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EXHIBIT 99.2   AMENDED AND RESTATED
NOTE AND WARRANT PURCHASE AGREEMENT BY AND AMONG MORTON INDUSTRIAL GROUP, INC.,
THE GUARANTORS FROM TIME TO TIME PARTY HERETO,
THE PURCHASERS AND BMO NESBITT BURNS CAPITAL (U.S.), INC.,
AS AGENT DATED AS OF JUNE 23, 2004




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TABLE OF CONTENTS PageSECTION 1 PURCHASE AND SALE OF THE NOTES AND WARRANTS
    
    
    1Section 1.1
    
    Notes and Warrants
    
    
    1Section 1.2
    
    The Closing
    
    
    2Section 1.3
    
    Pro Rata Payment
    
    
    2SECTION 2 INTEREST
    
    
    2Section 2.1
    
    Interest Rate
    
    
    2Section 2.2
    
    Computation of Interest
    
    
    3Section 2.3
    
    Default Rate.
    
    
    3SECTION 3 FEES, PREPAYMENTS, TERMINATIONS, APPLICATIONS AND NOTATIONS
    
    
    3Section 3.1
    
    Fees
    
    
    3Section 3.2
    
    Voluntary Prepayments of Notes
    
    
    3Section 3.3
    
    Place of Payments
    
    
    4Section 3.4
    
    Application of Payments
    
    
    5SECTION 4 COLLATERAL
    
    
    5Section 4.1
    
    Collateral
    
    
    5Section 4.2
    
    Guaranties
    
    
    6Section 4.3
    
    Further Assurances
    
    
    6Section 4.4
    
    Collections
    
    
    6SECTION 5 DEFINITIONS; INTERPRETATION
    
    
    7Section 5.1
    
    Definitions
    
    
    7Section 5.2
    
    Interpretation
    
    
    18Section 5.3
    
    Change in Accounting Principles
    
    
    18SECTION 6 REPRESENTATIONS AND WARRANTIES
    
    
    19Section 6.1
    
    Organization and Qualification
    
    
    19Section 6.2
    
    Subsidiaries
    
    
    19Section 6.3
    
    Authority and Validity of Obligations
    
    
    20Section 6.4
    
    Use of Proceeds; Margin Stock
    
    
    20Section 6.5
    
    Financial Reports
    
    
    20Section 6.6
    
    Full Disclosure
    
    
    21
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TABLE OF CONTENTS
(continued) PageSection 6.7
    
    Good Title
    
    
    21Section 6.8
    
    Litigation and Other Controversies
    
    
    21Section 6.9
    
    Taxes
    
    
    21Section 6.10
    
    Approvals
    
    
    22Section 6.11
    
    Affiliate Transactions
    
    
    22Section 6.12
    
    Investment Company; Public Utility Holding Company
    
    
    22Section 6.13
    
    ERISA
    
    
    22Section 6.14
    
    Compliance with Laws (Nonenvironmental)
    
    
    22Section 6.15
    
    Environmental and Safety Matters
    
    
    22Section 6.16
    
    Other Agreements
    
    
    24Section 6.17
    
    No Default
    
    
    24Section 6.18
    
    Trademarks, Franchises, and Licenses
    
    
    24Section 6.19
    
    Governmental Authority and Licensing
    
    
    24Section 6.20
    
    Solvency
    
    
    25Section 6.21
    
    Capital Structure
    
    
    25Section 6.22
    
    SEC Disclosure
    
    
    26SECTION 7 CONDITIONS PRECEDENT
    
    
    26Section 7.1
    
    Conditions
    
    
    26Section 7.2
    
    Documents
    
    
    27SECTION 8 COVENANTS
    
    
    28Section 8.1
    
    Maintenance of Business
    
    
    28Section 8.2
    
    Maintenance of Property
    
    
    28Section 8.3
    
    Taxes and Assessments
    
    
    28Section 8.4
    
    Insurance
    
    
    28Section 8.5
    
    Financial Reports
    
    
    29Section 8.6
    
    Total Funded Debt/EBITDA Ratio
    
    
    31Section 8.7
    
    Total Senior Funded Debt/EBITDA Ratio
    
    
    31Section 8.8
    
    Minimum EBITDA
    
    
    31Section 8.9
    
    Fixed Charge Coverage Ratio
    
    
    32
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TABLE OF CONTENTS
(continued) PageSection 8.10
    
