Exhibit
10.9


 


 


 


 


 






 


CREDIT
AGREEMENT


DATED AS
OF JANUARY 2, 2007


among


KAPSTONE
KRAFT PAPER CORPORATION,


as the
Company


THE
VARIOUS FINANCIAL INSTITUTIONS PARTY HERETO,


as
Lenders,


LASALLE
BANK NATIONAL ASSOCIATION,


as
Administrative Agent,


and






 


LASALLE
BANK NATIONAL ASSOCIATION,


as
Arranger


 















 


TABLE OF
CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.   DEFINITIONS.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other
  Interpretive Provisions

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Commitments

  	
   

  	
  25

  
	
  2.2

  	
   

  	
  Loan Procedures

  	
   

  	
  25

  
	
  2.3

  	
   

  	
  Letter of
  Credit Procedures

  	
   

  	
  29

  
	
  2.4

  	
   

  	
  Commitments Several

  	
   

  	
  32

  
	
  2.5

  	
   

  	
  Certain Conditions

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.   EVIDENCING OF
  LOANS.

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Notes

  	
   

  	
  32

  
	
  3.2

  	
   

  	
  Recordkeeping

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.   INTEREST.

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Interest Rates

  	
   

  	
  32

  
	
  4.2

  	
   

  	
  Interest Payment
  Dates

  	
   

  	
  33

  
	
  4.3

  	
   

  	
  Setting and
  Notice of LIBOR Rates

  	
   

  	
  33

  
	
  4.4

  	
   

  	
  Computation of
  Interest

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.   FEES.

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Non-Use Fee

  	
   

  	
  33

  
	
  5.2

  	
   

  	
  Letter of Credit Fees

  	
   

  	
  33

  
	
  5.3

  	
   

  	
  Administrative
  Agent’s Fees

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Reduction or
  Termination of the Revolving Commitment

  	
   

  	
  34

  
	
  6.2

  	
   

  	
  Prepayments

  	
   

  	
  35

  
	
  6.3

  	
   

  	
  Manner of
  Prepayments

  	
   

  	
  36

  
	
  6.4

  	
   

  	
  Repayments

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Making of Payments

  	
   

  	
  37

  
	
  7.2

  	
   

  	
  Application
  of Certain Payments

  	
   

  	
  37

  
	
  7.3

  	
   

  	
  Due Date Extension

  	
   

  	
  37

  
	
  7.4

  	
   

  	
  Setoff

  	
   

  	
  37

  
	
  7.5

  	
   

  	
  Proration of Payments

  	
   

  	
  38

  
	
  7.6

  	
   

  	
  Taxes

  	
   

  	
  38

  



 









 



 


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

  	
   

  	
  40

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Increased Costs

  	
   

  	
  40

  
	
  8.2

  	
   

  	
  Basis for
  Determining Interest Rate Inadequate or Unfair

  	
   

  	
  41

  
	
  8.3

  	
   

  	
  Changes in
  Law Rendering LIBOR Loans Unlawful

  	
   

  	
  41

  
	
  8.4

  	
   

  	
  Funding Losses

  	
   

  	
  42

  
	
  8.5

  	
   

  	
  Right of
  Lenders to Fund through Other Offices

  	
   

  	
  42

  
	
  8.6

  	
   

  	
  Discretion
  of Lenders as to Manner of Funding

  	
   

  	
  42

  
	
  8.7

  	
   

  	
  Mitigation
  of Circumstances; Replacement of Lenders

  	
   

  	
  42

  
	
  8.8

  	
   

  	
  Conclusiveness
  of Statements; Survival of Provisions

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.   REPRESENTATIONS
  AND WARRANTIES.

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Organization

  	
   

  	
  43

  
	
  9.2

  	
   

  	
  Authorization; No
  Conflict

  	
   

  	
  43

  
	
  9.3

  	
   

  	
  Validity and
  Binding Nature

  	
   

  	
  44

  
	
  9.4

  	
   

  	
  Financial Condition

  	
   

  	
  44

  
	
  9.5

  	
   

  	
  No Material
  Adverse Change

  	
   

  	
  44

  
	
  9.6

  	
   

  	
  Litigation
  and Contingent Liabilities

  	
   

  	
  44

  
	
  9.7

  	
   

  	
  Ownership of
  Properties; Liens

  	
   

  	
  44

  
	
  9.8

  	
   

  	
  Equity
  Ownership; Subsidiaries

  	
   

  	
  44

  
	
  9.9

  	
   

  	
  Pension Plans

  	
   

  	
  45

  
	
  9.10

  	
   

  	
  Investment Company
  Act

  	
   

  	
  45

  
	
  9.11

  	
   

  	
  Public
  Utility Holding Company Act

  	
   

  	
  46

  
	
  9.12

  	
   

  	
  Regulation U

  	
   

  	
  46

  
	
  9.13

  	
   

  	
  Taxes

  	
   

  	
  46

  
	
  9.14

  	
   

  	
  Solvency, etc

  	
   

  	
  46

  
	
  9.15

  	
   

  	
  Environmental
  Matters

  	
   

  	
  46

  
	
  9.16

  	
   

  	
  Insurance

  	
   

  	
  47

  
	
  9.17

  	
   

  	
  Real Property

  	
   

  	
  47

  
	
  9.18

  	
   

  	
  Information

  	
   

  	
  47

  
	
  9.19

  	
   

  	
  Intellectual Property

  	
   

  	
  47

  
	
  9.20

  	
   

  	
  Burdensome
  Obligations

  	
   

  	
  48

  
	
  9.21

  	
   

  	
  Labor Matters

  	
   

  	
  48

  
	
  9.22

  	
   

  	
  No Default

  	
   

  	
  48

  
	
  9.23

  	
   

  	
  Related
  Agreements, etc.

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.   AFFIRMATIVE
  COVENANTS.

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Reports,
  Certificates and Other Information

  	
   

  	
  49

  
	
  10.2

  	
   

  	
  Books,
  Records and Inspections

  	
   

  	
  51

  
	
  10.3

  	
   

  	
  Maintenance
  of Property; Insurance

  	
   

  	
  52

  
	
  10.4

  	
   

  	
  Compliance
  with Laws; Payment of Taxes and Liabilities

  	
   

  	
  53

  
	
  10.5

  	
   

  	
  Maintenance of
  Existence, etc

  	
   

  	
  54

  
	
  10.6

  	
   

  	
  Use of Proceeds

  	
   

  	
  54

  
	
  10.7

  	
   

  	
  Employee Benefit
  Plans

  	
   

  	
  54

  
	
  10.8

  	
   

  	
  Environmental
  Matters

  	
   

  	
  54

  
	
  10.9

  	
   

  	
  Further Assurances

  	
   

  	
  54

  



 



 ii
 






 



 


	
  10.10

  	
   

  	
  Deposit Accounts

  	
   

  	
  55

  
	
  10.11

  	
   

  	
  PNC Bank Accounts

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.   NEGATIVE
  COVENANTS.

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Debt

  	
   

  	
  56

  
	
  11.2

  	
   

  	
  Liens

  	
   

  	
  57

  
	
  11.3

  	
   

  	
  Operating Leases

  	
   

  	
  57

  
	
  11.4

  	
   

  	
  Restricted Payments

  	
   

  	
  58

  
	
  11.5

  	
   

  	
  Mergers,
  Consolidations, Sales

  	
   

  	
  58

  
	
  11.6

  	
   

  	
  Modification
  of Organizational Documents

  	
   

  	
  59

  
	
  11.7

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  59

  
	
  11.8

  	
   

  	
  Unconditional
  Purchase Obligations

  	
   

  	
  59

  
	
  11.9

  	
   

  	
  Inconsistent
  Agreements

  	
   

  	
  59

  
	
  11.10

  	
   

  	
  Business
  Activities; Issuance of Equity

  	
   

  	
  60

  
	
  11.11

  	
   

  	
  Investments

  	
   

  	
  60

  
	
  11.12

  	
   

  	
  Restriction
  of Amendments to Certain Documents

  	
   

  	
  60

  
	
  11.13

  	
   

  	
  Fiscal Year

  	
   

  	
  60

  
	
  11.14

  	
   

  	
  Financial Covenants

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.   EFFECTIVENESS;
  CONDITIONS OF LENDING, ETC.

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Initial Credit
  Extension

  	
   

  	
  61

  
	
  12.2

  	
   

  	
  Conditions

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.   EVENTS OF
  DEFAULT AND THEIR EFFECT.

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Events of Default

  	
   

  	
  66

  
	
  13.2

  	
   

  	
  Effect of Event
  of Default

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.   THE AGENT.

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Appointment
  and Authorization

  	
   

  	
  68

  
	
  14.2

  	
   

  	
  Issuing Lender

  	
   

  	
  69

  
	
  14.3

  	
   

  	
  Delegation of Duties

  	
   

  	
  69

  
	
  14.4

  	
   

  	
  Exculpation
  of Administrative Agent

  	
   

  	
  69

  
	
  14.5

  	
   

  	
  Reliance by
  Administrative Agent

  	
   

  	
  70

  
	
  14.6

  	
   

  	
  Notice of Default

  	
   

  	
  70

  
	
  14.7

  	
   

  	
  Credit Decision

  	
   

  	
  70

  
	
  14.8

  	
   

  	
  Indemnification

  	
   

  	
  71

  
	
  14.9

  	
   

  	
  Administrative
  Agent in Individual Capacity

  	
   

  	
  71

  
	
  14.10

  	
   

  	
  Successor
  Administrative Agent

  	
   

  	
  72

  
	
  14.11

  	
   

  	
  Collateral Matters

  	
   

  	
  72

  
	
  14.12

  	
   

  	
  Administrative
  Agent May File Proofs of Claim

  	
   

  	
  72

  
	
  14.13

  	
   

  	
  Other
  Agents; Arrangers and Managers

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15.   GENERAL.

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Waiver; Amendments

  	
   

  	
  74

  
	
  15.2

  	
   

  	
  Confirmations

  	
   

  	
  74

  



 



 iii
 






 



 


	
  15.3

  	
   

  	
  Notices

  	
   

  	
  74

  
	
  15.4

  	
   

  	
  Computations

  	
   

  	
  75

  
	
  15.5

  	
   

  	
  Costs, Expenses
  and Taxes

  	
   

  	
  75

  
	
  15.6

  	
   

  	
  Assignments;
  Participations

  	
   

  	
  75

  
	
  15.7

  	
   

  	
  Register

  	
   

  	
  77

  
	
  15.8

  	
   

  	
  GOVERNING LAW

  	
   

  	
  77

  
	
  15.9

  	
   

  	
  Confidentiality

  	
   

  	
  77

  
	
  15.10

  	
   

  	
  Severability

  	
   

  	
  78

  
	
  15.11

  	
   

  	
  Nature of Remedies

  	
   

  	
  78

  
	
  15.12

  	
   

  	
  Entire Agreement

  	
   

  	
  78

  
	
  15.13

  	
   

  	
  Counterparts

  	
   

  	
  79

  
	
  15.14

  	
   

  	
  Successors and
  Assigns

  	
   

  	
  79

  
	
  15.15

  	
   

  	
  Captions

  	
   

  	
  79

  
	
  15.16

  	
   

  	
  Customer
  Identification - USA Patriot Act Notice

  	
   

  	
  79

  
	
  15.17

  	
   

  	
  INDEMNIFICATION
  BY THE COMPANY

  	
   

  	
  79

  
	
  15.18

  	
   

  	
  Nonliability of
  Lenders

  	
   

  	
  80

  
	
  15.19

  	
   

  	
  FORUM
  SELECTION AND CONSENT TO JURISDICTION

  	
   

  	
  81

  
	
  15.20

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  81

  



 



 iv
 






 



ANNEXES


	
  ANNEX A

  	
   

  	
  Lenders and Pro Rata Shares

  
	
  ANNEX B

  	
   

  	
  Addresses for Notices

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 9.6

  	
   

  	
  Litigation and Contingent Liabilities

  
	
  SCHEDULE 9.8 

  	
   

  	
  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)

  



 



 v














 


CREDIT
AGREEMENT


THIS CREDIT AGREEMENT
dated as of January 2, 2007 (this “Agreement”) is entered into among
KAPSTONE KRAFT PAPER CORPORATION, a Delaware
corporation (the “Company”), the financial institutions that are or may
from time to time become parties hereto (together with their respective
successors and assigns, the “Lenders”) and LASALLE BANK NATIONAL
ASSOCIATION (in its individual capacity, “LaSalle”), as administrative
agent for the Lenders.


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


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


SECTION 1.           DEFINITIONS.


1.1           Definitions. When used herein the following terms shall
have the following meanings:


Account Debtor
is defined in the Collateral Agreement.


Account or Accounts
is defined in the UCC.


Acquisition
means any transaction or series of related 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) the acquisition of in excess of 50%
of the Capital Securities of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is already a Subsidiary).


Adjusted Working Capital
means the remainder of: (a)(i) the consolidated current assets of the Company
and its Subsidiaries minus (ii) the amount of cash and cash equivalents
included in such consolidated current assets; minus (b)(i) consolidated
current liabilities of the Company and its Subsidiaries minus (ii) the amount
of short-term Debt (including current maturities of long-term Debt) of the
Company and its Subsidiaries included in such consolidated current liabilities.


Administrative Agent
means LaSalle in its capacity as administrative agent for the Lenders hereunder
and any successor thereto in such capacity.


Affected Loan
- see Section 8.3.


Affiliate
of any Person means (a) any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person, (b)
any officer or director of such Person and (c) with respect to any Lender, any
entity administered or managed by such 









 



Lender or an
Affiliate or investment advisor thereof and which is engaged in making,
purchasing, holding or otherwise investing in commercial loans. A Person shall
be deemed to be “controlled by” any other Person if such Person possesses,
directly or indirectly, power to vote 5% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managers or power to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise. Unless expressly
stated otherwise herein, neither the Administrative Agent nor any Lender shall
be deemed an Affiliate of any Loan Party.


Agent Fee Letter
means the Fee letter dated as of June 23, 2006 between the Parent and the
Administrative Agent.


Aging Reserve
means a reserve against Eligible Accounts in an amount equal to 5% of the unpaid
amount of all Accounts owing in respect of Inventory sold by the Company’s
Roanoke Rapids division from either a distribution center or a consigned
location; provided that such reserve shall be eliminated at such time, if any,
as the Administrative Agent determines that the Company has implemented
accounting systems which accurately reflect the aging of such Accounts.


Agreement
- see the Preamble.


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


	
   

  	
   

  	
  Total Debt to EBITDA Ratio

  	
   

  	
  Term Loan

  	
   

  	
  Revolving Loan

  	
   

  	
  Non-Use

  Fee Rate

  	
   

  	
  L/C

  Fee Rate

  	
   

  
	
  Level

  	
   

  	
   

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  	
  LIBOR

  Margin

  	
   

  	
  Base Rate

  Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Greater than 2.25:1

  	
   

  	
  2.00

  	
  %

  	
  0.50

  	
  %

  	
  1.75

  	
  %

  	
  0.50

  	
  %

  	
  0.375

  	
  %

  	
  1.75

  	
  %

  
	
  II

  	
   

  	
  Greater than 1.75:1 but less than or equal to 2.25:1

  	
   

  	
  1.75

  	
  %

  	
  0.25

  	
  %

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  	
  0.375

  	
  %

  	
  1.50

  	
  %

  
	
  III

  	
   

  	
  Greater than 1.25:1 but less than or equal to 1.75:1

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  	
  0.375

  	
  %

  	
  1.25

  	
  %

  
	
  IV

  	
   

  	
  Less than or equal to 1.25:1

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  	
  0.375

  	
  %

  	
  1.00

  	
  %

  



 



 2
 






 



The LIBOR Margin, the
Base 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 Company
provides or is required to provide the annual and quarterly financial
statements and other information pursuant to Sections 10.1.1 or 10.1.2,
as applicable, and the related Compliance Certificate, pursuant to Section
10.1.3. Notwithstanding anything contained in this paragraph to the
contrary, (a) if the Company fails to deliver the financial statements and
Compliance Certificate in accordance with the provisions of Sections 10.1.1,
10.1.2 and 10.1.3, the LIBOR Margin, the Base Rate Margin, the
Non-Use Fee Rate and the L/C Fee Rate shall be based upon Level I above
beginning on the date such financial statements and Compliance Certificate were
required to be delivered until the fifth (5th) Business Day after such
financial statements and Compliance Certificate are actually delivered,
whereupon the Applicable Margin shall be determined by the then current Level;
(b) no reduction to any Applicable Margin shall become effective at any time
when an Event of Default or Unmatured Event of Default has occurred and is
continuing; and (c) the initial Applicable Margin on the Closing Date shall be
based on Level II until the date on which the financial statements and Compliance
Certificate are required to be delivered for the Fiscal Quarter ending March
31, 2007.


Asset Disposition
means the sale, lease, assignment or other transfer for value (each, a “Disposition”)
by any Loan Party to any Person (other than a Loan Party) of any asset or right
of such Loan Party (including, the loss, destruction or damage of any portion
thereof or any actual or threatened (in writing to any Loan Party)
condemnation, confiscation, requisition, seizure or taking thereof) other than
(a) the Disposition of any asset which is to be replaced, and is in fact
replaced, within 180 days (or if a binding commitment to replace such asset is
entered into within 180 days and such asset is replaced within 360 days) with
another asset performing the same or a similar function, (b) the sale or lease
of inventory in the ordinary course of business and (c) other Dispositions in
any Fiscal Year the Net Proceeds of which do not in the aggregate exceed
$500,000.


Assignee
- see Section 15.6.1.


Assignment Agreement
- see Section 15.6.1.



 3
 






 



Attorney Costs
means, with respect to any Person, all reasonable fees and charges of any
outside counsel to such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.


Availability
means, as of any date of determination, an amount equal to (a) the lesser of
(i) the Revolving Commitment Amount and (ii) the Borrowing Base minus
(b) the Revolving Outstandings.


Bank Product Agreements
means those certain cash management service agreements entered into from time
to time between any Loan Party and LaSalle 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 Loan Parties to LaSalle or its Affiliates pursuant to
or evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that a Loan Party is obligated to reimburse to the Administrative Agent as a
result of the Administrative Agent purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to the Loan Parties pursuant to the Bank Product Agreements.


Bank Products
means any service or facility extended to any Loan Party by LaSalle or its Affiliates including: (a) credit cards, (b) credit
card processing services, (c) debit cards, (d) purchase cards, (e) ACH
transactions, (f) cash management, including controlled disbursement, accounts
or services, or (g) Hedging Agreements.


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


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


Base Rate Margin
- see the definition of Applicable Margin.


Borrowing Base
means an amount equal to the total of (a) 85% of the unpaid amount (net of such
reserves and allowances as the Administrative Agent deems necessary in its
reasonable discretion, including without limitation the Aging Reserve, Dilution
Reserve and Rebate Reserve) of all Eligible Accounts plus (b) the lesser
of (i) 60% of the value of all Eligible Inventory valued at the lower of cost
or market (net of such reserves and allowances as the Administrative Agent
deems necessary in its reasonable discretion) and (ii) $16,000,000.


Borrowing Base
Certificate means a certificate substantially in the form of Exhibit
C.


BSA -
see Section 10.4.



 4














 


Business Day
means any day on which LaSalle is open for commercial banking business in
Chicago, Illinois and, in the case of a Business Day which relates to a LIBOR
Loan, on which dealings are carried on in the London interbank eurodollar
market.


Business
has the meaning given such term in the Purchase Agreement.


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


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


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


Cash Collateralize
means to deliver cash collateral to the Administrative Agent, to be held as
cash collateral for outstanding Letters of Credit, pursuant to documentation
satisfactory to the Administrative Agent and in an amount equal to 102% of the
aggregate Stated Amount of such Letters of Credit. Derivatives of such term
have corresponding meanings.


Cash Equivalent
Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Lender or its holding company) rated at least A-l
by Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any certificate
of deposit, time deposit or banker’s acceptance, maturing not more than one
year after such time, or any overnight Federal Funds transaction that is issued
or sold by any Lender or its holding company (or by a commercial banking
institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $500,000,000), (d)
any repurchase agreement entered into with any Lender (or commercial banking
institution of the nature referred to in clause (c)) which (i) is
secured by a fully perfected security interest in any obligation of the type
described in any of clauses (a) through (c) above and (ii) has a
market value at the time such repurchase agreement is entered into of not less
than 100% of the repurchase obligation of such Lender (or other commercial
banking institution) thereunder and (e) money market accounts or mutual funds
which invest exclusively in assets satisfying the 



 5
 






 



foregoing requirements,
and (f) other short term liquid investments approved in writing by the
Administrative Agent.


Change of Control
means the occurrence of any of the following events: (a) a majority of the
members of the Board of Directors of Parent shall cease to be Continuing
Members (as defined below); (b) Parent shall cease to own and control 100% of
each class of the outstanding Capital Securities of the Company or (c) the
Company shall cease to, directly or indirectly, own and control 100% of each
class of the outstanding Capital Securities of each Subsidiary. For purposes of
the foregoing, “Continuing Member” means a member of the Board of
Directors of Parent who either (i) was a member of Parent’s Board of Directors
on the day before the Closing Date and has been such continuously thereafter or
(ii) became a member of such Board of Directors after the day before the
Closing Date and whose election or nomination for election by the stockholders
of Parent was approved by a vote of the majority of the Continuing Members then
members of Parent’s Board of Directors.


Closing Date
- see Section 12.1.


Code
means the Internal Revenue Code of 1986.


Collateral
as defined in the Collateral Agreement of even date herewith executed by the
Loan Parties.


Collateral Access
Agreement means an agreement in form and substance reasonably
satisfactory to the Administrative Agent pursuant to which a mortgagee or
lessor of real property on which collateral is stored or otherwise located, or
a warehouseman, processor, consignee or other bailee of Inventory or other
property owned by any Loan Party, acknowledges the Liens of the Administrative
Agent and waives or subordinates any Liens or other interests held by such
Person on such property, and, in the case of any such agreement with a
mortgagee or lessor, permits the Administrative Agent reasonable access to and
use of such real property following the occurrence and during the continuance
of an Event of Default to assemble, complete and sell any Collateral stored or
otherwise located thereon.


Collateral Agreement
means the Collateral Agreement dated as of the date hereof executed and
delivered by the Loan Parties, together with any joinders thereto and any other
collateral agreement executed by a Loan Party, in each case in form and
substance satisfactory to the Administrative Agent.


Collateral Documents
means, collectively, the Collateral Agreement, each Mortgage, each Collateral
Access Agreement, each control agreement, the Parent Pledge Agreement, the
Purchase Agreement Assignment and any other agreement or instrument pursuant to
which the Company, any Subsidiary or any other Person grants or purports to
grant collateral to the Administrative Agent for the benefit of the Lenders or
otherwise relates to such collateral.


