exv10w1






Exhibit 10.1




 

 






SECOND AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of June 2, 2010



among



INSTEEL WIRE PRODUCTS COMPANY,



as Borrower,



THE OTHER CREDIT PARTIES SIGNATORY HERETO,



as Credit Parties,



THE LENDERS SIGNATORY HERETO



FROM TIME TO TIME,



as Lenders,



and



GENERAL ELECTRIC CAPITAL CORPORATION,



as Agent and Lender



GE CAPITAL MARKETS, INC.



as Lead Arranger



 

 












1









 


















TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	1.	 	AMOUNT AND TERMS OF CREDIT	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Credit Facilities	 	 	1	 
	 
	 	1.2	 	Letters of Credit	 	 	5	 
	 
	 	1.3	 	Prepayments	 	 	5	 
	 
	 	1.4	 	Use of Proceeds	 	 	7	 
	 
	 	1.5	 	Interest and Applicable Margins	 	 	7	 
	 
	 	1.6	 	Eligible Accounts	 	 	11	 
	 
	 	1.7	 	Eligible Inventory	 	 	14	 
	 
	 	1.8	 	Cash Management Systems	 	 	16	 
	 
	 	1.9	 	Fees	 	 	16	 
	 
	 	1.10	 	Receipt of Payments	 	 	16	 
	 
	 	1.11	 	Application and Allocation of Payments	 	 	16	 
	 
	 	1.12	 	Loan Account and Accounting	 	 	17	 
	 
	 	1.13	 	Indemnity	 	 	17	 
	 
	 	1.14	 	Access	 	 	19	 
	 
	 	1.15	 	Taxes	 	 	19	 
	 
	 	1.16	 	Capital Adequacy; Increased Costs; Illegality	 	 	20	 
	 
	 	1.17	 	Single Loan	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	2.	 	CONDITIONS PRECEDENT	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Conditions to Effectiveness	 	 	22	 
	 
	 	2.2	 	Further Conditions to Each Loan	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	3.	 	REPRESENTATIONS AND WARRANTIES	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Corporate Existence; Compliance with Law	 	 	23	 
	 
	 	3.2	 	Executive Offices, Collateral Locations, FEIN	 	 	24	 
	 
	 	3.3	 	Corporate Power, Authorization, Enforceable Obligations	 	 	24	 
	 
	 	3.4	 	Financial Statements and Projections	 	 	24	 
	 
	 	3.5	 	Material Adverse Effect	 	 	25	 
	 
	 	3.6	 	Ownership of Property; Liens	 	 	25	 
	 
	 	3.7	 	Labor Matters	 	 	26	 
	 
	 	3.8	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness	 	 	26	 
	 
	 	3.9	 	Government Regulation	 	 	27	 
	 
	 	3.10	 	Margin Regulations	 	 	27	 
	 
	 	3.11	 	Taxes	 	 	27	 
	 
	 	3.12	 	ERISA	 	 	27	 
	 
	 	3.13	 	No Litigation	 	 	28	 
	 
	 	3.14	 	Brokers	 	 	29	 
	 
	 	3.15	 	Intellectual Property	 	 	29	 
	 
	 	3.16	 	Full Disclosure	 	 	29	 
	 
	 	3.17	 	Environmental Matters	 	 	29	 






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	 	 	 	 	 	 	Page	 
	 
	 
	 	3.18	 	Insurance	 	 	30	 
	 
	 	3.19	 	Deposit and Disbursement Accounts	 	 	30	 
	 
	 	3.20	 	Government Contracts	 	 	30	 
	 
	 	3.21	 	Customer and Trade Relations	 	 	30	 
	 
	 	3.22	 	Bonding; Licenses	 	 	31	 
	 
	 	3.23	 	Solvency	 	 	31	 
	 
	 	3.24	 	Status of Holdings	 	 	31	 
	 
	 	3.25	 	Inactive Subsidiaries	 	 	31	 
	 
	 	3.26	 	Motor Vehicles	 	 	31	 
	 
	 	3.27	 	Vacant Land Lease	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	4.	 	FINANCIAL STATEMENTS AND INFORMATION	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Reports and Notices	 	 	31	 
	 
	 	4.2	 	Communication with Accountants	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Maintenance of Existence and Conduct of Business	 	 	32	 
	 
	 	5.2	 	Payment of Charges	 	 	32	 
	 
	 	5.3	 	Books and Records	 	 	33	 
	 
	 	5.4	 	Insurance; Damage to or Destruction of Collateral	 	 	33	 
	 
	 	5.5	 	Compliance with Laws	 	 	35	 
	 
	 	5.6	 	Supplemental Disclosure	 	 	35	 
	 
	 	5.7	 	Intellectual Property	 	 	35	 
	 
	 	5.8	 	Environmental Matters	 	 	35	 
	 
	 	5.9	 	Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases	 	 	36	 
	 
	 	5.10	 	[Intentionally Omitted]	 	 	37	 
	 
	 	5.11	 	Post-Closing Matters	 	 	37	 
	 
	 	5.12	 	Further Assurances	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	6.	 	NEGATIVE COVENANTS	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Mergers, Subsidiaries, Etc.	 	 	37	 
	 
	 	6.2	 	Investments; Loans and Advances	 	 	40	 
	 
	 	6.3	 	Indebtedness	 	 	41	 
	 
	 	6.4	 	Employee Loans and Affiliate Transactions	 	 	43	 
	 
	 	6.5	 	Capital Structure and Business	 	 	44	 
	 
	 	6.6	 	Guaranteed Indebtedness	 	 	44	 
	 
	 	6.7	 	Liens	 	 	44	 
	 
	 	6.8	 	Sale of Stock and Assets	 	 	45	 
	 
	 	6.9	 	ERISA	 	 	46	 
	 
	 	6.10	 	Financial Covenants	 	 	46	 
	 
	 	6.11	 	Hazardous Materials	 	 	46	 
	 
	 	6.12	 	Sale-Leasebacks	 	 	46	 
	 
	 	6.13	 	Restricted Payments	 	 	46	 
	 
	 	6.14	 	Change of Corporate Name or Location; Change of Fiscal Year	 	 	47	 
	 
	 	6.15	 	No Impairment of Intercompany Transfers	 	 	47	 
	 
	 	6.16	 	[Intentionally Omitted]	 	 	48	 






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	 	 	 	 	 	 	Page	 
	 
	 
	 	6.17	 	Holdings	 	 	48	 
	 
	 	6.18	 	Inactive Subsidiaries	 	 	48	 
	 
	 	6.19	 	Vacant Land Lease	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	7.	 	TERM	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Termination	 	 	48	 
	 
	 	7.2	 	Survival of Obligations Upon Termination of Financing Arrangements	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT; RIGHTS AND REMEDIES	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Events of Default	 	 	48	 
	 
	 	8.2	 	Remedies	 	 	50	 
	 
	 	8.3	 	Waivers by Credit Parties	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	9.	 	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Assignment and Participations	 	 	51	 
	 
	 	9.2	 	Appointment of Agent	 	 	54	 
	 
	 	9.3	 	Agent’s Reliance, Etc.	 	 	55	 
	 
	 	9.4	 	GE Capital and Affiliates	 	 	55	 
	 
	 	9.5	 	Lender Credit Decision	 	 	55	 
	 
	 	9.6	 	Indemnification	 	 	56	 
	 
	 	9.7	 	Successor Agent	 	 	56	 
	 
	 	9.8	 	Setoff and Sharing of Payments	 	 	56	 
	 
	 	9.9	 	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert	 	 	57	 
	 
	 	 	 	 	 	 	 	 
	10.	 	SUCCESSORS AND ASSIGNS	 	 	60	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Successors and Assigns	 	 	60	 
	 
	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	61	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Complete Agreement; Modification of Agreement	 	 	61	 
	 
	 	11.2	 	Amendments and Waivers	 	 	61	 
	 
	 	11.3	 	Fees and Expenses	 	 	63	 
	 
	 	11.4	 	No Waiver	 	 	64	 
	 
	 	11.5	 	Remedies	 	 	64	 
	 
	 	11.6	 	Severability	 	 	64	 
	 
	 	11.7	 	Conflict of Terms	 	 	65	 
	 
	 	11.8	 	Confidentiality	 	 	65	 
	 
	 	11.9	 	GOVERNING LAW	 	 	65	 
	 
	 	11.10	 	Notices	 	 	66	 
	 
	 	11.11	 	Section Titles	 	 	68	 
	 
	 	11.12	 	Counterparts	 	 	68	 
	 
	 	11.13	 	WAIVER OF JURY TRIAL	 	 	68	 
	 
	 	11.14	 	Press Releases and Related Matters	 	 	69	 
	 
	 	11.15	 	Reinstatement	 	 	69	 
	 
	 	11.16	 	Advice of Counsel	 	 	69	 
	 
	 	11.17	 	No Strict Construction	 	 	69	 
	 
	 	11.18	 	Patriot Act Notice	 	 	69	 






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	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	12.	 	RESTATEMENT OF ORIGINAL CREDIT AGREEMENT	 	 	69	 







iv











 





INDEX OF APPENDICES




	 	 	 	 	 

	Annex A (Recitals)

	 	—
	 	Definitions
	Annex B (Section 1.2)

	 	—
	 	Letters of Credit
	Annex C (Section 1.8)

	 	—
	 	Cash Management System
	Annex D (Section 2.1(a))

	 	—
	 	Closing Checklist
	Annex E (Section 4.1(a))

	 	—
	 	Financial Statements and Projections — Reporting
	Annex F (Section 4.1(b))

	 	—
	 	Collateral Reports
	Annex G (Section 6.10)

	 	—
	 	Financial Covenants
	Annex H (Section 9.9(a))

	 	—
	 	Lenders’ Wire Transfer Information
	Annex I (Section 11.10)

	 	—
	 	Notice Addresses
	Annex J (from Annex A-
	 	 	 	 
	Commitments definition)

	 	—
	 	Commitments as of Closing Date
	 
	 	 	 	 
	Exhibit 1.1(a)(i)

	 	—
	 	Form of Notice of Revolving Credit Advance
	Exhibit 1.1(a)(ii)

	 	—
	 	Form of Revolving Note
	Exhibit 1.1(c)(ii)

	 	—
	 	Form of Swing Line Note
	Exhibit 1.5(e)

	 	—
	 	Form of Notice of Conversion/Continuation
	Exhibit 4.1(b)

	 	—
	 	Form of Borrowing Base Certificate
	Exhibit 9.1(a)

	 	—
	 	Form of Assignment Agreement
	Exhibit B-1

	 	—
	 	Application for Standby Letter of Credit
	Exhibit B-2

	 	—
	 	Application for Documentary Letter of Credit
	 
	 	 	 	 
	Schedule 1.1

	 	—
	 	Agent’s Representatives
	Disclosure Schedule 3.1

	 	—
	 	Type of Entity; State of Organization
	Disclosure Schedule 3.2

	 	—
	 	Executive Offices, Collateral Locations, FEIN
	Disclosure Schedule 3.4(a)

	 	—
	 	Financial Statements
	Disclosure Schedule 3.6

	 	—
	 	Real Estate and Leases
	Disclosure Schedule 3.7

	 	—
	 	Labor Matters
	Disclosure Schedule 3.8

	 	—
	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock
	Disclosure Schedule 3.11

	 	—
	 	Tax Matters
	Disclosure Schedule 3.12

	 	—
	 	ERISA Plans
	Disclosure Schedule 3.13

	 	—
	 	Litigation
	Disclosure Schedule 3.14

	 	—
	 	Brokers
	Disclosure Schedule 3.15

	 	—
	 	Intellectual Property
	Disclosure Schedule 3.17

	 	—
	 	Hazardous Materials
	Disclosure Schedule 3.18

	 	—
	 	Insurance
	Disclosure Schedule 3.19

	 	—
	 	Deposit and Disbursement Accounts
	Disclosure Schedule 3.20

	 	—
	 	Government Contracts
	Disclosure Schedule 3.22

	 	—
	 	Bonds; Patent, Trademark Licenses
	Disclosure Schedule 5.1

	 	—
	 	Trade Names
	Disclosure Schedule 6.3

	 	—
	 	Indebtedness
	Disclosure Schedule 6.4(a)

	 	—
	 	Transactions with Affiliates
	Disclosure Schedule 6.7

	 	—
	 	Existing Liens






v









 






          This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of June
2, 2010 among INSTEEL WIRE PRODUCTS COMPANY, a North Carolina corporation (“Borrower”); the
other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(in its individual capacity, “GE Capital”), for itself, as Lender, and as Agent for
Lenders, and the other Lenders signatory hereto from time to time.




RECITALS




          WHEREAS, parties hereto are parties to a Credit Agreement, dated as of June 2, 2004 (the
“Original Credit Agreement”), as amended and restated pursuant to that certain Amended and
Restated Credit Agreement dated January 12, 2006 (as amended and restated and as otherwise amended,
restated, supplemented or otherwise modified prior to the date hereof, the “First A&R Credit
Agreement”); and




          WHEREAS, pursuant to and upon the terms and conditions set forth in the Agreement, each of the
parties hereto wishes to and agrees to amend and restate the First A&R Credit Agreement on the
terms and conditions set forth herein; and




          WHEREAS, Borrower has agreed to secure and continue to secure all of its obligations under the
Loan Documents by granting and continuing to grant to Agent, for the benefit of Agent and Lenders,
a security interest in and lien upon certain of its existing and after-acquired personal property;
and




          WHEREAS, Insteel Industries, Inc., a North Carolina corporation (“Holdings”) is
willing to guarantee and continue to guarantee all of the obligations of Borrower to Agent and
Lenders under the Loan Documents and to pledge and continue to pledge to Agent, for the benefit of
Agent and Lenders, all of the Stock of Borrower to secure such guaranty; and




          WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in
Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of
construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, “Appendices”) hereto, or expressly identified
to this Agreement, are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as part of the
Agreement.




          NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto agree to amend and
restate the Original Credit Agreement (including all Schedules, Annexes and Exhibits thereto) in
its entirety to read as follows:




1. AMOUNT AND TERMS OF CREDIT




          1.1 Credit Facilities.




          (a) Revolving Credit Facility.




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               (i) Subject to the terms and conditions hereof, each Revolving Lender agrees to make
available to Borrower from time to time until the Commitment Termination Date its Pro Rata
Share of advances (each, a “Revolving Credit Advance”). The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving
Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and
not joint. Until the Commitment Termination Date, Borrower may from time to time borrow,
repay and reborrow under this Section 1.1(a); provided, that the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing Availability at
such time. Borrowing Availability may be further reduced by Reserves imposed by Agent in
its Permitted Discretion. Each Revolving Credit Advance shall be made on notice by
Borrower to one of the representatives of Agent identified in Schedule 1.1 at the
address specified therein. Any such notice must be given no later than (1) 11:00 a.m.
(Chicago time) on the Business Day of the proposed Revolving Credit Advance, in the case of
an Index Rate Loan, or (2) 11:00 a.m. (Chicago time) on the date which is three (3)
Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan.
Each such notice (a “Notice of Revolving Credit Advance”) must be given in writing
(by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i),
and shall include the information required in such Exhibit and such other information as
may be required by Agent. If Borrower desires to have the Revolving Credit Advances bear
interest by reference to a LIBOR Rate, it must comply with Section 1.5(e).



               (ii) Except as provided in Section 1.12, Borrower shall execute and deliver to
each Revolving Lender a note to evidence the Revolving Loan Commitment of that Revolving
Lender. Each note shall be in the principal amount of the Revolving Loan Commitment of the
applicable Revolving Lender, dated the Closing Date and substantially in the form of
Exhibit 1.1(a)(ii) (each a “Revolving Note” and, collectively, the
“Revolving Notes”). Each Revolving Note shall represent the obligation of Borrower
to pay the amount of Revolving Lender’s Revolving Loan Commitment or, if less, such
Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving
Credit Advances to Borrower together with interest thereon as prescribed in Section
1.5. The entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.



               (iii) Any provision of this Agreement to the contrary notwithstanding, at the request
of Borrower, in its discretion Agent may (but shall have absolutely no obligation to), make
Revolving Credit Advances to Borrower on behalf of Revolving Lenders in amounts that cause
the outstanding balance of the aggregate Revolving Loan to exceed the Borrowing Base (less
the Swing Line Loan) (any such excess Revolving Credit Advances are herein referred to
collectively as “Overadvances”); provided, that (A) no such event or occurrence
shall cause or constitute a waiver of Agent’s, the Swing Line Lender’s or Revolving
Lenders’ right to refuse to make any further Overadvances, Swing Line Advances or Revolving
Credit Advances, or incur any Letter of Credit Obligations, as the case may be, at any time
that an Overadvance exists, and (B) no Overadvance shall result in a Default or Event of
Default due to Borrower’s failure to comply with Section 1.3(b)(i) for so long as
Agent permits such Overadvance



-2-









 







to remain outstanding, but solely with respect to the amount of such Overadvance. In
addition, Overadvances may be made even if the conditions to lending set forth in
Section 2 have not been met. All Overadvances shall constitute Index Rate Loans,
shall bear interest at the Default Rate and shall be payable on the earlier of demand or
the Commitment Termination Date. Except as otherwise provided in Section 1.11(b),
the authority of Agent to make Overadvances is limited to an aggregate amount not to exceed
$5,000,000 at any time, shall not cause the Revolving Loan to exceed the Maximum Amount,
and may be revoked prospectively by a written notice to Agent signed by the Requisite
Lenders.



          (b) [Intentionally Omitted]




          (c) Swing Line Facility.




               (i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice of
Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing Line
Lender may, in its discretion, make available from time to time until the Commitment
Termination Date advances (each, a “Swing Line Advance”) in accordance with any
such notice. The provisions of this Section 1.1(c) shall not relieve Revolving
Lenders of their obligations to make Revolving Credit Advances under Section
1.1(a); provided, that if the Swing Line Lender makes a Swing Line Advance pursuant to
any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance
that otherwise may be made by Revolving Credit Lenders pursuant to such notice. The
aggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesser
of (A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and (except for
Overadvances) the Borrowing Base, in each case, less the outstanding balance of the
Revolving Loan at such time (“Swing Line Availability”). Until the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow under this
Section 1.1(c). Each Swing Line Advance shall be made pursuant to a Notice of
Revolving Credit advance delivered by Borrower to Agent in accordance with Section
1.1(a). Any such notice must be given no later than 11:00 a.m. (Chicago time) on the
Business Day of the proposed Swing Line Advance. The Swing Line Lender shall,
notwithstanding the failure of any condition precedent set forth in Sections 2.2,
be entitled to fund that Swing Line Advance, and to have each Revolving Lender make
Revolving Credit Advances in accordance with Section 1.1(c)(iii) or purchase
participating interests in accordance with Section 1.1(c)(iv). Notwithstanding
any other provision of this Agreement or the other Loan Documents, the Swing Line Loan
shall constitute an Index Rate Loan. Borrower shall repay the aggregate outstanding
principal amount of the Swing Line Loan upon demand therefor by Agent.



               (ii) Borrower shall execute and deliver to the Swing Line Lender a promissory note to
evidence the Swing Line Commitment. Such note shall be in the principal amount of the
Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in
the form of Exhibit 1.1(c)(ii) (the “Swing Line Note”). The Swing Line Note
shall represent the obligation of Borrower to pay the amount of the Swing Line Commitment
or, if less, the aggregate unpaid principal amount of all Swing Line Advances made to
Borrower together with interest thereon as



-3-









 







prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan
and all other non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date if not sooner paid in full.



               (iii) If no Revolving Lender is a Non-Funding Lender, the Swing Line Lender, at any
time and from time to time no less frequently than once weekly, shall on behalf of Borrower
(and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit
Advance to Borrower (which shall be an Index Rate Loan) in an amount equal to that
Revolving Lender’s Pro Rata Share of the principal amount of the Swing Line Loan (the
“Refunded Swing Line Loan”) outstanding on the date such notice is given. Unless
any of the events described in Sections 8.1(h) or 8.1(i) has occurred (in which
event the procedures of Section 1.1(c)(iv) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, each Revolving Lender shall disburse directly to Agent, its Pro
Rata Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior to 2:00
p.m. (Chicago time), in immediately available funds on the Business Day next succeeding the
date that notice is given. The proceeds of those Revolving Credit Advances shall be
immediately paid to the Swing Line Lender and applied to repay the Refunded Swing Line
Loan. If any Revolving Lender is a Non-Funding Lender, that Non-Funding Lender’s
reimbursement obligations with respect to the Swing Line Loans shall be allocated to and
assumed by the other Revolving Lenders pro rata in accordance with their Pro Rata Share
(calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each
other Revolving Lender’s Pro Rata Share had been increased proportionately). If any
Revolving Lender is a Non-Funding Lender, upon receipt of the request described above, each
Revolving Lender that is not a Non-Funding Lender will be obligated to disburse to Agent
its Pro Rata Share (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to
zero and each other Revolving Lender’s Pro Rata Share had been increased proportionately)
of the Refunded Swing Line Loan; provided that no Revolving Lender shall be required to
fund any amount which would result in the sum of its outstanding Revolving Loans,
outstanding Letter of Credit Obligations (increased as described in clause (a) of
Annex B), the amount of its participation in Swing Line Loans and its pro rata
share of unparticipated amounts in Swing Line Loans (increased as described above) to
exceed its Revolving Loan Commitment.



               (iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant
to Section 1.1(c)(iii), one of the events described in Sections 8.1(h) or
8.1(i) has occurred, then, subject to the provisions of Section 1.1(c)(v)
below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have
been made for the benefit of Borrower, 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 Revolving Lender shall promptly transfer to the
Swing Line Lender, in immediately available funds, the amount of its participation
interest.



-4-









 







               (v) Each Revolving Lender’s obligation to make Revolving Credit Advances in accordance
with Section 1.1(c)(iii) and to purchase participation interests in accordance with
Section 1.1(c)(iv) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other
right that such Revolving Lender may have against the Swing Line Lender, Borrower or any
other Person for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing. If any Revolving
Lender does not make available to Agent or the Swing Line Lender, as applicable, the
amount required pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case may be,
the Swing Line Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Index Rate thereafter.



          (d) Reliance on Notices. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent may assume that
each Person executing and delivering any notice in accordance herewith was duly authorized, unless
the responsible individual acting thereon for Agent has actual knowledge to the contrary, and Agent
may, without incurring any liability hereunder, rely and act upon any notice, document and
information (including those transmitted by Electronic Transmission) and any telephone message or
conversation, in each case believed by it to be genuine and transmitted, signed or otherwise
authenticated by the appropriate parties.



          1.2 Letters of Credit. Subject to and in accordance with the terms and conditions
contained herein and in Annex B, Borrower shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of
Borrower.



          1.3 Prepayments.



          (a) Voluntary Prepayments; Reductions in Revolving Loan Commitments. Borrower may at
any time on at least five (5) days’ prior written notice to Agent permanently reduce (but not
terminate) the Revolving Loan Commitment; provided, that (A) any such reductions shall be in a
minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of such amount, and (B)
after giving effect to such reductions, Borrower shall comply with Section 1.3(b)(i).
Borrower may at any time on at least ten (10) days’ prior written notice to Agent terminate the
Revolving Loan Commitment, provided that upon such termination all Loans and other Obligations
shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto. Any voluntary
prepayment and any reduction or termination of the Revolving Loan Commitment must be accompanied by
payment of the Fee required by Section 1.9(c), if any,
plus the payment of any LIBOR funding breakage costs in accordance with Section
1.13(b). Upon any such reduction or termination of the Revolving Loan Commitment, Borrower’s
right to



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request Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances, shall simultaneously be permanently reduced
or terminated, as the case may be; provided, that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction in the L/C Sublimit. Each notice
of partial prepayment shall designate the Loan or other Obligations to which such prepayment is to
be applied.



          (b) Mandatory Prepayments.



               (i) If at any time the outstanding balances of the Revolving Loan and the Swing Line
Loan exceed the lesser of (A) the Maximum Amount and (B) the Borrowing Base, Borrower shall
immediately repay the aggregate outstanding Revolving Credit Advances to the extent
required to eliminate such excess. If any such excess remains after repayment in full of
the aggregate outstanding Revolving Credit Advances, Borrower shall provide cash collateral
for the Letter of Credit Obligations in the manner set forth in Annex B to the
extent required to eliminate such excess. Notwithstanding the foregoing, any Overadvance
made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section
1.1(a)(iii).



               (ii) Promptly upon receipt by any Credit Party of any cash proceeds of any asset
disposition, Borrower shall prepay the Loans in an amount equal to all such proceeds, net
of (A) commissions and other reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by Borrower in connection therewith
(in each case, paid to non-Affiliates), (B) sale or transfer taxes, (C) amounts payable to
holders of senior Liens on such asset (to the extent such Liens are permitted under
Section 6.7), if any, and (D) an appropriate reserve for income taxes in accordance
with GAAP in connection therewith (all such proceeds net of amounts described in clauses
(A), (B), (C) and (D) being the “Net Asset Disposition Proceeds”). Any such
prepayment shall be applied in accordance with Section 1.3(c). The following shall
not be subject to mandatory prepayment under this clause (ii): (1) proceeds of
sales of Inventory in the ordinary course of business; (2) so long as no Event of Default
has occurred and is continuing and Liquidity is at least $10,000,000, Net Asset Disposition
Proceeds of any sale or dispositions of assets other than Collateral and (3) asset
disposition proceeds that are reinvested in Equipment, Fixtures or Real Estate within one
hundred and eighty (180) days following receipt thereof; provided, that Borrower notifies
Agent of its intent to reinvest at the time such proceeds are received and when such
reinvestment occurs.



               (iii) The Borrower shall repay to the Lenders in full on the date specified in
clause (a) of the definition of the term “Commitment Termination Date” the
aggregate principal amount of the Revolving Loans and Swing Line Loans outstanding on such
date.



               (iv) Following the occurrence and during the continuance of an Event of Default, any
proceeds of Keyman Life Insurance (whether such proceeds arise
by reason of death benefit, at maturity, surrendering the policy and receiving the
surrender value thereof (unless upon such receipt of such surrender value, Keyman Life



-6-









 







Insurance is purchased which has a death benefit that is not less than the death benefit of
the Keyman Life Insurance which was surrendered) or otherwise) shall be immediately used to
prepay the Obligations in an amount equal to such proceeds, which shall be applied in
accordance with Section 1.11.



               (c) Application of Certain Mandatory Prepayments. Any prepayments made by Borrower
with respect to any or all Obligations pursuant to
Sections 1.3(b)(ii) or (b)(iv)
above and any prepayments from insurance or condemnation proceeds in accordance with Section
5.4(c) shall be applied as follows: first, to Fees and reimbursable expenses of Agent
then due and payable pursuant to any of the Loan Documents; second, to interest then due
and payable on the Swing Line Loan; third to the principal balance of the Swing Line Loan
until the same has been repaid in full; fourth, to interest then due and payable on the
Revolving Credit Advances; fifth, to the outstanding principal balance of Revolving Credit
Advances until the same has been paid in full; and sixth, if Borrower is required to
provide cash collateral for any Letter of Credit Obligations pursuant to this Agreement, including
Section 8.2, to provide cash collateral for any Letter of Credit Obligations in the manner
set forth in Annex B, until all such Letter of Credit Obligations have been fully cash
collateralized in the manner set forth in Annex B. To the extent permitted by the
foregoing sentence, amounts prepaid shall be applied first to any Index Rate Loans then outstanding
and then to outstanding LIBOR Loans with the shortest LIBOR Periods remaining. Neither the
Revolving Loan Commitment nor the Swing Line Commitment shall be permanently reduced by the amount
of any such prepayments.



               (d) No Implied Consent. Nothing in this Section 1.3 shall be construed to
constitute Agent’s or any Lender’s consent to any transaction that is not permitted by other
provisions of this Agreement or the other Loan Documents.



               1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Loans solely for the
Refinancing (and to pay any related transaction expenses) and to pay transaction expenses in
connection with this Agreement, and for the financing of Borrower’s ordinary working capital and
general corporate needs. Borrower shall only request a Revolving Credit Advance to the extent that
the proceeds thereof are reasonably anticipated by Borrower to be used and expended within three
Business days of such Revolving Credit Advance.



               1.5 Interest and Applicable Margins.



               (a) Borrower shall pay interest to Agent, for the ratable benefit of Lenders in accordance
with the various Loans being made by each Lender, in arrears on each applicable Interest Payment
Date, at the Index Rate plus the Applicable Revolver Index Margin per annum or, at the
election of Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin
per annum.




     (A) As of the First A&R Closing Date, the Applicable Margins were as follows:



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	Applicable Revolver Index Margin
	 	 	0.00	%
	Applicable Revolver LIBOR Margin
	 	 	1.25	%
	Applicable L/C Margin
	 	 	1.25	%
	Applicable Unused Line Fee Margin
	 	 	0.375	%







At all times from and after the First A&R Closing Date until (but excluding) the
Closing Date, the Applicable Margins shall be adjusted by reference to the following
grids:



	 	 	 
	 	 	Level of
	If Reference Availability is:	 	Applicable Margins:
	>$35,000,000

	 	Level I
	> $25,000,000, but <$35,000,000
	 	Level II
	> $15,000,000, but <$25,000,000
	 	Level III
	<$15,000,000
	 	Level IV






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margins
	 	 	Level I	 	Level II	 	Level III	 	Level IV
	Applicable Revolver
	 	 	0.00	%	 	 	0.00	%	 	 	0.25	%	 	 	0.50	%
	Index Margin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Revolver
	 	 	1.25	%	 	 	1.50	%	 	 	1.75	%	 	 	2.00	%
	LIBOR Margin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable L/C
	 	 	1.25	%	 	 	1.50	%	 	 	1.75	%	 	 	2.00	%
	Margin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Unused Line
	 	 	0.375	%	 	 	0.375	%	 	 	0.25	%	 	 	0.25	%
	Fee Margin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







Adjustments in the Applicable Margins commencing with the Fiscal Quarter ending on
or about December 31, 2005 shall be implemented quarterly on a prospective basis,
commencing on the first day of the calendar month that begins after the date of
delivery to Lenders of the Compliance Certificate delivered to Agent and Lenders
pursuant to paragraph (b) of Annex E with respect to a Fiscal
Quarter evidencing the need for an adjustment. Concurrently with the delivery of
such Compliance Certificate, Borrower shall deliver to Agent and Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable Margins.
Failure to timely deliver such Compliance Certificate shall, in addition to any
other remedy provided for in this Agreement, result in an increase in the



-8-









 







Applicable Margins to the highest level set forth in the foregoing grid, until the
date of the delivery of a Compliance Certificate demonstrating that such an increase
is not required. If an Event of Default has occurred and is continuing at the time
any reduction in the Applicable Margins is to be implemented, that reduction shall
be deferred until the date on which such Event of Default is waived or cured.




