                                                               |                                                            |   |
| SECTION 6 |   | REDUCTION OR TERMINATION OF THE REVOLVING  COMMITMENT; PREPAYMENTS                 |                                                            | 30     |
| 6.1            |   | Reduction or Termination of the Revolving Commitment                               |                                                            | 30     |
|           |   | 6.1.1                                                                              | Voluntary Reduction or Termination of the Revolving  Commitment |   | 30 |
|           |   | 6.1.2                                                                              | All Reductions of the Revolving Commitment                      |   | 31 |
| 6.2            |   | Prepayments                                                                        |                                                            | 31     |
|           |   | 6.2.1                                                                              | Voluntary Prepayments                                           |   | 31 |
| 6.3            |   | Manner of Prepayments                                                              |                                                            | 32     |

 

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|           |   | 6.3.1                                                     | All Prepayments |   | 32 |
|----------------|--------|-----------------------------------------------------------|-----------------|--------|----|
| 6.4            |   | Repayments                                                |            | 32     |
|           |   | 6.4.1                                                     | Revolving Loans |   | 32 |
|           |   | 6.4.2                                                     | Term Loan       |   | 32 |
|           |   |                                                      |            |   |
| SECTION 7 |   | MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES           |            | 33     |
| 7.1            |   | Making of Payments                                        |            | 33     |
| 7.2            |   | Application of Certain Payments                           |            | 33     |
| 7.3            |   | Due Date Extension                                        |            | 33     |
| 7.4            |   | Setoff                                                    |            | 33     |
| 7.5            |   | Proration of Payments                                     |            | 34     |
| 7.6            |   | Taxes                                                     |            | 34     |
|           |   |                                                      |            |   |
| SECTION 8 |   | INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS       |            | 36     |
| 8.1            |   | Increased Costs                                           |            | 36     |
| 8.2            |   | Basis for Determining Interest Rate Inadequate or  Unfair |            | 37     |
| 8.3            |   | Changes in Law Rendering LIBOR Loans Unlawful             |            | 37     |
| 8.4            |   | Funding Losses                                            |            | 37     |
| 8.5            |   | Right of Lenders to Fund through Other Offices            |            | 38     |
| 8.6            |   | Discretion of Lenders as to Manner of Funding             |            | 38     |
| 8.7            |   | Mitigation of Circumstances; Replacement of Lenders       |            | 38     |
| 8.8            |   | Conclusiveness of Statements; Survival of Provisions      |            | 38     |
|           |   |                                                      |            |   |
| SECTION 9 |   | REPRESENTATIONS AND WARRANTIES                            |            | 38     |
| 9.1            |   | Organization                                              |            | 38     |
| 9.2            |   | Authorization; No Conflict                                |            | 39     |
| 9.3            |   | Validity and Binding Nature                               |            | 39     |
| 9.4            |   | Financial Condition                                       |            | 39     |
| 9.5            |   | No Material Adverse Change                                |            | 40     |
| 9.6            |   | Litigation and Contingent Liabilities                     |            | 40     |
| 9.7            |   | Ownership of Properties; Liens                            |            | 40     |
| 9.8            |   | Equity Ownership; Subsidiaries                            |            | 40     |
| 9.9            |   | Pension Plans                                             |            | 40     |
| 9.10           |   | Investment Company Act                                    |            | 41     |
| 9.11           |   | Intentionally Omitted                                     |            | 41     |
| 9.12           |   | Regulation U                                              |            | 41     |
| 9.13           |   | Taxes                                                     |            | 41     |
| 9.14           |   | Solvency, etc.                                            |            | 41     |
| 9.15           |   | Environmental Matters                                     |            | 42     |
| 9.16           |   | Insurance                                                 |            | 42     |
| 9.17           |   | Real Property                                             |            | 42     |
| 9.18           |   | Information                                               |            | 42     |
| 9.19           |   | Intellectual Property                                     |            | 43     |
| 9.20           |   | Burdensome Obligations                                    |            | 43     |

 

ii

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| 9.21            |   | Labor Matters                                                               |                                                        | 43     |
|-----------------|--------|-----------------------------------------------------------------------------|-------------------------------------------------------------|--------|
| 9.22            |   | No Default                                                                  |                                                        | 43     |
| 9.23            |   | Inactive Subsidiaries                                                       |                                                        | 43     |
|            |   |                                                                        |                                                        |   |
| SECTION 10 |   | AFFIRMATIVE COVENANTS                                                       |                                                        | 43     |
| 10.1            |   | Reports, Certificates and Other Information                                 |                                                        | 43     |
|            |   | 10.1.1                                                                      | Annual Report                                               |   | 43 |
|            |   | 10.1.2                                                                      | Interim Reports                                             |   | 44 |
|            |   | 10.1.3                                                                      | Compliance Certificates                                     |   | 44 |
|            |   | 10.1.4                                                                      | Reports to the SEC and to Shareholders                      |   | 45 |
|            |   | 10.1.5                                                                      | Notice of Default, Litigation and ERISA Matters             |   | 45 |
|            |   | 10.1.6                                                                      | Borrowing Base Certificates and Additional Monthly  Reports |   | 45 |
|            |   | 10.1.7                                                                      | Management Reports                                          |   | 46 |
|            |   | 10.1.8                                                                      | Projections                                                 |   | 46 |
|            |   | 10.1.9                                                                      | Subordinated Debt Notices                                   |   | 46 |
|            |   | 10.1.10                                                                     | Other Information                                           |   | 46 |
| 10.2            |   | Books, Records and Inspections                                              |                                                        | 46     |
| 10.3            |   | Maintenance of Property; Insurance                                          |                                                        | 47     |
| 10.4            |   | Compliance with Laws, Material Contracts; Payment of  Taxes and Liabilities |                                                        | 48     |
| 10.5            |   | Maintenance of Existence, etc.                                              |                                                        | 48     |
| 10.6            |   | Use of Proceeds                                                             |                                                        | 48     |
| 10.7            |   | Employee Benefit Plans                                                      |                                                        | 48     |
| 10.8            |   | Environmental Matters                                                       |                                                        | 48     |
| 10.9            |   | Further Assurances                                                          |                                                        | 49     |
| 10.10           |   | Deposit Accounts                                                            |                                                        | 49     |
| 10.11           |   | Interest Rate Protection                                                    |                                                        | 49     |
| 10.12           |   | Rocky Mountain Transaction                                                  |                                                        | 50     |
|            |   |                                                                        |                                                        |   |
| SECTION 11 |   | NEGATIVE COVENANTS                                                          |                                                        | 50     |
| 11.1            |   | Debt                                                                        |                                                        | 50     |
| 11.2            |   | Liens                                                                       |                                                        | 50     |
| 11.3            |   | Intentionally Omitted                                                       |                                                        | 50     |
| 11.4            |   | Restricted Payments                                                         |                                                        | 50     |
| 11.5            |   | Mergers, Consolidations, Sales                                              |                                                        | 51     |
| 11.6            |   | Modification of Organizational Documents                                    |                                                        | 51     |
| 11.7            |   | Transactions with Affiliates                                                |                                                        | 51     |
| 11.8            |   | Unconditional Purchase Obligations                                          |                                                        | 51     |
| 11.9            |   | Inconsistent Agreements                                                     |                                                        | 52     |
| 11.10           |   | Business Activities; Issuance of Equity                                     |                                                        | 52     |
| 11.11           |   | Investments                                                                 |                                                        | 52     |
| 11.12           |   | Restriction of Amendments to Certain Documents                              |                                                        | 53     |
| 11.13           |   | Financial Covenants                                                         |                                                        | 53     |
|            |   | 11.13.1                                                                     | Minimum Adjusted EBITDA                                     |   | 53 |
|            |   | 11.13.2                                                                     | Minimum Fixed Charge Coverage Ratio                         |   | 54 |
|            |   | 11.13.3                                                                     | Minimum Tangible Net Worth                                  |   | 54 |
|                 |        |                                                                             |                                                             |        |  |  |

 

iii

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|            |   | 11.13.4                                   | Maximum Adjusted Total Cash Flow Leverage                                              |   | 54 |
|-----------------|--------|-------------------------------------------|----------------------------------------------------------------------------------------|--------|----|
|            |   | 11.13.5                                   | Capital Expenditures                                                                   |   | 54 |
|            |   |                                      |                                                                                   |   |
| SECTION 12 |   | EFFECTIVENESS; CONDITIONS OF LENDING, ETC |                                                                                   | 54     |
| 12.1            |   | Initial Credit Extension                  |                                                                                   | 54     |
|            |   | 12.1.1                                    | Notes                                                                                  |   | 55 |
|            |   | 12.1.2                                    | Authorization Documents                                                                |   | 55 |
|            |   | 12.1.3                                    | Consents, etc.                                                                         |   | 55 |
|            |   | 12.1.4                                    | Borrowing Request and Letter of Direction                                              |   | 55 |
|            |   | 12.1.5                                    | Guaranty and Collateral Agreement                                                      |   | 55 |
|            |   | 12.1.6                                    | Perfection Certificate                                                                 |   | 55 |
|            |   | 12.1.7                                    | Mortgages                                                                              |   | 55 |
|            |   | 12.1.8                                    | Williams Furnace Mortgaged Property                                                    |   | 55 |
|            |   | 12.1.9                                    | Draft 2008 Financial Statements                                                        |   | 57 |
|            |   | 12.1.10                                   | Opinions of Counsel                                                                    |   | 57 |
|            |   | 12.1.11                                   | Insurance                                                                              |   | 57 |
|            |   | 12.1.12                                   | Intentionally Omitted                                                                  |   | 57 |
|            |   | 12.1.13                                   | Payment of Fees                                                                        |   | 57 |
|            |   | 12.1.16                                   | Field Audit Report                                                                     |   | 58 |
|            |   | 12.1.17                                   | Search Results; Lien Terminations                                                      |   | 58 |
|            |   | 12.1.18                                   | Filings, Registrations and Recordings                                                  |   | 58 |
|            |   | 12.1.19                                   | Borrowing Base Certificate                                                             |   | 58 |
|            |   | 12.1.20                                   | Closing Certificate                                                                    |   | 58 |
|            |   | 12.1.21                                   | Other                                                                                  |   | 58 |
| 12.2            |   | Conditions                                |                                                                                   | 58     |
|            |   | 12.2.1                                    | Compliance with Warranties, No Default, etc.                                           |   | 58 |
|            |   |                                      |                                                                                   |   |
| SECTION 13 |   | EVENTS OF DEFAULT AND THEIR EFFECT        |                                                                                   | 59     |
| 13.1            |   | Events of Default                         |                                                                                   | 59     |
|            |   | 13.1.1                                    | Non-Payment of the Loans, etc.                                                         |   | 59 |
|            |   | 13.1.2                                    | Cross-Default                                                                          |   | 59 |
|            |   | 13.1.3                                    | Bankruptcy, Insolvency, etc.                                                           |   | 59 |
|            |   | 13.1.4                                    | Non-Compliance with Loan Documents                                                     |   | 59 |
|            |   | 13.1.5                                    | Representations; Warranties                                                            |   | 60 |
|            |   | 13.1.6                                    | Pension Plans                                                                          |   | 60 |
|            |   | 13.1.7                                    | Litigation                                                                             |   | 60 |
|            |   | 13.1.8                                    | Invalidity of Collateral Documents, etc.                                               |   | 60 |
|            |   | 13.1.9                                    | Invalidity of Subordination Provisions, etc.                                           |   | 60 |
|            |   | 13.1.10                                   | Change of Control                                                                      |   | 61 |
|            |   | 13.1.11                                   | Material Adverse Effect. The occurrence of any event  having a Material Adverse Effect |   | 61 |
| 13.2            |   | Effect of Event of Default                |                                                                                   | 61     |
|            |   |                                      |                                                                                   |   |
| SECTION 14 |   | THE AGENT                                 |                                                                                   | 61     |
| 14.1            |   | Appointment and Authorization             |                                                                                   | 61     |
| 14.2            |   | Issuing Lender                            |                                                                                   | 62     |

 

iv

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| 14.3            |   | Delegation of Duties                               |           | 62     |
|-----------------|--------|----------------------------------------------------|----------------|--------|
| 14.4            |   | Exculpation of Administrative Agent                |           | 62     |
| 14.5            |   | Reliance by Administrative Agent                   |           | 62     |
| 14.6            |   | Notice of Default                                  |           | 63     |
| 14.7            |   | Credit Decision                                    |           | 63     |
| 14.8            |   | Indemnification                                    |           | 64     |
| 14.9            |   | Administrative Agent in Individual Capacity        |           | 64     |
| 14.10           |   | Successor Administrative Agent                     |           | 64     |
| 14.11           |   | Collateral Matters                                 |           | 65     |
| 14.12           |   | Administrative Agent May File Proofs of Claim |           | 65     |
|            |   |                                               |           |   |
| SECTION 15 |   | GENERAL                                            |           | 66     |
| 15.1            |   | Waiver; Amendments                                 |           | 66     |
| 15.2            |   | Confirmations                                      |           | 67     |
| 15.3            |   | Notices                                            |           | 67     |
| 15.4            |   | Computations                                       |           | 67     |
| 15.5            |   | Costs, Expenses and Taxes                          |           | 67     |
| 15.6            |   | Assignments; Participations                        |           | 68     |
|            |   | 15.6.1                                             | Assignments    |   | 68 |
|            |   | 15.6.2                                             | Participations |   | 69 |
| 15.7            |   | Register                                           |           | 69     |
| 15.8            |   | GOVERNING LAW                                      |           | 69     |
| 15.9            |   | Confidentiality                                    |           | 70     |
| 15.10           |   | Severability                                       |           | 70     |
| 15.11           |   | Nature of Remedies                                 |           | 70     |
| 15.12           |   | Entire Agreement                                   |           | 71     |
| 15.13           |   | Counterparts                                       |           | 71     |
| 15.14           |   | Successors and Assigns                             |           | 71     |
| 15.15           |   | Captions                                           |           | 71     |
| 15.16           |   | Customer Identification - USA Patriot Act Notice   |           | 71     |
| 15.17           |   | INDEMNIFICATION BY THE COMPANY                     |           | 71     |
| 15.18           |   | Nonliability of Lenders                            |           | 72     |
| 15.19           |   | FORUM SELECTION AND CONSENT TO JURISDICTION        |           | 73     |
| 15.20           |   | WAIVER OF JURY TRIAL                               |           | 73     |

 

v

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ANNEXES

 
| ANNEX A | Lenders and Pro Rata  Shares |
|---------|------------------------------|
| ANNEX B | Addresses for Notices        |
| ANNEX C | Applicable Margin            |

 

SCHEDULES

 
| SCHEDULE 9.6   | Litigation and  Contingent Liabilities |
|----------------|----------------------------------------|
| SCHEDULE 9.8   | Equity Ownership and  Subsidiaries     |
| SCHEDULE 9.16  | Insurance                              |
| SCHEDULE 9.17  | Real Property                          |
| SCHEDULE 9.21  | Labor Matters                          |
| SCHEDULE 11.1  | Existing Debt                          |
| SCHEDULE 11.2  | Existing Liens                         |
| SCHEDULE 11.11 | Investments                            |
| SCHEDULE 12.1  | Debt to be Repaid                      |

 

EXHIBITS

 
| EXHIBIT A | Form of Note  (Section 3.1)                                |
|-----------|----------------------------------------------------------------------|
| EXHIBIT B | Form of Compliance  Certificate (Section 10.1.3)           |
| EXHIBIT C | Form of Borrowing  Base Certificate (Section 1.1)          |
| EXHIBIT D | Form of Assignment  Agreement (Section 15.6.1)             |
| EXHIBIT E | Form of Notice of  Borrowing (Section 2.2.2)               |
| EXHIBIT F | Form of Notice of  Conversion/Continuation (Section 2.2.3) |

 

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** **

**CREDIT AGREEMENT**

 

THIS CREDIT AGREEMENTdated as of April 16, 2009 (this “Agreement”) is entered into amongCONTINENTAL MATERIALS CORPORATION, a Delaware corporation (the “Company”),the financial institutions that are or may from time to time become partieshereto (together with their respective successors and assigns, the “Lenders”)and THE PRIVATEBANK AND TRUST COMPANY, an Illinois state charteredbank (in itsindividual capacity, “PVBT”), as administrative agent for the Lendersand as arranger.

 

The Lenders have agreedto make available to the Company a term loan and a revolving credit facility(which includes letters of credit) upon the terms and conditions set forthherein.

 

In consideration of themutual agreements herein contained, the parties hereto agree as follows:

 

# SECTION 1            DEFINITIONS.

#  

## 1.1           Definitions.  When used herein the following terms shallhave the following meanings:

##  

Account Debtor is defined in the Guaranty andCollateral Agreement.

 

Account or Accounts is defined in the UCC.

 

Acquisition means any transaction or series ofrelated transactions for the purpose of or resulting, directly or indirectly,in (a) the acquisition of all or substantially all of the assets of a Person,or of all or substantially all of any business or division of a Person, (b) theacquisition of in excess of 50% of the Capital Securities of any Person, orotherwise causing any Person to become a Subsidiary, or (c) a merger orconsolidation or any other combination with another Person (other than a Personthat is already a Subsidiary).

 

Adjusted EBITDA means EBITDA for the applicableComputation Period plus any gains from Asset Dispositions, anyextraordinary gains and any gains from discontinued operations (in each case,any gains shall be net of all costs and expenses incurred in connectiontherewith and such gains shall only be included to the extent such gains weresubtracted in the calculation of EBITDA).

 

Adjusted Total Cash FlowLeverage Ratio means,as of the last day of any Fiscal Quarter, the ratio of (a) Total Debt asof such day (excluding, for purposes of the calculation of this financialcovenant only, any Funded Debt resulting from Revolving Loans made on theClosing Date to provide cash collateral in replacement of, or as collateralfor, the Existing LCs, but only for so long as such cash collateral isoutstanding) to (b) Adjusted EBITDA for the Computation Period ending onsuch day.  For the sake of clarity, thiscalculation shall be used to determine financial covenant compliance (not forthe determination of the pricing of the Obligations).

 

----

 

Administrative Agent means PVBT in its capacity asadministrative agent for the Lenders hereunder and any successor thereto insuch capacity.

 

Affected Loan - see Section 8.3.

 

Affiliate of any Person means (a) any otherPerson which, directly or indirectly, controls or is controlled by or is undercommon control with such Person, (b) any officer or director of suchPerson and (c) with respect to any Lender, any entity administered ormanaged by such Lender or an Affiliate or investment advisor thereof and whichis engaged in making, purchasing, holding or otherwise investing in commercialloans.  A Person shall be deemed to be “controlledby” any other Person if such Person possesses, directly or indirectly, power tovote 5% or more of the securities (on a fully diluted basis) having ordinaryvoting power for the election of directors or managers or power to direct orcause the direction of the management and policies of such Person whether bycontract or otherwise.  Unless expresslystated otherwise herein, neither the Administrative Agent nor any Lender shallbe deemed an Affiliate of any Loan Party.

 

Agent Fee Lettermeans the Fee Letter datedas of February 3, 2009 (effective February 19, 2009) between theCompany and the Agent, as the same may be amended, restated or supplementedfrom time to time.

 

Agreement - see the Preamble.

 

Applicable Margin - see AnnexC hereto.

 

Asset Disposition means the sale, lease, assignment orother transfer for value (each, a “Disposition”) by any Loan Party toany Person (other than a Loan Party) of any asset or right of such Loan Party(including, the loss, destruction or damage of any thereof or any actual or threatened(in writing to any Loan Party) condemnation, confiscation, requisition, seizureor taking thereof) other than (a) the Disposition of any asset which is tobe replaced, and is in fact replaced, within ninety (90) days with anotherasset performing the same or a similar function, and (b) the sale or leaseof inventory in the ordinary course of business.

 

Assignee - see Section 15.6.1.

 

Assignment Agreement - see Section 15.6.1.

 

Attorney Costs means, with respect to any Person, allreasonable fees and charges of any counsel to such Person, the reasonableallocable cost of internal legal services of such Person, all reasonabledisbursements of such internal counsel and all court costs and similar legalexpenses.

 

Bank Product Agreements means those certain cash managementservice agreements entered into from time to time between any Loan Party and aLender or its Affiliates in connection with any of the Bank Products.

 

Bank Product Obligations means all obligations, liabilities,contingent reimbursement obligations, fees, and expenses owing by the LoanParties to any Lender or its Affiliates pursuant to or evidenced by the BankProduct Agreements and irrespective of whether for the payment of 

 

2

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money, whetherdirect or indirect, absolute or contingent, due or to become due, now existingor hereafter arising, and including all such amounts that a Loan Party isobligated to reimburse to the Administrative Agent or any Lender as a result ofthe Administrative Agent or such Lender purchasing participations or executingindemnities or reimbursement obligations with respect to the Bank Productsprovided to the Loan Parties pursuant to the Bank Product Agreements.

 

Bank Products means any service or facility extendedto any Loan Party by any Lender or its Affiliates including:  (a) credit cards, (b) credit cardprocessing services, (c) debit cards, (d) purchase cards, (e) ACHtransactions, (f) cash management, including controlled disbursement,accounts or services, or (g) Hedging Agreements.

 

Base Rate means at any time the greater of (a) theFederal Funds Rate plus 0.5% and (b) the Prime Rate.

 

Base Rate Loan means any Loan which bears interest ator by reference to the Base Rate.

 

Base Rate Margin - see the definition of ApplicableMargin.

 

Borrowing Base means an amount equal to the total of (a) 80%of the unpaid amount (net of such reserves and allowances as the AdministrativeAgent deems necessary in its reasonable discretion) of all Eligible Accounts, plus(b) the lesser of (i) 50% of the value of all Eligible Inventoryvalued at the lower of cost (determined on a first in-first out or averagebasis, as the case may be, consistent with past practice) or market value (netof such reserves and allowances as the Administrative Agent deems necessary inits reasonable discretion, including, without limitation, reserves in respectof slow-moving Inventory noted in any field audit report), and (ii) $10,000,000, minus(c) the Term Loan Reserve.  Notwithstanding anything to the contrarycontained herein, the availability provided by (x) the Dating ProgramAccounts shall not exceed $5,000,000 in the aggregate, and (y) the foreignAccounts covered by foreign account receivable insurance shall not exceed$250,000 in the aggregate.

 

Borrowing BaseCertificate meansa certificate substantially in the form of Exhibit C.

 

Business Day means any day on which PVBT is open forcommercial banking business in Chicago, Illinois and, in the case of a BusinessDay which relates to a LIBOR Loan, on which dealings are carried on in theLondon interbank eurodollar market.

 

Capital Expenditures means all expenditures which, inaccordance with GAAP, would be required to be capitalized and shown on theconsolidated balance sheet of the Company, including expenditures in respect ofCapital Leases, but excluding expenditures made in connection with thereplacement, substitution or restoration of assets to the extent financed (a) frominsurance proceeds (or other similar recoveries) paid on account of the loss ofor damage to the assets being replaced or restored or (b) with awards ofcompensation arising from the taking by eminent domain or condemnation of theassets being replaced.

 

Capital Lease means, with respect to any Person, anylease of (or other agreement conveying the right to use) any real or personalproperty by such Person that, in conformity with GAAP, is accounted for as acapital lease on the balance sheet of such Person.

 

3

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Capital Securities means, with respect to any Person, allshares, interests, participations or other equivalents (however designated,whether voting or non-voting) of such Person’s capital, whether now outstandingor issued or acquired after the Closing Date, including common shares,preferred shares, membership interests in a limited liability company, limitedor general partnership interests in a partnership, interests in a Trust,interests in other unincorporated organizations or any other equivalent of suchownership interest.

 

Cash Collateralize means to deliver cash collateral to theAdministrative Agent, to be held as cash collateral for outstanding Letters ofCredit in an amount equal to 102% of the outstanding undrawn face amount ofsuch Letters of Credit, pursuant to documentation reasonably satisfactory tothe Administrative Agent.  Derivatives ofsuch term have corresponding meanings.

 

Cash EquivalentInvestment means,at any time, (a) any evidence of Debt, maturing not more than one yearafter such time, issued or guaranteed by the United States Government or anyagency thereof, (b) commercial paper, maturing not more than one year fromthe date of issue, or corporate demand notes, in each case (unless issued by aLender or its holding company) rated at least A-l by Standard & Poor’sRatings Services, a division of The McGraw-Hill Companies, Inc. or P-l byMoody’s Investors Service, Inc., (c) any certificate of deposit, timedeposit or banker’s acceptance, maturing not more than one year after suchtime, or any overnight Federal Funds transaction that is issued or sold by anyLender or its holding company (or by a commercial banking institution that is amember of the Federal Reserve System and has a combined capital and surplus andundivided profits of not less than $500,000,000), (d) any repurchaseagreement entered into with any Lender (or commercial banking institution ofthe nature referred to in clause (c)) which (i) is secured by afully perfected security interest in any obligation of the type described inany of clauses (a) through (c) above and (ii) hasa market value at the time such repurchase agreement is entered into of notless than 100% of the repurchase obligation of such Lender (or other commercialbanking institution) thereunder, (e) money market accounts or mutual fundswhich invest exclusively in assets satisfying the foregoing requirements, and (f) othershort term liquid investments approved in writing by the Administrative Agent.

 

Change of Control means the occurrence of any of thefollowing events: (a) a transfer of or accumulation of a majority of theoutstanding voting stock of the Company shall be acquired, directly orindirectly, by any Person (including any group acting together), who own on thedate hereof less than 10% of such voting stock, or (b) the Company shallcease to, directly or indirectly, own and control 100% of each class of theoutstanding Capital Securities of each Subsidiary.

 

Closing Date - see Section 12.1.

 

Code means the Internal Revenue Code of 1986.

 

Collateral as such term is defined in the Guarantyand Collateral Agreement of even date herewith executed by the Loan Parties.

 

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Collateral AccessAgreement meansan agreement in form and substance reasonably satisfactory to theAdministrative Agent pursuant to which a mortgagee or lessor of real propertyon which Collateral is stored or otherwise located, or a warehouseman,processor or other bailee of Inventory or other property owned by any Loan Party,acknowledges the Liens of the Administrative Agent and waives any Liens held bysuch Person on such property, and, in the case of any such agreement with amortgagee or lessor, permits the Administrative Agent reasonable access to anduse of such real property following the occurrence and during the continuanceof an Event of Default to assemble, complete and sell any Collateral stored orotherwise located thereon.

 

Collateral Documents means, collectively, the Guaranty andCollateral Agreement, each Mortgage, each Environmental Indemnity Agreement,each Collateral Access Agreement, each Perfection Certificate, each controlagreement and any other agreement or instrument pursuant to which the Company,any Subsidiary or any other Person grants or purports to grant collateral tothe Administrative Agent for the benefit of the Lenders or otherwise relates tosuch collateral.

 

Commitment means, as to any Lender, such Lender’scommitment to make Loans, and to issue or participate in Letters of Credit,under this Agreement.  The initial amountof each Lender’s commitment to make Loans is set forth on Annex A.

 

Company - see the Preamble.

 

Compliance Certificate means a Compliance Certificate insubstantially the form of Exhibit B.

 

Computation Period means each period of four consecutiveFiscal Quarters ending on the last day of a Fiscal Quarter.

 

Consolidated Net Income means, with respect to the Company andits Subsidiaries for any period, the net income (or loss) of the Company andits Subsidiaries for such period

 

Contingent Liability means, with respect to any Person, eachobligation and liability of such Person and all such obligations andliabilities of such Person incurred pursuant to any agreement, undertaking orarrangement by which such Person:  (a) guarantees,endorses or otherwise becomes or is contingently liable upon (by direct orindirect agreement, contingent or otherwise, to provide funds for payment, tosupply funds to, or otherwise to invest in, a debtor, or otherwise to assure acreditor against loss) the indebtedness, dividend, obligation or otherliability of any other Person in any manner (other than by endorsement ofinstruments in the course of collection), including any indebtedness, dividendor other obligation which may be issued or incurred at some future time; (b) guaranteesthe payment of dividends or other distributions upon the Capital Securities ofany other Person; (c) undertakes or agrees (whether contingently orotherwise):  (i) to purchase,repurchase, or otherwise acquire any indebtedness, obligation or liability ofany other Person or any property or assets constituting security therefor, (ii) toadvance or provide funds for the payment or discharge of any indebtedness,obligation or liability of any other Person (whether in the form of loans,advances, stock purchases, capital contributions or otherwise), or to maintainsolvency, assets, level of income, working capital or other financial conditionof any other Person, or (iii) to make payment to any other Person other 

 

5

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than for valuereceived; (d) agrees to lease property or to purchase securities, propertyor services from such other Person with the purpose or intent of assuring theowner of such indebtedness or obligation of the ability of such other Person tomake payment of the indebtedness or obligation; (e) to induce the issuanceof, or in connection with the issuance of, any letter of credit for the benefitof such other Person; or (f) undertakes or agrees otherwise to assure acreditor against loss.  The amount of anyContingent Liability shall (subject to any limitation set forth herein) bedeemed to be the outstanding principal amount (or maximum permitted principalamount, if larger) of the indebtedness, obligation or other liabilityguaranteed or supported thereby.

 

Controlled Group means all members of a controlled groupof corporations, all members of a controlled group of trades or businesses(whether or not incorporated) under common control and all members of an affiliatedservice group which, together with the Company or any of its Subsidiaries, aretreated as a single employer under Section 414 of the Code or Section 4001of ERISA.