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


Company
- see the Preamble.



 6
 






 



Compliance Certificate
means a Compliance Certificate in substantially the form of Exhibit B.


Computation Period
means each of the following periods: (i) the Fiscal Quarter ending March 31,
2007; (ii) the period of two consecutive Fiscal Quarters ending June 30, 2007;
(iii) the period of three consecutive Fiscal Quarters ending September 30,
2007; and (iv) for each Fiscal Quarter ending on or after December 31, 2007,
the period of four consecutive Fiscal Quarters ending on the last day of such
Fiscal Quarter.


Consolidated Net Income
means, with respect to the Company and its Subsidiaries for any period, the net
income (or loss) of the Company and its Subsidiaries for such period, excluding
any gains from Asset Dispositions, any extraordinary gains and any gains from
discontinued operations.


Contingent Liability
means, with respect to any Person, each obligation and liability of such Person
and all such obligations and liabilities of such Person incurred pursuant to
any agreement, undertaking or arrangement by which such Person: (a) guarantees,
endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a
creditor against loss) the indebtedness, dividend, obligation or other
liability of any other Person in any manner (other than by endorsement of
instruments in the course of collection), including any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b)
guarantees the payment of dividends or other distributions upon the Capital
Securities of any other Person; (c) undertakes or agrees (whether contingently
or otherwise): (i) to purchase, repurchase, or otherwise acquire any
indebtedness, obligation or liability of any other Person or any property or
assets constituting security therefor, (ii) to advance 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 maintain solvency, assets, level of income,
working capital or other financial condition of any other Person, or (iii) to
make payment to any other Person other than for value received; (d) agrees to
lease property or to purchase securities, property or services from such other
Person with the purpose or intent of assuring the owner of such indebtedness or
obligation of the ability of such other Person to make payment of the
indebtedness or obligation; (e) induces the issuance of any letter of credit
for the benefit of such other Person; or (f) undertakes or agrees otherwise to
assure a creditor against loss. The amount of any Contingent Liability shall
(subject to any limitation set forth herein) be deemed to be the outstanding
principal amount (or maximum permitted principal amount, if larger) of the
indebtedness, obligation or other liability guaranteed or supported thereby.


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



 7
 






 



Cumulative Available
Excess Cash Flow means, as of any date of determination, the
sum of Available Excess Cash Flow (as defined below) for each of the Fiscal
Years ended prior to such date of determination for which audited financial
statements of the Company and its Subsidiaries have been delivered to the
Administrative Agent in accordance with Section 10.1.1 of this Agreement
(commencing with the 2007 Fiscal Year). “Available Excess Cash Flow” means (i)
with respect to each of the 2007 and 2008 Fiscal Years, 50% of Excess Cash Flow
for such Fiscal Year and (ii) with respect to the 2009 Fiscal Year and each
Fiscal Year thereafter, 100% of Excess Cash Flow for such Fiscal Year.


Debt of
any Person means, without duplication, (a) all indebtedness of such Person for
borrowed money, whether or not evidenced by bonds, debentures, notes or similar
instruments, (b) all obligations of such Person as lessee under Capital Leases
which have been or should be recorded as liabilities on a balance sheet of such
Person in accordance with GAAP, (c) all obligations of such Person to pay the
deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business but including the Earn-Out
Obligations), (d) all indebtedness secured by a Lien on the property of such
Person, whether or not such indebtedness shall have been assumed by such
Person; provided that if such Person has not assumed or otherwise become
liable for such indebtedness, such indebtedness shall be measured at the fair
market value of such property securing such indebtedness at the time of
determination, (e) all obligations, contingent or otherwise, with respect to
the face amount of all letters of credit (whether or not drawn), bankers’
acceptances and similar obligations issued for the account of such Person
(including the Letters of Credit), (f) all Hedging Obligations of such Person,
(g) all Contingent Liabilities of such Person, (h) all Debt of any partnership
of which such Person is a general partner and (i) any Capital Securities or
other equity instrument, whether or not mandatorily redeemable, that under GAAP
is characterized as debt, whether pursuant to financial accounting standards
board issuance No. 150 or otherwise.


Debt to be Repaid
means Debt listed on Schedule 12.1.


Designated Proceeds
- see Section 6.2.2(a).


Dilution Reserve
means a reserve against Eligible Accounts in an amount equal to 3% of the
unpaid amount of all Accounts owing in respect of sales by the Company’s
Roanoke Rapids division; provided that such reserve shall be eliminated at such
time, if any, as the Administrative Agent determines that the Company has
implemented accounting systems which accurately reflect dilution with respect
to such Accounts.


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


Earn-Out Obligations
means the Company’s payment obligations under Sections 1.11 and 1.12 of the
Purchase Agreement.


EBITDA
means, for any period, Consolidated Net Income for such period plus, to
the extent deducted in determining such Consolidated Net Income for such period
(without duplication), (a) Interest Expense, (b) income tax expense, (c)
depreciation and amortization, (d) extraordinary losses (or less gains), net of
related tax effects, (e) other non-cash charges or losses 



 8
 






 



(or less gains or
income) for which no cash outlay (or cash receipt) is foreseeable and (f)
expenses and fees incurred to consummate the transactions contemplated by the
Loan Documents in an aggregate amount for all periods not exceeding $4,500,000.
For purposes of calculating the Total Debt to EBITDA Ratio, (i) EBITDA shall be
deemed to be: $13,101,000 for the Fiscal Quarter ending June 30, 2006 and
$13,173,000 for the Fiscal Quarter ending September 30, 2006 and (ii) EBITDA
for the period from October 1, 2006 to December 31, 2006 shall be determined in
a manner consistent with clause (i) above.


Eligible Account
means an Account owing to the Company which meets each of the following
requirements:


(a)           it arises from the sale or lease of goods or the rendering
of services which have been fully performed by the Company; and if it arises
from the sale or lease of goods, (i) such goods comply with such Account Debtor’s
specifications (if any) and have been delivered to such Account Debtor and (ii)
the Company has possession of, or if requested by the Administrative Agent has
delivered to the Administrative Agent, delivery receipts evidencing such
delivery;


(b)           it (i) is subject to a perfected, first priority Lien in
favor of the Administrative Agent and (ii) is not subject to any other
assignment, claim or Lien (other than inchoate Liens permitted under Sections
11.2(a) and (e));


(c)           it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not subject to
the fulfillment of any condition whatsoever or any counterclaim, credit,
allowance, discount, rebate, offset or adjustment by the Account Debtor with
respect thereto, or to any claim by such Account Debtor denying liability
thereunder in whole or in part (provided, that in the event any
counterclaim, credit, allowance, discount, rebate, offset or adjustment is
asserted or granted, the Account shall only be ineligible pursuant to this
clause (c) to the extent of the same);


(d)           there is no bankruptcy, insolvency or liquidation
proceeding pending by or against the Account Debtor with respect thereto;


(e)           the Account Debtor with respect thereto is located in (i)
the United States or Canada (but in the case of Canada, limited to Account
Debtors located in Ontario or any other province in which the Personal Property
Security Act has been adopted in substantially the form as in effect in
Ontario) or (ii) any other country so long as with respect to such Account (A)
the Account Debtor has delivered to, and for the benefit of, the Company an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Administrative Agent and payable only in the United States and in United States
dollars, sufficient to cover such Account, in form and substance satisfactory
to Administrative Agent and, if required by Administrative Agent, the original
of such letter of credit has been delivered to Administrative Agent or
Administrative Agent’s agent, and Company has assigned the proceeds of such
letter of credit to Administrative Agent pursuant to documentation in form and
substance acceptable to Administrative Agent or otherwise named Administrative
Agent as transferee beneficiary thereunder, as Administrative Agent may
specify, (B) such Account is subject to credit insurance payable to
Administrative 



 9
 






 



Agent issued by an insurer and on terms and
in an amount acceptable to Administrative Agent, or (C) such Account is
otherwise acceptable in all respects to Administrative Agent in its sole
discretion;


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


(g)           it is not an Account with respect to which possession
and/or control of the goods sold giving rise thereto is held, maintained or
retained by the Company (or by any agent or custodian of the Company) for the
account of or subject to further and/or future direction from the Account
Debtor with respect thereto;


(h)           it arises in the ordinary course of business of the
Company;


(i)            if the Account Debtor is the United States or any
department, agency or instrumentality thereof, the Company has assigned its
right to payment of such Account to the Administrative Agent pursuant to the
Assignment of Claims Act of 1940, and evidence (satisfactory to the
Administrative Agent) of such assignment has been delivered to the
Administrative Agent;


(j)            if the Company maintains a credit limit for an Account
Debtor, the aggregate dollar amount of Accounts due from such Account Debtor,
including such Account, does not exceed such credit limit;


(k)           if the Account is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have been
endorsed and/or assigned and delivered to the Administrative Agent or, in the
case of electronic chattel paper, shall be in the control of the Administrative
Agent, in each case in a manner satisfactory to the Administrative Agent;


(l)            such Account is evidenced by an invoice delivered to the
related Account Debtor and is not more than 90 days (120 days in respect of
Accounts owing by Account Debtors approved in writing by the Administrative
Agent in its sole discretion) past the original invoice date thereof, in each
case according to the original terms of sale;


(m)          it is not an Account with respect to an Account Debtor that
is located in any jurisdiction which has adopted a statute or other requirement
with respect to which any Person that obtains business from within such
jurisdiction must file a notice of business activities report or make any other
required filings in a timely manner in order to enforce its claims in such jurisdiction’s
courts unless (i) such notice of business activities report has been duly and
timely filed or the Company is exempt from filing such report and has provided
the Administrative Agent with satisfactory evidence of such exemption or (ii)
the failure to make such filings may be cured retroactively by the Company for
a nominal fee;


(n)           the Account Debtor with respect thereto is not an
Affiliate of the Company;



 10














 


(o)           it is not owed by an Account Debtor with respect to which
25% or more of the aggregate amount of outstanding Accounts owed at such time
by such Account Debtor is classified as ineligible under clause (l) of
this definition;


(p)           if the aggregate amount of all Accounts owed by the
Account Debtor thereon exceeds 25% of the aggregate amount of all Accounts at
such time 40% in the case of Accounts owed by Altivity Packaging, LLC and its
Subsidiaries, then all Accounts owed by such Account Debtor in excess of such
amount shall be deemed ineligible;


(q)           it is otherwise not unacceptable to the Administrative
Agent in its reasonable discretion for any other reason.


An Account which is at
any time an Eligible Account, but which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be an Eligible Account. Further,
with respect to any Account, if the Administrative Agent or the Required
Lenders at any time hereafter determine in its or their reasonable discretion
that the prospect of payment or performance by the Account Debtor with respect
thereto is materially impaired for any reason whatsoever, such Account shall
cease to be an Eligible Account after notice of such determination is given to
the Company.


Eligible Inventory
means Inventory of the Company which meets each of the following requirements:


(a)           it (i) is subject to a perfected, first priority Lien in
favor of the Administrative Agent and (ii) is not subject to any other
assignment, claim or Lien (other than inchoate Liens permitted under Sections
11.2(a), (b) and (e));


(b)           it is salable and not slow-moving, obsolete or
discontinued or in excess of a 12-month supply;


(c)           it is either (i) in the possession and control of the
Company and it is stored and held in facilities owned by the Company or, if
such facilities are not so owned, the Administrative Agent is in possession of
a Collateral Access Agreement with respect thereto or (ii) on consignment with
a customer of the Company pursuant to a valid consignment agreement satisfactory
to the Administrative Agent and so long as the Administrative Agent is in
possession of a Collateral Access Agreement with respect thereto and such other
documentation as the Administrative Agent may require;


(d)           it is not Inventory produced in violation 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 or license which would
restrict the Administrative Agent’s ability to sell or otherwise dispose of
such Inventory;


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



 11
 






 



(g)           it is not “in transit” to the Company or held by the
Company on consignment;


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


(i)            it is not supply items, repair materials, butt rolls,
pallets or packaging;


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


(k)           it does not breach any of the representations, warranties
or covenants pertaining to Inventory set forth in the Loan Documents; and


(l)            the Administrative Agent shall not have determined in its
reasonable discretion that it is unacceptable due to age, type, category,
quality, quantity and/or any other reason whatsoever.


Inventory which is at any
time Eligible Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible Inventory.


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


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 and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, 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 Income Security Act of 1974.


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


Excess Cash Flow
means, for any period, (a) EBITDA for
such period, minus (b) scheduled repayments of principal of the Term
Loan made during such period, minus (c) voluntary prepayments of the
Term Loan pursuant to Section 6.2.1 during such period, minus (d)
cash payments made in such period with respect to Capital Expenditures, minus
(e) all income taxes paid in cash by the Loan Parties during such period, minus
(f) cash Interest Expense of the Loan Parties during such period, minus
(g) any cash losses (and plus any cash gains) from extraordinary items
to the extent excluded from the calculation of EBITDA, minus (h) any
increase in Adjusted Working Capital for such period.



 12
 






 



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


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


Fiscal Quarter
means a fiscal quarter of a Fiscal Year.


Fiscal Year
means the fiscal year of the Company and its Subsidiaries, which period shall
be the 12-month period ending on December 31 of each year. References to a
Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal
Year 2007”) refer to the Fiscal Year ending on December 31 of such calendar
year.


Fixed Charge Coverage
Ratio means, for any Computation Period, the ratio of (a) the
total for such period of EBITDA minus the sum of income taxes paid in
cash by the Loan Parties and all unfinanced Capital Expenditures to (b)
the sum for such period of (i) cash Interest Expense plus (ii) required
payments of principal of Funded Debt (including the Term Loan but excluding the
Revolving Loans and the Parent Revolving Debt).


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


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


GAAP
means generally accepted accounting principles set forth from time to time in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S.
accounting profession) and the Securities and Exchange Commission, which are
applicable to the circumstances as of the date of determination.



 13
 






 



Group -
see Section 2.2.1.


Hazardous Substances
means (a) any petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation,
dielectric fluid containing levels of polychlorinated biphenyls, radon gas and
mold; (b) any chemicals, materials, pollutant or substances defined as or
included in the definition of “hazardous substances”, “hazardous waste”, “hazardous
materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any governmental authority or for which any
duty or standard of care is imposed pursuant to, any Environmental Law.


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


Hedging Obligation
means, with respect to any Person, any liability of such Person under any
Hedging Agreement.


Indemnified Liabilities
- see Section 15.17.


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


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


(a)           if any 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 the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;


(b)           any Interest Period that begins on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period shall end on the last Business Day of the calendar month at the
end of such Interest Period;


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



 14
 






 



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


Inventory
is defined in the Collateral Agreement.


Investment
means, with respect to any Person, any investment in another Person, whether by
acquisition of any debt or Capital Security, by making any loan or advance, by
becoming obligated with respect to a Contingent Liability in respect of
obligations of such other Person (other than travel and similar advances to
employees in the ordinary course of business) or by making an Acquisition.


Issuing Lender
means LaSalle, in its capacity as the issuer of Letters of Credit hereunder, or
any Affiliate of LaSalle that may from time to time issue Letters of Credit,
and their successors and assigns in such capacity.


LaSalle
- see the Preamble.


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


L/C Fee Rate
- see the definition of Applicable Margin.


Lender
- see the Preamble. References to the “Lenders” shall include the
Issuing Lender; for purposes of clarification only, to the extent that LaSalle
(or any successor Issuing Lender) may have any rights or obligations in
addition to those of the other Lenders due to its status as Issuing Lender, its
status as such will be specifically referenced. In addition to the foregoing,
for the purpose of identifying the Persons entitled to share in the Collateral
and the proceeds thereof under, and in accordance with the provisions of, this
Agreement and the Collateral Documents, the term “Lender” shall include
Affiliates of LaSalle 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 a rate determined by reference to the
LIBOR Rate.


LIBOR Margin
- see the definition of Applicable Margin.


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



 15














 


LIBOR Rate
means a rate of interest equal to (a) the per annum rate of interest at which
United States dollar deposits in an amount comparable to the amount of the
relevant LIBOR Loan and for a period equal to the relevant Interest Period are
offered in the London Interbank Eurodollar market at 11:00 A.M. (London time)
two (2) Business Days prior to the commencement of such Interest Period (or
three (3) Business Days prior to the commencement of such Interest Period if
banks in London, England were not open and dealing in offshore United States
dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative
source selected by the Administrative Agent in its sole discretion) or, if the Bloomberg Financial Markets system or another authoritative
source is not available, as the LIBOR Rate is otherwise determined by the
Administrative Agent in its sole and absolute discretion, divided by (b) a
number determined by subtracting from 1.00 the then stated maximum reserve
percentage for determining reserves to be maintained by member banks of the
Federal Reserve System for Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D),
such rate to remain fixed for such Interest Period. The Administrative Agent’s
determination of the LIBOR Rate shall be conclusive, absent manifest error.


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


Loan Documents
means this Agreement, the Notes, the Letters of Credit, the Master Letter of
Credit Agreement, the L/C Applications, the Agent Fee Letter, the Collateral
Documents, the Parent Subordination Agreement, and all documents, instruments
and agreements delivered in connection with the foregoing.


Loan Party
means the Company and each Subsidiary.


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


Mandatory Prepayment
Event - see Section 6.2.2(a).


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


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


Material Adverse Effect
means (a) a material adverse change in, or a material adverse effect upon, the
financial condition, operations, assets, business or properties of the Loan
Parties taken as a whole, (b) a material impairment of the ability of any Loan
Party or Parent to perform any of the Obligations under any Loan Document or
(c) a material adverse effect upon any 



 16
 






 



substantial
portion of the collateral under the Collateral Documents or upon the legality,
validity, binding effect or enforceability against any Loan Party or Parent of
any Loan Document.


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


Multiemployer Pension
Plan means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Company or any other member of the Controlled
Group may have any liability.


Net Cash Proceeds
means:


(a)           with respect to any Asset Disposition, the aggregate cash
proceeds (including cash proceeds received pursuant to policies of insurance or
by way of deferred payment of principal pursuant to a note, installment
receivable or otherwise, but only as and when received) received by any Loan
Party pursuant to such Asset Disposition net of (i) the direct costs relating
to such sale, transfer or other disposition (including sales commissions and
legal, accounting and investment banking fees), (ii) taxes paid 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 tax sharing arrangements)
and (iii) amounts required to be applied to the repayment of any Debt secured
by a Lien on the asset subject to such Asset Disposition (other than the
Loans);


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


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


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


Non-Use Fee Rate
- see the definition of Applicable Margin.


Note
means a promissory note substantially in the form of Exhibit A.


Notice of Borrowing
- see Section 2.2.2.


Notice of
Conversion/Continuation - see Section 2.2.3.


Obligations
means all obligations (monetary (including post-petition interest, allowed or
not) or otherwise) of any Loan Party under this Agreement and any other Loan
Document including Attorney Costs and any reimbursement obligations of each
Loan Party in respect of Letters of Credit and surety bonds, all Hedging
Obligations permitted hereunder which are owed to LaSalle or its Affiliate or
Administrative Agent, and all Bank Products Obligations, all in each 



 17
 






 



case howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.


OFAC -
see Section 10.4.


Operating Lease
means any lease of (or other agreement conveying the right to use) any real or
personal property by any Loan Party, as lessee, other than any Capital Lease.


Parent
means Stone Arcade Acquisition Corporation (to be renamed Kapstone Paper and
Packaging Corporation), a Delaware corporation.


Parent Pledge Agreement
means the Pledge Agreement dated as of the date hereof executed and delivered
by the Parent in form and substance satisfactory to the Administrative Agent.


Parent Revolving Debt
means unsecured Debt of the Company to Parent in respect of revolving loans and
advances made by Parent to the Company pursuant to the Parent Subordinated Note.


Parent Subordinated Note
means that certain Subordinated Promissory Note dated as of the Closing Date by
the Company in favor of Parent.


Parent Subordination
Agreement means that certain Subordination and Intercreditor
Agreement dated as of the date hereof by and among Parent, Company and
Administrative Agent, as amended, restated or otherwise modified from time to
time pursuant to the terms thereof.


Participant
- see Section 15.6.2.


PBGC
means the Pension Benefit Guaranty Corporation and any entity succeeding to any
or all of its functions under ERISA.


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


Permitted Acquisition
means any Proposed Acquisition which satisfies each of the following
conditions:


(i)            None of the Loan Parties shall incur or assume any Debt
(other than Debt permitted under Section 11.1) or other liabilities in
connection with such Proposed Acquisition except for ordinary course trade
payables and accrued expenses. No earn-



 18
 






 



out or similar payment obligations shall be
incurred in connection with such Proposed Acquisition unless approved in
writing by the Administrative Agent;


(ii)           Before and after giving effect to such acquisition, no
Unmatured Default or Event of Default shall have occurred and be continuing;


(iii)          After giving effect to such Proposed Acquisition,
Availability shall be at least $10,000,000;


(iv)          The aggregate amount payable in connection with, and other
consideration for (in each case, including all transaction costs and all Debt,
liabilities and Contingent Liabilities incurred or assumed in connection
therewith or otherwise reflected in a consolidated balance sheet of the Company
and such acquired Person) such Proposed Acquisition and all other Permitted
Acquisitions shall not exceed $30,000,000;


(v)           After giving effect to such Proposed Acquisition, the
Company shall be in compliance on a Pro Forma Basis with the financial
covenants set forth in Section 11.14, recomputed for the most recent
Fiscal Quarter for which financial statements have been delivered;


(vi)          Upon consummation of such Proposed Acquisition, the
Administrative Agent, on behalf of the Lenders, shall have a perfected first
priority Lien upon all assets acquired in connection therewith, subject only to
Permitted Liens;


(vii)         Not less than twenty (20) Business Days prior to
consummating such Proposed Acquisition, the Company shall deliver to the
Administrative Agent an acquisition summary with respect to such Proposed
Acquisition, such summary to include (1) a reasonably detailed description of
the business to be acquired (including financial information) and operating
results (including financial statements in form and substance reasonably
satisfactory to the Administrative Agent), (2) the terms and conditions,
including economic terms, of the Proposed Acquisition, and (3) pro forma
financial projections for the Loan Parties for the four Fiscal Quarters following
the date of such Proposed Acquisition, together with a calculation of the
Company’s compliance on a Pro Forma Basis with the financial covenants set
forth in subsection 11.14 for such period, in each case in form and
substance reasonably satisfactory to the Administrative Agent;


(viii)        The Administrative Agent shall have completed business, legal
and environmental due diligence with respect to the proposed business and
assets to be acquired, with results reasonably satisfactory to the
Administrative Agent; and


(ix)           Prior to consummating such Proposed Acquisition, the
Company shall provide the Administrative Agent with all acquisition documents
relating thereto and such other information (including officer’s certificates
and opinions of counsel) as the Administrative Agent shall reasonably request
in order to confirm that the conditions set forth herein have been satisfied.