(B) As of the Closing Date, the Applicable Margins are as follows:



	 	 	 	 	 

	Applicable Revolver Index Margin
	 	 	0.75	%
	Applicable Revolver LIBOR Margin
	 	 	2.25	%
	Applicable L/C Margin
	 	 	2.25	%
	Applicable Unused Line Fee Margin
	 	 	0.50	%







After the Closing Date, the Applicable Margins (other than Applicable Unused Line
Fee Margin) shall be adjusted by reference to the following grids:



	 	 	 
	 	 	Level of
	 	 	Applicable Margins (other than
	If Reference Availability is:	 	Applicable Unused Line Fee Margin):
	>$30,000,000

	 	Level I
	> $10,000,000, but <$30,000,000
	 	Level II
	<$10,000,000
	 	Level III






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margins (other than
	 	 	Applicable Unused Line Fee Margin)
	 	 	Level I	 	Level II	 	Level III
	Applicable Revolver
	 	 	0.75	%	 	 	1.00	%	 	 	1.50	%
	Index Margin
	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Revolver LIBOR
	 	 	2.25	%	 	 	2.50	%	 	 	3.00	%
	Margin
	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable L/C Margin
	 	 	2.25	%	 	 	2.50	%	 	 	3.00	%







Adjustments in the Applicable Margins (other than Applicable Unused Line Fee Margin)
commencing with the Fiscal Quarter ending on or about July 3, 2010 shall be
implemented quarterly on a prospective basis, commencing on the first day of the
calendar month that begins after the date of delivery to Lenders of the



-9-









 







Compliance Certificate delivered to Agent and Lenders pursuant to paragraph
(b) of Annex E with respect to a Fiscal Quarter evidencing the need for
an adjustment. Concurrently with the delivery of such Compliance Certificate,
Borrower shall deliver to Agent and Lenders a certificate, signed by its chief
financial officer, setting forth in reasonable detail the basis for the continuance
of, or any change in, the Applicable Margins. Failure to timely deliver such
Compliance Certificate shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins (other than Applicable
Unused Line Fee Margin) to the highest level set forth in the foregoing grid, until
the date of the delivery of a Compliance Certificate demonstrating that such an
increase is not required. If an Event of Default has occurred and is continuing at
the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the date on which such Event of Default is waived
or cured.




After the Closing Date, the Applicable Unused Line Fee Margin shall be adjusted as
follows: (i) if the average of the daily closing balances of the Revolving Loan and
the Swing Line Loan outstanding during the period for which the Fee under
Section 1.9(b) is due is equal to or greater than 50% of the average Maximum
Amount during such period, the Applicable Unused Line Fee Margin for such period
shall be equal to 0.375% per annum and (ii) if the average of the daily closing
balances of the Revolving Loan and the Swing Line Loan outstanding during the period
for which the Fee under Section 1.9(b) is due is less than 50% of the
average Maximum Amount for such period, the Applicable Unused Line Fee Margin for
such period shall be equal to 0.50% per annum.



          (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the
maturity thereof will be extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.




          (c) All computations of Fees calculated on a per annum basis and interest shall be made by
Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the
period for which such interest and Fees are payable. The Index Rate is a floating rate determined
for each day. Each determination by Agent of interest rates and Fees hereunder shall be
presumptive evidence of the correctness of such rates and Fees.




          (d) So long as an Event of Default has occurred and is continuing under Section 8.1(a),
(h) or (i), or so long as any other Event of Default has occurred and is continuing and at the
election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice
from Agent to Borrower, the interest rates applicable to the Loans and the Letter of Credit Fees
shall be increased to the rate per annum which is determined by adding two percent (2.0%) per annum
to the Applicable Margin then in effect for such Loans (plus the LIBOR Rate or Index Rate, as the
case may be) or to the rate of such Fees otherwise applicable hereunder unless Agent or Requisite
Lenders elect to impose a smaller increase (the “Default Rate”), and all outstanding
Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and
Letter of Credit Fees at the Default Rate shall be payable upon demand





-10-











 




and shall accrue from the initial date of such Event of Default until that Event of
Default is cured or waived.




          (e) Subject to the conditions precedent set forth in Section 2.2, Borrower shall have
the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Loans (other than the Swing Line Loan) from Index Rate
Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of
LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to
the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any
Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR
Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after
the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans having
the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be
in a minimum amount of $2,000,000 and integral multiples of $1,000,000 in excess of such amount.
Any such election must be made by 11:00 a.m. (Chicago time) on the Third Business Day prior to (1)
the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each
LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by
Borrower in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m.
(Chicago time) on the Third Business Day prior to the end of the LIBOR Period with respect thereto
(or if a Default or an Event of Default has occurred and is continuing or the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR Loan shall be
converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must make such election
by notice to Agent in writing, including by Electronic Transmission. In the case of any conversion
or continuation, such election must be made pursuant to a written notice (a “Notice of
Conversion/Continuation”) in the form of Exhibit 1.5(e).




          (f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a court
of competent jurisdiction determines in a final order that the rate of interest payable hereunder
exceeds the highest rate of interest permissible under law (the “Maximum Lawful Rate”),
then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total
interest received by Agent, on behalf of Lenders, is equal to the total interest that would have
been received had the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise provided in this
Agreement. In no event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount that such Lender could lawfully have received had the interest due
hereunder been calculated for the full term hereof at the Maximum Lawful Rate.




          1.6 Eligible Accounts. All of the Accounts owned by Borrower and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent shall be “Eligible Accounts” for purposes of
this Agreement, except any Account to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify or eliminate Reserves against Eligible
Accounts from time to time in its Permitted Discretion. In



-11-









 







addition, Agent reserves the right, at
any time and from time to time after the Closing Date, to adjust any of the criteria set forth
below and to establish new criteria, and to adjust advance rates with respect to Eligible Accounts,
in its Permitted Discretion, subject to the approval of Supermajority Revolving Lenders in the case
of adjustments or new criteria or changes in advance rates which have the effect of making more
credit available. Eligible Accounts shall not include any Account of Borrower, without
duplication:



          (a) that does not arise from the sale of goods or the performance of services by Borrower in
the ordinary course of its business;




          (b) (i) upon which Borrower’s right to receive payment is not absolute or is contingent upon
the fulfillment of any condition whatsoever or (ii) as to which Borrower is not able to bring suit
or otherwise enforce its remedies against the Account Debtor through judicial process, or (iii) if
the Account represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that
invoice is subject to Borrower’s completion of further performance under such contract or is
subject to the equitable lien of a surety bond issuer;




          (c) to the extent that any defense, counterclaim, contra, setoff or dispute is asserted as to
such Account but only to the extent of any such defense, counterclaim, contra, setoff or dispute;




          (d) that is not a true and correct statement of bona fide indebtedness incurred in the amount
of the Account for merchandise sold to or services rendered and accepted by the applicable Account
Debtor;




          (e) with respect to which an invoice, in form and substance consistent with Borrower’s
customary billing practices, has not been sent to the applicable Account Debtor;




          (f) that (i) is not owned by Borrower or (ii) is subject to any Lien of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders;




          (g) that arises from a sale to any director, officer, other employee or Affiliate of any
Credit Party, or to any entity that has any common officer or director with any Credit Party (other
than those sales to an Affiliate (determined solely for the purposes of this clause (g), as
if the phrase “5% or more” set forth in clause (a) of the definition of the term of
“Affiliate” was the phrase “15% or less” and without giving effect to clauses (b),
(c) and (d) of such definition) of any Credit Party so long as such sales are on an
arms-length basis and in the ordinary course of such Credit Party’s business);




          (h) that is the obligation of an Account Debtor that is the United States government or a
political subdivision thereof, or any state, county or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has agreed to the contrary
in writing and Borrower, if necessary or desirable, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such obligation;




-12-









 








          (i) that is the obligation of an Account Debtor located in a foreign country other than Canada
unless payment thereof is assured by a letter of credit assigned and delivered to Agent, reasonably
satisfactory to Agent as to form, amount and issuer;




          (j) to the extent Borrower or any Subsidiary thereof is liable for goods sold or services
rendered by the applicable Account Debtor to Borrower or any Subsidiary thereof but only to the
extent of the potential offset;




          (k) that arises with respect to goods that are delivered on a cash-on-delivery basis or placed
on consignment, guaranteed sale or other terms by reason of which the payment by the Account Debtor
is or may be conditional;




          (l) the Account is not paid within the earlier of: sixty (60) days following its due date or
one hundred twenty (120) days following its original invoice date;




          (m) as to which:




               (i) the Account Debtor obligated upon such Account suspends business, makes a general
assignment for the benefit of creditors or fails to pay its debts generally as they come
due; or



               (ii) a petition is filed by or against any Account Debtor obligated upon such Account
under any bankruptcy law or any other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the relief of debtors;



          (n) that is the obligation of an Account Debtor for which fifty percent (50%) or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under the other criteria
set forth in this Section 1.6 (l)(i);




          (o) as to which Agent’s Lien thereon, on behalf of itself and Lenders, is not a first priority
perfected Lien;




          (p) as to which any of the representations or warranties in the Loan Documents are untrue in
any material respect;




          (q) that is a Bill-and-Hold Account to the extent that the book value thereof, when added to
the book value of all other Bill-and-Hold Accounts, exceeds 60% of the aggregate book value of all
Bill-and-Hold Accounts, provided, however, that the aggregate amount of Borrowing Availability
attributable to Bill-and-Hold Accounts which are not excluded from being Eligible Accounts pursuant
to this clause (q) and which otherwise constitute and are deemed to be “Eligible Accounts”
in accordance with this Section 1.6 shall not exceed $3,000,000 at any time;




          (r) to the extent such Account is evidenced by a judgment, Instrument or Chattel Paper;




-13-









 








          (s) to the extent such Account exceeds any credit limit established by Agent, in its Permitted
Discretion; provided, that Agent shall notify Borrower of Agent’s proposed credit limit or an
amendment of the existing credit limit, as the case may be, prior to Agent’s establishment or
amendment thereof and Agent and Borrower shall mutually agree on such credit limit; provided,
further, that if no agreement is reached within ten (10) Business Days of the date of the proposal
of such credit limit or amendment thereof by the Agent, the Agent’s proposed credit limit or
amendment thereof shall be deemed to be established and in effect for purposes of this clause
(r);




          (t) to the extent that such Account, together with all other Accounts owing to such Account
Debtor and its Affiliates as of any date of determination exceed 15% of all Eligible Accounts; or




          (u) that is payable in any currency other than Dollars.




          If Agent deems any Account ineligible in its Permitted Discretion based on a new criterion
other than the criteria set forth above, then Agent shall give Borrower at least three (3) Business
Days’ prior notice (oral or written or by Electronic Transmission) thereof unless an Event of
Default exists, in which case no notice shall be required.




          1.7 Eligible Inventory. All of the inventory owned by the Borrower and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent shall be “Eligible Inventory” for purposes of
this Agreement, except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify, or eliminate Reserves against Eligible
Inventory from time to time in its Permitted Discretion. In addition, Agent reserves the right, at
any time and from time to time after the Closing Date, to adjust any of the criteria set forth
below and to establish new criteria and to adjust advance rates with respect to Eligible Inventory
in its reasonable credit judgment, subject to the approval of Supermajority Revolving Lenders in
the case of adjustments or new criteria or changes in advance rates which have the effect of making
more credit available. Eligible Inventory shall not include any Inventory of Borrower that,
without duplication:




          (a) is not owned by Borrower free and clear of all Liens and rights of any other Person
(including the rights of a purchaser that has made progress payments and the rights of a surety
that has issued a bond to assure Borrower’s performance with respect to that Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders and except for Liens described in
clause (d) of the definition of the term “Permitted Encumbrances” (subject to Reserves in
the Permitted Discretion of the Agent);




          (b) (i) is not located on premises owned, leased or rented by Borrower and set forth in
Disclosure Schedule (3.2) or (ii) is stored at a leased location, unless (x) a reasonably
satisfactory landlord waiver has been delivered to Agent or (y) Rent Reserves have been established
with respect thereto, (iii) is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged Bailee Letter has been received by Agent and, if required by Agent,
Reserves reasonably satisfactory to Agent have been established with respect to all past-due
amounts owing to any such bailee or warehouseman, or (iv) is located at an owned location subject
to a mortgage in favor of a lender other than Agent, unless a reasonably satisfactory




-14-









 







mortgagee
waiver or a collateral access agreement referred to in Section 6.3(a)(ix) has been
delivered to Agent, or (v) is located at any site if the aggregate book value of Inventory at any
such location is less than $100,000;




          (c) is placed on consignment or is in transit, except for Inventory in transit between
domestic locations (including leased locations and domestic port locations with respect to which a
Bailee Letter has been delivered to Agent) of Credit Parties as to which Agent’s Liens have been
perfected at origin and destination;




          (d) is covered by a negotiable document of title, unless such document has been delivered to
Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent
and Lenders;




          (e) obsolete, slow moving (in excess of one year’s supply), unsalable, shopworn, seconds,
damaged or unfit for sale;




          (f) consists of display items or packing or shipping materials, manufacturing supplies, stores
or replacement parts;




          (g) consists of goods which have been returned by the buyer unless such returned goods have
been inspected by Borrower and determined to be free of defect or damage and have been returned to
finished goods Inventory for sale;




          (h) is not of a type held for sale in the ordinary course of Borrower’s business;




          (i) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders;




          (j) breaches any of the representations or warranties pertaining to Inventory set forth in the
Loan Documents in any material respect;




          (k) consists of any costs associated with “freight-in” charges, except those charges that are
customary in, and consistent with, Borrower’s historical accounting practices;




          (l) consists of Hazardous Materials or goods that can be transported or sold only with
licenses that are not readily available;




          (m) is not covered by casualty insurance reasonably acceptable to Agent; or




          (n) is subject to any patent or trademark license requiring the payment of royalties or fees
or requiring the consent of the licensor for a sale thereof by Agent.




          If Agent deems any Inventory ineligible in its Permitted Discretion based on a new criterion
other than the criteria set forth above, then Agent shall give Borrower at least three
(3) Business Days’ prior notice (oral or written or by Electronic Transmission) thereof unless
an Event of Default exists, in which case no notice shall be required.




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          1.8 Cash Management Systems. On or prior to the Closing Date, Borrower and Holdings will establish and will maintain
until the Termination Date, the cash management systems described in Annex C (the “Cash
Management Systems”).




          1.9 Fees.




          (a) Borrower shall pay to GE Capital, individually, the Fees specified in the GE Capital Fee
Letter.




          (b) As additional compensation for the Revolving Lenders, Borrower shall pay to Agent, for the
ratable benefit of such Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrower’s non use of
available funds in an amount equal to the Applicable Unused Line Fee Margin per annum (calculated
on the basis of a 360 day year for actual days elapsed) multiplied by the
difference between (x) the average daily Maximum Amount (as it may be reduced from time to time)
during the preceding calendar month and (y) the average of the daily closing balances of the
Revolving Loan and the Swing Line Loan outstanding during the preceding calendar month,
provided, that in no event shall the amount computed pursuant to clause (x) and clause (y)
be less then zero. For purposes of this Section 1.9(b), the Revolving Loan Commitment of
any Non-Funding Lender shall be deemed to be zero.




          (c) [Intentionally Omitted].




          (d) Borrower shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of
Credit Fee as provided in Annex B.




          1.10 Receipt of Payments. Borrower shall make each payment under this Agreement not later than 2:00 p.m. (New York
time) on the day when due in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability as of any date, all
payments shall be deemed received on the first Business Day following the Business Day on which
immediately available funds therefor are received in the Collection Account prior to 2:00 p.m. (New
York time). Payments received after 2:00 p.m. (New York time) on any Business Day or on a day that
is not a Business Day shall be deemed to have been received on the following Business Day.




          1.11 Application and Allocation of Payments.




          (a) So long as no Event of Default has occurred and is continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be applied, first, to the
Swing Line Loan and, second, to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments;
(iii) voluntary prepayments shall be applied in accordance with the provisions of Section
1.3(a); and (iv) mandatory prepayments shall be applied as set forth in Section 1.3(c).
All payments and prepayments applied to a particular Loan shall be applied ratably to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to any other payment, and as
to all payments made when an Event of Default has occurred and is continuing or following the
Commitment Termination Date, Borrower hereby irrevocably waives the right to direct the application
of any and all payments received from or on behalf of Borrower, and Borrower




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hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply any and all such payments
against the Obligations as Agent may deem advisable notwithstanding any previous entry by Agent in
the Loan Account or any other books and records. In the absence of a specific determination by
Agent with respect thereto, payments shall be applied to amounts then due and payable in the
following order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2) to interest on the
Swing Line Loan; (3) to principal payments on the Swing Line Loan; (4) to interest on the other
Loans ratably in proportion to the interest accrued as to each Loan; (5) to principal payments on
the other Loans and any Obligations under any Secured Rate Contract and to provide cash collateral
for Letter of Credit Obligations in the manner described in Annex B, ratably to the
aggregate, combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.




          (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance
on behalf of Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and principal, other than
principal of the Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts as and when due,
even if the amount of such charges would exceed Borrowing Availability at such time. At Agent’s
option and to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.




          1.12 Loan Account and Accounting. Agent shall maintain a loan account (the “Loan Account”) on its books to record:
all Advances, all payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent’s customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Agent’s most recent printout or other
written statement, shall, absent manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided, that any failure to so record or any error in so
recording shall not limit or otherwise affect Borrower’s duty to pay the Obligations. Agent shall
render to Borrower a monthly accounting of transactions with respect to the Loans setting forth the
balance of the Loan Account for the immediately preceding month. Unless Borrower notifies Agent in
writing of any objection to any such accounting (specifically describing the basis for such
objection), within thirty (30) days after the date thereof, each and every such accounting shall be
presumptive evidence of all matters reflected therein. Only those items expressly objected to in
such notice shall be deemed to be disputed by Borrower. Notwithstanding any provision herein
contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to that Lender and may rely on
the Loan Account as evidence of the amount of Obligations from time to time owing to it.




          1.13 Indemnity.




          (a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and
hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and representatives (each, an
“Indemnified Person”), from and against any and all suits, actions, proceedings, claims,




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damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any appeal) that may be
instituted or asserted against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and in connection with any agreement or contractual
obligation entered into in connection with any E-Systems or other Electronic Transmissions and
legal costs and expenses arising out of or incurred in connection with disputes between or among
any parties to any of the Loan Documents (collectively, “Indemnified Liabilities”);
provided, that no such Credit Party shall be liable for any indemnification to an Indemnified
Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person’s gross negligence or willful misconduct. NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH
MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.




          (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)
any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any provision of this Agreement or any other Loan
Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii)
Borrower shall refuse to accept any borrowing of, or shall request a termination of any borrowing,
conversion into or continuation of LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan after
Borrower has given a notice thereof in accordance herewith, then Borrower shall indemnify and hold
harmless each Lender from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss (including loss of margin) or
expense arising from the reemployment of funds obtained by it or from fees payable to terminate
deposits from which such funds were obtained. For the purpose of calculating amounts payable to a
Lender under this subsection, each Lender shall be deemed to have actually funded its relevant
LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the
amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
provided, that each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts payable under this
subsection. This covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances,
each Lender shall provide Borrower with its written calculation of all amounts payable pursuant to
this Section 1.13(b), and such calculation shall be binding on the parties hereto unless
Borrower shall object in writing within ten (10) Business Days of receipt thereof, specifying the
basis for such objection in detail.




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          1.14 Access. Each Credit Party that is a party hereto shall, during normal business hours, from time to
time upon two (2) Business Days’ prior notice as frequently as Agent reasonably determines to be
appropriate: (a) provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors, officers and employees of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect, audit and
make extracts from any Credit Party’s books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review, evaluate and conduct field examinations, audits, test
verifications and counts of the Accounts, Inventory and other Collateral of any Credit Party;
provided, that the Credit Parties shall only be obligated to reimburse Agent for the expenses for
one such field examination, audit and inspection per year and for one additional field examination,
audit and inspection per year if such additional field examination, audit and inspection is
commenced after Borrowing Availability is less than $15,000,000 or for more frequent field
examinations, audits and inspections while an Event of Default has occurred and is continuing. If
an Event of Default has occurred and is continuing, each such Credit Party shall provide such
access to Agent and to each Lender at all times and without advance notice. Each Credit Party
shall make available to Agent and its counsel reasonably promptly originals or copies of all books
and records that Agent may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain records from any
service bureau or other Person that maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer tapes and discs owned by
such Credit Party. Agent will give Lenders at least five (5) Business Days’ prior written notice
of regularly scheduled audits. Representatives of other Lenders may accompany Agent’s
representatives on regularly scheduled audits at no charge to Borrower.




          1.15 Taxes.




          (a) Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance
with this Section 1.15, free and clear of and without deduction for any and all present or
future Taxes. If Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Notes, (i) the sum payable shall be increased as much as shall
be necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.15) Agent or Lenders, as applicable, receive
an amount equal to the sum they would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Borrower shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof.




          (b) Each Credit Party that is a signatory hereto shall indemnify and, within ten (10) days of
demand therefor, pay Agent and each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 1.15) paid by Agent or
such Lender, as appropriate, and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted.




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          (c) Each Lender organized under the laws of a jurisdiction outside the United States (a
“Foreign Lender”) as to which payments to be made under this Agreement or under the Notes
are exempt from United States withholding tax under an applicable statute or tax treaty shall
provide to Borrower and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or
other applicable form, certificate or document prescribed by the IRS or the United States
certifying as to such Foreign Lender’s entitlement to such exemption (a “Certificate of
Exemption”). Any foreign Person that seeks to become a Lender under this Agreement shall
provide a Certificate of Exemption to Borrower and Agent prior to becoming a Lender hereunder. No
foreign Person may become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.




          1.16 Capital Adequacy; Increased Costs; Illegality.




          (a) If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted after the Closing
Date, from any central bank or other Governmental Authority increases or would have the effect of
increasing the amount of capital, reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lender’s capital as a consequence of its
obligations hereunder, then Borrower shall from time to time upon demand by such Lender (with a
copy of such demand to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction; provided, that the Borrower shall not be
required to compensate any Lender pursuant to this Section 1.16(a) for any such reduction
incurred more than 180 days prior to the date of such Lender made such demand for compensation
therefor; provided, further, that if the circumstance giving rise to such reduction is retroactive,
then the 180-day period referred to above shall be extended to include the period of retroactive
effect thereof. A certificate as to the amount of that reduction and showing the basis of the
computation thereof submitted by such Lender to Borrower and to Agent shall be presumptive evidence
of the matters set forth therein.




          (b) If, due to either (i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining any Loan, then Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay
to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for
such increased cost; provided, that the Borrower shall not be required to compensate any Lender
pursuant to this Section 1.16(b) for any such increased cost incurred more than 180 days
prior to the date of such Lender made such demand for compensation therefor; provided, further,
that if the circumstance giving rise to such increased cost is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect thereof. A
certificate as to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be presumptive evidence of the matters set forth therein. Each Lender agrees that,
as promptly as practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the extent not inconsistent




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with such Lender’s internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrower pursuant to this
Section 1.16(b).




          (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) shall make it
unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for
any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another
branch or office of that Lender without, in that Lender’s reasonable opinion, materially adversely
affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor
by such Lender to Borrower through Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall
forthwith prepay in full all outstanding LIBOR Loans owing to such Lender, together with interest
accrued thereon, unless Borrower, within five (5) Business Days after the delivery of such
notice and demand, converts all LIBOR Loans into Index Rate Loans.




          (d) Within thirty (30) days after receipt by Borrower of written notice and demand from any
Lender (an “Affected Lender”) for payment of additional amounts or increased costs as
provided in Sections 1.15(a), 1.16(a) or 1.16(b) and with respect to a Lender that is a
Non-Funding Lender, Borrower may, at its option, notify Agent and such Affected Lender (or such
Non-Funding Lender) of its intention to replace the Affected Lender (or such Non-Funding Lender).
So long as no Default or Event of Default has occurred and is continuing, Borrower, with the
consent of Agent, may obtain, at Borrower’s expense, a replacement Lender (“Replacement
Lender”) for the Affected Lender (or such Non-Funding Lender), which Replacement Lender must be
reasonably satisfactory to Agent. Notwithstanding the foregoing, with respect to a Lender that is
a Non-Funding Lender or an Impacted Lender, Agent may, but shall not be obligated to, obtain a
Replacement Lender and execute an Assignment on behalf of such Non-Funding Lender or Impacted
Lender at any time with three (3) Business Days’ prior notice to such Lender (unless notice is not
practicable under the circumstances) and cause such Lender’s Loans and Commitments to be sold and
assigned, in whole or in part, at par. If Borrower obtains a Replacement Lender within ninety (90)
days following written notice to such Affected Lender (or such Non-Funding Lender) of its intention
to do so, the Affected Lender (or such Non-Funding Lender) must sell and assign its Loans and
Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans
held by the
Affected Lender (or such Non-Funding Lender) and all accrued interest and Fees with respect
thereto through the date of such sale and such assignment shall not require the payment of an
assignment fee to Agent; provided, that, in the case of an Affected Lender, Borrower shall have
reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled
to receive under this Agreement through the date of such sale and assignment. In the event that a
replaced Lender does not execute an Assignment Agreement pursuant to Section 9.1 within
five (5) Business Days after receipt by such replaced Lender of notice of replacement pursuant to
this Section 1.16(d) and presentation to such replaced Lender of an Assignment Agreement
evidencing an assignment pursuant to this Section 1.16(d), the Borrower shall be entitled
(but not obligated) to execute such an Assignment Agreement on behalf of such replaced Lender, and
any such Assignment Agreement so executed by the Borrower, the Replacement Lender and Agent,




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shall
be effective for purposes of this 1.16(d) and Section 9.1. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender for an Affected Lender
if the Affected Lender rescinds its demand for increased costs or additional amounts within 15 days
following its receipt of Borrower’s notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives written notice to an Affected Lender of its intention to replace and
does not so replace such Affected Lender within ninety (90) days after delivery of such written
notice, Borrower’s rights under this Section 1.16(d) shall terminate with respect to such
Affected Lender and Borrower shall promptly pay all increased costs or additional amounts demanded
by such Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).




          1.17 Single Loan. All Loans to Borrower and all of the other Obligations of Borrower arising under this
Agreement and the other Loan Documents shall constitute one general obligation of Borrower secured,
until the Termination Date, by all of the Collateral.




2. CONDITIONS PRECEDENT




          2.1 Conditions to Effectiveness. This Agreement shall be effective upon the satisfaction of the following conditions in a
manner reasonably satisfactory to Agent, or waived in writing by Agent and Requisite Lenders:




          (a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, Borrower, each other Credit Party, Agent and Lenders;
and Agent shall have received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by this Agreement and the
other Loan Documents, including all those listed in the Closing Checklist attached hereto as
Annex D, each in form and substance reasonably satisfactory to Agent.




          (b) Approvals. Agent shall have received (i) satisfactory evidence that the Credit
Parties have obtained all required consents and approvals of all Persons including all requisite
Governmental Authorities, to the execution, delivery and performance of this Agreement and the
other Loan Documents and the consummation of the Related Transactions or
(ii) an officer’s certificate in form and substance reasonably satisfactory to Agent affirming
that no such consents or approvals are required.




          (c) Payment of Fees. Borrower shall have paid the Fees required to be paid on the
Closing Date in the respective amounts specified in Section 1.9 (including the Fees
specified in the GE Capital Fee Letter), and shall have reimbursed Agent for all fees, costs and
expenses of closing presented as of the Closing Date.




          2.2 Further Conditions to Each Loan. Except as otherwise expressly provided herein (including, without limitation, Section
1.1(a)(iii)), no Lender shall be obligated to fund any Advance, convert or continue any Loan as
a LIBOR Loan or incur any Letter of Credit Obligation, if, as of the date thereof:




          (a) any representation or warranty by any Credit Party contained herein or in any other Loan
Document to which a Credit Party is a party is untrue or incorrect in any material




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respect (without
duplication of any materiality qualifier contained therein) as of such date as determined by Agent
or Requisite Lenders, except to the extent that such representation or warranty expressly relates
to an earlier date and except for changes therein expressly permitted or expressly contemplated by
this Agreement, and Agent or Requisite Lenders have determined not to make such Advance, convert or
continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact
that such warranty or representation is untrue or incorrect;




          (b) (i) any Default or Event of Default has occurred and is continuing or would result after
giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent or
Requisite Lenders shall have determined not to make any Advance, convert or continue any Loan as a
LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or




          (c) after giving effect to any Advance (or the incurrence of any Letter of Credit
Obligations), the outstanding principal amount of the Revolving Loan would exceed the lesser of the
Borrowing Base and the Maximum Amount, in each case, less the then outstanding principal amount of
the Swing Line Loan.



The request and acceptance by Borrower of the proceeds of any Advance, the incurrence of any Letter
of Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shall
be deemed to constitute, as of the date thereof, (i) a representation and warranty by Borrower that
the conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrower of the granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.




3. REPRESENTATIONS AND WARRANTIES




          To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit
Parties executing this Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.




          3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a corporation, limited liability company or limited partnership
duly organized, validly existing and in good standing under the laws of its respective jurisdiction
of incorporation or organization set forth in Disclosure Schedule (3.1); (b) is duly
qualified to conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not result in exposure to losses or liabilities which
could reasonably be expected to have a Material Adverse Effect; (c) has the requisite power and
authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its business; (d) subject
to specific representations regarding Environmental Laws, has all material licenses, permits,
consents or approvals from or by, and has made all material filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (e) is in compliance in all material respects with its charter and bylaws or
partnership or operating




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agreement, as applicable; and (f) subject to specific representations set
forth herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all
applicable provisions of law, except where the failure to comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.




          3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date, each Credit Party’s name as it appears in official filings in its
state of incorporation or organization, state of incorporation or organization, organization type,
organization number, if any, issued by its state incorporation or organization, and the current
location of each Credit Party’s chief executive office and the warehouses and premises at which any
Collateral is located as of the Closing Date are set forth in Disclosure Schedule (3.2).
In addition, Disclosure Schedule (3.2) sets forth the locations of warehouses and premises
at which any Collateral has been located at any time within four (4) months preceding the Closing
Date. In addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.




          3.3 Corporate Power, Authorization, Enforceable Obligations. The execution, delivery and performance by each Credit Party of the Loan Documents to which
it is a party and the creation of all Liens provided for therein: (a) are within such Person’s
power; (b) have been duly authorized by all necessary corporate, limited liability company or
limited partnership action; (c) do not contravene any provision of such Person’s charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any law or regulation, or any
order or decree of any court or Governmental Authority in any material respect; (e) do not conflict
with or result in the material breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which such Person is a party or by which such Person or any
of its property is bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of itself and Lenders,
pursuant to the Loan Documents; and (g) do not require
the consent or approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made or complied
with prior to the Closing Date. Each of the Loan Documents shall be duly executed and delivered by
each Credit Party that is a party thereto and each such Loan Document shall constitute a legal,
valid and binding obligation of such Credit Party enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors’ rights generally or by equitable principles relating
to enforceability.