 

Dating Program means the extended terms program madeavailable to the customers of Williams Furnace and Phoenix Manufacturing,permitting such customers to place orders and receive product during the periodfrom (i) with respect to Williams Furnace, April 1 to August 31of a particular year, which program requires such customers to pay one hundredpercent (100%) of the invoiced amount by October 10 of such year and (ii) withrespect to Phoenix Manufacturing, October 1 of a particular year to April 30of the immediately succeeding year (the “following year”), which programrequires such customers to pay fifty percent (50.0%) of the invoiced amount by June 10of the following year, and the remaining invoiced amount by July 10 of thefollowing year, such programs to be on the terms and conditions in place on thedate hereof or such other terms and conditions that are reasonably satisfactoryto the Administrative Agent.

 

Dating Program Accounts means the Accounts owing to WilliamsFurnace or Phoenix Manufacturing pursuant to the Dating Program.

 

Debt of any Person means, withoutduplication, (a) all indebtedness of such Person for borrowed money,whether or not evidenced by bonds, debentures, notes or similar instruments, (b) allobligations of such Person as lessee under Capital Leases which have been orshould be recorded as liabilities on a balance sheet of such Person inaccordance with GAAP, (c) all obligations of such Person to pay thedeferred purchase price of property or services (excluding trade accountspayable in the ordinary course of business), (d) all indebtedness securedby a Lien on the property of such Person, whether or not such indebtednessshall have been assumed by such Person; provided that if such Person hasnot assumed or otherwise become liable for such indebtedness, such indebtednessshall be measured at the fair market value of such property securing suchindebtedness at the time of determination, (e) all obligations, contingentor otherwise, with respect to the face amount of all letters of credit (whetheror not drawn), bankers’ acceptances and similar obligations issued for theaccount of such Person (including the Letters of Credit), (f) all HedgingObligations of such Person, (g) all Contingent Liabilities of such Person,(h) all Debt of any partnership of which such Person is a general partnerand (i) any Capital Securities or other equity instrument, whether or notmandatorily redeemable, that under GAAP is characterized as debt, whetherpursuant to financial accounting standards board issuance No. 150 orotherwise.

 

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Debt to be Repaid means Debt listed on Schedule 12.1.

 

Designated Proceeds - see Section 6.2.2(a).

 

Dollar and the sign “$” mean lawfulmoney of the United States of America.

 

Draft 2008 FinancialStatements meansthe draft audited, consolidated financial statements of the Company and itsSubsidiaries for the 2008 Fiscal Year, which draft is dated on or about April 14,2009.

 

Drennen Road Transaction means the transactions consummatedpursuant to that certain Possession and Use Agreement dated as of December 17,2008 (the “Possession and Use Agreement”) by and between the Company andthe City of Colorado Springs (the “City”) pursuant to which the Companymade an irrevocable grant of possession to the City for certain of the Company’sproperty located on Drennen Road, Colorado Springs, Colorado (as such propertyis more fully described in the Possession and Use Agreement) for an initialpurchase price of $2,113,600.00 and certain other amounts to be paid at a laterdate, the amount of which is currently being negotiated between the Company andthe City.  If such negotiations do notproduce an agreed upon amount within one-hundred eighty (180) days followingthe date of the Possession and Use Agreement, the City will initiate eminentdomain proceedings.

 

EBITDA means, for any Computation Period, the sum of the following with respectto the Company and its Subsidiaries each as determined in accordance with GAAP:

####  

#### (a)           ConsolidatedNet Income, plus

####  

#### (b)           federal,state and other income taxes deducted in the determination of Consolidated NetIncome, plus

####  

#### (c)           InterestExpense deducted in the determination of Consolidated Net Income, plus

####  

#### (d)           depreciation,depletion and amortization expense deducted in the determination ofConsolidated Net Income, plus

####  

#### (e)           any other non-cash charges and anyextraordinary charges deducted in the determination of Consolidated Net Income,including any asset impairment charges and write downs of goodwill (provided,however, except for non-cash charges arising in Fiscal Year 2008 and 2009relating to Rocky Mountain and other non-cash charges up to $1,000,000 in anytwelve month period (collectively, the “permitted non-cash charges”),all non-cash charges (other than the permitted non-cash charges) arising afterthe date hereof shall be reasonably acceptable to the Administrative Agent), minus

####  

#### (f)            any gains from Asset Dispositions,any extraordinary gains and any gains from discontinued operations included inthe determination of Consolidated Net Income.

 

Eligible Account shall mean anAccount owing to any Loan Party which meets each of the following requirements:

 

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#### (a)           it arises from the sale or lease ofgoods or the rendering of services which have been fully performed by such LoanParty; and if it arises from the sale or lease of goods, (i) such goodscomply with such Account Debtor’s specifications (if any) and have beendelivered to such Account Debtor and (ii) the applicable Loan Party haspossession of, or if requested by the Administrative Agent, has delivered toAdministrative Agent, delivery receipts evidencing such delivery;

####  

#### (b)           it (x) is subject to aperfected, first-priority Lien in favor of the Administrative Agent for thebenefit of the Lenders, and (y) is not subject to any other assignment,claim or Lien, in each case, other than Permitted Liens;

####  

#### (c)           it is a valid, legally enforceableand unconditional obligation of the Account Debtor with respect thereto, and isnot subject to the fulfillment of any condition whatsoever or any counterclaim,credit, allowance, discount, rebate or adjustment by the Account Debtor withrespect thereto, or to any claim by such Account Debtor denying liabilitythereunder in whole or in part and the Account Debtor has not refused to acceptand/or has not returned or offered to return any of the goods or services whichare the subject of such Account;

####  

#### (d)           there is no bankruptcy, insolvency orliquidation proceeding pending by or against the Account Debtor with respectthereto;

####  

#### (e)           the Account Debtor with respectthereto is a resident or citizen of, and is located within, the United States,unless the sale of goods or services giving rise to such Account is on letterof credit, banker’s acceptance, other credit support terms reasonablysatisfactory to the Administrative Agent, or, in the case of foreign Accountsowed to Williams Furnace or Phoenix Manufacturing, any such Account covered byforeign account receivable insurance in at least the amount of such Account (inthe case of each such foreign Account, the amount of such Account for purposesof the Borrowing Base calculation shall be equal to ninety-five percent (95%)of the original amount of such Account minus $25,000 representing theapplicable deductible);

####  

#### (f)            it is not an Account arising from a “saleon approval,” “sale or return,” “consignment” or “bill and hold” or subject toany other repurchase or return agreement;

####  

#### (g)           it is not an Account with respect towhich possession and/or control of the goods sold giving rise thereto is held,maintained or retained by any Loan Party (or by any agent or custodian of anyLoan Party) for the account of or subject to further and/or future directionfrom the Account Debtor with respect thereto;

####  

#### (h)           it arises in the ordinary course ofbusiness of the applicable Loan Party;

####  

#### (i)            if the Account Debtor is the UnitedStates or any department, agency or instrumentality thereof, the applicableLoan Party has assigned its right to payment of such Account to theAdministrative Agent for the benefit of the Lenders pursuant to the Assignmentof Claims Act of 1940, and evidence (reasonably satisfactory to theAdministrative Agent) of such assignment has been delivered to theAdministrative Agent;

####  

#### (j)            if the Account is evidenced bychattel paper or an instrument, the originals of such chattel paper orinstrument shall have been endorsed and/or assigned and delivered to the 

 

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#### Administrative Agent or, in the case of electronicchattel paper, shall be in the control of the Administrative Agent, in eachcase in a manner satisfactory to the Administrative Agent;

####  

#### (k)           such Account is evidenced by aninvoice delivered to the related Account Debtor and is not more than (i) sixty(60) days past the due date thereof as reflected in the original invoicetherefor, or (ii) one-hundred (120) days past the original invoice datetherefor (provided, however, the requirements set forth in this clause (k) shallnot apply to the Dating Program Accounts to the extent the applicable AccountDebtors are in compliance with the terms and conditions of the Dating Programwith respect to the applicable Dating Program Accounts and a Senior Officercertifies in the applicable Borrowing Base Certificate that to his or herknowledge such Account Debtors are in compliance with the Dating Program);

####  

#### (l)            it is not an Account with respect toan Account Debtor that is located in any jurisdiction which has adopted astatute or other requirement with respect to which any Person that obtainsbusiness from within such jurisdiction must file a notice of businessactivities report or make any other required filings in a timely manner inorder to enforce its claims in such jurisdiction’s courts unless (x) suchnotice of business activities report has been duly and timely filed or theapplicable Loan Party is exempt from filing such report and has provided theAdministrative Agent with satisfactory evidence of such exemption or (y) thefailure to make such filings may be cured retroactively by the applicable LoanParty for a nominal fee;

####  

#### (m)          the Account Debtor with respectthereto is not a Loan Party or an Affiliate of any Loan Party;

####  

#### (n)           it is not owed by an Account Debtorwith respect to which twenty-five percent (25%) or more of the aggregate amountof outstanding Accounts owed at such time by such Account Debtor is classifiedas ineligible under clause (k) of this definition; and

####  

#### (o)           if the aggregate amount of allAccounts owed by the Account Debtor thereon exceeds twenty-five percent (25%)of the aggregate amount of all Accounts at such time, then all Accounts owed bysuch Account Debtor in excess of such amount shall be deemed ineligible.

 

An Account which is at anytime an Eligible Account, but which subsequently fails to meet any of theforegoing requirements, shall forthwith cease to be an Eligible Account;provided, however, if such Account then meets each of the foregoingrequirements it shall again be deemed an Eligible Account.

 

Eligible Inventory shall meanInventory of any Loan Party which meets each of the following requirements:

####  

#### (a)           it (x) is subject to aperfected, first-priority Lien in favor of the Administrative Agent for thebenefit of the Lenders and (y) is not subject to any other assignment,claim or Lien, in each case, other than Permitted Liens;

####  

#### (b)           it is salable and not slow-moving,obsolete or discontinued;

 

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#### (c)           it is in the possession andcontrol of theapplicable Loan Party and it is stored and held at locations owned by theapplicable Loan Party or, if any such location is not so owned, theAdministrative Agent is in possession of a Collateral Access Agreement withrespect thereto;

####  

#### (d)           it is not Inventory produced inviolation of the Fair Labor Standards Act and subject to the “hot goods”provisions contained in Title 29 U.S.C. §215;

####  

#### (e)           it is not subject to any agreement orlicense which would restrict the Administrative Agent’s ability to sell orotherwise dispose of such Inventory;

####  

#### (f)            it is located in the United Statesor in any territory or possession of the United States that has adopted Article 9of the UCC;

####  

#### (g)           it is not “in transit” to theapplicable Loan Party or held by the applicable Loan Party on consignment;

####  

#### (h)           it is not “work-in-progress”Inventory;

####  

#### (i)            it is not supply items or packaging;

####  

#### (j)            it is not identified to any purchaseorder or contract to the extent progress or advance payments are received withrespect to such Inventory;

####  

#### (k)           it does not breach any of therepresentations, warranties or covenants pertaining to Inventory set forth inthe Loan Documents; and

####  

#### (l)            the Administrative Agent shall nothave determined in the exercise of its reasonable credit judgment that it isunacceptable due to age, type, category, quality, quantity and/or any otherreason whatsoever.

Inventory which is at anytime Eligible Inventory but which subsequently fails to meet any of theforegoing requirements shall forthwith cease to be Eligible Inventory;provided, however, if such Inventory then meets each of the foregoing requirementsit shall again be deemed Eligible Inventory.

 

Environmental Claims means all claims, however asserted, byany governmental, regulatory or judicial authority or other Person allegingpotential liability or responsibility for violation of any Environmental Law,or for release or injury to the environment.

 

Environmental IndemnityAgreement meansthe Hazardous Substance Remediation and Indemnification Agreement dated as ofthe date hereof executed and delivered by the Company in favor of theAdministrative Agent, in form and substance satisfactory to the AdministrativeAgent and as amended, restated or supplemented from time to time.

 

Environmental Laws means all present or future federal,state or local laws, statutes, common law duties, rules, regulations,ordinances and codes, together with all administrative or judicial orders,consent agreements, directed duties, requests, licenses, authorizations andpermits of, and agreements with, any governmental authority, in each caserelating to any matter 

 

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arising out of orrelating to public health and safety, or pollution or protection of theenvironment or workplace, including any of the foregoing relating to thepresence, use, production, generation, handling, transport, treatment, storage,disposal, distribution, discharge, emission, release, threatened release,control or cleanup of any Hazardous Substance.

 

ERISA means the Employee Retirement IncomeSecurity Act of 1974.

 

Event of Default means any of the events described in Section 13.1.

 

Excess Cash Flow means, for any period, the remainder of (a) Adjusted EBITDA for such period, minus  (b) the sum, without duplication, of (i) scheduled repayments of principal of the TermLoan made during such period, plus  (ii) voluntaryprepayments of the Term Loan pursuant to Section 6.2.1 during suchperiod, plus  (iii) mandatory prepayments of theTerm Loan made pursuant to Section 6.2.2 during such period to theextent the amount of such mandatory prepayment was included in Adjusted EBITDAfor such period, plus (iv) cash payments made in such periodwith respect to Capital Expenditures, plus  (v) allincome taxes paid in cash by the Loan Parties during such period, plus  (vi) cash Interest Expense of the Loan Parties duringsuch period.

 

Excluded Taxes means taxes based upon, or measured by,the Lender’s or Administrative Agent’s (or a branch of the Lender’s orAdministrative Agent’s) overall net income, overall net receipts, or overallnet profits (including franchise taxes imposed in lieu of such taxes), but onlyto the extent such taxes are imposed by a taxing authority (a) in ajurisdiction in which such Lender or Administrative Agent is organized, (b) ina jurisdiction which the Lender’s or Administrative Agent’s principal office islocated, or (c) in a jurisdiction in which such Lender’s or AdministrativeAgent’s lending office (or branch) in respect of which payments under thisAgreement are made is located.

 

ExistingLCs shall mean (a) that certain outstanding letterof credit issued by the Company’s prior lender to St. Paul Fire and MarineInsurance Co. in the amount of $4,490,000, which shall be cancelled on or priorto the Closing Date and replaced with proceeds of a Revolving Loan, and (b) thatcertain outstanding letter of credit issued by the Company’s prior lender tothe Colorado Department of Revenue, Motor Vehicle Business Group in the amountof $20,000, which shall remain outstanding on the Closing Date and be cashcollateralized with proceeds of a Revolving Loan.

 

Federal Funds Rate means, for any day, a fluctuatinginterest rate equal for each day during such period to the weighted average ofthe rates on overnight Federal funds transactions with members of the FederalReserve System arranged by Federal funds brokers, as published for such day(or, if such day is not a Business Day, for the next preceding Business Day) bythe Federal Reserve Bank of New York, or, if such rate is not so published forany day which is a Business Day, the average of the quotations for such day onsuch transactions received by the Administrative Agent from three Federal fundsbrokers of recognized standing selected by the Administrative Agent.  The Administrative Agent’s determination ofsuch rate shall be binding and conclusive absent manifest error.

 

Final 2008 FinancialStatements - see Section 9.4.

 

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Fiscal Quarter means a fiscal quarter of a Fiscal Year.

 

Fiscal Year means the fiscal year of the Company andits Subsidiaries, which period shall be the 12-month period ending on theSaturday closest to December 31 of each year.  References to a Fiscal Year with a numbercorresponding to any calendar year (e.g., “Fiscal Year 2009”) refer tothe Fiscal Year ending on the Saturday closest to December 31 of suchcalendar year.

 

Fixed Charge CoverageRatio means, forany Computation Period, the ratio of (a) the total for such period ofAdjusted EBITDA minus the sum of income taxes paid in cash by the LoanParties and all unfinanced Capital Expenditures to (b) the sum forsuch period of (i) Interest Expense plus (ii) requiredpayments of principal of Funded Debt (including the Term Loan but excluding theRevolving Loans).

 

FRB means the Board of Governors of theFederal Reserve System or any successor thereto.

 

Funded Debt means, as to any Person, all Debt ofsuch Person that matures more than one year from the date of its creation (oris renewable or extendible, at the option of such Person, to a date more thanone year from such date).

 

GAAP means generally accepted accountingprinciples set forth from time to time in the opinions and pronouncements ofthe Accounting Principles Board and the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial AccountingStandards Board (or agencies with similar functions of comparable stature andauthority within the U.S. accounting profession) and the Securities andExchange Commission, which are applicable to the circumstances as of the dateof determination.

 

Group - see Section 2.2.1.

 

Guaranty and CollateralAgreement meansthe Guaranty and Collateral Agreement dated as of the date hereof executed anddelivered by the Loan Parties, together with any joinders thereto and any otherguaranty and collateral agreement executed by a Loan Party, in each case inform and substance satisfactory to the Administrative Agent and as amended,restated or supplemented from time to time.

 

Hazardous Substances means (a) any petroleum orpetroleum products, radioactive materials, asbestos in any form that is orcould become friable, urea formaldehyde foam insulation, dielectric fluidcontaining levels of polychlorinated biphenyls, radon gas and mold; (b) anychemicals, materials, pollutant or substances defined as or included in thedefinition of “hazardous substances”, “hazardous waste”, “hazardous materials”,“extremely hazardous substances”, “restricted hazardous waste”, “toxicsubstances”, “toxic pollutants”, “contaminants”, “pollutants” or words ofsimilar import, under any applicable Environmental Law; and (c) any otherchemical, material or substance, the exposure to, or release of which isprohibited, limited or regulated by any governmental authority or for which anyduty or standard of care is imposed pursuant to, any Environmental Law.

 

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Hedging Agreement means any interest rate, currency orcommodity swap agreement, cap agreement or collar agreement, and any otheragreement or arrangement designed to protect a Person against fluctuations ininterest rates, currency exchange rates or commodity prices.

 

Hedging Obligation means, with respect to any Person, anyliability of such Person under any Hedging Agreement.  The amount of any Person’s obligation inrespect of any Hedging Obligation shall be deemed to be the incrementalobligation that would be reflected in the financial statements of such Personin accordance with GAAP.

 

HedgingObligation Amount means $300,000 in the event the Company enters intoa Hedging Agreement under Section 10.11 hereof covering fiftypercent (50%) or more of the Term Loan Commitment (provided, that if theCompany enters into a Hedging Agreement with respect to a lesser percentage ofthe Term Loan Commitment, the reserve amount shall be reduced on aproportionate basis).

 

Inactive Subsidiaries means, collectively, Continental Copper, Inc.,an Arizona corporation and Wholly-Owned Subsidiary of the Company, andContinental Catalina, Inc., an Arizona corporation and Wholly-OwnedSubsidiary of Continental Copper, Inc.

 

Indemnified Liabilities - see Section 15.17.

 

Interest Expense means for any period the consolidatedinterest expense of the Company and its Subsidiaries for such period (includingall imputed interest on Capital Leases).

 

Interest Period means, as to any LIBOR Loan, the periodcommencing on the date such Loan is borrowed or continued as, or convertedinto, a LIBOR Loan and ending on the date one, two, three or six monthsthereafter as selected by the Company pursuant to Section 2.2.2 or 2.2.3,as the case may be; provided that:

 

(a)           ifany Interest Period would otherwise end on a day that is not a Business Day,such Interest Period shall be extended to the following Business Day unless theresult of such extension would be to carry such Interest Period into anothercalendar month, in which event such Interest Period shall end on the precedingBusiness Day;

 

(b)           anyInterest Period that begins on a day for which there is no numericallycorresponding day in the calendar month at the end of such Interest Periodshall end on the last Business Day of the calendar month at the end of suchInterest Period;

 

(c)           theCompany may not select any Interest Period for a Revolving  Loan which would extend beyond the scheduledTermination Date; and

 

(d)           theCompany may not select any Interest Period for any portion of the Term Loan if,after giving effect to such selection, the aggregate principal amount of theTerm Loan having Interest Periods ending after any date on which an installmentof the Term Loan is scheduled to be repaid would exceed the

 

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aggregate principalamount of the Term Loan scheduled to be outstanding after giving effect to suchrepayment.

 

Inventory is defined in the Guaranty andCollateral Agreement.

 

Investment means, with respect to any Person, anyinvestment in another Person, whether by acquisition of any debt or CapitalSecurity, by making any loan or advance, by becoming obligated with respect toa Contingent Liability in respect of obligations of such other Person (otherthan travel and similar advances to employees in the ordinary course ofbusiness) or by making an Acquisition.

 

Issuing Lender means any Lender selected by theRequired Lenders after the date hereof, and their successors and assigns insuch capacity.

 

L/C Application means, with respect to any request forthe issuance of a Letter of Credit, a letter of credit application in the formbeing used by the Issuing Lender at the time of such request for the type ofletter of credit requested.

 

L/C Fee Rate - see the definition of ApplicableMargin.

 

Lender - see the Preamble.  References to the “Lenders” shall include theIssuing Lender; for purposes of clarification only, to the extent that PVBT (orany successor Issuing Lender) may have any rights or obligations in addition tothose of the other Lenders due to its status as Issuing Lender, its status assuch will be specifically referenced.  Inaddition to the foregoing, for the purpose of identifying the Persons entitledto share in the Collateral and the proceeds thereof under, and in accordancewith the provisions of, this Agreement and the Collateral Documents, the term “Lender”shall include Affiliates of a Lender providing a Bank Product.

 

Lender Party - see Section 15.17.

 

Letter of Credit - see Section 2.1.3.

 

LIBOR Loan means any Loan which bears interest at arate determined by reference to the LIBOR Rate.

 

LIBOR Margin - see the definition of ApplicableMargin.

 

LIBOR Office means with respect to any Lender theoffice or offices of such Lender which shall be making or maintaining the LIBORLoans of such Lender hereunder.  A LIBOROffice of any Lender may be, at the option of such Lender, either a domestic orforeign office.

 

LIBOR Ratemeans a rate of interestequal to (a) the per annum rate of interest at which United States dollardeposits for a period equal to the relevant Interest Period are offered in theLondon Interbank Eurodollar market at 11:00 a.m. (London time) twoBusiness Days prior to the commencement of such Interest Period (or threeBusiness Days prior to the commencement of such Interest Period if banks inLondon, England were not open and dealing in offshore United States dollars onsuch second preceding Business Day), as displayed in the *BloombergFinancial Markets* system (or other authoritative source selected bythe Administrative Agent in its sole 

 

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discretion), divided by (b) a number determined bysubtracting from 1.00 the then stated maximum reserve percentage fordetermining reserves to be maintained by member banks of the Federal ReserveSystem for Eurocurrency funding or liabilities as defined in Regulation D (orany successor category of liabilities under Regulation D), or as the LIBOR Rateis otherwise determined by the Administrative Agent in its sole and absolutediscretion.  The Administrative Agent’sdetermination of the LIBOR Rate shall be conclusive, absent manifest error andshall remain fixed during such Interest Period. Notwithstandinganything to the contrary contained herein, for purposes of calculating the rateof interest in this Agreement and any Note, in no event shall the LIBOR Rate bebelow two percent (2.0%).

 

Lien means, with respect to any Person, anyinterest granted by such Person in any real or personal property, asset orother right owned or being purchased or acquired by such Person (including aninterest in respect of a Capital Lease) which secures payment or performance ofany obligation and shall include any mortgage, lien, encumbrance, titleretention lien, charge or other security interest of any kind, whether arisingby contract, as a matter of law, by judicial process or otherwise.

 

Loan Documents means this Agreement, the Notes, theLetters of Credit, the Master Letter of Credit Agreement, the L/C Applications,the Agent Fee Letter, the Collateral Documents, the Subordination Agreements(if any) and all documents, instruments and agreements delivered in connectionwith the foregoing.

 

Loan Party means the Company and each Subsidiary(including, without limitation, each Guarantor referenced in the Guaranty andCollateral Agreement).

 

Loan or Loans means, as the context may require,Revolving Loans and the Term Loan.

 

Mandatory PrepaymentEvent - see Section 6.2.2(a).

 

Margin Stock means any “margin stock” as defined inRegulation U.

 

Master Letter of CreditAgreement means,at any time, with respect to the issuance of Letters of Credit, a master letterof credit agreement or reimbursement agreement in the form, if any, being usedby the Issuing Lender at such time.

 

Material Adverse Effect means (a) a material adverse changein, or a material adverse effect upon, the financial condition, operations,assets, business or properties of the Loan Parties taken as a whole, (b) amaterial impairment of the ability of any Loan Party to perform any of theObligations under any Loan Document or (c) a material adverse effect uponany substantial portion of the collateral under the Collateral Documents orupon the legality, validity, binding effect or enforceability against any LoanParty of any Loan Document.

 

Mining Royalty Agreement means that certain Fee Sand and GravelLease, dated as of October 21, 1996, by and between Valco Inc. and theCompany, as amended, restated or modified from time to time.

 

Mortgage means a mortgage, deed of trust,leasehold mortgage or similar instrument granting the Administrative Agent aLien on real property of any Loan Party.

 

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Mortgaged Property means the following real propertylocations (and the buildings and other structures located thereon) as morefully described in the applicable Mortgage: (i) parcel(s) of land located in Colton, California owned byWilliams Furnace, (ii) parcel(s) of land located in Colorado Springs,Colorado owned by McKinney Door and Hardware, Inc., and (iii) parcel(s) ofland located in Colorado Springs, Colorado owned by Transit Mix Concrete Co.

 

Multiemployer PensionPlan means amultiemployer plan, as defined in Section 4001(a)(3) of ERISA, towhich the Company or any other member of the Controlled Group may have anyliability.

 

Net Cash Proceeds means:

 

(a)                                  with respect to any Asset Disposition,the aggregate cash proceeds (including cash proceeds received pursuant topolicies of insurance or by way of deferred payment of principal pursuant to anote, installment receivable or otherwise, but only as and when received)received by any Loan Party pursuant to such Asset Disposition net of (i) thedirect costs relating to such sale, transfer or other disposition (includingsales commissions and legal, accounting and investment banking fees), (ii) taxespaid or reasonably estimated by the Company to be payable as a result thereof(after taking into account any available tax credits or deductions and any taxsharing arrangements) and (iii) amounts required to be applied to therepayment of any Debt secured by a Lien on the asset subject to such AssetDisposition (other than the Loans);

 

(b)                                 with respect to any issuance of CapitalSecurities, the aggregate cash proceeds received by any Loan Party pursuant tosuch issuance, net of the direct costs relating to such issuance (includingsales and underwriters’ commissions); and

 

(c)                                  with respect to any issuance of Debt, theaggregate cash proceeds received by any Loan Party pursuant to such issuance,net of the direct costs of such issuance (including up-front, underwriters’ andplacement fees).

 

Net Worth means, as of any date, the sum of thecapital stock and additional paid-in capital plus retained earnings (orminus accumulated deficit) calculated in conformity with GAAP.

 

Non-U.S. Participant - see Section 7.6(d).

 

Non-Use Fee Rate - see the definition of ApplicableMargin.

 

Note means a promissory note substantially inthe form of Exhibit A.

 

Notice of Borrowing - see Section 2.2.2.

 

Notice ofConversion/Continuation - see Section 2.2.3.

 

Obligations means all obligations (monetary(including post-petition interest, allowed or not) or otherwise) of any LoanParty under this Agreement and any other Loan Document 

 

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including AttorneyCosts and any reimbursement obligations of each Loan Party in respect ofLetters of Credit and surety bonds, all Hedging Obligations permitted hereunderwhich are owed to any Lender or its Affiliate or Administrative Agent, and allBank Products Obligations, all in each case howsoever created, arising orevidenced, whether direct or indirect, absolute or contingent, now or hereafterexisting, or due or to become due.

 

PBGC means the Pension Benefit GuarantyCorporation and any entity succeeding to any or all of its functions underERISA.

 

Participant - see Section 15.6.2.

 

Pension Plan means a “pension plan”, as such term isdefined in Section 3(2) of ERISA, which is subject to Title IV ofERISA or the minimum funding standards of ERISA (other than a MultiemployerPension Plan), and as to which the Company or any member of the ControlledGroup may have any liability, including any liability by reason of having beena substantial employer within the meaning of Section 4063 of ERISA at anytime during the preceding five years, or by reason of being deemed to be acontributing sponsor under Section 4069 of ERISA.

 

Perfection Certificate means a perfection certificate executedand delivered to the Administrative Agent by a Loan Party.

 

Permitted Lien means (i) Liens for Taxes,assessments or other governmental charges not at the time delinquent orthereafter payable without penalty or being contested in good faith byappropriate proceedings and, in each case, for which it maintains adequatereserves in accordance with GAAP and in respect of which no Lien senior to theLiens of the Administrative Agent has been filed; (ii) Liens arising inthe ordinary course of business (such as (a) Liens of carriers,warehousemen, mechanics and materialmen and other similar Liens imposed by law,and (b) Liens in the form of deposits or pledges incurred in connectionwith worker’s compensation, unemployment compensation and other types of socialsecurity (excluding Liens arising under ERISA) or in connection with suretybonds, bids, performance bonds and similar obligations) for sums not overdue orbeing contested in good faith by appropriate proceedings and not involving anyadvances or borrowed money or the deferred purchase price of property orservices, which do not in the aggregate materially detract from the value ofthe property or assets of any Loan Party or materially impair the use thereofin the operation of any Loan Party’s business and, in each case, for which itmaintains adequate reserves in accordance with GAAP and in respect of which noLien senior to the Liens of the Administrative Agent has been filed; (iii) Liensdescribed on Schedule 11.2 as of the Closing Date; (iv) attachments,appeal bonds, judgments and other similar Liens, for sums not exceeding TwoHundred Fifty Thousand and 00/100 Dollars ($250,000.00) arising in connectionwith court proceedings, provided the execution or other enforcement ofsuch Liens is effectively stayed and the claims secured thereby are beingactively contested in good faith and by appropriate proceedings and to theextent such judgments or awards do not constitute an Event of Default under Section 13.1.7hereof; (v) easements, rights of way, restrictions, minor defects orirregularities in title (including leasehold title) and other similar Liens notinterfering in any material respect with the ordinary conduct of the businessof any Loan Party; (vi) subject to the limitation set forth in Section 11.1(v),Liens arising in connection with capitalized leases (and attaching only to theproperty being leased) and Liens that constitute purchase money securityinterests on any property securing Indebtedness 

 

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incurred for the purpose of financing all or any part of the cost ofacquiring such property, provided that any such Lien attaches to suchproperty within twenty (20) days of the acquisition thereof and attaches solelyto the property so acquired; (vii) Liens granted to the AdministrativeAgent for the benefit of the Lenders hereunder and under the other LoanDocuments; (viii) customaryrights of set-off in favor of banks existing solely with respect to cash andcash equivalents on deposit in one or more accounts maintained by any LoanParty and not in violation of this Agreement (to the extent arising in theordinary course of business and not in connection with any financing); (ix) thefiling of UCC financing statements solely as a precautionary measure inconnection with operating leases permitted under this Agreement; (x) Lienson premium refunds and insurance proceeds granted in favor of insurancecompanies (or their financing affiliates) in connection with the financing ofinsurance premiums; and (xi) extensions, renewals or replacements of any Lienreferred to in clauses (i) through (x) of this definition, providedthat the principal amount of the Debt secured thereby is not increased and thatany such extension, renewal or replacement is limited to the assets originallyencumbered thereby.