 19
 






 



Permitted Lien
means a Lien expressly permitted hereunder pursuant to Section 11.2.


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


Prime Rate
means, for any day, the rate of interest in effect for such day as publicly
announced from time to time by LaSalle as its prime rate (whether or not such
rate is actually charged by LaSalle), which is not intended to be LaSalle’s
lowest or most favorable rate of interest at any one time. Any change in the
Prime Rate announced by LaSalle shall take effect at the opening of business on
the day specified in the public announcement of such change; provided
that the Administrative Agent shall not be obligated to give notice of any
change in the Prime Rate.


Pro Forma Basis
means, with respect to any determination for any period and any Pro Forma
Transaction, that such determination shall be made by giving pro forma effect
to each such Pro Forma Transaction, as if each such Pro Forma Transaction had
been consummated on the first day of such period.


Pro Forma Transaction
means any transaction consummated as part of any Permitted Acquisition,
together with each other transaction relating thereto and consummated in
connection therewith, including any incurrence or repayment of Debt.


Proposed Acquisition
means (a) any proposed acquisition that is consensual and approved by the board
of directors of such Proposed Acquisition Target, of all or substantially all
of the assets or Capital Securities of any Proposed Acquisition Target by the
Company or any Subsidiary of the Company or (b) any proposed merger of any
Proposed Acquisition Target with or into the Company or any Subsidiary of the
Company (and, in the case of a merger with the Company, with the Company being
the surviving corporation).


Proposed Acquisition
Target means any Person or any brand, line of business,
division, branch, operating division or other unit operation of any Person.


Pro Rata Share
means:


(a)           with respect to a Lender’s obligation to make Revolving
Loans, participate in Letters of Credit, reimburse the Issuing Lender, and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (x) prior to the Revolving Commitment being terminated or reduced to
zero, the percentage obtained by dividing (i) such Lender’s Revolving
Commitment, by (ii) the aggregate Revolving Commitment of all Lenders and (y)
from and after the time the Revolving Commitment has been terminated or reduced
to zero, the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender’s Revolving Outstandings (after settlement and repayment
of all Swing Line Loans by the Lenders) by (ii) the aggregate unpaid principal
amount of all Revolving Outstandings;



 20
 






 



(b)           with respect to a Lender’s obligation to make a Term Loan
and receive payments of interest, fees, and principal with respect thereto, (x)
prior to the making of the Term Loans, the percentage obtained by dividing (i)
such Lender’s Term Loan Commitment, by (ii) the aggregate amount of all Lenders’
Term Loan Commitments, and (y) from and after the making of the Term Loans, the
percentage obtained by dividing (i) the principal amount of such Lender’s Term Loan
by (ii) the principal amount of all Term Loans
of all Lenders; and


(c)           with respect to all other matters as
to a particular Lender, the percentage obtained by dividing (i) such Lender’s
Revolving Commitment plus such Lender’s Term Loan Commitment, by (ii)
the aggregate amount of Revolving Commitment of all Lenders plus the
Term Loan Commitment of all Lenders; provided that in the event the
Commitments have been terminated or reduced to zero, Pro Rata Share shall be
the percentage obtained by dividing (A) the principal amount of such Lender’s
Revolving Outstandings (after settlement and repayment of all Swing Line Loans
by the Lenders) plus the unpaid principal amount of such Lender’s Term
Loan by (B) the principal amount of all outstanding Revolving Outstandings plus
the unpaid principal amount of all Term Loans of all Lenders.


Purchase
means the purchase by the Company of the Business pursuant to the Purchase
Agreement.


Purchase Agreement
means that certain Purchase Agreement dated as of June 23, 2006 among the
Parent, the Company and Seller, as amended from time to time prior to the
Closing Date.


Purchase Agreement
Assignment means the Purchase Agreement Assignment between
the Company, Parent and the Administrative Agent and acknowledged by Seller, in
form and substance satisfactory to the Administrative Agent.


Rebate Reserve
means a reserve against Eligible Accounts in an amount equal to 100% of the
rebate reserve maintained by the Company on its books and records in respect of
Accounts arising from sales by the Company’s Roanoke Rapids division; provided
that such reserve shall be eliminated at such time, if any, as the
Administrative Agent determines that the Company is accurately reporting the
amount of such rebate.


Refunded Swing Line Loan
- see Section 2.2.4(c).


Regulation D
means Regulation D of the FRB.


Regulation U
means Regulation U of the FRB.


Related Agreements
means the Purchase Agreement and all agreements and instruments entered into or
delivered in connection therewith, including without limitation all supply
agreements and transitional services agreements with Seller.


Related Transactions
means the transactions contemplated by the Related Agreements.



 21














 


Replacement Lender - see Section
8.7(b).


Reportable Event
means a reportable event as defined in Section 4043 of ERISA and the
regulations issued thereunder as to which the PBGC has not waived the
notification requirement of Section 4043(a), or the failure of a Pension Plan
to meet the minimum funding standards of Section 412 of the Code (without
regard to whether the Pension Plan is a plan described in Section 4021(a)(2) of
ERISA) or under Section 302 of ERISA.


Required Lenders means, at any time,
Lenders whose Pro Rata Shares exceed 662¤3% as
determined pursuant to clause (d) of the definition of “Pro Rata Share”.


Revolving Commitment
means $35,000,000 as reduced from time to time pursuant to Section 6.1.


Revolving Loan -
see Section 2.1.1.


Revolving Loan Availability
means the lesser of (i) the Revolving Commitment and (ii) the Borrowing Base.


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


SEC
means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.


Seller
means International Paper Company, a New York corporation.


Senior Officer
means, with respect to any Loan Party, any of the chief executive officer, the
chief financial officer, the chief operating officer, president or the
treasurer of such Loan Party.


Stated Amount
means, with respect to any Letter of Credit at any date of determination, (a)
the maximum aggregate amount available for drawing thereunder under any and all
circumstances plus (b) the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.


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


Swing Line Availability
means the lesser of (a) the Swing Line Commitment Amount and (b) Revolving Loan
Availability (less Revolving Outstandings at such time).



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Swing Line Commitment
Amount means $5,000,000, as reduced from time to time
pursuant to Section 6.1, which commitment constitutes a subfacility of
the Revolving Commitment of the Swing Line Lender.


Swing Line Lender
means LaSalle.


Swing Line Loan
- see Section 2.2.4.


Taxes
means any and all present and future taxes, duties, levies, imposts,
deductions, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing, but excluding Excluded Taxes.


Term Loan Commitment
means $60,000,000.


Term Loan Maturity Date
means the earlier of (a) December 31, 2011 or (b) the Termination Date.


Term Loans
- see Section 2.1.2.


Termination Date
means the earlier to occur of (a) December 31, 2011, (b) such other date on
which the Commitments terminate pursuant to Section 6 or Section 13
or (c) the date which is ninety (90) days prior to the date on which any of the
Earn-Out Obligations become due and owing under the Purchase Agreement.


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


Total Debt
means all Debt of the Company and its Subsidiaries, determined on a
consolidated basis, excluding (a) contingent obligations in respect of
Contingent Liabilities (except to the extent constituting Contingent
Liabilities in respect of Debt of a Person other than any Loan Party or in
respect of Letters of Credit), (b) Hedging Obligations, (c) Debt of the Company
to Subsidiaries and Debt of Subsidiaries to the Company or to other
Subsidiaries and (d) the Earn-Out Obligations.


Total Debt to EBITDA
Ratio means, as of the last day of any Fiscal Quarter, the
ratio of (a) Total Debt as of such day to (b) EBITDA for the period of four
consecutive Fiscal Quarters ending on such day.



 23
 






 



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


type -
see Section 2.2.1.


UCC is
defined in the Collateral Agreement.


Unfunded Liability
means the amount (if any) by which the present value of all vested and unvested
accrued benefits under all Pension Plans 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 of
Default means any event that, if it continues uncured, will,
with lapse of time or notice or both, constitute an Event of Default.


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


Withholding Certificate
- see Section 7.6(d).


1.2           Other Interpretive Provisions.


(a)           The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.


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


(c)           The term “including” is not limiting and means “including
without limitation.”


(d)           In the computation of periods of time from a specified
date to a later specified date, 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)           Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement and the other Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, supplements and other modifications thereto, but only to the
extent such amendments, restatements, supplements and other modifications are
not prohibited by the terms of any Loan Document, and 



 24
 






 



(ii) references to any statute or regulation
shall be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute or regulation.


(f)            This Agreement 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 measurements are cumulative
and each shall be performed in accordance with its terms.


(g)           This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Administrative
Agent, the Company, the Lenders and the other parties thereto and are the
products of all parties. Accordingly, they shall not be construed against the
Administrative Agent or the Lenders merely because of the Administrative 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
of this Agreement, each of the Lenders, severally and for itself alone, agrees
to make loans to, and to issue or participate in letters of credit for the
account of, the Company as follows:


2.1.1        Revolving Loan Commitment. Each
Lender with a Revolving Loan Commitment agrees to make loans on a revolving
basis (“Revolving Loans”) from time to time until the Termination Date
in such Lender’s Pro Rata Share of such aggregate amounts as the Company may
request from all Lenders; provided that the Revolving Outstandings will
not at any time exceed Revolving Loan Availability (less the amount of any
Swing Line Loans outstanding at such time).


2.1.2        Term Loan Commitment. Each Lender
with a Term Loan Commitment agrees to make a loan to the Company (each such
loan, a “Term Loan” and collectively, the “Term Loans”) on the
Closing Date in such Lender’s Pro Rata Share of the Term Loan Commitment. The
Commitments of the Lenders to make Term Loans shall expire concurrently with
the making of the Term Loans on the Closing Date.


2.1.3        L/C Commitment. Subject to Section
2.3.1, the Issuing Lender agrees to issue letters of credit, in each case
containing such terms and conditions as are permitted by this Agreement and are
reasonably satisfactory to the Issuing Lender (each, a “Letter of Credit”),
at the request of and for the account of the Company from time to time before
the scheduled Termination Date and, as more fully set forth in Section 2.3.2,
each Lender agrees to purchase a participation in each such Letter of Credit; provided
that (a) the aggregate Stated Amount of all Letters of Credit shall not at any
time exceed $10,000,000 and (b) the Revolving Outstandings shall not at any
time exceed Revolving Loan Availability (less the amount of any Swing Line
Loans outstanding at such time).


2.2           Loan Procedures.



 25
 






 



2.2.1        Various Types of Loans. Each
Revolving Loan shall be, and the Term Loan may be divided into tranches which
are, either a Base Rate Loan or a LIBOR Loan (each a “type” of Loan), as
the Company shall specify in the related notice of borrowing or conversion
pursuant to Section 2.2.2 or 2.2.3. LIBOR Loans having the same
Interest Period which expire on the same day are sometimes called a “Group”
or collectively “Groups”. Base Rate Loans and LIBOR Loans may be
outstanding at the same time, provided that not more than six (6)
different Groups of LIBOR Loans shall be outstanding at any one time. All
borrowings, conversions and repayments of Revolving Loans 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 Company
shall 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 of each
proposed borrowing not later than (a) in the case of a Base Rate borrowing,
noon, Chicago time, on the proposed date of such borrowing, and (b) in the case
of a LIBOR borrowing, noon, Chicago time, at least three Business Days prior to
the proposed date of such borrowing. Each such notice shall be effective upon
receipt by the Administrative Agent, shall be irrevocable, and shall specify
the date, amount and type of borrowing and, in the case of a LIBOR borrowing,
the initial Interest Period therefor. Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof. Not later than 1:00
P.M., Chicago time, on the date of a proposed borrowing, subject to Section
2.2.4, each Lender shall provide the Administrative Agent at the office
specified by the Administrative Agent with immediately available funds covering
such Lender’s Pro Rata Share of such borrowing and, so long as the
Administrative Agent has not received written notice that the conditions
precedent set forth in Section 12.2 with respect to such borrowing have
not been satisfied, the Administrative Agent shall pay over the funds received
by the Administrative Agent to the Company on the requested borrowing date. Each
borrowing 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 $50,000, and
each LIBOR borrowing shall be in an aggregate amount of at least $1,000,000 and
an integral multiple of at least $100,000.


2.2.3        Conversion and Continuation Procedures.


(a)           Subject to Section 2.2.1, the Company may, upon
irrevocable written notice to the Administrative Agent in accordance with clause
(b) below:


(A)          elect, as of any Business Day, to convert any Loans (or any
part thereof in an aggregate amount not less than $1,000,000 or a higher
integral multiple of $100,000) into Loans of the other type; or


(B)           elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods expiring on such
day (or any part thereof in an aggregate amount not less than $1,000,000 or a
higher integral multiple of $100,000) for a new Interest Period;



 26
 






 



provided
that after giving effect to any prepayment, conversion or continuation, the
aggregate principal amount of each Group of LIBOR Loans shall be at least
$1,000,000 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 the Administrative 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 case of conversion into or continuation of LIBOR
Loans, 11:00 A.M., Chicago time, at least three Business Days prior to the
proposed date of such conversion or continuation, specifying in each case:


(A)          the proposed date of conversion or continuation;


(B)           the aggregate amount of Loans to be converted or
continued;


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


(D)          in the case of conversion into, or continuation of, LIBOR
Loans, the duration of the requested Interest Period therefor.


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


(d)           The Administrative Agent will promptly notify each Lender
of its receipt of a notice of conversion or continuation pursuant to this Section
2.2.3 or, if no timely notice is provided by the Company, of the details of
any automatic conversion.


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


2.2.4        Swing Line Facility.


(a)           The Administrative Agent shall notify the Swing Line
Lender upon the Administrative Agent’s receipt of any Notice of Borrowing. Subject
to the terms and conditions hereof, the Swing Line Lender may, in its sole
discretion, make available from time to time until the Termination Date
advances (each, a “Swing Line Loan”) in accordance with any such notice,
notwithstanding that after making a requested Swing Line Loan, the sum of the
Swing Line Lender’s Pro Rata Share of the Revolving Outstandings and all
outstanding Swing Line Loans, may exceed the Swing Line Lender’s Pro Rata Share
of the Revolving Commitment. The provisions of this Section 2.2.4 shall
not relieve Lenders of their obligations to make 



 27
 






 



Revolving Loans under Section 2.1.1; provided
that if the Swing Line Lender makes a Swing Line Loan pursuant to any such
notice, such Swing Line Loan shall be in lieu of any Revolving Loan that otherwise
may be made by the Lenders pursuant to such notice. The aggregate amount of
Swing Line Loans outstanding shall not exceed at any time Swing Line
Availability. Until the Termination Date, the Company may from time to time
borrow, repay and reborrow under this Section 2.2.4. Each Swing Line
Loan shall be made pursuant to a Notice of Borrowing delivered by the Company
to the Administrative Agent in accordance with Section 2.2.2. Any such
notice must be given no later than 2:00 P.M., Chicago time, on the Business Day
of the proposed Swing Line Loan. Unless the Swing Line Lender has received at
least one Business Day’s prior written notice from the Required Lenders
instructing it not to make a Swing Line Loan, the Swing Line Lender shall,
notwithstanding the failure of any condition precedent set forth in Section
12.2, be entitled to fund that Swing Line Loan, and to have such Lender
make Revolving Loans in accordance with Section 2.2.4(c) or purchase
participating interests in accordance with Section 2.2.4(d). Notwithstanding
any other provision of this Agreement or the other Loan Documents, each Swing
Line Loan shall constitute a Base Rate Loan.


(b)           The entire unpaid balance of each Swing Line Loan and all
other noncontingent Obligations shall be immediately due and payable in full in
immediately available funds on the Termination Date if not sooner paid in full.


(c)           The Swing Line Lender, at any time and from time to time
no less frequently than once every two weeks, shall on behalf of the Company
(and the Company hereby irrevocably authorizes the Swing Line Lender to so act
on its behalf) request each Lender with a Revolving Commitment (including the
Swing Line Lender) to make a Revolving Loan to the Company (which shall be a
Base Rate Loan) in an amount equal to that Lender’s Pro Rata Share of the
principal amount of all Swing Line Loans (the “Refunded Swing Line Loan”)
outstanding on the date such notice is given. Unless any of the events
described in Section 13.1.4 has occurred (in which event the procedures
of Section 2.2.4(d) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Loan are then satisfied, each Lender shall disburse directly to the
Administrative Agent, its Pro Rata Share on behalf of the Swing Line Lender,
prior to 2:00 P.M., Chicago time, in immediately available funds on the date
that notice is given (provided that such notice is given by 12:00 p.m.,
Chicago time, on such date). The proceeds of those Revolving Loans shall be
immediately paid to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.


(d)           If, prior to refunding a Swing Line Loan with a Revolving
Loan pursuant to Section 2.2.4(c), one of the events described in Section
13.1.4 has occurred, then, subject to the provisions of Section 2.2.4(e)
below, each Lender shall, on the date such Revolving Loan was to have been made
for the benefit of the Company, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan in an amount equal to
its Pro Rata Share of such Swing Line Loan. Upon request, each Lender shall
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation interest.



 28














 


(e)           Each Lender’s obligation to make Revolving Loans in
accordance with Section 2.2.4(c) and to purchase participation interests
in accordance with Section 2.2.4(d) shall be absolute and unconditional
and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such Lender may have
against the Swing Line Lender, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of any Unmatured Event of
Default or Event of Default; (iii) any inability of the Company to satisfy the
conditions precedent to borrowing set forth in this Agreement at any time or
(iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. If and to the extent any Lender shall not have
made such amount available to the Administrative Agent or the Swing Line
Lender, as applicable, by 2:00 P.M., Chicago time, the amount required pursuant
to Sections 2.2.4(c) or 2.2.4(d), as the case may be, on the Business
Day on which such Lender receives notice from the Administrative Agent of such
payment or disbursement (it being understood that any such notice received
after noon, Chicago time, on any Business Day shall be deemed to have been
received on the next following Business Day), such Lender agrees to pay
interest on such amount to the Administrative Agent for the Swing Line Lender’s
account forthwith on demand, for each day from the date such amount was to have
been delivered to the Administrative Agent to the date such amount is paid, at
a rate per annum equal to (a) for the first three days after demand, the
Federal Funds Rate from time to time in effect and (b) thereafter, the Base
Rate from time to time in effect.


2.3           Letter of Credit Procedures.


2.3.1        L/C Applications. The Company
shall execute and deliver to the Issuing Lender the Master Letter of Credit
Agreement from time to time in effect. The Company shall give notice to the
Administrative Agent and the Issuing Lender of the proposed issuance of each
Letter of Credit on a Business Day which is at least three Business Days (or
such lesser number of days as the Administrative Agent and the Issuing Lender
shall agree in any particular instance in their sole discretion) prior to the
proposed date of issuance of such Letter of Credit. Each such notice shall be
accompanied by an L/C Application, duly executed by the Company and in all
respects satisfactory to the Administrative Agent and the Issuing Lender,
together with such other documentation as the Administrative Agent or the
Issuing Lender may request in support thereof, it being understood that each
L/C Application shall specify, among other 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 the scheduled Termination Date (unless
such Letter of Credit is Cash Collateralized on or prior to the Termination
Date and has an expiration date no later than one hundred eighty (180) days
after the scheduled Termination Date)) and whether such Letter of Credit is to
be transferable in whole or in part. Any Letter of Credit outstanding after the
scheduled Termination Date which is Cash Collateralized for the benefit of the
Issuing Lender shall be the sole responsibility of the Issuing Lender. So long
as the Issuing Lender has not received written notice that the conditions
precedent set forth in Section 12 with 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 issuance date. The Issuing Lender shall
promptly advise the Administrative Agent of the issuance of each Letter of
Credit and of any amendment thereto, extension thereof or event or circumstance
changing the amount available for drawing 



 29
 






 



thereunder. In the
event of any inconsistency between the terms of the Master Letter of Credit
Agreement, any L/C Application and the terms of this Agreement, the terms of
this Agreement shall control.


2.3.2        Participations in Letters of Credit.
Concurrently with the issuance of each Letter of Credit, the Issuing Lender
shall be deemed to have sold and transferred to each Lender with a Revolving
Loan Commitment, and each such Lender shall be deemed irrevocably and
unconditionally to have purchased and received from the Issuing Lender, without
recourse or warranty, an undivided interest and participation, to the extent of
such Lender’s Pro Rata Share, in such Letter of Credit and the Company’s
reimbursement obligations with respect thereto. If the Company does not pay any
reimbursement obligation when due, the Company shall be deemed to have
immediately requested that the Lenders make a Revolving Loan which is a Base
Rate Loan in a principal amount equal to such reimbursement obligations. The
Administrative Agent shall promptly notify such Lenders of such deemed request
and, without the necessity of compliance with the requirements of Section
2.2.2, Section 12.2 or otherwise such Lender shall make available to
the Administrative Agent its Pro Rata Share of such Loan. The proceeds of such
Loan shall be paid over by the Administrative Agent to the Issuing Lender for
the account of the Company in satisfaction of such reimbursement obligations. For
the purposes of this Agreement, the unparticipated portion of each Letter of
Credit shall be deemed to be the Issuing Lender’s “participation” therein. The
Issuing Lender hereby agrees, upon request of the Administrative Agent or any
Lender, to deliver to the Administrative Agent or such Lender a list of all
outstanding Letters of Credit issued by the Issuing Lender, together with such
information related thereto as the Administrative Agent or such Lender may
reasonably request.


2.3.3        Reimbursement Obligations.


(a)           The Company hereby unconditionally and irrevocably agrees
to reimburse the Issuing Lender for each payment or disbursement made by the
Issuing Lender under any Letter of Credit honoring any demand for payment made
by the beneficiary thereunder, in each case on the date that such payment or disbursement
is made; provided that the Company may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.2 that
such reimbursement be financed with a Revolving Loan or Swing Line Loan in an
equivalent amount. Any amount not reimbursed on the date of such payment or
disbursement shall bear interest from the date of such payment or disbursement
to the date that the Issuing Lender is reimbursed by the Company therefor,
payable on demand, at a rate per annum equal to the Base Rate from time to time
in effect plus the Base Rate Margin from time to time in effect plus,
beginning on the third Business Day after receipt of notice from the Issuing
Lender of such payment or disbursement, 2%. The Issuing Lender shall notify the
Company and the Administrative Agent whenever any demand for payment is made
under any Letter of Credit by the beneficiary thereunder; provided that
the failure of the Issuing Lender to so notify the Company or the
Administrative Agent shall not affect the rights of the Issuing Lender or the
Lenders in any manner whatsoever.