          3.4 Financial Statements and Projections. Except for the Projections, all Financial Statements concerning Holdings and its
Subsidiaries that are referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered and present fairly in all material respects the financial
position of the Persons covered thereby as at the dates thereof and the results of their operations
and cash flows for the periods then ended.




          (a) Financial Statements. The following Financial Statements attached hereto as
Disclosure Schedule (3.4(a)) have been delivered to the Agent prior to the Closing Date:




               (i) [Intentionally Omitted]



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               (ii) The audited consolidated balance sheet at October 2, 2004 and the related statements of
income and cash flows of Holdings and its Subsidiaries for the Fiscal Year then ended certified by
Grant Thornton LLP.



               (iii) The audited consolidated balance sheet at September 27, 2003 and the related statements
of income and cash flows of Holdings and its Subsidiaries for the Fiscal Year then ended, certified
by Grant Thornton LLP.



               (iv) The audited consolidated balance sheet at October 1, 2005 and the related
statement(s) of income and cash flows of Holdings and its Subsidiaries for the Fiscal Year
then ended, certified by Grant Thornton, LLP.



               (v) The audited consolidated balance sheet at October 3, 2009, and the related
statement(s) of income and cash flows of Holdings and its Subsidiaries for the Fiscal Year
then ended, certified by Grant Thornton, LLP.



          3.5 Material Adverse Effect. Between October 3, 2009 and the Closing Date, (a) no Credit Party has incurred any
obligations, contingent or noncontingent liabilities, liabilities for Charges, long-term leases or
unusual forward or long-term commitments that are not reflected in the Projections and that, alone
or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (b) no
contract, lease or other agreement or instrument has been entered into by any Credit Party or has
become binding upon any Credit Party’s assets and no law or regulation applicable to any Credit
Party has been adopted that has had or could reasonably be expected to have a Material Adverse
Effect, and (c) no Credit Party is in default and to the best of Borrower’s knowledge no third
party is in default under any material contract, lease or other agreement or instrument, that
alone or in the aggregate could reasonably be expected to have a Material Adverse Effect. Since
October 3, 2009 no event has occurred, that alone or together with other events, could reasonably
be expected to have a Material Adverse Effect.




          3.6 Ownership of Property; Liens. As of the Closing Date, the real estate (“Real Estate”) listed in Disclosure
Schedule (3.6) constitutes all of the real property owned, leased, subleased, or used by any
Credit Party. Each Credit Party owns good and marketable fee simple title to all of its owned Real
Estate and valid and marketable leasehold interests in all of its leased Real Estate (in each case
subject to Liens permitted under Section 6.7), and copies of all such leases or a summary
of terms thereof have been delivered to Agent. Disclosure Schedule (3.6) further describes
any Real Estate with respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid leasehold
interests in, all of its personal property and assets (subject to Liens permitted under Section
6.7). As of the Closing Date, none of the properties and assets of any Credit Party are
subject to any Liens other than Liens permitted under Section 6.7, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Liens permitted under Section 6.7. Except as
could not reasonably be expected to have a Material Adverse Effect, each Credit Party has received
all deeds, assignments, waivers, consents, nondisturbance and attornment or similar agreements,
bills of sale and other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect





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such Credit Party’s right, title and interest in and to all such Real Estate and other
properties and assets. Disclosure Schedule (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any Real Estate as of the
Closing Date. As of the Closing Date, no portion of any Credit Party’s Real Estate has suffered
any material damage by fire or other casualty loss that has not heretofore been repaired and
restored in all material respects to its original condition or otherwise remedied. As of the
Closing Date, all material permits required to have been issued or appropriate to enable the Real
Estate to be lawfully occupied and used for all of the purposes for which it is currently occupied
and used have been lawfully issued and are in full force and effect.




          3.7 Labor Matters. Except as set forth on Disclosure Schedule (3.7), as of the Closing Date: (a) no
strikes or other material labor disputes against any Credit Party are pending or, to any Credit
Party’s knowledge, threatened; (b) hours worked by and payment made to employees of each Credit
Party comply in all material respects with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters; (c) all payments due from any Credit Party
for employee health and welfare insurance have been paid or accrued as a liability on the books of
such Credit Party; (d) no Credit Party is a party to or bound by any collective bargaining
agreement, management agreement, consulting agreement, employment agreement, bonus, restricted
stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or
arrangement (and true and complete copies of any agreements described on Disclosure Schedule
(3.7) have been filed with the Securities and Exchange Commission in the filings of Holdings on
or before the Closing Date or otherwise delivered to Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party’s knowledge, threatened by any labor
union or group of employees; (f) there are no representation proceedings pending or, to any Credit
Party’s knowledge, threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for recognition; and (g) there are
no material complaints or charges against any Credit Party pending or, to the knowledge of any
Credit Party, threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.




          3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the Closing Date, no Credit
Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person,
or is (except for those holders of the issued and outstanding Stock of Holdings that constitute
Affiliates of Holdings) an Affiliate of any other Person of the type described in clause
(a) or (b) of the definition of the term “Affiliate”. Except for Holdings, all of the
issued and outstanding Stock of each Credit Party is owned by each of the Stockholders and in the
amounts set forth in Disclosure Schedule (3.8). Except as set forth in Disclosure
Schedule (3.8), there are no outstanding rights to purchase, options, warrants or similar
rights or agreements pursuant to which any Credit Party may be required to issue, sell, repurchase
or redeem any of its Stock or
other equity securities or any Stock or other equity securities of its Subsidiaries. All
outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date
(except for the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)).




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          3.9 Government Regulation. No Credit Party is an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company,” as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of the
Loans by Lenders to Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof and the consummation of the
Related Transactions will not violate any provision of any such statute or any rule, regulation or
order issued by the Securities and Exchange Commission.




          3.10 Margin Regulations. No Credit Party is engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any
“margin stock” as such terms are defined in Regulation U of the Federal Reserve Board as now and
from time to time hereafter in effect (such securities being referred to herein as “Margin
Stock”). No Credit Party owns any Margin Stock, and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness
that was originally incurred to purchase or carry any Margin Stock or for any other purpose that
might cause any of the Loans or other extensions of credit under this Agreement to be considered a
“purpose credit” within the meaning of Regulations T, U or X of the Federal Reserve Board. No
Credit Party will take or permit to be taken any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board.




          3.11 Taxes. All Federal and other material tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party have been filed
with the appropriate Governmental Authority, and all Charges have been paid prior to the date on
which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof,
excluding Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by each Credit Party from its respective employees
for all periods in full and complete compliance with all applicable federal, state, local and
foreign laws and such withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing Date those taxable
years for which any Credit Party’s tax returns are currently being audited by the IRS or any other
applicable Governmental Authority and any assessments or threatened assessments in connection with
such audit, or otherwise currently outstanding. Except as described in Disclosure Schedule
(3.11), as of the Closing Date, no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having
the effect of extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party’s knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which
would reasonably be expected to have a Material Adverse Effect.




          3.12 ERISA.




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          (a) Disclosure Schedule (3.12) lists as of the Closing Date, all Plans and separately
identifies all Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare
Plans, including all Retiree Welfare Plans. Copies of all such listed Plans, together with a copy
of the latest form IRS/DOL 5500-series for each such Plan will be delivered to Agent upon Agent’s
request. Except with respect to Multiemployer Plans, each Qualified Plan has been determined by
the IRS to qualify under Section 401 of the IRC, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC. Each Plan is in
compliance in all material respects with the applicable provisions of ERISA and the IRC, including
the timely filing of all reports required under the IRC or ERISA, including the statement required
by 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed to make any
material contribution or pay any material amount due as required by either Section 412 of the IRC
or Section 302 of ERISA or the terms of any such Plan. Neither any Credit Party nor ERISA
Affiliate has engaged in a “prohibited transaction,” as defined in Section 406 of ERISA and Section
4975 of the IRC, in connection with any Plan, that would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.




          (b) Except for those that would not reasonably be expected to result in the imposition of a
Lien on any asset of a Credit Party with respect to any Title IV Plan or have a Material Adverse
Effect: (i) no Title IV Plan has any material Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party,
threatened material claims (other than claims for benefits in the normal course), sanctions,
actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor
of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incur
any material liability as a result of a complete or partial withdrawal from a Multiemployer Plan;
(v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been
terminated, whether or not in a “standard termination” as that term is used in Section 4041 of
ERISA, nor has any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any time
within the past five years) with material Unfunded Pension Liabilities been transferred outside of
the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; (vi) except in the case of any ESOP, 401k or as set forth on Disclosure
Schedule (3.12), Stock of all Credit Parties and their ERISA Affiliates makes up, in the
aggregate, no more than 10% of fair market value of the assets of any Plan measured on the basis of
fair market value as of the latest valuation date of any Plan; and (vii) no liability under any
Title IV Plan has been satisfied with the purchase of a contract from an insurance company that is
not rated AAA by the Standard & Poor’s Corporation or an equivalent rating by another nationally
recognized rating agency.




          3.13 No Litigation. No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the
knowledge of any Credit Party, threatened against any Credit Party, before any Governmental
Authority or before any arbitrator or panel of arbitrators (collectively, “Litigation”),
(a) that challenges any Credit Party’s right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or enforceability of
any Loan Document or any action taken thereunder, or (b) that has a reasonable risk of being
determined adversely to any Credit Party and that, if so determined, could reasonably be expected
to have a Material Adverse Effect. Except as set forth on Disclosure




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Schedule (3.13), as
of the Closing Date there is no Litigation pending or threatened that seeks damages in excess of
$250,000 or injunctive relief against, or alleges criminal misconduct of, any Credit Party.




          3.14 Brokers. Except as set forth on Disclosure Schedule (3.14), no broker or finder acting on
behalf of any Credit Party or Affiliate thereof brought about the obtaining, making or closing of
the Loans or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation
to any Person in respect of any finder’s or brokerage fees in connection therewith.




          3.15 Intellectual Property. As of the Closing Date, each Credit Party owns or has rights to use all Intellectual
Property necessary to continue to conduct its business as now conducted by it or presently proposed
to be conducted by it except for such Intellectual Property the failure of which to own or license
would not reasonably be expected to have, either individually or in the aggregate, a Material
Adverse Effect, and each Patent, Trademark, Copyright and License is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule (3.15). Each
Credit Party conducts its business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect. Except as set forth in
Disclosure Schedule (3.15), no Credit Party is aware of any material infringement claim by
any other Person with respect to any Intellectual Property.




          3.16 Full Disclosure. No information contained in this Agreement, any of the other Loan Documents, any
Projections (subject to the remaining provisions of this Section 3.16), Financial Statements or
Collateral Reports or other written reports from time to time prepared by any Credit Party and
delivered hereunder or any written statement prepared by any Credit Party and furnished by or on
behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains
or will contain any untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading in light of the
circumstances under which they were made. Projections from time to time delivered hereunder are or
will be based upon the estimates and assumptions stated therein, all of which Borrower believed at
the time of delivery to be reasonable and fair in light of current conditions and current facts
known to Borrower as of such delivery date, and reflect Borrower’s good faith and reasonable
estimates of the future financial performance of Borrower and of the other
information projected therein for the period set forth therein. Such Projections are not a
guaranty of future performance and actual results may differ from those set forth in such
Projections. The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted Encumbrances.




          3.17 Environmental Matters.




          (a) Except as set forth in Disclosure Schedule (3.17), as of the Closing Date: (i) the
Real Estate is free of contamination from any Hazardous Material except for such contamination that
would not adversely impact the value or marketability of such Real Estate and that would not result
in Environmental Liabilities that could reasonably be expected to exceed $2,000,000; (ii) no Credit
Party has caused or suffered to occur any material Release of




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Hazardous Materials on, at, in,
under, above, to, from or about any of its Real Estate; (iii) the Credit Parties are and have been
in compliance with all Environmental Laws, except for such noncompliance that would not result in
Environmental Liabilities which could reasonably be expected to exceed $2,000,000; (iv) the Credit
Parties have obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with such Environmental
Permits would not result in Environmental Liabilities that could reasonably be expected to exceed
$2,000,000, and all such Environmental Permits are valid, uncontested and in good standing; (v) no
Credit Party is involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any Environmental
Liabilities of such Credit Party which could reasonably be expected to exceed $2,000,000; (vi)
there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $2,000,000
or injunctive relief against, or that alleges criminal misconduct by, any Credit Party; (vii) no
notice has been received by any Credit Party identifying it as a “potentially responsible party” or
requesting information under CERCLA or analogous state statutes, and to the knowledge of the Credit
Parties, there are no facts, circumstances or conditions that may result in any Credit Party being
identified as a “potentially responsible party” under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided to Agent copies of all existing environmental reports,
reviews and audits and all written information pertaining to actual or potential Environmental
Liabilities, in each case to the extent such reports, reviews, audits and documents are in Credit
Parties’ possession, custody, or control.




          (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not
ever been, in control of any of the Real Estate or any Credit Party’s affairs, and (ii) does not
have the capacity through the provisions of the Loan Documents or otherwise to influence any Credit
Party’s conduct with respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.




          3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies of any nature maintained,
as of the Closing Date, for current occurrences by each Credit Party, as well as a summary of the
terms of each such policy.




          3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists all banks and other financial institutions at
which any Credit Party maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description of the purpose of
the account, and the complete account number therefor.




          3.20 Government Contracts. Except as set forth in Disclosure Schedule (3.20), as of the Closing Date, no
Credit Party is a party to any contract or agreement with any Governmental Authority and no Credit
Party’s Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or
any similar state or local law.




          3.21 Customer and Trade Relations. As of the Closing Date, there exists no actual or, to the knowledge of any Credit Party,
threatened termination or cancellation




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of, or any material adverse modification or change in: the
business relationship of any Credit Party with any customer or group of customers whose purchases
during the preceding 12 months caused them to be ranked among the ten largest customers of such
Credit Party; or the business relationship of any Credit Party with any supplier essential to its
operations.




          3.22 Bonding; Licenses. Except as set forth on Disclosure Schedule (3.22), as of the Closing Date, no
Credit Party is a party to or bound by any surety bond agreement or bonding requirement with
respect to products or services sold by it or any trademark or patent license agreement with
respect to products sold by it.




          3.23 Solvency. Both before and after giving effect to (a) the Loans and Letter of Credit Obligations to be
made or incurred on the Closing Date or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower, (c) the Refinancing and the consummation of the other
Related Transactions and (d) the payment and accrual of all transaction costs in connection with
the foregoing, each Credit Party is and will be Solvent.




          3.24 Status of Holdings. Prior to the Original Closing Date, Holdings will not have engaged in any business or
incurred any Indebtedness or any other liabilities (except in connection with its corporate
formation, the Prior Lender Obligations under and as defined in the Original Credit Agreement, the
Related Transactions Documents and this Agreement).




          3.25 Inactive Subsidiaries. No Inactive Subsidiary (a) has any assets with a net book value in excess of $500,000, (b)
has any material liabilities or (c) is engaged in any trade or business.




          3.26 Motor Vehicles. [Intentionally Omitted]




          3.27 Vacant Land Lease. No Collateral is stored or located on the property that is subject to the Vacant Land
Lease.




4. FINANCIAL STATEMENTS AND INFORMATION




          4.1 Reports and Notices.




          (a) Each Credit Party executing this Agreement hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information at the times, to the
Persons and in the manner set forth in Annex E.




          (b) Each Credit Party executing this Agreement hereby agrees that from and after the Closing
Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as
required, the various Collateral Reports (including Borrowing Base Certificates in the form of
Exhibit 4.1(b)) at the times, to the Persons and in the manner set forth in Annex
F.




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          4.2 Communication with Accountants. Each Credit Party executing this Agreement authorizes Agent and each Lender, so long as an
Event of Default has occurred and is continuing, to communicate directly with its independent
certified public accountants, including Grant Thornton LLP, and authorizes and shall instruct those
accountants and advisors to communicate to Agent and each Lender information relating to any Credit
Party with respect to the business, results of operations and financial condition of any Credit
Party; provided, that Agent shall give a representative of the Borrower reasonable opportunity to
participate in such communications.




5. AFFIRMATIVE COVENANTS




          Each Credit Party executing this Agreement jointly and severally agrees as to all Credit
Parties that from and after the date hereof and until the Termination Date:



          5.1 Maintenance of Existence and Conduct of Business. Each Credit Party shall:




          (a) do or cause to be done all things necessary to preserve and keep in full force and effect
its corporate existence, except, with respect to the Borrower’s Subsidiaries, in connection with
transactions permitted by Section 6.1;




          (b) do or cause to be done all things necessary to preserve and keep in full force and effect
its material rights and franchises; continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder, except in connection with transactions permitted by
Section 6.1 and sales of assets permitted by Section 6.8 and except as would not
reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect;
and




          (c) at all times maintain, preserve and protect all of its assets and properties used or
useful in the conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and tear) (except for
Real Estate Held for Sale, which will be maintained adequately in order to preserve the value and
marketability of such real estate) and from time to time make, or cause to be made, all necessary
or appropriate repairs, replacements and improvements thereto consistent with industry practices;
and transact business only in such corporate and trade names as are set forth in Disclosure
Schedule (5.1), except in each case where the failure to do so would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.




          5.2 Payment of Charges.




          (a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause to
be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it,
its income and profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security and unemployment withholding with respect to its employees, (ii)
lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or
rental charges payable to warehousemen and bailees, in each case, before any thereof shall become
past due, except in the case of clauses (ii) and (iii) where the failure to pay or
discharge such Charges would not result in aggregate liabilities in excess of $1,000,000.




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          (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges, Taxes or claims described in Section 5.2(a); provided, that (i)
adequate reserves with respect to such contest are maintained on the books of such Credit Party, in
accordance with and to the extent required under GAAP; (ii) no Lien shall be imposed to secure
payment of such Charges (other than Charges permitted under clauses (ii) and (iii)
of Section 5.2(a)) that is superior to any of the Liens securing payment of the Obligations
and such contest is maintained and prosecuted continuously and with diligence by appropriate
proceedings which stay the enforcement of any Lien, (iii) if any Collateral becomes subject to
forfeiture or loss as a result of such contest, such forfeiture or loss of Collateral shall not
constitute an Event of Default under Section 8.1(g), and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all additional charges,
interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable
to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Credit Party or the conditions set forth in this Section 5.2(b) are no
longer met.




          5.3 Books and Records. Each Credit Party shall keep adequate books and records with respect to its business
activities in which proper entries, reflecting all financial transactions, are made in
accordance with GAAP and on a basis consistent with the Financial Statements (taking into
account any Accounting Changes in accordance with and pursuant to the provisions of Annex
G) that are referenced on Disclosure Schedule (3.4(a)).




          5.4 Insurance; Damage to or Destruction of Collateral.




          (a) The Credit Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) and Keyman Life Insurance as in effect on
the Closing Date or otherwise of a nature and providing such coverage as is sufficient and as is
customarily carried by businesses of the size and character of the business of the Credit Parties
and with financially sound and reputable insurers. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions pursuant to which
the insurer agrees to provide thirty (30) days prior written notice to Agent in the event of any
non-renewal, cancellation or amendment of any such insurance policy. If any Credit Party at any
time or times hereafter shall fail to obtain or maintain any of the policies of insurance required
above or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain and
maintain such policies of insurance and pay such premiums and take any other action with respect
thereto that Agent deems advisable. Agent shall have no obligation to obtain insurance for any
Credit Party or pay any premiums therefor. By doing so, Agent shall not be deemed to have waived
any Default or Event of Default arising from any Credit Party’s failure to maintain such insurance
or pay any premiums therefor. All sums so disbursed, including reasonable attorneys’ fees, court
costs and other charges related thereto, shall be payable on demand by Borrower to Agent and shall
be additional Obligations hereunder secured by the Collateral.




          (b) Agent reserves the right at any time upon any material adverse change in any Credit
Party’s risk profile (including any change in the product mix maintained by any Credit Party or any
laws affecting the potential liability of such Credit Party) to require additional forms and limits
of insurance to, in Agent’s reasonable opinion, adequately protect both Agent’s and Lenders’
interests in all or any portion of the Collateral and to ensure that each




-33-









 







Credit Party is protected
by insurance in amounts and with coverage customary for its industry. If reasonably requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a reputable insurance
broker reasonably satisfactory to Agent, with respect to its insurance policies.




          (c) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory to
Agent, endorsements to (i) all “All Risk” and business interruption insurance naming Agent, on
behalf of itself and Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional insured. Each Credit Party
irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated
by Agent), so long as any Default or Event of Default has occurred and is continuing or the
anticipated insurance proceeds exceed $4,000,000, as each Credit Party’s true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims relating to the
Collateral under such “All Risk” policies of insurance, endorsing the name of each Credit Party on
any check or other item of payment for the proceeds of such “All Risk” policies of insurance and
for making all determinations and decisions with respect to such “All Risk” policies of insurance.
Agent shall have no duty to exercise any rights or powers granted to it
pursuant to the foregoing power-of-attorney. Borrower shall promptly notify Agent of any
loss, damage, or destruction to the Collateral in the amount of $500,000 or more, whether or not
covered by insurance. After deducting from such proceeds (i) the expenses incurred by Agent in the
collection or handling thereof, and (ii) amounts required to be paid to creditors (other than
Lenders) holding Liens permitted under Section 6.7, Agent may, at its option, apply such proceeds
to the reduction of the Obligations in accordance with Section 1.3(c), provided, that in
the case of insurance proceeds pertaining to any Credit Party other than Borrower, such insurance
proceeds shall be applied to the Loans owing by Borrower, or permit or require each Credit Party to
use such money, or any part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially the same quality as
existed before the loss, damage or destruction. Notwithstanding the foregoing, if the casualty
giving rise to such insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $1,000,000 in the aggregate, Agent shall permit
the applicable Credit Party to replace, restore, repair or rebuild the property; provided, that if
such Credit Party has not completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 90 days of such casualty, Agent may apply
such insurance proceeds to the Obligations in accordance with this Section and Section
1.3(c); provided, further that in the case of insurance proceeds pertaining to any Credit Party
other than Borrower, such insurance proceeds shall be applied to the Loans owing by Borrower. All
insurance proceeds that are to be made available to Borrower to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against the Borrowing Base
in an amount equal to the amount of such proceeds so applied. All insurance proceeds made
available to any Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such funds shall be made
available to such Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (i) Borrower shall request a Revolving Credit Advance or release from the
cash collateral account be made to such Credit Party in the amount requested to be released; (ii)
so long as the conditions set forth in Section 2.2




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have been met, Revolving Lenders shall
make such Revolving Credit Advance or Agent shall release funds from the cash collateral account;
and (iii) in the case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds (excluding any amounts required to be paid to creditors (other
than Lenders) holding Liens permitted under Section 6.7) shall be applied in accordance
with Section 1.3(c); provided, that in the case of insurance proceeds pertaining to any
Credit Party other than Borrower, such insurance proceeds shall be applied to the Loans owing by
Borrower. Nothing herein shall be deemed to prohibit Borrower from naming any other creditor who
holds a Lien permitted under Section 6.7 as a loss payee or additional insured, directing
any insurer to pay proceeds of any insurance policy to such creditor or granting such creditor
rights consistent with those granted to Agent hereunder in respect of any insurance maintained with
respect to the property or assets subject to such Lien.




          5.5 Compliance with Laws. Each Credit Party shall comply with all federal, state, local and foreign laws and
regulations applicable to it, including ERISA, labor laws, and Environmental Laws and Environmental
Permits, except to the extent that the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.




          5.6 Supplemental Disclosure. From time to time as may be reasonably requested by Agent (which request will not be made
more frequently than once each year absent the occurrence and continuance of an Event of Default)
or at Credit Parties’ election, the Credit Parties shall supplement each Disclosure Schedule
hereto, or any representation herein or in any other Loan Document, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedule or as an exception to such
representation or that is necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of any supplements to
any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes
made therein); provided that (a) no such supplement to any such Disclosure Schedule or
representation shall amend, supplement or otherwise modify any Disclosure Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders in writing, and
(b) no supplement shall be required or permitted as to representations and warranties that relate
solely to the Closing Date.




          5.7 Intellectual Property. Each Credit Party will conduct its business and affairs without infringement of or
interference with any Intellectual Property of any other Person in any material respect and shall
comply in all material respects with the terms of its Licenses.




          5.8 Environmental Matters. Each Credit Party shall and shall cause each Person within its control to: (a) conduct its
operations and keep and maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) except as could not reasonably be expected to have a Material Adverse
Effect, implement any and all investigation, remediation, removal and response actions that are
appropriate or necessary




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to comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate; (c) notify
Agent promptly after such Credit Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate
that, in each case, is reasonably likely to result in Environmental Liabilities in excess of
$2,000,000; and (d) promptly forward to Agent a copy of any order, notice, request for information
or any communication or report received by such Credit Party in connection with any such violation
or Release or any other matter relating to any Environmental Laws or Environmental Permits that
could reasonably be expected to result in Environmental Liabilities in excess of $2,000,000 in each
case whether or not the Environmental
Protection Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter.




          5.9 Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases. Each Credit Party shall use commercially reasonable efforts to obtain a landlord’s
agreement, mortgagee agreement or Bailee Letter, as applicable, from the lessor of each leased
property (other than property leased to Borrower by Snead Family I, L.L.C., a Virginia limited
liability company pursuant to that Lease dated June 24, 1996 (as in effect on the date hereof, the
“Vacant Land Lease” as long as (i) such property remains subject to the Vacant Land Lease
and (ii) no Collateral is stored or located on such property), mortgagee of owned property or
bailee with respect to any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in form and substance to Agent. With
respect to such locations or warehouse space leased or owned as of the Original Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or Bailee Letter as of the
Original Closing Date (or, if later, as of the date such location is acquired or leased),
Borrower’s Eligible Inventory at that location shall, in Agent’s discretion, be excluded from the
Borrowing Base or be subject to Rent Reserves or such other Reserves referenced in Section
1.7(b)(iii). After the Original Closing Date, no real property or warehouse space shall be
leased by any Credit Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date without (i) a 30 days’ prior written notice to
Agent describing and identifying such real properties, warehouses, processors and converters, as
the case may be, if the book value of all Inventory at all such other real estate properties and
warehouses, including, without limitation, the book value of all Inventory shipped or to be shipped
to all such processors and converters, is less than $10,000,000 in the aggregate and (ii) the prior
written consent of Agent (which consent, in Agent’s discretion, may be conditioned upon the
exclusion from the Borrowing Base of Eligible Inventory at that location or the establishment of
Reserves acceptable to Agent) and unless and until a satisfactory landlord agreement or Bailee
Letter, as appropriate, shall first have been obtained with respect to such location, if the book
value of all Inventory at all such other real estate properties and warehouses, including, without
limitation, the book value of all Inventory shipped or to be shipped to all such processors and
converters, is $10,000,000 or more in the aggregate. Each Credit Party shall timely and fully pay
and perform its obligations in all material respects under all leases and other agreements with
respect to each leased location or public warehouse where any Collateral is or may be located.




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          5.10 [Intentionally Omitted].




          5.11 Post-Closing Matters




          (a) On or prior to July 30, 2010, Credit Parties shall deliver to Agent a Control Letter
relating to the account numbered 26031120, which shall be in form and substance satisfactory to
Agent.




          (b) On or prior to June 11, 2010, Credit Parties shall deliver or cause to be delivered to
Agent a satisfactory evidence that the insurance policies required by Section 5.4 are in
full force and effect, together with appropriate evidence showing loss payable and/or additional
insured clauses or endorsements, in favor of Agent, on behalf of Lenders, which shall be in form
and substance satisfactory to Agent.




          5.12 Further Assurances.




          (a) Each Credit Party executing this Agreement agrees that it shall and shall cause each other
Credit Party to, at such Credit Party’s expense and upon the reasonable request of Agent, duly
execute and deliver, or cause to be duly executed and delivered, to Agent such further instruments
and do and cause to be done such further acts as may be necessary or proper in the reasonable
opinion of Agent to carry out more effectively the provisions and purposes of this Agreement and
each Loan Document.




          (b) Each Credit Party shall (i) cause each Person, upon its becoming a Domestic Subsidiary of
such Credit Party (provided that this shall not be construed to constitute consent by any of the
Lenders to any transaction not expressly permitted by the terms of this Agreement), promptly to
guaranty the Obligations and to grant to Agent, for the benefit of Agent and Lenders, a security
interest in the personal property (other than real property, Equipment and Fixtures) of such
Domestic Subsidiary to secure the Obligations and (ii) pledge, or cause to be pledged, to Agent,
for the benefit of Agent and Lenders, all of the Stock of such Domestic Subsidiary to secure the
Obligations. Each Credit Party shall pledge, or cause to be pledged, to Agent, for the benefit of
Agent and Lenders, 66% of the outstanding voting Stock and 100% of the outstanding nonvoting Stock
of any person upon its becoming a first tier Foreign Subsidiary of any Credit Party. The
documentation for such guaranty, security and pledge shall be substantially similar to the Loan
Documents executed concurrently herewith with such modifications as are reasonably requested by
Agent.