 

Person means any natural person, corporation,partnership, trust, limited liability company, association, governmentalauthority or unit, or any other entity, whether acting in an individual,fiduciary or other capacity.

 

PhoenixManufacturing means Phoenix Manufacturing, Inc., an Arizonacorporation and a Loan Party.

 

Prime Rate means, for any day, the rate of interestin effect for such day as publicly announced from time to time by theAdministrative Agent as its prime rate (whether or not such rate is actuallycharged by the Administrative Agent), which is not intended to be theAdministrative Agent’s lowest or most favorable rate of interest at any onetime.  Any change in the Prime Rateannounced by the Administrative Agent shall take effect at the opening ofbusiness on the day specified in the public announcement of such change; providedthat the Administrative Agent shall not be obligated to give notice of anychange in the Prime Rate. Notwithstanding anything to the contrary contained herein, for purposesof calculating the rate of interest in this Agreement and any Note, in no eventshall the Prime Rate be below four percent (4.0%).

 

ProRata Share means:

 

(a)                                  with respect to a Lender’s obligation tomake Revolving Loans, participate in Letters of Credit, reimburse the IssuingLender, and receive payments of principal, interest, fees, costs, and expenseswith respect thereto, (x) prior to the Revolving Commitment beingterminated or reduced to zero, the percentage obtained by dividing (i) suchLender’s Revolving Commitment, by (ii) the aggregate Revolving Commitmentof all Lenders and (y) from and after the time the Revolving Commitmenthas been terminated or reduced to zero, the percentage obtained by dividing (i) theaggregate unpaid principal amount of such Lender’s Revolving Outstandings by (ii) theaggregate unpaid principal amount of all Revolving Outstandings;

 

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(b)                                 with respect to a Lender’s obligation tomake the Term Loan and receive payments of interest, fees, and principal withrespect thereto, (x) prior to the making of the Term Loan, the percentageobtained by dividing (i) such Lender’s Term Loan Commitment, by (ii) theaggregate amount of all Lenders’ Term Loan Commitments, and (y) from andafter the making of the Term Loan, the percentage obtained by dividing (i) theprincipal amount of such Lender’s Term Loan by (ii) the aggregateprincipal amount of the Term Loan; and

 

(c)                                  with respect to all other matters as to aparticular Lender, the percentage obtained by dividing (i) such Lender’sRevolving Commitment plus such Lender’s Term Loan Commitment, by (ii) theaggregate amount of the Revolving Commitment of all Lenders plus theTerm Loan Commitment of all Lenders; provided that in the event theCommitments have been terminated or reduced to zero, Pro Rata Share shall bethe percentage obtained by dividing (A) the principal amount of suchLender’s Revolving Outstandings plus the unpaid principal amount of suchLender’s Term Loan by (B) the principal amount of all outstandingRevolving Outstandings plus the unpaid principal amount of all TermLoans of all Lenders.

 

PVBT - see the Preamble.

 

Regulation D means Regulation D of the FRB.

 

Regulation U means Regulation U of the FRB.

 

Reportable Event means a reportable event as defined in Section 4043of ERISA and the regulations issued thereunder as to which the PBGC has notwaived the notification requirement  of Section 4043(a),or the failure of a Pension Plan to meet the minimum funding standards of Section 412of the Code (without regard to whether the Pension Plan is a plan described in Section 4021(a)(2) ofERISA) or under Section 302 of ERISA.

 

Required Lenders means, at any time, Lenders having Pro Rata Shares (as determinedpursuant to clause (c) of the definition of “Pro Rata Shares”) aggregatingat least sixty-six and two-thirds percent (66.67%); provided that if atany time there are two or fewer Lenders, “Required Lenders” shall mean allLenders.

 

Revolving Commitment means $20,000,000, as reduced from timeto time pursuant to Section 6.1.

 

Revolving Loan - see Section 2.1.1.

 

Revolving LoanAvailabilitymeans the lesser of (i) the Revolving Commitment and (ii) theBorrowing Base.

 

Revolving Outstandings means, at any time, the sum of (a) theaggregate principal amount of all outstanding Revolving Loans, plus (b) theStated Amount of all Letters of Credit, plus (c) the HedgingObligation Amount.

 

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Rocky Mountain means Rocky Mountain Ready Mix Concrete, Inc.,a Colorado corporation and a Subsidiary of the Company.

 

Rocky MountainTransaction meansthe sale of substantially all of the assets of Rocky Mountain or the sale ofall of the Capital Securities owned by the Company in Rocky Mountain.

 

SEC means the Securities and ExchangeCommission or any other governmental authority succeeding to any of theprincipal functions thereof.

 

Senior Officer means, with respect to any Loan Party,any of the chief executive officer, the chief financial officer, the chiefoperating officer, the corporate secretary, the controller or the treasurer ofsuch Loan Party.

 

Stated Amount means, with respect to any Letter ofCredit at any date of determination, (a) the maximum aggregate amountavailable for drawing thereunder under any and all circumstances plus (b) theaggregate amount of all unreimbursed payments and disbursements under suchLetter of Credit to the extent such unreimbursed amounts have not beenconverted into Revolving Loans.

 

Subordinated Debt means any unsecured Debt of the Companywhich has subordination terms, covenants, pricing and other terms which havebeen approved in writing by the Required Lenders.

 

Subordinated DebtDocuments meansall documents and instruments relating to the Subordinated Debt and allamendments and modifications thereof approved by the Administrative Agent.

 

Subordination Agreements means all subordination agreementsexecuted by a holder of Subordinated Debt in favor of the Administrative Agentand the Lenders from time to time after the Closing Date in form and substanceand on terms and conditions satisfactory to Administrative Agent.

 

Subsidiary means, with respect to any Person, acorporation, partnership, limited liability company or other entity of whichsuch Person owns, directly or indirectly, such number of outstanding CapitalSecurities as have more than 50% of the ordinary voting power for the electionof directors or other managers of such corporation, partnership, limitedliability company or other entity. Unless the context otherwise requires, each reference to Subsidiariesherein shall be a reference to Subsidiaries of the Company.

 

Tangible Net Worthmeansthe sum of the following with respect to the Company and its Subsidiaries:  (i) Net Worth plus Subordinated Debt, ifany; minus (ii) goodwill, patents, trademarks, service marks, tradenames, copyrights, prepaid expenses, deposits, deferred charges and all otherintangible assets and all items that are treated as intangible assets underGAAP; minus (iii) all obligations owed to the Company or any of itsSubsidiaries by any Affiliate or any of its Subsidiaries; and minus (iv) allloans owed by its officers, stockholders, Subsidiaries or employees.

 

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Taxes means any and all present and futuretaxes, duties, levies, imposts, deductions, assessments, charges orwithholdings, and any and all liabilities (including interest and penalties andother additions to taxes) with respect to the foregoing, but excluding ExcludedTaxes.

 

Term Loan Commitment means $10,000,000.

 

Term Loan Maturity Date means the earlier of (a) April 16,2012 or (b) the Termination Date.

 

Term Loan — see Section 2.1.2.

 

Term Loan Reserve means $5,000,000; provided that the TermLoan Reserve shall be eliminated to the extent (and only to the extent) theWilliams Furnace Valuation equals or exceeds $5,000,000.

 

Termination Date means the earlier to occur of (a) April 16,2012 or (b) such other date on which the Commitments terminate pursuant toSection 6 or Section 13.

 

Termination Event means, with respect to a Pension Planthat is subject to Title IV of ERISA, (a) a Reportable Event, (b) thewithdrawal of Company or any other member of the Controlled Group from suchPension Plan during a plan year in which Company or any other member of theControlled Group was a “substantial employer” as defined in Section 4001(a)(2) ofERISA or was deemed such under Section 4068(f) of ERISA, (c) thetermination of such Pension Plan, the filing of a notice of intent to terminatethe Pension Plan or the treatment of an amendment of such Pension Plan as atermination under Section 4041 of ERISA, (d) the institution by thePBGC of proceedings to terminate such Pension Plan or (e) any event orcondition that might constitute grounds under Section 4042 of ERISA forthe termination of, or appointment of a trustee to administer, such PensionPlan.

 

Total Cash Flow LeverageRatio means, asof the last day of any Fiscal Quarter, the ratio of (a) Total Debt as ofsuch day to (b) EBITDA for the Computation Period ending on such day.  For the sake of clarity, this calculationshall be used to determine the pricing of the Obligations (not for thedetermination of financial covenant compliance).

 

Total Debt means all Debt of the Company and itsSubsidiaries, determined on a consolidated basis, excluding (a) contingentobligations in respect of Contingent Liabilities (except to the extentconstituting Contingent Liabilities in respect of Debt of a Person other thanany Loan Party), (b) Hedging Obligations, (c) Debt of the Company toSubsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries,and (d) contingent obligations in respect of undrawn letters of credit.

 

Total Plan Liability means, at any time, the present value ofall vested and unvested accrued benefits under all Pension Plans, determined asof the then most recent valuation date for each Pension Plan, using PBGCactuarial assumptions for single employer plan terminations.

 

Type - see Section 2.2.1.

 

UCC is defined in the Guaranty andCollateral Agreement.

 

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Unfunded Liability means the amount (if any) by which thepresent value of all vested and unvested accrued benefits under all PensionPlans exceeds the fair market value of all assets allocable to those benefits,all determined as of the then most recent valuation date for each Pension Plan,using PBGC actuarial assumptions for single employer plan terminations.

 

Unmatured Event ofDefault means anyevent that, if it continues uncured, will, with lapse of time or notice orboth, constitute an Event of Default.

 

WilliamsFurnace means Williams Furnace Co., a Delaware corporation and a Loan Party.

 

Williams FurnaceValuation meansan amount determined pursuant to the following formula:  (a) $7,000,000 multiplied byseventy-five percent (75%), minus (b) the Williams FurnaceRemediation Expense.

 

Williams FurnaceRemediation Expensemeans the aggregate estimated remediation expense reasonably determined by theAdministrative Agent in consultation with its environmental consultants andagents after receipt of the Phase II results in respect of the MortgagedProperty owned by Williams Furnace.

 

Withholding Certificate - see Section 7.6(d).

 

Wholly-Owned Subsidiary means, as to any Person, a Subsidiaryall of the Capital Securities of which (except directors’ qualifying CapitalSecurities) are at the time directly or indirectly owned by such Person and/oranother Wholly-Owned Subsidiary of such Person.

##  

## 1.2                                 OtherInterpretive Provisions.  (a) The meanings of defined terms are equally applicable to the singular and pluralforms of the defined terms.

####  

#### (b)                                 Section,Annex, Schedule and Exhibit references are to thisAgreement unless otherwise specified.

####  

#### (c)                                  Theterm “including” is not limiting and means “including without limitation.”

####  

#### (d)                                 Inthe computation of periods of time from a specified date to a later specifieddate, the word “from” means “from and including”; the words “to” and “until”each mean “to but excluding”, and the word “through” means “to and including.”

####  

#### (e)                                  Unlessotherwise expressly provided herein, (i) references to agreements(including this Agreement and the other Loan Documents) and other contractualinstruments shall be deemed to include all subsequent amendments, restatements,supplements and other modifications thereto, but only to the extent suchamendments, restatements, supplements and other modifications are notprohibited by the terms of any Loan Document, and (ii) references to anystatute or regulation shall be construed as including all statutory andregulatory provisions amending, replacing, supplementing or interpreting suchstatute or regulation.

####  

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#### (f)                                    ThisAgreement and the other Loan Documents may use several different limitations,tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurementsare cumulative and each shall be performed in accordance with its terms.

####  

#### (g)                                 ThisAgreement and the other Loan Documents are the result of negotiations among andhave been reviewed by counsel to the Administrative Agent, the Company, theLenders and the other parties thereto and are the products of all parties.  Accordingly, they shall not be construedagainst the Administrative Agent or the Lenders merely because of theAdministrative Agent’s or Lenders’ involvement in their preparation.

#  

| SECTION 2 | COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION  AND LETTER OF CREDIT PROCEDURES. |
|----------------|-------------------------------------------------------------------------------------|

##  

## 2.1                                 Commitments.  On and subject to the terms and conditions ofthis Agreement, each of the Lenders, severally and for itself alone, agrees tomake loans to, and to issue or participate in letters of credit for the accountof, the Company as follows:

###  

### 2.1.1            Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitmentagrees to make loans on a revolving basis (“Revolving Loans”) from timeto time until the Termination Date in such Lender’s Pro Rata Share of suchaggregate amounts as the Company may request from all Lenders; provided thatthe Revolving Outstandings will not at any time exceed Revolving LoanAvailability.

###  

### 2.1.2            Term Loan Commitment.  Each Lender with a Term Loan Commitmentagrees to make a loan to the Company (collectively, the “Term Loan”) onthe Closing Date in such Lender’s Pro Rata Share of the Term LoanCommitment.  The Commitments of theLenders to make Term Loans shall expire concurrently with the making of theTerm Loans on the Closing Date.

###  

### 2.1.3            L/C Commitment.  Subject to Section 2.3.1, theIssuing Lender agrees to issue letters of credit, in each case containing suchterms and conditions as are permitted by this Agreement and are reasonablysatisfactory to the Issuing Lender (each, a “Letter of Credit”), at therequest of and for the account of the Company or the other Loan Parties at thedirection of the Company from time to time before the scheduled TerminationDate and, as more fully set forth in Section 2.3.2, each Lenderagrees to purchase a participation in each such Letter of Credit; providedthat (a) the aggregate Stated Amount of all Letters of Credit shall not atany time exceed $5,000,000 and (b) the Revolving Outstandings shall not atany time exceed Revolving Loan Availability. The Company acknowledges and agrees that, notwithstanding anything tothe contrary contained herein, no Letters of Credit will be issued hereunderuntil such time as an additional Lender becomes a party to the Loan Documentsand the Company enters into all required letter of credit agreements anddocuments with such additional Lender; provided, however, in the event theCompany or any other Loan Party requires a Letter of Credit prior to the dateon which an additional Lender becomes a party to the Loan Documents, PVBT willact as the initial Issuing Lender (to the extent the beneficiary will accept aLetter of Credit issued by PVBT) once the Company enters into all requiredletter of credit agreements and documents with PVBT.

 

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##  

## 2.2                                 Loan Procedures.

##  

### 2.2.1            Various Types of Loans.  EachRevolving Loan shall be, and the Term Loan may be divided into tranches whichare, either a Base Rate Loan or a LIBOR Loan (each a “type” of Loan), asthe Company shall specify in the related notice of borrowing or conversionpursuant to Section 2.2.2 or 2.2.3.  LIBOR Loans having the same Interest Periodwhich expire on the same day are sometimes called a “Group” orcollectively “Groups”.  Base RateLoans and LIBOR Loans may be outstanding at the same time, provided thatnot more than three (3) different Groups of LIBOR Loans shall beoutstanding with respect to the Revolving Commitment at any one time, and notmore than three (3) different Groups of LIBOR Loans shall be outstandingwith respect to the Term Loan Commitment at any one time.  All borrowings, conversions and repayments ofLoans shall be effected so that each Lender will have a ratable share(according to its Pro Rata Share) of all types and Groups of Loans.

###  

### 2.2.2            Borrowing Procedures.  The Companyshall give written notice (each such written notice, a “Notice of Borrowing”)substantially in the form of Exhibit E or telephonic notice(followed immediately by a Notice of Borrowing) to the Administrative Agent ofeach proposed borrowing not later than (a) in the case of a Base Rateborrowing, 11:00 A.M., Chicago time, on the proposed date of suchborrowing, and (b) in the case of a LIBOR borrowing, 11:00 A.M.,Chicago time, at least three Business Days prior to the proposed date of suchborrowing.  Each such notice shall beeffective upon receipt by the Administrative Agent, shall be irrevocable, andshall specify the date, amount and type of borrowing and, in the case of aLIBOR borrowing, the initial Interest Period therefor.  Promptly upon receipt of such notice, theAdministrative Agent shall advise each Lender thereof.  Not later than 1:00 P.M., Chicago time,on the date of a proposed borrowing, each Lender shall provide theAdministrative Agent at the office specified by the Administrative Agent withimmediately available funds covering such Lender’s Pro Rata Share of suchborrowing and, so long as the Administrative Agent has not received writtennotice that the conditions precedent set forth in Section 12 withrespect to such borrowing have not been satisfied, the Administrative Agentshall pay over the funds received by the Administrative Agent to the Company onthe requested borrowing date.  Eachborrowing shall be on a Business Day. Each Base Rate borrowing shall be in an aggregate amount of at least$100,000 and an integral multiple of $100,000, and each LIBOR borrowing shallbe in an aggregate amount of at least $500,000 and an integral multiple of atleast $100,000.

###  

### 2.2.3            Conversion and Continuation Procedures.  (a) Subject to Section 2.2.1, the Company may, upon irrevocable writtennotice to the Administrative Agent in accordance with clause (b) below:

###  

##### (A)                              elect, as of any Business Day, to convertany Loans (or any part thereof in an aggregate amount not less than $500,000 ora higher integral multiple of $100,000) into Loans of the other type; or

#####  

##### (B)                                elect, as of the last day of theapplicable Interest Period, to continue any LIBOR Loans having Interest Periodsexpiring on such day (or any part thereof in an aggregate 

 

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#####  

##### amount not less than $500,000 or a higher integralmultiple of $100,000) for a new Interest Period;

#####  

provided that after giving effect to any prepayment,conversion or continuation, the aggregate principal amount of each Group ofLIBOR Loans shall be at least $500,000 and an integral multiple of $100,000.

 

#### (b)                                 The Company shall give written notice(each such written notice, a “Notice of Conversion/Continuation”)substantially in the form of Exhibit F or telephonic notice(followed immediately by a Notice of Conversion/Continuation) to theAdministrative Agent of each proposed conversion or continuation not later than(i) in the case of conversion into Base Rate Loans, 11:00 A.M.,Chicago time, on the proposed date of such conversion and (ii) in the caseof conversion into or continuation of LIBOR Loans, 11:00 A.M., Chicagotime, at least three Business Days prior to the proposed date of suchconversion or continuation, specifying in each case:

####  

##### (A)                              the proposed date of conversion orcontinuation;

#####  

##### (B)                                the aggregate amount of Loans to beconverted or continued;

#####  

##### (C)                                the type of Loans resulting from theproposed conversion or continuation; and

#####  

##### (D)                               in the case of conversion into, orcontinuation of, LIBOR Loans, the duration of the requested Interest Periodtherefor.

#####  

#### (c)                                  If upon the expiration of any InterestPeriod applicable to LIBOR Loans, the Company has failed to select timely a newInterest Period to be applicable to such LIBOR Loans, the Company shall be deemedto have elected to convert such LIBOR Loans into Base Rate Loans effective onthe last day of such Interest Period.

####  

#### (d)                                 The Administrative Agent will promptlynotify each Lender of its receipt of a notice of conversion or continuationpursuant to this Section 2.2.3 or, if no timely notice is providedby the Company, of the details of any automatic conversion.

####  

#### (e)                                  Any conversion of a LIBOR Loan on a dayother than the last day of an Interest Period therefor shall be subject to Section 8.4.

####  

## 2.3                                 Letter of Credit Procedures.

##  

### 2.3.1            L/C Applications.  The Company shall execute anddeliver to the Issuing Lender the Master Letter of Credit Agreement from timeto time in effect.  The Company shallgive notice to the Administrative Agent and the Issuing Lender of the proposedissuance of each Letter of Credit on a Business Day which is at least three (3) BusinessDays (or such lesser number of days as the Administrative Agent and the IssuingLender shall agree in any particular instance in their sole discretion) priorto the proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by anL/C Application, duly executed by the Company and in all respects satisfactoryto the Administrative Agent and the 

 

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###  

### Issuing Lender, together with such other documentationas the Administrative Agent or the Issuing Lender may request in supportthereof, it being understood that each L/C Application shall specify, amongother things, the date on which the proposed Letter of Credit is to be issued,the expiration date of such Letter of Credit (which shall not be later than thescheduled Termination Date (unless such Letter of Credit is CashCollateralized)) and whether such Letter of Credit is to be transferable inwhole or in part.  Any Letter of Creditoutstanding after the scheduled Termination Date which is Cash Collateralizedfor the benefit of the Issuing Lender shall be the sole responsibility of the IssuingLender.  So long as the Issuing Lenderhas not received written notice that the conditions precedent set forth in Section 12with respect to the issuance of such Letter of Credit have not been satisfied,the Issuing Lender shall issue such Letter of Credit on the requested issuancedate.  The Issuing Lender shall promptlyadvise the Administrative Agent of the issuance of each Letter of Credit and ofany amendment thereto, extension thereof or event or circumstance changing theamount available for drawing thereunder. In the event of any inconsistency between the terms of the Master Letterof Credit Agreement, any L/C Application and the terms of this Agreement, theterms of this Agreement shall control.

###  

### 2.3.2            Participations in Letters of Credit.  Concurrentlywith the issuance of each Letter of Credit, the Issuing Lender shall be deemedto have sold and transferred to each Lender with a Revolving Loan Commitment,and each such Lender shall be deemed irrevocably and unconditionally to havepurchased and received from the Issuing Lender, without recourse or warranty,an undivided interest and participation, to the extent of such Lender’s ProRata Share, in such Letter of Credit and the Company’s reimbursementobligations with respect thereto.  If theCompany does not pay any reimbursement obligation when due, the Company shallbe deemed to have immediately requested that the Lenders make a Revolving Loanwhich is a Base Rate Loan in a principal amount equal to such reimbursementobligations.  The Administrative Agentshall promptly notify such Lenders of such deemed request and, without thenecessity of compliance with the requirements of Section 2.2.2, Section 12.2or otherwise such Lender shall make available to the Administrative Agent itsPro Rata Share of such Loan.  Theproceeds of such Loan shall be paid over by the Administrative Agent to theIssuing Lender for the account of the Company in satisfaction of suchreimbursement obligations.  For thepurposes of this Agreement, the unparticipated portion of each Letter of Creditshall be deemed to be the Issuing Lender’s “participation” therein.  The Issuing Lender hereby agrees, uponrequest of the Administrative Agent or any Lender, to deliver to theAdministrative Agent or such Lender a list of all outstanding Letters of Creditissued by the Issuing Lender, together with such information related thereto asthe Administrative Agent or such Lender may reasonably request.

###  

### 2.3.3            Reimbursement Obligations.  (a) TheCompany hereby unconditionally and irrevocably agrees to reimburse the Issuing Lenderfor each payment or disbursement made by the Issuing Lender under any Letter ofCredit honoring any demand for payment made by the beneficiary thereunder, ineach case on the date that such payment or disbursement is made.  Any amountnot reimbursed on the date of such payment or disbursement shall bear interestfrom the date of such payment or disbursement to the date that the IssuingLender is reimbursed by the Company therefor at a rate per annum equal to theBase Rate from time to time in effect plus the Base Rate Margin fromtime to time in effect (plus the default rate of 

 

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###  

### interest set forth in Section 4.1to the extent an Event of Default exists). If any reimbursement obligation is not paid on the day a payment ordisbursement is made by the Issuing Lender under a Letter of Credit, theCompany hereby authorizes and directs the Administrative Agent to increase theprincipal balance of the Revolving Loan as a Base Rate Loan in an amount equalto such payment or disbursement made by the Issuing Lender with respect to suchLetter of Credit, except that if Revolving Loans are not available at such timeas a result of the existence of an Event of Default or otherwise, thereimbursement obligation (including all interest accrued thereon) shall bepayable on demand.  The Issuing Lender shall notify theCompany and the Administrative Agent whenever any demand for payment is madeunder any Letter of Credit by the beneficiary thereunder; provided thatthe failure of the Issuing Lender to so notify the Company or theAdministrative Agent shall not affect the rights of the Issuing Lender or theLenders in any manner whatsoever.

###  

(b)                                 The Company’s reimbursement obligationshereunder shall be irrevocable and unconditional under all circumstances,including (a) any lack of validity or enforceability of any Letter ofCredit, this Agreement or any other Loan Document, (b) the existence ofany claim, set-off, defense or other right which any Loan Party may have at anytime against a beneficiary named in a Letter of Credit, any transferee of anyLetter of Credit (or any Person for whom any such transferee may be acting),the Administrative Agent, the Issuing Lender, any Lender or any other Person,whether in connection with any Letter of Credit, this Agreement, any other LoanDocument, the transactions contemplated herein or any unrelated transactions(including any underlying transaction between any Loan Party and thebeneficiary named in any Letter of Credit), (c) the validity, sufficiencyor genuineness of any document which the Issuing Lender has determined complieson its face with the terms of the applicable Letter of Credit, even if suchdocument should later prove to have been forged, fraudulent, invalid or insufficientin any respect or any statement therein shall have been untrue or inaccurate inany respect, or (d) the surrender or impairment of any security for theperformance or observance of any of the terms hereof.  Without limiting the foregoing, no action oromission whatsoever by the Administrative Agent or any Lender (excluding anyLender in its capacity as the Issuing Lender) under or in connection with anyLetter of Credit or any related matters shall result in any liability of theAdministrative Agent or any Lender to the Company, or relieve the Company ofany of its obligations hereunder to any such Person.

 

### 2.3.4            Funding by Lenders to Issuing Lender.  If theIssuing Lender makes any payment or disbursement under any Letter of Credit and(a) the Company has not reimbursed the Issuing Lender in full for suchpayment or disbursement by 11:00 A.M., Chicago time, on the date of suchpayment or disbursement, (b) a Revolving Loan may not be made inaccordance with Section 2.3.2 (as the result of the existence of anEvent of Default or otherwise) or (c) any reimbursement received by theIssuing Lender from the Company is or must be returned or rescinded upon orduring any bankruptcy or reorganization of the Company or otherwise, each otherLender with a Revolving Loan Commitment shall be obligated to pay to theAdministrative Agent for the account of the Issuing Lender, in full or partialpayment of the purchase price of its participation in such Letter of Credit,its Pro Rata Share of such payment or disbursement (but no such payment shalldiminish the obligations of the Company under Section 2.3.3), and,upon notice from the Issuing Lender, the Administrative Agent shall promptlynotify each other Lender thereof.  Eachother Lender irrevocably and unconditionally agrees to so pay to theAdministrative Agent in immediately 

 

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###  

### available funds for the Issuing Lender’s account theamount of such other Lender’s Pro Rata Share of such payment ordisbursement.  If and to the extent anyLender shall not have made such amount available to the Administrative Agent by2:00 P.M., Chicago time, on the Business Day on which such Lender receivesnotice from the Administrative Agent of such payment or disbursement (it beingunderstood that any such notice received after noon, Chicago time, on anyBusiness Day shall be deemed to have been received on the next followingBusiness Day), such Lender agrees to pay interest on such amount to theAdministrative Agent for the Issuing Lender’s account forthwith on demand, foreach day from the date such amount was to have been delivered to theAdministrative Agent to the date such amount is paid, at a rate per annum equalto (a) for the first three days after demand, the Federal Funds Rate fromtime to time in effect and (b) thereafter, the Base Rate from time to timein effect.  Any Lender’s failure to makeavailable to the Administrative Agent its Pro Rata Share of any such payment ordisbursement shall not relieve any other Lender of its obligation hereunder tomake available to the Administrative Agent such other Lender’s Pro Rata Shareof such payment, but no Lender shall be responsible for the failure of anyother Lender to make available to the Administrative Agent such other Lender’sPro Rata Share of any such payment or disbursement.

###  

## 2.4                                 Commitments Several. The failure of any Lender to make a requested Loan on any date shall notrelieve any other Lender of its obligation (if any) to make a Loan on suchdate, but no Lender shall be responsible for the failure of any other Lender tomake any Loan to be made by such other Lender.

##  

## 2.5                                 Certain Conditions. Except as otherwise provided in Sections 2.2.2 and 2.3.4of this Agreement, no Lender shall have an obligation to make any Loan, or topermit the continuation of or any conversion into any LIBOR Loan, and theIssuing Lender shall not have any obligation to issue any Letter of Credit, ifan Event of Default or Unmatured Event of Default exists.

##  

# SECTION 3                                   EVIDENCING OF LOANS.

#  

## 3.1                                 Notes.  The RevolvingLoans of each Lender shall be evidenced by a Note, with appropriate insertions,payable to the order of such Lender in a face principal amount equal to suchLender’s Revolving Loan Commitment.  TheTerm Loan of each Lender shall be evidenced by a Note, with appropriateinsertions, payable to the order of such Lender in a face principal amountequal to such Lender’s Term Loan Commitment.