(b)           The Company’s reimbursement obligations hereunder shall be
irrevocable and unconditional under all circumstances, including (a) any lack
of validity or 



 30
 






 



enforceability of any Letter of Credit, this Agreement or any other
Loan Document, (b) the existence of any claim, set-off, defense or other right
which any Loan Party may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter 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 Loan Document, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between any Loan Party and the beneficiary named in any Letter of
Credit), (c) the validity, sufficiency or genuineness of any document which the
Issuing Lender has determined complies on its face with the terms of the
applicable Letter of Credit, even if such document should later prove to have
been forged, fraudulent, invalid or insufficient in any respect or any
statement therein shall have been untrue or inaccurate in any respect, or (d)
the surrender or impairment of any security for the performance or observance
of any of the terms hereof. Without limiting the foregoing, no action or
omission whatsoever by the Administrative Agent or any Lender (excluding any
Lender in its capacity as the Issuing Lender) under or in connection with any
Letter of Credit or any related matters shall result in any liability of the
Administrative Agent or any Lender to the Company, or relieve the Company of
any of its obligations hereunder to any such Person.


2.3.4        Funding by Lenders to Issuing Lender.
If the Issuing Lender makes any payment or disbursement under any Letter of
Credit and (a) the Company has not reimbursed the Issuing Lender in full for
such payment or disbursement by 11:00 A.M., Chicago time, on the date of such
payment or disbursement, (b) a Revolving Loan may not be made in accordance
with Section 2.3.2 or (c) any reimbursement received by the Issuing
Lender from the Company is or must be returned or rescinded upon or during any
bankruptcy or reorganization of the Company or otherwise, each other Lender
with a Revolving Loan Commitment shall be obligated to pay to the
Administrative Agent for the account of the Issuing Lender, in full or partial
payment 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 shall
diminish the obligations of the Company under Section 2.3.3), and, upon
notice from the Issuing Lender, the Administrative Agent shall promptly notify
each other Lender thereof. Each other Lender irrevocably and unconditionally
agrees to so pay to the Administrative Agent in immediately available funds for
the Issuing Lender’s account the amount of such other Lender’s Pro Rata Share
of such payment or disbursement. If and to the extent any Lender shall not have
made such amount available to the Administrative Agent by 2:00 P.M., Chicago
time, on the Business Day on which such Lender receives notice from the
Administrative Agent of such payment or disbursement (it being understood that
any such notice received after noon, Chicago time, on any Business Day shall be
deemed to have been received on the next following Business Day), such Lender
agrees to pay interest on such amount to the Administrative Agent for the
Issuing Lender’s account forthwith on demand, for each day from the date such
amount was to have been delivered to the Administrative Agent to the date such
amount is paid, at a rate per annum equal to (a) for the first three days after
demand, the Federal Funds Rate from time to time in effect and (b) thereafter,
the Base Rate from time to time in effect. Any Lender’s failure to make
available to the Administrative Agent its Pro Rata Share of any such payment or
disbursement shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Agent such other Lender’s Pro Rata Share
of such payment, but no Lender shall be responsible 



 31
 






 



for the failure of
any other Lender to make available to the Administrative Agent such other
Lender’s Pro 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 not relieve any other Lender of its obligation
(if any) to make a Loan on such date, but no Lender shall be responsible for
the failure of any other Lender to make any Loan to be made by such other
Lender.


2.5           Certain Conditions. Except as otherwise provided in
Sections 2.2.4 and 2.3.4 of this Agreement, no Lender shall have an obligation
to make any Loan, or to permit the continuation of or any conversion into any
LIBOR Loan, and the Issuing Lender shall not have any obligation to issue any
Letter of Credit, if an Event of Default or Unmatured Event of Default exists.


SECTION 3.           EVIDENCING OF LOANS.


3.1           Notes.
The Loans of each Lender shall be evidenced by a Note, with appropriate
insertions, payable to the order of such Lender and each in a face principal
amount equal to the sum of such Lender’s Revolving Loan Commitment or the
principal amount of such Lender’s Term Loans (as applicable).


3.2           Recordkeeping. The Administrative Agent, on behalf of
each Lender, shall record in its records, the date and amount of each Loan made
by each Lender, each repayment or conversion thereof and, in the case of each
LIBOR Loan, the dates on which each Interest Period for such Loan shall begin
and end. The aggregate unpaid principal amount so recorded shall be presumptive
evidence of the principal amount of the Loans owing and unpaid. The failure to
so record any such amount or any error in so recording any such amount shall
not, however, limit or otherwise affect the Obligations of the Company
hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.


SECTION 4.           INTEREST.


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


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


(b)           at all times while such Loan is a LIBOR Loan, at a rate
per annum equal to the sum of the LIBOR Rate applicable to each Interest Period
for such Loan plus the LIBOR Margin from time to time in effect;


provided
that at any time an Event of Default exists, unless the Required Lenders
otherwise consent, the interest rate applicable to each Loan shall, at the
direction of the Required Lenders 



 32
 






 



or at the
Administrative Agent’s election, be increased by 2% (and, in the case of
Obligations not bearing interest, such Obligations shall bear interest at the
Base Rate applicable to Revolving Loans plus 2%), provided  further
that such increase may thereafter be rescinded by the Required Lenders,
notwithstanding Section 15.1. Notwithstanding the foregoing, upon the
occurrence of an Event of Default under Sections 13.1.1 or 13.1.4,
such increase shall occur automatically.


4.2           Interest Payment Dates. Accrued interest on each Base Rate
Loan shall be payable in arrears on the last day of each calendar month and at
maturity. Accrued interest on each LIBOR Loan shall be payable on the last day
of each Interest Period relating to such Loan (and, in the case of a LIBOR Loan
with an Interest Period in excess of three months, accrued interest shall be
payable on the three-month anniversary of the first day of such Interest Period
and on the last day of each Interest Period), upon a prepayment of such Loan,
and at maturity. After maturity, 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 determined by the Administrative Agent, and
notice thereof shall be given by the Administrative Agent promptly to the
Company and each Lender. Each determination of the applicable LIBOR Rate by the
Administrative Agent shall be conclusive and binding upon the parties hereto,
in the absence of demonstrable error. The Administrative Agent shall, upon
written request of the Company or any Lender, deliver to the Company or such
Lender a statement showing the computations used by the Administrative Agent in
determining any applicable LIBOR Rate hereunder.


4.4           Computation of Interest. Interest shall be computed for
the actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Base Rate 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 of each Lender a non-use fee, for the
period from the Closing Date to the Termination Date, at the Non-Use Fee Rate
in effect from time to time of such Lender’s Pro Rata Share (as adjusted from
time to time) of the unused amount of the Revolving Commitment. For purposes of
calculating usage under this Section, the Revolving Commitment shall be deemed
used to the extent of the sum of Revolving Outstandings plus the aggregate
principal amount of all outstanding Swing Line Loans. Such non-use fee shall be
payable in arrears on the last day of each calendar month and on the
Termination Date for any period then ending for which such non-use fee shall
not have previously been paid. The non-use fee shall be computed for the actual
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 each Lender a letter of credit fee for each Letter of Credit
equal to the L/C Fee Rate in effect from time to time of such Lender’s Pro Rata
Share (as adjusted from time to time) of the 



 33
 






 



undrawn amount of such Letter of Credit
(computed for the actual number of days elapsed on the basis of a year of 360
days); provided that, unless the Required Lenders otherwise consent, the
rate applicable to each Letter of Credit shall, at the direction of the
Required Lenders or at the Administrative Agent’s election, be increased by 2%
at any time that an Event of Default exists. Such letter of credit fee shall be
payable in arrears on the last day of each calendar month and on the
Termination Date (or such later date on which such Letter of Credit expires or
is terminated) for the period from the date of the issuance of each Letter of
Credit (or the last day on which the letter of credit fee was paid with respect
thereto) to the date such payment is due or, if earlier, the date on which such
Letter of Credit expired or was terminated.


(b)           In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Issuing Lender, for its own account, (i) such fees
and expenses as the Issuing Lender customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations and (ii) a letter of credit fronting fee in the amount and
at the times agreed to by the Company and the Issuing Lender.


5.3           Administrative Agent’s Fees. The Company agrees to pay to
the Administrative Agent such agent’s fees as are mutually agreed to from time
to time by the Company and the Administrative Agent including the fees set
forth in the Agent Fee Letter.


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


6.1           Reduction or Termination of the Revolving Commitment.


6.1.1        Voluntary Reduction or Termination of
the Revolving Commitment. The Company may from time to time on at least
five Business Days’ prior written notice received by the Administrative Agent
(which shall promptly advise each Lender thereof) permanently reduce the
Revolving Commitment to an amount not less than the Revolving Outstandings plus
the outstanding amount of all Swing Line Loans. Any such reduction shall be in
an amount not less than $1,000,000 or a higher integral multiple of $100,000. Concurrently
with any reduction of the Revolving Commitment to zero, the Company shall pay
all interest on the Revolving Loans, all non-use fees and all letter of credit
fees and shall Cash Collateralize in full all obligations arising with respect
to the Letters of Credit.


6.1.2        [Reserved]


6.1.3        All Reductions of the Revolving
Commitment. All reductions of the Revolving Commitment shall reduce the
Commitments ratably among the Lenders according to their respective Pro Rata
Shares.


6.2           Prepayments.


6.2.1        Voluntary Prepayments. The
Company may from time to time prepay the Loans in whole or in part; provided
that the Company shall give the Administrative Agent (which shall promptly
advise each Lender) notice thereof not later than 11:00 A.M., Chicago 



 34
 






 



time, on the day
of such prepayment (which shall be a Business Day), specifying the Loans to be
prepaid and the date and amount of prepayment. Any such partial prepayment
shall be in an amount equal to $500,000 or a higher integral multiple of
$100,000.


6.2.2        Mandatory Prepayments.


(a)           The Company shall make a prepayment of the 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 the following amounts (such
applicable amounts being referred to as “Designated Proceeds”):


(i)            Concurrently with the receipt by any Loan Party of any
Net Cash Proceeds from any Asset Disposition, in an amount equal to 100% of
such Net Cash Proceeds.


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


(iii)          Concurrently with the receipt by any Loan Party of any Net
Cash Proceeds from any issuance of any Debt of any Loan Party (excluding Debt
permitted by Section 11.1), in an amount equal to 100% of such Net Cash
Proceeds.


(iv)          Within 100 days after the end of each of Fiscal Year 2007
and Fiscal Year 2008, in an amount equal to 50% of Excess Cash Flow for such
Fiscal Year.


(b)           If on any day the Revolving Outstandings plus the
outstanding amount of the Swing Line Loan exceeds the Borrowing Base, the
Company shall immediately prepay Revolving Loans and/or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing, in an
amount sufficient to eliminate such excess.


(c)           If on any day on which the Revolving Commitment is reduced
pursuant to Section 6.1 the Revolving Outstandings plus the outstanding
amount of the Swing Line Loan exceeds the Revolving Commitment, the Company
shall immediately prepay Revolving Loans or Cash Collateralize the outstanding
Letters of Credit, or do a combination of the foregoing, in an amount
sufficient to eliminate such excess.


6.3           Manner of Prepayments.


6.3.1        All Prepayments. Each voluntary
partial prepayment shall be in a principal amount of $500,000 or a higher
integral multiple of $100,000. Any partial prepayment of a Group of LIBOR Loans
shall be subject to the proviso to Section 2.2.3(a). Any prepayment of a
LIBOR Loan on a day other than the last day of an Interest Period therefor
shall include 



 35
 






 



interest on the
principal amount being repaid and shall be subject to Section 8.4. All
prepayments of the Term Loan shall be applied pro rata to the remaining
installments thereof. Except as otherwise provided by this Agreement, all
principal payments in respect of the Loans (other than the Swing Line Loans)
shall be applied first, to repay outstanding Base Rate Loans and then to repay
outstanding LIBOR Rate Loans in direct order of Interest Period maturities.


If the Company is
required to make a mandatory prepayment of any LIBOR Rate Loans under Section
6.2.2 at a time when no Event of Default has occurred and is continuing,
the Company shall have the right, in lieu of making such prepayment in full, to
deposit an amount equal to such mandatory prepayment with the Administrative
Agent in a cash collateral account maintained (pursuant to documentation
reasonably satisfactory to the Administrative Agent) by the Company with, and
under the sole dominion and control of, the Administrative Agent. Any amounts
so deposited shall be held by the Administrative Agent as Collateral for such
LIBOR Rate Loans and shall be applied to the prepayment of the applicable LIBOR
Rate Loans at the earlier of the end of the current Interest Periods applicable
thereto or, at the Administrative Agent’s election, if an Event of Default is
in existence.


6.4           Repayments.


6.4.1        Revolving Loans. The Revolving
Loans of each Lender shall be paid in full and the Revolving Commitment shall
terminate on the Termination Date.


6.4.2        Term Loans. The Term Loan of each
Lender shall be paid in installments equal to such Lender’s Pro Rata Share of
the aggregate principal amount of the installments of the Term Loan as follows:




	
  Payment Date

  	
   

  	
   

  	
   

  	
  Amount

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  1,875,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  1,875,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  1,875,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  1,875,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  2,125,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  2,250,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  2,250,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  2,250,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  20,750,000

  	
   

  






 



 36
 






 



Unless sooner paid in
full, the outstanding principal balance of the Term Loan shall be paid in full
on 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 immediately available funds at the office specified by
the Administrative Agent not later than 1:00 p.m., Chicago time, on the date
due, and shall be applied by the Administrative Agent to the Obligations on the
date received if received prior to that hour; and funds received after that
hour shall be deemed to have been received by the Administrative Agent (and
applied to the Obligations) on the following Business Day. The Administrative Agent
shall promptly remit to each Lender its share of all such payments received in
collected funds by the Administrative Agent for the account of such Lender. All
payments under Section 8.1 shall be made by the Company directly to the Lender
entitled thereto without setoff, counterclaim or other defense.


7.2           Application of Certain Payments. So long as no Unmatured
Event of Default or Event of Default has occurred and is continuing, (a)
payments matching specific scheduled payments then due shall be applied to
those scheduled payments and (b) voluntary and mandatory prepayments shall be
applied as set forth in Sections 6.2 and 6.3. After the
occurrence and during the continuance of an Unmatured Event of Default or Event
of Default, all amounts collected or received by the Administrative Agent or
any Lender as proceeds from the sale of, or other realization upon, all or any
part of the Collateral shall be applied as the Administrative Agent shall
determine in its discretion or, in the absence of a specific determination by
the Administrative Agent, as set forth in the Guaranty and Collateral
Agreement. Concurrently with each remittance to any Lender of its share of any
such payment, the Administrative Agent shall advise such Lender as to the
application of such payment.


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


7.4           Setoff. The Company, for itself and each other Loan
Party, agrees that the Administrative Agent and, with the Administrative Agent’s
written consent, each Lender have all rights of set-off and bankers’ lien
provided by applicable law, and in addition thereto, the Company, for itself
and each other Loan Party, agrees that at any time any Event of Default exists,
the Administrative Agent and, with the Administrative Agent’s written consent,
each Lender may apply to the payment of any Obligations of the Company and each
other Loan Party 



 37
 






 



hereunder, whether
or not then due, any and all balances, credits, deposits, accounts or moneys of
the Company and each other Loan Party then or thereafter with the
Administrative Agent or such Lender.


7.5           Proration of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
offset or otherwise, on account of (a) principal of or interest on any Loan,
but excluding (i) any payment pursuant to Section 8.7 or 15.6 and
(ii) payments of interest on any Affected Loan) or (b) its participation in any
Letter of Credit) in excess of its applicable Pro Rata Share of payments and
other recoveries obtained by all Lenders on account of principal of and
interest on the Loans (or such participation) then held by them, then such
Lender shall purchase from the other Lenders such participations in the Loans
(or sub-participations in Letters of Credit) held by them as shall be necessary
to cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.


7.6           Taxes.


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


(b)           If the Company makes any payment hereunder or under any
Loan Document in respect of which it is required by applicable law to deduct or
withhold any Taxes, the Company shall increase the payment hereunder or under
any such Loan Document such that after the reduction for the amount of Taxes
withheld (and any taxes withheld or imposed with respect to the additional
payments required under this Section 7.6(b)), the amount paid to the
Lenders or the Administrative Agent equals the amount that was payable
hereunder or under any such Loan Document without regard to this Section
7.6(b). To the extent the Company withholds any Taxes on payments hereunder
or under any Loan Document, the Company shall pay the full amount deducted to
the relevant taxing authority within the time allowed for payment under
applicable law and shall deliver to the Administrative Agent within 30 days
after it has made payment to such authority a receipt issued by such authority
(or other evidence satisfactory to the Administrative Agent) evidencing the
payment of all amounts so required to be deducted or withheld from such
payment.


(c)           If any Lender or the Administrative Agent is required by
law to make any payments of any Taxes on or in relation to any amounts received
or receivable hereunder or under any other Loan Document, or any Tax is
assessed against a Lender or the Administrative Agent with respect to amounts
received or receivable hereunder or under any other Loan Document, the Company
will indemnify such person against (i) such Tax (and any 



 38
 






 



reasonable counsel fees and expenses
associated with such Tax) and (ii) any taxes imposed as a result of the receipt
of the payment under this Section 7.6(c). A certificate prepared in good
faith as to the amount of such payment by such Lender or the Administrative
Agent shall, absent manifest error, be final, conclusive, and binding on all
parties.


(d)           (i) To the extent permitted by applicable law, each Lender
that 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
the Administrative Agent on or prior to the Closing Date (or in the case of a
Lender that is an Assignee, on the date of such assignment to such Lender) two
accurate 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 a
reduced rate in, United States withholding tax on interest payments to be made
hereunder or any Loan. If a Lender that is a Non-U.S. Participant is claiming a
complete exemption from withholding on interest pursuant to Code Sections
871(h) or 881(c), the Lender shall deliver (along with two accurate and
complete original signed copies of IRS Form W-8BEN) a certificate in form and
substance reasonably acceptable to Administrative Agent (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 the case of a Lender that is an Assignee, after the date of the assignment
to such Lender), when a lapse in time (or change in circumstances occurs)
renders the prior certificates hereunder obsolete or inaccurate in any material
respect, such Lender shall, to the extent permitted under applicable law,
deliver to the Company and the Administrative Agent two new and accurate and
complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or
any successor or other applicable forms prescribed by the IRS), and if
applicable, a new Withholding Certificate, to confirm or establish the
entitlement of such Lender or the Administrative Agent to an exemption from, or
reduction in, United States 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 for U.S. federal income tax
purposes) shall provide two properly completed and duly executed copies of IRS
Form W-9 (or any successor or other applicable form) to the Company and the
Administrative Agent certifying that such Lender is exempt from United States
backup withholding tax. To the extent that a form provided pursuant to this Section
7.6(d)(ii) is rendered obsolete or inaccurate in any material respects as
result of change in circumstances with respect to the status of a Lender, such
Lender shall, to the extent permitted by applicable law, deliver to the Company
and the Administrative Agent revised forms necessary to confirm or establish
the entitlement to such Lender’s or Agent’s exemption from United States backup
withholding tax.


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



 39














 


(iv)          Each Lender agrees to indemnify the Administrative Agent
and hold the Administrative Agent harmless for the full amount of any and all
present or future Taxes and related liabilities (including penalties, interest,
additions to tax and expenses, and any Taxes imposed by any jurisdiction on
amounts payable to the Administrative Agent under this Section 7.6)
which are imposed on or with respect to principal, interest or fees payable to
such Lender hereunder and which are not paid by the Company pursuant to this Section
7.6, whether or not such Taxes or related liabilities were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date the Administrative Agent makes written demand therefor.


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 applicable law, rule or regulation, or any change in the interpretation
or administration of any applicable law, rule or regulation by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency: (i) shall impose, modify or deem applicable
any reserve (including any reserve imposed by the FRB, but excluding any
reserve included in the determination of the LIBOR Rate pursuant to Section
4), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by any Lender; or (ii) shall impose
on any Lender any other condition affecting its LIBOR Loans, its Note or its
obligation 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 cost on) such
Lender (or any LIBOR Office of such Lender) of making or maintaining any LIBOR
Loan, or to reduce the amount of any sum received or receivable by such Lender
(or its LIBOR Office) under this Agreement or under its Note with respect
thereto, then upon demand by such Lender (which demand shall be accompanied by
a statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail, a copy of which shall be furnished to the
Administrative Agent), the Company shall pay directly to such Lender such
additional amount as will compensate such Lender for such increased cost or
such reduction, so long as such amounts have accrued on or after the day which
is 180 days prior to the date on which such Lender first made demand therefor.


(b)           If any Lender shall reasonably determine that any change
in, or the adoption or phase-in of, any applicable law, rule or regulation
regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
the compliance by any Lender or any Person controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender’s or such
controlling Person’s capital as a consequence of such Lender’s obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such 



 40
 






 



controlling Person could have achieved but
for such change, adoption, phase-in or compliance (taking into consideration
such Lender’s or such controlling Person’s policies with respect to capital
adequacy) by an amount deemed by such Lender or such controlling Person to be
material, then from time to time, upon demand by such Lender (which demand shall
be accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall
be furnished to the Administrative Agent), the Company shall pay to such Lender
such additional amount as will compensate such Lender or such controlling
Person for such reduction so long as such amounts have accrued on or after the
day which is 180 days prior to the date on which such Lender first made demand
therefor.


8.2           Basis for Determining Interest
Rate Inadequate or Unfair.
If:


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


(b)           the Required Lenders advise the Administrative Agent that
the LIBOR Rate as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of maintaining or funding LIBOR
Loans for such Interest Period (taking into account any 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 a result of an event occurring after
the date of this Agreement which in the opinion of such Lenders materially
affects such Loans;


then
the Administrative Agent shall promptly notify the other parties thereof and,
so long as such circumstances shall continue, (i) no Lender shall be under any
obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii) on
the last day of the current Interest Period for each LIBOR Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.


8.3           Changes in Law Rendering LIBOR Loans
Unlawful. If any
change in, or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or other
regulatory body charged with the administration thereof, should make it (or in
the good faith judgment of any Lender cause a substantial question as to
whether it is) unlawful for any Lender to make, maintain or fund LIBOR Loans,
then such Lender shall promptly notify each of the other parties hereto and, so
long as such circumstances shall continue, (a) such Lender shall have no
obligation to make or convert any Base Rate Loan into a LIBOR Loan (but shall
make Base Rate Loans concurrently with the making of or conversion of Base Rate
Loans into LIBOR Loans by the Lenders which are not so affected, in each case
in an amount equal to the amount of LIBOR Loans which would be made or
converted into by such Lender at such time in the absence of such
circumstances) and (b) on the last 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 



 41
 






 



Loan shall, unless
then repaid in full, 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 LIBOR Loan (an “Affected Loan”) shall
remain outstanding for the period corresponding to the Group of LIBOR Loans of
which such Affected Loan would be a part absent such circumstances.