6. NEGATIVE COVENANTS




          Each Credit Party executing this Agreement jointly and severally agrees as to all Credit
Parties that from and after the date hereof until the Termination Date:




          6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or indirectly, by operation of law or otherwise, (a) form or
acquire any Subsidiary other than the formation or acquisition of a Subsidiary that constitutes a
Permitted Acquisition, or (b) merge with, consolidate with, or convey, transfer, lease or otherwise
dispose of, or acquire all or substantially all of the assets or Stock of, or otherwise combine
with or acquire, any Person, except upon not less than five (5) Business Days prior written notice
to Agent, (A) any




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Subsidiary of the Borrower may merge with, or dissolve or liquidate into, the
Borrower or a wholly-owned Subsidiary of the Borrower which is a Domestic Subsidiary, provided that
the Borrower or such wholly-owned Subsidiary which is a Domestic
Subsidiary shall be the continuing or surviving entity and all actions required to maintain
perfected Liens on the Stock of the surviving entity and other Collateral in favor of Agent shall
have been completed and (B) any Inactive Subsidiary may dissolve, liquidate or wind up its affairs.
Notwithstanding the foregoing, Borrower (or Holdings, so long as contemporaneously therewith, all
assets so acquired are transferred to Borrower), may acquire all or substantially all of the
assets, which assets are located in the United States, or Stock of any Person organized under the
laws of any State in the United States or the District of Columbia (the “Target”) (in each
case, a “Permitted Acquisition”) subject to the satisfaction of each of the following
conditions:




          (i) Agent shall receive written notice of such proposed Permitted Acquisition at least fifteen
(15) Business Days prior to the consummation of such proposed Permitted Acquisition (or such lesser
period as agreed by the Agent in its sole discretion), which notice shall include a reasonably
detailed description of such proposed Permitted Acquisition;




          (ii) such Permitted Acquisition shall only comprise a business, or those assets of a business,
of the type engaged in by Borrower as of the Closing Date or a business reasonably related thereto,
and which business would not subject Agent or any Lender to regulatory or third party approvals
that would be reasonably likely to have an adverse effect on Agent’s or any Lender’s exercise of
its rights and remedies under this Agreement or any other Loan Documents other than approvals
applicable to the exercise of such rights and remedies with respect to Borrower prior to such
Permitted Acquisition;




          (iii) such Permitted Acquisition shall be consensual and shall have been approved by the
Target’s board of directors or selling shareholders or equivalent body;




          (iv) the business and assets acquired in such Permitted Acquisition shall be free and clear of
all Liens (other than Liens permitted by Section 6.7);




          (v) at or prior to the closing of any Permitted Acquisition, Agent will be granted a first
priority perfected Lien (subject to Liens permitted under Section 6.7) in all assets (other
than any real property, Equipment or Fixtures) acquired pursuant thereto or in the assets (other
than any real property, Equipment or Fixtures) and Stock of the Target, any Person upon becoming a
Subsidiary of a Credit Party pursuant to any Permitted Acquisition shall guarantee the Obligations
and join this Agreement as a Credit Party, and Holdings and Borrower and the Target shall have
executed such documents and taken such actions as may be required by Agent in connection therewith;




          (vi) concurrently with delivery of the notice referred to in clause (i) above,
Borrower shall have delivered to Agent, in form and substance reasonably satisfactory to Agent:





               (A) Audited financial statements of the Target (or, if not available,
other financial information reasonably satisfactory to Agent);



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               (B) a pro forma consolidated balance sheet, income statement and cash
flow statement of Holdings, its Subsidiaries and the
business and operations being acquired (“Acquisition Pro
Forma”) and either:



                    (I) such Acquisition Pro Forma shall reflect that (x) Liquidity is at least $10,000,000
immediately prior to and after giving effect to such Permitted Acquisition and all Loans funded in
connection therewith, if any, and (y) on a pro forma basis, Holdings and its Subsidiaries would
have on a consolidated basis a Fixed Charge Coverage Ratio of not less than 1.00 : 1.00 for the
four quarter period reflected in the Compliance Certificate most recently delivered to Agent
pursuant to Annex E prior to the consummation of such Permitted Acquisition (calculated as
if such Permitted Acquisition and all Loans funded in connection therewith had been made on the
first day of such period); or



                    (II) no Revolving Credit Advances shall be outstanding immediately prior to such Permitted
Acquisition, on the date of such Acquisition or immediately after giving effect to such Permitted
Acquisition;




               (C) projections covering the one (1) year period commencing on the
anticipated date of such Permitted Acquisition and otherwise prepared in
accordance with the Projections and based upon historical financial data of
a recent date reasonably satisfactory to Agent, taking into account such
Permitted Acquisition;




               (D) a certificate of the chief financial officer of Holdings and
Borrower to the effect that: (x) Borrower (after taking into consideration
all rights of contribution and indemnity Borrower has against Holdings and
each other Subsidiary of Holdings) will be Solvent upon the consummation of
the Permitted Acquisition and (y) the Acquisition Pro Forma fairly presents
the financial condition of Holdings and Borrower (on a consolidated basis)
as of the date thereof after giving effect to the Permitted Acquisition; and




               (E) if requested by Agent, the Credit Parties shall deliver written
information relating to their due diligence investigation with respect to
the Target and such Permitted Acquisition; provided, that if such written
information is subject to confidentiality restrictions, Agent shall enter
into a confidentiality agreement which is in form and substance reasonably
satisfactory to Agent (and, if applicable, the Target);



          (vii) on or prior to the date of such Permitted Acquisition, Agent shall have received
copies of the acquisition agreement and related agreements and instruments, and all
opinions, certificates, lien search results and other documents and information reasonably
requested by Agent, including those specified in the last sentence of Section 5.9;
and




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          (viii) no Default or Event of Default shall then exist or would exist immediately
after giving effect thereto.



Notwithstanding the foregoing, the Accounts and Inventory of the Target shall not be included in
Eligible Accounts and Eligible Inventory until field examinations and appraisals of Target and/or
its assets have been satisfactorily completed (and with respect to such Accounts and Inventory of
the Target, Agent shall have the right to adjust the criteria of Eligible Accounts and Eligible
Inventory, adjust advance rates and establish Reserves in its Permitted Discretion); it being
understood and agreed that, if Borrower requests such field examination and appraisal, Agent agrees
to use reasonable efforts to have such field examination and appraisal completed (in each case,
with Borrower’s cooperation with appraisers, Agent and its agents in an effort to facilitate and
promptly conclude any such field examination and appraisal) within the time period that is
customary and reasonable for completion of such field examination and appraisal; provided that
field examinations and appraisals in connection with Permitted Acquisitions shall not count against
the limited number of field examinations or appraisals for which expense reimbursement may be
sought.




          6.2 Investments; Loans and Advances. Except as otherwise expressly permitted by this Section 6, no Credit Party shall
make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding of securities or
otherwise, except that: (a) Credit Parties may hold investments comprised of accounts payable or
notes payable, chattel paper or stock or other securities acquired pursuant to negotiated
agreements with respect to settlement of an Account Debtor’s delinquent Accounts in the ordinary
course of business, consistent with past practices, or in connection with the bankruptcy or
reorganization of suppliers or customers; (b) each Credit Party may maintain its existing
investments in its Subsidiaries as of the Closing Date; (c) so long as (x) no Default or Event of
Default has occurred and is continuing and (y) Liquidity immediately prior to making an investment
pursuant to this clause (c) is at least $10,000,000, Borrower may make investments, subject
to Control Letters in favor of Agent for the benefit of Lenders, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one year from the date of creation thereof and currently having the highest
rating obtainable from at least two of the following: Standard & Poor’s Ratings Group, Moody’s
Investors Service, Inc. and Fitch Investors Services and issued by any Person organized under the
laws of any state of the United States, (iii) certificates of deposit maturing no more than one
year from the date of creation thereof issued by commercial banks incorporated under the laws of
the United States of America, each having combined capital, surplus and undivided profits of not
less than $300,000,000 and having a senior unsecured rating of “A” or better by a nationally
recognized rating agency (an “A Rated Bank”), (iv) time deposits maturing no more than
thirty (30) days from the date of creation thereof with A Rated Banks and (v) any mutual fund that
has substantially all of its assets invested continuously in one or more of the investments
described in clauses (i) through (iv) above, (d) so long as (x) no Default or Event of
Default has occurred and is continuing, (y) the outstanding Revolving Loan balance does not exceed
$5,000,000 and (z) Liquidity is at least $15,000,000, Borrower may make investments in taxable or
tax-free money market mutual funds that (i) comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, and (ii) are either rated A
by Standard & Poor’s Ratings Group and A by Moody’s Investors




-40-









 







Service, Inc. or have portfolio
assets of at least $2,000,000,000, (e) Credit Parties may endorse
negotiable instructions held for collection in the ordinary course of business, (f) Credit
Parties may extend trade credit to customers in the ordinary course of business and consistent with
past practices, (g) Credit Parties may prepay expenses in the ordinary course of business and
consistent with past practices, (h) Credit Parties may make deposits representing purchase price
for asset purchases permitted hereunder, (i) Credit Parties may deposit cash with banks or other
depository institutions in the course of establishing and maintaining the Cash Management Systems
described on Annex C, (j) Credit Parties may receive investments as the non-cash portion of
consideration received in connection with transactions permitted pursuant to Section 6.8,
and (k) Credit Parties may make other investments not exceeding $5,000,000 in the aggregate at any
time outstanding. For the avoidance of doubt, nothing in this Section 6.2 shall prohibit
any Credit Parties from making any investment, loans or advances permitted under Section 6.1,
6.3, 6.4, 6.6 or 6.13 or pledges or deposits permitted under Section 6.7.




          6.3 Indebtedness.




          (a) No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except
(without duplication) (i) Indebtedness secured by purchase money security interests and Capital
Leases permitted in Section 6.7(c) and refinancings thereof or amendments or modifications
thereof that do not have the effect of increasing the principal amount thereof (except, in the case
of refinancing, by an amount equal to unpaid interest and premium thereon and reasonable fees and
expenses incurred in connection with such refinancing) or changing the amortization thereof (other
than to extend the same); (ii) the Loans and the other Obligations; (iii) unfunded pension fund and
other employee benefit plan obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law; (iv) existing Indebtedness described in Disclosure Schedule
(6.3) and refinancings thereof or amendments or modifications thereof that do not have the
effect of increasing the principal amount thereof (except, in the case of refinancing, by an amount
equal to unpaid interest and premium thereon and reasonable fees and expenses incurred in
connection with such refinancing) or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions (other than any increase in pricing due to
then prevailing market conditions at the time of such refinancing) no less favorable to the Credit
Parties, taken as a whole, than the terms of the Indebtedness being refinanced, amended or
modified; (v) Indebtedness consisting of intercompany loans and advances made by Borrower to any
other Credit Party that is a Guarantor (other than Holdings and a Guarantor that is an Inactive
Subsidiary) or by any such Guarantor (other than Holdings and a Guarantor that is an Inactive
Subsidiary) to Borrower; provided, that: (A) such intercompany Indebtedness is evidenced by a
subordinated demand note (collectively, the “Intercompany Notes”) executed and delivered by
Borrower to each such Guarantor, and by each such Guarantor to Borrower (including, without
limitation, the Intercompany Note executed and delivered on the Original Closing Date), which
Intercompany Notes shall be pledged (and in the case of the Intercompany Note dated as of the
Original Closing Date, have been pledged) and delivered to Agent pursuant to the applicable Pledge
Agreement or Security Agreement as additional collateral security for the Obligations; (B) Borrower
shall accurately record all intercompany transactions on its books and records; (C) the obligations
of Borrower under any such Intercompany Notes shall be subordinated to the Obligations of Borrower
hereunder in a manner reasonably satisfactory to Agent; (D) at the time any such intercompany loan
or advance is made by Borrower and after giving effect thereto, Borrower shall be Solvent; (E) no
Default or




-41-









 







Event of Default would occur and be continuing after giving effect to any such proposed
intercompany loan; and (F) the aggregate amount of all such intercompany loans shall not
exceed an aggregate principal amount of $5,000,000 at any one time outstanding; (vi) amounts owing
by Borrower to Holdings as a result of taxes paid or owing by Holdings to Governmental Authorities
as a result of the assets or operations of Borrower as long as all such amounts are evidenced by
Intercompany Notes, (vii) loans made by Borrower to Holdings to the extent necessary to permit
Holdings to (I) pay operating expenses incurred in the ordinary course of business consistent with
past practices as in existence on the Original Closing Date (as long as (A) Holdings promptly upon
its receipt thereof uses the proceeds of such loans to pay such operating expenses, B) such loans
are repaid or reduced to zero by crediting such operating expenses of Holdings against such loans
within twelve (12) months of the date made and (C) such loans are evidenced by Intercompany Notes)
and (II) pay Dividends to the extent permitted by Section 6.13(d) or make Stock Repurchases
permitted by Section 6.13(e) (as long as (A) Holdings promptly upon its receipt thereof
uses the proceeds of such loans to pay such Dividends or make such Stock Repurchases and (B) such
loans are evidenced by Intercompany Notes); (viii) Indebtedness owing by Holdings to Borrower in an
aggregate principal amount not to exceed $8,000,000 arising as a result of the Refinancing under
and as defined in the Original Credit Agreement, including a payment, on the Original Closing Date,
on a guaranty by Borrower of Prior Lender Obligations under and as defined in the Original Credit
Agreement; (ix) Indebtedness in an aggregate principal amount at any time outstanding not to exceed
$35,000,000 secured by Liens permitted by Section 6.7(d) as long as, in each case, such
Indebtedness has terms that are consistent with the terms of similar financings in then prevailing
market conditions and Agent shall have received such access agreements or mortgagee waivers, all in
form and substance satisfactory to Agent, in its sole discretion, as Agent may request in
connection with such Indebtedness, and refinancings thereof with the proceeds of other Indebtedness
secured by Liens permitted by Section 6.7(d) as long as, in each case, (x) the aggregate
amount of such refinancing Indebtedness, when taken together with the aggregate amount of all other
Indebtedness incurred in reliance on this Section 6.3(a)(ix), does not exceed $35,000,000
in an aggregate principal amount at any time outstanding, (y) such refinancing Indebtedness has
terms that are consistent with the terms of similar financings in then prevailing market conditions
and (z) Agent shall have received such access agreements or mortgagee waivers, all in form and
substance satisfactory to Agent, in its sole discretion, as Agent may request in connection with
such refinancing Indebtedness; (x) unsecured Subordinated Debt in an aggregate principal amount at
any time outstanding not to exceed $30,000,000, and any refinancing of such Subordinated Debt with
the proceeds of other unsecured Subordinated Debt as long as the aggregate amount of such
refinancing Subordinated Debt, when together with the aggregate amount of all other Subordinated
Debt incurred in reliance on this Section 6.3(a)(x), does not exceed $30,000,000 in an
aggregate principal amount at any time outstanding; (xi) unsecured Indebtedness incurred pursuant
to Rate Contracts entered into by the Borrower or any of its Subsidiaries in the ordinary course of
their business for bona fide hedging purposes and not for speculation; (xii) Indebtedness in
respect of deposits held under forward purchasing arrangements entered into with customers in the
ordinary course of business for bona fide hedging purposes and not for speculation in an aggregate
outstanding amount not to exceed $1,000,000; (xiii) Indebtedness in respect of performance, bid,
surety, appeal or similar bonds or completion or performance guarantees or in respect of workers’
compensation claims or self-insurance obligations, in each case in the ordinary course of business
consistent with past




-42-









 







practices in an aggregate outstanding. amount not to exceed $2,000,000; (xiv)
customary
indemnification, reimbursement or similar obligations and warranties under leases and other
contracts in the ordinary course of business consistent with past practices; (xv) Indebtedness
arising from the honoring by a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of business, so long as such
Indebtedness is extinguished within five (5) Business Days after its incurrence; and (xvi) other
unsecured Indebtedness not to exceed $10,000,000 in the aggregate at any time outstanding, any
refinancing of such unsecured Indebtedness with the proceeds of other unsecured Indebtedness as
long as the aggregate amount of such refinancing unsecured Indebtedness, when together with the
aggregate amount of all other unsecured Indebtedness incurred in reliance on this Section
6.3(a)(xvi), does not exceed $10,000,000 at any time outstanding.




          (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount payable in respect of any
Indebtedness prior to its scheduled maturity, other than (i) the Obligations; (ii) Indebtedness
other than the Obligations secured by a Lien permitted under Section 6.7 if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance with Sections
6.8(b) or 6.8(c); (iii) Indebtedness (A) permitted by Section 6.3(a)(i) upon
any refinancing thereof in accordance with Section 6.3(a)(i), (B) permitted by Section
6.3(a)(iv) upon any refinancing thereof in accordance with Section 6.3(a)(iv), (C)
permitted by Section 6.3(a)(ix) upon any refinancing thereof in accordance with Section
6.3(a)(ix), (D) permitted by Section 6.3(a)(x) upon any refinancing thereof in
accordance with Section 6.3(a)(x) and (D) permitted by Section 6.3(a)(xvi) upon any
refinancing thereof in accordance with Section 6.3(a)(xvi); (iv) Indebtedness permitted by
Sections 6.3(a)(i), 6.3(a)(iv), 6.3(a)(ix) or 6.3(a)(xvi) as long as (A) Borrowing
Availability is at least $10,000,000 immediately after giving effect to the proposed purchase,
redemption, defeasance or prepayment and Revolving Credit Advances, if any, used to fund such
purchase, redemption, defeasance or prepayment and (B) no Default or Event of Default has occurred
and is continuing or would result after giving effect to any such purchase, redemption, defeasance
or prepayment and Revolving Credit Advances, if any, used to fund such purchase, redemption,
defeasance or prepayment; and (v) as otherwise permitted in Section 6.13.




          6.4 Employee Loans and Affiliate Transactions.




          (a) No Credit Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except:




               (i) as expressly permitted by this Agreement;



               (ii) in the ordinary course of and pursuant to the reasonable requirements of such
Credit Party’s business and upon fair and reasonable terms that are no less favorable to
such Credit Party than would be obtained in a comparable arm’s length transaction with a
Person not an Affiliate of such Credit Party; or



               (iii) transactions or payments pursuant to any employee, officer or director
compensation or benefit plans or other compensation arrangements entered into in the
ordinary course of business and consistent with past practices.



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All such transactions involving payment in excess of $250,000 existing as of the date
hereof are described in Disclosure Schedule (6.4(a)).




          (b) No Credit Party shall enter into any lending or borrowing transaction with any employees
of any Credit Party, except loans to its respective employees on an arm’s-length basis in the
ordinary course of business consistent with past practices for travel and entertainment expenses,
relocation costs and similar purposes up to a maximum of $10,000 to any employee and up to a
maximum of $500,000 in the aggregate at any one time outstanding.




          6.5 Capital Structure and Business. If all or part of a Credit Party’s Stock is pledged to Agent, that Credit Party shall not
issue additional Stock unless such Stock is pledged to Agent as security for the Obligations. No
Credit Party shall amend its charter or bylaws in a manner that would adversely affect Agent’s or
Lenders’ interest under the Loan Documents or such Credit Party’s duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the businesses currently
engaged in by it or businesses reasonably related thereto.




          6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume or permit to exist any Guaranteed Indebtedness
except (a) by endorsement of instruments or items of payment for deposit to the general account of
any Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of any other Credit
Party if the primary obligation is expressly permitted by this Agreement.




          6.7 Liens. No Credit Party shall create, incur, assume or permit to exist any Lien on or with respect
to its Accounts or any of its other properties or assets (whether now owned or hereafter acquired)
except for (a) Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing Indebtedness outstanding on such date and permitted by
Section 6.3(a)(iv), including replacement Liens on the property currently subject to such
Liens securing Indebtedness permitted by Section 6.3(a)(iv); (c) Liens created after the
date hereof by conditional sale or other title retention agreements (including Capital Leases) or
in connection with purchase money Indebtedness with respect to Equipment and Fixtures acquired by
any Credit Party in the ordinary course of business (provided, that such Liens attach only to the
assets subject to such agreement or purchase money debt (and the proceeds and products thereof) and
such Indebtedness is incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets) or is refinanced, amended or modified in
accordance with Section 6.3(a)(i); (d) Liens created after the Closing Date on any real
property, Equipment or Fixtures (other than Liens permitted by Section 6.7(c)) owned or
acquired by any Credit Party securing Indebtedness permitted by Section 6.3(a)(ix) as long
as Agent shall have received such access agreements or mortgagee waivers, all in form and substance
satisfactory to Agent, in its sole discretion, as Agent may request in connection with such
Indebtedness; (e) Liens (including the right of set-off) in favor of a bank or other depository
institution arising as a matter of law encumbering deposits; (f) Liens arising out of consignment
or similar arrangements for the sale of goods entered into in the
ordinary course of business; (g) any interest or title of a lessor or sublessor under any
lease entered into by a Credit Party as a lessee or sublessee; (h) Liens in favor of collecting
banks arising by operation of law under Section 4-210 of the Code or, with respect to collecting
banks located in the State of New York, under 4-208 of the Code; (i) Liens




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in favor of customs and
revenue authorities arising as a matter of law which secure payment of customs duties in connection
with the importation of goods in the ordinary course of business and (j) Liens other than Liens on
Collateral not otherwise permitted under this Section 6.7 securing obligations of the
Credit Parties that do not exceed $1,000,000 in the aggregate at any time. In addition, no Credit
Party shall become a party to any agreement, note, indenture or instrument, or take any other
action, that would prohibit or otherwise restrict the creation of a Lien on any of its properties
or other assets which are of the type that constitutes Collateral in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations; except for (x) prohibitions or
restrictions on the creation of Liens on cash deposits pledged in the ordinary course of business
to the extent such pledges are permitted by this Agreement provided  that any such prohibition or
restriction relates only to the creation of Liens on the cash deposits that are pledged; (y)
customary restrictions on the creation of Liens on the property permitted by to be disposed under
Section 6.8(b) or  6.8(c) contained in any agreement relating to the disposition of
such property pending the consummation of such disposition, so long as such restrictions on the
creation of Liens apply only to such property to be disposed of and (z) customary provisions in
contracts restricting the assignment thereof to the extent such restriction constitutes a
restriction on creation of Liens; and it also being understood and agreed that any prohibition or
restriction on the creation of Liens contained in the notes, indentures or instruments governing
Liens permitted pursuant to Section 6.7(c) and Section 6.7(d) shall relate only to
the asset or assets subject to such permitted Liens and shall not relate to any asset or assets
constituting Collateral.




          6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the Stock of any of its Subsidiaries (whether in a public or
a private offering or otherwise) or any of its Accounts, other than (a) the sale of Inventory in
the ordinary course of business, (b) the sale or other disposition by a Credit Party in the
ordinary course of such Credit Parties’ business to any Person other than an Affiliate of a Credit
Party of obsolete, worn-out or surplus Inventory or of obsolete, worn-out, surplus or idle
Equipment or Fixtures, (c) dispositions (other than of (i) the Stock of any Subsidiary of any
Credit Party or (ii) any Accounts of any Credit Party) not otherwise permitted under this
Section 6.8 which are made for fair market value; provided, that (i) at the time of any
disposition, no Event of Default shall exist or shall result from such disposition, (ii) not less
than 75% of the aggregate sales price from such disposition shall be paid in cash, and (iii) the
aggregate fair market value of all assets so sold by the Credit Parties and their Subsidiaries,
together, shall not exceed in any Fiscal Year $15,000,000, (d) the sale of Real Estate located at
1351 Belman Rd., Fredericksburg, Virginia, (the “Real Estate Held for Sale”), (e)
dispositions of cash and investments permitted by Section 6.2(c) or 6.2(d), (f)
non-exclusive licenses and sublicenses granted by a Credit Party and leases or subleases (by a
Credit Party as lessor or sublessor) to third parties in the ordinary course of Credit Parties’
business not interfering with the business of the Credit Parties or any of their Subsidiaries, (g)
Restricted Payments permitted under Section 6.13, (h) dispositions of past due Accounts in
connection with the collection or compromise thereof; provided, that the Account Debtor is
financially troubled or distressed; provided, further, that after the occurrence and
during the continuance of an Event of Default, such disposition shall only be made upon the
prior written consent of Agent, (i) as long as no Default or Event of Default has occurred and is
continuing or would result after giving effect thereto, the surrender or waiver of contractual
rights or settlement, release or surrender of any contract, tort or other litigation claims in the
ordinary course of business, (j)




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abandonment, cancellation or other disposition of Intellectual
Property (which such Credit Party reasonably in good faith determines is not useful to its
business) in the ordinary course of business and which does not materially interfere with the
ordinary conduct of the business of any Credit Party, (k) mergers and consolidations permitted by
Section 6.1, (l) dissolutions, liquidations or other discontinuance of existence of a
Subsidiary of the Borrower permitted by Section 6.1, (m) the granting of consensual Liens
permitted under Section 6.7, and (n) the sale of Stock in an Inactive Subsidiary.




          6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to
occur (i) an event that could result in the imposition of a Lien on any asset of a Credit Party
with respect to any Title IV Plan or Multiemployer Plan or (ii) an ERISA Event to the extent such
ERISA Event would reasonably be expected to have a Material Adverse Effect. No Credit Party shall
cause or suffer to exist any event that could result in the imposition of a Lien with respect to
any Plan.




          6.10 Financial Covenants. Borrower shall not breach or fail to comply with any of the Financial Covenants.




          6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of any Hazardous Material on, at, in,
under, above, to, from or about any of the Real Estate where such Release would (a) violate in any
respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the
Real Estate or any of the Collateral, other than such violations or Environmental Liabilities that
could not reasonably be expected to have create liabilities in excess of $2,000,000.




          6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback, synthetic lease or similar transaction
involving any of its assets, except for a sale and subsequent leaseback of a portion of the Real
Estate located at: 825 North Lane Avenue, Jacksonville, Duvall County, Florida.




          6.13 Restricted Payments. No Credit Party shall make any Restricted Payment, except (a) intercompany loans and
advances between Borrower and Guarantors to the extent permitted by Section 6.3, and
payments with respect thereto, (b) dividends and distributions by any wholly-owned Subsidiary of
the Borrower paid to the Borrower or any wholly-owned Subsidiary of the Borrower, (c)
employee loans permitted under Section 6.4(b), (d) Borrower may pay cash dividends in
respect of its Stock to Holdings which Holdings promptly upon its receipt thereof uses to make cash
dividends in respect of its Stock (and Holdings is permitted to pay such cash dividends in respect
of its Stock) (“Dividends”) as long as (A) Liquidity is at least $10,000,000 immediately
after giving effect to the proposed Dividend and Revolving Credit Advances, if any, used to fund
such Dividend and (B) no Default or Event of Default has occurred and is continuing or would result
after giving effect to any such Dividend and Revolving Credit Advances, if any, used to fund such
Dividend, (e) Borrower may pay cash dividends in respect of its Stock to Holdings which Holdings
promptly upon its receipt thereof uses to redeem, purchase, repurchase or retire, or obtain the
surrender of, any outstanding Stock in Holdings, or any outstanding warrants, options or other
rights to acquire such Stock (and Holdings is permitted to redeem, purchase, repurchase or retire,
or obtain the surrender of,




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any outstanding Stock in Holdings, or any outstanding warrants, options
or other rights to acquire such Stock) (“Stock Repurchase”) as long as (A) Liquidity is at
least $10,000,000 immediately after giving effect to the proposed Stock Repurchase and Revolving
Credit Advances, if any, used to fund such Stock Repurchase, and (B) no Default or Event of Default
has occurred and is continuing or would result after giving effect to any such Stock Repurchase and
Revolving Credit Advances, if any, used to fund such Stock Repurchase), (f) any Credit Party may
declare and make dividend payments or other distributions payable solely in its Stock or Stock
Equivalents, (g) in the event the Borrower files a consolidated, combined, unitary or similar type
income tax return with Holdings, the Borrower may make distributions to Holdings to permit Holdings
to pay federal and state income taxes then due and payable, franchise taxes and other similar
licensing expenses incurred in the ordinary course of business provided, that the amount of such
distribution shall not be greater than the amount of such taxes or expenses that would have been
due and payable by the Borrower and its relevant Subsidiaries had the Borrower not filed a
consolidated, combined, unitary or similar type return with Holdings, (h) the Credit Parties may
make payments on the Subordinated Debt to the extent permitted under the applicable subordination
agreement between the holders of such Subordinated Debt and Agent and (i) the Borrower and Holdings
may make Restricted Payments not otherwise permitted hereunder to the extent required to be made
pursuant to and in accordance with the terms any stock option plans or other benefit plans for
management and employees of the Borrower and its Subsidiaries in the ordinary course of business
and consistent with past practices.




          6.14 Change of Corporate Name or Location; Change of Fiscal Year. No Credit Party shall (a) change its name as it appears in official filings in the state of
its incorporation or other organization, (b) change its chief executive office, principal place of
business, corporate offices or warehouses or locations at which Collateral is held or stored, or
the location of its records concerning the Collateral, (c) change the type of entity that it is,
(d) change its organization identification number, if any, issued by its state of incorporation or
other organization, or (e) change its state of incorporation or organization, in each case without
at least thirty (30) days prior written notice to Agent and after Agent’s written acknowledgment
that any reasonable action requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has been
completed or taken (which written acknowledgment the Agent shall give reasonably promptly after
such actions have been completed or taken), and provided, that any such new location shall be in
the continental United States. No Credit Party shall change its Fiscal Year without ninety
(90) days’ advance written notice to Agent. Nothing in this Section 6.14 shall
prohibit any liquidation, dissolution or other discontinuance of the existence of a Subsidiary of
the Borrower permitted under Section 6.1.




          6.15 No Impairment of Intercompany Transfers. No Credit Party shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the other Loan Documents)
that could directly or indirectly restrict, prohibit or require the consent of any Person with
respect to the payment of dividends or distributions or the making or repayment of intercompany
loans by a Subsidiary of Borrower to Borrower except customary conditions and restrictions
contained in agreements relating to a sale or disposition of a Subsidiary permitted hereunder,
provided that such restrictions and conditions apply only to such Subsidiary to be sold or disposed
of.





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          6.16 [Intentionally Omitted].




          6.17 Holdings. At all times after the Original Closing Date, Holdings shall
not engage in any trade or business, or own any assets (other than (i) assets which it owns
as of the Closing Date and (ii) other assets as long as the fair market value of all such
assets does not exceed $1,000,000 in the aggregate at any time) or incur any Indebtedness
or Guaranteed Indebtedness (other than the Obligations) and intercompany Indebtedness
permitted by Section 6.3(a)(vii).




          6.18 Inactive Subsidiaries. No Inactive Subsidiary shall (a) acquire any
assets, (b) incur any liabilities (whether to an Affiliate or otherwise) other than for
franchise taxes, maintenance fees and other de minimus expenses or (c) engage in any active
trade or business.




          6.19 Vacant Land Lease No Credit Party shall store or maintain, or permit to
be stored or maintained, any Collateral on the property that is subject to the Vacant Land
Lease.




7. TERM




          7.1 Termination. The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other Obligations shall
be automatically due and payable in full on such date.




          7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement under this
Agreement shall in any way affect or impair the obligations, duties and liabilities of the
Credit Parties or the rights of Agent and Lenders relating to any unpaid portion of the
Loans or any other Obligations, due or not due, liquidated, contingent or unliquidated or
any transaction or event occurring prior to such termination, or any transaction or event,
the performance of which is required after the Commitment Termination Date. Except as
otherwise expressly provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding upon the Credit
Parties, and all rights of Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination Date;
provided, that the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents shall
survive the Termination Date.




8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES




          8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:




          (a) Borrower (i) fails to make any payment of principal of the Loans or any of the other
Obligations when due and payable, (ii) fails to make any payment of interest on, or




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Fees owing in respect of, the Loans or any of the other Obligations within three (3) days
after the same is due and payable or (iii) fails to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document within ten (10) days following
Agent’s demand for such reimbursement or payment of expenses.




          (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of
Sections 1.4, 1.8, 5.4(a), 5.11 or 6, or any of the
provisions set forth in Annexes C or G, respectively.