    Capital Expenditures
    
    
    32Section 8.11
    
    Board Matters
    
    
    32Section 8.12
    
    Investor Protection
    
    
    33Section 8.13
    
    Equity Restriction
    
    
    33Section 8.14
    
    Indebtedness
    
    
    33Section 8.15
    
    Liens
    
    
    34Section 8.16
    
    Investments, Loans, Advances and Guaranties
    
    
    35Section 8.17
    
    Leases
    
    
    37Section 8.18
    
    Dividends and Certain Other Restricted Payments
    
    
    37Section 8.19
    
    Mergers, Consolidations and Sales
    
    
    37Section 8.20
    
    Acquisitions
    
    
    38Section 8.21
    
    Maintenance of Subsidiaries
    
    
    38Section 8.22
    
    Formation of Subsidiaries
    
    
    39Section 8.23
    
    ERISA
    
    
    39Section 8.24
    
    Compliance with Laws
    
    
    39Section 8.25
    
    Burdensome Contracts with Affiliates
    
    
    39Section 8.26
    
    Changes in Fiscal Year
    
    
    39Section 8.27
    
    Change in the Nature of Business
    
    
    40Section 8.28
    
    Use of Loan Proceeds
    
    
    40Section 8.29
    
    No Restrictions
    
    
    40Section 8.30
    
    Senior Debt
    
    
    40Section 8.31
    
    Junior Subordinated Debt
    
    
    40Section 8.32
    
    [Reserved]
    
    
    40Section 8.33
    
    Worthington Settlement Documents
    
    
    40Section 8.34
    
    Mid-Central Debt
    
    
    41Section 8.35
    
    D & O Insurance
    
    
    41Section 8.36
    
    Capital Stock
    
    
    41Section 8.37
    
    Management Compensation
    
    
    41Section 8.38
    
    Additional Life Insurance
    
    
    41
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TABLE OF CONTENTS
(continued) PageSECTION 9 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
    
    
    42Section 9.1
    
    Organization and Good Standing
    
    
    42Section 9.2
    
    Authorization; Power
    
    
    42Section 9.3
    
    Validity
    
    
    42Section 9.4
    
    Accredited Investor
    
    
    42Section 9.5
    
    Purchase for Own Account; Acknowledgment of Risk
    
    
    42SECTION 10 EVENTS OF DEFAULT AND REMEDIES
    
    
    43Section 10.1
    
    Events of Default.
    
    
    43Section 10.2
    
    Consequences of Events of Default
    
    
    45SECTION 11 THE AGENT
    
    
    46Section 11.1
    
    Appointment and Authorization of Agent
    
    
    46Section 11.2
    
    Agent and its Affiliates
    
    
    46Section 11.3
    
    Action by Agent
    
    
    46Section 11.4
    
    Consultation with Experts
    
    
    47Section 11.5
    
    Liability of Agent; Credit Decision
    
    
    47Section 11.6
    
    Indemnity
    
    
    47Section 11.7
    
    Resignation of Agent and Successor Agent
    
    
    48Section 11.8
    
    Designation of Additional Agents
    
    
    48Section 11.9
    
    Authorization to Release or Subordinate or Limit Liens
    
    
    48Section 11.10
    
    Authorization to Enter into, and Enforcement of, the
Collateral Documents
    
    
    49Section 11.11
    
    Subordination and Intercreditor Agreement
    
    
    49SECTION 12 THE GUARANTIES
    
    
    49Section 12.1
    
    The Guaranties
    
    
    49Section 12.2
    
    Guaranty Unconditional
    
    
    50Section 12.3
    
    Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances
    
    
    51Section 12.4
    
    Waivers
    
    
    51Section 12.5
    
    Limit on Recovery
    
    
    51
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TABLE OF CONTENTS
(continued) PageSection 12.6
    