8.4           Funding Losses. The Company hereby agrees that upon
demand by any Lender (which demand shall be accompanied by a statement setting
forth the basis for the amount being claimed, a copy of which shall be
furnished to the Administrative Agent), the Company will indemnify such Lender
against any net loss or expense which such Lender may sustain or incur
(including any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan), as reasonably determined by such Lender, as a result
of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender
on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any failure of
the Company to borrow, convert or continue any Loan on a date specified
therefor in a notice of borrowing, conversion or continuation pursuant to this
Agreement. For this purpose, all notices to the Administrative Agent pursuant
to this Agreement shall be deemed to be irrevocable.


8.5           Right of Lenders to Fund through
Other Offices. Each
Lender may, if it so elects, fulfill its commitment as to any LIBOR Loan by
causing a foreign branch or Affiliate of such Lender to make such Loan; provided
that in such event for the purposes of this Agreement such Loan shall be deemed
to have been made by such Lender and the obligation of the Company to repay
such Loan shall nevertheless be to such Lender and shall be deemed held by it,
to the extent of such Loan, for the account of such branch or Affiliate.


8.6           Discretion of Lenders as to Manner
of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of its Loans in any manner
it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each LIBOR Loan during each Interest Period for
such Loan through the purchase of deposits having a maturity corresponding to
such Interest Period and bearing an interest rate equal to the LIBOR Rate for
such Interest Period.


8.7           Mitigation of Circumstances; Replacement of Lenders.


(a)           Each Lender shall promptly notify the Company and the
Administrative Agent of any event of which it has knowledge which will result
in, and will use reasonable commercial efforts available to it (and not, in
such Lender’s sole judgment, otherwise disadvantageous to such Lender) to
mitigate or avoid, (i) any obligation by the Company to pay any amount pursuant
to Sections 7.6 or 8.1 or (ii) the occurrence 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 shall promptly so notify
the Company and the Administrative Agent). Without limiting the foregoing, each
Lender will designate a different funding office if such designation will avoid
(or reduce the cost to the 



 42
 






 



Company of) any event described in clause (i)
or (ii) above and such designation will not, in such Lender’s sole judgment, be
otherwise disadvantageous to such Lender.


(b)           If the Company becomes obligated to pay additional amounts
to any Lender pursuant to Sections 7.6 or 8.1, or any Lender
gives notice of the occurrence of any circumstances described in Sections
8.2 or 8.3, the Company may designate another bank which is
acceptable to the Administrative Agent and the Issuing Lender in their
reasonable discretion (such other bank being called a “Replacement Lender”)
to purchase the Loans of such Lender and such Lender’s rights hereunder,
without recourse to or warranty by, or expense to, such Lender, for a purchase
price equal to the outstanding principal amount of the Loans payable to such
Lender plus any accrued but unpaid interest on such Loans and all accrued but
unpaid fees owed to such Lender and any other amounts payable to such Lender
under this Agreement, and to assume all the obligations of such Lender
hereunder, and, upon such purchase and assumption (pursuant to an Assignment
Agreement), such Lender shall no longer be a party hereto or have any rights
hereunder (other than rights with respect to indemnities and similar rights
applicable to such Lender prior to the date of such purchase and assumption)
and shall be relieved from all obligations to the Company hereunder, and the
Replacement Lender shall succeed to the rights and obligations of such Lender
hereunder.


8.8           Conclusiveness of Statements;
Survival of Provisions.
Determinations and statements of any Lender pursuant to Sections 8.1, 8.2,
8.3 or 8.4 shall be conclusive absent demonstrable error. Lenders
may use reasonable averaging and attribution methods in determining
compensation under Sections 8.1 and 8.4, and the provisions of
such Sections shall survive repayment of the Obligations, cancellation of any
Notes, expiration or termination of the Letters of Credit and termination of
this Agreement.


SECTION 9.           REPRESENTATIONS AND WARRANTIES.


To induce the
Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company represents and warrants to the Administrative Agent and
the Lenders that, both before and after giving effect to the Related
Transactions:


9.1           Organization. Each Loan Party is validly existing and in
good standing under the laws of its jurisdiction of organization; and each Loan
Party is duly qualified to do business in each jurisdiction where, because of
the nature of its activities or properties, such qualification is required,
except for such jurisdictions where the failure to so qualify would not have a
Material Adverse Effect.


9.2           Authorization; No Conflict. Each Loan Party is duly
authorized to execute and deliver each Loan Document to which it is a party,
the Company is duly authorized to borrow monies hereunder and each Loan Party
is duly authorized to perform its Obligations under each Loan Document to which
it is a party. The execution, delivery and performance by each Loan Party of
each Loan Document to which it is a party, and the borrowings by the Company
hereunder, do not and will not (a) require any consent or approval of any
governmental agency or authority (other than any consent or approval which has
been obtained and is in full force and 



 43
 






 



effect), (b)
conflict with (i) any provision of law, (ii) the charter, by-laws or other
organizational documents of any Loan Party or (iii) any agreement, indenture,
instrument or other document, or any judgment, order or decree, which is
binding upon any Loan Party or any of their respective properties or (c)
require, or result in, the creation or imposition of any Lien on any asset of
any Loan Party (other than Liens in favor of the Administrative Agent created
pursuant to the Collateral Documents).


9.3           Validity and Binding Nature. Each of this Agreement and
each other Loan Document to which any Loan Party is a party is the legal, valid
and binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors’ rights generally and to general
principles of equity.


9.4           Financial Condition. The audited consolidated financial
statements of the Business as at December 31, 2003, December 31, 2004 and
December 31, 2005, respectively, and the unaudited consolidated financial
statements of the Business as at March 31,
2006, copies of each of which have been delivered to each Lender, were prepared
in accordance with GAAP (subject, in the case of such unaudited statements, to
the absence of footnotes and to normal year-end adjustments) and present fairly
the consolidated financial condition of the Business as at such dates and the
results of its operations for the periods then ended.


9.5           No Material Adverse Change. Since December 31, 2005, there
has been no material adverse change in the Business or, after giving effect to
the Related Transactions, in the financial condition, operations, assets,
business, properties or prospects of the Loan Parties taken as a whole.


9.6           Litigation and Contingent
Liabilities. No
litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Company’s
knowledge, threatened against any Loan Party which, if adversely determined,
might reasonably be expected to have a Material Adverse Effect, except as set forth
in Schedule 9.6. Other than any liability incident to such litigation or
proceedings, no Loan Party has any material contingent liabilities not listed
on Schedule 9.6 or permitted by Section 11.1.


9.7           Ownership of Properties; Liens. Each Loan Party owns good
and, in the case of real property, marketable title to all of its properties
and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like) except as permitted by Section 11.2.


9.8           Equity Ownership; Subsidiaries. All issued and outstanding
Capital Securities of each Loan Party are duly authorized and validly issued,
fully paid, non-assessable, and free and clear of all Liens other than those in
favor of the Administrative Agent, and such securities were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities, except where the failure to so comply would not have a Material
Adverse Effect. Schedule 9.8 sets forth the authorized Capital
Securities of each Loan Party as of the Closing 



 44
 






 



Date. All of the
issued and outstanding Capital Securities of the Company are owned by Parent,
and all of the issued and outstanding Capital Securities of each Wholly-Owned
Subsidiary is, directly or indirectly, owned by the Company. There are no
pre-emptive or other outstanding rights, options, warrants, conversion rights
or other similar agreements or understandings for the purchase or acquisition
of any Capital Securities of any Loan Party.


9.9           Pension Plans.


(a)           The Unfunded Liability of all Pension Plans does not in
the aggregate exceed the greater of (i) twenty percent of the Total Plan
Liability for all such Pension Plans and (ii) $5,000,000. Each Pension Plan
complies in all material respects with all applicable requirements of law and
regulations. No contribution failure under Section 412 of the Code, Section 302
of ERISA or the terms of any Pension Plan has occurred with respect to any
Pension Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA,
or otherwise to have a Material Adverse Effect. There are no pending or, to the
knowledge of Company, threatened, claims, actions, investigations or lawsuits
against any Pension Plan, any fiduciary of any Pension Plan, or Company or
other any member of the Controlled Group with respect to a Pension Plan or a
Multiemployer Pension Plan which could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any other member of the
Controlled Group has engaged in any prohibited transaction (as defined in
Section 4975 of the Code or Section 406 of ERISA) in connection with any
Pension Plan or Multiemployer Pension Plan which could reasonably be expected
to have a Material Adverse Effect. Within the past five years, neither the
Company nor any other member of the Controlled Group has engaged in a transaction
which resulted in a Pension Plan with an Unfunded Liability being transferred
out of the Controlled Group, which could reasonably be expected to have a
Material Adverse Effect. No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan, which could reasonably be
expected to have a Material Adverse Effect.


(b)           All contributions (if any) have been made to any
Multiemployer Pension Plan that are required to be made by the Company or any
other member of the Controlled Group under the terms of the plan or of any
collective bargaining agreement or by applicable law; neither the Company nor
any other member of the Controlled Group has withdrawn or partially withdrawn
from any Multiemployer Pension Plan, incurred any withdrawal liability with
respect to any such plan or received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, could result in a withdrawal or partial
withdrawal from any such plan; and neither the Company nor any other member of
the Controlled Group has received any notice that any Multiemployer Pension
Plan is in reorganization, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, that
any such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or that
any such plan is or may become insolvent.


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 the meaning of the Investment Company Act of
1940.



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9.11         Public Utility Holding Company Act. No Loan Party is a “holding
company”, or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935.


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


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


9.14         Solvency, etc. On the Closing Date, and immediately prior
to and after giving effect to the issuance of each Letter of Credit and each
borrowing hereunder and the use of the proceeds thereof, with respect to each
Loan Party, individually, (a) the fair value of its assets is greater than the
amount of its liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated in
accordance with GAAP, (b) the present fair saleable value of its assets is not
less than the amount that will be required to pay the probable liability on its
debts as they become absolute and matured, (c) it is able to pay its debts and
other liabilities (including disputed, contingent and unliquidated liabilities)
as they mature in the normal course of business, (d) it does not intend to, and
does not believe that it will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (e) it is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which its property would constitute unreasonably small capital.


9.15         Environmental Matters. The on-going operations of each
Loan Party comply in all respects with all Environmental Laws, except such
non-compliance which could not (if enforced in accordance with applicable law)
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. Each Loan Party has obtained, and maintained in good
standing, all licenses, permits, authorizations, registrations and other
approvals required under any Environmental Law and required for their
respective ordinary course operations, and for their reasonably anticipated
future operations, and each Loan Party is in compliance with all terms and
conditions thereof, except where the failure to do so could not reasonably be
expected to result in material liability to any Loan Party and could not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. No Loan Party or any of its properties or operations
is subject to, or reasonably anticipates the issuance of, any written order
from or agreement with any Federal, state or local governmental authority, nor
subject to any 



 46
 






 



judicial or
docketed administrative or other proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Substance. There are no Hazardous Substances
or other conditions or circumstances existing with respect to any property,
arising from operations prior to the Closing Date, or relating to any waste
disposal, of any Loan Party that would reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect. No Loan Party
has any underground storage tanks that are not properly registered or permitted
under applicable Environmental Laws or that at any time have released, leaked,
disposed of or otherwise discharged Hazardous Substances.


9.16         Insurance. Set forth on Schedule 9.16 is a
complete and accurate summary of the property and casualty insurance program of
the Loan Parties as of the Closing Date (including the names of all insurers,
policy numbers, expiration dates, amounts and types of coverage, annual
premiums, exclusions, deductibles, self-insured retention, and a description in
reasonable detail of any self-insurance program, retrospective rating plan,
fronting arrangement or other risk assumption arrangement involving any Loan
Party). Each Loan Party and its properties are, to such Loan Party’s knowledge,
insured with financially sound and reputable insurance companies which are not
Affiliates of the Loan Parties, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where such Loan Parties
operate.


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


9.18         Information. All written information heretofore or
contemporaneously herewith furnished by any Loan Party to the Administrative
Agent or any Lender for purposes of or in connection with this Agreement and
the transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which made (it being recognized by the
Administrative Agent and the Lenders that any projections and forecasts provided
by the Company are based on good faith estimates and assumptions believed by
the Company to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may materially differ from projected or
forecasted results).


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



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


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


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


9.23         Related Agreements, etc.


(a)           The Company has heretofore furnished the Administrative
Agent a true and correct copy of the Related Agreements.


(b)           Each Loan Party and, to the Company’s knowledge, each
other party to the Related Agreements, has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution, delivery
and performance of the Related Agreements and the consummation of transactions
contemplated thereby.


(c)           The Related Transactions will comply with all applicable
legal requirements, and all necessary governmental, regulatory, creditor,
shareholder, partner and other material consents, approvals and exemptions
required to be obtained by the Loan Parties and, to the Company’s knowledge,
each other party to the Related Agreements in connection with the Related
Transactions will be, prior to consummation of the Related Transactions, duly
obtained and will be in full force and effect. As of the date of the Related
Agreements, all applicable waiting periods with respect to the Related
Transactions will have expired without any action being taken by any competent
governmental authority which restrains, prevents or imposes material adverse
conditions upon the consummation of the Related Transactions.


(d)           The execution and delivery of the Related Agreements did
not, and the consummation of the Related Transactions will not, violate any
statute or regulation of the United States (including any securities law) or of
any state or other applicable jurisdiction, or any order, judgment or decree of
any court or governmental body binding on any Loan Party or, to the Company’s
knowledge, any other party to the Related Agreements, or result in a breach of,
or constitute a default under, any material agreement, indenture, instrument or
other document, or any judgment, order or decree, to which any Loan Party is a
party or by which any Loan Party is bound or, to the Company’s knowledge, to
which any other party to the Related Agreements is a party or by which any such
party is bound.



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(e)           No statement or representation made in the Related
Agreements by any Loan Party or, to the Company’s knowledge, any other Person,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading.


SECTION 10.         AFFIRMATIVE COVENANTS.


Until the expiration or
termination of the Commitments and thereafter until all Obligations hereunder
and under the other Loan Documents are paid in full and all Letters of Credit
have been terminated or Cash Collateralized, the Company agrees that, unless at
any time the Required Lenders shall otherwise expressly consent in writing, it
will:


10.1         Reports, Certificates and Other
Information. Furnish
to the Administrative Agent and each Lender:


10.1.1      Annual Report. Promptly when
available and in any event within 90 days after the close of each Fiscal Year:
(a) a copy of the annual audit report of the Company and its Subsidiaries for
such Fiscal Year, including therein consolidated balance sheets and statements
of earnings and cash flows of the Company and its Subsidiaries as at the end of
such Fiscal Year, certified without adverse reference to going concern value
and without qualification by independent auditors of recognized standing selected
by the Company and reasonably acceptable to the Administrative Agent, together
with a comparison with the budget for such Fiscal Year and a comparison with
the previous Fiscal Year; and (b) a consolidating balance sheet of the Company
and its Subsidiaries as of the end of such Fiscal Year and consolidating
statement of earnings and cash flows for the Company and its Subsidiaries for
such Fiscal Year, certified as true and correct in all material respects in
accordance with GAAP by a Senior Officer of the Company. Any comparisons
delivered in accordance with this Section 10.1.1 with respect to any
period preceding the Closing Date shall be made with respect to the Business
for such period.


10.1.2      Interim Reports. (a) Promptly when
available and in any event within 45 days after the end of each Fiscal Quarter,
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
and consolidating statements of earnings and cash flows for such Fiscal Quarter
and for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year and a comparison with the
budget for such period of the current Fiscal Year, certified as true and
correct in all material respects in accordance with GAAP by a Senior Officer of
the Company; and (b) promptly when available and in any event within 30 days
after the end of each month, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such month, together with
consolidated and consolidating statements of earnings and a consolidated
statement of cash flows for such month and for the period beginning with the
first day of such Fiscal Year and ending on the last day of such month,
together with a comparison with the corresponding period of the previous Fiscal
Year and a comparison with the budget for such period of the current Fiscal Year.
Any comparisons delivered in accordance with this 



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Section 10.1.2
with respect to any period preceding the Closing Date shall be made with
respect to the Business for such period.


10.1.3      Compliance Certificates. Contemporaneously
with the furnishing of a copy of each annual audit report pursuant to Section
10.1.1 and each set of quarterly statements pursuant to Section 10.1.2,
a duly completed compliance certificate in the form of Exhibit B, with
appropriate insertions, dated the date of such annual report or such quarterly
statements and signed by a Senior Officer of the Company, containing (i) a
computation of each of the financial ratios and restrictions set forth in Section
11.14 and to the effect that such officer has not become aware of any Event
of Default or Unmatured Event of Default that has occurred and is continuing
or, if there is any such event, describing it and the steps, if any, being
taken to cure it and (ii) a written statement of the Company’s management
setting forth a discussion of the Company’s financial condition, changes in
financial condition and results of operations.


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 all
registration statements of any Loan Party filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made to
security holders generally.


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


(a)           the occurrence of an Event of Default or an Unmatured
Event of Default;


(b)           any litigation, arbitration or governmental investigation
or proceeding not previously disclosed by the Company to the Administrative
Agent which has been instituted or, to the knowledge of the Company, is
threatened against any Loan Party or to which any of the properties of any
thereof is subject which might reasonably be expected to have a Material
Adverse Effect;


(c)           the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan, or the
failure of any member of the Controlled Group to make a required contribution
to any Pension Plan (if such failure 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 respect to a Pension Plan which could result in the requirement
that the Company furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan or
Multiemployer Pension Plan which could result in the incurrence by any member
of the Controlled Group of any material liability, fine or penalty (including
any claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in the contingent
liability of the Company with respect to any post-retirement welfare benefit
plan or other employee benefit plan of the Company or another member of the
Controlled Group, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions 



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may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the Code, that
any such plan is or may be terminated, or that any such plan is or may become
insolvent but only to the extent that the event(s) described in this subsection
individually or in the aggregate might reasonably be expected to have a
Material Adverse Effect;


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


(e)           any other event (including (i) any violation of any
Environmental Law or the assertion of any Environmental Claim or (ii) the
enactment or effectiveness of any law, rule or regulation) which might
reasonably be expected to have a Material Adverse Effect.


10.1.6      Borrowing Base Certificates. Within
10 days of the end of each month, a Borrowing Base Certificate dated as of the
end of such month and executed by a Senior Officer of the Company on behalf of
the Company (provided that (a) the Company may deliver a Borrowing Base
Certificate more frequently if it chooses and (b) at any time an Event of
Default exists, the Administrative Agent may require the Company to deliver
Borrowing Base Certificates more frequently).


10.1.7      Management Reports. Promptly upon
receipt thereof, copies of all detailed financial and management reports
submitted to the Company by independent accountants in connection with each
annual or interim audit made by such auditors of the books of the Company.


10.1.8      Projections. As soon as
practicable, and in any event not later than 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
manner consistent with the projections delivered by the Company to the
Administrative Agent prior to the Closing Date or otherwise in a manner
reasonably satisfactory to the Administrative Agent, accompanied by a certificate
of a Senior Officer of the Company on behalf of the Company to the effect that
(a) such projections were prepared by the Company in good faith, (b) the
Company has a reasonable basis for the assumptions contained in such
projections and (c) such projections have been prepared in accordance with such
assumptions.


10.1.9      Related Transactions. Promptly
following receipt, copies of any notices (including notices of default or
acceleration) received in connection with the Related Transactions.


10.1.10    Other Information. Promptly from time
to time, such other information concerning the Loan Parties as the
Administrative Agent may reasonably request.


10.2         Books, Records and Inspections. Keep, and cause each other
Loan Party to keep, its books and records in accordance with sound business
practices sufficient to allow the preparation of financial statements in
accordance with GAAP; permit, and cause each other Loan Party to permit, the
Administrative Agent or any Lender (so long as such Lender’s visit or inspection
is made concurrently with Administrative Agent) or any representative thereof
to inspect the properties and operations of the Loan Parties; and permit, and
cause each other Loan Party to permit, at any reasonable time and with
reasonable notice (or at any time without notice if an Event of Default
exists), the Administrative Agent or any Lender (so long as such Lender’s visit
or 



 51
 






 



inspection is made
concurrently with Administrative Agent) or any representative thereof to visit
any or all of its offices, to discuss its financial matters with its officers
and its independent auditors (and the Company hereby authorizes such
independent auditors to discuss such financial matters with any Lender or the
Administrative Agent or any representative thereof), and to examine (and, at
the expense of the Loan Parties, photocopy extracts from) any of its books or
other records; and permit, and cause each other Loan Party to permit, the
Administrative Agent and its representatives to inspect the Inventory and other
tangible assets of the Loan Parties, to perform appraisals of the equipment of
the Loan Parties, and to 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
other collateral. All such inspections or audits by the Administrative Agent
shall be at the Company’s expense; provided that following the Closing Date and
so long as no Event of Default has occurred and is continuing, the Borrower
shall only be required to reimburse the Administrative Agent for the cost of
(1) two inspections in any Fiscal Year and (ii) one appraisal in any Fiscal
year.


10.3         Maintenance of Property; Insurance.


(a)           Keep, and cause each other Loan Party to keep, all
property useful and necessary in the business of the Loan Parties in good
working order and condition, ordinary wear and tear excepted.


(b)           Maintain, and cause each other Loan Party to maintain,
with responsible insurance companies, such insurance coverage as may be
required by any law or governmental regulation or court decree or order
applicable to it and such other insurance, to such extent and against such
hazards and liabilities, as is customarily maintained by companies similarly
situated, but which shall insure against all risks and liabilities of the type
identified on Schedule 9.16 and shall have insured amounts no less than,
and deductibles no higher than, those set forth on such schedule; and, upon
request of the Administrative Agent, furnish to the Administrative Agent a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Loan Parties. The Company shall cause each issuer
of an insurance policy to provide the Administrative Agent with an endorsement
(i) showing the Administrative Agent as loss payee with respect to each policy
of property or casualty insurance and naming the Administrative Agent as an
additional insured with respect to each policy of liability insurance, (ii)
providing that 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 material modification to such policy and (iii) reasonably acceptable in
all other respects to the Administrative Agent. The Company shall execute and
deliver to the Administrative Agent a collateral assignment, in form and
substance satisfactory to the Administrative Agent, of each business
interruption insurance policy maintained by the Company.



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(c)           UNLESS THE COMPANY
PROVIDES THE ADMINISTRATIVE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE
REQUIRED BY THIS AGREEMENT, THE ADMINISTRATIVE AGENT MAY, FOLLOWING WRITTEN
NOTICE TO THE COMPANY, PURCHASE INSURANCE AT THE COMPANY’S EXPENSE TO PROTECT
THE ADMINISTRATIVE AGENT’S AND THE LENDERS’ INTERESTS IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY’S INTERESTS. THE COVERAGE
THAT THE ADMINISTRATIVE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE
AGAINST ANY LOAN PARTY IN CONNECTION WITH THE COLLATERAL. THE COMPANY MAY LATER
CANCEL ANY INSURANCE PURCHASED BY THE ADMINISTRATIVE AGENT, BUT ONLY AFTER
PROVIDING THE ADMINISTRATIVE AGENT WITH EVIDENCE THAT THE COMPANY HAS OBTAINED
INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE ADMINISTRATIVE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF
THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED
WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE
CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE LOAN PARTIES MAY BE
ABLE TO OBTAIN ON THEIR OWN.