          (c) Borrower fails or neglects to perform, keep or observe any of the provisions of
Section 4.1 or any provisions set forth in Annexes E or F, respectively, and the
same shall remain unremedied for three (3) Business Days or more.




          (d) Any Credit Party fails or neglects to perform, keep or observe any other provision of this
Agreement or of any of the other Loan Documents (other than any provision embodied in or covered by
any other clause of this Section 8.1) and the same shall remain unremedied for thirty (30)
days or more.




          (e) A default or breach occurs under any other agreement, document or instrument to which any
Credit Party is a party that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess
of $10,000,000 in the aggregate (including (x) undrawn committed or available amounts and (y)
amounts owing to all creditors under any combined or syndicated credit arrangements), or (ii)
causes, or permits any holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause
(after giving effect to any applicable grace or notice period), Indebtedness or Guaranteed
Indebtedness or a portion thereof in excess of $10,000,000 in the aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral to be
demanded in respect thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.




          (f) Any information contained in any Borrowing Base Certificate is untrue or incorrect in any
respect (other than (i) immaterial errors not exceeding the greater of (1) $1,000,000 or (2) 2.5%
of the Borrowing Availability as such Borrowing Availability is calculated after giving effect to
the correction of such errors and (ii) errors understating the amount of the Borrowing Base), or
any representation or warranty herein or in any Loan Document or in any written statement, report,
financial statement or certificate (other than a Borrowing Base Certificate) made or delivered to
Agent or any Lender by any Credit Party is untrue or incorrect in any material respect as of the
date when made or deemed made.




          (g) Any Collateral with a fair market value of the greater of (1) $500,000 and (2) 2.5% of the
Borrowing Availability or more are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors of any Credit Party and such condition continues for thirty (30) days or more.




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          (h) A case or proceeding is commenced against any Credit Party seeking a decree or order in
respect of such Credit Party (i) under the Bankruptcy Code or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party’s assets, or (iii) ordering the winding-up or liquidation
of the affairs of such Credit Party, and such case or proceeding shall remain undismissed or
unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case
or proceeding is granted by a court of competent jurisdiction.




          (i) Any Credit Party (i) files a petition seeking relief under the Bankruptcy Code or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or
fails to contest in a timely and appropriate manner to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party
or for any substantial part of any such Credit Party’s assets, (iii) makes an assignment for the
benefit of creditors, or (iv) takes any action in furtherance of any of the foregoing, or (v)
admits in writing its inability to, or is generally unable to, pay its debts as such debts become
due.




          (j) A final judgment or judgments for the payment of money in excess of $2,000,000 in the
aggregate at any time are outstanding against one or more of the Credit Parties (excluding amounts
covered by insurance to the extent the relevant independent third party insurer has not denied
coverage therefor), and the same are not, within thirty (30) days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay.




          (k) Any material provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Credit Party shall challenge the enforceability of
any Loan Document or shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan
Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted
herein or therein) in any of the Collateral purported to be covered thereby.




          (l) Any Change of Control occurs.




          8.2 Remedies.




          (a) If any Event of Default has occurred and is continuing, Agent may (and at the written
request of the Requisite Lenders shall), without notice, suspend the Revolving Loan facility with
respect to additional Advances and/or the incurrence of additional Letter of Credit Obligations,
whereupon any additional Advances and additional Letter of Credit Obligations shall be made or
incurred in Agent’s sole discretion (or in the sole discretion of the Requisite Lenders, if such
suspension occurred at their direction) so long as such Default or Event of Default is continuing.
If any Event of Default has occurred and is continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly




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provided herein, increase the rate of interest applicable to the Loans and the Letter of
Credit Fees to the Default Rate.




          (b) If any Event of Default has occurred and is continuing, Agent may (and at the written
request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility
with respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii)
reduce the Revolving Loan Commitment from time to time; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and payable, and require
that the Letter of Credit Obligations be cash collateralized in the manner set forth in Annex
B, all without presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; or (iv) exercise any rights and remedies
provided to Agent under the Loan Documents or at law or equity, including all remedies provided
under the Code; provided, that upon the occurrence of an Event of Default specified in Sections
8.1(h) or (i), the Commitments shall be immediately terminated and all of the Obligations,
including the Revolving Loan, shall become immediately due and payable without declaration, notice
or demand by any Person.




          8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives: (a) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Agent may do in
this regard, (b) all rights to notice and a hearing prior to Agent’s taking possession or
control of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Agent to exercise any of its
remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.




9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT




          9.1 Assignment and Participations.




          (a) Subject to the terms of this Section 9.1, any Lender may make an assignment to a
Qualified Assignee or to any other Person acceptable to Agent of, or sale of participations in, at
any time or times, the Loan Documents, Loans, Letter of Credit Obligations and any Commitment or
any portion thereof or interest therein, including any Lender’s rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of Agent
(which consent shall not be unreasonably withheld or delayed with respect to a Qualified Assignee)
and the execution of an assignment agreement (an “Assignment Agreement” substantially in
the form attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent and Borrower, which shall not to be unreasonably
withheld or delayed; provided, however, that assignments by Non-Funding Lenders shall be subject to
Agent’s prior written consent in all instances in the sole discretion of Agent; (ii) be conditioned
on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution







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thereof; (iii) after giving effect to any such partial assignment, the assignee Lender shall
have Commitments in an amount at least equal to $10,000,000 and the assigning Lender shall have
retained Commitments in an amount at least equal to $10,000,000; (iv) include a payment to Agent of
an assignment fee of $3,500, and (v) so long as no Event of Default has occurred and is continuing,
require the consent of the Borrower, which shall not be unreasonably withheld or delayed and shall
be deemed granted if not objected to within ten (10) Business Days following notice thereof to
Borrower (it being understood and agreed that, so long as no Event of Default has occurred and is
continuing, the Borrower may withhold its consent to an assignment by a Lender if the Borrower
demonstrates to the satisfaction of the Agent, in its sole discretion, that the assignee is a
direct business competitor (or an Affiliate thereof) of the Borrower within ten (10) Business Days
following notice of such assignment to Borrower). In the case of an assignment by a Lender under
this Section 9.1, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or assigned portion thereof
from and after the date of such assignment. Borrower hereby acknowledges and agrees that any
assignment shall give rise to a direct obligation of Borrower to the assignee and that the assignee
shall be considered to be a “Lender”. In all instances, each Lender’s liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender’s Pro Rata Share of
the applicable Commitment. In the event Agent or any Lender assigns or otherwise transfers all or
any part of the Obligations, Agent or any such Lender shall so notify Borrower and Borrower shall,
upon the request of Agent or such Lender, execute new Notes in exchange for the Notes, if any,
being assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time pledge the Obligations held by it and such Lender’s rights under this
Agreement and the other Loan Documents to a Federal Reserve Bank, and any lender that is an
investment fund may assign the Obligations held by it and such Lender’s rights under this Agreement
and the other Loan Documents to another investment fund managed by the same investment advisor;
provided, that no such pledge to a Federal Reserve Bank shall release such Lender from such
Lender’s obligations hereunder or under any other Loan Document.




          (b) Any participation by a Lender of all or any part of its Commitments shall be made with the
understanding that all amounts payable by Borrower hereunder shall be determined as if that Lender
had not sold such participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder except actions
directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable
with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled
amortization of the principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other
than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8 subject to
clause (f) of this Section 9.1, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the participant shall be
considered to be a “Lender”. Except as set forth in the preceding sentence neither Borrower nor
any other Credit Party shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no such sale had
occurred.







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          (c) Except as expressly provided in this Section 9.1, no Lender shall, as between
Borrower and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Loans, the Notes or other Obligations owed to such Lender.




          (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation, including the execution
and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and the preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Each Credit Party executing this Agreement
shall certify the correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by it and all other
information provided by it and included in such materials, except that any Projections delivered by
Borrower shall only be certified by Borrower as having been prepared by Borrower in compliance with
the representations contained in Section 3.4(c).




          (e) A Lender may furnish any information concerning Credit Parties in the possession of such
Lender from time to time to assignees and participants (including prospective assignees and
participants); provided that such Lender shall obtain from assignees or participants
confidentiality covenants substantially equivalent to those contained in Section 11.8.




          (f) So long as no Event of Default has occurred and is continuing, no Lender shall assign or
sell participations in any portion of its Loans or Commitments to a potential Lender or
participant, if, as of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under Section
1.16(a), increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).




          (g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”), may grant to a special purpose funding vehicle (an “SPC”), identified as such
in writing by the Granting Lender to Agent and Borrower, the option to provide to Borrower all or
any part of any Loans that such Granting Lender would otherwise be obligated to make to Borrower
pursuant to this Agreement; provided, that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan; and (ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Lender). Any SPC may (i) with
notice to, but without the prior written consent of, Borrower and Agent and without paying any
processing fee therefor assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by Borrower and Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding or maintenance of
Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to
any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section 9.1(g) may




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not be amended without the prior written consent of each Granting Lender, all or any of whose
Loans are being funded by an SPC at the time of such amendment. For the avoidance of doubt, the
Granting Lender shall for all purposes, including without limitation, the approval of any amendment
or waiver of any provision of any Loan Document or the obligation to pay any amount otherwise
payable by the Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.




          (h) Nothing contained in this Section 9 shall be construed to require the consent of
any party for the Swing Line Lender to make a Swing Lien Advance.




          9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of
all Lenders as Agent under this Agreement and the other Loan Documents. The provisions of
this Section 9.2 are solely for the benefit of Agent and Lenders and no Credit
Party nor any other Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement and the
other Loan Documents, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of agency or
trust with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature and Agent
shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document
or otherwise a fiduciary relationship in respect of any Lender. Except as expressly set
forth in this Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information relating to any
Credit Party or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any capacity.
Neither Agent nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any action taken or
omitted to be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages caused by its or their own gross negligence or
willful misconduct.




          If Agent shall request instructions from Requisite Lenders, Supermajority Revolving Lenders or
all affected Lenders with respect to any act or action (including failure to act) in connection
with this Agreement or any other Loan Document, then Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received instructions from Requisite
Lenders, Supermajority Revolving Lenders, or all affected Lenders, as the case may be, and Agent
shall not incur liability to any Person by reason of so refraining. Agent shall be fully justified
in failing or refusing to take any action hereunder or under any other Loan Document (a) if such
action would, in the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose Agent to
Environmental Liabilities or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder
or under any other Loan Document in accordance with the instructions of Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable.







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          9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of
their respective directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for damages caused by its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, Agent: (a) may
treat the payee of any Note as the holder thereof until Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form reasonably satisfactory
to Agent; (b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the advice of such counsel, accountants or experts;
(c) makes no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or conditions of
this Agreement or the other Loan Documents on the part of any Credit Party or to inspect
the Collateral (including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no
liability under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by telecopy,
telegram, cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.




          9.4 GE Capital and Affiliates. With respect to its Commitments hereunder, GE
Capital shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not Agent; and
the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GE
Capital in its individual capacity. GE Capital and its Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Credit Party, any of
their Affiliates and any Person who may do business with or own securities of any Credit
Party or any such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and other
consideration from any Credit Party for services in connection with this Agreement or
otherwise without having to account for the same to Lenders. Each Lender acknowledges the
potential conflict of interest between GE Capital as a Lender holding disproportionate
interests in the Loans and GE Capital as Agent.




          9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on the
Financial Statements referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial analysis of the
Credit Parties and its own decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any other
Lender and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action under this
Agreement. Each Lender acknowledges the potential conflict of interest of each other
Lender as a result of Lenders holding disproportionate interests in the Loans, and
expressly consents to, and waives any claim based upon, such conflict of interest.







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          9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Credit Parties and without limiting the obligations of Credit Parties
hereunder), ratably according to their respective Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by
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 and each other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Credit Parties.




          9.7 Successor Agent. Agent may resign at any time by giving not less than
thirty (30) days’ prior written notice thereof to Lenders and Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Requisite Lenders and shall have
accepted such appointment within thirty (30) days after the resigning Agent’s giving notice
of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor
Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of a
commercial bank or financial institution if such commercial bank or financial institution
is organized under the laws of the United States of America or of any State thereof and has
a combined capital and surplus of at least $300,000,000. If no successor Agent has been
appointed pursuant to the foregoing, within thirty (30) days after the date such notice of
resignation was given by the resigning Agent, such resignation shall become effective and
the Requisite Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Any
successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date of the resigning
Agent’s resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any indemnity
rights or other rights in favor of such resigning Agent shall continue. After any
resigning Agent’s resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under this
Agreement and the other Loan Documents.




          9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default and subject to
Section 9.9(f),




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each Lender is hereby authorized at any time or from time to time, without prior
notice to any Credit Party or to any Person other than Agent, any such notice being hereby
expressly waived, to offset and to appropriate and to apply any and all balances held by it
at any of its offices for the account of Borrower or any Guarantor (regardless of whether
such balances are then due to Borrower or any Guarantor) and any other properties or assets
at any time held or owing by that Lender or that holder to or for the credit or for the
account of Borrower or any Guarantor against and on account of any of the Obligations that
are not paid when due; provided that the Lender exercising such offset rights shall give
notice thereof to the affected Credit Party promptly after exercising such rights. Any
Lender exercising a right of setoff or otherwise receiving any payment on account of the
Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender’s or holder’s
Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the
amount so offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares, (other than offset rights exercised by any Lender with
respect to Sections 1.13, 1.15 or 1.16). If a Non-Funding Lender or Impacted
Lender receives any such payment as described in the previous sentence, such Lender shall
turn over such payments to Agent in an amount that would satisfy the cash collateral
requirements set forth in Section 9.9(a)(ii). Each Lender’s obligation under this
Section 9.8 shall be in addition to and not in limitation of its obligations to
purchase a participation in an amount equal to its Pro Rata Share of the Swing Line Loans
under Section 1.1. Borrower and each Guarantor agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell participations in
such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a
participation in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of offset, bankers’ lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder of the
Loans and the other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the purchase
of participations by that Lender shall be rescinded and the purchase price restored without
interest.




          9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.




          (a) Advances; Payments.




               (i) Revolving Lenders shall refund or participate in the Swing Line Loan in accordance with
clauses (iii) and (iv) of Section 1.1(c). If the Swing Line Lender declines to
make a Swing Line Loan or if Swing Line Availability is zero, Agent shall notify Revolving Lenders,
promptly after receipt of a Notice of Revolving Advance and in any event prior to 1:00 p.m. (New
York time) on the date such Notice of Revolving Advance is received, by telecopy, telephone or
other similar form of transmission. Each Revolving Lender shall make the amount of such Lender’s
Pro Rata Share of such Revolving Credit Advance available to Agent in same day funds by wire
transfer to Agent’s account as set forth in Annex H not later
than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate
Loan and not later than 11:00 a.m. (New York time) on the requested funding date in the case of a
LIBOR Loan. After receipt of such wire transfers (or, in the Agent’s sole discretion, before



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receipt of such wire transfers), subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to Borrower. All payments by each Revolving Lender shall be made without
setoff, counterclaim or deduction of any kind.




               (ii) Not less than once during each calendar week or more frequently at Agent’s election
(each, a “Settlement Date”), Agent shall advise each Lender by telephone, or telecopy of
the amount of such Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of
Lenders with respect to each applicable Loan. Provided that each Lender has funded all payments
and Revolving Credit Advances required to be made by it and purchased all participations required
to be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date,
Agent shall pay to each Lender such Lender’s Pro Rata Share of principal, interest and Fees paid by
Borrower since the previous Settlement Date for the benefit of such Lender on the Loans held by it.
To the extent that any Lender (a “Non-Funding Lender”) has failed to fund all such
payments and Revolving Credit Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro
Rata Share of all payments received from Borrower and hold, in a non-interest bearing account, all
payments received by Agent for the benefit of any Non-Funding Lender pursuant to this Agreement as
cash collateral for any unfunded reimbursement obligations of such Non-Funding Lender until the
Obligations are paid in full in cash, all Letter of Credit Obligations have been discharged or cash
collateralized and all Commitments have been terminated, and upon such unfunded obligations owing
by a Non-Funding Lender becoming due and payable, Agent shall be authorized to use such cash
collateral to make such payment on behalf of such Non-Funding Lender. Any amounts owing by a
Non-Funding Lender to Agent which are not paid when due shall accrue interest at the interest rate
applicable during such period to Revolving Loans that are Index Rate Loans. Such payments shall be
made by wire transfer to such Lender’s account (as specified by such Lender in Annex H or
the applicable Assignment Agreement) not later than 1:00 p.m. (Chicago time) on the next Business
Day following each Settlement Date.



          (b) Availability of Lender‘s Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance available to Agent
on each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such Revolving
Lender when due, Agent will be entitled to recover such amount on demand from such Revolving Lender
without setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith within five (5) Business Days following Agent’s demand,
Agent shall promptly notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents
shall be deemed to require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrower may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to Borrower on behalf of any
Revolving Lender and is not reimbursed therefor on the same Business Day as such Advance is made,
Agent shall be entitled to retain for its account all interest accrued on such Advance until
reimbursed by the applicable Revolving Lender.




          (c) Return of Payments.




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               (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that
a related payment has been or will be received by Agent from Borrower and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.



               (ii) If Agent determines at any time that any amount received by Agent under this Agreement
must be returned to Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to
such Lender, together with interest at such rate, if any, as Agent is required to pay to Borrower
or such other Person, without setoff, counterclaim or deduction of any kind.



          (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any Revolving
Credit Advance, pay any Letter of Credit Obligation or any other payment required by it hereunder,
or to purchase any participation in any Swing Line Loan to be made or purchased by it on the date
specified therefor shall not relieve any other Lender (each such other Revolving Lender, an
“Other Lender”) of its obligations to make such Revolving Credit Advance or purchase such
participation on such date, but neither Agent nor, other than as expressly set forth herein, any
Other Lender shall be responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment required hereunder. Notwithstanding anything
set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a “Lender” or a “Revolving Lender” (or be
(or be, or have its Loans and Commitments, included in the determination of “Requisite Lenders” or
“Supermajority Revolving Lenders” or “Lenders directly affected” pursuant to Section 11.2)
for any voting or consent rights under or with respect to any Loan Document. Moreover, for the
purposes of determining Requisite Lenders and Supermajority Revolving Lenders, the Loans and
Commitments held by Non-Funding Lenders shall be excluded from the total Loans and Commitments
outstanding. At Borrower’s request, Agent or a Person acceptable to Agent shall have the right
with Agent’s consent and in Agent’s sole discretion (but shall have no obligation) to purchase from
any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request, sell
and assign to Agent or such Person, all of the Commitments of that Non-Funding Lender for an amount
equal to the principal balance of all Loans held by such Non-Funding Lender and all accrued
interest and fees with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement. In addition, a Lender that is a
Non-Funding Lender on account of its failure to fund payments and Revolving Credit Advances
described in Section 9.9(a)(ii) above or purchases of participations described in
Section 9.9(a)(ii) above shall not earn and shall not be entitled to receive, and the
Borrower shall not be required to pay, such Lender’s portion of the fees payable pursuant to
Section 1.9(b) during the time such Lender is a Non-Funding Lender. In the event that any
reallocation of Letter of Credit Obligations occurs pursuant to paragraph (b) of Annex C,
during the period of time that such reallocation remains in effect, the Letter of Credit Fee
payable with respect to such reallocated portion shall be payable to (A) all Revolving Lenders
based on their pro rata share of such reallocation or (B) to the L/C Issuer for any remaining
portion not reallocated to any other Revolving Lenders.







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          (e) Dissemination of Information. Agent shall use reasonable efforts to provide
Lenders with any notice of Default or Event of Default received by Agent from, or delivered by
Agent to, any Credit Party, with notice of any Event of Default of which Agent has actually become
aware and with notice of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent’s gross negligence or willful misconduct. Lenders acknowledge
that Borrower is required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall have no duty to
provide the same to Lenders.




          (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or
enforce its rights arising out of this Agreement or the Notes (including exercising any rights of
setoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it being
the intent of Lenders that any such action to protect or enforce rights under this Agreement and
the Notes shall be taken in concert and at the direction or with the consent of Agent or Requisite
Lenders. With respect to any action by Agent to enforce the rights and remedies of Agent and the
Lenders under this Agreement and the other Loan Documents, each Lender hereby consents to the
jurisdiction of the court in which such action is maintained, and agrees to deliver its Notes to
Agent to the extent necessary to enforce the rights and remedies of Agent for the benefit of the
Lenders under the Mortgages in accordance with the provisions hereof.




          (g) Procedures. Agent is hereby authorized by each Credit Party and each other Person
to whom any Obligations are owed to establish procedures (and to amend such procedures from time to
time) to facilitate administration and servicing of the Loans and other matters incidental thereto.
Without limiting the generality of the foregoing, Agent is hereby authorized to establish
procedures to make available or deliver, or to accept, notices, documents and similar items on, by
posting to or submitting and/or completion on, E-Systems. The posting, completion and/or
submission by any Credit Party of any communication pursuant to an E-System shall constitute a
representation and warranty by the Credit Parties that any representation, warranty, certification
or other similar statement required by the Loan Documents to be provided, given or made by a Credit
Party in connection with any such communication is true, correct and complete except as expressly
noted in such communication or E-System.




10. SUCCESSORS AND ASSIGNS




          10.1 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party, Agent, Lenders and
their respective successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein
or therein. No Credit Party may assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under any of the other Loan Documents
without the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party without the
prior express written consent of Agent and Lenders shall be
void. The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders







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with respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of the other
Loan Documents.




11. MISCELLANEOUS




          11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the subject matter
thereof and may not be modified, altered or amended except as set forth in Section
11.2. Any letter of interest, commitment letter, fee letter or confidentiality
agreement, if any, between any Credit Party and Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this Agreement.
Notwithstanding the foregoing, the GE Capital Fee Letter between Agent and Borrower shall
survive the execution and delivery of this Agreement and shall continue to be binding
obligations of the parties.




          11.2 Amendments and Waivers.




          (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan Document, or any consent
to any departure by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrower, and by Requisite Lenders, Supermajority
Revolving Lenders or all affected Lenders, as applicable. Except as set forth in clauses (b)
and (c) below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.




          (b) No amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement that increases the percentage advance rates set forth in the definition
of the Borrowing Base, or that makes less restrictive the nondiscretionary criteria for exclusion
from Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be
effective unless the same shall be in writing and signed by Agent, Supermajority Revolving Lenders
and Borrower. No amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement that waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit Obligations
shall be effective unless the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary, no waiver or
consent with respect to any Default or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 unless the same shall be in writing and signed by Agent, Requisite
Lenders and Borrower.




          (c) No amendment, modification, termination or waiver shall, unless in writing and signed by
Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender’s
Commitment (which action shall be deemed to directly affect all
Lenders); (ii) reduce the principal of, rate of interest on or Fees payable with respect to
any Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled payment
date







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(other than payment dates of mandatory prepayments under Section 1.3(b)(ii)-(iv)) or
final maturity date of the principal amount of any Loan of any affected Lender; (iv) waive,
forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v)
release any Guaranty or, except as otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose of, any Collateral with a value
exceeding $5,000,000 in the aggregate (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate unpaid principal amount
of the Loans that shall be required for Lenders or any of them to take any action hereunder; and
(vii) amend or waive this Section 11.2 or the definitions of the terms “Requisite Lenders”
or “Supermajority Revolving Lenders” insofar as such definitions affect the substance of this
Section 11.2. Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent or L/C Issuer under this Agreement or any other Loan Document shall be
effective unless in writing and signed by Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. No amendment, modification or waiver of this
Agreement or any Loan Document altering the ratable treatment of Obligations arising under Secured
Rate Contracts resulting in such Obligations being junior in right of payment to principal on the
Loans or resulting in Obligations owing to any Secured Swap Provider becoming unsecured (other than
release of Liens in accordance with the terms hereof), in each case in a manner adverse to any
Secured Swap Provider, shall be effective without the written consent of GE Capital. Each
amendment, modification, termination or waiver shall be effective only in the specific instance and
for the specific purpose for which it was given. No amendment, modification, termination or waiver
shall be required for Agent to take additional Collateral pursuant to any Loan Document. No
amendment, modification, termination or waiver of any provision of any Note shall be effective
without the written concurrence of the holder of that Note. No notice to or demand on any Credit
Party in any case shall entitle such Credit Party or any other Credit Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.2 shall be binding upon each
holder of the Notes at the time outstanding and each future holder of the Notes.




          (d) If, in connection with any proposed amendment, modification, waiver or termination (a
“Proposed Change”):




               (i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is
obtained, but the consent of other Lenders whose consent is required is not obtained (any
such Lender whose consent is not obtained as described in this clause (i) and in
clause (ii) below being referred to as “Non Consenting Lender”);



               (ii) requiring the consent of Supermajority Revolving Lenders, the consent of
Requisite Lenders is obtained, but the consent of Supermajority Revolving Lenders is not
obtained; or


then, so long as Agent is not a Non Consenting Lender, at Borrower’s request Agent, or a Person
reasonably acceptable to Agent, shall have the right with Agent’s consent and in Agent’s sole
discretion (but shall have no obligation) to purchase from such Non Consenting Lenders, and such
Non Consenting Lenders agree that they shall, upon Agent’s request, sell and assign to Agent or
such Person, all of the Commitments of such Non Consenting Lenders for an amount






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equal to the principal balance of all Loans held by the Non Consenting Lenders and all accrued
interest and Fees with respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.




          (e) Upon payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations), termination of the Commitments and a release of all claims against
Agent and Lenders, and so long as no suits, actions proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements, mortgage releases
and other documents necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.




          11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its counsel,
advisors, consultants and auditors) and (ii) Agent (and, with respect to clauses (c)
and (d) below, all Lenders) for all fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) incurred in connection with the negotiation,
preparation and filing and/or recordation of the Loan Documents and incurred in connection
with:




          (a) any amendment, modification or waiver of, or consent with respect to, or termination of,
any of the Loan Documents or Related Transactions Documents or advice in connection with the
administration of the Loans made pursuant hereto or its rights hereunder or thereunder;




          (b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent,
any Lender, any Credit Party or any other Person and whether as a party, witness or otherwise) in
any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed
or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit,
case, proceeding or action, and any appeal or review thereof, in connection with a case commenced
by or against any or all of the Credit Parties or any other Person that may be obligated to Agent
by virtue of the Loan Documents, including any such litigation, contest, dispute, suit, proceeding
or action arising in connection with any work-out or restructuring of the Loans during the pendency
of one or more Events of Default; provided, that no Person shall be entitled to reimbursement under
this clause (c) in respect of any litigation, contest, dispute, suit, proceeding or action
to the extent any of the foregoing results from such Person’s gross negligence or willful
misconduct;




          (c) any attempt to enforce any remedies of Agent or any Lender against any or all of the
Credit Parties or any other Person that may be obligated to Agent or any Lender by virtue of any of
the Loan Documents, including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events of Default;
provided, that in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;







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          (d) any workout or restructuring of the Loans during the pendency of one or more Events of
Default; provided, that in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; and




          (e) efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe
or assess any of the Credit Parties or their respective affairs, and (iii) verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral;



including, as to each of clauses (a) through (e) above, all reasonable attorneys’ and other
professional and service providers’ fees arising from such services and other advice, assistance or
other representation, including those in connection with any appellate proceedings, and all
expenses, costs, charges and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of which shall
be payable, on demand, by Borrower to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of accountants,
environmental advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred
in connection with the performance of such legal or other advisory services.




          11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of Agent or such Lender
thereafter to demand strict compliance and performance herewith or therewith. Any
suspension or waiver of an Event of Default shall not suspend, waive or affect any other
Event of Default whether the same is prior or subsequent thereto and whether the same or of
a different type. Subject to the provisions of Section 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or Event of
Default by any Credit Party shall be deemed to have been suspended or waived by Agent or
any Lender, unless such waiver or suspension is by an instrument in writing signed by an
officer of or other authorized employee of Agent and the applicable required Lenders and
directed to Borrower specifying such suspension or waiver.




          11.5 Remedies. Agent’s and Lenders’ rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies that Agent or any
Lender may have under any other agreement, including the other Loan Documents, by operation
of law or otherwise. Recourse to the Collateral shall not be required.




          11.6 Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan Document
shall be prohibited by or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement or such
other Loan Document.







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          11.7 Conflict of Terms. Except as otherwise provided in this Agreement or any
of the other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any provision in any
of the other Loan Documents, the provision contained in this Agreement shall govern and
control.




          11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as confidential all
confidential information provided to them by the Credit Parties and designated as
confidential for a period of two (2) years following receipt thereof, except that Agent and
each Lender may disclose such information (a) to Persons employed or engaged by Agent or
such Lender; (b) to any bona fide assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this Section
11.8 (and any such bona fide 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 Governmental
Authority or reasonably believed by 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
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 Agent or such Lender is a party; or (f) that ceases to be confidential through no
fault of Agent or any Lender.




          11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT
AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY
AND; PROVIDED, FURTHER THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH
CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT







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PARTY HEREBY WAIVES ANY OBJECTION THAT
SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.




          11.10 Notices.




          (a) Addresses. All notices and other communications required or expressly authorized
to be made by this Agreement shall be given in writing, unless otherwise expressly specified
herein, and (i) addressed to the address set forth on the applicable signature page hereto, (ii)
posted to Intralinks® (to the extent such system is available and set up by or at the direction of
Agent prior to posting) in an appropriate location by uploading such notice, demand, request,
direction or other communication to www.intralinks.com, faxing it to 866-545-6600 with an
appropriate bar-code fax coversheet or using such other means of posting to Intralinks® as may be
available and reasonably acceptable to Agent prior to such posting, (iii) posted to any other
E-System approved by or set up by or at the direction of Agent or (iv) addressed to such other
address as shall be notified in writing (A) in the case of the Borrower, Agent and the Swing Line
Lender, to the other parties hereto and (B) in the case of all other parties, to the Borrower and
Agent. Transmissions made by electronic mail or E-Fax to Agent shall be effective only (x) for
notices where such transmission is specifically authorized by this Agreement, (y) if such
transmission is delivered in compliance with procedures of Agent applicable at the time and
previously communicated to Borrower, and (z) if receipt of such transmission is acknowledged by
Agent.




          (b) Effectiveness.




               (i) All communications described in clause (a) above and all other notices,
demands, requests and other communications made in connection with this Agreement shall be
effective and be deemed to have been received (i) if delivered by hand, upon personal
delivery, (ii) if delivered by overnight courier service, one (1) Business Day after
delivery to such courier service, (iii) if delivered by mail, three (3) Business Days after
deposit in the mail, (iv) if delivered by facsimile (other than to post to an E-System
pursuant to clause (a)(ii) or (a)(iii) above), upon sender’s receipt of
confirmation of proper transmission, and (v) if delivered by posting to any E-System, on
the later of the Business Day of such posting and the Business Day access to such posting
is given to the recipient thereof in accordance with the standard procedures
applicable to such E-System; provided, however, that no communications to Agent pursuant to
Section 1 shall be effective until received by Agent.