    Stay of Acceleration
    
    
    51Section 12.7
    
    Benefit to Guarantors
    
    
    51Section 12.8
    
    Guarantor Covenants
    
    
    52SECTION 13 MISCELLANEOUS
    
    
    52Section 13.1
    
    Holidays
    
    
    52Section 13.2
    
    No Waiver, Cumulative Remedies
    
    
    52Section 13.3
    
    Waivers, Modifications and Amendments
    
    
    52Section 13.4
    
    Costs and Expenses
    
    
    52Section 13.5
    
    Documentary Taxes
    
    
    53Section 13.6
    
    Survival of Representations
    
    
    53Section 13.7
    
    Survival of Indemnities
    
    
    53Section 13.8
    
    Notices
    
    
    53Section 13.9
    
    Headings
    
    
    54Section 13.10
    
    Severability of Provisions
    
    
    54Section 13.11
    
    Counterparts
    
    
    54Section 13.12
    
    Binding Nature, Governing Law, Etc
    
    
    54Section 13.13
    
    Entire Understanding
    
    
    54Section 13.14
    
    Confidentiality
    
    
    55Section 13.15
    
    Sharing of Set-Off
    
    
    55Section 13.16
    
    Headings
    
    
    55Section 13.17
    
    Set-off
    
    
    55Section 13.18
    
    Construction
    
    
    56Section 13.19
    
    Submission to Jurisdiction; Waiver of Jury Trial
    
    
    56Section 13.20
    
    Confirmation and Ratification of Terms
    
    
    56
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PURCHASER SCHEDULE Exhibit A-1
    
    
    
    Form of A NoteExhibit A-2
    
    
    
    Form of B NoteExhibit B
    
    
    
    Form of WarrantExhibit C
    
    
    
    Compliance CertificateAttachment to Compliance CertificateExhibit D
    
    
    
    GuarantySchedule 6.2
    
    
    
    SubsidiariesSchedule 6.7
    
    
    
    PropertySchedule 6.15
    
    
    
    Environmental and Safety MattersSchedule 6.21
    
    
    
    Capital StructureSchedule 7.2(l)
    
    
    
    EBITDA ReconciliationSchedule 8.15
    
    
    
    Other Liens




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MORTON INDUSTRIAL GROUP, INC.
AMENDED AND RESTATED
NOTE AND WARRANT
PURCHASE AGREEMENT This Amended and Restated Note and Warrant Purchase Agreement is entered
into as of June 23, 2004, (the Agreement), by and among Morton Industrial
Group, Inc., a Georgia corporation (the Company), each of the Subsidiaries
from time to time becoming a party hereto, as Guarantors, each of the
purchasers set forth in the Purchaser Schedule hereto (together with any other
transferee or other Person that becomes a holder of any Note, collectively, the
"Purchasers and individually, a Purchaser), and BMO Nesbitt Burns Capital
(U.S.), Inc., in its capacity as agent hereunder (hereinafter referred to as
"BMO or the Agent). WHEREAS, Agent, the Company and certain other parties entered into that
certain Note and Warrant Purchase Agreement dated as of March 26, 2004 (the
"Original Purchase Agreement), pursuant to which, among other things: Agent
purchased from the Company (i) a Senior Secured Subordinated Promissory Note in
the aggregate principal amount of $10,000,000 (the Original BMO Note) and
(ii) a Stock Purchase Warrant to acquire shares of the Common Stock of the
Company (the Original BMO Warrant); WHEREAS, JZ Equity Partners PLC, a company formed under the laws of
England and Wales (JZ Partners) and Prism Mezzanine Fund SBIC, L.P., a
Delaware limited partnership (Prism and, together with BMO and JZ Partners,
the Investors) desire to lend money to the Company and become a party to, and
be subject to the terms of, the Purchase Agreement as if each of them were
originally named a party thereunder; WHEREAS, the Company has requested the Investors to extend an additional
loan to the Company in the aggregate amount of $2,000,000 to repay certain of
the Companys senior debt and certain expenses of the Company; WHEREAS, as a result of the transactions contemplated by this Agreement, a
portion of the obligations under the Original BMO Note will be paid off and the
Original BMO Warrant will be reduced; and WHEREAS, the parties hereto have agreed to amend and restate in its
entirety the Original Purchase Agreement in accordance with the terms of this
Agreement. The parties hereto agree as follows: SECTION 1 PURCHASE AND SALE OF THE NOTES AND WARRANTS Section 1.1 Notes and Warrants. (a) Sale and Issuance of Securities. Subject to the terms and conditions
hereof, at the Closing the Company shall sell to the Purchasers and the
Purchasers shall purchase from the Company (i) the Notes in the aggregate
principal amount of $12,000,000, in the