10.4         Compliance with Laws; Payment of
Taxes and Liabilities.
(a) Comply, and cause each other Loan Party to comply, in all material respects
with all applicable laws, rules, regulations, decrees, orders, judgments,
licenses and permits, except where failure to comply could not reasonably be
expected to have a Material Adverse Effect; (b) without limiting clause (a)
above, ensure, and cause each other Loan Party to ensure, that no person who
owns a controlling interest in or otherwise controls a Loan Party is or shall
be (i) listed on the Specially Designated Nationals and Blocked Person List
maintained by the Office of Foreign Assets Control (“OFAC”), Department
of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any
authorizing statute, Executive Order or regulation or (ii) a person designated
under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23,
2001), any related enabling legislation or any other similar Executive Orders,
(c) without limiting clause (a) above, comply, and cause each other Loan
Party to comply, with all applicable Bank Secrecy Act (“BSA”) and
anti-money laundering laws and regulations and (d) pay, and cause each other
Loan Party to pay, prior to delinquency, all taxes and other governmental
charges against it or any collateral, as well as claims of any kind which, if
unpaid, could become a Lien on any of its property; provided that the
foregoing shall not require any Loan Party to pay any such tax or charge so
long as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves with respect
thereto in accordance with GAAP and, in the case of a claim which could become
a Lien on any collateral, such contest proceedings shall stay the foreclosure
of such Lien or the sale of any portion of the collateral to satisfy such
claim.



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10.5         Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 11.5) cause each other Loan Party to maintain and
preserve, (a) its existence and good standing in the jurisdiction of its
organization and (b) its qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification
necessary (other than such jurisdictions in which the failure to be qualified
or in good standing could not reasonably be expected to have a Material Adverse
Effect).


10.6         Use of Proceeds.
Use the proceeds of the Loans, and the Letters of Credit, solely to finance the
Related Transactions, for working capital purposes, for Capital Expenditures
and for other general business purposes; and not use or permit any proceeds of
any Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of “purchasing or carrying” any Margin
Stock.


10.7         Employee Benefit Plans.


(a)           Maintain, and cause each other member of the Controlled
Group to maintain, each Pension Plan in compliance with all applicable
requirements of law and regulations except where the failure to maintain could
not reasonably be expected to have a Material Adverse Effect.


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


(c)           Not, and not permit any other member of the Controlled
Group to (i) seek a waiver of the minimum funding standards of ERISA, (ii)
terminate or withdraw from any Pension Plan or Multiemployer Pension Plan or
(iii) take any other action with respect to any Pension Plan that would
reasonably be expected to entitle the PBGC to terminate, impose liability in
respect of, or cause a trustee to be appointed to administer, any Pension Plan,
unless the actions or events described in clauses (i), (ii) and (iii)
individually or in the aggregate would not have a Material Adverse Effect.


10.8         Environmental Matters. If any release or threatened
release or other disposal of Hazardous Substances shall occur or shall have
occurred on any real property or any other assets of any Loan Party, the
Company shall, or shall cause the applicable Loan Party to, cause the prompt
containment and removal of such Hazardous Substances and the remediation of
such real property or other assets as necessary to comply in all material
respects with all Environmental Laws and to preserve the value of such real
property or other assets. Without limiting the generality of the foregoing, the
Company shall, and shall cause each other Loan Party to, comply in all material
respects with any Federal or state judicial or administrative order requiring
the performance at any real property of any Loan Party of activities in
response to the release or threatened release of a Hazardous Substance. To the
extent that the transportation of Hazardous Substances is permitted by this
Agreement, the Company shall, and shall cause its Subsidiaries to, dispose of
such Hazardous Substances, or of any other wastes, only at licensed disposal
facilities operating in compliance with Environmental Laws.


10.9         Further Assurances.



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(a)           Take, and cause each other Loan Party and Parent to take,
such actions as are necessary or as the Administrative Agent or the Required
Lenders may reasonably request from time to time to ensure that the Obligations
of each Loan Party under the Loan Documents are secured by substantially all of
the assets of the Company and each domestic Subsidiary (as well as all Capital
Securities of the Company and each domestic Subsidiary and 65% of all Capital
Securities of each direct foreign Subsidiary) and guaranteed by each domestic
Subsidiary (including, upon the acquisition or creation thereof, any Subsidiary
acquired or created after the Closing Date), in each case as the Administrative
Agent may determine, including (a) the execution and delivery of guaranties,
security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, and the filing or recording of any of the
foregoing and (b) the delivery of certificated securities and other Collateral
with respect to which perfection is obtained by possession.


(b)           Cause all collections from Accounts to be directed to (i)
a bank account maintained with the Administrative Agent or (ii), subject to the
provisions set forth in Section 10.11 below, to the Company’s lockbox
and/or deposit account(s) maintained at PNC Bank, National Association (such
lockbox and account(s) collectively referred to herein as the “PNC Accounts”)
and cause each financial institution (other than the Administrative Agent) at
which the Company or any Subsidiary maintains any deposit account or other
similar account (other than petty cash accounts or payroll accounts as long as
such payroll accounts are maintained as zero balance accounts) to deliver to
the Administrative Agent a writing, in form and substance satisfactory to the
Administrative Agent, (x) acknowledging and consenting to the security interest
of the Administrative Agent in such account and all cash, checks, drafts and
other instruments or writings for the payment of money from time to time
therein, (y) confirming such financial institution’s agreement to follow the
instructions of the Administrative Agent with respect to all such cash, checks,
drafts and other instruments or writings for the payment of money following
(other than with respect to the PNC Accounts which shall be subject to the
Administrative Agent’s full dominion and control) receipt from the
Administrative Agent of notice of the occurrence of any Event of Default or
Unmatured Event of Default and (z) waiving all rights of setoff and banker’s
lien on all items held in any such account (other than with respect to payment
of fees and expenses for account services).


10.10       Deposit Accounts.
Except for the PNC Accounts or unless the Administrative Agent otherwise
consents in writing, in order to facilitate the Administrative Agent’s and the
Lenders’ maintenance and monitoring of their security interests in the collateral,
maintain all of their principal deposit accounts with the Administrative Agent.


10.11       PNC Bank Accounts.
Not later than December 31, 2007, Company shall submit to all Account Debtors
remitting payments to the Company’s PNC Accounts all proper notices and
requests to cause such Account Debtors to remit such payments directly to a
deposit account maintained with the Administrative Agent.


SECTION 11.         NEGATIVE COVENANTS



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Until the expiration or
termination of the Commitments and thereafter until all Obligations hereunder
and under the other Loan Documents are paid in full and all Letters of Credit
have been terminated or Cash Collateralized, the Company agrees that, unless at
any time the Required Lenders shall otherwise expressly consent in writing, it
will:


11.1         Debt. Not, and not
permit any other Loan Party to, create, incur, assume or suffer to exist any
Debt, except:


(a)           Obligations under this Agreement and the other Loan
Documents;


(b)           Debt secured by Liens permitted by Section 11.2(d),
and extensions, renewals and refinancings thereof; provided that the
aggregate amount of all such Debt at any time outstanding shall not exceed
$2,000,000;


(c)           Debt of the Company to any domestic Wholly-Owned
Subsidiary or Debt of any domestic Wholly-Owned Subsidiary to the Company or
another domestic Wholly-Owned Subsidiary; provided that such Debt shall
be evidenced by a demand note in form and substance reasonably satisfactory to
the Administrative Agent and pledged and delivered to the Administrative Agent
pursuant to the Collateral Documents as additional collateral security for the
Obligations, and the obligations under such demand note shall be subordinated
to the Obligations of the Company hereunder in a manner reasonably satisfactory
to the Administrative Agent;


(d)           the Earn-Out Obligations;


(e)           Hedging Obligations approved by Administrative Agent and
incurred in favor of LaSalle or an Affiliate thereof for bona fide hedging
purposes and not for speculation;


(f)            Debt described on Schedule 11.1 and any extension,
renewal or refinancing thereof so long as the principal amount thereof is not
increased;


(g)           the Debt to be Repaid (so long as such Debt is repaid on
the Closing Date with the proceeds of the initial Loans hereunder);


(h)           Contingent Liabilities arising with respect to customary
indemnification obligations in favor purchasers in connection with dispositions
permitted under Section 11.5;


(i)            Parent Revolving Debt in an aggregate outstanding amount
not at any time exceeding $30,000,000; and


(j)            other unsecured subordinated Debt, in addition to the
Debt listed above, in an aggregate outstanding amount not at any time exceeding
$10,000,000.



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11.2         Liens. Not, and not
permit any other Loan Party to, create or permit to exist any Lien on any of
its real or personal properties, assets or rights of whatsoever nature (whether
now owned or hereafter acquired), except:


(a)           Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;


(b)           Liens arising in the ordinary course of business (such as
(i) Liens of landlords, carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law and (ii) Liens in the form of deposits or
pledges incurred in connection with worker’s compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety bonds, bids, performance bonds and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any advances or borrowed money or the
deferred purchase price of property or services and, in each case, for which it
maintains adequate reserves;


(c)           Liens described on Schedule 11.2 as of the Closing
Date;


(d)           subject to the limitation set forth in Section 11.1(b),
(i) Liens arising in connection with Capital Leases (and attaching only to the
property being leased), (ii) Liens existing on property at the time of the
acquisition thereof by any Loan Party (and not created in contemplation of such
acquisition) and (iii) Liens that constitute purchase money security interests
on any property securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any such Lien
attaches to such property within 20 days of the acquisition thereof and
attaches solely to the property so acquired;


(e)           attachments, appeal bonds, judgments and other similar
Liens, for sums not exceeding $1,000,000 arising in connection with court
proceedings, provided the execution or other enforcement of such Liens
is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;


(f)            easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of any Loan Party;


(g)           Liens arising under the Loan Documents; and


(h)           the replacement, extension or renewal of any Lien
permitted by clause (c) above upon or in the same property subject
thereto arising out of the extension, renewal or replacement of the Debt
secured thereby (without increase in the amount thereof).


11.3         Operating Leases.
Not permit the aggregate amount of all rental payments under Operating Leases
made (or scheduled to be made) by the Loan Parties (on a consolidated basis) to
exceed $5,000,000 in any Fiscal Year.



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11.4         Restricted Payments. Not, and not permit any other Loan
Party to, (a) make any distribution to any holders of its Capital Securities,
(b) purchase or redeem any of its Capital Securities, (c) pay any management
fees or similar fees or expenses to any of its equityholders or any Affiliate
thereof, (d) make any redemption, prepayment, defeasance, repurchase or any
other payment in respect of any Parent Subordinated Debt or (e) set aside funds
for any of the foregoing. Notwithstanding the foregoing:


(i)            the Company may reimburse Parent for out-of-pocket costs
and expenses incurred by Parent on behalf of or for the benefit of the Company,
and for fees charged by Parent to the Company, in an aggregate amount not to
exceed $4,000,000 during any Fiscal Year.


(ii)           subject to the Parent Subordination Agreement, the Company
may pay scheduled installments of accrued and unpaid interest on the Parent
Subordinated Note at the non-default rate of interest set forth in the Parent
Subordinated Note;


(iii)          subject to the Parent Subordination Agreement, the Company
may at any time and from time to time repay all or any portion of the
outstanding principal balance of the Parent Revolving Debt;


(iv)          any Subsidiary may pay dividends or make other
distributions to the Company or to a domestic Wholly-Owned Subsidiary;


(v)           so long as the Company files a consolidated income tax
return with Parent, the Company may make distributions to Parent to permit
Parent to pay federal and state income taxes then due and owing; provided
that the amount of such distribution shall not be greater, nor the receipt by
the Company of tax benefits less, than they would have been had the Borrower
not filed a consolidated return with Parent; and


(vi)          Borrower may make other cash distributions to Parent from
time to time so long as (A) no Event of Default or Unmatured Default has
occurred and is continuing on the date of any such distribution or would result
therefrom, (B) after giving effect to any such distribution (and any Debt
incurred to fund such distribution), Borrower is in compliance on a pro forma
basis with the financial covenants set forth in Section 11.14 as of the
last day of the most recent Fiscal Quarter, (C) after giving effect to any such
distribution (and any Revolving Loan made to fund such distribution).
Availability is at least $10,000,000 and (D) after giving effect to any such
distribution, the aggregate amount of all such distributions made following the
Closing Date shall not exceed Cumulative Available Excess Cash Flow as of the
date of such distribution.


11.5         Mergers, Consolidations, Sales


(A)          . Not, and not permit any other Loan Party to, (a) be a
party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any Capital Securities of any class of, or
any partnership or joint venture interest in, any other Person other than in
connection with a Permitted Acquisition, (b) sell, transfer, convey or lease
all or any substantial part of its assets or Capital Securities (including the
sale of Capital Securities of any Subsidiary) except for sales of inventory in
the ordinary course of 



 58
 






 



business and obsolete or worn-out equipment,
or (c) sell or assign with or without recourse any receivables, except for (i)
any such merger, consolidation, sale, transfer, conveyance, lease or assignment
of or by any Wholly-Owned Subsidiary into the Company or into any other
domestic Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition
by the Company or any domestic Wholly-Owned Subsidiary of the assets or Capital
Securities of any Wholly-Owned Subsidiary; (iii) sales and dispositions of
assets (including the Capital Securities of Subsidiaries) for at least fair
market value (as determined by the Board of Directors of the Company) so long
as the net book value of all assets sold or otherwise disposed of in any Fiscal
Year does not exceed 10% of the net book value of the consolidated assets of
the Loan Parties as of the last day of the preceding Fiscal Year.


11.6         Modification of Organizational Documents. Not permit the charter,
by-laws or other organizational documents of any Loan Party to be amended or
modified in any way which could reasonably be expected to materially adversely
affect the interests of the Lenders; not change, or allow any Loan Party to
change, its state of formation or its organizational form.


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 or contract with any of its other Affiliates (other
than the Loan Parties) which is on terms which are less favorable than are
obtainable from any Person which is not one of its Affiliates; provided, that
the transactions contemplated under the Parent Subordinated Note shall not be
deemed violative of this Section 11.7.


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 payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services.


11.9         Inconsistent Agreements. Not, and not permit any other
Loan Party to, enter into any agreement containing any provision which would
(a) be violated or breached by any borrowing by the Company hereunder or by the
performance by any Loan Party of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit any Loan Party from granting to the
Administrative Agent and the Lenders, a Lien on any of its assets or (c) create
or permit to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i) pay dividends or make other distributions to
the Company or any other Subsidiary, or pay any Debt owed to the Company or any
other Subsidiary, (ii) make loans or advances to any Loan Party or (iii)
transfer any of its assets or properties to any Loan Party, other than (A)
customary restrictions and conditions contained in agreements relating to the
sale of all or a substantial part of the assets of any Subsidiary pending such
sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder (B) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Debt and (C) customary
provisions in leases and other contracts restricting the assignment thereof.



 59














 


11.10       Business Activities; Issuance of Equity.   Not, and not permit
any other Loan Party to, engage in any line of business other than the
businesses engaged in on the date hereof and businesses reasonably related
thereto. Not, and not permit any other Loan Party to, issue any Capital
Securities other than any issuance by a Subsidiary to the Company or another
Subsidiary in accordance with Section 11.4.


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


(a)           contributions by the Company to the capital of any
Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any other
domestic Wholly-Owned Subsidiary, so long as the recipient of any such capital
contribution has guaranteed the Obligations and such guaranty is secured by a
pledge of all of its Capital Securities and substantially all of its real and
personal property, in each case in accordance with Section 10.10;


(b)           Investments constituting Debt permitted by Section 11.1;


(c)           Contingent Liabilities constituting Debt permitted by Section
11.1 or Liens permitted by Section 11.2;


(d)           Cash Equivalent Investments;


(e)           bank deposits in the ordinary course of business, provided
that the aggregate amount of all such deposits which are maintained with any
bank other than a Lender shall not at any time exceed $50,000;


(f)            Investments in securities of Account Debtors received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such account debtors; and


(g)           Investments listed on Schedule 11.11 as of the
Closing Date.


provided
that (x) any Investment which when made complies with the requirements of the
definition of the term “Cash Equivalent Investment” may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements; and (y) no Investment otherwise permitted by clause (b) or
(c) shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Unmatured Event of Default exists.


11.12       Restriction of Amendments to Certain Documents.   Not amend or
otherwise modify, or waive any rights under, the Related Agreements if, in any case, such
amendment, modification or waiver could be adverse to the interests of the
Lenders. Without limiting the generality of the foregoing, the Company shall
not amend the Purchase Agreement in any manner which would accelerate the
payment of the Earn-Out Obligations and the Company shall not prepay the Earn-Out
Obligations.


11.13       Fiscal Year.   Not
change its Fiscal Year.



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11.14       Financial Covenants.


11.14.1   EBITDA.   Not
Permit EBITDA for any Computation Period to be less than the applicable amount
set forth below for such Computation Period:




	
  Computation

  Period Ending

  	
   

  	
   

  	
   

  	
  EBITDA

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  7,053,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  14,105,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  21,753,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  29,400,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  29,995,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  30,590,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  30,205,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  29,820,000

  	
   

  






 


11.14.2   Fixed Charge
Coverage Ratio.   Not permit the Fixed Charge Coverage Ratio for any
Computation Period to be less than 1.10:1.


11.14.3   Total Debt to
EBITDA Ratio.   Not permit the Total Debt to EBITDA Ratio as of the
last day of any Fiscal Quarter to exceed the applicable ratio set forth below
for the four consecutive Fiscal Quarters ending on such date:




	
  Fiscal Quarter

  Ending

  	
   

  	
   

  	
   

  	
  Total Debt to

  EBITDA Ratio

  	
   

  
	
  March 31, 2007 through
  and including June 30, 2008

  	
   

  	
  3.50:1.0

  	
   

  
	
  September 30, 2008 and
  thereafter

  	
   

  	
  3:00:1.0

  	
   

  






 


11.14.4   Capital
Expenditures.   Not permit the aggregate amount of all Capital
Expenditures made by the Loan Parties in any Fiscal Year to exceed $15,000,000.
If the Loan Parties do not utilize the entire amount of Capital Expenditures
permitted in any Fiscal Year, the Loan Parties may carry forward, to the
immediately succeeding Fiscal Year only, such unutilized amount (with Capital
Expenditures made by the Loan Parties in such succeeding Fiscal Year applied
last to such unutilized amount).


SECTION 12.         EFFECTIVENESS; CONDITIONS OF LENDING,
ETC.


The obligation of each
Lender to make its Loans and of the Issuing Lender to issue Letters of Credit
is subject to the following conditions precedent:


12.1         Initial Credit Extension.   The obligation of the
Lenders to make the initial Loans and the obligation of the Issuing Lender to
issue its initial Letter of Credit (whichever first occurs) is, in addition to
the conditions precedent specified in Section 12.2, subject to the
conditions precedent that (a) all Debt to be Repaid has been (or concurrently
with the initial 



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borrowing will be) paid in full, and that all
agreements and instruments governing the Debt to be Repaid and that all Liens
securing such Debt to be Repaid have been (or concurrently with the initial
borrowing will be) terminated and (b) the Administrative Agent shall have
received (i) evidence, reasonably satisfactory to the Administrative Agent,
that the Company has received cash equity contributions from Parent in an amount
not less than $90,000,000 in connection with the Purchase, which shall be
satisfactory in all respects to the Administrative Agent; (ii) evidence,
reasonably satisfactory to the Administrative Agent, that (A) the Company has
completed, or concurrently with the initial credit extension hereunder will
complete, the Related Transactions in accordance with the terms of the Related
Agreements (without any amendment thereto or waiver thereunder that is in a
manner adverse to the Lenders unless consented to by the Lenders) and in
accordance with applicable law, (B) the sum of (x) the aggregate consideration
for the Purchase (exclusive of the Earn-Out Obligations) plus (y) all
Debt to be Repaid shall not exceed $155,000,000 and (C) the aggregate fees and
expenses in connection with the Related Transactions and the transactions
hereunder shall not exceed $5,000,000; and (iii) all of the following, each
duly executed and dated the Closing Date (or such earlier date as shall be
satisfactory to the Administrative Agent), in form and substance satisfactory
to the Administrative Agent (and the date on which all such conditions
precedent have been satisfied or waived in writing by the Administrative Agent
and the Lenders is called the “Closing Date”):


12.1.1   Notes.   A
Note for each Lender.


12.1.2   Authorization
Documents.   For each Loan Party, such Person’s (a) charter (or similar
formation document), certified by the appropriate governmental authority; (b)
good standing certificates in its state of incorporation (or formation) and in
each other state requested by the Administrative Agent; (c) bylaws (or similar
governing document); (d) resolutions of its board of directors (or similar
governing body) approving and authorizing such Person’s execution, delivery and
performance of the Loan Documents to which it is party and the transactions
contemplated thereby; and (e) signature and incumbency certificates of its
officers executing any of the Loan Documents (it being understood that the
Administrative Agent and each Lender may conclusively rely on each such
certificate until formally advised by a like certificate of any changes
therein), all certified by its secretary or an assistant secretary (or similar
officer) as being in full force and effect without modification.


12.1.3   Consents, etc.   Certified
copies of all documents evidencing any necessary corporate or partnership
action, consents and governmental approvals (if any) required for the
execution, delivery and performance by the Loan Parties of the documents
referred to in this Section 12.


12.1.4   Letter of
Direction.   A letter of direction containing funds flow information
with respect to the proceeds of the Loans on the Closing Date.


12.1.5   Collateral
Agreement.   A counterpart of the Collateral Agreement executed by each
Loan Party, together with all instruments, transfer powers and other items
required to be delivered in connection therewith.



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12.1.6   Parent Pledge Agreement.   A counterpart
of the Parent Pledge Agreement executed by Parent and acknowledged by the
Company, together with all certificates, transfer powers and other items
required to be delivered in connection therewith.