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               (ii) The posting, completion and/or submission by any Credit Party of any
communication pursuant to an E-System shall constitute a representation and warranty by the
Credit Parties that any representation, warranty, certification or other similar statement
required by the Loan Documents to be provided, given or made by a Credit Party in
connection with any such communication is true, correct and complete except as expressly
noted in such communication or E-System.



          (c) Each Lender shall notify Agent in writing of any changes in the address to which notices
to such Lender should be directed, of addresses of its Lending Office, of payment instructions in
respect of all payments to be made to it hereunder and of such other administrative information as
Agent shall reasonably request.




          (d) Electronic Transmissions




               (i) Authorization. Subject to the provisions of clause (a) above,
each of Agent, Lenders, each Credit Party and each of their Affiliates and each director,
officer, employee, agent, trustee, representative, attorney, accountant and each insurance,
environmental, legal, financial and other advisor and other consultants and their agents of
any of their Affiliates, is authorized (but not required) to transmit, post or otherwise
make or communicate, in its sole discretion, Electronic Transmissions in connection with
any Loan Document and the transactions contemplated therein. Each Credit Party, Agent and
each Lender hereto acknowledges and agrees that the use of Electronic Transmissions is not
necessarily secure and that there are risks associated with such use, including risks of
interception, disclosure and abuse and each indicates it assumes and accepts such risks by
hereby authorizing the transmission of Electronic Transmissions.



               (ii) Signatures. Subject to the provisions of clause (a) above,
(i)(A) no posting to any E-System shall be denied legal effect merely because it is made
electronically, (B) each E-Signature on any such posting shall be deemed sufficient to
satisfy any requirement for a “signature” and (C) each such posting shall be deemed
sufficient to satisfy any requirement for a “writing”, in each case including pursuant to
any Loan Document, any applicable provision of any UCC, the federal Uniform Electronic
Transactions Act, the Electronic Signatures in Global and National Commerce Act and any
substantive or procedural Requirement of Law governing such subject matter, (ii) each such
posting that is not readily capable of bearing either a signature or a reproduction of a
signature may be signed, and shall be deemed signed, by attaching to, or logically
associating with such posting, an E-Signature, upon which Agent, each Secured Party and
each Credit Party may rely and assume the authenticity thereof, (iii) each such posting
containing a signature, a reproduction of a signature or an E-Signature shall, for all
intents and purposes, have the same effect and weight as a signed paper original and (iv)
each party hereto or beneficiary hereto agrees not to contest the validity or
enforceability of any posting on any E-System or E-Signature on any such posting under the
provisions of any applicable Requirement of Law requiring certain documents to be in
writing or signed; provided, however, that nothing herein shall limit such party’s
or beneficiary’s right to contest whether any posting to any E-System or E-Signature
has been altered after transmission.



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               (iii) Separate Agreements. All uses of an E-System shall be governed by and
subject to, in addition to this Section 11.10, the separate terms, conditions and
privacy policy posted or referenced in such E-System (or such terms, conditions and privacy
policy as may be updated from time to time, including on such E-System) and related
agreements executed or contractual obligations entered into by Agent and Credit Parties in
connection with the use of such E-System.



               (iv) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS
SHALL BE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF AGENT, ANY LENDER OR ANY OF THEIR
RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR
ELECTRONIC TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO
WARRANTY OF ANY KIND IS MADE BY AGENT, ANY LENDER OR ANY OF THEIR RELATED PERSONS IN
CONNECTION WITH ANY E-SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS
OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS. Each of the Borrower, each other Credit
Party executing this Agreement and each Secured Party agrees that Agent has no
responsibility for maintaining or providing any equipment, software, services or any
testing required in connection with any Electronic Transmission or otherwise required for
any E-System.



          11.11 Section Titles. The Section titles and Table of Contents contained in
this Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.




          11.12 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one agreement.




          11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED
AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.







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          11.14 Press Releases and Related Matters. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its affiliates without
at least two (2) Business Days’ prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party or Affiliate
is required to do so under law (including as a requisite part of reports required to be
filed with the Securities and Exchange Commission), and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press release or other
public disclosure. Each Credit Party consents to the publication by Agent or any Lender of
advertising material relating to the financing transactions contemplated by this Agreement
using Borrower’s name, product photographs, logo or trademark. Agent or such Lender shall
provide a draft of any advertising material to each Credit Party for review and comment
prior to the publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.




          11.15 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Credit Party’s assets, and shall continue
to be effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise,
all as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.




          11.16 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 11.9 and 11.13, with its counsel.




          11.17 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this Agreement.




          11.18 Patriot Act Notice. Each Lender subject to the USA Patriot Act of 2001
(31 U.S.C. 5318 et seq.) hereby notifies the Borrower that, pursuant to Section 326
thereof, it is required to obtain, verify and record information that identifies the
Borrower, including the name and address of the Borrower and other information allowing
such Lender to identify the Borrower in accordance with such act.




12. RESTATEMENT OF ORIGINAL CREDIT AGREEMENT







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          (a) The parties hereto agree that, on the Closing Date, the following transactions shall be
deemed to occur automatically, without further action by any party hereto:




               (i) the Original Credit Agreement shall be deemed to be amended and restated in its entirety
in the form of this Agreement;



               (ii) all Existing Obligations outstanding on the Closing Date shall, to the extent not paid on
the Closing Date, be deemed to be Obligations outstanding hereunder;



               (iii) the guaranties and Collateral Documents, including the Liens created thereunder in favor
of Agent for the benefit of Agent and Lenders or in favor of Agent and Lenders, as applicable, and
securing payment of the Existing Obligations, as amended and restated on the Closing Date, shall
remain in full force and effect with respect to the Obligations and are hereby reaffirmed; and



               (iv) all references in the other Loan Documents to the Original Credit Agreement shall be
deemed to refer without further amendment to this Agreement.



          (b) The parties acknowledge and agree that this Agreement and the other Loan Documents do not
constitute a novation, payment and reborrowing or termination of the Existing Obligations and that
all such Existing Obligations are in all respects continued and outstanding as Obligations under
this Agreement and the Notes with only the terms being modified from and after the Closing Date of
this Agreement as provided in this Agreement, the Notes and the other Loan Documents.




[Signature Pages Follow]





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          IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.




	 	 	 	 	 
	 	BORROWER:



INSTEEL WIRE PRODUCTS COMPANY, a North 

Carolina corporation

 	 
	 	By:  	/s/ Michael C. Gazmarian
 	 
	 	 	Name:  	Michael C. Gazmarian                           	 
	 	 	Title:  	VP, CFO and Treasurer 	 
	 
	 	AGENT AND LENDERS:



GENERAL ELECTRIC CAPITAL

CORPORATION, as Agent and Lender

 	 
	 	By:  	/s/ Michael R. Todorow
 	 
	 	 	Duly Authorized Signatory 	 
	 	 	 	 
	 



Signature Page to 

the Second Amended and Restated Credit Agreement





 









 





          The following Persons are signatories to this Agreement in their capacity as Credit
Parties and not as Borrowers.




	 	 	 	 	 
	 	INSTEEL INDUSTRIES, INC., a North Carolina corporation

 	 
	 	By:  	/s/ Michael C. Gazmarian
 	 
	 	 	Name:  	Michael C. Gazmarian 	 
	 	 	Title:  	VP, CFO and Treasurer 	 
	 
	 	INTERCONTINENTAL METALS CORPORATION, a

North Carolina corporation

 	 
	 	By:  	/s/ Michael C. Gazmarian
 	 
	 	 	Name:  	Michael C. Gazmarian 	 
	 	 	Title:  	VP and Treasurer 	 
	 



Signature Page to 

the Second Amended and Restated Credit Agreement









 









 








ANNEX A (Recitals)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




DEFINITIONS



          Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere
in the Loan Documents) the following respective meanings and all references to Sections, Exhibits,
Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or
Annexes of or to the Agreement:`




          “Account Debtor” means any Person who may become obligated to any Credit Party under,
with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a
payment intangible).




          “Accounting Changes” has the meaning ascribed thereto in Annex G.




          “Accounts” means all “accounts,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations evidenced by Chattel
Paper or Instruments), (including any such obligations that may be characterized as an account or
contract right under the Code), (b) all of each Credit Party’s rights in, to and under all purchase
orders or receipts for goods or services, (c) all of each Credit Party’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation
incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel
under a charter or other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit Party), (e) all
healthcare insurance receivables, and (f) all collateral security of any kind, now or hereafter in
existence, given by any Account Debtor or other Person with respect to any of the foregoing.




          “Advance” means any Revolving Credit Advance or Swing Line Advance, as the context may
require.




          “Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary,
5% or more of the Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with such Person, (c)
each of such Person’s officers, directors, joint venturers and partners and (d) in the case of
Borrower, the immediate family members, spouses and lineal descendants of individuals who are
Affiliates of Borrower. For the purposes of this definition, “control” of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term “Affiliate” shall specifically exclude Agent
and each Lender.







A-1









 








          “Agent” means GE Capital in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.7.




          “Agreement” means the Credit Agreement by and among Borrower, the other Credit Parties
party thereto, GE Capital, as Agent and Lender and the other Lenders from time to time party
thereto, as the same may be amended, supplemented, restated or otherwise modified from time to
time.




          “Appendices” has the meaning ascribed to it in the recitals to the Agreement.




          “Applicable L/C Margin” means the per annum fee, from time to time in effect, payable
with respect to outstanding Letter of Credit Obligations as determined by reference to Section
1.5(a).




          “Applicable Margins” means collectively the Applicable L/C Margin, the Applicable
Unused Line Fee Margin, the Applicable Revolver Index Margin and the Applicable Revolver LIBOR
Margin.




          “Applicable Revolver Index Margin” means the per annum interest rate margin from time
to time in effect and payable in addition to the Index Rate applicable to the Revolving Loan, as
determined by reference to Section 1.5(a).




          “Applicable Revolver LIBOR Margin” means the per annum interest rate from time to time
in effect and payable in addition to the LIBOR Rate applicable to the Revolving Loan, as determined
by reference to Section 1.5(a).




          “Applicable Unused Line Fee Margin” means the per annum fee, from time to time in
effect, payable in respect of Borrower’s non-use of committed funds pursuant to Section
1.9(b), which fee is determined by reference to Section 1.5(a).




          “Assignment Agreement” has the meaning ascribed to it in Section 9.1(a).




          “Bailee Letter” means bailee letters, in form and substance satisfactory to Agent and
its counsel delivered to Agent pursuant to Section 5.9.




          “Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. §§ 101 et seq.




          “Bill-and-Hold Account” means an Account arising with respect to goods that are sold
on a bill-and-hold basis.




          “Blocked Accounts” has the meaning ascribed to it in Annex C.




          “Borrower” has the meaning ascribed thereto in the preamble to the Agreement.




          “Borrower Pledge Agreement” means the Pledge Agreement dated as of the Original
Closing Date executed by Borrower in favor of Agent, on behalf of itself and Lenders, pledging all
Stock of Intercontinental and all Intercompany Notes owing to or held by it.







A-2









 








          “Borrowing Availability” means as of any date of determination the lesser of (i) the
Maximum Amount less any Reserves established by Agent at such time and (ii) the Borrowing
Base, in each case, less the sum of the Revolving Loan and Swing Line Loan then
outstanding.




          “Borrowing Base” means, as of any date of determination by Agent, from time to time,
an amount equal to the sum at such time of:






     (a) up to 85% of the book value of Borrower’s Eligible Accounts at such time;
plus




     (b) (i) the lesser of (x) up to 75% of the book value of Eligible Inventory, valued at
the lower of cost (determined on a first-in, first-out basis) or market and (y) 85% of the
most recently appraised NOLV of Eligible Inventory;


in each case, less any Reserves established by Agent in its Permitted Discretion at such time.




          “Borrowing Base Certificate” means a certificate to be executed and delivered from
time to time by Borrower’s Chief Financial Officer, or another responsible officer of Borrower
having substantially the same authority and responsibility or otherwise acceptable to Agent in the
form attached to the Agreement as Exhibit 4.1(b).




          “Business Day” means any day that is not a Saturday, a Sunday or a day on which banks
are required or permitted to be closed in the States of Illinois and/or New York and in reference
to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.




          “Capital Expenditures” means, with respect to any Person, all expenditures (by the
expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period
for any fixed assets or improvements or for replacements, substitutions or additions thereto, that
have a useful life of more than one year and that are required to be capitalized under GAAP.




          “Capital Lease” means, with respect to any Person, any lease of any property (whether
real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required
to be classified and accounted for as a capital lease on a balance sheet of such Person.




          “Capital Lease Obligation” means, with respect to any Capital Lease of any Person, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a
balance sheet of such lessee in respect of such Capital Lease.




          “Cash Collateral Account” has the meaning ascribed to it Annex B.




          “Cash Equivalents” has the meaning ascribed to it in Annex B.




          “Cash Management Systems” has the meaning ascribed to it in Section 1.8.







A-3









 








          “Change of Control” means any of the following: (a) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 20% or more of the issued and outstanding shares of
capital Stock of Holdings having the right to vote for the election of directors of Holdings under
ordinary circumstances; (b) during any period of twelve consecutive calendar months, individuals
who at the beginning of such period constituted the board of directors of Holdings (together with
any new directors whose election by the board of directors of Holdings or whose nomination for
election by the Stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any reason other than
death or disability to constitute a majority of the directors then in office; (c) Holdings ceases
to own and control all of the economic and voting rights associated with all of the outstanding
capital Stock of Borrower or (d) Holdings ceases to own and control all of the economic and voting
rights associated with all of the outstanding capital Stock of any of its Subsidiaries other than
Borrower.




          “Charges” means all federal, state, county, city, municipal, local, foreign or other
governmental taxes (including taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party’s ownership or use of any properties or other assets, or (e) any other aspect of any
Credit Party’s business.




          “Chattel Paper” means any “chattel paper,” as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any Credit Party, wherever
located.




          “Closing Date” means June 2, 2010.




          “Closing Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in connection with the
Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in
the form attached hereto as Annex D.




          “Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the extent that the Code is used
to define any term herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the Code, the definition of such term contained in Article or Division 9
shall govern; provided, further, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s or
any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of New York, the term “Code” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.







A-4









 








          “Collateral” means the property covered by the Security Agreement and the other
Collateral Documents and any other property, real or personal, tangible or intangible, now existing
or hereafter acquired, that may at any time be or become subject to a security interest or Lien in
favor of Agent, on behalf of itself and Lenders, to secure the Obligations.




          “Collateral Documents” means the Security Agreement, the Pledge Agreements, the
Guaranties, the Patent Security Agreement, the Trademark Security Agreement, the Copyright Security
Agreement and all similar agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.




          “Collateral Reports” means the reports with respect to the Collateral referred to in
Annex F.




          “Collection Account” means that certain account of Agent, account number 502-328-54
in the name of Agent at DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001
033, or such other account as may be specified in writing by Agent as the “Collection Account.”




          “Commitment Termination Date” means the earliest of (a) June 2, 2015, (b) the date of
termination of Lenders’ obligations to make Advances and to incur Letter of Credit Obligations or
permit existing Loans to remain outstanding pursuant to Section 8.2(b), and (c) the date of
indefeasible prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit
Obligations pursuant to Annex B, and the permanent reduction of the Commitments to zero
dollars ($0).




          “Commitments” means (a) as to any Lender, the aggregate of such Lender’s Revolving
Loan Commitment (including without duplication the Swing Line Lender’s Swing Line Commitment as a
subset of its Revolving Loan Commitment) as set forth on Annex J to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate
of all Lenders’ Revolving Loan Commitments (including without duplication the Swing Line Lender’s
Swing Line Commitment as a subset of its Revolving Loan Commitment), which aggregate commitment was
One Hundred Million Dollars ($100,000,000) on the First A&R Closing Date and which aggregate
commitment was reduced to Seventy-Five Million Dollars ($75,000,000) on the Closing Date, as to
each of clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted from
time to time in accordance with the Agreement.




          “Compliance Certificate” has the meaning ascribed to it in Annex E.




          “Concentration Account” has the meaning ascribed to it in Annex C.




          “Contracts” means all “contracts,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, in any event, including all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Credit Party may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance of any Account.







A-5









 








          “Control Letter” means a letter agreement between Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name of any Credit
Party, (ii) a securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a securities account in
the name of any Credit Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit Party, whereby, among
other things, the issuer, securities intermediary or futures commission merchant limits any
security interest in the applicable financial assets in a manner reasonably satisfactory to Agent,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such financial assets, and
agrees to follow the instructions or entitlement orders of Agent without further consent by the
affected Credit Party (which instruction or entitlement order may be given by Agent at any time
following the occurrence and during the continuance of an Event of Default or at any time after
Liquidity is less than $10,000,000; provided that, if during a period of 30 consecutive days, no
Event of Default exists and Borrowing Availability has been greater than $20,000,000 at all such
times, Agent shall rescind such instruction or entitlement order following a written request
therefor by the Borrower, which request the Borrower must deliver promptly after the expiration of
such period).




          “Copyright License” means any and all rights now owned or hereafter acquired by any
Credit Party under any written agreement granting any right to use any Copyright or Copyright
registration.




          “Copyright Security Agreements” means the Copyright Security Agreements made in favor
of Agent, on behalf of itself and Lenders, by each applicable Credit Party.




          “Copyrights” means all of the following now owned or hereafter adopted or acquired by
any Credit Party: (a) all copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or territory thereof, or
any other country or any political subdivision thereof, and (b) all reissues, extensions or
renewals thereof.




          “Credit Parties” means Holdings, Borrower, and each of their respective Subsidiaries.




          “Default” means any event that, with the passage of time or notice or both, would,
unless cured or waived, become an Event of Default.




          “Default Rate” has the meaning ascribed to it in Section 1.5(d).




          “Deposit Accounts” means all “deposit accounts” as such term in defined in the Code,
now or hereafter held in the name of any Credit Party.




          “Disbursement Accounts” has the meaning ascribed to it in Annex C.




          “Disclosure Schedules” means the Schedules prepared by Borrower and denominated as
Disclosure Schedules (1.1) through (6.7) in the Index to the Agreement.







A-6









 








          “Documents” means any “documents,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located.




          “Dollars” or “$” means lawful currency of the United States of America.




          “Domestic Subsidiaries” means any Subsidiary organized under the laws of a
jurisdiction in the United States of America.




          “E-Fax” means any system used to receive or transmit faxes electronically.




          “E-Signature” means the process of attaching to or logically associating with an
Electronic Transmission an electronic symbol, encryption, digital signature or process (including
the name or an abbreviation of the name of the party transmitting the Electronic Transmission) with
the intent to sign, authenticate or accept such Electronic Transmission.




          “E-System” means any electronic system approved by Agent, including Intralinks® and
ClearPar® and any other Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by Agent, any of its Related Persons or any other Person, providing for access
to data protected by passcodes or other security system.




          “EBITDA” means, with respect to any Person for any fiscal period, without duplication,
an amount equal to (a) consolidated net income (with Inventory valued on a FIFO basis) of such
Person for such period, determined in accordance with GAAP, minus (b) the sum of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary items for such period, (iv) any
aggregate net gain (but not any aggregate net loss) during such period arising from the sale,
exchange or other disposition of capital assets by such Person (including any fixed assets, whether
tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and
all securities), (v) any cash pension or other post retirement employee benefits (“OPEB”)
contribution payments, and (vi) any other non-cash gains recorded as other income that have been
added in determining consolidated net income, in each case (other than clause (v) above) to
the extent included in the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any provision for
income taxes, (ii) Interest Expense, (iii) loss from extraordinary items for such period as agreed
upon by Agent, (iv) depreciation and amortization for such period, (v) amortized debt discount for
such period, (vi) pension or OPEB expenses, (vii) the amount of any deduction to consolidated net
income as the result of any grant to any members of the management of such Person of any Stock,
(viii) any other non-cash losses (other than those reflecting write-down of Inventory or Accounts)
recorded as other expenses that have been subtracted in determining consolidated net income, and
(ix) any losses or expenses specifically recorded in connection with the termination of the
Interest Rate Swaps, in each case to the extent included in the calculation of consolidated net
income of such Person for such period in accordance with GAAP, but without duplication. For
purposes of this definition, the following items shall be excluded in determining consolidated net
income of a Person: (1) the income (or deficit) of any other Person accrued prior to the date it
became a Subsidiary of, or was merged or consolidated into, such Person or any of such Person’s
Subsidiaries; (2) the income (or deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any such income has actually been
received by such Person in the form of






A-7









 







cash dividends or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any contractual obligation or Requirement
of Law applicable to such Subsidiary; (4) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of the proceeds of life
insurance policies; (7) any net gain arising from the acquisition of any securities, or the
extinguishment, under GAAP, of any Indebtedness, of such Person; (8) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets; and (9) any deferred credit
representing the excess of equity in any Subsidiary of such Person at the date of acquisition of
such Subsidiary over the cost to such Person of the investment in such Subsidiary.




          “Electronic Transmission” means each document, instruction, authorization, file,
information and any other communication transmitted, posted or otherwise made or communicated by
e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service acceptable to
Agent.




          “Eligible Accounts” has the meaning ascribed to it in Section 1.6 of the
Agreement.




          “Eligible Inventory” has the meaning ascribed to it in Section 1.7 of the
Agreement.




          “Environmental Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601
et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of
1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act
(42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251
et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and
the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and
any transfer of ownership notification or approval statutes.




          “Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs, investigation and feasibility
study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages,
property damages, natural resource damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel, experts and






A-8









 







consultants), fines, penalties, sanctions and interest incurred as a result of or related to
any claim, suit, action, investigation, proceeding or demand by any Person, whether based in
contract, tort, implied or express warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal property.




          “Environmental Permits” means all permits, licenses, authorizations, certificates,
approvals or registrations required by any Governmental Authority under any Environmental Laws.




          “Equipment” means all “equipment,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located and, in any event, including all such
Credit Party’s machinery and equipment, including processing equipment, conveyors, machine tools,
data processing and computer equipment, including embedded software and peripheral equipment and
all engineering, processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and
nature, trade fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for
any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights
with respect thereto, and all products and proceeds thereof and condemnation awards and insurance
proceeds with respect thereto.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any regulations promulgated thereunder.




          “ERISA Affiliate” means, with respect to any Credit Party, any trade or business
(whether or not incorporated) that, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.




          “ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate, (a) any
event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of
any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c)
the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any
Credit Party or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or
Title IV Plan unless such failure is cured within thirty (30) days; (g) any other event or
condition that would reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or






A-9









 







(i) the loss of a Qualified Plan’s qualification or tax exempt status; or (j) the termination
of a Plan described in Section 4064 of ERISA.




          “ESOP” means a Plan that is intended to satisfy the requirements of Section 4975(e)(7)
of the IRC.




          “Event of Default” has the meaning ascribed to it in Section 8.1.




          “Existing Letter of Credit” means that certain letter of credit no. LC SM209 in the
face amount of $50,000 expiring on July 12, 2010, which was issued under the Prior Credit Agreement
and is outstanding immediately prior to the effectiveness of this Agreement.




          “Existing Obligations” means the “Obligations” under and as defined in the First A&R
Credit Agreement.




          “Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.




          “Federal Funds Rate” means, for any day, a floating rate equal to the weighted average
of the rates on overnight federal funds transactions among members of the Federal Reserve System,
as determined by Agent in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).




          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System.




          “Fees” means any and all fees payable to Agent or any Lender pursuant to the Agreement
or any of the other Loan Documents.




          “Financial Covenants” means the financial covenants set forth in Annex G.




          “Financial Statements” means the consolidated and consolidating income statements,
statements of cash flows and balance sheets of Holdings and its Subsidiaries delivered in
accordance with Section 3.4 and Annex E.




          “Fiscal Month” means any of the monthly accounting periods of Borrower.




          “Fiscal Quarter” means any of the quarterly accounting periods of Borrower.




          “Fiscal Year” means the 52 or 53 week period, as the case may be, of Holdings and its
Subsidiaries ending on the Saturday closest to September 30 in each year.




          “First A&R Closing Date” means January 12, 2006.




          “Fixed Charges” means, with respect to any Person for any fiscal period, without
duplication, (a) the aggregate of all Interest Expense paid or accrued during such period
(excluding amortized capitalized financing costs to the extent included in determining Interest
Expense), plus (b) scheduled payments of principal with respect to Indebtedness during such






A-10









 







period, plus (c) income taxes paid in cash during such fiscal period, plus (d)
dividends, stock repurchases and other Restricted Payments paid in cash during such fiscal period,
plus (e) prepayments of Indebtedness permitted by Section 6.3(b) during such fiscal
period. For the avoidance of doubt, Fixed Charges shall not include any expenses or losses
specifically recorded in connection with the termination of the Interest Rate Swaps.




          “Fixed Charge Coverage Ratio” means, with respect to any Person for any fiscal period,
the ratio of EBITDA minus Unfunded Capital Expenditures to Fixed Charges.




          “Fixtures” means all “fixtures” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party.




          “Foreign Subsidiary” means any direct or indirect Subsidiary of Holdings organized
under the laws of a jurisdiction outside of the United States.




          “Funded Debt” means, with respect to any Person, without duplication, all Indebtedness
for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness and
that by its terms matures more than one year from, or is directly or indirectly renewable or
extendible at such Person’s option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the date of creation
thereof, and specifically including Capital Lease Obligations, current maturities of long-term
debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor,
and also including, in the case of Borrower, the Obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.




          “GAAP” means generally accepted accounting principles in the United States of America,
consistently applied, as such term is further defined in Annex G to the Agreement.




          “GE Capital” means General Electric Capital Corporation, a Delaware corporation.




          “GE Capital Fee Letter” means that certain third amended and restated letter, dated as
of June 2, 2010, between GE Capital and Borrower with respect to certain Fees to be paid from time
to time by Borrower to GE Capital.




          “General Intangibles” means “general intangibles,” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest
that such Credit Party may now or hereafter have in or under any Contract, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all rights and claims
in or under insurance policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all unearned premiums),






A-11









 







uncertificated securities, chooses in action, deposit, checking and other bank accounts,
rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.




          “Goods” means any “goods” as defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located, including embedded software to the extent included in “goods”
as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals.




          “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.




          “Guaranteed Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other
obligation (“primary obligation”) of any other Person (the “primary obligor”) in
any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase
any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss
(other than product warranties given in the ordinary course of business) or (e) indemnify the owner
of such primary obligation against loss in respect thereof. The amount of any Guaranteed
Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which such Guaranteed
Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to
the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full performance) in respect
thereof.




          “Guaranties” means, collectively, the Holdings Guaranty, each Subsidiary Guaranty and
any other guaranty executed by any Guarantor in favor of Agent and Lenders in respect of the
Obligations.




          “Guarantors” means Holdings, each Subsidiary of Holdings other than Borrower and each
other Person, if any, that executes a guaranty or other similar agreement in favor of Agent, for
itself and the ratable benefit of Lenders, in connection with the transactions contemplated by the
Agreement and the other Loan Documents.




          “Hazardous Material” means any substance, material or waste that is regulated by, or
forms the basis of liability now or hereafter under, any Environmental Laws, including any






A-12









 







material or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,”
“pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other
similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product
thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.




          “Holdings” has the meaning ascribed thereto in the recitals to the Agreement.




          “Holdings Guaranty” means the guaranty dated as of the Original Closing Date executed
by Holdings in favor of Agent and Lenders.




          “Holdings Pledge Agreement” means the Pledge Agreement of dated as of the Original
Closing Date executed by Holdings in favor of Agent, on behalf of itself and Lenders, pledging all
Stock of Borrower and all Intercompany Notes owing to or held by it.




          “Impacted Lender” means any Lender that fails promptly to provide Agent, upon Agent’s
request, satisfactory assurance that such Lender will not become a Non-Funding Lender.




          “Inactive Subsidiaries” means Intercontinental Metals Corporation, a North Carolina
Corporation and any other Subsidiary of the Borrower which (a) has assets with a net book value of
less than $500,000, (b) does not have any material liabilities, (c) is not engaged in any trade or
business and (d) the Borrower has designated as “Inactive Subsidiary” by a written notice to the
Agent.




          “Indebtedness” means , with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase price of property
payment for which is deferred 6 months or more, but excluding obligations to trade creditors
incurred in the ordinary course of business that are unsecured and not overdue by more than 6
months unless being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, (c)
all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index Rate as in effect on
the Closing Date) of future rental payments under all synthetic leases, (f) all obligations of such
Person under commodity purchase or option agreements or other commodity price hedging arrangements,
in each case whether contingent or matured, (g) all obligations of such Person under any foreign
exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether contingent or matured, (h)
all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other
assets (including accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations.







A-13









 








          “Indemnified Liabilities” has the meaning ascribed to it in Section 1.13.




          “Indemnified Person” has the meaning ascribed to it in Section 1.13.




          “Index Rate” means, for any day, a rate per annum equal to the highest of (a) the rate
last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if
The Wall Street Journal ceases to quote such rate, the highest per annum interest rate
published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected
Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any
similar rate quoted therein (as determined by Agent) or any similar release by the Federal Reserve
Board (as determined by Agent), (b) the sum of 0.50% per annum and the Federal Funds Rate, and (c)
the sum of (x) LIBOR Rate calculated for each such day based on a LIBOR Period of one month
determined two (2) Business Days prior to such day, plus (y) the excess of the Applicable Margin
for LIBOR Loans over the Applicable Margin for Index Rate Loans, in each instance, as of such day.
Any change in the Index Rate due to a change in any of the foregoing shall be effective on the
effective date of such change in the “Prime Rate”, Federal Funds Rate or LIBOR Rate for a LIBOR
Period of one month, as the case may be.




          “Index Rate Loan” means a Loan or portion thereof bearing interest by reference to the
Index Rate.




          “Instruments” means all “instruments,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all promissory notes and other evidences
of indebtedness, other than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.




          “Intellectual Property” means any and all Licenses, Patents, Copyrights, Trademarks,
and the goodwill associated with such Trademarks.




          “Intercompany Notes” has the meaning ascribed to it in Section 6.3.




          “Intercontinental” means Intercontinental Metals Corporation, a North Carolina
corporation.




          “Interest Coverage Ratio” means, with respect to any Person for any period, the ratio
of EBITDA to Interest Expense.




          “Interest Expense” means, with respect to any Person for any fiscal period, interest
expense (whether cash or non-cash) of such Person determined in accordance with GAAP for the
relevant period ended on such date, including interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been capitalized on the balance
sheet of such Person.