##  

## 3.2                                 Recordkeeping. The Administrative Agent, on behalf of each Lender, shall record in itsrecords, the date and amount of each Loan made by each Lender, each repaymentor conversion thereof and, in the case of each LIBOR Loan, the dates on whicheach Interest Period for such Loan shall begin and end.  The aggregate unpaid principal amount sorecorded shall be rebuttably presumptive evidence of the principal amount ofthe Loans owing and unpaid.  The failureto so record any such amount or any error in so recording any such amount shallnot, however, limit or otherwise affect the Obligations of the Companyhereunder or under any Note to repay the principal amount of the Loanshereunder, together with all interest accruing thereon.

 

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#  

# SECTION 4                                   INTEREST.

#  

## 4.1                                 Interest Rates. The Company promises to pay interest on the unpaid principal amount ofeach Loan for the period commencing on the date of such Loan until such Loan ispaid in full as follows:

##  

#### (a)                                  at all times while such Loan is a BaseRate Loan, at a rate per annum equal to the sum of the Base Rate from time totime in effect plus the Base Rate Margin from time to time in effect;and

####  

#### (b)                                 at all times while such Loan is a LIBORLoan, at a rate per annum equal to the sum of the LIBOR Rate applicable to eachInterest Period for such Loan plus the LIBOR Margin from time to time ineffect;

####  

provided that at any time an Event of Default exists, unlessthe Required Lenders otherwise consent, the interest rate applicable to eachLoan shall automatically be increased by 2%; providedfurtherthat such increase may thereafter be rescinded by the Required Lenders,notwithstanding Section 15.1.

 

## 4.2                                 Interest Payment Dates. Accrued interest on each Base Rate Loan shall be payable in arrears onthe last day of each calendar month and on the Termination Date.  Accrued interest on each LIBOR Loan shall bepayable on the last day of each Interest Period relating to such Loan (and, inthe case of a LIBOR Loan with an Interest Period in excess of three months, onthe three-month anniversary of the first day of such Interest Period), upon aprepayment of such Loan, and at maturity. After the Termination Date, and at any time an Event of Default exists,accrued interest on all Loans shall be payable on demand.

##  

## 4.3                                 Setting and Notice of LIBOR Rates. The applicable LIBOR Rate for each Interest Period shall be determinedby the Administrative Agent, and notice thereof shall be given by theAdministrative Agent promptly to the Company and each Lender.  Each determination of the applicable LIBORRate by the Administrative Agent shall be conclusive and binding upon theparties hereto, in the absence of demonstrable error.  The Administrative Agent shall, upon writtenrequest of the Company or any Lender, deliver to the Company or such Lender astatement showing the computations used by the Administrative Agent indetermining any applicable LIBOR Rate hereunder.

##  

## 4.4                                 Computation of Interest. Interest on LIBOR Loans shall be computed for the actual number of dayselapsed on the basis of a year of 360 days. Interest on Base Rate Loans shall be computed for the actual number ofdays elapsed on the basis of a year of 365 or 366 days, as applicable.  The applicable interest rate for each BaseRate Loan shall change simultaneously with each change in the Base Rate.

##  

# SECTION 5                                   FEES.

#  

## 5.1                                 Non-Use Fee. The Company agrees to pay to the Administrative Agent for the account ofeach Lender a non-use fee, for the period from the Closing Date to theTermination Date, at the Non-Use Fee Rate in effect from time to time on suchLender’s Pro Rata Share (as adjusted from time to time) of the average unusedamount of the Revolving Commitment during 

 

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##  

## each calendarquarter.  For purposes of calculatingusage under this Section, the Revolving Commitment shall be deemed used to theextent of Revolving Outstandings.  Suchnon-use fee shall be payable in arrears on the last day of each calendarquarter and on the Termination Date for any period then ending for which suchnon-use fee shall not have previously been paid.  The non-use fee shall be computed for theactual number of days elapsed on the basis of a year of 360 days.

##  

## 5.2                                 Letter of Credit Fees.  (a) The Company agrees to pay to the Administrative Agent for the account of eachLender a letter of credit fee for each Letter of Credit equal to the L/C FeeRate in effect from time to time on such Lender’s Pro Rata Share (as adjustedfrom time to time) of the undrawn amount of such Letter of Credit (computed forthe actual number of days elapsed on the basis of a year of 360 days); providedthat, unless the Required Lenders otherwise consent, the rate applicable toeach Letter of Credit shall be increased by 2% at any time that an Event ofDefault exists.  Such letter of creditfee shall be payable in arrears on the last day of each calendar quarter and onthe Termination Date (or such later date on which such Letter of Credit expiresor is terminated) for the period from the date of the issuance of each Letterof Credit (or the last day on which the letter of credit fee was paid withrespect thereto) to the date such payment is due or, if earlier, the date onwhich such Letter of Credit expired or was terminated.  Notwithstanding anything to the contrarycontained herein, with respect to the letter of credit fee that is payable atthe L/C Fee Rate as provided in this Section 5.2, 0.25% of suchletter of credit fee shall be considered a fronting fee payable entirely to theIssuing Lender.

##  

#### (b)                                 In addition, with respect to each Letterof Credit, the Company agrees to pay to the Issuing Lender, for its ownaccount, such reasonable fees and expenses as the Issuing Lender customarilyrequires in connection with the issuance, negotiation, processing and/oradministration of letters of credit in similar situations.

####  

## 5.3                                 Administrative Agent’s Fees. The Company agrees to pay to the Administrative Agent such agent’s feesas are mutually agreed to from time to time by the Company and theAdministrative Agent including the fees set forth in the Agent Fee Letter.  The Company acknowledges and agrees that theAgent Fee Letter continues to be in full force and effect for all purposes.

##  

# SECTION 6                                   REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT;PREPAYMENTS.

#  

## 6.1                                 Reduction or Termination of the RevolvingCommitment.

##  

### 6.1.1            Voluntary Reduction or Termination of the Revolving Commitment. The Company may from time to time on at least five (5) BusinessDays’ prior written notice given in accordance with Section 15.3hereof (which the Administrative Agent shall promptly advise each Lenderthereof) permanently reduce the Revolving Commitment to an amount not less thanthe Revolving Outstandings.  Any suchreduction shall be in an amount not less than $500,000 or a higher integralmultiple of $100,000.  Concurrently withany reduction of the Revolving Commitment to zero, the Company shall pay allaccrued interest on the Revolving Loans, all accrued non-use fees and allaccrued letter of credit fees and shall Cash Collateralize in full allobligations arising with respect to the Letters of Credit.

 

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###  

### 6.1.2            All Reductions of the Revolving Commitment. All reductions of the Revolving Commitment shall reduce the Commitmentsratably among the Lenders according to their respective Pro Rata Shares.

###  

## 6.2                                 Prepayments.

##  

### 6.2.1            Voluntary Prepayments.  The Companymay from time to time prepay the Loans in whole or in part; providedthat the Company shall give the Administrative Agent (which shall promptlyadvise each Lender) notice thereof not later than 11:00 A.M., Chicagotime, on the day of such prepayment (which shall be a Business Day), specifyingthe Loans to be prepaid and the date and amount of prepayment.  Any such partial prepayment shall be in anamount equal to $500,000 or a higher integral multiple of $100,000.

###  

#### 6.2.2                        Mandatory Prepayments.

####  

#### (a)                                  The Company shall make a prepayment ofthe Term Loan until paid in full upon the occurrence of any of the following(each a “Mandatory Prepayment Event”) at the following times and in thefollowing amounts (such applicable amounts being referred to as “DesignatedProceeds”):

####  

(i)                                   Concurrently with the receipt by any LoanParty of any Net Cash Proceeds from any Asset Disposition (excluding (1) anyproceeds from the Drennen Road Transaction received by the Company or any otherLoan Party prior to the date hereof, (2) the first $1,000,000 of proceedsfrom the Drennen Road Transaction received by the Company or any other LoanParty after the date hereof, (3) an amount equal to fifty percent (50%) ofthe proceeds from the Drennen Road Transaction in excess of $1,000,000 receivedby the Company or any other Loan Party after the date hereof, (4) anamount equal to fifty percent (50%) of the proceeds received by the Company orany other Loan Party from the sale of water storage rights related to anyagreement entered into among the Company or Transit Mix Concrete Co., Valco, Inc.and the Woodmoor Water Reclamation District or other Woodmoor, Coloradogovernment agency, and (5) in addition to the foregoing, an aggregate of$200,000 in proceeds per Fiscal Year in respect of Asset Dispositions occurringin such Fiscal Year), in an amount equal to 100% of such Net Cash Proceeds.

 

(ii)                                Concurrently with the receipt by any LoanParty of any Net Cash Proceeds from any issuance of Capital Securities of anyLoan Party (excluding (x) any issuance of Capital Securities pursuant toany employee or director option program, benefit plan or compensation programand (y) any issuance by a Subsidiary to the Company or anotherSubsidiary), in an amount equal to 100% of such Net Cash Proceeds.

 

(iii)                             Concurrently with the receipt by any LoanParty of any Net Cash Proceeds from any issuance of any Debt of any Loan Party(excluding Subordinated 

 

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Debt permitted under Section 11.1),in an amount equal to 100% of such Net Cash Proceeds.

 

(iv)                            Within one-hundred twenty (120) daysafter the end of each Fiscal Year (commencing with Fiscal Year 2009), in anamount equal to fifty percent (50.0%) of Excess Cash Flow for such Fiscal Year.

 

#### (b)                                 If on any day the Revolving Outstandingsexceed the Borrowing Base, the Company shall immediately prepay Revolving Loansand/or Cash Collateralize the outstanding Letters of Credit, or do a combinationof the foregoing, in an amount sufficient to eliminate such excess.

####  

#### (c)                                  If on any day on which the RevolvingCommitment is reduced pursuant to Section 6.1 the RevolvingOutstandings exceed the Revolving Commitment, the Company shall immediatelyprepay Revolving Loans or Cash Collateralize the outstanding Letters of Credit,or do a combination of the foregoing, in an amount sufficient to eliminate suchexcess.

####  

## 6.3                                 Manner of Prepayments.

##  

### 6.3.1            All Prepayments.  Each voluntary partialprepayment of the Term Loan shall be in a principal amount of $500,000 or ahigher integral multiple of $100,000. Any partial prepayment of a Group of LIBOR Loans shall be subject to theproviso to Section 2.2.3(a). Any prepayment of a LIBOR Loan on a day other than the last day of anInterest Period therefor shall include interest on the principal amount beingrepaid and shall be subject to Section 8.4.  All prepayments of the Term Loan shall beapplied pro rata and in the inverse order of maturity to the remaining installmentsthereof.  Except as otherwise provided bythis Agreement, all principal payments in respect of the Loans shall be appliedfirst, to repay outstanding Base Rate Loans and then to repay outstanding LIBORRate Loans in direct order of Interest Period maturities.

###  

## 6.4                                 Repayments.

##  

### 6.4.1            Revolving Loans.  The Revolving Loans of eachLender shall be paid in full and the Revolving Commitment shall terminate onthe Termination Date.

###  

### 6.4.2            Term Loan.  The principal amount of the Term Loan shallbe paid in installments as follows:

###  

| **Payment Date**   | ** ** | **Term Loan** | ** ** |
|-------------------------|------------|--------------------|------------|
|                    |       |               |       |
| June 30, 2009      |       | $                  | 250,000    |   |
| September 30, 2009 |       | $                  | 250,000    |   |
| December 31, 2009  |       | $                  | 250,000    |   |
| March 31, 2010     |       | $                  | 250,000    |   |
| June 30, 2010      |       | $                  | 375,000    |   |
| September 30, 2010 |       | $                  | 375,000    |   |
| December 31, 2010  |       | $                  | 375,000    |   |

 

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| **Payment Date**   | ** ** | **Term Loan** | ** ** |
|-------------------------|------------|--------------------|------------|
|                    |       |               |       |
| March 31, 2011     |       | $                  | 375,000    |   |
| June 30, 2011      |       | $                  | 500,000    |   |
| September 30, 2011 |       | $                  | 500,000    |   |
| December 31, 2011  |       | $                  | 500,000    |   |
| March 31, 2012     |       | $                  | 500,000    |   |

 

Unless sooner paid infull, the outstanding principal balance of the Term Loan shall be paid in fullon the Term Loan Maturity Date.

 

# SECTION 7                                   MAKING AND PRORATION OF PAYMENTS; SETOFF;TAXES.

#  

## 7.1                                 Making of Payments. All payments of principal or interest on the Notes, and of all fees,shall be made by the Company to the Administrative Agent in immediatelyavailable funds at the office specified by the Administrative Agent not laterthan 2:00 p.m., Chicago time, on the date due; and funds received afterthat hour shall be deemed to have been received by the Administrative Agent onthe following Business Day.  TheAdministrative Agent shall promptly remit to each Lender its share of all suchpayments received in collected funds by the Administrative Agent for the accountof such Lender.  All payments under Section 8.1shall be made by the Company directly to the Lender entitled thereto withoutsetoff, counterclaim or other defense.

##  

## 7.2                                 Application of Certain Payments. So long as no Event of Default has occurred and is continuing, (a) paymentsmatching specific scheduled payments then due shall be applied to thosescheduled payments and (b) voluntary and mandatory prepayments shall beapplied as set forth in Sections 6.2 and 6.3.  After the occurrence and during the continuanceof an Event of Default, all amounts collected or received by the AdministrativeAgent or any Lender as proceeds from the sale of, or other realization upon,all or any part of the Collateral shall be applied as set forth in the Guarantyand Collateral Agreement.  Concurrentlywith each remittance to any Lender of its share of any such payment, theAdministrative Agent shall advise such Lender as to the application of suchpayment.

##  

## 7.3                                 Due Date Extension. If any payment of principal or interest with respect to any of theLoans, or of any fees, falls due on a day which is not a Business Day, thensuch due date shall be extended to the immediately following Business Day(unless, in the case of a LIBOR Loan, such immediately following Business Day isthe first Business Day of a calendar month, in which case such due date shallbe the immediately preceding Business Day) and, in the case of principal,additional interest shall accrue and be payable for the period of any suchextension.

##  

## 7.4                                 Setoff.  The Company,for itself and each other Loan Party, agrees that the Administrative Agent andeach Lender have all rights of set-off and bankers’ lien provided by applicablelaw, and in addition thereto, the Company, for itself and each other LoanParty, agrees that at any time any Event of Default exists, the AdministrativeAgent and each Lender may apply to the payment of any Obligations of theCompany and each other Loan Party hereunder, whether or not then due, any andall balances, credits, deposits, accounts or moneys of the

 

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##  

## Company and each other Loan Party then or thereafterwith the Administrative Agent or such Lender.

##  

## 7.5                                 Proration of Payments. If any Lender shall obtain any payment or other recovery (whethervoluntary, involuntary, by application of offset or otherwise, on account of (a) principalof or interest on any Loan, but excluding (i) any payment pursuant to Section 8.7or 15.6 and (ii) payments of interest on any Affected Loan) or (b) itsparticipation in any Letter of Credit) in excess of its applicable Pro RataShare of payments and other recoveries obtained by all Lenders on account ofprincipal of and interest on the Loans (or such participation) then held bythem, then such Lender shall purchase from the other Lenders suchparticipations in the Loans (or sub-participations in Letters of Credit) heldby them as shall be necessary to cause such purchasing Lender to share theexcess payment or other recovery ratably with each of them; providedthat if all or any portion of the excess payment or other recovery isthereafter recovered from such purchasing Lender, the purchase shall berescinded and the purchase price restored to the extent of such recovery.

##  

## 7.6                                 Taxes.

##  

#### (a)                                  All payments made by the Companyhereunder or under any Loan Documents shall be made without setoff,counterclaim, or other defense.  To theextent permitted by applicable law, all payments hereunder or under the LoanDocuments (including any payment of principal, interest, or fees) to, or forthe benefit, of any person shall be made by the Company free and clear of andwithout deduction or withholding for, or account of, any Taxes now orhereinafter imposed by any taxing authority.

####  

#### (b)                                 If the Company makes any paymenthereunder or under any Loan Document in respect of which it is required by applicablelaw to deduct or withhold any Taxes, the Company shall increase the paymenthereunder or under any such Loan Document such that after the reduction for theamount of Taxes withheld (and any taxes withheld or imposed with respect to theadditional payments required under this Section 7.6(b)), the amountpaid to the Lenders or the Administrative Agent equals the amount that waspayable hereunder or under any such Loan Document without regard to this Section 7.6(b).  To the extent the Company withholds any Taxeson payments hereunder or under any Loan Document, the Company shall pay thefull amount deducted to the relevant taxing authority within the time allowedfor payment under applicable law and shall deliver to the Administrative Agentwithin 30 days after it has made payment to such authority a receipt issued bysuch authority (or other evidence satisfactory to the Administrative Agent)evidencing the payment of all amounts so required to be deducted or withheldfrom such payment.

####  

#### (c)                                  If any Lender or the Administrative Agentis required by law to make any payments of any Taxes on or in relation to anyamounts received or receivable hereunder or under any other Loan Document, orany Tax is assessed against a Lender or the Administrative Agent with respectto amounts received or receivable hereunder or under any other Loan Document,the Company will indemnify such person against (i) such Tax (and anyreasonable counsel fees and expenses associated with such Tax) and (ii) anytaxes imposed as a result of the receipt of the payment under this Section 7.6(c).  A certificate prepared in good faith as tothe 

 

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####  

#### amount of such payment by such Lender or theAdministrative Agent shall, absent manifest error, be final, conclusive, andbinding on all parties.

####  

#### (d)                                 (i)                                     To the extent permitted by applicable law, each Lenderthat is not a United States person within the meaning of Code Section 7701(a)(30)(a “Non-U.S. Participant”) shall deliver to the Company and theAdministrative Agent on or prior to the Closing Date (or in the case of aLender that is an Assignee, on the date of such assignment to such Lender) twoaccurate and complete original signed copies of IRS Form W-8BEN, W-8ECI,or W-8IMY (or any successor or other applicable form prescribed by the IRS)certifying to such Lender’s entitlement to a complete exemption from, or areduced rate in, United States withholding tax on interest payments to be madehereunder or any Loan.  If a Lender thatis a Non-U.S. Participant is claiming a complete exemption from withholding oninterest pursuant to Code Sections 871(h) or 881(c), the Lender shalldeliver (along with two accurate and complete original signed copies of IRS Form W-8BEN)a certificate in form and substance reasonably acceptable to AdministrativeAgent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S.Participant agrees that from time to time after the Closing Date, (or in thecase of a Lender that is an Assignee, after the date of the assignment to suchLender), when a lapse in time (or change in circumstances occurs) renders theprior certificates hereunder obsolete or inaccurate in any material respect,such Lender shall, to the extent permitted under applicable law, deliver to theCompany and the Administrative Agent two new and accurate and complete originalsigned copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successoror other applicable forms prescribed by the IRS), and if applicable, a newWithholding Certificate, to confirm or establish the entitlement of such Lenderor the Administrative Agent to an exemption from, or reduction in, UnitedStates withholding tax on interest payments to be made hereunder or any Loan.

####  

#### (ii)                                  Each Lender that is not a Non-U.S.Participant (other than any such Lender which is taxed as a corporation forU.S. federal income tax purposes) shall provide two properly completed and dulyexecuted copies of IRS Form W-9 (or any successor or other applicableform) to the Company and the Administrative Agent certifying that such Lenderis exempt from United States backup withholding tax.  To the extent that a form provided pursuantto this Section 7.6(d)(ii) is rendered obsolete or inaccuratein any material respects as result of change in circumstances with respect tothe status of a Lender, such Lender shall, to the extent permitted byapplicable law, deliver to the Company and the Administrative Agent revisedforms necessary to confirm or establish the entitlement to such Lender’s orAgent’s exemption from United States backup withholding tax.

####  

#### (iii)                               The Company shall not be required to pay additionalamounts to a Lender, or indemnify any Lender, under this Section 7.6to the extent that such obligations would not have arisen but for the failureof such Lender to comply with Section 7.6(d).

####  

#### (iv)                              Each Lender agrees to indemnify theAdministrative Agent and hold the Administrative Agent harmless for the fullamount of any and all present or future Taxes and related liabilities(including penalties, interest, additions to tax and expenses, and any Taxesimposed by any jurisdiction on amounts payable to the Administrative Agentunder this Section 7.6) which are imposed on or with respect toprincipal, interest or fees payable to such Lender hereunder and which are notpaid by the Company pursuant to this Section 7.6, whether or not 

 

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####  

#### such Taxes or related liabilities were correctly or legallyasserted.  This indemnification shall bemade within 30 days from the date the Administrative Agent makes written demandtherefor.

####  

# SECTION 8                                   INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

#  

## 8.1                                 Increased Costs.  (a) If, after the date hereof, the adoption of, or any change in, any applicablelaw, rule or regulation, or any change in the interpretation oradministration of any applicable law, rule or regulation by anygovernmental authority, central bank or comparable agency charged with theinterpretation or administration thereof, or compliance by any Lender with anyrequest or directive (whether or not having the force of law) of any suchauthority, central bank or comparable agency: (i) shall impose, modify or deem applicable any reserve (includingany reserve imposed by the FRB, but excluding any reserve included in thedetermination of the LIBOR Rate pursuant to Section 4), specialdeposit or similar requirement against assets of, deposits with or for theaccount of, or credit extended by any Lender; or (ii) shall impose on anyLender any other condition affecting its LIBOR Loans, its Note or itsobligation to make LIBOR Loans; and the result of anything described in clauses(i) and (ii) above is to increase the cost to (or to impose a coston) such Lender (or any LIBOR Office of such Lender) of making or maintainingany LIBOR Loan, or to reduce the amount of any sum received or receivable bysuch Lender (or its LIBOR Office) under this Agreement or under its Note withrespect thereto, then upon demand by such Lender (which demand shall beaccompanied by a statement setting forth the basis for such demand and acalculation of the amount thereof in reasonable detail, a copy of which shallbe furnished to the Administrative Agent), the Company shall pay directly tosuch Lender such additional amount as will compensate such Lender for suchincreased cost or such reduction, so long as such amounts have accrued on orafter the day which is 180 days prior to the date on which such Lender firstmade demand therefor.

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#### (b)                                 If any Lender shall reasonably determinethat any change in, or the adoption or phase-in of, any applicable law, rule orregulation regarding capital adequacy, or any change in the interpretation oradministration thereof by any governmental authority, central bank or comparableagency charged with the interpretation or administration thereof, or thecompliance by any Lender or any Person controlling such Lender with any requestor directive regarding capital adequacy (whether or not having the force oflaw) of any such authority, central bank or comparable agency, has or wouldhave the effect of reducing the rate of return on such Lender’s or suchcontrolling Person’s capital as a consequence of such Lender’s obligationshereunder or under any Letter of Credit to a level below that which such Lenderor such controlling Person could have achieved but for such change, adoption,phase-in or compliance (taking into consideration such Lender’s or suchcontrolling Person’s policies with respect to capital adequacy) by an amountdeemed by such Lender or such controlling Person to be material, then from timeto time, upon demand by such Lender (which demand shall be accompanied by astatement setting forth the basis for such demand and a calculation of theamount thereof in reasonable detail, a copy of which shall be furnished to theAdministrative Agent), the Company shall pay to such Lender such additionalamount as will compensate such Lender or such controlling Person for suchreduction so long as such amounts have accrued on or after the day which is 180days prior to the date on which such Lender first made demand therefor.

 

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## 8.2                                 Basis for Determining Interest RateInadequate or Unfair.  If:

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#### (a)                                  the Administrative Agent reasonablydetermines (which determination shall be binding and conclusive on the Company)that by reason of circumstances affecting the interbank LIBOR market adequateand reasonable means do not exist for ascertaining the applicable LIBOR Rate;or

####  

#### (b)                                 the Required Lenders advise theAdministrative Agent that the LIBOR Rate as determined by the AdministrativeAgent will not adequately and fairly reflect the cost to such Lenders ofmaintaining or funding LIBOR Loans for such Interest Period (taking into accountany amount to which such Lenders may be entitled under Section 8.1)or that the making or funding of LIBOR Loans has become impracticable as aresult of an event occurring after the date of this Agreement which in theopinion of such Lenders materially affects such Loans;

####  

then the Administrative Agent shall promptly notify theother parties thereof and, so long as such circumstances shall continue, (i) noLender shall be under any obligation to make or convert any Base Rate Loansinto LIBOR Loans and (ii) on the last day of the current Interest Periodfor each LIBOR Loan, such Loan shall, unless then repaid in full, automaticallyconvert to a Base Rate Loan.

 

## 8.3                                 Changes in Law Rendering LIBOR LoansUnlawful.  If any change in, or the adoption of any new,law or regulation, or any change in the interpretation of any applicable law orregulation by any governmental or other regulatory body charged with theadministration thereof, should make it (or in the good faith judgment of anyLender cause a substantial question as to whether it is) unlawful for anyLender to make, maintain or fund LIBOR Loans, then such Lender shall promptlynotify each of the other parties hereto and, so long as such circumstancesshall continue, (a) such Lender shall have no obligation to make orconvert any Base Rate Loan into a LIBOR Loan (but shall make Base Rate Loansconcurrently with the making of or conversion of Base Rate Loans into LIBORLoans by the Lenders which are not so affected, in each case in an amount equalto the amount of LIBOR Loans which would be made or converted into by suchLender at such time in the absence of such circumstances) and (b) on thelast day of the current Interest Period for each LIBOR Loan of such Lender (or,in any event, on such earlier date as may be required by the relevant law,regulation or interpretation), such LIBOR Loan shall, unless then repaid infull, automatically convert to a Base Rate Loan.  Each Base Rate Loan made by a Lender which,but for the circumstances described in the foregoing sentence, would be a LIBORLoan (an “Affected Loan”) shall remain outstanding for the periodcorresponding to the Group of LIBOR Loans of which such Affected Loan would bea part absent such circumstances.

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## 8.4                                 Funding Losses. The Company hereby agrees that upon demand by any Lender (which demandshall be accompanied by a statement setting forth the basis for the amountbeing claimed, a copy of which shall be furnished to the Administrative Agent),the Company will indemnify such Lender against any net loss or expense whichsuch Lender may sustain or incur (including any net loss or expense incurred byreason of the liquidation or reemployment of deposits or other funds acquiredby such Lender to fund or maintain any LIBOR Loan), as reasonably determined bysuch Lender, as a result of (a) any payment, prepayment or conversion ofany LIBOR Loan of such Lender on a date other than the last day of an InterestPeriod for such Loan (including any conversion pursuant to Section 8.3)or (b) any failure of the Company to borrow, convert or continue any Loanon a date specified therefor in a notice of borrowing, 

 

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## conversion or continuation pursuant to thisAgreement.  For this purpose, all noticesto the Administrative Agent pursuant to this Agreement shall be deemed to beirrevocable.

##  

## 8.5                                 Right of Lenders to Fund through OtherOffices.  Each Lender may, if it so elects, fulfill itscommitment as to any LIBOR Loan by causing a foreign branch or Affiliate of suchLender to make such Loan; provided that in such event for the purposesof this Agreement such Loan shall be deemed to have been made by such Lenderand the obligation of the Company to repay such Loan shall nevertheless be tosuch Lender and shall be deemed held by it, to the extent of such Loan, for theaccount of such branch or Affiliate.

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## 8.6                                 Discretion of Lenders as to Manner ofFunding.  Notwithstanding any provision of thisAgreement to the contrary, each Lender shall be entitled to fund and maintainits funding of all or any part of its Loans in any manner it sees fit, it beingunderstood, however, that for the purposes of this Agreement all determinationshereunder shall be made as if such Lender had actually funded and maintainedeach LIBOR Loan during each Interest Period for such Loan through the purchaseof deposits having a maturity corresponding to such Interest Period and bearingan interest rate equal to the LIBOR Rate for such Interest Period.

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## 8.7                                 Mitigation of Circumstances; Replacementof Lenders.  (a)  Each Lender shall promptly notifythe Company and the Administrative Agent of any event of which it has knowledgewhich will result in, and will use reasonable commercial efforts available toit (and not, in such Lender’s sole judgment, otherwise disadvantageous to suchLender) to mitigate or avoid, (i) any obligation by the Company to pay anyamount pursuant to Sections 7.6 or 8.1 or (ii) theoccurrence of any circumstances described in Sections 8.2 or 8.3(and, if any Lender has given notice of any such event described in clause (i) or(ii) above and thereafter such event ceases to exist, such Lender shallpromptly so notify the Company and the Administrative Agent).  Without limiting the foregoing, each Lenderwill designate a different funding office if such designation will avoid (orreduce the cost to the Company of) any event described in clause (i) or (ii) aboveand such designation will not, in such Lender’s sole judgment, be otherwisedisadvantageous to such Lender.

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## 8.8                                 Conclusiveness of Statements; Survival ofProvisions.  Determinations and statements of any Lenderpursuant to Sections 8.1, 8.2, 8.3 or 8.4 shall beconclusive absent demonstrable error. Lenders may use reasonable averaging and attribution methods indetermining compensation under Sections 8.1 and 8.4, and theprovisions of such Sections shall survive repayment of the Obligations,cancellation of any Notes, expiration or termination of the Letters of Creditand termination of this Agreement.

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# SECTION 9                                   REPRESENTATIONS AND WARRANTIES.

#  

To induce theAdministrative Agent and the Lenders to enter into this Agreement and to inducethe Lenders to make Loans and issue and participate in Letters of Credithereunder, the Company represents and warrants to the Administrative Agent andthe Lenders that:

 

## 9.1                                 Organization. Each Loan Party is validly existing and in good standing under the lawsof its jurisdiction of incorporation; and each Loan Party is duly qualified todo business in each jurisdiction where, because of the nature of its activitiesor properties, such qualification is 

 

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## required, except for such jurisdictions where thefailure to so qualify would not have a Material Adverse Effect.