12.1.7   [Reserved]


12.1.8   Real Estate
Documents.   With respect to each parcel of real property owned by any
Loan Party, a duly executed Mortgage providing for a fully perfected Lien, in
favor of the Administrative Agent, in all right, title and interest of the
Company or such Subsidiary in such real property, together with:


(a)           an ALTA Loan Title Insurance Policy, issued by an insurer
acceptable to the Administrative Agent, insuring the Administrative Agent’s
first priority Lien on such real property and containing such endorsements as
the Administrative Agent may reasonably require (it being understood that the
amount of coverage, exceptions to coverage and status of title set forth in
such policy shall be acceptable to the Administrative Agent);


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


(c)           original or certified copies of all insurance policies
required to be maintained with respect to such real property by this Agreement,
the applicable Mortgage or any other Loan Document;


(d)           a survey certified to the Administrative Agent meeting
such standards as the Administrative Agent may reasonably establish and
otherwise reasonably satisfactory to the Administrative Agent;


(e)           a flood insurance policy concerning such real property, if
required by the Flood Disaster Protection Act of 1973; and


(f)            an appraisal, prepared by an independent appraiser
engaged directly by the Administrative Agent, of such parcel of real property
or interest in real property, which appraisal shall satisfy the requirements of
the Financial Institutions Reform, Recovery and Enforcement Act, if applicable,
and shall evidence compliance with the supervisory loan-to-value limits set
forth in the Federal Deposit Insurance Corporation Improvement Act of 1991, if
applicable.


Additionally, in the case
of any leased or mortgaged real property, a Collateral Access Agreement from
the landlord or mortgagee, as applicable, of such property.


12.1.9   Consignee
Agreements; Collateral Access Agreements.


12.1.10   Purchase
Agreement Assignment.   A counterpart of the Purchase Agreement
Assignment executed by the Company, Parent and Seller.



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12.1.11   Opinions of
Counsel.   Opinions of counsel for each Loan Party, including local
counsel reasonably requested by the Administrative Agent, and all other
opinions issued pursuant to the Related Transactions.


12.1.12   Insurance.   Evidence
of the existence of insurance required to be maintained pursuant to Section
10.3(b), together with evidence that the Administrative Agent has been
named as a lender’s loss payee and an additional insured on all related
insurance policies.


12.1.13   Copies of
Documents.   Copies of the Related Agreements certified by the
secretary or assistant secretary (or similar officer) of the Company as being
true, accurate and complete.


12.1.14   Payment of
Fees.   Evidence of payment by the Company of all accrued and unpaid
fees, costs and expenses to the extent then due and payable on the Closing
Date, together with all Attorney Costs of the Administrative Agent to the
extent invoiced prior to the Closing Date, plus such additional amounts
of Attorney Costs as shall constitute the Administrative Agent’s reasonable
estimate of Attorney Costs incurred or to be incurred by the Administrative
Agent through the closing proceedings (provided that such estimate shall
not thereafter preclude final settling of accounts between the Company and the
Administrative Agent).


12.1.15   Solvency
Certificate.   A Solvency Certificate executed by a Senior Officer of
the Company.


12.1.16   Pro Forma.   A
consolidated pro  forma balance sheet of the Company as at the
Closing Date, adjusted to give effect to the consummation of the Related
Transactions and the financings contemplated hereby as if such transactions had
occurred on such date, consistent in all material respects with the sources and
uses of cash as previously described to the Lenders and the forecasts previously
provided to the Lenders.


12.1.17   Initial
Revolving Outstandings.   After giving effect to the funding of the
initial Loans and the consummation of the Related Transactions and the payment
of all fees and expenses in connection therewith, the Revolving Outstandings as
of the Closing Date shall not be greater than $10,000,000.


12.1.18   Maximum
Leverage Ratio.   The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that the ratio of Total Debt as of the
Closing Date to EBITDA for the eleven-month period ending November 30, 2006,
determined on a pro forma basis after giving effect to the Loans and the
Related Transactions (and any adjustments to EBITDA approved by Administrative
Agent) shall not exceed 2.00:1.


12.1.19   Environmental
Reports.   Environmental site assessment reports requested by the
Administrative Agent.


12.1.20   Search
Results; Lien Terminations.   Certified copies of Uniform Commercial
Code search reports dated a date reasonably near to the Closing Date, listing
all 



 64
 






 



effective financing statements which name any
Loan Party or Seller (under their present names and any previous names) as
debtors, together with (a) copies of such financing statements, (b) payoff
letters evidencing repayment in full of all Debt to be Repaid, the termination
of all agreements relating thereto and the release of all Liens granted in
connection therewith, with Uniform Commercial Code or other appropriate
termination statements and documents effective to evidence the foregoing (other
than Liens permitted by Section 11.2) and (c) such other Uniform
Commercial Code termination statements as the Administrative Agent may
reasonably request.


12.1.21   Filings,
Registrations and Recordings.   The Administrative Agent shall have
received each document (including Uniform Commercial Code financing statements)
required by the Collateral Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to create
in favor of the Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the collateral described therein, prior to any other Liens
(subject only to Liens permitted pursuant to Section 11.2), in proper
form for filing, registration or recording.


12.1.22   Borrowing Base
Certificate.   A Borrowing Base Certificate dated as of the Closing
Date.


12.1.23   Closing
Certificate, Consents and Permits.   A certificate executed by an
officer of the Company on behalf of the Company certifying (a) the matters set
forth in Section 12.2.1 as of the Closing Date and (b) the occurrence of
the closing of the Related Transactions and that such closing has been
consummated in accordance with the terms of the Related Agreements without
waiver of any material condition thereof; together with evidence that (i) all
necessary governmental, regulatory, creditor, shareholder, partner and other
material consents, approvals and exemptions required to be obtained by the
Company in connection with the Related Transactions have been duly obtained and
are in full force and effect and (ii) all material permits necessary for the
operation of any business(es) acquired in connection with the Related
Transactions have been obtained.


12.1.24   Other.   Such
other documents as the Administrative Agent or any Lender may reasonably
request.


12.2         Conditions.   The
obligation (a) of each Lender to make each Loan and (b) of the Issuing Lender
to issue each Letter of Credit is subject to the following further conditions
precedent that:


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


(a)           the representations and warranties of each Loan Party set
forth in this Agreement and the other Loan Documents shall be true and correct
in all material respects with the same effect as if then made (except to the
extent stated to relate to a specific earlier date, 



 65
 






 



in which case such representations and warranties
shall be true and correct as of such earlier date); and


(b)           no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing.


12.2.2      Confirmatory Certificate.   If requested by the
Administrative Agent or any Lender, the Administrative Agent shall have received
(in sufficient counterparts to provide one to each Lender) a certificate dated
the date of such requested Loan or Letter of Credit and signed by a duly authorized
representative of the Company as to the matters set out in Section 12.2.1
(it being understood that each request by the Company for the making of a Loan
or the issuance of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Company that the conditions precedent set
forth in Section 12.2.1 will be satisfied at the time of the making of
such Loan or the issuance of such Letter of Credit), together with such other
documents as the Administrative Agent or any Lender may reasonably request in
support thereof.


SECTION 13.         EVENTS OF DEFAULT AND THEIR EFFECT.


13.1         Events of Default.   Each
of the following shall constitute an Event of Default under this Agreement:


13.1.1      Non-Payment of the Loans, etc.   Default in the
payment when due of the principal of any Loan; or default, and continuance
thereof for five days, in the payment when due of any interest, fee,
reimbursement obligation with respect to any Letter of Credit or other amount
payable by the Company hereunder or under any other Loan Document.


13.1.2      Non-Payment of Other Debt.   Any default shall occur
under the terms applicable to any Debt of any Loan Party in an aggregate amount
(for all such Debt so affected and including undrawn committed or available
amounts and amounts owing to all creditors under any combined or syndicated
credit arrangement) exceeding $2,500,000 and such default shall (a) consist of
the failure to pay such Debt when due, whether by acceleration or otherwise, or
(b) accelerate the maturity of such Debt or permit the holder or holders
thereof, or any trustee or agent for such holder or holders, to cause such Debt
to become due and payable (or require any Loan Party to purchase or redeem such
Debt or post cash collateral in respect thereof) prior to its expressed
maturity.


13.1.3      Other Material Obligations.   Default in the payment
when due, or in the performance or observance of, any material obligation of,
or condition agreed to by, any Loan Party with respect to any material purchase
or lease of goods or services where such default, singly or in the aggregate
with all other such defaults, could reasonably be expected to have a Material
Adverse Effect.


13.1.4      Bankruptcy, Insolvency, etc.   The Parent or any
Loan Party becomes insolvent or generally fails to pay, or admits in writing
its inability or refusal to pay, debts as they become due; or any Loan Party
applies for, consents to, or the Parent acquiesces in the appointment of a
trustee, receiver or other custodian for such Person or any property thereof,
or 



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makes a general assignment for the benefit of creditors;
or, in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for the Parent or any Loan Party or
for a substantial part of the property of any thereof and is not discharged
within 60 days; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceeding, is commenced in respect of the Parent or any Loan
Party, and if such case or proceeding is not commenced by such Person, it is
consented to or acquiesced in by such Person, or remains for 60 days
undismissed; or the Parent or any Loan Party takes any action to authorize, or
in furtherance of, any of the foregoing.


13.1.5      Non-Compliance with Loan Documents.   (a) Failure by
any Loan Party to comply with or to perform any covenant set forth in Sections
10.1.5, 10.3(b) or 10.5 or Section 11; (b) failure by Parent
to comply with or perform any provision of the Parent Pledge Agreement; or (c) failure
by any Loan Party to comply with or to perform any other provision of this
Agreement or any other Loan Document (and not constituting an Event of Default
under any other provision of this Section 13) and continuance of such
failure described in this clause (b) for 30 days.


13.1.6      Representations; Warranties.   Any representation or
warranty made by the Parent or any Loan Party herein or in any other Loan
Document is breached or is false or misleading in any material respect, or any
schedule, certificate, financial statement, report, notice or other writing furnished
by the Parent or any Loan Party to the Administrative Agent or any Lender in
connection herewith is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified.


13.1.7      Pension Plans.   (a) Any Person institutes steps to
terminate a Pension Plan if as a result of such termination the Company or any
member of the Controlled Group could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension Plan, in
excess of $2,500,000; (b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;
(c) the Unfunded Liability exceeds twenty percent of the Total Plan Liability,
or (d) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Pension Plan and the withdrawal liability (without unaccrued
interest) to Multiemployer Pension Plans as a result of such withdrawal
(including any outstanding withdrawal liability that the Company or any member
of the Controlled Group have incurred on the date of such withdrawal) exceeds
$2,500,000.


13.1.8      Judgments.   One or more judgments or orders for the
payment of money (not paid or fully covered by insurance maintained in
accordance with the requirements of this Agreement and as to which the relevant
insurance company has acknowledged coverage) aggregating in excess of
$2,500,000 shall be rendered against any or all Loan Parties and either (a)
enforcement proceedings shall have been commenced by any creditor upon any such
judgments or orders or (b) there shall be any period of thirty (30) consecutive
days during which a stay of enforcement of any such judgments or orders, by
reason of a pending appeal, bond or otherwise, shall not be in effect;



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13.1.9   Invalidity
of Collateral Documents, etc.   Any Collateral
Document shall cease to be in full force and effect in any material respect; or
any Loan Party (or any Person by, through or on behalf of the Parent or any
Loan Party) shall contest in any manner the validity, binding nature or
enforceability of any material provision of any Collateral Document.


13.1.10   Invalidity of
Subordination Provisions, etc. Any subordination provision in the Parent
Subordination Agreement shall cease to be in full force and effect, or any Loan
Party or Parent shall contest in any manner the validity, binding nature or
enforceability of any such provision.


13.1.11   Change
of Control.   A
Change of Control shall occur.


13.1.12   Material
Adverse Effect.   The
occurrence of any event having a Material Adverse Effect.


13.2   Effect
of Event of Default.   If
any Event of Default described in Section 13.1.4 shall occur in respect
of the Company, the Commitments shall immediately terminate and the Loans and
all other Obligations hereunder shall become immediately due and payable and
the Company shall become immediately obligated to Cash Collateralize all
Letters of Credit, all without presentment, demand, protest or notice of any
kind; and, if any other Event of Default shall occur and be continuing, the
Administrative Agent may (and, upon the written request of the Required Lenders
shall) declare the Commitments to be terminated in whole or in part and/or
declare all or any part of the Loans and all other Obligations hereunder to be
due and payable and/or demand that the Company immediately Cash Collateralize
all or any Letters of Credit, whereupon the Commitments shall immediately
terminate (or be reduced, as applicable) and/or the Loans and other Obligations
hereunder shall become immediately due and payable (in whole or in part, as
applicable) and/or the Company shall immediately become obligated to Cash
Collateralize the Letters of Credit (all or any, as applicable), all without
presentment, demand, protest or notice of any kind. The Administrative Agent
shall promptly advise the Company of any such declaration, but failure to do so
shall not impair the effect of such declaration. Any cash collateral delivered
hereunder shall be held by the Administrative Agent (without liability for
interest thereon) and applied to the Obligations arising in connection with any
drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Administrative
Agent to any remaining Obligations hereunder and any excess shall be delivered
to the Company or as a court of competent jurisdiction may elect.


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 such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Administrative Agent shall not have any duty or responsibility 



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except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship
between independent contracting parties.


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


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


14.4   Exculpation
of Administrative Agent.   None
of the Administrative Agent nor any of its directors, officers, employees or
agents shall (a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document
or the transactions contemplated hereby (except to the extent resulting from
its own gross negligence or willful misconduct in connection with its duties
expressly set forth herein as determined by a final, nonappealable judgment by
a court of competent jurisdiction), or (b) be responsible in any manner to any
Lender or participant for any recital, statement, representation or warranty
made by any Loan Party or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document (or the creation, perfection or priority of any Lien or security
interest therein), or for any failure of the Company or any other party to any
Loan Document to perform its Obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company’s Subsidiaries or Affiliates.



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14.5   Reliance
by Administrative Agent.   The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, electronic mail message, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, confirmation from the Lenders of their
obligation to indemnify the Administrative Agent against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant
thereto shall be binding upon each Lender. For purposes of determining
compliance with the conditions specified in Section 12, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received written notice from
such Lender prior to the proposed Closing Date specifying its objection
thereto.


14.6   Notice
of Default.   The
Administrative Agent shall not be deemed to have knowledge or notice of the occurrence
of any Event of Default or Unmatured Event of Default except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a “notice of default”.
The Administrative Agent will notify the Lenders of its receipt of any such
notice. The Administrative Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Lenders in accordance with Section 13; provided that
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 or
Unmatured Event of Default as it shall deem advisable or in the best interest
of the Lenders.


14.7   Credit
Decision.   Each
Lender acknowledges that the Administrative Agent has not made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent and acceptance of any assignment or
review of the affairs of the Loan Parties, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender as to any
matter, including whether the Administrative Agent has disclosed material
information in its possession. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent 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 



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other condition and creditworthiness of the Loan
Parties, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder. Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial or other
condition or creditworthiness of the Company which may come into the possession
of the Administrative Agent.


14.8   Indemnification.   Whether or not the
transactions contemplated hereby are consummated, each Lender shall indemnify
upon demand the Administrative Agent and its directors, officers, employees and
agents (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), according to its applicable
Pro Rata Share, from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that no Lender shall be liable for any
payment to any such Person of any portion of the Indemnified Liabilities to the
extent determined by a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from the applicable Person’s own gross negligence
or willful misconduct. No action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including
Attorney Costs and Taxes) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not reimbursed
for such expenses by or on behalf of the Company. The undertaking 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 of the Collateral Documents,
termination of this Agreement and the resignation or replacement of the
Administrative Agent.


14.9   Administrative
Agent in Individual Capacity.   LaSalle
and its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with the Loan Parties and Affiliates as though LaSalle were not the
Administrative 



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Agent hereunder and without notice to or consent of
any Lender. Each Lender acknowledges that, pursuant to such activities, LaSalle
or its Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information
to them. With respect to their Loans (if any), LaSalle and its Affiliates shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though LaSalle were not the Administrative Agent, and
the terms “Lender” and “Lenders” include LaSalle and its Affiliates, to the
extent applicable, in their individual capacities.


14.10   Successor
Administrative Agent.   The
Administrative Agent may resign as Administrative Agent upon 30 days’ notice to
the Lenders. If the Administrative Agent resigns under this Agreement, the
Required Lenders shall, with (so long as no Event of Default exists) the
consent of the Company (which shall not be unreasonably withheld or delayed),
appoint from among the Lenders a successor agent for the Lenders. If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor agent, and the retiring Administrative Agent’s appointment,
powers and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Section 14 and Sections 15.5 and 15.16
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement. If no successor agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.


14.11   Collateral
Matters.   The
Lenders irrevocably authorize the Administrative Agent, at its option and in
its discretion, (a) to release any Lien granted to or held by the
Administrative Agent under any Collateral Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of the
Company hereunder and the expiration or termination of all Letters of Credit;
(ii) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; or (iii) subject to Section
15.1, if approved, authorized or ratified in writing by the Required
Lenders; or (b) to subordinate its interest in any Collateral to any holder of
a Lien on such Collateral which is permitted by Section 11.2(d)(i) or (d)(iii)
(it being understood that the Administrative Agent may conclusively rely on a
certificate from the Company in determining whether the Debt secured by any
such Lien is permitted by Section 11.1(b)). Upon request by the
Administrative Agent at any time, the Lenders will confirm in writing the
Administrative Agent’s authority to release, or subordinate its interest in,
particular types or items of Collateral pursuant to this Section 14.11. Each
Lender hereby authorizes the Administrative Agent to give blockage notices in
connection with any Subordinated Debt at the direction of Required Lenders and
agrees that it will not act unilaterally to deliver such notices.


14.12   Administrative
Agent May File Proofs of Claim.   In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, 



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composition or other judicial proceeding relative to
any Loan Party, the Administrative Agent (irrespective of whether the principal
of any Loan shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Administrative Agent shall have
made any demand on the Company) shall be entitled and empowered, by
intervention in such proceeding or otherwise:


(a)           to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, and all other
Obligations that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative
Agent and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Sections 5, 15.5 and 15.17)
allowed in such judicial proceedings; and


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


and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make
such payments to the Administrative Agent and, in the event that the
Administrative Agent shall consent to the making of such payments directly to
the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 5, 15.5 and 15.17.


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


14.13   Other
Agents; Arrangers and Managers.   None
of the Lenders or other Persons identified on the facing page or signature
pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,”
“book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger”,
if any, shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than, in the case of such Lenders, those
applicable to all Lenders as such. Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has
not relied, and will not rely, on any of the Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.


SECTION 15.         GENERAL.



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15.1   Waiver;
Amendments.   No
delay on the part of the Administrative Agent or any Lender in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any of them of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or the other Loan Documents shall in any event
be effective unless the same shall be in writing and acknowledged by Lenders
having an aggregate Pro Rata Shares of not less than the aggregate Pro Rata
Shares expressly designated herein with respect thereto or, in the absence of
such designation as to any provision of this Agreement, by the Required
Lenders, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No amendment, modification, waiver or consent shall (a) extend or
increase the Commitment of any Lender without the written consent of such
Lender; (b) extend the date scheduled for payment of any principal (excluding
mandatory prepayments) of or interest on the Loans or any fees payable
hereunder without the written consent of each Lender directly affected thereby;
(c) reduce the principal amount of any Loan, the rate of interest thereon or
any fees payable hereunder, without the consent of each Lender directly
affected thereby (except for periodic adjustments of interest rates and fees
resulting from a change in the Applicable Margin as provided for in this
Agreement); (d) increase the advance rates set forth in the definition of “Borrowing
Base”; or (e) release all or any substantial part of the Collateral granted
under the Collateral Documents, change the definition of Required Lenders, any
provision of this Section 15.1 or reduce the aggregate Pro Rata Share
required to effect an amendment, modification, waiver or consent, without, in
each case, the written consent of all Lenders. No provision of Sections
6.2.2 or 6.3 with respect to the timing or application of mandatory
prepayments of the Loans shall be amended, modified or waived without the
consent of Lenders having a majority of the aggregate Pro Rata Shares of the
Term Loans affected thereby. No provision of Section 14 or other
provision of this Agreement affecting 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 to the rights or
duties of the Issuing Lender in its capacity as such shall be amended, modified
or waived without the consent of the Issuing Lender. No provision of this
Agreement relating to the rights or duties of the Swing Line Lender in its
capacity as such shall be amended, modified or waived without the consent of
the Swing Line Lender.


15.2   Confirmations.   The Company and
each holder of a Note agree from time to time, upon written request received by
it from the other, to confirm to the other in writing (with a copy of each such
confirmation to the Administrative Agent) the aggregate unpaid principal amount
of the Loans then outstanding under such Note.


15.3   Notices.   Except as otherwise
provided in Sections 2.2.2 and 2.2.3, all notices hereunder shall
be in writing (including facsimile transmission) and shall be sent to the
applicable party at its address shown on Annex B or at such other
address as such party may, by written notice received by the other parties,
have designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given three Business Days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery or overnight 



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courier service shall be deemed to have been given
when received. For purposes of Sections 2.2.2 and 2.2.3, the
Administrative Agent shall be entitled to rely on telephonic instructions from
any person that the Administrative Agent in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Administrative Agent and each other Lender harmless from any loss, cost or
expense resulting from any such reliance.


15.4   Computations.   Where the character
or amount of any asset 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, to the extent applicable and except as otherwise specified
in this Agreement, be made in accordance with GAAP, consistently applied; provided
that if the Company notifies the Administrative Agent that the Company wishes
to amend any covenant in Sections 10 or 11.14 (or any related definition) to
eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the Company
that the Required Lenders wish to amend Sections 10 or 11.14 (or any related
definition) for such purpose), then the Company’s compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant (or related definition) is amended in a manner satisfactory to
the Company and the Required Lenders.


15.5   Costs,
Expenses and Taxes.   The
Company agrees to pay on demand all reasonable out-of-pocket costs and expenses
of the Administrative Agent (including Attorney Costs and any Taxes) in
connection with the preparation, execution, syndication, delivery and
administration (including perfection and protection of any Collateral and the
costs of Intralinks (or other similar service), if applicable) of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including
any amendment, supplement or waiver to any Loan Document), whether or not the
transactions contemplated hereby or thereby shall be consummated, and all
reasonable out-of-pocket costs and expenses (including Attorney Costs and any
Taxes) incurred by the Administrative Agent and each Lender after an Event of
Default in connection with the collection of the Obligations or the enforcement
of this Agreement the other Loan Documents or any such other documents or
during any workout, restructuring or negotiations in respect thereof. In
addition, the Company agrees to pay, and to save the Administrative Agent and
the Lenders harmless from all liability for, any fees of the Company’s auditors
in connection with any reasonable exercise by the Administrative Agent and the
Lenders of their rights pursuant to Section 10.2. All Obligations
provided for in this Section 15.5 shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination 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 assign to one or more Persons
(any such Person, an “Assignee”) all or any portion of such Lender’s
Loans and Commitments, with 



 75
 






 



the prior written consent of the Administrative Agent,
the Issuing Lender (for an assignment of the Revolving Loans and the Revolving
Commitment) and, so long as no Event of Default exists, the Company (which
consents shall not be unreasonably withheld or delayed and shall not be
required for an assignment by a Lender to a Lender or an Affiliate of a
Lender). Except as the Administrative Agent may otherwise agree, any such
assignment shall be in a minimum aggregate amount equal to $5,000,000 or, if
less, the remaining Commitment and Loans held by the assigning Lender. The
Company and the Administrative Agent shall be entitled to continue to deal
solely and directly with such Lender in connection with the interests so
assigned to an Assignee until the Administrative Agent shall have received and
accepted an effective assignment agreement in substantially the form of Exhibit
D hereto (an “Assignment Agreement”) executed, delivered and fully
completed by the applicable parties thereto and a processing fee of $3,500 from
such Assignee. No assignment may be made to any Person if at the time of such
assignment the Company would be obligated to pay any greater amount under Sections
7.6 or 8 to the Assignee than the Company is then obligated to pay
to the assigning Lender under such Sections (and if any assignment is made in
violation of the foregoing, the Company will not be required to pay such
greater amounts). Any attempted assignment not made in accordance with this Section
15.6.1 shall be treated as the sale of a participation under Section 15.6.2.
The Company shall be deemed to have granted its consent to any assignment
requiring its consent hereunder unless the Company has expressly objected to
such assignment within five Business Days after notice thereof.