          “Interest Rate Swaps” means the interest rate swap transactions between Holdings and
Bank of America, N.A. (Reference No. 148487) for a notional amount of $25,000,000 and the interest
rate swap transactions between Holdings and First Union National Bank (n/k/a






A-14









 







Wachovia National Bank, N.A. (Reference No. 135835/195600) for a notional amount of
$25,000,000.




          “Interest Payment Date” means (a) as to any Index Rate Loan, the first Business Day of
each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of
the applicable LIBOR Period; provided that, in addition to the foregoing, each of (x) the date
upon which all of the Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an “Interest Payment Date” with
respect to any interest that has then accrued under the Agreement.




          “Inventory” means any “inventory,” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, and in any event including inventory,
merchandise, goods and other personal property that are held by or on behalf of any Credit Party
for sale or lease or are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, supplies or materials of
any kind, nature or description used or consumed or to be used or consumed in such Credit Party’s
business or in the processing, production, packaging, promotion, delivery or shipping of the same,
including all supplies and embedded software.




          “Investment Property” means all “investment property” as such term is defined in the
Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all
securities, whether certificated or uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund
shares; (ii) all securities entitlements of any Credit Party, including the rights of such Credit
Party to any securities account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity
contracts of any Credit Party; and (v) all commodity accounts held by any Credit Party.




          “IRC” means the Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder.




          “Keyman Life Insurance” means the keyman life insurance policy on the life of H.O.
Woltz, III issued by Northwestern Mutual (or any replacement policy).




          “IRS” means the Internal Revenue Service.




          “L/C Issuer” has the meaning ascribed to it in Annex B.




          “L/C Sublimit” has the meaning ascribed to in it Annex B.




          “Lenders” means (a) GE Capital, the other Lenders named on the signature pages of the
Agreement, and, if any such Lender shall decide to assign all or any portion of the Obligations,
such term shall include any assignee of such Lender and (b) solely for the purpose of obtaining the
benefit of the Liens granted to the Agent for the benefit of the Lenders under the Collateral
Documents, a Person to whom any Obligations in respect of a Secured Rate Contract are owed. For
the avoidance of doubt, any Person to whom any Obligations in respect of a






A-15









 







Secured Rate Contract are owed and which does not hold any Loans or Commitments shall not be
entitled to any other rights as a “Lender” under this Agreement or any other Loan Document.




          “Letter of Credit Fee” has the meaning ascribed to it in Annex B.




          “Letter of Credit Obligations” means all outstanding obligations incurred by Agent and
Lenders at the request of Borrower, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by Agent or another L/C Issuer or the
purchase of a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount that may be payable
by Agent or Lenders thereupon or pursuant thereto.




          “Letters of Credit” means the Existing Letter of Credit and other documentary or
standby letters of credit issued for the account of Borrower by any L/C Issuer, and bankers’
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.




          “Letter-of Credit Rights” means “letter-of-credit rights” as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including rights to payment or
performance under a letter of credit, whether or not such Credit Party, as beneficiary, has
demanded or is entitled to demand payment or performance.




          “LIBOR Business Day” means a Business Day on which banks in the City of London are
generally open for interbank or foreign exchange transactions.




          “LIBOR Loan” means a Loan or any portion thereof bearing interest by reference to the
LIBOR Rate.




          “LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on a
LIBOR Business Day selected by Borrower pursuant to the Agreement and ending one, two or three
months thereafter, as selected by Borrower’s irrevocable notice to Agent as set forth in
Section 1.5(e); provided, that the foregoing provision relating to LIBOR Periods is subject
to the following:





     (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day,
such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the
result of such extension would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day;




     (b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date
shall end two (2) LIBOR Business Days prior to such date;




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








A-16









 












     (d) Borrower shall select LIBOR Periods so as not to require a payment or prepayment of
any LIBOR Loan during a LIBOR Period for such Loan; and




     (e) Borrower shall select LIBOR Periods so that there shall be no more than five (5)
separate LIBOR Loans in existence at any one time.



          “LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent equal
to:





     (a) the offered rate per annum for deposits of Dollars for the applicable LIBOR Period
that appears on Reuters Screen LIBOR 01 Page as of 11:00 A.M. (London, England time) two (2)
Business Days prior to the first day in such LIBOR Period (if no such offered rate exists,
such rate will be the rate of interest per annum, as determined by Agent at which deposits
of Dollars in immediately available funds are offered at 11:00 A.M. (London, England time)
two (2) Business Days prior to the first day in such LIBOR Period by major financial
institutions reasonably satisfactory to Agent in the London interbank market for such LIBOR
Period for the applicable principal amount on such date of determination); divided by




     (b) a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is
two (2) LIBOR Business Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the Federal Reserve
Board or other Governmental Authority having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board that are required to
be maintained by a member bank of the Federal Reserve System).



          “License” means any Copyright License, Patent License, Trademark License or other
license of rights or interests now held or hereafter acquired by any Credit Party.




          “Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable law of any
jurisdiction).




          “Liquidity” means, at any time of determination, the sum of (a) Borrowing Availability
at such time plus (b) the aggregate amount of (I) cash on deposit in Blocked Accounts and the
Concentration Account at such time to the extent such cash is not subject to any restriction (other
than restrictions set forth in the related tri-party blocked account agreements with Agent,
applicable Credit Party and the applicable Relationship Bank) plus (II) investments described in
Section 6.2(c) outstanding at such time to the extent such investments are permitted by
Section 6.2(c) and are not subject to any restriction (other than restrictions set forth in
the related Control Letter).







A-17









 








          “Litigation” has the meaning ascribed to it in Section 3.13.




          “Loan Account” has the meaning ascribed to it in Section 1.12.




          “Loan Documents” means the Agreement, the Notes, the Collateral Documents, the GE
Capital Fee Letter, the Master Standby Agreement, the Master Documentary Agreement, and all other
agreements, instruments, documents and certificates identified in the Closing Checklist executed
and delivered to, or in favor of, Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit agreements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of any Credit Party,
or any employee of any Credit Party, and delivered to Agent or any Lender in connection with the
Agreement, the Original Credit Agreement or the transactions contemplated thereby. Any reference
in the Agreement or any other Loan Document to a Loan Document shall include all appendices,
exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications
thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any
and all times such reference becomes operative.




          “Loans” means the Revolving Loan and the Swing Line Loan.




          “Lock Boxes” has the meaning ascribed to it in Annex C.




          “Margin Stock” has the meaning ascribed to it in Section 3.10.




          “Master Documentary Agreement” means the Master Agreement for Documentary Letters of
Credit dated as of the Original Closing Date between Borrower, as Applicant, and GE Capital, as
Issuer.




          “Master Standby Agreement” means the Master Agreement for Standby Letters of Credit
dated as of the Original Closing Date between Borrower, as Applicant, and GE Capital, as Issuer.




          “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or financial or other condition of the Credit Parties, taken as a whole, (b)
Borrower’s ability to pay any of the Loans or any of the other Obligations in accordance with the
terms of the Agreement, (c) the Collateral or Agent’s Liens, on behalf of itself and Lenders, on
the Collateral or the priority of such Liens, or (d) Agent’s or any Lender’s rights and remedies
under the Agreement and the other Loan Documents.




          “Maximum Amount” means, as of any date of determination, an amount equal to the
Revolving Loan Commitment of all Lenders as of that date.




          “Mortgaged Properties” has the meaning assigned to it in Annex D.




          “Mortgages” means each of the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust, collateral assignments of leases or other real estate security documents
delivered by any Credit Party to Agent on behalf of itself and Lenders with respect to the
Mortgaged Properties, all in form and substance reasonably satisfactory to Agent.







A-18









 








          “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made
or been obligated to make, contributions on behalf of participants who are or were employed by any
of them.




          “Net Asset Disposition Proceeds” has the meaning assigned to it in Section
1.3(b)(ii).




          “Net Orderly Liquidation Value” or “NOLV” means, with respect to any category
of Eligible Inventory or Equipment, as the case may be, the appraised orderly liquidation value
(expressed as a percentage) as determined by Agent in good faith based on the most recent appraisal
report prepared by an appraiser reasonably acceptable to Agent which reflects the net cash value
(expressed as a percentage) expected by the appraiser to be derived from a sale or disposition at a
liquidation or going-out-of-business sale of such Eligible Inventory or Equipment, as the case may
be, after deducting all costs, expenses and fees attributable to such sale or disposition,
including, without limitation, all fees, costs and expenses of any attorneys, appraisers,
auctioneers and liquidators engaged to conduct such sale or disposition, all costs and expenses of
removing and delivering the same to purchasers, and the costs and expenses of operating Credit
Parties’ businesses and securing the Collateral during the pendency of the liquidation process.




          “Non-Funding Lender” has the meaning ascribed to it in Section 9.9(a)(ii).




          “Notes” means, collectively, the Revolving Notes and the Swing Line Note.




          “Notice of Conversion/Continuation” has the meaning ascribed to it in Section
1.5(e).




          “Notice of Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).




          “Obligations” means all loans, advances, debts, liabilities and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or such amounts are liquidated or determinable) owing
by any Credit Party to Agent or any Lender, and all covenants and duties regarding such amounts, of
any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of
credit agreement or other instrument, arising under the Agreement or any of the other Loan
Documents or any Secured Rate Contract. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or against any Credit
Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, expenses, attorneys’
fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.




          “Overadvance” has the meaning ascribed to it in Section 1.1(a)(iii).




          “Original Closing Date” means June 2, 2004.





A-19












 





          “Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right with respect to any invention on which a Patent is
in existence.




          “Patent Security Agreements” means the Patent Security Agreements made in favor of
Agent, on behalf of itself and Lenders, by each applicable Credit Party.




          “Patents” means all of the following in which any Credit Party now holds or hereafter
acquires any interest: (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of the United States
or of any other country, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State or
any other country, and (b) all reissues, continuations, continuations-in-part or extensions
thereof.




          “PBGC” means the Pension Benefit Guaranty Corporation.




          “Pension Plan” means a Plan described in Section 3(2) of ERISA.




          “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business judgment provided that,
in the case of imposition of any Reserves, the amount of such Reserves will bear a relationship to
the event, condition or other matter that is the basis for such Reserves in the business judgment
of Agent and shall be established in good faith.




          “Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are being contested in
accordance with Section 5.2(b); (b) pledges or deposits of money securing statutory
obligations under workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of money) or leases
to which any Credit Party is a party as lessee made in the ordinary course of business; (d)
workers’, mechanics’, repairmen’s or similar liens arising in the ordinary course of business, so
long as such Liens attach only to Equipment, Fixtures and/or Real Estate which are not past due or
remain payable without penalty or which are being contested in good faith and by appropriate
proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture
or sale of the property subject thereto and for which adequate reserves in accordance with GAAP are
being maintained; (e) carriers’, warehousemen’s, suppliers’ or other similar possessory liens
arising in the ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $300,000 at any time; (f) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h) zoning
restrictions, easements, licenses, or other restrictions on the use of any Real Estate or other
minor defects or irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the ordinary conduct of the businesses of any Credit Party or the use of
such Real Estate, or any exceptions to title set forth in any title insurance policy or matters
disclosed on any survey delivered to Agent pursuant to Annex D to the Original Credit




A-20









 




Agreement;
and (i) presently existing or hereafter created Liens in favor of Agent, on behalf of Lenders .




          “Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability company, institution,
public benefit corporation, other entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or
department thereof).




          “Plan” means, at any time, an “employee benefit plan,” as defined in Section 3(3) of
ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any Credit Party.




          “Pledge Agreements” means the Holdings Pledge Agreement, the Borrower Pledge Agreement
and any other pledge agreement entered into after the Closing Date by any Credit Party (as required
by the Agreement or any other Loan Document).




          “Proceeds” means “proceeds,” as such term is defined in the Code, including (a) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party from
time to time with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral
by any Governmental Authority (or any Person acting under color of governmental authority), (c) any
claim of any Credit Party against third parties (i) for past, present or future infringement of any
Patent or Patent License, or (ii) for past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the Collateral including
claims arising out of the loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed
on account of, other Collateral, including dividends, interest, distributions and Instruments with
respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.




          “Projections” means Borrower’s forecasted consolidated: (a) balance sheets; (b)
profit and loss statements; and (c) cash flow statements consistent with the historical Financial
Statements of Borrower, together with appropriate supporting details and a statement of underlying
assumptions.




          “Pro Rata Share” means with respect to all matters relating to any Lender (a) with
respect to the Revolving Loan, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders, as any
such percentages may be adjusted by assignments permitted pursuant to Section 9.1, (b) with
respect to all Loans, the percentage obtained by dividing (i) the aggregate Commitments of that
Lender by (ii) the aggregate Commitments of all Lenders, and (c) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i)




A-21









 




the aggregate
outstanding principal balance of the Loans held by that Lender, by (ii) the outstanding principal
balance of the Loans held by all Lenders.




          “Qualified Plan” means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.




          “Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial loans, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other entity which is an
“accredited investor” (as defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of BBB or higher from
S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and which,
through its applicable lending office, is capable of lending to Borrower without the imposition of
any withholding or similar taxes; provided that no Person proposed to become a Lender after the
Closing Date and determined by Agent to be acting in the capacity of a vulture fund or distressed
debt purchaser shall be a Qualified Assignee, and no Person or Affiliate of such Person proposed to
become a Lender after the Closing Date and that holds Subordinated Debt or Stock issued by any
Credit Party shall be a Qualified Assignee.




          “Rate Contracts” means swap agreements (as such term is defined in Section 101 of the
Bankruptcy Code) and any other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.




          “Real Estate” has the meaning ascribed to it in Section 3.6.




          “Real Estate Held for Sale” has the meaning ascribed to it in Section 6.8.




          “Reference Availability” means, for any Fiscal Quarter, the daily average Borrowing
Availability during such Fiscal Quarter.




          “Refinancing” means the repayment in full by Borrower of the Term Loans under and as
defined in the Original Credit Agreement on the Closing Date.




          “Refunded Swing Line Loan” has the meaning ascribed to it in Section
1.1(c)(iii).




          “Related Transactions” means the borrowing under the Revolving Loan on the Closing
Date, the Refinancing, the payment of all fees, costs and expenses associated with all of the
foregoing and the execution and delivery of all of the Related Transactions Documents.




          “Related Transactions Documents” means the Loan Documents and all other agreements or
instruments executed in connection with the Related Transactions.




          “Relationship Bank” has the meaning ascribed to it in Annex C.




A-22









 








          “Release” means any release, threatened release, spill, emission, leaking, pumping,
pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material in the indoor or outdoor environment,
including the movement of Hazardous Material through or in the air, soil, surface water,
ground water or property.




          “Requisite Lenders” means Lenders having (a) more than 50% of the Commitments of all
Lenders, or (b) if the Commitments have been terminated, more than 50% of the aggregate outstanding
amount of the Loans.




          “Rent Reserve” means, with respect to any (i) leased location at which Inventory that
has an aggregate book value of $100,000 or more is located and (ii) a corporate or accounting
office not owned by Borrower where books and records or other information relating to Accounts and
Inventory are maintained, with respect to which no landlord waiver reasonably acceptable to Agent
is in effect, a reserve equal to three (3) months’ rent, as applicable at such location or office.




          “Requirement of Law” means, as to any Person, any law (statutory or common),
ordinance, treaty, rule, regulation, order, policy, other legal requirement or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or assets or to which such Person or any of its property or asset is
subject.




          “Reserves” means (a) reserves established by Agent from time to time against Eligible
Inventory pursuant to Section 5.9, (b) reserves established pursuant to Section
5.4(c), and (c) such other reserves against Eligible Accounts, Eligible Inventory, Maximum
Amount or Borrowing Availability that Agent may, in its Permitted Discretion, establish from time
to time. Without limiting the generality of the foregoing, Reserves established to ensure the
payment of accrued Interest Expense or Indebtedness shall be deemed to be a reasonable exercise of
Agent’s Permitted Discretion.




          “Restricted Payment” means, with respect to any Credit Party (a) the declaration or
payment of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Stock; (b) any payment on account of
the purchase, redemption, defeasance, sinking fund or other retirement of such Credit Party’s Stock
or any other payment or distribution made in respect thereof, either directly or indirectly; (c)
any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on
or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Subordinated Debt; (d) any payment made
to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter outstanding; (e) any
payment of a claim for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party’s Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any such claim for
damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or other
property to any Stockholder of such Credit Party other than payment of compensation or benefits in
the ordinary course of business to Stockholders who are employees




A-23









 







or directors of such Credit
Party; and (g) any payment of management fees (or other fees of a similar nature) by such Credit
Party to any Stockholder of such Credit Party or its Affiliates.




          “Retiree Welfare Plan” means, at any time, a Welfare Plan that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant after such
participant’s termination of employment, other than continuation coverage provided pursuant to
Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the
participant.




          “Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a)(i).




          “Revolving Lenders” means, as of any date of determination, Lenders having a Revolving
Loan Commitment.




          “Revolving Loan” means, at any time, the sum of (i) the aggregate amount of Revolving
Credit Advances outstanding to Borrower plus (ii) the aggregate Letter of Credit
Obligations incurred on behalf of Borrower. Unless the context otherwise requires, references to
the outstanding principal balance of the Revolving Loan shall include the outstanding balance of
Letter of Credit Obligations.




          “Revolving Loan Commitment” means (a) as to any Revolving Lender, the aggregate
commitment of such Revolving Lender to make Revolving Credit Advances or incur Letter of Credit
Obligations as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Revolving Lender and (b) as to all Revolving Lenders, the aggregate
commitment of all Revolving Lenders to make Revolving Credit Advances or incur Letter of Credit
Obligations, which aggregate commitment shall be Seventy-Five Million Dollars ($75,000,000) on the
Closing Date, as such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.




          “Revolving Note” has the meaning ascribed to it in Section 1.1(a)(ii).




          “Secured Rate Contract” means any Rate Contract between Borrower and the counterparty
thereto which has been provided or arranged by GE Capital or an Affiliate of GE Capital.




          “Secured Swap Provider” means a Person with whom Borrower has entered into a Secured
Rate Contract provided or arranged by GE Capital or an Affiliate of GE Capital, and any assignee
thereof.




          “Security Agreement” means the Security Agreement dated as of the Original Closing
Date entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party that
is a signatory thereto.




          “Software” means all “software” as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, other than software embedded in any category of Goods,
including all computer programs and all supporting information provided in connection with a
transaction related to any program.




A-24









 








          “Solvent” means, with respect to any Person on a particular date, that on such date
(a) the fair value of the property of such Person is greater than the total amount of liabilities,
including contingent liabilities, of such Person; (b) the present fair salable value of the assets
of
such Person is not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which such Person’s
property would constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the
amount that, in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured liability.




          “Stock” means all shares, options, warrants, general or limited partnership interests,
membership interests or other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934).




          “Stock Equivalents” means all securities convertible into or exchangeable for Stock or
any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or
otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible,
exchangeable or exercisable.




          “Stockholder” means, with respect to any Person, each holder of Stock of such Person.




          “Subordinated Debt” means any Indebtedness of any Credit Party subordinated to the
Obligations in a manner and form satisfactory to Agent and Lenders in their sole discretion, as to
right and time of payment and as to any other rights and remedies thereunder.




          “Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, Stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which
any such Person has the right to vote or designate the vote of 50% or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital contribution) of more than
50% or of which any such Person is a general partner or may exercise the powers of a general
partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a
reference to a Subsidiary of the Borrower.




A-25









 








          “Subsidiary Guaranty” means the Subsidiary Guaranty dated as of the Original Closing
Date executed by Intercontinental in favor of Agent, on behalf of itself and Lenders.




          “Supermajority Revolving Lenders” means Lenders having (a) 80% or more of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, 80% or more of the aggregate outstanding amount of the Revolving Loan (with the Swing
Line Loan being attributed to the Lender making such Loan) and Letter of Credit Obligations.




          “Supporting Obligations” means all “supporting obligations” as such term is defined in
the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, or Investment Property.




          “Swing Line Advance” has the meaning ascribed to it in Section 1.1(c)(i).




          “Swing Line Availability” has the meaning ascribed to it in Section 1.1(c)(i).




          “Swing Line Commitment” means, as to the Swing Line Lender, the commitment of the
Swing Line Lender to make Swing Line Advances as set forth on Annex J to the Agreement,
which commitment constitutes a subfacility of the Revolving Loan Commitment of the Swing Line
Lender.




          “Swing Line Lender” means GE Capital.




          “Swing Line Loan” means at any time, the aggregate amount of Swing Line Advances
outstanding to Borrower.




          “Swing Line Note” has the meaning ascribed to it in Section 1.1(c)(ii).




          “Taxes” means taxes, levies, imposts, deductions, Charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Agent
or a Lender by the jurisdictions under the laws of which Agent and Lenders are organized or conduct
business or any political subdivision thereof.




          “Termination Date” means the date on which (a) the Loans have been indefeasibly repaid
in full, (b) all other Obligations under the Agreement and the other Loan Documents have been
completely discharged, (c) all Letter of Credit Obligations have been cash collateralized,
cancelled or backed by standby letters of credit in accordance with Annex B, and (d)
Borrower shall not have any further right to borrow any monies under the Agreement.




          “Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is
covered by Title IV of ERISA, and that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or were employed by any
of them.




          “Trademark Security Agreements” means the Trademark Security Agreements made in favor
of Agent, on behalf of Lenders, by each applicable Credit Party.




A-26









 








          “Trademark License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right to use any Trademark.




          “Trademarks” means all of the following now owned or hereafter adopted or acquired by
any Credit Party: (a) all trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof; (b) all reissues,
extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the
foregoing.




          “Unfunded Capital Expenditures” means Capital Expenditures other than Capital
Expenditures that are specifically financed by lenders other than the Lenders hereunder within 60
days of the date such amount became a Capital Expenditure.




          “Unfunded Pension Liability” means, at any time, the aggregate amount, if any, of the
sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan
exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, all determined as of the most recent valuation date for each
such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, and (b) for a period of five (5) years following a transaction which might reasonably be
expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that
could be avoided by any Credit Party or any ERISA Affiliate as a result of such transaction.




          “Vacant Land Lease” has the meaning ascribed to it in Section 5.9.




          “Welfare Plan” means a Plan described in Section 3(i) of ERISA.




          Rules of construction with respect to accounting terms used in the Agreement or the other Loan
Documents shall be as set forth in Annex G. All other undefined terms contained in any of
the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by
the Code to the extent the same are used or defined therein; in the event that any term is defined
differently in different Articles or Divisions of the Code, the definition contained in Article or
Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as
the same may from time to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.




          Wherever from the context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and neuter genders. The words




A-27









 







“including”,
“includes” and “include” shall be deemed to be followed by the words “without limitation”; the word
“or” is not exclusive; references to Persons include their respective successors and assigns (to
the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include any amendments of the
same and any successor statutes and regulations. Whenever any provision in any Loan Document
refers to the knowledge (or an analogous phrase) of any Credit Party, such words are intended to
signify that such Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised reasonable diligence, would have known
or been aware of such fact or circumstance.




A-28









 








ANNEX B (Section 1.2)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




LETTERS OF CREDIT



          (a) Issuance. Subject to the terms and conditions of the Agreement, Agent and
Revolving Lenders agree to incur, from time to time prior to the Commitment Termination Date,
Letter of Credit Obligations. Subject to the terms and conditions of the Agreement, upon the
request of Borrower, GE Capital or a Subsidiary thereof or a bank or other legally authorized
Person selected by or acceptable to Agent in its sole discretion (each, an “L/C Issuer”)
may in its sole discretion issue Letters of Credit for Borrower’s account and guaranteed by Agent;
provided, that if the L/C Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the terms and conditions
hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such
Letters of Credit issued with the written consent of Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) Ten Million Dollars ($10,000,000) (the “L/C Sublimit”), and (ii)
the Maximum Amount less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan, and (iii) the Borrowing Base less the aggregate outstanding
principal balance of the Revolving Credit Advances and the Swing Line Loan. No such Letter of
Credit shall have an expiry date that is more than one year following the date of issuance thereof,
unless otherwise determined by Agent in its sole discretion (including with respect to customary
evergreen provisions), and neither Agent nor Revolving Lenders shall be under any obligation to
incur Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date that is later than the Commitment Termination Date. If (i) any Lender
is a Non-Funding Lender or Agent determines that any of the Lenders is an Impacted Lender and (ii)
the reallocation of that Non-Funding Lender’s or Impacted Lender’s Letter of Credit Obligations to
the other Revolving Lenders would reasonably be expected to cause the Letter of Credit Obligations
and Revolving Loans of any Lender to exceed its Revolving Loan Commitment, taking into account the
amount of outstanding Revolving Loans and expected advances of Revolving Loans as determined by
Agent, then no Letters of Credit may be issued or renewed unless the Non-Funding Lender or Impacted
Lender has been replaced, the Letter of Credit Obligations of that Non-Funding Lender or Impacted
Lender have been cash collateralized, or the Revolving Loan Commitments of the other Lenders have
been increased by an amount sufficient to satisfy Agent that all future Letter of Credit
Obligations will be covered by all Revolving Lenders who are not Non-Funding Lenders or Impacted
Lenders.




          (b)(i) Advances Automatic; Participations. In the event that Agent or any Revolving
Lender shall make any payment on or pursuant to any Letter of Credit Obligation, such payment shall
then be deemed automatically to constitute a Revolving Credit Advance under Section 1.1(a)
of the Agreement regardless of whether a Default or Event of Default has occurred and is continuing
and notwithstanding Borrower’s failure to satisfy the conditions precedent set forth in Section
2, and, if no Revolving Lender is a Non-Funding Lender (or if the only Non-Funding Lender is
the L/C Issuer that issued such Letter of Credit), each Revolving Lender shall be obligated to pay
its Pro Rata Share thereof in accordance with the Agreement. If






B-1









 







any Revolving Lender (other than the Revolving Lender that is also the L/C Issuer that issued
such Letter of Credit) is a Non-Funding Lender, that Non-Funding Lender’s Letter of Credit
Obligations shall be reallocated to and assumed by the other Revolving Lenders pro rata in
accordance with their Pro Rata Shares of the Revolving Loan Commitment (calculated as if the
Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Revolving Lender’s Pro Rata
Share had been increased proportionately). If any Revolving Lender (other than the Revolving
Lender that is also the L/C Issuer that issued such Letter of Credit) is a Non-Funding Lender, upon
payment by Agent or any Revolving Lender on or pursuant to any Letter of Credit, each Revolving
Lender that is not a Non-Funding Lender shall pay to Agent for the account of such L/C Issuer its
pro rata share (increased as described above) of the Letter of Credit Obligations that from time to
time remain outstanding; provided that no Revolving Lender shall be required to fund any amount
which would result in the sum of its outstanding Revolving Loans, outstanding Letter of Credit
Obligations, the amounts of its participation in Swing Loans and its pro rata share of
unparticipated amounts in Swing Line Loans (each as increased as described in subsection
1.1(c)(iii)) to exceed its Revolving Loan Commitment. The failure of any Revolving Lender to make
available to Agent for Agent’s own account its Pro Rata Share of any such Revolving Credit Advance
or payment by Agent under or in respect of a Letter of Credit shall not relieve any other Revolving
Lender of its obligation hereunder to make available to Agent its Pro Rata Share thereof.




          (ii) If it shall be illegal or unlawful for Borrower to incur Revolving Credit Advances as
contemplated by paragraph (b)(i) above because of an Event of Default described in Sections
8.1(h) or (i) or otherwise or if it shall be illegal or unlawful for any Revolving Lender to be
deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or
if the L/C Issuer is a Revolving Lender, then, (1) if no Revolving Lender is a Non-Funding Lender
(or if the only Non-Funding Lender is the L/C Issuer that issued such Letter of Credit), (i)
immediately and without further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation equal to such Revolving Lender’s Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of all Letters of Credit
then outstanding and (ii) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally purchased from Agent (or
such L/C Issuer, as the case may be) an undivided interest and participation in such Revolving
Lender’s Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance or (2) if any
Revolving Lender (other than the Revolving Lender that is also the L/C Issuer that issued such
Letter of Credit) is a Non-Funding Lender, (A) immediately and without further action whatsoever,
each Revolving Lender which is not a Non-Funding Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest
and participation equal to such Revolving Lender’s Pro Rata Share (calculated as if the Non-Funding
Lender’s Pro Rata Share was reduced to zero and each other Revolving Lender’s Pro Rata Share had
been increased proportionately) of the Letter of Credit Obligations in respect of all Letters of
Credit then outstanding and (B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender which is not a Non-Funding Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest
and participation in such Revolving Lender’s Pro Rata Share (calculated as if the Non-






B-2









 







Funding Lender’s Pro Rata Share was reduced to zero and each other Revolving Lender’s Pro Rata
Share had been increased proportionately) of the Letter of Credit Obligations with respect to such
Letter of Credit on the date of such issuance; provided that no Revolving Lender shall be required
to fund any amount which would result in the sum of its outstanding Revolving Loans, outstanding
Letter of Credit Obligations, amounts of its participation in Swing Loans and its pro rata share of
unparticipated amounts in Swing Line Loans (each as increased as described in subsection
1.1(c)(iii)) to exceed its Revolving Loan Commitment. Each Revolving Lender shall fund its
participation in all payments or disbursements made under the Letters of Credit in the same manner
as provided in the Agreement with respect to Revolving Credit Advances.




          (c) Cash Collateral. (i) If Borrower is required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement, including Section 8.2 of the
Agreement, prior to the Commitment Termination Date, Borrower will pay to Agent for the ratable
benefit of itself and Revolving Lenders cash or cash equivalents acceptable to Agent (“Cash
Equivalents”) in an amount equal to 103% of the maximum amount then available to be drawn under
each applicable Letter of Credit outstanding. Such funds or Cash Equivalents shall be held by
Agent in a cash collateral account (the “Cash Collateral Account”) maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be in the name of
Borrower and shall be pledged to, and subject to the control of, Agent, for the benefit of Agent
and Lenders, in a manner satisfactory to Agent. Borrower hereby pledges and grants to Agent, on
behalf of itself and Lenders, a security interest in all such funds and Cash Equivalents held in
the Cash Collateral Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and other Obligations, whether or
not then due. The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.




          (ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any
reason be outstanding on the Commitment Termination Date, Borrower shall either (A) provide cash
collateral therefor in the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit Obligations, which stand-by letter (or
letters) of credit shall be of like tenor and duration (plus thirty (30) additional days) as, and
in an amount equal to 103% of the aggregate maximum amount then available to be drawn under, the
Letters of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued
by a Person, and shall be subject to such terms and conditions, as are be satisfactory to Agent in
its sole discretion.




          (iii) From time to time after funds are deposited in the Cash Collateral Account by Borrower,
whether before or after the Commitment Termination Date, Agent may apply such funds or Cash
Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such
order as Agent may elect, as shall be or shall become due and payable by Borrower to Agent and
Lenders with respect to such Letter of Credit Obligations of Borrower and, upon the satisfaction in
full of all Letter of Credit Obligations of Borrower, to any other Obligations then due and
payable.