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## 9.2                                 Authorization; No Conflict. Each Loan Party is duly authorized to execute and deliver each LoanDocument to which it is a party, the Company is duly authorized to borrowmonies hereunder and each Loan Party is duly authorized to perform its Obligationsunder each Loan Document to which it is a party.  The execution, delivery and performance byeach Loan Party of each Loan Document to which it is a party, and theborrowings by the Company hereunder, do not and will not (a) require anyconsent or approval of any governmental agency or authority (other than anyconsent or approval which has been obtained and is in full force and effect), (b) conflictwith (i) any provision of law applicable to such Loan Party, the violationof which could reasonably be expected to result in a Material Adverse Effect, (ii) thecharter, by-laws or other organizational documents of any Loan Party or (iii) anyagreement, indenture, instrument or other document, or any judgment, order ordecree, which is binding upon any Loan Party or any of their respectiveproperties or (c) require, or result in, the creation or imposition of anyLien on any asset of any Loan Party (other than Liens in favor of theAdministrative Agent created pursuant to the Collateral Documents).

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## 9.3                                 Validity and Binding Nature. Each of this Agreement and each other Loan Document to which any LoanParty is a party is the legal, valid and binding obligation of such Person,enforceable against such Person in accordance with its terms, subject tobankruptcy, fraudulent transfer, moratorium, reorganization, insolvency andsimilar laws affecting the enforceability of creditors’ rights generally and togeneral principles of equity.

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## 9.4                                 Financial Condition. The audited consolidated financial statements of the Company and itsSubsidiaries as at December 31, 2007, and the unaudited consolidatedfinancial statements of the Company and its Subsidiaries as at February 28,2009 (such financial statements providing sales and pre-tax incomeinformation), copies of which have been delivered to each Lender, were preparedin accordance with GAAP (subject, in the case of such unaudited statements, tothe absence of footnotes and to normal year-end adjustments) and present fairlythe consolidated financial condition of the Company and its Subsidiaries as atsuch dates and the results of their operations for the periods then ended.  The Company has delivered to theAdministrative Agent a draft of the audited consolidated financial statementsof the Company and its Subsidiaries as at December 31, 2008 (the “Draft2008 Financial Statements”), which were prepared in accordance with GAAP,the financial results of which are consistent in all respects with thepreliminary consolidated financial information previously provided by theCompany with respect to the financial performance of the Company and itsSubsidiaries in Fiscal Year 2008.  Thefinal audited consolidated financial statements of the Company and itsSubsidiaries as at December 31, 2008 (the “Final 2008 FinancialStatements”) will be delivered to the Administrative Agent by April 20,2009 (certified without adverse reference to going concern value and withoutqualification by Deloitte & Touche LLP or other independent auditorsof recognized standing selected by the Company and reasonably acceptable to theAdministrative Agent) and such Final 2008 Financial Statements will have nomaterial changes (to the extent adverse to any Loan Party) from the Draft 2008Financial Statements on which the Administrative Agent and each Lender hasrelied in determining to enter into this Agreement and to provide theCommitments.

 

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## 9.5                                 No Material Adverse Change. Since December 31, 2008 there has been no material adverse changein the business, assets, liabilities, properties, condition (financial orotherwise) or results of operations of the Loan Parties taken as a whole.

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## 9.6                                 Litigation and Contingent Liabilities. No litigation (including derivative actions), arbitration proceeding orgovernmental investigation or proceeding is pending or, to the Company’sknowledge, threatened against any Loan Party which might reasonably be expectedto have a Material Adverse Effect, except as set forth in Schedule 9.6.  Other than any liability incident to suchlitigation or proceedings, no Loan Party has any material ContingentLiabilities not listed on Schedule 9.6 or permitted by Section 11.1.

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## 9.7                                 Ownership of Properties; Liens. Each Loan Party owns good and, in the case of real property, marketabletitle to all of its material properties and assets, real and personal, tangibleand intangible, of any nature whatsoever (including patents, trademarks, tradenames, service marks and copyrights), free and clear of all Liens, charges andclaims (including infringement claims with respect to patents, trademarks,service marks, copyrights and the like) other than Permitted Liens.

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## 9.8                                 Equity Ownership; Subsidiaries. All issued and outstanding Capital Securities of the Loan Parties (otherthan the Company) are duly authorized and validly issued, fully-paid,non-assessable, and free and clear of all Liens other than those in favor ofthe Administrative Agent, and such securities were issued in compliance withall applicable state and federal laws concerning the issuance of securities.  Schedule 9.8 sets forth the authorizedCapital Securities of each Loan Party (other than the Company) as of theClosing Date.  All of the issued andoutstanding Capital Securities of the Loan Parties (other than the Company) areowned as set forth on Schedule 9.8 as of the Closing Date.  As of the Closing Date, except as set forthon Schedule 9.8, there are no pre-emptive or other outstanding rights,options, warrants, conversion rights or other similar agreements orunderstandings for the purchase or acquisition of any Capital Securities of anyLoan Party (other than the Company).

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## 9.9                                 Pension Plans.  (a) TheUnfunded Liability of all Pension Plans does not in the aggregate exceed twentypercent of the Total Plan Liability for all such Pension Plans.  Each Pension Plan complies in all materialrespects with all applicable requirements of law and regulations.  No contribution failure under Section 412of the Code, Section 302 of ERISA or the terms of any Pension Plan hasoccurred with respect to any Pension Plan, sufficient to give rise to a Lienunder Section 302(f) of ERISA, or otherwise to have a MaterialAdverse Effect.  There are no pending or,to the knowledge of Company, threatened, claims, actions, investigations orlawsuits against any Pension Plan, any fiduciary of any Pension Plan, orCompany or other any member of the Controlled Group with respect to a PensionPlan or a Multiemployer Pension Plan which could reasonably be expected to havea Material Adverse Effect.  Neither theCompany nor any other member of the Controlled Group has engaged in anyprohibited transaction (as defined in Section 4975 of the Code or Section 406of ERISA) in connection with any Pension Plan or Multiemployer Pension Planwhich would subject that Person to any material liability.  Within the past five years, neither theCompany nor any other member of the Controlled Group has engaged in atransaction which resulted in a Pension Plan with an Unfunded Liability beingtransferred out of the Controlled Group, which could reasonably be expected tohave a Material Adverse Effect.  NoTermination Event has occurred or is reasonably expected to occur with 

 

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## respect to any Pension Plan, which could reasonably beexpected to have a Material Adverse Effect.

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#### (b)                                 All contributions (if any) have been madeto any Multiemployer Pension Plan that are required to be made by the Companyor any other member of the Controlled Group under the terms of the plan or ofany collective bargaining agreement or by applicable law; neither the Companynor any other member of the Controlled Group has withdrawn or partiallywithdrawn from any Multiemployer Pension Plan, incurred any withdrawalliability with respect to any such plan or received notice of any claim ordemand for withdrawal liability or partial withdrawal liability from any suchplan, and no condition has occurred which, if continued, could result in awithdrawal or partial withdrawal from any such plan; and neither the Companynor any other member of the Controlled Group has received any notice that anyMultiemployer Pension Plan is in reorganization, that increased contributionsmay be required to avoid a reduction in plan benefits or the imposition of anyexcise tax, that any such plan is or has been funded at a rate less than thatrequired under Section 412 of the Code, that any such plan is or may beterminated, or that any such plan is or may become insolvent.

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## 9.10                           Investment Company Act. No Loan Party is an “investment company” or a company “controlled” by an“investment company” or a “subsidiary” of an “investment company,” within themeaning of the Investment Company Act of 1940.

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## 9.11                           Intentionally Omitted.

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## 9.12                           Regulation U. The Company is not engaged principally, or as one of its importantactivities, in the business of extending credit for the purpose of purchasingor carrying Margin Stock.

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## 9.13                           Taxes.  Each LoanParty has timely filed all tax returns and reports required by law to have beenfiled by it and has paid all taxes and governmental charges due and payablewith respect to such return, except any such taxes or charges which are beingdiligently contested in good faith by appropriate proceedings and for whichadequate reserves in accordance with GAAP shall have been set aside on itsbooks.  The Loan Parties have madeadequate reserves on their books and records in accordance with GAAP for alltaxes that have accrued but which are not yet due and payable.  No Loan Party has participated in anytransaction that relates to a year of the taxpayer (which is still open underthe applicable statute of limitations) which is a “reportable transaction”within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespectiveof the date when the transaction was entered into).

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## 9.14                           Solvency, etc. On the Closing Date, and immediately prior to and after giving effect tothe issuance of each Letter of Credit and each borrowing hereunder and the useof the proceeds thereof, with respect to each Loan Party other than InactiveSubsidiaries, individually, (a) the fair value of its assets is greaterthan the amount of its liabilities (including disputed, contingent andunliquidated liabilities) as such value is established and liabilitiesevaluated in accordance with GAAP, (b) the present fair saleable value ofits assets is not less than the amount that will be required to pay theprobable liability on its debts as they become absolute and matured, (c) itis able to realize upon its assets and pay its debts and other liabilities(including disputed, contingent and unliquidated liabilities) as they mature inthe normal course 

 

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## of business, (d) it does not intend to, and doesnot believe that it will, incur debts or liabilities beyond its ability to payas such debts and liabilities mature and (e) it is not engaged in businessor a transaction, and is not about to engage in business or a transaction, forwhich its property would constitute unreasonably small capital.

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## 9.15                           Environmental Matters.  The on-going operations of each Loan Partycomply in all respects with all Environmental Laws, except such non-compliancewhich could not (if enforced in accordance with applicable law) reasonably beexpected to result, either individually or in the aggregate, in a MaterialAdverse Effect.  Each Loan Party hasobtained, and maintained in good standing, all licenses, permits,authorizations, registrations and other approvals required under anyEnvironmental Law and required for their respective ordinary course operations,and for their reasonably anticipated future operations, and each Loan Party isin compliance with all terms and conditions thereof, except where the failureto do so could not reasonably be expected to result in material liability toany Loan Party and could not reasonably be expected to result, eitherindividually or in the aggregate, in a Material Adverse Effect.  No Loan Party or any of its properties oroperations is subject to, or reasonably anticipates the issuance of, anywritten order from or agreement with any Federal, state or local governmentalauthority, nor subject to any judicial or docketed administrative or otherproceeding, respecting any Environmental Law, Environmental Claim or HazardousSubstance.  There are no Hazardous Substancesor other conditions or circumstances existing with respect to any property,arising from operations prior to the Closing Date, or relating to any wastedisposal, of any Loan Party that would reasonably be expected to result, eitherindividually or in the aggregate, in a Material Adverse Effect.  No Loan Party has any underground storagetanks that are not properly registered or permitted under applicableEnvironmental Laws or that at any time have released, leaked, disposed of orotherwise discharged Hazardous Substances.

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## 9.16                           Insurance.  Set forth on Schedule9.16 is a complete and accurate summary of the property and casualtyinsurance program of the Loan Parties as of the Closing Date (including thenames of all insurers, policy numbers, expiration dates, amounts and types ofcoverage, annual premiums, exclusions, deductibles, self-insured retention, anda description in reasonable detail of any self-insurance program, retrospectiverating plan, fronting arrangement or other risk assumption arrangementinvolving any Loan Party).  Each LoanParty and its properties are insured with financially sound and reputableinsurance companies which are not Affiliates of the Loan Parties, in suchamounts, with such deductibles and covering such risks as are customarilycarried by companies engaged in similar businesses and owning similarproperties in localities where such Loan Parties operate.

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## 9.17                           Real Property. Set forth on Schedule 9.17 is a complete and accurate list, as ofthe Closing Date, of the address of all real property owned or leased by anyLoan Party, together with, in the case of leased property, the name and mailingaddress of the lessor of such property.

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## 9.18                           Information. All information heretofore or contemporaneously herewith furnished inwriting by any Loan Party to the Administrative Agent or any Lender forpurposes of or in connection with this Agreement and the transactionscontemplated hereby is, and all written information hereafter furnished by oron behalf of any Loan Party to the Administrative Agent or any Lender pursuanthereto or in connection herewith will be (including, without limitation, allinformation filed prior to or after the date hereof with the SEC), true andaccurate 

 

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## in every material respect on the date as of which suchinformation is dated or certified, and none of such information is or will beincomplete by omitting to state any material fact necessary to make suchinformation not misleading in light of the circumstances under which made (itbeing recognized by the Administrative Agent and the Lenders that anyprojections, forecasts and other forward looking statements provided by theLoan Parties are based on good faith estimates and assumptions believed by theLoan Parties to be reasonable as of the date of the applicable projections orassumptions and that actual results during the period or periods covered by anysuch projections and forecasts may differ from projected or forecastedresults).

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## 9.19                           Intellectual Property. Each Loan Party owns and possesses or has a license or other right touse all patents, patent rights, trademarks, trademark rights, trade names,trade name rights, service marks, service mark rights and copyrights as arenecessary for the conduct of the businesses of the Loan Parties, without anyinfringement upon rights of others which could reasonably be expected to have aMaterial Adverse Effect.

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## 9.20                           Burdensome Obligations. No Loan Party is a party to any agreement or contract or subject to anyrestriction contained in its organizational documents which could reasonably beexpected to have a Material Adverse Effect.

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## 9.21                           Labor Matters. Except as set forth on Schedule 9.21, no Loan Party is subject toany labor or collective bargaining agreement. There are no existing or threatened strikes, lockouts or other labordisputes involving any Loan Party that singly or in the aggregate couldreasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to employeesof the Loan Parties are not in violation of the Fair Labor Standards Act or anyother applicable law, rule or regulation dealing with such matters.

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## 9.22                           No Default.  No Event ofDefault or Unmatured Event of Default exists or would result from the incurrenceby any Loan Party of any Debt hereunder or under any other Loan Document.

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## 9.23                           Inactive Subsidiaries. Each of the Inactive Subsidiaries has ceased the operation of businessand has no material assets or liabilities.

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# SECTION 10                             AFFIRMATIVE COVENANTS.

#  

Until the expiration ortermination of the Commitments and thereafter until all Obligations hereunderand under the other Loan Documents are paid in full (other than any Obligation arising solely from any Bank ProductAgreement or contingent indemnification Obligations to the extent no claimgiving rise thereto has been asserted) and all Letters of Credit havebeen terminated or Cash Collateralized, the Company agrees that, unless at anytime the Required Lenders shall otherwise expressly consent in writing, itwill:

 

## 10.1                           Reports, Certificates and OtherInformation.  Furnish to the Administrative Agent and eachLender:

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### 10.1.1                                          Annual Report. Promptly when available and in any event within one hundred twenty (120)days after the close of each Fiscal Year: (a) a copy of the annual auditreport of the Company and its Subsidiaries for such Fiscal Year, includingtherein

 

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### consolidated balance sheets and statements of earningsand cash flows of the Company and its Subsidiaries as at the end of such FiscalYear, certified without adverse reference to going concern value and withoutqualification by independent auditors of recognized standing selected by theCompany and reasonably acceptable to the Administrative Agent, together with (i) awritten statement from such accountants to the effect that in making theexamination necessary for the signing of such annual audit report by suchaccountants, nothing came to their attention that caused them to believe thatthe Company was not in compliance with any provision of Section 11.13of this Agreement insofar as such provision relates to accounting matters or,if something has come to their attention that caused them to believe that theCompany was not in compliance with any such provision, describing suchnon-compliance in reasonable detail and (ii) a comparison with the budgetfor such Fiscal Year and a comparison with the previous Fiscal Year; and (b) aconsolidating balance sheet of the Company and its Subsidiaries as of the endof such Fiscal Year and consolidating statement of earnings and cash flows forthe Company and its Subsidiaries for such Fiscal Year, certified by a SeniorOfficer of the Company.

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10.1.2              Interim Reports.  (a)  Promptly when available and in anyevent within 45 days after the end of each Fiscal Quarter, consolidated andconsolidating balance sheets of the Company and its Subsidiaries as of the endof such Fiscal Quarter, together with consolidated and consolidating statementsof earnings and cash flows for such Fiscal Quarter and for the period beginningwith the first day of such Fiscal Year and ending on the last day of suchFiscal Quarter, together with a comparison with the corresponding period of theprevious Fiscal Year and a comparison with the budget for such period of thecurrent Fiscal Year, certified by a Senior Officer of the Company; and (b) promptlywhen available and in any event within 30 days after the end of each month,consolidated and consolidating statements of earnings for the Company and itsSubsidiaries for such month and for the period beginning with the first day ofsuch Fiscal Year and ending on the last day of such month, together with (x) acomparison with the corresponding period of the previous Fiscal Year and acomparison with the budget for such period of the current Fiscal Year,certified by a Senior Officer of the Company, and (y) a monthly internalmanagement report providing an analysis of the financial performance for suchmonth and for the period beginning with the first day of the applicable FiscalYear and ending on the last day of such month.

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10.1.3              Compliance Certificates.  Contemporaneously with the furnishing of a copyof each annual audit report pursuant to Section 10.1.1 and each setof quarterly statements pursuant to Section 10.1.2, a dulycompleted compliance certificate in the form of Exhibit B, withappropriate insertions, dated the date of such annual report or such quarterlystatements and signed by a Senior Officer of the Company, containing (i) acomputation of each of the financial ratios, restrictions and requirements setforth in Section 11.13 and to the effect that such officer has notbecome aware of any Event of Default or Unmatured Event of Default that hasoccurred and is continuing or, if there is any such event, describing it andthe steps, if any, being taken to cure it and (ii) to the extent there has been a change in the corporate structure of theCompany or the Subsidiaries since the previously delivered compliancecertificate under this Section 10.1.3, an updated organizationalchart listing all Subsidiaries and the jurisdictions of their respectiveincorporation.

 

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10.1.4                                          Reports to the SEC and to Shareholders. Promptly upon the filing or sending thereof, copies of all regular,periodic or special reports of any Loan Party filed with the SEC; copies of allregistration statements of any Loan Party filed with the SEC (other than on Form S-8);copies of all proxy statements or other communications made to security holdersgenerally; and copies of any other filings, reports or other documents to orfrom any securities exchange or the SEC upon the Administrative Agent’srequest.

 

10.1.5                                          Notice of Default, Litigation and ERISAMatters.  Promptly upon becoming aware of any of thefollowing, written notice describing the same and the steps being taken by theCompany or the Subsidiary affected thereby with respect thereto:

#### (a)           theoccurrence of an Event of Default or an Unmatured Event of Default;

####  

#### (b)           anylitigation, arbitration or governmental investigation or proceeding notpreviously disclosed by the Company to the Lenders which has been institutedor, to the knowledge of the Company, is threatened against any Loan Party or towhich any of the properties of any thereof is subject which might reasonably beexpected to have a Material Adverse Effect;

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#### (c)           theinstitution of any steps by any member of the Controlled Group or any otherPerson to terminate any Pension Plan, or the failure of any member of theControlled Group to make a required contribution to any Pension Plan (if suchfailure is sufficient to give rise to a Lien under Section 302(f) of ERISA)or to any Multiemployer Pension Plan, or the taking of any action with respectto a Pension Plan which could result in the requirement that the Companyfurnish a bond or other security to the PBGC or such Pension Plan, or theoccurrence of any event with respect to any Pension Plan or MultiemployerPension Plan which could result in the incurrence by any member of theControlled Group of any material liability, fine or penalty (including anyclaim or demand for withdrawal liability or partial withdrawal from anyMultiemployer Pension Plan), or any material increase in the contingentliability of the Company with respect to any post-retirement welfare benefitplan or other employee benefit plan of the Company or another member of theControlled Group, or any notice that any Multiemployer Pension Plan is inreorganization, that increased contributions may be required to avoid areduction in plan benefits or the imposition of an excise tax, that any suchplan is or has been funded at a rate less than that required under Section 412of the Code, that any such plan is or may be terminated, or that any such planis or may become insolvent;

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#### (d)           anycancellation or material change in any insurance maintained by any Loan Party;or

####  

#### (e)           anyother event (including (i) any violation of any Environmental Law or theassertion of any Environmental Claim or (ii) the enactment oreffectiveness of any law, rule or regulation) which might reasonably beexpected to have a Material Adverse Effect.

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10.1.6                                          Borrowing Base Certificates andAdditional Monthly Reports.  Withinfifteen (15) days of the end of each month, (i) a Borrowing BaseCertificate dated as of the 

 

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### end of such month and executed by a Senior Officer ofthe Company on behalf of the Company (provided that (a) the Companymay deliver a Borrowing Base Certificate more frequently if it chooses and (b) duringany time an Event of Default exists, the Administrative Agent may require theCompany to deliver Borrowing Base Certificates more frequently), and (ii) reportssetting forth the aging and other relevant information of the accountsreceivable, accounts payable and inventory of the Loan Parties as of such monthend (such reports to be in form and substance reasonably acceptable to theAdministrative Agent).

###  

10.1.7              Management Reports.  Promptly upon receipt thereof, copies of alldetailed financial and management reports submitted to the Company byindependent auditors in connection with each annual or interim audit made bysuch auditors of the books of the Company.

 

10.1.8              Projections.  As soon as practicable, and in any event notlater than thirty (30) days after the commencement of each Fiscal Year,financial projections for the Company and its Subsidiaries for such Fiscal Year(including monthly operating and cash flow budgets) prepared in a mannerconsistent with the projections delivered by the Company to the AdministrativeAgent prior to the Closing Date or otherwise in a manner reasonablysatisfactory to the Administrative Agent, accompanied by a certificate of aSenior Officer of the Company on behalf of the Company to the effect that suchprojections were based on good faith estimates of future financial performanceprepared by the Company.

 

10.1.9              Subordinated Debt Notices.  Promptly following receipt, copies of anynotices (including notices of default or acceleration) received from any holderor trustee of, under or with respect to any Subordinated Debt.

 

10.1.10            Other Information.  Promptly from time to time, such otherinformation concerning the Loan Parties as any Lender or the AdministrativeAgent may reasonably request.

##  

## 10.2         Books, Records and Inspections.  Keep, and cause each other Loan Party tokeep, its books and records in accordance with sound business practicessufficient to allow the preparation of financial statements in accordance withGAAP; permit, and cause each other Loan Party to permit, any Lender or theAdministrative Agent or any representative thereof to inspect the propertiesand operations of the Loan Parties; and permit, and cause each other Loan Partyto permit, at any reasonable time and with reasonable notice (or at any timewithout notice if an Event of Default exists), any Lender or the AdministrativeAgent or any representative thereof to visit any or all of its offices, todiscuss its financial matters with its officers and its independent auditors(and the Company hereby authorizes such independent auditors to discuss suchfinancial matters with any Lender or the Administrative Agent or anyrepresentative thereof), and to examine (and, at the expense of the LoanParties, photocopy extracts from) any of its books or other records; andpermit, and cause each other Loan Party to permit, the Administrative Agent andits representatives to inspect the Inventory and other tangible assets of theLoan Parties, to perform appraisals of the equipment of the Loan Parties, andto inspect, audit, check and make copies of and extracts from the books,records, computer data, computer programs, journals, orders, receipts,correspondence and other data relating to Inventory, Accounts and any othercollateral.  All such inspections oraudits by the Administrative Agent shall be at the Company’s 

 

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##  

## expense, provided that so long as no Event ofDefault or Unmatured Event of Default exists, the Company shall not be requiredto reimburse the Administrative Agent for inspections or audits more frequentlythan once each Fiscal Year.

##  

## 10.3         Maintenance of Property; Insurance.  (a)  Keep, and cause each other LoanParty (other than the Inactive Subsidiaries) to keep, all property useful andnecessary in the business of the Loan Parties in working order and insubstantially the same condition as of the date hereof, ordinary wear and tearexcepted.

####  

#### (b)           Maintain, and cause each other LoanParty (other than the Inactive Subsidiaries) to maintain, with responsibleinsurance companies, such insurance coverage as may be required by any law orgovernmental regulation or court decree or order applicable to it and suchother insurance, to such extent and against such hazards and liabilities, as iscustomarily maintained by companies similarly situated, but which shall insureagainst all risks and liabilities of the type identified on Schedule 9.16and shall have insured amounts no less than, and deductibles no higher than,those set forth on such schedule; and, upon written request of theAdministrative Agent or any Lender, furnish within three (3) Business Daysof such request to the Administrative Agent or such Lender a certificatesetting forth in reasonable detail the nature and extent of all insurancemaintained by the Loan Parties.  TheCompany shall cause each issuer of an insurance policy to provide the AdministrativeAgent with an endorsement (i) showing the Administrative Agent as lender’sloss payee with respect to each policy of property or casualty insurance andnaming the Administrative Agent as an additional insured with respect to eachpolicy of liability insurance, (ii) providing that thirty (30) days’notice will be given to the Administrative Agent prior to any cancellation of,material reduction or change in coverage provided by or other materialmodification to such policy and (iii) reasonably acceptable in all otherrespects to the Administrative Agent.

#### ** **

#### **(c)           UNLESSTHE COMPANY PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCECOVERAGE REQUIRED BY THIS AGREEMENT WITHIN THREE (3) BUSINESS DAYS OFWRITTEN REQUEST BY THE ADMINISTRATIVE AGENT OR ANY LENDER, THE ADMINISTRATIVEAGENT MAY PURCHASE INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT THEADMINISTRATIVE AGENT’S AND THE LENDERS’ INTERESTS IN THE COLLATERAL.  THIS INSURANCE MAY, BUT NEED NOT, PROTECT ANYLOAN PARTY’S INTERESTS.  THE COVERAGETHAT THE ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADEAGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL.  THE COMPANY MAY LATER CANCEL ANYINSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER PROVIDING THEADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE ASREQUIRED BY THIS AGREEMENT.  IF THEADMINISTRATIVE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILLBE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANYOTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE INSURANCE,UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THEINSURANCE.  THE COSTS OF THE INSURANCE MAY BEADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. **

 

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#### ** **

#### **THE COSTS OF THE INSURANCE MAY BE MORE THANTHE COST OF THE INSURANCE THE LOAN PARTIES MAY BE ABLE TO OBTAIN ON THEIROWN.**

##  

## 10.4         Compliance with Laws, Material Contracts; Payment ofTaxes and Liabilities.  (a) Comply, and cause each Loan Party tocomply, in all material respects with all material applicable laws, rules,regulations, decrees, orders, judgments, licenses, material contracts andpermits, the noncompliance with which could reasonably be expected to have,individually or in the aggregate, a Material Adverse Effect; and (b) pay,and cause each Loan Party to pay, prior to delinquency, all United Statesfederal taxes and all other material taxes and governmental charges against itor any of its property, as well as claims of any kind which, if unpaid, mightbecome a Lien on any of its property, other than Liens permitted by Section 11.2; providedthat the foregoing shall not require the Company or any Subsidiary to pay anysuch tax or charge so long as it shall contest the validity thereof in goodfaith by appropriate proceedings and shall set aside on its books adequatereserves with respect thereto in accordance with GAAP.

##  

## 10.5         Maintenance of Existence, etc.  Maintain and preserve, and (subject to Section 11.5)cause each other Loan Party other than the Inactive Subsidiaries to maintainand preserve, (a) its existence and good standing in the jurisdiction ofits organization and (b) its qualification to do business and goodstanding in each jurisdiction where the nature of its business makes suchqualification necessary (other than such jurisdictions in which the failure tobe qualified or in good standing could not reasonably be expected to have aMaterial Adverse Effect).  For theavoidance of doubt, the Company may dissolve any of the Inactive Subsidiariesprior to the first anniversary of this Agreement with prior notice to theAdministrative Agent.

##  

## 10.6         Use of Proceeds.  Use the proceeds of the Loans and the Lettersof Credit, solely for working capital purposes, for Capital Expenditures andfor other general business purposes; and not use or permit any proceeds of anyLoan to be used, either directly or indirectly, for the purpose, whetherimmediate, incidental or ultimate, of “purchasing or carrying” any MarginStock.

##  

## 10.7         Employee Benefit Plans.

####  

#### (a)           Maintain, and cause each other memberof the Controlled Group to maintain, each Pension Plan in substantialcompliance with all applicable requirements of law and regulations.

####  

#### (b)           Make, and cause each other member ofthe Controlled Group to make, on a timely basis, all required contributions toany Multiemployer Pension Plan.

####  

#### (c)           Not, and not permit any other memberof the Controlled Group to (i) seek a waiver of the minimum fundingstandards of ERISA, (ii) terminate or withdraw from any Pension Plan orMultiemployer Pension Plan or (iii) take any other action with respect toany Pension Plan that would reasonably be expected to entitle the PBGC toterminate, impose liability in respect of, or cause a trustee to be appointedto administer, any Pension Plan, unless the actions or events described inclauses (i), (ii) and (iii) individually or in the aggregate wouldnot have a Material Adverse Effect.

##  

## 10.8         Environmental Matters.  If any release or threatened release or otherdisposal of Hazardous Substances shall occur or shall have occurred on any realproperty or any other assets 

 

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## of any Loan Party, the Company shall, or shall causethe applicable Loan Party to, cause the prompt containment and removal of suchHazardous Substances and the remediation of such real property or other assetsas necessary to comply with all Environmental Laws and to preserve the value ofsuch real property or other assets.  Without limiting the generality of theforegoing, the Company shall, and shall cause each other Loan Party to, complywith any Federal or state judicial or administrative order requiring theperformance at any real property of any Loan Party of activities in response tothe release or threatened release of a Hazardous Substance.  To the extent that the transportation ofHazardous Substances is permitted by this Agreement, the Company shall, andshall cause its Subsidiaries to, dispose of such Hazardous Substances, or ofany other wastes, only at licensed disposal facilities operating in compliancewith Environmental Laws.