(b)           From and after the date on which the conditions described
above have been met, (i) such Assignee shall be deemed automatically to have
become a party hereto and, to the extent that rights and obligations hereunder
have been assigned to such Assignee pursuant to such Assignment Agreement,
shall have the rights and obligations of a Lender hereunder and (ii) the
assigning Lender, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, shall be released from
its rights (other than its indemnification rights) and obligations hereunder. Upon
the request of the Assignee (and, as applicable, the assigning Lender) pursuant
to an effective Assignment Agreement, the Company shall execute and deliver to
the Administrative Agent for delivery to the Assignee (and, as applicable, the
assigning Lender) a Note in the principal amount of the Assignee’s Pro Rata
Share of the Revolving Commitment plus the principal amount of the Assignee’s
Term Loan (and, as applicable, a Note in the principal amount of the Pro Rata
Share of the Revolving Commitment retained by the assigning Lender plus the
principal amount of the Term Loan retained by the assigning Lender). Each such
Note shall be dated the effective date of such assignment. Upon receipt by the
assigning Lender of such Note, the assigning Lender shall return to the Company
any prior Note held by it.


(c)           Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.



 76














 


15.6.2   Participations.   Any
Lender may at any time sell to one or more Persons participating interests in
its Loans, Commitments or other interests hereunder (any such Person, a “Participant”).
In the event of a sale by a Lender of a participating interest to a
Participant, (a) such Lender’s obligations hereunder shall remain unchanged for
all purposes, (b) the Company and the Administrative Agent shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations hereunder and (c) all amounts payable by the Company
shall be determined as if such Lender had not sold such participation and shall
be paid directly to such Lender. No Participant shall have any direct or
indirect voting rights hereunder except with respect to any event described in Section
15.1 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders. Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. The Company agrees that if
amounts outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement; provided that such right of set-off shall be
subject to the obligation of each Participant to share with the Lenders, and
the Lenders agree to share with each Participant, as provided in Section 7.5.
The Company also agrees that each Participant shall be entitled to the benefits
of Section 7.6 or 8 as if it were a Lender (provided that
on the date of the participation no Participant shall be entitled to any
greater compensation pursuant to Section 7.6 or 8 than would have
been paid to the participating Lender on such date if no participation had been
sold and that each Participant complies with Section 7.6(d) as if it
were an Assignee).


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


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


15.9   Confidentiality.   As required 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 and
documentation in connection with opening or maintaining accounts, or
establishing or continuing to provide services. The Administrative Agent
and each Lender agree to use commercially reasonable efforts (equivalent to the
efforts 



 77
 






 



the Administrative Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain
as confidential all information provided to them by any Loan Party and
designated as confidential, except that the Administrative Agent and each
Lender may disclose such information (a) to Persons employed or engaged by the
Administrative Agent or such Lender in evaluating, approving, structuring or
administering the Loans and the Commitments; (b) to any assignee or participant
or potential assignee or participant 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 may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c)
as required or requested by any federal or state regulatory authority or
examiner, or any insurance industry association, or as reasonably believed by
the Administrative Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
the Administrative Agent’s or such Lender’s counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any litigation to which the Administrative Agent or such
Lender is a party; (f) to any nationally recognized rating agency that requires
access to information about a Lender’s investment portfolio in connection with
ratings issued with respect to such Lender; (g) to any Affiliate of the
Administrative Agent, the Issuing Lender or any other Lender who may provide
Bank Products to the Loan Parties; or (h) that ceases to be confidential
through no fault of the Administrative Agent or any Lender. Notwithstanding the
foregoing, the Company consents to the publication by the Administrative Agent
or any Lender of a tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement, and the Administrative
Agent reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.


15.10   Severability.   Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement. All obligations of the Company and rights of the Administrative
Agent and the Lenders expressed herein or in any other Loan Document shall be
in addition to and not in limitation of those provided by applicable law.


15.11   Nature
of Remedies.   All
Obligations of the Company and rights of the Administrative Agent and the
Lenders expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.


15.12   Entire
Agreement.   This
Agreement, together with the other Loan Documents, embodies the entire
agreement and understanding among the parties hereto and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof (except as relates
to the fees described in Section 



 78
 






 



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 any number of counterparts and by the different parties hereto
on separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Agreement. Receipt of an executed signature page to this Agreement by
facsimile or other electronic transmission shall constitute effective delivery
thereof. Electronic records of executed Loan Documents maintained by the
Lenders shall deemed to be originals.


15.14   Successors
and Assigns.   This
Agreement shall be binding upon the Company, the Lenders and the Administrative
Agent and their respective successors and assigns, and shall inure to the
benefit of the Company, the Lenders and the Administrative Agent and the
successors and assigns of the Lenders and the Administrative Agent. No other
Person shall be a direct or indirect legal beneficiary of, or have any direct
or indirect cause of action or claim in connection with, this Agreement or any
of the other Loan Documents. The Company may not assign or transfer any of its
rights or Obligations under this Agreement without the prior written consent of
the Administrative Agent and each Lender.


15.15   Captions.   Section captions
used in this Agreement are for convenience only and shall not affect the
construction of this Agreement.


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


15.17   INDEMNIFICATION BY THE COMPANY.   IN CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE
ADMINISTRATIVE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE
COMMITMENTS PROVIDED HEREUNDER, THE COMPANY HEREBY AGREES TO INDEMNIFY,
EXONERATE AND HOLD THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THE
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND 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 LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR
ARISING OUT OF, OR RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF
CAPITAL SECURITIES, PURCHASE OF ASSETS 



 79
 






 



(INCLUDING THE RELATED TRANSACTIONS) OR OTHER
SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B) THE USE,
HANDLING, RELEASE, EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN
PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS
AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN PARTY OR THE OPERATIONS CONDUCTED
THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT
WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE
DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION,
DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION. IF AND TO THE EXTENT THAT THE
FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, THE COMPANY HEREBY
AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH
OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL
OBLIGATIONS PROVIDED FOR IN THIS SECTION 15.17 SHALL SURVIVE REPAYMENT
OF THE LOANS, CANCELLATION OF THE NOTES, EXPIRATION OR TERMINATION OF THE
LETTERS OF CREDIT, ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR
DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS
AGREEMENT.


15.18   Nonliability
of Lenders.   The
relationship between the Company on the one hand and the Lenders and the
Administrative Agent on the other hand shall be solely that of borrower and
lender. Neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Loan Party arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between the Loan Parties, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor. Neither the Administrative Agent nor any Lender
undertakes any responsibility to any Loan Party to review or inform any Loan
Party of any matter in connection with any phase of any Loan Party’s business
or operations. The Company agrees, on behalf of itself and each other Loan
Party, that neither the Administrative Agent nor any Lender shall have
liability to any Loan Party (whether sounding in tort, contract or otherwise)
for losses suffered by any Loan Party in connection with, arising out of, or in
any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final non-appealable
judgment by a court of competent jurisdiction that such losses resulted from
the gross negligence or willful misconduct of the party from which recovery is
sought. NO LENDER 



 80
 






 



PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM
THE USE BY OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH
INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH
THIS AGREEMENT, NOR SHALL ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO,
AND THE COMPANY ON BEHALF OF ITSELF AND EACH OTHER LOAN PARTY, HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT
OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER
BEFORE OR AFTER THE CLOSING DATE). The Company acknowledges
that it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Loan Documents to which it is a party. No joint
venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or among the
Loan Parties and the Lenders.


15.19   FORUM SELECTION AND CONSENT TO JURISDICTION.   ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


15.20   WAIVER OF JURY TRIAL.   EACH OF THE
COMPANY, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING 



 81
 






 



RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF
THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.


[Signature Pages
Follow]



 82














 


 


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


	
  

  	
  KAPSTONE KRAFT PAPER CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew Kaplan

  
	
   

  	
  Title:

  	
  President

  



 


 


 


[Signature Page to
the Credit Agreement]


 









 



 


	
  

  	
  LASALLE BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as Administrative Agent, as Swing Line Lender, as 

  
	
   

  	
  Issuing Lender and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Manas Athanikar

  
	
   

  	
  Title:

  	
  Assistant Vice President

  



 


 


 


[Signature Page to
the Credit Agreement]


 









 



 


	
  

  	
  BANK OF AMERICA, N.A., as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles R. Dickerson

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


	
  

  	
  ALLIED IRISH BANKS, P.L.C., as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shreya Shah

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


	
  

  	
  REGIONS BANK, as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wendy B. Nelson

  
	
   

  	
  Title:

  	
  Attorney-in-Fact

  



 


 


[Signature Page to
the Credit Agreement]


 















 


ANNEX A


LENDERS AND PRO
RATA SHARES


	
  

  Lender

  	
   

  	
  Revolving

  Commitment Amount

  	
   

  	
  

  Pro Rata Share*

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  

  Pro Rata Share*

  	
   

  
	
  LaSalle Bank National
  Association

  	
   

  	
  $

  	
   

  	
  **

  	
   

  	
  %

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
  Regions Bank

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
  Allied Irish Banks,
  p.l.c.

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  100

  	
  %

  	
  $

  	
  60,000,000

  	
   

  	
  100

  	
  %

  







*                    Carry
out to nine decimal places.


**             Includes
Swing Line Commitment Amount of $5,000,000.



 Annex A-1














 


ANNEX B


ADDRESSES
FOR NOTICES


KAPSTONE KRAFT PAPER CORPORATION


One Northfield Plaza

Suite 480

Northfield, IL 60093

Attention:  Roger Stone


Telephone: 847-441-0929


Facsimile: 847-441-8267


LASALLE BANK NATIONAL
ASSOCIATION, as Administrative Agent, Issuing Lender and a
Lender


Notices of Borrowing ,
Conversion, Continuation and Letter of Credit Issuance


135 South LaSalle Street

Chicago, Illinois 60603

Attention:  Damatria Gilbert

Telephone: (312) 904-8277

Facsimile:  (312) 821-8710


All Other Notices


135 South LaSalle Street

Chicago, Illinois 60603

Attention:  Manas Athanikar

Telephone: (312) 904-2609

Facsimile:  (312) 904-5483


 


 



 Annex B-1














 


EXHIBIT A-1


FORM OF


[REVOLVING]
[TERM] NOTE


_______,_______


	
  $__________________

  	
   

  	
  Chicago, Illinois

  



 


The undersigned, for value received, promises to pay
to the order of ______________ (the “Lender”) at the principal office of
LaSalle Bank National Association (the “Administrative Agent”) in
Chicago, Illinois the aggregate unpaid amount of all [Revolving] [Term] Loans
made to the undersigned by the Lender pursuant to the Credit Agreement referred
to below (as shown on the schedule attached hereto (and any continuation
thereof) or in the records of the Lender), such principal amount to be payable
on the dates set forth in the Credit Agreement.


The undersigned further promises to pay interest on
the unpaid principal amount of each [Revolving] [Term] Loan from the date of
such Loan until such Loan is paid in full, payable at the rate(s) and at the
time(s) set forth in the Credit Agreement. 
Payments of both principal and interest are to be made in lawful money
of the United States of America.


This Note evidences indebtedness incurred under, and
is subject to the terms and provisions of, the Credit Agreement, dated as of
January 2, 2007 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”; terms not otherwise defined herein
are used herein as defined in the Credit Agreement), among the undersigned,
certain financial institutions (including the Lender) and the Administrative
Agent, to which Credit Agreement reference is hereby made for a statement of
the terms and provisions under which this Note may or must be paid prior to its
due date or its due date accelerated.


This Note is made under and governed by the laws of
the State of Illinois applicable to contracts made and to be performed entirely
within such State.


	
  

  	
  KAPSTONE KRAFT PAPER CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  



 



 Exhibit A-1














 


EXHIBIT B


FORM OF COMPLIANCE
CERTIFICATE


To:          LaSalle Bank National Association, as
Administrative Agent


Please refer to the Credit Agreement dated as of
January 2, 2007 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) among Kapstone Kraft Paper
Corporation (the “Company”), various financial institutions and LaSalle
Bank National Association, as Administrative Agent.  Terms used but not otherwise 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 as
at                      ,
           (the “Computation
Date”), which report fairly presents in all material respects the financial
condition and results of operations [(subject to the absence
of footnotes and to normal year-end adjustments)] of the Company as
of the Computation Date and has been prepared in accordance with GAAP
consistently applied.


II.                                                     Financial Tests.  The Company hereby certifies and warrants to
you that the following is a true and correct computation as at the Computation
Date of the following ratios and/or financial restrictions contained in the
Credit Agreement:


[REVISE
AS APPROPRIATE]


	
  A.            Section
  11.14.1 - Minimum EBITDA

  	
   

  
	
  1.             Consolidated
  Net Income

  	
  $________

  
	
  2.             Plus:       Interest Expense

  	
  $________

  
	
                                  income
  tax expense

  	
  $________

  
	
                                  depreciation

  	
  $________

  
	
                                  amortization

  	
  $________

  
	
  3.             Total
  (EBITDA)

  	
  $________

  
	
  2.             Minimum
  required $________

  	
  $________

  
	
  B.            Section
  11.14.2 - Minimum Fixed Charge Coverage Ratio

  	
   

  
	
  1.             EBITDA

  	
  $________

  
	
  2.             Income
  taxes paid

  	
  $________

  
	
  3.             Unfinanced
  Capital Expenditures

  	
  $________

  
	
  4.             Sum
  of (2) and (3)

  	
  $________

  
	
  5.             Remainder
  of (1) minus (4)

  	
  $________

  



 



 Exhibit B-1
 






 



 


	
  6.             Cash
  Interest Expense

  	
  $________

  
	
  7.             Required
  payments of principal of Funded Debt (including
                Term Loans but excluding
  Revolving Loans and Parent
                Revolving Debt)

  	
   

  $________

  
	
  8.             Sum
  of (6) and (7)

  	
  $________

  
	
  9.             Ratio
  of (5) to (8)

  	
  ____ to 1

  
	
  10.           Minimum
  Required

  	
  ____ to 1

  
	
  C.            Section
  11.14.3 - Maximum Total Debt to EBITDA Ratio

  	
   

  
	
  1.             Total
  Debt

  	
  $________

  
	
  2.             EBITDA
  (from Item A(3) above)

  	
  $________

  
	
  3.             Ratio
  of (1) to (2)

  	
  ____ to 1

  
	
  4.             Maximum
  allowed

  	
  ____ to 1

  
	
  D.            Section 11.14.4 - Capital Expenditures

  	
   

  
	
  1.             Capital
  Expenditures for the Fiscal Year

  	
  $________

  
	
  2.             Maximum
  Permitted Capital Expenditures

  	
  $________

  



 


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



 Exhibit B-2
 






 



                The Company has caused this
Certificate to be executed and delivered by its duly authorized officer on                 ,
         .


KAPSTONE KRAFT PAPER CORPORATION


By:                                                                                                        


Title:                                                                                                     


 



 Exhibit B-3














 


EXHIBIT C


FORM OF
BORROWING BASE CERTIFICATE


To:          LaSalle Bank National Association, as
Administrative Agent


Please refer to the Credit Agreement dated as of
January 2, 2007 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) among Kapstone Kraft Paper
Corporation (the “Company”), various financial institutions and LaSalle
Bank National Association, as Administrative Agent.  This certificate (this “Certificate”),
together with supporting calculations attached hereto, is delivered to you
pursuant to the terms of the Credit Agreement. 
Capitalized terms used but not otherwise defined herein shall have the
same meanings herein as in the Credit Agreement.


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


The Company has caused this Certificate to be executed
and delivered by its officer thereunto duly authorized on                     ,
          .


KAPSTONE KRAFT PAPER CORPORATION


By:                                                                                                        


Title:                                                                                                     



 Exhibit C-1
 






 



SCHEDULE
TO BORROWING BASE CERTIFICATE


Dated as
of [                    ]


 



 Exhibit C-2














 


EXHIBIT D


FORM OF


ASSIGNMENT
AGREEMENT


Date:_________________


To:          Kapstone Kraft Paper Corporation


and


LaSalle Bank
National Association, as Administrative Agent


Re:          Assignment under the Credit
Agreement referred to below


Gentlemen and Ladies:


Please refer to Section 15.6.1 of the Credit Agreement
dated as of January 2, 2007 (as amended or otherwise modified from time to
time, the “Credit Agreement”) among Kapstone Kraft Paper Corporation
(the “Company”), various financial institutions and LaSalle Bank National
Association, as administrative agent (in such capacity, the “Administrative
Agent”).  Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.


                    
(the “Assignor”) hereby sells and assigns, without recourse, to (the “Assignee”),
and the Assignee hereby purchases and assumes from the Assignor, that interest
in and to the Assignor’s rights and obligations under the Credit Agreement as
of the date hereof equal to           %
of all of the Loans, of the participation interests in the Letters of Credit
and of the Commitments, such sale, purchase, assignment and assumption to be
effective as of                     ,
                    ,
or such later date on which the Company and the Administrative Agent shall have
consented 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 the
Credit Agreement will be as set forth opposite their names on the signature
pages hereof.


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


The Assignor represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim.



 Exhibit D-1
 






 



The Assignee represents and warrants to the Company
and the Administrative Agent that, as of the date hereof, the Company will not
be obligated to pay any greater amount under Section 7.6 or 8 of the Credit
Agreement than the Company is obligated to pay to the Assignor under such
Section.  [The
Assignee has delivered, or is delivering concurrently herewith, to the Company
and the Administrative Agent the forms required by Section 7.6 of the Credit
Agreement.] [INSERT IF ASSIGNEE IS ORGANIZED UNDER THE LAWS OF A JURISDICTION OTHER
THAN THE UNITED STATES OF AMERICA OR A STATE THEREOF.]  The Assignee shall pay the fee payable to the
Administrative Agent pursuant to Section 15.6.1.


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


(a)                                  the
Assignee (i) shall be deemed automatically to have become a party to the Credit
Agreement and to have all the rights and obligations of a “Lender” under the
Credit Agreement as if it were an original signatory thereto to the extent
specified in the second paragraph hereof; and (ii) agrees to be bound by the
terms and conditions set forth in the Credit Agreement as if it were an
original signatory thereto; and


(b)                                 the
Assignor shall be released from its obligations under the Credit Agreement to
the extent specified in the second paragraph hereof.


The Assignee hereby advises each of you of the
following administrative details with respect to the assigned Loans and
Commitment:


(A)          Institution
Name:


Address:


Attention:


Telephone:


Facsimile:


(B)           Payment
Instructions:


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


Please evidence your receipt hereof and your consent
to the sale, assignment, purchase and assumption set forth herein by signing
and returning counterparts hereof to the Assignor and the Assignee.



 Exhibit D-2
 






 



 


	
  Percentage =       %

  	
  [ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Adjusted
  Percentage =       %

  	
  [ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  



ACKNOWLEDGED AND CONSENTED TO


this ____ day of
________, ____


LASALLE BANK NATIONAL
ASSOCIATION, as Administrative Agent


By:                                                                                  


Title:                                                                               


ACKNOWLEDGED AND CONSENTED TO


this ____ day of
____________


KAPSTONE KRAFT PAPER CORPORATION


By:                                                                                  


Title:                                                                               


 



 Exhibit D-3














 


EXHIBIT E


FORM OF NOTICE OF BORROWING


To:          LaSalle Bank National Association, as
Administrative Agent


Please refer to the Credit Agreement dated as of January 2, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”) among Kapstone
Kraft Paper Corporation (the “Company”), various financial institutions
and LaSalle Bank National Association, as Administrative Agent.  Terms used but not otherwise defined herein
are used herein as defined in the Credit Agreement.


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


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


(ii)           The
aggregate amount of the proposed borrowing is $                    .


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


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


The undersigned hereby certifies that on the date
hereof and on the date of borrowing set forth above, and immediately after
giving effect to the borrowing requested hereby: (i) there exists and there
shall exist no Unmatured Event of Default or Event of Default under the Credit
Agreement; and (ii) each of the representations and warranties contained in the
Credit Agreement and the other Loan Documents is true and correct as of the
date hereof, except to the extent that such representation or warranty
expressly relates to another date and except for changes therein expressly
permitted or expressly contemplated by the Credit Agreement.


The Company has caused this Notice of Borrowing to be
executed and delivered by its officer thereunto duly authorized on                     ,
          .


KAPSTONE KRAFT PAPER CORPORATION


By:                                                                                                        


Title:                                                                                                     


 



 Exhibit E-1














 


EXHIBIT F


FORM OF
NOTICE OF CONVERSION/CONTINUATION


To:          LaSalle Bank National Association, as
Administrative Agent


Please refer to the Credit Agreement dated as of [                    , 2006] (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”) among Kapstone Kraft Paper
Corporation (the “Company”), various financial institutions and LaSalle
Bank National Association, as Administrative Agent.  Terms used but not otherwise defined herein
are used herein as defined in the Credit Agreement.


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


(a)           on [    date    ] convert $[                    ]of the 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 $[                    ]of the aggregate outstanding principal amount of the [                    ] Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an
Interest Period of [                    ] month(s)].


The undersigned hereby represents and warrants that
all of the conditions contained in Section 12.2 of the Credit Agreement
have been satisfied on and as of the date hereof, and will continue to be
satisfied on and as of the date of the conversion/continuation requested
hereby, before and after giving effect thereto.


The Company has caused this Notice of
Conversion/Continuation to be executed and delivered by its officer thereunto
duly authorized on                     ,
          .


KAPSTONE KRAFT PAPER CORPORATION


By:                                                                                                        


Title:                                                                                                     


 



 Exhibit F-1