          (iv) Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any
right to withdraw any of the funds or Cash Equivalents held in the Cash




B-3









 




Collateral Account, except that upon the termination of all Letter of Credit Obligations and
the payment of all amounts payable by Borrower to Agent and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations then due and owing
and upon payment in full of such Obligations any remaining amount shall be paid to Borrower or as
otherwise required by law. Interest earned on deposits in the Cash Collateral Account shall be
held as additional collateral.




          (d) Fees and Expenses. Borrower agrees to pay to Agent for the benefit of Revolving
Lenders, as compensation to such Lenders for Letter of Credit Obligations incurred hereunder, (i)
all reasonable costs and expenses incurred by Agent or any Lender on account of such Letter of
Credit Obligations, and (ii) for each month during which any Letter of Credit Obligation shall
remain outstanding, a fee (the “Letter of Credit Fee”) in an amount equal to the Applicable
L/C Margin from time to time in effect multiplied by the maximum amount available from time to time
to be drawn under the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit
of the Revolving Lenders in arrears, on the first day of each month and on the Commitment
Termination Date. In addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise
payable pursuant to the application and related documentation under which such Letter of Credit is
issued.




          (e) Request for Incurrence of Letter of Credit Obligations. Borrower shall give Agent
at least two (2) Business Days’ prior notice (which shall be made in a writing or Electronic
Transmission) requesting the incurrence of any Letter of Credit Obligation. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to the L/C Issuer) and a
completed Application for Standby Letter of Credit Application for Documentary Letter of Credit, as
applicable, in the form Exhibit B-1 or B-2 attached hereto. Notwithstanding anything
contained herein to the contrary, Letter of Credit applications by Borrower and approvals by Agent
and the L/C Issuer may be made and transmitted pursuant to electronic codes and security measures
mutually agreed upon and established by and among Borrower, Agent and the L/C Issuer.




          (f) Obligation Absolute. The obligation of Borrower to reimburse Agent and Revolving
Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute,
unconditional and irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrower and
Revolving Lenders shall be paid strictly in accordance with the terms hereof under all
circumstances including the following:





     (i) any lack of validity or enforceability of any Letter of Credit or the Agreement or
the other Loan Documents or any other agreement;




     (ii) the existence of any claim, setoff, defense or other right that Borrower or any of
its Affiliates or any Lender may at any time have against a beneficiary or any transferee of
any Letter of Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection



B-4









 






with the Agreement, the Letter of Credit, the transactions contemplated herein or
therein or any unrelated transaction (including any underlying transaction between Borrower
or any of its Affiliates and the beneficiary for which the Letter of Credit was procured);




     (iii) any draft, demand, certificate or any other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;




     (iv) payment by Agent (except as otherwise expressly provided in paragraph (g)(ii)(C)
below) or any L/C Issuer under any Letter of Credit or guaranty thereof against presentation
of a demand, draft or certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;




     (v) any other circumstance or event whatsoever, that is similar to any of the
foregoing; or




     (vi) the fact that a Default or an Event of Default has occurred and is continuing.



          (g) Indemnification; Nature of Lenders’ Duties.




          (i) In addition to amounts payable as elsewhere provided in the Agreement, Borrower hereby
agrees to pay and to protect, indemnify, and save harmless Agent and each Lender from and against
any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys’ fees and allocated costs of internal counsel) that Agent or any Lender may
incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or guaranty thereof, or (B) the failure of Agent or any Lender seeking indemnification or of
any L/C Issuer to honor a demand for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority, in each case other than to the extent as a result of
the gross negligence or willful misconduct of Agent or such Lender (as finally determined by a
court of competent jurisdiction).




          (ii) As between Agent and any Lender and Borrower, Borrower assumes all risks of the acts and
omissions of, or misuse of any Letter of Credit by beneficiaries of any Letter of Credit. In
furtherance and not in limitation of the foregoing, to the fullest extent permitted by law neither
Agent nor any Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection with the application
for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to demand payment under such Letter of
Credit; provided, that in the case of any payment by Agent under any Letter of Credit or guaranty
thereof, Agent shall be liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent jurisdiction) in






B-5









 







determining that the demand for payment under such Letter of Credit or guaranty thereof
complies on its face with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be
in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a payment under any Letter of
Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent’s or any Lender’s rights or powers hereunder or under the
Agreement.




          (iii) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or
indemnities made by Borrower in favor of any L/C Issuer in any letter of credit application,
reimbursement agreement or similar document, instrument or agreement between Borrower and such L/C
Issuer, including a Master Documentary Agreement and a Master Standby Agreement entered into with
L/C Issuer.





B-6











 





ANNEX C (Section 1.8)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




CASH MANAGEMENT SYSTEM



          Borrower and Holdings shall, and shall cause their Subsidiaries to, establish and maintain the
Cash Management Systems described below:




          (a) On or before the Closing Date and until the Termination Date, Borrower and Holdings shall
(i) establish lock boxes (“Lock Boxes”) or, at Agent’s discretion, blocked accounts
(“Blocked Accounts”) at one or more of the banks set forth in Disclosure Schedule
(3.19), and shall request in writing and otherwise take such reasonable steps to ensure that
all Account Debtors forward payment directly to such Lock Boxes, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all Collateral (whether or
not otherwise delivered to a Lock Box) into one or more Blocked Accounts in Borrower’s name or any
such Subsidiary’s name and at a bank identified in Disclosure Schedule (3.19) (each, a
“Relationship Bank”). On or before the Closing Date, Borrower shall have established a
concentration account in its name (the “Concentration Account”) at the bank that shall be
designated as the Concentration Account bank for Borrower in Disclosure Schedule (3.19)
(the “Concentration Account Bank”) which bank shall be reasonably satisfactory to Agent.




          (b) Borrower may maintain, in its name, an account (each a “Disbursement Account” and
collectively, the “Disbursement Accounts”) at a bank acceptable to Agent into which Agent
shall, from time to time, deposit proceeds of Revolving Credit Advances and Swing Line Advances
made to Borrower pursuant to Section 1.1 for use by Borrower in accordance with the
provisions of Section 1.4.




          (c) On or before the Closing Date (or such later date as Agent shall consent to in writing),
the Concentration Account Bank, each bank where a Disbursement Account is maintained and all other
Relationship Banks, shall have entered into tri-party blocked account agreements with Agent, for
the benefit of itself and Lenders, and Borrower, Holdings and Subsidiaries thereof, as applicable,
in form and substance reasonably acceptable to Agent, which shall become operative on or prior to
the Closing Date. Each such blocked account agreement shall provide, among other things, that (i)
all items of payment deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for returned checks or
other items of payment, and (iii) from and after the Closing Date (A) with respect to banks at
which a Blocked Account is maintained, such bank agrees to forward immediately all amounts in each
Blocked Account to the Concentration Account Bank and to commence the process of daily sweeps from
such Blocked Account into the Concentration Account and (B) with respect to the Concentration
Account




C-1









 




Bank, such bank agrees from and after the receipt of a notice (on “Activation Notice”)
from the Agent (which Activation Notice may be given by Agent at any time following the occurrence
and during the continuance of an Event of Default or at any time after Liquidity is less than
$10,000,000; provided that, if during a period of 30 consecutive days, no Event of Default exists
and Borrowing Availability has been greater than $20,000,000 at all such times, Agent shall rescind
such Activation Notice following a written request therefor by the Borrower, which request the
Borrower must deliver promptly after the expiration of such period) to immediately forward all
amounts received in the Concentration Account to the Collection Account through daily sweeps from
such Concentration Account into the Collection Account. Borrower shall not, and shall not cause or
permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements.




          (d) So long as no Event of Default has occurred and is continuing, Borrower may amend
Disclosure Schedule (3.19) to add or replace a Relationship Bank, Lock Box or Blocked
Account or to replace any Concentration Account or any Disbursement Account; provided, that (i)
Agent shall have consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or Lock Box, Borrower
or its Subsidiaries, as applicable, and such bank shall have executed and delivered to Agent a
tri-party blocked account agreement, in form and substance reasonably satisfactory to Agent.
Borrower shall close any of its accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly as practicable and in any event within one hundred and twenty (120)
days following notice from Agent that the operating performance, funds transfer or availability
procedures or performance with respect to accounts or Lock Boxes of the bank holding such accounts
or Agent’s liability under any tri-party blocked account agreement with such bank is no longer
acceptable in Agent’s reasonable judgment.




          (e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the Concentration Account
shall be cash collateral accounts, with all cash, checks and other similar items of payment in such
accounts securing payment of the Loans and all other Obligations, and in which Borrower and each
Subsidiary thereof shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to
the Security Agreement or other Collateral Documents.




          (f) All amounts deposited in the Collection Account shall be deemed received by Agent in
accordance with Section 1.10 and shall be applied (and allocated) by Agent in accordance
with Section 1.11. In no event shall any amount be so applied unless and until such amount
shall have been credited in immediately available funds to the Collection Account.




          (g) Borrower shall and shall cause its Affiliates, officers, employees, agents, directors or
other Persons acting for or in concert with Borrower (each a “Related Person”) to (i) hold
in trust for Agent, for the benefit of itself and Lenders, all checks, cash and other items of
payment received by Borrower or any such Related Person, and (ii) within one (1) Business Day after
receipt by Borrower or any such Related Person of any checks, cash or other items of payment,
deposit the same into a Blocked Account. Borrower on behalf of itself and each Related Person
acknowledges and agrees that all cash, checks or other items of payment




C-2









 




constituting proceeds of Collateral are part of the Collateral. All proceeds of the sale or
other disposition of any Collateral, shall be deposited directly into Blocked Accounts.




          Any
provision of this Annex C to the contrary notwithstanding, Credit Parties may
maintain (A) disbursement or petty cash accounts with local banks that are not a part of the Cash
Management Systems described in this Annex C (including account #8200886679 maintained at
Citizens Bank; account #00022829 maintained at Citizen Bank of Hickman; account #2078281047935
maintained at Wachovia National Bank, N.A.; and account #178377116 maintained at First Tennessee),
so long as the balance on deposit in each such accounts does not exceed $5,000 at any time (net of
checks written but not yet cleared against the balance on deposit in such accounts) and the
aggregate balance on deposit in all such accounts does not exceed $25,000 at any time (net of
checks written but not yet cleared against the balance on deposit in such accounts); (B) account
#2020000363204 of Holdings maintained at Wachovia National Bank, N.A. so long as (i) the balance on
deposit in such accounts does not exceed $1,100,000 in the aggregate at any time, (ii) the
disbursements of funds from such account are used solely to satisfy Holdings’ Voluntary Employee
Beneficiary Association (“VEBA”) obligations and (ii) funds are deposited in such account
no earlier than 120 days prior the distribution of funds from such account to satisfy Holdings’
VEBA obligations and (C) account #2079900011199 of Borrower maintained at Wachovia National Bank,
N.A. so long as (i) the balance on deposit in such accounts does not exceed $50,000 in the
aggregate at any time, (ii) the disbursements of funds from such account are used solely to satisfy
Borrower’s payroll obligations and (iii) funds are deposited in such account no earlier than 2 days
prior the distribution of funds from such account to satisfy Borrower’s payroll obligations.









C-3









 








ANNEX D (Section 2.1(a))

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




CLOSING CHECKLIST



          In addition to, and not in limitation of, the conditions described in Section 2.1 of
the Agreement, pursuant to Section 2.1(a), the following items must be received by Agent in
form and substance satisfactory to Agent on or prior to the Closing Date (each capitalized term
used but not otherwise defined herein shall have the meaning ascribed thereto in Annex A to
the Agreement):




          A. Appendices. All Appendices to the Agreement, in form and substance satisfactory to
Agent.




          B. Revolving Notes and Swing Line Note. Duly executed originals of the Revolving
Notes and Swing Line Note for each applicable Lender, dated the Closing Date.




          C. Master Reaffirmation and Amendment and Restated Security Agreement. Duly executed
originals of the master reaffirmation of the Loan Documents and Amended and Restated Security
Agreement executed and delivered in connection with the Original Credit Agreement, dated the
Closing Date, and in form and substance satisfactory to the Agent.




          D. Cash Management System; Blocked Account Agreements. Evidence satisfactory to Agent
that, as of the Closing Date, Cash Management Systems complying with Annex C to the
Agreement have been established and are currently being maintained in the manner set forth in such
Annex C, together with copies of duly executed tri-party blocked account and lock box
agreements, reasonably satisfactory to Agent, with the banks as required by Annex C.




          E. Charter and Good Standing. For each Credit Party, such Person’s (a) charter and
all amendments thereto, (b) good standing certificates (including verification of tax status) in
its state of incorporation and (c) good standing certificates (including verification of tax
status) and certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such qualification, each
dated a recent date prior to the Closing Date and certified by the applicable Secretary of State or
other authorized Governmental Authority.




          F. Bylaws and Resolutions. For each Credit Party, (a) such Person’s bylaws, together
with all amendments thereto and (b) resolutions of such Person’s Board of Directors, approving and
authorizing the execution, delivery and performance of the Loan Documents to which such Person is a
party and the transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person’s corporate secretary or an assistant secretary as being in full force
and effect without any modification or amendment.







D-1









 








          G. Incumbency Certificates. For each Credit Party, signature and incumbency
certificates of the officers of each such Person executing any of the Loan Documents, certified as
of the Closing Date by such Person’s corporate secretary or an assistant secretary as being true,
accurate, correct and complete.




          H. Opinions of Counsel. Duly executed originals of opinions of Womble Carlyle
Sandridge & Rice, PLLC, counsel for the Credit Parties, in form and substance reasonably
satisfactory to Agent and its counsel, dated the Closing Date.




          I. Fee Letter. Duly executed originals of the GE Capital Fee Letter.




          J. Officer’s Certificate. Agent shall have received duly executed originals of a
certificate of the Chief Executive Officer and Chief Financial Officer of Borrower, dated the
Closing Date, stating that, since October 3, 2009 (a) no event or condition has occurred or is
existing which could reasonably be expected to have a Material Adverse Effect; (b) there has been
no material adverse change in the industry in which Borrower operates; (c) no Litigation has been
commenced which, if successful, would have a Material Adverse Effect or could challenge any of the
transactions contemplated by the Agreement and the other Loan Documents; (d) there have been no
Restricted Payments made by any Credit Party which when made would have violated the terms of this
Agreement, (e) before and after giving effect to the transactions contemplated by the Credit
Agreement, each Credit Party will be Solvent, and (f) there has been no material increase in
liabilities, liquidated or contingent, and no material decrease in assets of Borrower or any of its
Subsidiaries.




          K. Termination of Mortgages. Terminations or releases of Mortgages covering all of
the Real Estate (the “Mortgaged Properties”).




          L. Other Documents. Such other certificates, documents and agreements respecting any
Credit Party as Agent may reasonably request.








D-2









 








ANNEX E (Section 4.1(a))

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




FINANCIAL STATEMENTS AND PROJECTIONS — REPORTING



          Borrower shall deliver or cause to be delivered to Agent or to Agent and Lenders, as
indicated, the following:




          (a) Monthly Financials. To Agent and Lenders, within thirty (30) days after the end
of each Fiscal Month (including the Fiscal Month of September of each Fiscal Year), financial
information regarding Holdings and its Subsidiaries, certified by the Chief Financial Officer of
Borrower, consisting of (i) unaudited consolidating balance sheets as of the close of such Fiscal
Month and the related consolidated statements of income and cash flows for that portion of the
Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited consolidated statements of
income and cash flows for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end adjustments and year-end
audit adjustments); and (iii) a summary of the outstanding balance of all intercompany balances as
evidenced by Intercompany Notes as of the last day of that Fiscal Month. Such financial
information shall be accompanied by the certification of the Chief Financial Officer of Borrower
that (i) such financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments and year-end audit adjustments) the financial position and results of
operations of Holdings and its Subsidiaries, on a consolidated basis, in each case as at the end of
such Fiscal Month and for that portion of the Fiscal Year then ended and (ii) any other information
presented is true, correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of Default shall have
occurred and be continuing, describing the nature thereof and all efforts undertaken to cure such
Default or Event of Default.




          (b) Quarterly Financials. To Agent and Lenders, within forty-five (45) days after the
end of each Fiscal Quarter (including the last Fiscal Quarter of each Fiscal Year), consolidated
financial information regarding Holdings and its Subsidiaries, certified by the Chief Financial
Officer of Borrower, including consolidated (i) unaudited balance sheets as of the close of such
Fiscal Quarter and the related statements of income and cash flow for that portion of the Fiscal
Year ending as of the close of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end adjustments and year-end
audit adjustments). Such financial information shall be accompanied by (A) a statement in
reasonable detail (each, a “Compliance Certificate”) showing (x) reasonably detailed
calculation of Reference Availability for such Fiscal Quarter), (y) the calculations of each
Financial Covenant (regardless of whether compliance with any such Financial Covenant is tested for
such Fiscal Quarter) and (z) if then applicable, the calculations used in determining compliance
with each of the Financial Covenants that is tested on a quarterly basis and (B) the certification
of the Chief Financial Officer of Borrower that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments and year-end




E-1









 




audit adjustments) the financial position, results of operations and statements of cash flows
of Holdings and its Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or Event of Default.
In addition, Borrower shall deliver to Agent and Lenders, within forty-five (45) days after the end
of each Fiscal Quarter, the management discussion and analysis as provided in the Form 10-Q for
such Fiscal Quarter.




          (c) Operating Plan. To Agent and Lenders, as soon as available, but not later than
thirty (30) days after the end of each Fiscal Year, an annual operating plan for Holdings and its
Subsidiaries as presented by management to the Board of Directors of Holdings, for the following
Fiscal Year, which (i) includes a statement of all of the material assumptions on which such plan
is based, (ii) includes monthly consolidated balance sheets and a monthly budget for the following
year and (iii) integrates sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections, all prepared on the same basis and in similar
detail as that on which operating results are reported (and in the case of cash flow projections,
representing management’s good faith estimates of future financial performance based on historical
performance), and including plans for Capital Expenditures and facilities.




          (d) Annual Audited Financials. To Agent and Lenders, within twenty (20) days after the
Closing Date in respect of the Fiscal Year 2003 and within ninety (90) days after the end of each
Fiscal Year in respect of any other Fiscal Year, audited Financial Statements for Holdings and its
Subsidiaries on a consolidated basis, consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each case the figures for
the previous Fiscal Year, which Financial Statements shall be prepared in accordance with GAAP and
certified without qualification, by an independent certified public accounting firm of national
standing or otherwise acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations used in determining compliance
with each of the Financial Covenants, (ii) a report from such accounting firm to the effect that,
in connection with their audit examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred with respect to the Financial Covenants (or
specifying those Defaults and Events of Default that they became aware of), it being understood
that such audit examination extended only to accounting matters and that no special investigation
was made with respect to the existence of Defaults or Events of Default, and (iii) the
certification of the Chief Executive Officer or Chief Financial Officer of Borrower that all such
Financial Statements present fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of Holdings and its Subsidiaries on a consolidated basis,
as at the end of such Fiscal Year and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.




          (e) Management Letters. To Agent and Lenders, within five (5) Business Days after
receipt thereof by any Credit Party, copies of all management letters, exception




E-2









 




reports or similar letters or reports received by such Credit Party from its independent
certified public accountants.




          (f) Default Notices. To Agent and Lenders, as soon as practicable, and in any event
within three (3) Business Days after an executive officer of Borrower has actual knowledge of the
existence of any Default, Event of Default or other event that has had a Material Adverse Effect,
telephonic or telecopied notice specifying the nature of such Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day.




          (g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices and proxy statements
made publicly available by any Credit Party to its security holders; (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority; and (iii) all press releases and other statements made available by
any Credit Party to the public concerning material changes or developments in the business of any
such Person.




          (h) Subordinated Debt and Equity Notices. To Agent, as soon as practicable, copies of
all material written notices given or received by any Credit Party with respect to any Subordinated
Debt or Stock of such Person, and, within two (2) Business Days after any Credit Party obtains
knowledge of any matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.




          (i) Supplemental Schedules. To Agent, supplemental disclosures, if any, required by
Section 5.6.




          (j) Litigation. To Agent in writing, promptly upon learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks damages in excess of
$250,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the violation of any law
regarding, or seeks remedies in connection with, any Environmental Liabilities; or (vi) involves
any product recall.




          (k) Insurance Notices. To Agent, disclosure of losses or casualties required by
Section 5.4.




          (l) Lease Default Notices. To Agent, (i) within two (2) Business Days after receipt
thereof, copies of any and all default notices received under or with respect to any leased
location or public warehouse where Collateral is located, (ii) monthly within three (3) Business
Days after payment thereof, evidence of payment of lease or rental payments as to each leased or
rented location for which a landlord or bailee waiver has not been obtained and (iii) such other
notices or documents as Agent may reasonably request.




          (m) Lease Amendments. To Agent, within ten (10) Business Days after receipt thereof,
copies of all material amendments to real estate leases.







E-3









 








          (n) Hedging Agreements. To Agent within ten (10) Business Days after entering into
such agreement or amendment, copies of all interest rate, commodity or currency hedging agreements
or amendments thereto.




          (o) Material Agreements. To Agent or its counsel, on behalf of Lenders, complete
copies (or accurate summaries) of the following agreements or documents: supply agreements,
purchase agreements and sale agreements not terminable by such Credit Party within sixty (60) days
following written notice issued by such Credit Party and involving transactions in excess of
$500,000 per annum; leases of Equipment having a remaining term of one year or longer and requiring
aggregate rental and other payments in excess of $500,000 per annum; licenses and permits held by
the Credit Parties, the absence of which could be reasonably likely to have a Material Adverse
Effect; instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness of such
Credit Party in excess of $500,000 and any Lien granted by such Credit Party with respect thereto;
and instruments and agreements evidencing the issuance of any equity securities, warrants, rights
or options to purchase equity securities of such Credit Party.




          (p) Certain Bank Accounts. To Agent, immediately upon request of Agent, copies of all
bank statements provided to the applicable Credit Parties relating to each of the bank accounts
referenced in the last paragraph of Annex C and such other information relating to such
accounts as shall reasonably be requested by Agent from time to time.




          (q) Other Documents. To Agent and Lenders, such other financial and other information
respecting any Credit Party’s business or financial condition as Agent or any Lender shall, from
time to time, reasonably request.







E-4









 








ANNEX F (Section 4.1(b))

to

CREDIT AGREEMENT




SECOND AMENDED AND RESTATED COLLATERAL REPORTS



          Borrower shall deliver or cause to be delivered the following:




          (a) To Agent, ,within five (5) Business Days after the end of each Fiscal Month, or more
frequently upon Agent’s request made at any time that Borrowing Availability is less than
$25,000,000, (together with a copy of all or any part of the following reports requested by any
Lender in writing after the Closing Date), each of the following reports, each of which shall be
prepared by the Borrower as of the date two (2) days prior to the date of any such request:





     (i) a Borrowing Base Certificate with respect to Borrower, accompanied by such
supporting detail and documentation as shall be requested by Agent in its reasonable
discretion;




     (ii) with respect to Borrower, a summary of Inventory by location and type with a
supporting perpetual Inventory report, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion; and




     (iii) with respect to Borrower, a monthly trial balance showing Accounts outstanding
aged from invoice date and due date in form reasonably satisfactory to Agent, accompanied by
such supporting detail and documentation as shall be requested by Agent in its reasonable
discretion.



          (b) To Agent, on a monthly basis or at such more frequent intervals as Agent may request from
time to time (together with a copy of all or any part of such delivery requested by any Lender in
writing after the Closing Date), collateral reports with respect to Borrower, including all
additions and reductions (cash and non-cash) with respect to Accounts of Borrower, in each case
accompanied by such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion each of which shall be prepared by the applicable Borrower as of the last day
of the immediately preceding week or the date two (2) days prior to the date of any request;




          (c) To Agent, at the time of delivery of each of the monthly Financial Statements delivered
pursuant to Annex E:





          (i) a reconciliation of the most recent Borrowing Base, general ledger and monthly
trial balance of Borrower to Borrower’s general ledger and monthly Financial Statements
delivered pursuant to such Annex E, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable discretion;



F-1









 






          (ii) a reconciliation of the perpetual inventory by location to Borrower’s most recent
Borrowing Base Certificate, general ledger and monthly Financial Statements delivered
pursuant to Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;




          (iii) an aging of accounts payable and a reconciliation of that accounts payable aging
to Borrower’s general ledger and monthly Financial Statements delivered pursuant to
Annex E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;




          (iv) a reconciliation of the outstanding Loans as set forth in the monthly Loan Account
statement provided by Agent to Borrower’s general ledger and monthly Financial Statements
delivered pursuant to Annex E, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion;



          (d) To Agent, at the time of delivery of each of the Financial Statements delivered pursuant
to Annex E, (i) a listing of government contracts of Borrower subject to the Federal
Assignment of Claims Act of 1940; and (ii) a list of any applications for the registration of any
Patent, Trademark or Copyright filed by any Credit Party with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or agency in the prior
Fiscal Quarter;




          (e) Borrower, at its own expense, shall deliver to Agent the results of each physical
verification, if any, that Borrower or any of its Subsidiaries may in their discretion have made,
or caused any other Person to have made on their behalf, of all or any portion of their Inventory
(and, if a Default or an Event of Default has occurred and be continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical verifications as Agent may
require);




          (f) Upon Agent’s request from time to time, the Credit Parties shall permit and enable Agent
to obtain appraisals in form and substance and from appraisers reasonably satisfactory to Agent
relating to Inventory and stating the then current Net Orderly Liquidation Value of Inventory, in
each instance, at the Credit Parties’ expense; provided, that the Credit Parties shall only be
obligated to reimburse Agent for the expenses of such appraisals occurring once per year and for
one additional appraisal per year if such additional appraisal is commenced after Borrowing
Availability is less than $15,000,000 or for more frequent appraisals if an Event of Default has
occurred and is continuing (and, in each case, Borrower shall cooperate with such appraisers, Agent
and its agents in an effort to facilitate and promptly conclude any such appraisal); and




          (g) Such other reports, statements and reconciliations with respect to the Borrowing Base or
Collateral or Obligations of any or all Credit Parties as Agent shall from time to time request in
its reasonable discretion.









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ANNEX G (Section 6.10)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




FINANCIAL COVENANTS



               Borrower shall not breach or fail to comply with any of the following financial covenants,
each of which shall be calculated in accordance with GAAP consistently applied:



Minimum Fixed Charge Coverage Ratio. If Liquidity on any day is less than $10,000,000,
Holdings and its Subsidiaries shall have on a consolidated basis a Fixed Charge Coverage Ratio
(measured as of the last day of the most recent Fiscal Quarter for which the Financial Statements
have been delivered for the 12-month period then ended) of not less than 1.10 : 1.00.




          Unless otherwise specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall
in no way be construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a change in the calculation of the financial covenants, standards
or terms used in the Agreement or any other Loan Document, then Borrower, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of the Agreement so as to equitably
reflect such Accounting Changes with the desired result that the criteria for evaluating Borrower’s
and its Subsidiaries’ financial condition shall be the same after such Accounting Changes as if
such Accounting Changes had not been made; provided, however, that the agreement of Requisite
Lenders to any required amendments of such provisions shall be sufficient to bind all Lenders.
“Accounting Changes” means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or successor thereto or
any agency with similar functions), (ii) changes in accounting principles concurred in by
Borrower’s certified public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or
17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109,
including the establishment of reserves pursuant thereto and any subsequent reversal (in whole or
in part) of such reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments. If Agent, Borrower and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the underlying Accounting
Change with respect thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting Change, refer to GAAP,
consistently applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments within thirty (30)
days following the date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and terms in accordance
with the Agreement and the other Loan Documents shall be prepared, delivered and made without
regard to the underlying Accounting Change. For purposes of Section 8.1, a breach of a
Financial Covenant contained in this Annex G shall be deemed to have occurred as of any
date of determination by Agent or as of the last day of any specified measurement period,



G-1









 




regardless of when the Financial Statements reflecting such breach are delivered to Agent.
Notwithstanding any other provision contained herein, all terms of an accounting or financial
nature used herein shall be construed, and all computations of amounts and ratios referred to
herein shall be made, without giving effect to any election under Statement of Financial Accounting
Standards 159 (or any other Financial Accounting Standard having a similar result or effect) to
value any Indebtedness or other liabilities of any Credit Party or any Subsidiary of any Credit
Party at “fair value”, as defined therein.









G-2









 








ANNEX H (Section 1.1(d))

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




LENDERS’ WIRE TRANSFER INFORMATION


Account Name — GECC CFS CIF Collection Account

Bank Name — DEUTSCHE BANK

Account Number — 50279513

Swift ID — 021001033

Currency Code — USD

Reference — CFN5577 & Insteel





H-1









 








ANNEX I (Section 11.10)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT




NOTICE ADDRESSES




	(A)	 	If to Agent or GE Capital, at

General Electric Capital Corporation

500 West Monroe Street

Chicago, Illinois 60661

Attention: Insteel, Account Manager

Telecopier No.: (312) 441-3840

Telephone No.: (312) 441-7669
	 
	 	 	with copies to:
	 
	 	 	Latham & Watkins

5800 Sears Tower

Chicago, Illinois 60606

Attention: Jeffrey G. Moran

Telecopier No.: (312) 993-9767

Telephone No.: (312) 876-7700
	 
	 	 	and
	 
	 	 	General Electric Capital Corporation

201 Merritt 7

6th Floor

Norwalk, CT 06856-5201

Attention: Corporate Counsel-Commercial Finance

Telecopier No.: (203)-229-5810

Telephone No.: (203) 956-4379
	 
	(B)	 	If to Borrower, at

Insteel Wire Products Company

1373 Boggs Drive

Mount Airy, North Carolina 27030

Attention: Michael C. Gazmarian

Telecopier No.: (336) 786-2144

Telephone No.: (336) 786-2141
	 
	 	 	with copies to:
	 
	 	 	Insteel Industries, Inc.

1373 Boggs Drive

Mount Airy, North Carolina 27030

Attention: James F. Petelle, Vice President — Administration




I-1









 






	 	 	Telecopier No.: (336) 786-2144

Telephone No.: (336) 786-2141
	 
	 	 	with copies to:
	 
	 	 	Womble Carlyle Sandridge & Rice, PLLC

One West Fourth Street

Winston-Salem, NC 27101

Attention: Christopher E. Leon

Telecopier No.: (336) 726-6932

Telephone No.: (336) 721-3518










I-2









 








ANNEX J (from Annex A — Commitments definition)

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT



Lender: General Electric Capital Corporation




	 	 	 	 	 

	Revolving
Loan Commitment

(including a Swing Line Commitment
of $5,000,000):
	 	$	75,000,000	 







J-1