##  

## 10.9         Further Assurances.  Take, and cause each other Loan Party totake, such actions as are necessary or as the Administrative Agent or theRequired Lenders may reasonably request from time to time to ensure that theObligations of each Loan Party under the Loan Documents are secured bysubstantially all of the assets of the Company and each domestic Subsidiary (aswell as all Capital Securities of each domestic Subsidiary and 65% of allCapital Securities of each direct foreign Subsidiary) and guaranteed by eachdomestic Subsidiary (including, upon the acquisition or creation thereof, anySubsidiary acquired or created after the Closing Date), in each case as theAdministrative Agent may determine, including (a) the execution anddelivery of guaranties, security agreements, pledge agreements, mortgages,deeds of trust, financing statements and other documents, and the filing orrecording of any of the foregoing and (b) the delivery of certificatedsecurities and other Collateral with respect to which perfection is obtained bypossession.  Notwithstanding anything tothe contrary contained herein, the Inactive Subsidiaries shall not be requiredto become Loan Parties or Guarantors so long as the Inactive Subsidiariescontinue to be dormant companies without business operations and such InactiveSubsidiaries are dissolved by April 16, 2010, it being agreed that on theearlier of such date or the date on which any of the Inactive Subsidiariescommences business operations, the Inactive Subsidiaries shall be required tobecome Loan Parties and Guarantors and execute all required documentation inconnection therewith.

##  

## 10.10       Deposit Accounts.  Unless the Administrative Agent otherwiseconsents in writing, the Loan Parties shall maintain, within sixty (60) days ofthe Closing Date, all of their deposit and securities accounts with theAdministrative Agent; provided that the Loan Parties may maintain a maximumaggregate balance of $400,000 in local depository accounts, except that theaccounts with any single institution shall not exceed a maximum aggregatebalance of $75,000, it being agreed that each of the Company and theSubsidiaries will, upon the Administrative Agent’s request, use commerciallyreasonable efforts to cause the local depository institutions to enter intoaccount control agreements in favor of the Administrative Agent (each suchaccount control agreement to be on terms reasonably satisfactory to theAdministrative Agent in all respects).

##  

## 10.11       Interest Rate Protection.  Enter into, not later than ninety (90) daysafter the Closing Date, a Hedging Agreement with a term of at least three (3) yearson an ISDA standard form with one or more Lenders or Affiliates thereof or withcounterparties reasonably acceptable to the Administrative Agent to hedge theinterest rate with respect to not less than 50% of the 

 

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##  

## principal amount of the Term Loan in form andsubstance reasonably satisfactory to the Administrative Agent.

##  

## 10.12       Rocky Mountain Transaction.  The Company shall use commercially reasonableefforts to consummate the Rocky Mountain Transaction within one hundred twenty(120) days of the Closing Date (a) on substantially the terms set forth inthe letter of intent previously provided to the Administrative Agent regardingthe Rocky Mountain Transaction or (b) on terms consented to by theRequired Lenders in the event the final terms of the Rocky Mountain Transactionare materially different from the terms in the letter of intent.  The proceeds of the Rocky MountainTransaction (net of the reasonable costs and expenses incurred by the Companyor Rocky Mountain in connection with such transaction) shall be used to prepaythe Term Loan on the terms set forth in Section 6.2.2 and 6.3.1.  Notwithstanding anything to the contrarycontained herein, on or prior to December 31, 2009, either the RockyMountain Transaction shall have been consummated as provided above or theCompany shall have provided to the Lenders a detailed plan of liquidationregarding Rocky Mountain, which plan shall be reasonably acceptable to theRequired Lenders.

#  

# SECTION 11          NEGATIVE COVENANTS

 

Until the expiration ortermination of the Commitments and thereafter until all Obligations hereunderand under the other Loan Documents are paid in full (other than any Obligation arising solely from any Bank ProductAgreement or contingent indemnification Obligations to the extent no claimgiving rise thereto has been asserted) and all Letters of Credit havebeen terminated or Cash Collateralized, the Company agrees that, unless at anytime the Required Lenders shall otherwise expressly consent in writing, itwill:

##  

## 11.1         Debt.  Not, and not permit any other Loan Party to,incur, permit to remain outstanding, assumeor in any way become committed for Debt, except (i) Debt incurredhereunder or to any Lender or the Administrative Agent, (ii) Debt existingon the date of this Agreement and shown in the Draft 2008 Financial Statements(other than the Debt to be Repaid) delivered to the Administrative Agent priorto the date hereof, (iii) Debt existing on the date hereof as listed in Schedule11.1 hereto, (iv) Debt with respect to which the Required Lenders havegiven the Company prior written consent; and (v) Debt in the aggregateamount not greater than $500,000 at any time.

##  

## 11.2         Liens.  Not, and not permit any other Loan Party to,create, suffer or permit to exist any Lien of anykind or nature upon any of their assets now or hereafter owned or acquired, oracquire or agree to acquire any property or assets of any character under anyconditional sale agreement or other title retention agreement; notwithstandingthe foregoing, Permitted Liens are permitted hereunder.

##  

## 11.3         Intentionally Omitted.

##  

## 11.4         Restricted Payments.  Not, and not permit any other Loan Party to, (a) makeany distribution to any holders of its Capital Securities, (b) purchase orredeem any of its Capital Securities, (c) pay any management fees orsimilar fees to any of its equityholders or any Affiliate thereof, (d) makeany redemption, prepayment, defeasance, repurchase or any other 

 

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##  

## payment in respect of any Subordinated Debt or (e) setaside funds for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may pay dividendsor make other distributions to the Company or to a domestic Wholly-OwnedSubsidiary; (ii) the Company may make regularly scheduled payments ofinterest in respect of Subordinated Debt to the extent permitted under thesubordination provisions thereof; and (iii) from andafter the date of this Agreement, the Company may purchase its outstandingCapital Securities so long as (A) no Event of Default exists as of thedate of any proposed purchase, and (B) the total of all such purchasesfrom June 30, 2005 (both prior to and after giving effect to thecontemplated purchase) shall not exceed $1,438,000 in the aggregate.

##  

## 11.5         Mergers, Consolidations, Sales.  Not, and not permit any other Loan Party to, (a) bea party to any merger or consolidation, or purchase or otherwise acquire all orsubstantially all of the assets or any Capital Securities of any class of, orany partnership or joint venture interest in, any other Person, (b) sell,transfer, convey or lease all or any substantial part of its assets or CapitalSecurities (including the sale of Capital Securities of any Subsidiary) exceptfor sales of inventory in the ordinary course of business, or (c) sell orassign with or without recourse any receivables, except for (i) any suchmerger, consolidation, sale, transfer, conveyance, lease or assignment of or byany Wholly-Owned Subsidiary into the Company or into any other domestic Wholly-OwnedSubsidiary; (ii) any such purchase or other acquisition by the Company orany domestic Wholly-Owned Subsidiary of the assets or Capital Securities of anyWholly-Owned Subsidiary; and (iii) sales and dispositions of assets(excluding the Capital Securities of Subsidiaries) for at least fair marketvalue (as determined by the Board of Directors of the Company) so long as thenet book value of all assets sold or otherwise disposed of in any Fiscal Yeardoes not exceed $3,000,000 (excluding the Rocky Mountain Transaction).  Notwithstanding anything to the contrarycontained herein, the Rocky Mountain Transaction shall be a permittedtransaction under this Agreement (to the extent such transaction satisfies theterms of Section 10.12 hereof) and this Section 11.5shall not apply to the Rocky Mountain Transaction.

##  

## 11.6         Modification of OrganizationalDocuments.  Not permit the charter,by-laws or other organizational documents of any Loan Party to be amended ormodified in any way which could reasonably be expected to materially adverselyaffect the interests of the Lenders; not change, or allow any Loan Party tochange, its state of incorporation or its organizational form unless such LoanParty gives the Administrative Agent ninety (90) days’ prior written notice;provided, however, that the restrictions contained in this Section 11.6shall not apply to the Inactive Subsidiaries so long as the InactiveSubsidiaries remain inactive companies with no business operations or materialassets.

##  

## 11.7         Transactions with Affiliates.  Not, and not permit any other Loan Party to,enter into, or cause, suffer or permit to exist any transaction, arrangement orcontract with any of its other Affiliates (other than the Loan Parties) whichis on terms which are less favorable than are obtainable from any Person whichis not one of its Affiliates.

##  

## 11.8         Unconditional Purchase Obligations.  Not, and not permit any other Loan Party to,enter into or be a party to any contract for the purchase of materials,supplies or other property or services if such contract requires that paymentbe made by it regardless of whether delivery is ever made of such materials,supplies or other property or services.

 

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##  

## 11.9         Inconsistent Agreements.  Not, and not permit any other Loan Party to,enter into any agreement containing any provision which would (a) beviolated or breached by any borrowing by the Company hereunder or by theperformance by any Loan Party of any of its Obligations hereunder or under anyother Loan Document, (b) prohibit any Loan Party from granting to theAdministrative Agent and the Lenders, a Lien on any of its assets or (c) createor permit to exist or become effective any encumbrance or restriction on theability of any Subsidiary to (i) pay dividends or make other distributionsto the Company or any other Subsidiary, or pay any Debt owed to the Company orany other Subsidiary, (ii) make loans or advances to any Loan Party or (iii) transferany of its assets or properties to any Loan Party, other than (A) customaryrestrictions and conditions contained in agreements relating to the sale of allor a substantial part of the assets of any Subsidiary pending such sale, providedthat such restrictions and conditions apply only to the Subsidiary to be soldand such sale is permitted hereunder (B) restrictions or conditionsimposed by any agreement relating to purchase money Debt, Capital Leases andother secured Debt permitted by this Agreement if such restrictions orconditions apply only to the property or assets securing such Debt and (C) customaryprovisions in leases and other contracts restricting the assignment thereof.

##  

## 11.10       Business Activities; Issuance of Equity. Not, and not permit any other Loan Party to, engage in any line ofbusiness other than the businesses engaged in on the date hereof and businessesreasonably related thereto.  Not, and notpermit any other Loan Party to, issue any Capital Securities other than (a) anyissuance of shares of the Company’s common Capital Securities pursuant to anyemployee or director option program, benefit plan or compensation program or (b) anyissuance by a Subsidiary to the Company or another Subsidiary in accordancewith Section 11.4.

##  

## 11.11       Investments. Not, and not permit any other Loan Party to, make or permit to exist anyInvestment in any other Person, except the following:

####  

#### (a)           contributionsby the Company to the capital of any Wholly-Owned Subsidiary, or by anySubsidiary to the capital of any other domestic Wholly-Owned Subsidiary, solong as the recipient of any such capital contribution has guaranteed theObligations and such guaranty is secured by a pledge of all of its CapitalSecurities and substantially all of its real and personal property, in eachcase in accordance with Section 11.10;

####  

#### (b)           Investmentsconstituting Debt permitted by Section 11.1;

####  

#### (c)           ContingentLiabilities constituting Debt permitted by Section 11.1 or Lienspermitted by Section 11.2;

####  

#### (d)           CashEquivalent Investments;

####  

#### (e)           bankdeposits in the ordinary course of business, provided that, commencingsixty (60) days after the Closing Date, the aggregate amount of all suchdeposits which are maintained with any bank other than a Lender shall not atany time exceed the amounts described in Section 10.10 hereof;

 

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####  

#### (f)            Investmentsin securities of Account Debtors received pursuant to any plan ofreorganization or similar arrangement upon the bankruptcy or insolvency of suchaccount debtors;

####  

#### (g)           Investmentslisted on Schedule 11.11 as of the Closing Date;

####  

#### (h)           extensions of credit upon customaryterms to their customers in the ordinary course of their business; and

####  

#### (i)             extensions of credit to officersand employees in accordance with policies in effect on the date of thisAgreement to the extent the Administrative Agent has received a written copy ofsuch policy;

 

provided that (x) any Investment which when made complieswith the requirements of the definition of the term “Cash EquivalentInvestment” may continue to be held notwithstanding that such Investment ifmade thereafter would not comply with such requirements; (y) no Investmentotherwise permitted by clause (b), (c), (g), (h) or (i) of this Section 11.11shall be permitted to be made if, immediately before or after giving effectthereto, any Event of Default or Unmatured Event of Default exists.

##  

## 11.12       Restriction of Amendments to CertainDocuments.   Not, and not permit any other Loan Party to,make or agree to any amendment to or modification of, or waive any of itsrights under (a) any agreement or instrument governing any SubordinatedDebt which would (i) have the effect of (x) providing for earlierpayment in respect of principal or redemptions or otherwise, (y) requiringcollateral or guarantees to secure any Subordinated Debt or (z) increasingthe interest rate payable with respect to any Subordinated Debt or (ii) otherwiseadversely affect the interest of the Lenders in any material respect, or (b) theMining Royalty Agreement without prompt notice thereof to the AdministrativeAgent (such notice to include a description of the amendment, modification orwaiver).

##  

## 11.13       Financial Covenants.

###  

### 11.13.1            MinimumAdjusted EBITDA.  Not permit AdjustedEBITDA for any Computation Period to be less than the applicable amount setforth below for such Computation Period:

 
| **Computation  Period Ending**                            | ** ** | **Adjusted EBITDA** | ** ** |
|----------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                     | ** ** | ** **               | ** ** |
| June 30,  2009                                            |       | $                        | 7,500,000  |   |
|                                                           |       |                     |       |
| September 30,  2009                                       |       | $                        | 8,150,000  |   |
|                                                           |       |                     |       |
| December 31,  2009 and each Fiscal Quarter end thereafter |       | $                        | 6,500,000  |   |

 

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### 11.13.2            MinimumFixed Charge Coverage Ratio.  Notpermit the Fixed Charge Coverage Ratio for any Computation Period to be lessthan 1.30 to 1.00 for such Computation Period.

###  

### 11.13.3            Minimum Tangible Net Worth. Not permit Tangible Net Worth as of the last day of any ComputationPeriod to be less than $32,000,000 (provided that the required amount ofTangible Net Worth shall increase (but not decrease) each Fiscal Year,commencing with Fiscal Year 2010, by an amount equal to fifty percent (50%) ofthe Consolidated Net Income for the immediately preceding Fiscal Year.

###  

### 11.13.4            MaximumAdjusted Total Cash Flow Leverage. Not permit the Adjusted Total Cash Flow Leverage as of the last day ofany Computation Period to exceed the applicable ratio set forth below for suchComputation Period:

 
| **Computation  Period Ending**                         | ** ** | **Adjusted Total Cash  Flow Leverage Ratio** | ** ** |
|-------------------------------------------------------------|------------|------------------------------------------------------------------|------------|
| ** **                                                  | ** ** | ** **                                                       | ** ** |
| June 30,  2009                                         |       | 2.75 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| September 30,  2009 and December 31, 2009         |       | 2.25 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| March 31,  2010 and June 30, 2010                 |       | 2.75 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| September 30,  2010                                    |       | 2.50 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| December 31,  2010                                     |       | 2.00 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| March 31,  2011 and June 30, 2011                 |       | 2.50 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| September 30,  2011                                    |       | 2.25 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| December 31,  2011                                     |       | 1.75 to 1.00                                                     |       |
|                                                        |       |                                                             |       |
| March 31,  2012 and each Fiscal Quarter end thereafter |       | 2.25 to 1.00                                                     |       |

 

### 11.13.5            CapitalExpenditures.  Not permit theaggregate amount of all Capital Expenditures made by the Loan Parties in anyFiscal Year to exceed $3,500,000.

#  

# SECTION 12                             EFFECTIVENESS; CONDITIONS OF LENDING,ETC.

 

The obligation of eachLender to make its Loans and of the Issuing Lender to issue Letters of Creditis subject to the following conditions precedent:

##  

## 12.1         Initial Credit Extension.  The obligation of the Lenders to make theinitial Loans and the obligation of the Issuing Lender to issue its initialLetter of Credit (whichever first 

 

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##  

## occurs) is, in addition to the conditions precedentspecified in Section 12.2, subject to the conditions precedent that(a) all Debt to be Repaid has been (or concurrently with the initialborrowing will be) paid in full, and that all agreements and instrumentsgoverning the Debt to be Repaid and that all Liens securing such Debt to beRepaid have been (or concurrently with the initial borrowing will be)terminated and (b) the Administrative Agent shall have received all of thefollowing, each duly executed and dated the Closing Date (or such earlier dateas shall be satisfactory to the Administrative Agent), in form and substancesatisfactory to the Administrative Agent (and the date on which all suchconditions precedent have been satisfied or waived in writing by theAdministrative Agent and the Lenders is called the “Closing Date”):

###  

### 12.1.1      Notes.  A Revolving Loan Note and Term Loan Note foreach Lender.

###  

### 12.1.2      AuthorizationDocuments.  For each Loan Party, suchPerson’s (a) charter (or similar formation document), certified by theappropriate governmental authority; (b) good standing certificates in itsstate of incorporation and in each other state requested by the AdministrativeAgent; (c) bylaws; (d) resolutions of its board of directorsapproving and authorizing such Person’s execution, delivery and performance ofthe Loan Documents to which it is party and the transactions contemplatedthereby; and (e) signature and incumbency certificates of its officersexecuting any of the Loan Documents (it being understood that theAdministrative Agent and each Lender may conclusively rely on each suchcertificate until formally advised by a like certificate of any changestherein), all certified by its secretary or an assistant secretary (or similarofficer) as being in full force and effect without modification.

###  

### 12.1.3      Consents,etc.  Certified copies of alldocuments evidencing any necessary corporate action, consents andgovernmental approvals (if any) required for the execution, delivery andperformance by the Loan Parties of the documents referred to in this Section 12.

###  

### 12.1.4      BorrowingRequest and Letter of Direction.  Aborrowing request and letter of direction containing funds flow informationwith respect to the proceeds of the Loans on the Closing Date.

###  

### 12.1.5      Guarantyand Collateral Agreement.  Acounterpart of the Guaranty and Collateral Agreement executed by each Loan Party,together with all instruments, transfer powers and other items required to bedelivered in connection therewith.

###  

### 12.1.6      PerfectionCertificate.  A PerfectionCertificate completed and executed by each Loan Party.

###  

### 12.1.7      Mortgages.  With respect to each Mortgaged Property, aduly executed Mortgage providing for a fully perfected Lien, in favor of theAdministrative Agent, in all right, title and interest of the Company or theapplicable Subsidiary in such real property.

###  

### 12.1.8      WilliamsFurnace Mortgaged Property.  Withrespect to the Mortgaged Property owned by Williams Furnace, the followingadditional items shall be provided or permitted:

 

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####  

#### (a)           anALTA Loan Title Insurance Policy, issued by an insurer acceptable to theAdministrative Agent, insuring the Administrative Agent’s first priority Lienon such real property and containing such endorsements as the AdministrativeAgent may reasonably require (it being understood that the amount of coverage, exceptionsto coverage and status of title set forth in such policy shall be acceptable tothe Administrative Agent, which title insurance shall initially be in theamount of $5,000,000, provided that the amount of such title insurance may beincreased by the Administrative Agent after the Closing Date at the expense ofthe Company to an amount equal to the Williams Furnace Valuation to the extentthe Williams Furnace Valuation exceeds $5,000,000);

####  

#### (b)           copiesof all documents of record concerning such real property as shown on thecommitment for the ALTA Loan Title Insurance Policy referred to above;

####  

#### (c)           originalor certified copies of all insurance policies required to be maintained withrespect to such real property by this Agreement, the applicable Mortgage or anyother Loan Document (or, in each case, a certificate of insurance with respectto such insurance policies reasonably acceptable to the Administrative Agent);

####  

#### (d)           asurvey certified to the Administrative Agent meeting such standards as the AdministrativeAgent may reasonably establish and otherwise reasonably satisfactory to theAdministrative Agent (provided that if the survey is not available onthe Closing Date with respect to such Mortgaged Property, the Company willcause Williams Furnace to deliver a survey for such Mortgaged Property withinsixty (60) days of the Closing Date and the title insurance policy shall bebrought forward and updated accordingly);

####  

#### (e)           aPhase II environmental site assessment in respect of such Mortgaged Property,which assessment shall be performed after the Closing Date (providedthat (i) the Company shall permit the Administrative Agent and itsconsultants and agents to perform the Phase II environmental site assessment onsuch Mortgaged Property, (ii) the Company shall cause Williams Furnace toprovide full access to the applicable real property and all applicableinformation for purposes of such assessment, (iii) the Company shall causeWilliams Furnace to provide all assistance reasonably required to perform andcomplete such assessment, and (iv) all costs and expenses related theretoshall be the sole responsibility of the Company);

####  

#### (f)            floodinsurance policy concerning such real property, if required by the FloodDisaster Protection Act of 1973; and

####  

#### (g)           an appraisal,prepared by an independent appraiser engaged directly by the AdministrativeAgent, of such parcel of real property or interest in real property.

 

In addition to theforegoing, (i) in the case of any leased real property, a CollateralAccess Agreement from the landlord of such property waiving any landlord’s Lienin respect of personal property kept at the premises subject to such lease andpermitting access to the location by the Administrative Agent and its agentsand containing such other terms and provisions as may be required by theAdministrative Agent (to the extent that any Collateral Access 

 

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Agreement is notdelivered on the Closing Date and the Administrative Agent elects to waive thedelivery of such Collateral Access Agreement as a closing condition, theCompany and the applicable Subsidiaries shall have forty-five (45) days afterthe Closing Date to deliver a Collateral Access Agreement for each leasedlocation listed on Schedule 9.17 hereof where a material amount ofCollateral is located or historically has been located, it being agreed thatthe failure to provide a reasonably acceptable Collateral Access Agreement forall such leased locations within such forty-five (45) day period shall resultin an Event of Default), and (ii) in the case of all real property ownedby any Loan Party that will not be subject to a Mortgage, a title searchshowing all Liens affecting such real property within forty-five (45) days ofthe Closing Date (to the extent such title search results are not reasonablyacceptable to the Administrative Agent, the Company shall make commerciallyreasonable efforts to remove any encumbrances or other exceptions to titlewithin forty-five (45) days of written request from the Administrative Agent,and if such encumbrances or other title exceptions are not removed or otherwisewaived by Administrative Agent in writing within such time period, such failureshall result in an Event of Default). All real property owned by any Loan Party that will not be subject to aMortgage will be subject to the negative pledge set forth in the Guaranty andCollateral Agreement.

###  

### 12.1.9      Draft2008 Financial Statements.   TheCompany shall have delivered to the Administrative Agent the Draft 2008Financial Statements, along with a certificate from a Senior Officer statingthat there will be no material changes (to the extent adverse to any LoanParty) to the Final 2008 Financial Statements, each of which shall besatisfactory to the Administrative Agent in form and substance.

###  

12.1.10    Opinions of Counsel.  Opinions of counsel for each Loan Party,including local counsel in respect of each Mortgage, in each case in form andsubstance satisfactory to the Administrative Agent.

###  

12.1.11    Insurance.  Evidence of the existence of insurancerequired to be maintained pursuant to Section 10.3(b), togetherwith evidence that the Administrative Agent has been named as a lender’s losspayee and an additional insured on all related insurance policies.

###  

12.1.12    Intentionally Omitted.

###  

12.1.13    Payment of Fees.  Evidence of payment by the Company of allaccrued and unpaid fees, costs and expenses to the extent then due and payableon the Closing Date, together with all Attorney Costs of the Administrative Agentto the extent invoiced prior to the Closing Date, plus such additionalamounts of Attorney Costs as shall constitute the Administrative Agent’sreasonable estimate of Attorney Costs incurred or to be incurred by theAdministrative Agent through the closing proceedings (provided that suchestimate shall not thereafter preclude final settling of accounts between theCompany and the Administrative Agent).

 

12.1.14    SolvencyCertificate.  A Solvency Certificateexecuted by a Senior Officer of the Company.

 

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12.1.15    MaterialAdverse Change.  The AdministrativeAgent shall be satisfied that since December 31, 2008 there has been nomaterial adverse change in the business, assets, liabilities, properties,condition (financial or otherwise) or results of operations of the Loan Partiestaken as a whole.

###  

12.1.16    Field Audit Report.  A field exam report prepared by an auditorengaged by the Administrative Agent.

 

12.1.17    Search Results; Lien Terminations.  Certified copies of Uniform Commercial Codesearch reports dated a date reasonably near to the Closing Date, listing alleffective financing statements which name any Loan Party (under their presentnames and any previous names) as debtors, together with (a) copies of suchfinancing statements, (b) payoff letters evidencing repayment in full ofall Debt to be Repaid, the termination of all agreements relating thereto andthe release of all Liens granted in connection therewith, with UniformCommercial Code or other appropriate termination statements and documentseffective to evidence the foregoing (other than Liens permitted by Section 11.2)and (c) such other Uniform Commercial Code termination statements as theAdministrative Agent may reasonably request.

 

12.1.18    Filings, Registrations and Recordings.  The Administrative Agent shall have receivedeach document (including Uniform Commercial Code financing statements) requiredby the Collateral Documents or under law or reasonably requested by theAdministrative Agent to be filed, registered or recorded in order to create infavor of the Administrative Agent, for the benefit of the Lenders, a perfectedLien on the collateral described therein, prior to any other Liens (subjectonly to Liens permitted pursuant to Section 11.2), in proper formfor filing, registration or recording.

 

12.1.19    Borrowing Base Certificate.  A Borrowing Base Certificate dated as of theClosing Date.

 

12.1.20    Closing Certificate.  A certificate executed by an officer of theCompany on behalf of the Company certifying the matters set forth in Section 12.2.1as of the Closing Date.

 

12.1.21    Other.  Such other documents as the AdministrativeAgent or any Lender may reasonably request.

##  

## 12.2                           Conditions.  Theobligation (a) of each Lender to make each Loan and (b) of theIssuing Lender to issue each Letter of Credit is subject to the followingfurther conditions precedent that:

###  

12.2.1      Compliance with Warranties, No Default,etc.  Both before and after givingeffect to any borrowing and the issuance of any Letter of Credit, the followingstatements shall be true and correct:

####  

(a)           the representations and warranties ofeach Loan Party set forth in this Agreement and the other Loan Documents shallbe true and correct in all respects with the same effect as if then made(except to the extent stated to relate to a specific earlier 

 

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#### date,in which case such representations and warranties shall be true and correct asof such earlier date); and

####  

#### (b)           noEvent of Default or Unmatured Event of Default shall have then occurred and becontinuing.

 

Each request by the Company for the making of a Loanor the issuance of a Letter of Credit shall be deemed to constitute arepresentation and warranty by the Company that the conditions precedent setforth in this Section 12.2.1 are satisfied at the time of themaking of such Loan or the issuance of such Letter of Credit.

#  

# SECTION 13                             EVENTS OF DEFAULT AND THEIR EFFECT.

##  

## 13.1                           Events of Default. Each of the following shall constitute an Event of Default underthis Agreement:

###  

### 13.1.1      Non-Paymentof the Loans, etc.  The Company orany other Loan Party shall fail to make any payment ofprincipal or interest when and as due; or, in the case of any other amountspayable hereunder or under any other Loan Document, the Company or any otherLoan Party shall fail to make such payment within five (5) days of the duedate thereof.

###  

### 13.1.2      Cross-Default.  There shall occur any default orevent of default, or any event which might become such with notice or thepassage of time or both, or any similar event, or any event which requires theprepayment of borrowed money or the acceleration of the maturity thereof, underthe terms of any evidence of Indebtedness or other agreement issued or assumedor entered into by the Company or any other Loan Party or under the terms ofany indenture, agreement or instrument under which any such evidence ofIndebtedness or other agreement is issued, assumed, secured or guaranteed, andsuch event shall continue beyond any applicable period of grace.

###  

### 13.1.3      Bankruptcy,Insolvency, etc.  Any Loan Partybecomes insolvent or generally fails to pay, or admits in writing its inabilityor refusal to pay, debts as they become due; or any Loan Party applies for,consents to, or acquiesces in the appointment of a trustee, receiver or othercustodian for such Loan Party or any property thereof, or makes a generalassignment for the benefit of creditors; or, in the absence of suchapplication, consent or acquiescence, a trustee, receiver or other custodian isappointed for any Loan Party or for a substantial part of the property of anythereof and is not discharged within 60 days; or any bankruptcy,reorganization, debt arrangement, or other case or proceeding under any bankruptcyor insolvency law, or any dissolution or liquidation proceeding, is commencedin respect of any Loan Party, and if such case or proceeding is not commencedby such Loan Party, it is consented to or acquiesced in by such Loan Party, orremains for 60 days undismissed; or any Loan Party takes any action toauthorize, or in furtherance of, any of the foregoing.

###  

### 13.1.4      Non-Compliancewith Loan Documents.  (a) Failureby any Loan Party to comply with or to perform any covenant set forth in Section 9.4(solely as such section relates to the delivery of the Final 2008 FinancialStatements), Sections 10.1.5, 10.3(b) 

 

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### (solely as such section relates to the maintenance ofinsurance at all times), 10.5, 10.10 or 10.12, Section 11or Section 12.1.8(d) or (e); or (b) failure by anyLoan Party to comply with or to perform any other provision of this Agreementor any other Loan Document (and not constituting an Event of Default under anyother provision of this Section 13) and continuance of such failuredescribed in this clause (b) for 30 days.

###  

### 13.1.5      Representations;Warranties.  Any representation orwarranty made by any Loan Party herein or any other Loan Document is breachedor is false or misleading in any material respect, or any schedule,certificate, financial statement, report, notice or other writing furnished byany Loan Party to the Administrative Agent or any Lender in connection herewithis false or misleading in any material respect on the date as of which thefacts therein set forth are stated or certified.