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amounts set forth opposite each Purchasers name as set forth in the
Purchaser Schedule, and (ii) the Warrants to purchase in the aggregate nine
percent (9%) of the Companys common stock on a fully-diluted basis, in the
amounts set forth opposite each Purchasers name as set forth in the Purchaser
Schedule. (b) Guaranties. The obligations of the Company under the Notes, the
Collateral Documents and, with respect to the payment to each Purchaser of the
Put Price (as defined in the Warrants), shall be guaranteed by each Subsidiary
of the Company pursuant to a guaranty in form and substance acceptable to the
Agent (the Guaranty). Section 1.2 The Closing. The closing of the separate purchases and sales
of the Securities (the Closing) shall take place at the offices of Vedder,
Price, Kaufman & Kammholz, P.C., at 10:00 a.m. on June 23, 2004 (the Closing
Date), or at such other place or on such other date as may be mutually
agreeable to the Company, the Agent and the Purchasers. At the Closing, the
Company shall deliver to the Purchasers instruments evidencing the Notes and
the Warrants to be purchased by such Purchaser, payable to the order of such
Purchaser or its nominee or registered in such Purchasers or its nominees
name, respectively, upon payment by such Purchaser of the amount set forth
opposite such Purchasers name in the Purchaser Schedule, by wire transfer of
immediately available funds to an account specified in writing by the Company
to the Agent at least two (2) Business Days prior to the Closing. Section 1.3 Pro Rata Payment. All payments to the Purchasers or any other
holders of the Notes (whether for principal, interest or otherwise) shall be
made pro rata among such holders based upon the aggregate unpaid principal
amount of the Notes held by each such holder. If any holder of any of the
Notes obtains any payment (whether voluntary or involuntary) of principal,
interest or other amount with respect to any of the Notes in excess of such
holders pro rata share of such payments obtained by all holders of the Notes,
such holder hereby agrees to purchase from the other holders of the Notes a
participation in the Notes held by them as is necessary to cause such holders
to share the excess payment ratably among each of them as provided in this
Section 1.3. SECTION 2 INTEREST Section 2.1 Interest Rate. (a) The A Notes shall bear interest on the unpaid balance thereof at the
aggregate rate of 16% per annum, and shall be payable at the times specified in
the A Notes, which interest shall be segregated into Current Interest and
Deferred Interest, all as more fully specified in the A Notes. (b) The B Note shall bear interest on the unpaid balance thereof at the
aggregate rate of 14% per annum and having such other terms as set forth in
such B Note, and shall be payable at the times specified in the B Note, which
interest shall be segregated into Current Interest and Deferred Interest, all
as more fully specified in the B Note. 2