###  

### 13.1.6      PensionPlans.  (a) Any Personinstitutes steps to terminate a Pension Plan if as a result of such terminationthe Company or any member of the Controlled Group could be required to make acontribution to such Pension Plan, or could incur a liability or obligation tosuch Pension Plan, in excess of $500,000; (b) a contribution failureoccurs with respect to any Pension Plan sufficient to give rise to a Lien underSection 302(f) of ERISA; (c) the Unfunded Liability exceedstwenty percent of the Total Plan Liability, or (d) there shall occur anywithdrawal or partial withdrawal from a Multiemployer Pension Plan and thewithdrawal liability (without unaccrued interest) to Multiemployer PensionPlans as a result of such withdrawal (including any outstanding withdrawalliability that the Company or any member of the Controlled Group have incurredon the date of such withdrawal) exceeds $500,000.

###  

13.1.7                                          Litigation.  Any suit, action or other proceeding(judicial or administrative) commenced against the Company or any other LoanParty, or with respect to any assets of the Company or any other Loan Party,shall threaten to have a material and adverse effect on the future operations of the Company or anyother Loan Party; or a final judgment or settlement shall be entered in, oragreed to in respect of, any such suit, action or proceeding and said finaljudgment or settlement would have a Material Adverse Effect on the Company andthe other Loan Parties taken as a whole, it being agreed that any finaljudgment or settlement (either individually or collectively with all otherjudgments and settlements) in excess of $250,000 shall be deemed to have aMaterial Adverse Effect (provided that any amounts covered by insurance shallnot be included in such aggregate amount so long as the insurance company hasacknowledged coverage in writing).

###  

13.1.8                                          Invalidity of Collateral Documents, etc. Any Collateral Document shall cease to be in full force and effect; orany Loan Party (or any Person by, through or on behalf of any Loan Party) shallcontest in any manner the validity, binding nature or enforceability of anyCollateral Document.

 

13.1.9                                          Invalidity of Subordination Provisions,etc.  Any subordination provision in any documentor instrument governing Subordinated Debt (if any), or any subordinationprovision in any guaranty by any Subsidiary of any Subordinated Debt, shallcease to be in full force and effect, or any Loan Party or any other Person(including the holder of any 

 

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### applicable Subordinated Debt) shall contest in anymanner the validity, binding nature or enforceability of any such provision.

###  

### 13.1.10            Changeof Control.  A Change of Control shalloccur.

###  

### 13.1.11            MaterialAdverse Effect. The occurrence of any event having a Material AdverseEffect.

##  

## 13.2                           Effect of Event of Default. If any Event of Default described in Section 13.1.3 shalloccur in respect of the Company, the Commitments shall immediately terminateand the Loans and all other Obligations hereunder shall become immediately dueand payable and the Company shall become immediately obligated to CashCollateralize all Letters of Credit, all without presentment, demand, protestor notice of any kind; and, if any other Event of Default shall occur and becontinuing, the Administrative Agent may (and, upon the written request of theRequired Lenders shall) declare the Commitments to be terminated in whole or inpart and/or declare all or any part of the Loans and all other Obligationshereunder to be due and payable and/or demand that the Company immediately CashCollateralize all or any Letters of Credit, whereupon the Commitments shallimmediately terminate (or be reduced, as applicable) and/or the Loans and otherObligations hereunder shall become immediately due and payable (in whole or inpart, as applicable) and/or the Company shall immediately become obligated toCash Collateralize the Letters of Credit (all or any, as applicable), allwithout presentment, demand, protest or notice of any kind.  The Administrative Agent shall promptlyadvise the Company of any such declaration, but failure to do so shall notimpair the effect of such declaration. Any cash collateral delivered hereunder shall be held by theAdministrative Agent (without liability for interest thereon) and applied tothe Obligations arising in connection with any drawing under a Letter ofCredit.  After the expiration ortermination of all Letters of Credit, such cash collateral shall be applied bythe Administrative Agent to any remaining Obligations hereunder and any excessshall be delivered to the Company or as a court of competent jurisdiction mayelect.

#  

# SECTION 14                             THE AGENT.

##  

## 14.1                           Appointment and Authorization. Each Lender hereby irrevocably (subject to Section 14.10)appoints, designates and authorizes the Administrative Agent to take suchaction on its behalf under the provisions of this Agreement and each other LoanDocument and to exercise such powers and perform such duties as are expresslydelegated 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 contrarycontained elsewhere in this Agreement or in any other Loan Document, theAdministrative Agent shall not have any duty or responsibility except thoseexpressly set forth herein, nor shall the Administrative Agent have or bedeemed to have any fiduciary relationship with any Lender or participant, andno implied covenants, functions, responsibilities, duties, obligations orliabilities shall be read into this Agreement or any other Loan Document orotherwise exist against the Administrative Agent.  Without limiting the generality of theforegoing sentence, the use of the term “agent” herein and in other LoanDocuments with reference to the Administrative Agent is not intended to connoteany fiduciary or other implied (or express) obligations arising under agencydoctrine of any applicable law.  

 

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## Instead, such term is used merely as a matter ofmarket custom, and is intended to create or reflect only an administrativerelationship between independent contracting parties.

##  

## 14.2         Issuing Lender.  The Issuing Lender shall act on behalf of theLenders (according to their Pro Rata Shares) with respect to any Letters ofCredit issued by it and the documents associated therewith.  The Issuing Lender shall have all of thebenefits and immunities (a) provided to the Administrative Agent in this Section 14with respect to any acts taken or omissions suffered by the Issuing Lender inconnection with Letters of Credit issued by it or proposed to be issued by itand the applications and agreements for letters of credit pertaining to suchLetters of Credit as fully as if the term “Administrative Agent”, as used inthis Section 14, included the Issuing Lender with respect to suchacts or omissions and (b) as additionally provided in this Agreement withrespect to the Issuing Lender.

##  

## 14.3         Delegation of Duties.  The Administrative Agent may execute any ofits duties under this Agreement or any other Loan Document by or throughagents, employees or attorneys-in-fact and shall be entitled to advice ofcounsel and other consultants or experts concerning all matters pertaining tosuch duties.  The Administrative Agentshall not be responsible for the negligence or misconduct of any agent orattorney-in-fact that it selects in the absence of gross negligence or willfulmisconduct.

##  

## 14.4         Exculpation of Administrative Agent.  None of the Administrative Agent nor any ofits directors, officers, employees or agents shall (a) be liable for anyaction taken or omitted to be taken by any of them under or in connection withthis Agreement or any other Loan Document or the transactions contemplatedhereby (except to the extent resulting from its own gross negligence or willfulmisconduct in connection with its duties expressly set forth herein asdetermined by a final, nonappealable judgment by a court of competentjurisdiction), or (b) be responsible in any manner to any Lender orparticipant for any recital, statement, representation or warranty made by anyLoan Party or Affiliate of the Company, or any officer thereof, contained in thisAgreement or in any other Loan Document, or in any certificate, report,statement or other document referred to or provided for in, or received by theAdministrative Agent under or in connection with, this Agreement or any otherLoan Document, or the validity, effectiveness, genuineness, enforceability orsufficiency of this Agreement or any other Loan Document (or the creation,perfection or priority of any Lien or security interest therein), or for anyfailure of the Company or any other party to any Loan Document to perform itsObligations hereunder or thereunder.  TheAdministrative Agent shall not be under any obligation to any Lender toascertain or to inquire as to the observance or performance of any of theagreements contained in, or conditions of, this Agreement or any other LoanDocument, or to inspect the properties, books or records of the Company or anyof the Company’s Subsidiaries or Affiliates.

##  

## 14.5         Reliance by Administrative Agent.  The Administrative Agent shall be entitled torely, and shall be fully protected in relying, upon any writing, communication,signature, resolution, representation, notice, consent, certificate, electronicmail message, affidavit, letter, telegram, facsimile, telex or telephonemessage, statement or other document or conversation believed by it to begenuine and correct and to have been signed, sent or made by the proper Personor Persons, and upon advice and statements of legal counsel (including counselto the Company), independent accountants and other experts selected by theAdministrative Agent.  The AdministrativeAgent shall be fully justified in failing or refusing to take any action under 

 

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## this Agreement or any other Loan Document unless itshall first receive such advice or concurrence of the Required Lenders as itdeems appropriate and, if it so requests, confirmation from the Lenders oftheir obligation to indemnify the Administrative Agent against any and allliability and expense which may be incurred by it by reason of taking orcontinuing to take any such action.  TheAdministrative Agent shall in all cases be fully protected in acting, or inrefraining from acting, under this Agreement or any other Loan Document inaccordance with a request or consent of the Required Lenders and such requestand any action taken or failure to act pursuant thereto shall be binding uponeach Lender.  For purposes of determiningcompliance with the conditions specified in Section 12, each Lenderthat has signed this Agreement shall be deemed to have consented to, approvedor accepted or to be satisfied with, each document or other matter requiredthereunder to be consented to or approved by or acceptable or satisfactory to aLender unless the Administrative Agent shall have received written notice fromsuch Lender prior to the proposed Closing Date specifying its objectionthereto.

##  

## 14.6         Notice of Default.  The Administrative Agent shall not be deemedto have knowledge or notice of the occurrence of any Event of Default orUnmatured Event of Default except with respect to defaults in the payment ofprincipal, interest and fees required to be paid to the Administrative Agentfor the account of the Lenders, unless the Administrative Agent shall havereceived written notice from a Lender or the Company referring to thisAgreement, describing such Event of Default or Unmatured Event of Default andstating that such notice is a “notice of default”.  The Administrative Agent will notify theLenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to suchEvent of Default or Unmatured Event of Default as may be requested by theRequired Lenders in accordance with Section 13; providedthat unless and until the Administrative Agent has received any such request,the Administrative Agent may (but shall not be obligated to) take such action,or refrain from taking such action, with respect to such Event of Default orUnmatured Event of Default as it shall deem advisable or in the best interestof the Lenders.

##  

## 14.7         Credit Decision.  Each Lender acknowledges that theAdministrative Agent has not made any representation or warranty to it, andthat no act by the Administrative Agent hereafter taken, including any consentand acceptance of any assignment or review of the affairs of the Loan Parties,shall be deemed to constitute any representation or warranty by theAdministrative Agent to any Lender as to any matter, including whether theAdministrative Agent has disclosed material information in its possession.  Each Lender represents to the AdministrativeAgent that it has, independently and without reliance upon the AdministrativeAgent 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 theLoan Parties, and made its own decision to enter into this Agreement and toextend credit to the Company hereunder. Each Lender also represents that it will, independently and withoutreliance upon the Administrative Agent and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit analysis, appraisals and decisions in taking or not taking action underthis Agreement and the other Loan Documents, and to make such investigations asit deems necessary to inform itself as to the business, prospects, operations,property, financial and other condition and creditworthiness of the Company.  Except for notices, reports and otherdocuments expressly herein required to be furnished to the Lenders by theAdministrative Agent, the Administrative Agent shall not have any duty orresponsibility to provide any Lender with any credit or other

 

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## information concerning the business, prospects,operations, property, financial or other condition or creditworthiness of theCompany which may come into the possession of the Administrative Agent.

##  

## 14.8         Indemnification.  Whether or not the transactions contemplatedhereby are consummated, each Lender shall indemnify upon demand theAdministrative Agent and its directors, officers, employees and agents (to theextent not reimbursed by or on behalf of the Company and without limiting theobligation of the Company to do so), according to its applicable Pro RataShare, from and against any and all Indemnified Liabilities (as hereinafterdefined); provided that no Lender shall be liable for any payment to anysuch Person of any portion of the Indemnified Liabilities to the extentdetermined by a final, nonappealable judgment by a court of competentjurisdiction to have resulted from the applicable Person’s own gross negligenceor willful misconduct.  No action takenin accordance with the directions of the Required Lenders shall be deemed toconstitute gross negligence or willful misconduct for purposes of thisSection.  Without limitation of theforegoing, each Lender shall reimburse the Administrative Agent upon demand forits ratable share of any costs or out-of-pocket expenses (including AttorneyCosts and Taxes) incurred by the Administrative Agent in connection with thepreparation, execution, delivery, administration, modification, amendment orenforcement (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 the Administrative Agent is not reimbursed for such expensesby or on behalf of the Company.  Theundertaking in this Section shall survive repayment of the Loans,cancellation of the Notes, expiration or termination of the Letters of Credit,any foreclosure under, or modification, release or discharge of, any or all ofthe Collateral Documents, termination of this Agreement and the resignation orreplacement of the Administrative Agent.

##  

## 14.9         Administrative Agent in IndividualCapacity.  PVBT and its Affiliatesmay make loans to, issue letters of credit for the account of, accept depositsfrom, acquire equity interests in and generally engage in any kind of banking,trust, financial advisory, underwriting or other business with the Loan Partiesand Affiliates as though PVBT were not the Administrative Agent hereunder andwithout notice to or consent of any Lender. Each Lender acknowledges that, pursuant to such activities, PVBT or itsAffiliates may receive information regarding the Company or its Affiliates(including information that may be subject to confidentiality obligations infavor of the Company or such Affiliate) and acknowledge that the AdministrativeAgent shall be under no obligation to provide such information to them.  With respect to their Loans (if any), PVBT andits Affiliates shall have the same rights and powers under this Agreement asany other Lender and may exercise the same as though PVBT were not theAdministrative Agent, and the terms “Lender” and “Lenders” include PVBT and itsAffiliates, to the extent applicable, in their individual capacities.

##  

## 14.10       Successor Administrative Agent.  The Administrative Agent may resign asAdministrative Agent upon 30 days’ notice to the Lenders.  If the Administrative Agent resigns underthis Agreement, the Required Lenders shall, with (so long as no Event ofDefault exists) the consent of the Company (which shall not be unreasonablywithheld or delayed), appoint from among the Lenders a successor agent for theLenders.  If no successor agent isappointed prior to the effective date of the resignation of the AdministrativeAgent, the Administrative Agent may 

 

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## appoint, after consulting with the Lenders and theCompany, a successor agent from among the Lenders.  Upon the acceptance of its appointment as successoragent hereunder, such successor agent shall succeed to all the rights, powersand duties of the retiring Administrative Agent and the term “AdministrativeAgent” shall mean such successor agent, and the retiring Administrative Agent’sappointment, powers and duties as Administrative Agent shall be terminated.After any retiring Administrative Agent’s resignation hereunder asAdministrative Agent, the provisions of this Section 14 and Sections15.5 and 15.17 shall inure to its benefit as to any actions taken oromitted to be taken by it while it was Administrative Agent under thisAgreement.  If no successor agent hasaccepted appointment as Administrative Agent by the date which is 30 daysfollowing a retiring Administrative Agent’s notice of resignation, the retiringAdministrative Agent’s resignation shall nevertheless thereupon becomeeffective and the Lenders shall perform all of the duties of the AdministrativeAgent hereunder until such time, if any, as the Required Lenders appoint asuccessor agent as provided for above.

##  

## 14.11       Collateral Matters.  The Lenders irrevocably authorize theAdministrative Agent, at its option and in its discretion, (a) to releaseany Lien granted to or held by the Administrative Agent under any CollateralDocument (i) upon termination of the Commitments and payment in full ofall Loans and all other obligations of the Company hereunder (other than any Obligation arising solely fromany Bank Product Agreement or contingent indemnification Obligations to theextent no claim giving rise thereto has been asserted) and theexpiration or termination of all Letters of Credit (or Cash Collateralizationof all such Letters of Credit); (ii) constituting property sold or to besold or disposed of as part of or in connection with any disposition permittedhereunder; or (iii) subject to Section 15.1, if approved,authorized or ratified in writing by the Required Lenders; or (b) tosubordinate its interest in any Collateral to any holder of a Lien on suchCollateral which is permitted by Section 11.2  (it being understood that the AdministrativeAgent may conclusively rely on a certificate from the Company in determiningwhether the Debt secured by any such Lien is permitted by Section 11.1).  Upon request by the Administrative Agent atany time, the Lenders will confirm in writing the Administrative Agent’sauthority to release, or subordinate its interest in, particular types or itemsof Collateral pursuant to this Section 14.11.  Each Lender hereby authorizes theAdministrative Agent to give blockage notices in connection with anySubordinated Debt at the direction of Required Lenders and agrees that it willnot act unilaterally to deliver such notices.

##  

## 14.12       Administrative Agent May FileProofs of Claim.  In case of thependency of any receivership, insolvency, liquidation, bankruptcy,reorganization, arrangement, adjustment, composition or other judicialproceeding relative to any Loan Party, the Administrative Agent (irrespectiveof whether the principal of any Loan shall then be due and payable as hereinexpressed or by declaration or otherwise and irrespective of whether theAdministrative Agent shall have made any demand on the Company) shall beentitled and empowered, by intervention in such proceeding or otherwise:

##  

#### (a)           to file and prove a claim for thewhole amount of the principal and interest owing and unpaid in respect of theLoans, and all other Obligations that are owing and unpaid and to file suchother documents as may be necessary or advisable in order to have the claims ofthe Lenders and the Administrative Agent (including any claim for thereasonable compensation, expenses, disbursements and advances of the Lendersand the Administrative Agent and their 

 

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#### respective agents and counsel and all other amountsdue the Lenders and the Administrative Agent under Sections 5, 15.5and 15.17) allowed in such judicial proceedings; and

####  

#### (b)           to collect and receive any monies orother property payable or deliverable on any such claims and to distribute thesame;

####  

and any custodian, receiver,assignee, trustee, liquidator, sequestrator or other similar official in anysuch judicial proceeding is hereby authorized by each Lender to make suchpayments to the Administrative Agent and, in the event that the AdministrativeAgent shall consent to the making of such payments directly to the Lenders, topay to the Administrative Agent any amount due for the reasonable compensation,expenses, disbursements and advances of the Administrative Agent and its agentsand counsel, and any other amounts due the Administrative Agent under Sections5, 15.5 and 15.17.

 

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

 

# SECTION 15          GENERAL.

#  

## 15.1         Waiver; Amendments.  No delay on the part of the AdministrativeAgent or any Lender in the exercise of any right, power or remedy shall operateas a waiver thereof, nor shall any single or partial exercise by any of them ofany right, power or remedy preclude other or further exercise thereof, or theexercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, anyprovision of this Agreement or the other Loan Documents shall in any event beeffective unless the same shall be in writing and acknowledged by Lendershaving aggregate Pro Rata Shares of not less than the aggregate Pro Rata Sharesexpressly designated herein with respect thereto or, in the absence of suchdesignation as to any provision of this Agreement, by the Required Lenders, andthen any such amendment, modification, waiver or consent shall be effectiveonly in the specific instance and for the specific purpose for whichgiven.  No amendment, modification,waiver or consent shall (a) extend or increase the Commitment of anyLender without the written consent of such Lender, (b) extend the datescheduled for payment of any principal (excluding mandatory prepayments) of orinterest on the Loans or any fees payable hereunder without the written consentof each Lender directly affected thereby, (c) reduce the principal amountof any Loan, the rate of interest thereon or any fees payable hereunder,without the consent of each Lender directly affected thereby (except forperiodic adjustments of interest rates and fees resulting from a change in theApplicable Margin as provided for in this Agreement); or (d) release anyparty from its obligations under the Guaranty and Collateral Agreement or allor any substantial part of the Collateral granted under the CollateralDocuments, change the definition of Required Lenders, any provision of this Section 15.1or reduce the aggregate Pro Rata Share required to effect an amendment,modification, waiver or consent, without, in each case, the written consent ofall Lenders.  No provision of Sections6.2.2 or 6.3 with respect to the timing or application of mandatoryprepayments of the Loans shall be amended, modified or waived without theconsent of Lenders having a majority of the aggregate Pro Rata Shares of theTerm Loans affected 

 

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## thereby.  Noprovision of Section 14 or other provision of this Agreementaffecting the Administrative Agent in its capacity as such shall be amended,modified or waived without the consent of the Administrative Agent.  No provision of this Agreement relating tothe rights or duties of the Issuing Lender in its capacity as such shall beamended, modified or waived without the consent of the Issuing Lender.

##  

## 15.2         Confirmations.  The Company and each holder of a Note agreefrom time to time, upon written request received by it from the other, toconfirm to the other in writing (with a copy of each such confirmation to theAdministrative Agent) the aggregate unpaid principal amount of the Loans thenoutstanding under such Note.

##  

## 15.3         Notices.  Except as otherwise provided in Sections 2.2.2and 2.2.3, all notices hereunder shall be in writing (includingfacsimile transmission) and shall be sent to the applicable party at itsaddress shown on Annex B or at such other address as such party may, bywritten notice received by the other parties, have designated as its addressfor such purpose.  Notices sent byfacsimile transmission shall be deemed to have been given when sent; noticessent by mail shall be deemed to have been given three Business Days after thedate when sent by registered or certified mail, postage prepaid; and noticessent by hand delivery or overnight courier service shall be deemed to have beengiven when received.  For purposes of Sections2.2.2 and 2.2.3, the Administrative Agent shall be entitled to relyon telephonic instructions from any person that the Administrative Agent ingood faith believes is an authorized officer or employee of the Company, andthe Company shall hold the Administrative Agent and each other Lender harmlessfrom any loss, cost or expense resulting from any such reliance.

##  

## 15.4         Computations.  Where the character or amount of anyasset or liability or item of income or expense is required to be determined,or any consolidation or other accounting computation is required to be made,for the purpose of this Agreement, such determination or calculation shall, tothe extent applicable and except as otherwise specified in this Agreement, bemade in accordance with GAAP, consistently applied; provided that if theCompany notifies the Administrative Agent that the Company wishes to amend anycovenant in Sections 10 or 11.13 (or any related definition) toeliminate or to take into account the effect of any change in GAAP on theoperation of such covenant (or if the Administrative Agent notifies the Companythat the Required Lenders wish to amend Sections 10 or 11.13 (orany related definition) for such purpose), then the Company’s compliance withsuch covenant shall be determined on the basis of GAAP in effect immediatelybefore the relevant change in GAAP became effective, until either such noticeis withdrawn or such covenant (or related definition) is amended in a mannersatisfactory to the Company and the Required Lenders.

##  

## 15.5         Costs, Expenses and Taxes.  The Company agrees to pay on demand allreasonable out-of-pocket costs and expenses of the Administrative Agent(including Attorney Costs and any Taxes) in connection with the preparation,negotiation, execution, syndication, delivery and administration (includingperfection and protection of any Collateral and the costs of Intralinks (orother similar service), if applicable) of this Agreement, the other LoanDocuments and all other documents provided for herein or delivered or to bedelivered hereunder or in connection herewith (including any amendment,supplement or waiver to any Loan Document), whether or not the transactionscontemplated hereby or thereby shall be consummated, and all reasonableout-of-pocket costs and expenses (including Attorney Costs 

 

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## and any Taxes) incurred by the Administrative Agentand each Lender after an Event of Default in connection with the collection ofthe Obligations or the enforcement of this Agreement the other Loan Documentsor any such other documents or during any workout, restructuring ornegotiations in respect thereof.  Inaddition, the Company agrees to pay, and to hold the Administrative Agent andthe Lenders harmless from all liability for, any fees of the Company’s auditorsin connection with any reasonable exercise by the Administrative Agent and theLenders of their rights pursuant to Section 10.2.  All Obligations provided for in this Section 15.5shall survive repayment of the Loans, cancellation of the Notes, expiration ortermination of the Letters of Credit and termination of this Agreement.

##  

## 15.6         Assignments; Participations.

##  

### 15.6.1  Assignments.  (a)  Any Lender may at any time assignto one or more Persons (any such Person, an “Assignee”) all or anyportion of such Lender’s Loans and Commitments, with the prior written consentof the Administrative Agent, the Issuing Lender (for an assignment of theRevolving Loans and the Revolving Commitment) and, so long as no Event ofDefault exists, the Company (which consents shall not be unreasonably withheldor delayed and shall not be required for an assignment by a Lender to a Lenderor an Affiliate of a Lender).  Except asthe Administrative Agent may otherwise agree, any such assignment shall be in aminimum aggregate amount equal to $5,000,000 or, if less, the remainingCommitment and Loans held by the assigning Lender.  The Company and the Administrative Agentshall be entitled to continue to deal solely and directly with such Lender inconnection with the interests so assigned to an Assignee until theAdministrative Agent shall have received and accepted an effective assignmentagreement in substantially the form of Exhibit D hereto (an “AssignmentAgreement”) executed, delivered and fully completed by the applicableparties thereto and a processing fee of $3,500. Any attempted assignment by a Lender not made in accordance with this Section 15.6.1shall be treated as the sale of a participation under Section 15.6.2.

###  

(b)   From and after the date on which theconditions described above have been met, (i) such Assignee shall bedeemed automatically to have become a party hereto and, to the extent thatrights and obligations hereunder have been assigned to such Assignee pursuantto such Assignment Agreement, shall have the rights and obligations of a Lenderhereunder and (ii) the assigning Lender, to the extent that rights andobligations hereunder have been assigned by it pursuant to such AssignmentAgreement, shall be released from its rights (other than its indemnificationrights) and obligations hereunder.  Uponthe request of the Assignee (and, as applicable, the assigning Lender) pursuantto an effective Assignment Agreement, the Company shall execute and deliver tothe Administrative Agent for delivery to the Assignee (and, as applicable, theassigning Lender) a Note in the principal amount of the Assignee’s Pro RataShare of the Revolving Commitment plus the principal amount of the Assignee’sTerm Loan (and, as applicable, a Note in the principal amount of the Pro RataShare of the Revolving Commitment retained by the assigning Lender plus theprincipal amount of the Term Loan retained by the assigning Lender).  Each such Note shall be dated the effectivedate of such assignment.  Upon receipt bythe assigning Lender of such Note, the assigning Lender shall return to theCompany any prior Note held by it.

 

(c)   Any Lender may at any time pledge or assign asecurity interest in all or any portion of its rights under this Agreement tosecure obligations of such Lender, including any 

 

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pledge orassignment to secure obligations to a Federal Reserve Bank, and this Section shallnot apply to any such pledge or assignment of a security interest; providedthat no such pledge or assignment of a security interest shall release a Lenderfrom any of its obligations hereunder or substitute any such pledgee orassignee for such Lender as a party hereto.

 

### 15.6.2  Participations.  Any Lender may at any time sell to one ormore Persons participating interests in its Loans, Commitments or otherinterests hereunder (any such Person, a “Participant”).  In the event of a sale by a Lender of aparticipating interest to a Participant, (a) such Lender’s obligationshereunder shall remain unchanged for all purposes, (b) the Company and theAdministrative Agent shall continue to deal solely and directly with suchLender in connection with such Lender’s rights and obligations hereunder and (c) allamounts payable by the Company shall be determined as if such Lender had notsold such participation and shall be paid directly to such Lender.  No Participant shall have any direct orindirect voting rights hereunder except with respect to any event described in Section 15.1expressly requiring the unanimous vote of all Lenders or, as applicable, allaffected Lenders.  Each Lender agrees toincorporate the requirements of the preceding sentence into each participationagreement which such Lender enters into with any Participant.  The Company agrees that if amountsoutstanding under this Agreement are due and payable (as a result ofacceleration or otherwise), each Participant shall be deemed to have the rightof set-off in respect of its participating interest in amounts owing under thisAgreement and with respect to any Letter of Credit to the same extent as if theamount of its participating interest were owing directly to it as a Lenderunder this Agreement; provided that such right of set-off shall besubject to the obligation of each Participant to share with the Lenders, andthe Lenders agree to share with each Participant, as provided in Section 7.5.  The Company also agrees that each Participantshall be entitled to the benefits of Section 7.6 or 8 as ifit were a Lender (provided that on the date of the participation noParticipant shall be entitled to any greater compensation pursuant to Section 7.6or 8 than would have been paid to the participating Lender on such dateif no participation had been sold and that each Participant complies with Section 7.6(d) asif it were an Assignee).

###  

## 15.7         Register.  The Administrative Agent shall maintain acopy of each Assignment Agreement delivered and accepted by it and register(the “Register”) for the recordation of names and addresses of theLenders and the Commitment of each Lender from time to time and whether suchLender is the original Lender or the Assignee. No assignment shall be effective unless and until the AssignmentAgreement is accepted and registered in the Register. All records of transferof a Lender’s interest in the Register shall be conclusive, absent manifesterror, as to the ownership of the interests in the Loans. The AdministrativeAgent shall not incur any liability of any kind with respect to any Lender withrespect to the maintenance of the Register.

##  

15.8         **GOVERNING LAW.  THIS AGREEMENT AND EACH NOTE SHALL BE ACONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOISAPPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.**

 

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## 15.9         Confidentiality.  Asrequired by federal law and the Administrative Agent’s policies and practices,the Administrative Agent may need to obtain, verify, and record****certain customer identification information anddocumentation in connection with opening or maintaining accounts, orestablishing or continuing to provide services. The Administrative Agent and each Lender agree to usecommercially reasonable efforts (equivalent to the efforts the AdministrativeAgent or such Lender applies to maintain the confidentiality of its ownconfidential information) to maintain as confidential all information providedto them by any Loan Party and designated as confidential, except that theAdministrative Agent and each Lender may disclose such information (a) toPersons employed or engaged by the Administrative Agent or such Lender inevaluating, approving, structuring or administering the Loans and theCommitments; (b) to any assignee or participant or potential assignee orparticipant that has agreed to comply with the covenant contained in this Section 15.9(and any such assignee or participant or potential assignee or participant maydisclose such information to Persons employed or engaged by them as describedin clause (a) above); (c) as required or requested by any federal orstate regulatory authority or examiner, or any insurance industry association,or as reasonably believed by the Administrative Agent or such Lender to becompelled by any court decree, subpoena or legal or administrative order orprocess; (d) as, on the advice of the Administrative Agent’s or suchLender’s counsel, is required by law; (e) in connection with the exerciseof any right or remedy under the Loan Documents or in connection with anylitigation to which the Administrative Agent or such Lender is a party; (f) toany nationally recognized rating agency that requires access to informationabout a Lender’s investment portfolio in connection with ratings issued withrespect to such Lender; (g) to any Affiliate of the Administrative Agent,the Issuing Lender or any other Lender who may provide Bank Products to theLoan Parties; or (h) that ceases to be confidential through no fault ofthe Administrative Agent or any Lender. Notwithstanding the foregoing, the Company consents to the publicationby the Administrative Agent or any Lender of a tombstone or similar advertisingmaterial relating to the financing transactions contemplated by this Agreement,and the Administrative Agent reserves the right to provide to industry tradeorganizations information necessary and customary for inclusion in league tablemeasurements.

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## 15.10       Severability.  Whenever possible each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement shall beprohibited by or invalid under applicable law, such provision shall be ineffectiveto the extent of such prohibition or invalidity, without invalidating theremainder of such provision or the remaining provisions of this Agreement.  All obligations of the Company and rights ofthe Administrative Agent and the Lenders expressed herein or in any other LoanDocument shall be in addition to and not in limitation of those provided byapplicable law.

##  

## 15.11       Nature of Remedies.  All Obligations of the Company and rights ofthe Administrative Agent and the Lenders expressed herein or in any other LoanDocument shall be in addition to and not in limitation of those provided byapplicable law.  No failure to exerciseand no delay in exercising, on the part of the Administrative Agent or anyLender, any right, remedy, power or privilege hereunder, shall operate as awaiver thereof; nor shall any single or partial exercise of any right, remedy,power or privilege hereunder preclude any other or further exercise thereof orthe exercise of any other right, remedy, power or privilege.

 

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## 15.12       Entire Agreement.  This Agreement, together with the other LoanDocuments, embodies the entire agreement and understanding among the partieshereto and supersedes all prior or contemporaneous agreements andunderstandings of such Persons, verbal or written, relating to the subjectmatter hereof and thereof (except as relates to the fees described in Section 5.3)and any prior arrangements made with respect to the payment by the Company of(or any indemnification for) any fees, costs or expenses payable to or incurred(or to be incurred) by or on behalf of the Administrative Agent or the Lenders.

##  

## 15.13       Counterparts.  This Agreement may be executed in anynumber of counterparts and by the different parties hereto on separatecounterparts and each such counterpart shall be deemed to be an original, butall such counterparts shall together constitute but one and the sameAgreement.  Receipt of an executedsignature page to this Agreement by facsimile or other electronictransmission shall constitute effective delivery thereof.  Electronic records of executed Loan Documentsmaintained by the Lenders shall be deemed to be originals.

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## 15.14       Successors and Assigns.  This Agreement shall be binding upon theCompany, the Lenders and the Administrative Agent and their respectivesuccessors and assigns, and shall inure to the benefit of the Company, theLenders and the Administrative Agent and the successors and assigns of theLenders and the Administrative Agent.  Noother Person shall be a direct or indirect legal beneficiary of, or have anydirect or indirect cause of action or claim in connection with, this Agreementor any of the other Loan Documents.  TheCompany may not assign or transfer any of its rights or Obligations under thisAgreement without the prior written consent of the Administrative Agent andeach Lender.

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## 15.15       Captions.  Section captions used in thisAgreement are for convenience only and shall not affect the constructionof this Agreement.

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## 15.16       Customer Identification - USA PatriotAct Notice.  EachLender and PVBT (for itself and not on behalf of any other party) herebynotifies the Loan Parties that, pursuant to the requirements of the USA PatriotAct, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Act”),it is required to obtain, verify and record information that identifies theLoan Parties, which information includes the name and address of the LoanParties and other information that will allow such Lender or PVBT, as applicable,to identify the Loan Parties in accordance with the Act.

##  

## 15.17       **INDEMNIFICATION BY THECOMPANY.  IN CONSIDERATION OFTHE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE ADMINISTRATIVE AGENT ANDTHE LENDERS AND THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, THECOMPANY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD THE ADMINISTRATIVEAGENT, EACH LENDER AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATESAND AGENTS OF THE ADMINISTRATIVE AGENT AND EACH LENDER (EACH A “LENDER PARTY”)FREE AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION,SUITS, LOSSES, LIABILITIES, DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS(COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), INCURRED BY THE LENDERPARTIES OR ANY OF THEM AS A**

 

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## **RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANYTENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF ASSETS ORSIMILAR TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART,DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THEUSE, HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENTOR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANYLOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TOCONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONSCONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OFOFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS AREALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THEEXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHERLOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIEDLIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSSNEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLEJUDGMENT BY A COURT OF COMPETENT JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BEUNENFORCEABLE FOR ANY REASON, THE COMPANY HEREBY AGREES TO MAKE THE MAXIMUMCONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIEDLIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION ORTERMINATION OF THE LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANYMODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTSAND TERMINATION OF THIS AGREEMENT.**

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## 15.18       Nonliability of Lenders.  The relationship between the Company on theone hand and the Lenders and the Administrative Agent on the other hand shallbe solely that of borrower and lender. Neither the Administrative Agent nor any Lender has any fiduciaryrelationship with or duty to any Loan Party arising out of or in connectionwith this Agreement or any of the other Loan Documents, and the relationshipbetween the Loan Parties, on the one hand, and the Administrative Agent and theLenders, on the other hand, in connection herewith or therewith is solely thatof debtor and creditor.  Neither theAdministrative Agent nor any Lender undertakes any responsibility to any LoanParty to review or inform any Loan Party of any matter in connection with anyphase of any Loan Party’s business or operations.  The Company agrees, on behalf of itself andeach other Loan Party, that neither the Administrative Agent nor any Lendershall have liability to any Loan Party (whether sounding in tort, contract orotherwise) for losses suffered by any Loan Party in connection with, arisingout of, or in any way related to the transactions contemplated and therelationship established by the Loan Documents, or any act, omission or eventoccurring in connection therewith, unless it is determined in a finalnon-appealable judgment by a court of competent jurisdiction that such lossesresulted from the gross negligence or willful misconduct of the party fromwhich recovery is sought.  **NO LENDER PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY**

 

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## **OTHERS OF ANY INFORMATION OR OTHER MATERIALSOBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMSIN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY LENDER PARTY HAVE ANYLIABILITY WITH RESPECT TO, AND THE COMPANY ON BEHALF OF ITSELF AND EACH OTHERLOAN PARTY, HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL,PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THISAGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES INCONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE CLOSINGDATE). **The Company acknowledges that it has been advised bycounsel in the negotiation, execution and delivery of this Agreement and the otherLoan Documents to which it is a party. No joint venture is created hereby or by the other Loan Documents orotherwise exists by virtue of the transactions contemplated hereby among theLenders or among the Loan Parties and the Lenders.

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## 15.19       **FORUM SELECTION ANDCONSENT TO JURISDICTION.  ANYLITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THISAGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINEDEXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATESDISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THATNOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THEADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANYOTHER JURISDICTION.  THE COMPANY HEREBYEXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THESTATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERNDISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  THE COMPANY FURTHER IRREVOCABLY CONSENTS TOTHE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONALSERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLYWAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOWOR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANYSUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEENBROUGHT IN AN INCONVENIENT FORUM.**

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## 15.20       **WAIVER OF JURY TRIAL****. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBYWAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE ORDEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT ANDANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY INTHE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANYLENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, ANDAGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOTBEFORE A JURY.**

 

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The parties hereto havecaused this Agreement to be duly executed and delivered by their dulyauthorized officers as of the date first set forth above.

 
|   | **CONTINENTAL MATERIALS CORPORATION**,                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------|
|   | as the Company and a Loan Party                                                                             |
|   |                                                                                                        |
|   | By:                                                                                                         |   |
|   |                                                                                                        | Joseph J. Sum |
|   |                                                                                                        | Chief Financial Officer |
|   |                                                                                                        |
|   | ** **                                                                                                  |
|   | **THE PRIVATEBANK AND TRUST COMPANY**,  as Administrative Agent, as a Lender and the initial Issuing Lender |
|   |                                                                                                        |
|   | By:                                                                                                         |   |
|   |                                                                                                        | Steven M. Cohen |
|   |                                                                                                        | Managing Director & Senior Vice President |

 

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ANNEXA

 

LENDERSAND PRO RATA SHARES

 
| **Lender**                         | ** ** | **Revolving  Commitment  Amount** | ** ** | **Pro Rata  Share** | ** ** | **Term Loan  Commitment** | ** ** | **Pro Rata  Share** | ** ** |
|------------------------------------|------------|-----------------------------------|------------|--------------------------|------------|--------------------------------|------------|--------------------------|------------|
| ** **                         | ** ** | ** **                        | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **               | ** ** |
| The PrivateBank  and Trust Company |       | $                                 | 20,000,000 |                     | 100        | %                              | $          | 10,000,000               |       | 100 | % |
|                               |       |                              |       |                     |       |                           |       |                     |       |
| TOTALS                             |       | $                                 | 20,000,000 |                     | 100        | %                              | $          | 10,000,000               |       | 100 | % |

 

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ANNEXB

 

ADDRESSESFOR NOTICES

 

**CONTINENTAL MATERIALS CORPORATION**, as the Company

 

200 South Wacker DriveSuite 4000Chicago, Illinois 60606Attention:  Vice President & CFOFacsimile:  (312) 541-8089

 

**THE PRIVATEBANK AND TRUST COMPANY**, as Administrative Agent, Issuing Lenderand a Lender

* *

*Notices of Borrowing, Conversion, Continuation andLetter of Credit Issuance*

 

120 South LaSalle Street

Chicago, Illinois 60603

Attention: Rosina Ordaz

Telephone: (312) 564-1321

Facsimile: (312) 564-6886

* *

*All Other Notices*

 

120 South LaSalle Street

Chicago, Illinois 60603

Attention: Steven M. Cohen

Facsimile: (312) 564-6887

 

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ANNEXC

 

APPLICABLEMARGIN

 

ApplicableMargin means, for any day, the rate per annum setforth below opposite the level (the “Level”) then in effect, it beingunderstood that the Applicable Margin for (i) LIBOR Loans shall be thepercentage set forth under the column “LIBOR Margin”, (ii) Base Rate Loansshall be the percentage set forth under the column “Base Rate Margin”, (iii) theNon-Use Fee Rate shall be the percentage set forth under the column “Non-UseFee Rate” and (iv) the L/C Fee shall be the percentage set forth under thecolumn “L/C Fee Rate”:

 
| ** ** | ** ** | ** **                                                     | ** ** | **Revolving Loan and  Term Loan** | ** ** | ** **                 | ** ** | ** **                 | ** ** |
|------------|------------|----------------------------------------------------------------|------------|--------------------------------------------------|------------|----------------------------|------------|----------------------------|------------|
| **Level**  | ** ** | **Total Cash Flow Leverage Ratio**         | ** ** | **LIBOR  Margin**                                | ** ** | **Base Rate  Margin** | ** ** | **Non-Use  Fee Rate** | ** ** | **L/C Fee  Rate** | ** ** |
|       |       |                                                           |       |                                             |       |                       |       |                       |       |   |   |
| I          |       | Less than 1.50 to 1.0                                          |       | 2.0                                              | %          | 0                          | %          | 0.25                       | %          | 1.50 | % |
|       |       |                                                           |       |                                             |       |                       |       |                       |       |   |   |
| II         |       | Equal to or greater than 1.50 to 1.0 but less than  2.0 to 1.0 |       | 2.50                                             | %          | 0.25                       | %          | 0.25                       | %          | 1.50 | % |
|       |       |                                                           |       |                                             |       |                       |       |                       |       |   |   |
| III        |       | Equal to or greater than 2.0 to 1.0 but less than  2.50 to 1.0 |       | 3.0                                              | %          | 0.75                       | %          | 0.25                       | %          | 1.50 | % |
|       |       |                                                           |       |                                             |       |                       |       |                       |       |   |   |
| IV         |       | Equal to or greater than 2.50 to 1.0 but less than  3.0 to 1.0 |       | 3.50                                             | %          | 1.25                       | %          | 0.25                       | %          | 1.50 | % |
|       |       |                                                           |       |                                             |       |                       |       |                       |       |   |   |
| V          |       | Equal to or greater than 3.0 to 1.0                            |       | 4.0                                              | %          | 1.75                       | %          | 0.25                       | %          | 1.50 | % |

 

The LIBOR Margin, theBase Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be adjusted,to the extent applicable, on the fifth (5th) Business Day after the Companyprovides the annual and quarterly financial statements and other informationpursuant to Sections 10.1.1 or 10.1.2, as applicable, and therelated Compliance Certificate, pursuant to Section 10.1.3.  Notwithstanding anything contained in thisparagraph to the contrary, (a) if the Company fails to deliver thefinancial statements and Compliance Certificate in accordance with theprovisions of Sections 10.1.1, 10.1.2 and 10.1.3, theLIBOR Margin, the Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rateshall be based upon Level V above beginning on the date such financialstatements and Compliance Certificate were required to be delivered until thefifth (5th) Business Day after such financial statements and ComplianceCertificate are actually delivered, whereupon the Applicable Margin shall bedetermined by the then current Level; (b)  no reduction to any ApplicableMargin shall become effective at any time when an Event of Default or UnmaturedEvent of Default has occurred and is continuing; and (c) notwithstandinganything to the contrary contained herein, the initial Applicable Margin on theClosing Date shall be based on Level III and such margin shall continue untilthe date on which the financial 

 

77

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statements andCompliance Certificate are delivered for the Fiscal Quarter ending September 30,2009 (at which point the margin may be adjusted as provided above).

 

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EXHIBIT A

 

FORM OF NOTE

 
|                                                                                                                                                                                                    | April     , 2009 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
| $                                  | Chicago, Illinois                    |

 

Theundersigned, for value received, promises to pay to the order of                        (the “Lender”) at the principal office of The PrivateBank and TrustCompany (the “Administrative Agent”) in Chicago, Illinois the aggregateunpaid amount of all Loans made to the undersigned by the Lender pursuant tothe Credit Agreement referred to below (as shown on the schedule attachedhereto (and any continuation thereof) or in the records of the Lender), suchprincipal amount to be payable on the dates set forth in the Credit Agreement.

 

Theundersigned further promises to pay interest on the unpaid principal amount ofeach Loan from the date of such Loan until such Loan is paid in full, payableat the rate(s) and at the time(s) set forth in the CreditAgreement.  Payments of both principaland interest are to be made in lawful money of the United States of America.

 

ThisNote evidences indebtedness incurred under, and is subject to the terms andprovisions of, the Credit Agreement, dated as of April                   ,2009 (as amended, restated, supplemented or otherwise modified from time totime, the “Credit Agreement”; terms not otherwise defined herein areused herein as defined in the Credit Agreement), among the undersigned, certainfinancial institutions (including the Lender) and the Administrative Agent, towhich Credit Agreement reference is hereby made for a statement of the termsand provisions under which this Note may or must be paid prior to its due dateor its due date accelerated.

 

ThisNote is made under and governed by the laws of the State of Illinois applicableto contracts made and to be performed entirely within such State.

 

 
|   | **CONTINENTAL  MATERIALS CORPORATION** |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |

 

79

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EXHIBIT B

 

FORM OF COMPLIANCECERTIFICATE

 

To:          The PrivateBank and Trust Company, as Administrative Agent

 

Pleaserefer to the Credit Agreement dated as of April     , 2009(as amended, restated, supplemented or otherwise modified from time to time,the “Credit Agreement”) among Continental Materials Corporation (the “Company”),various financial institutions and The PrivateBank and Trust Company, asAdministrative Agent.  Terms used but nototherwise defined herein are used herein as defined in the Credit Agreement.

 

I.                                                         Reports.  Enclosed herewith is a copy of the **[annual audited/quarterly/monthly]** report of the Company asat                     ,         (the “Computation Date”),which report fairly presents in all material respects the financial conditionand results of operations **[(subject to the absenceof footnotes and to normal year-end adjustments)]** of the Company asof the Computation Date and has been prepared in accordance with GAAPconsistently applied.

 

II.                                                     FinancialTests.  The Company hereby certifiesand warrants to you that the following is a true and correct computation as atthe Computation Date of the following ratios and/or financial restrictionscontained in the Credit Agreement:

** **
| **A.** |   | **Section 11.13.1  - Minimum Adjusted EBITDA** |                     |                                                                                                                                                                                                       |   |
|--------|--------|-----------------------------------------------------|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |
|   |   | 1.                                                  | Consolidated  Net Income |                                                                                                                                                                                                       | $      |   |
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |
|   |   | 2.                                                  | Plus:                    | (i)   income tax expense                                                                                                                                                                              |   | $ |   |
|   |   |                                                |                     | (ii)   Interest Expense                                                                                                                                                                               |   | $ |   |
|   |   |                                                |                     | (iii) depreciation                                                                                                                                                                                    |   | $ |   |
|   |   |                                                |                     | (iv)   amortization                                                                                                                                                                                   |   | $ |   |
|   |   |                                                |                     | (v)   depletion                                                                                                                                                                                       |   | $ |   |
|   |   |                                                |                     | (vi)   other non-cash charges (to the extent reasonably approved by the  Administrative Agent, except that no approval is necessary for impairment  charges taken by Rocky Mountain in 2008 and 2009) |   | $ |   |
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |   |
|   |   | 3.                                                  | Total  (EBITDA)          |                                                                                                                                                                                                       | $      |   |
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |   |
|   |   | 4.                                                  | Plus:                    | any  gains from Asset Dispositions, any extraordinary gains and any gains from  discontinued operations (net of costs and expenses)                                                                        |   | $ |   |
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |   |
|   |   | 5.                                                  | Total  (Adjusted EBITDA) |                                                                                                                                                                                                       | $      |   |
|   |   |                                                |                     |                                                                                                                                                                                                       |   |   |
|   |   | 6.                                                  | Minimum  required        |                                                                                                                                                                                                       | $      |   |

 

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| **B.**     |       | **Section 11.13.2 - Minimum  Fixed Charge Coverage Ratio** |                                                                                                |   |                                                                                |
|------------|------------|-----------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 1.                                                              | Adjusted EBITDA                                                                                     |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 2.                                                              | Income taxes paid                                                                                   |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 3.                                                              | Capital Expenditures  (unfinanced)                                                                  |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 4.                                                              | Sum of (2) and (3)                                                                             |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 5.                                                              | Remainder of  (1) minus (4)                                                                    |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 6.                                                              | Interest Expense                                                                                    |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |   |
|       |       | 7.                                                              | Required payments of  principal of Funded Debt (including Term Loans but excluding Revolving Loans) |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 8.                                                              | Sum of (6) and (7)                                                                             |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 9.                                                              | Ratio of (5) to  (8)                                                                           |   |              to  1 |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 10.                                                             | Minimum Required                                                                                    |   |              to  1 |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
| **C.**     |       | **Section 11.13.3 - Minimum  Tangible Net Worth**          |                                                                                                |   |                                                                                |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 1.                                                              | Net Worth plus  Subordinated Debt                                                                   |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 2.                                                              | Intangible assets  (goodwill, intellectual property, prepaid expenses, deferred charges, etc.)      |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 3.                                                              | Obligations payable by  Affiliates                                                                  |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 4.                                                              | Loans to Officers,  Stockholders, etc.                                                              |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 5.                                                              | Sum of (2),  (3) and (4)                                                                       |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
| ** ** | ** ** | 6.                                                              | Tangible Net Worth

(Item 1 less Item 5)                                                            |   | $                                                                                   |   |
|       |       |                                                            |                                                                                                |   |                                                                                |   |
|       |       | 7.                                                              | Minimum Required                                                                                    |   | $                                                                                   |   |

 

81

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| **D.** |   | **Section 11.13.4 - Maximum  Adjusted Total Cash Flow Leverage** |                                           |   |
|--------|--------|-----------------------------------------------------------------------|------------------------------------------------|--------|
|   |   |                                                                  |                                           |   |   |   |
|   |   | 1.                                                                    | Total Debt                                     |   | $ |   |
|   |   |                                                                  |                                           |   |   |   |
|   |   | 2.                                                                    | Adjusted  EBITDA

(from  Item A(5) above) |   | $ |   |
|   |   |                                                                  |                                           |   |   |   |
|   |   | 3.                                                                    | Ratio  of (1) to (2)                      |   |              to  1 |   |
|   |   |                                                                  |                                           |   |   |   |
|   |   | 4.                                                                    | Maximum  allowed                               |   |              to  1 |   |
|   |   |                                                                  |                                           |   |   |   |
| **E.** |   | **Section 11.13.5  - Capital Expenditures**                      |                                           |   |   |
|   |   |                                                                  |                                           |   |   |   |
|   |   | 1.                                                                    | Capital  Expenditures for the  Fiscal Year     |   | $ |   |
|   |   |                                                                  |                                           |   |   |   |
|   |   | 2.                                                                    | Maximum  Permitted Capital Expenditures        |   | $ |   |

 

TheCompany further certifies to you that no Event of Default or Unmatured Event ofDefault has occurred and is continuing.

 

TheCompany has caused this Certificate to be executed and delivered by its dulyauthorized officer on                ,       .

 

 
|   | **CONTINENTAL  MATERIALS CORPORATION** |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |

 

82

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EXHIBIT C

 

FORM OF BORROWING BASECERTIFICATE

 

To:          The PrivateBank and Trust Company, asAdministrative Agent

 

Pleaserefer to the Credit Agreement dated as of April     , 2009(as amended, restated, supplemented or otherwise modified from time to time,the “Credit Agreement”) among Continental Materials Corporation (the “Company”),various financial institutions and The PrivateBank and Trust Company, asAdministrative Agent.  This certificate(this “Certificate”), together with supporting calculations attachedhereto, is delivered to you pursuant to the terms of the Credit Agreement.  Capitalized terms used but not otherwisedefined herein shall have the same meanings herein as in the Credit Agreement.

 

TheCompany hereby certifies and warrants to the Administrative Agent and theLenders that at the close of business on                      ,         (the “Calculation Date”),the Borrowing Base was $                  ,computed as set forth on the schedule attached hereto.

 

TheCompany has caused this Certificate to be executed and delivered by its officerthereunto duly authorized on **                    ,          .**

 

 
|   | **CONTINENTAL  MATERIALS CORPORATION** |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |

 

83

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SCHEDULETO BORROWING BASE CERTIFICATEDated as of**[                         ]**

 

See Attached Form

 

84

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EXHIBITD

 

FORM OFASSIGNMENT AGREEMENT

 

Date:                              

 

To:                              Continental Materials Corporation

 

and

 

The PrivateBank and TrustCompany, as Administrative Agent

 

Re:                               Assignment under the Credit Agreementreferred to below

 

Gentlemen and Ladies:

 

Please refer to Section 15.6.1of the Credit Agreement dated as of April             ,2009 (as amended or otherwise modified from time to time, the “CreditAgreement”) among Continental Materials Corporation (the “Company”),various financial institutions and The PrivateBank and Trust Company, asadministrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein or thecontext otherwise requires, terms used herein have the meanings provided in theCredit Agreement.

 

                         (the “Assignor”) hereby sells and assigns, without recourse, to                                  (the“Assignee”), and the Assignee hereby purchases and assumes from theAssignor, that interest in and to the Assignor’s rights and obligations underthe Credit Agreement as of the date hereof equal to      %of all of the Loans, of the participation interests in the Letters of Creditand of the Commitments, such sale, purchase, assignment and assumption to beeffective as of                ,                ,or such later date on which the Company and the Administrative Agent shall haveconsented hereto (the “Effective Date”). After giving effect to such sale, purchase, assignment and assumption,the Assignee’s and the Assignor’s respective percentages for purposes of theCredit Agreement will be as set forth opposite their names on the signature pages hereof.

 

The Assignor herebyinstructs the Administrative Agent to make all payments from and after theEffective Date in respect of the interest assigned hereby directly to theAssignee.  The Assignor and the Assigneeagree that all interest and fees accrued up to, but not including, theEffective Date are the property of the Assignor, and not the Assignee.  The Assignee agrees that, upon receipt of anysuch interest or fees, the Assignee will promptly remit the same to the Assignor.

 

85

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The Assignor representsand warrants that it is the legal and beneficial owner of the interest beingassigned by it hereunder and that such interest is free and clear of anyadverse claim.

 

Unless otherwise waivedby the Administrative Agent, the Assignor shall pay the fee payable to theAdministrative Agent pursuant to Section 15.6.1 of the CreditAgreement.

 

The Assignee herebyconfirms that it has received a copy of the Credit Agreement.  Except as otherwise provided in the CreditAgreement, effective as of the Effective Date:

 

(a)                                  the Assignee (i) shall be deemedautomatically to have become a party to the Credit Agreement and to have allthe rights and obligations of a “Lender” under the Credit Agreement as if itwere an original signatory thereto to the extent specified in the secondparagraph hereof; and (ii) agrees to be bound by the terms and conditionsset forth in the Credit Agreement as if it were an original signatory thereto;and

 

(b)                                 the Assignor shall be released from itsobligations under the Credit Agreement to the extent specified in the secondparagraph hereof.

 

The Assignee herebyadvises each of you of the following administrative details with respect to theassigned Loans and Commitment:

 

(A)                              Institution Name:

 

Address:

 

Attention:

 

Telephone:

 

Facsimile:

 

(B)                                Payment Instructions:

 

This Assignment shall begoverned by and construed in accordance with the laws of the State of Illinois

 

Please evidence yourreceipt hereof and your consent to the sale, assignment, purchase andassumption set forth herein by signing and returning counterparts hereof to theAssignor and the Assignee.

 

86

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| Percentage =      %    | [ASSIGNEE] |
|------------------------------------------------------|------------|
|                                                 |       |
|                                                 | By:        |   |
|                                                 | Title:     |   |
|                                                 |       |
| Adjusted Percentage =     % | [ASSIGNOR] |
|                                                 |       |
|                                                 |       |
|                                                 | By:        |   |
|                                                 | Title:     |   |

 

 

ACKNOWLEDGED ANDCONSENTED TO

this          day of                   ,         

 

THE PRIVATEBANK AND TRUSTCOMPANY, as Administrative Agent

 

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |

 

 

ACKNOWLEDGED ANDCONSENTED TO

this    day of               ,

 

CONTINENTAL MATERIALSCORPORATION

 

 
| By:    |   |   |
|--------|--------|--------|
| Name:  |   |   |
| Title: |   |   |

 

87

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EXHIBITE

 

FORM OF NOTICE OF BORROWING

 

To:          The PrivateBank and Trust Company, asAdministrative Agent

 

Pleaserefer to the Credit Agreement dated as of April          ,2009 (as amended, restated, supplemented or otherwise modified from time totime, the “Credit Agreement”) among Continental Materials Corporation (the “Company”),various financial institutions and The PrivateBank and Trust Company, asAdministrative Agent.  Terms used but nototherwise defined herein are used herein as defined in the Credit Agreement.

 

Theundersigned hereby gives irrevocable notice, pursuant to Section 2.2.2of the Credit Agreement, of a request hereby for a borrowing as follows:

 

(i)            The requested borrowing date for theproposed borrowing (which is a Business Day) is                             ,          .

 

(ii)           The aggregate amount of the proposedborrowing is $                      .

 

(iii)          The type of Revolving Loans comprisingthe proposed borrowing are [Base Rate] [LIBOR] Loans.

 

(iv)          The duration of the Interest Periodfor each LIBOR Loan made as part of the proposed borrowing, if applicable, is                        months (which shall be 1, 2, 3 or 6 months).

 

Theundersigned hereby certifies that on the date hereof and on the date ofborrowing set forth above, and immediately after giving effect to the borrowingrequested hereby: (i) there exists and there shall exist no UnmaturedEvent of Default or Event of Default under the Credit Agreement; and (ii) eachof the representations and warranties contained in the Credit Agreement and theother Loan Documents is true and correct as of the date hereof, except to theextent that such representation or warranty expressly relates to another dateand except for changes therein expressly permitted or expressly contemplated bythe Credit Agreement.

 

TheCompany has caused this Notice of Borrowing to be executed and delivered by itsofficer thereunto duly authorized on                         ,              .

 
|   | **CONTINENTAL  MATERIALS CORPORATION** |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |

 

88

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EXHIBITF

 

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

To:          The PrivateBank and Trust Company, asAdministrative Agent

 

Pleaserefer to the Credit Agreement dated as of April           ,2009 (as amended, restated, supplemented or otherwise modified from time totime, the “Credit Agreement”) among Continental Materials Corporation (the “Company”),various financial institutions and The PrivateBank and Trust Company, asAdministrative Agent.  Terms used but nototherwise defined herein are used herein as defined in the Credit Agreement.

 

Theundersigned hereby gives irrevocable notice, pursuant to Section 2.2.3of the Credit Agreement, of its request to:

 

(a)           on [    date   ] convert $[                 ]ofthe aggregate outstanding principal amount of the [                ]Loan, bearing interest at the [               ]Rate, into a(n) [                   ]Loan [and, in the case of a LIBOR Loan, having an Interest Period of [              ]month(s)];

[(b)          on [   date    ] continue $[                ]ofthe aggregate outstanding principal amount of the [              ]Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an InterestPeriod of [            ]month(s)].

 

Theundersigned hereby represents and warrants that all of the conditions containedin Section 12.2 of the Credit Agreement have been satisfied on andas of the date hereof, and will continue to be satisfied on and as of the dateof the conversion/continuation requested hereby, before and after giving effectthereto.

 

TheCompany has caused this Notice of Conversion/Continuation to be executed anddelivered by its officer thereunto duly authorized on                            ,               .

 
|   | **CONTINENTAL  MATERIALS CORPORATION** |
|--------|----------------------------------------|
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |

 

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