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Section 2.2 Computation of Interest. All interest shall be computed on
the basis of a year of 360 days for the actual number of days elapsed. Section 2.3 Default Rate. Notwithstanding anything to the contrary
contained herein, while any Event of Default exists or after acceleration, the
Company shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all Notes at a rate
per annum equal to the rate specified in Section 10.2 of this Agreement. Any
interest above the aggregate rate specified in Section 2.1 required to be paid
under this Section 2.3 shall be deemed to be Current Interest. SECTION 3 FEES, PREPAYMENTS, TERMINATIONS,
APPLICATIONS AND NOTATIONS Section 3.1 Fees. (a) Commitment Fee. For the period from and including the date hereof to
but not including the Maturity Date, the Company shall pay to the Agent for the
ratable benefit of the Purchasers as hereinafter set forth, a commitment fee of
$40,000. (b) Audit and Appraisal Fees. The Company shall pay to the Agent for its
own use and benefit reasonable charges for audits of the Collateral by the
Agent or its agents or representatives in such amounts as the Agent may from
time to time reasonably request (the Agent acknowledging and agreeing that such
charges shall be computed in the same manner as it at the time customarily uses
for the assessment of charges for similar collateral audits actually performed
by it). The Agent, on behalf of the Purchasers, shall be entitled to conduct
two (2) such audits (each a Scheduled Field Audit) during each calendar year
(unless any Default or Event of Default has occurred, in which case there shall
be no limit on the number of such audits). In the absence of any Default or
Event of Default, the Company shall not be required to reimburse the Agent for
more than two (2) Scheduled Field Audits per calendar year. Section 3.2 Voluntary Prepayments of Notes. (a) Optional Prepayments of the Notes. At any time and from time to time,
the Company may, at its option, upon notice as provided in Section 3.2(b),
prepay all or any portion of the principal balance of the Notes, on any
quarterly payment date, in minimum increments of $500,000, plus a prepayment
premium equal to the product obtained by multiplying (i) the amount being
prepaid by (ii) the percentage set forth below opposite the time period in
which such prepayment shall occur (the Prepayment Premium): Time Period
    
    PercentageClosing Date to March 31, 2005
    
    
    3
    %April 1, 2005 to March 31, 2006
    
    
    2
    %April 1, 2006 to March 31, 2007
    
    
    1
    %April 1, 2007 to maturity
    
    No Prepayment Premium
 3




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In addition, the Company may, at its option, upon notice as provided in Section
3.2(b), prepay all or any portion of the Deferred Interest on any quarterly
payment date without having to pay a prepayment premium. Except as provided in
Section 3.2(a) and 3.2(c) hereof, the Notes may not be voluntarily prepaid by
the Company. (b) Notice of Optional Prepayments; Officers Certificate. The Company
will give each holder of the Notes written notice of such optional prepayment
under Section 3.2(a) not less than two (2) Business Days prior to the date
fixed for such prepayment. Each such notice shall be accompanied by an
officers certificate (i) stating the principal amount and holder of each Note
to be prepaid and the principal amount thereof to be prepaid, (ii) stating the
proposed date of prepayment and any conditions relating thereto and (iii)
stating the Prepayment Premium required under Section 3.2(a) (calculated as of
the date of such prepayment). (c) Contingent Prepayments of Notes on Change of Control; Officers
Certificates. (i) In the event of a Change of Control, the Company will, at least
thirty (30) days and not more than sixty (60) days prior to such Change
of Control, give written notice thereof to each holder of the Securities,
which shall contain a written irrevocable notice that the Company will
prepay (a Prepayment Notice), by a date (the Prepayment Date)
specified in such notice (which date shall be on or prior to the
effective date of the Change of Control), all of the Obligations under
the Notes held by such holder in full (and not in part) in cash. Such
notice may state that the Companys prepayment is conditioned upon the
consummation of such Change of Control. The Company shall pay to such
holder the outstanding principal amount of all Notes then held by such
holder, together with all accrued and unpaid interest thereon and all
other amounts thereunder. In the event of a prepayment of the Notes in
connection with a Change of Control, no Prepayment Premium shall be due
in connection therewith and neither the Company nor any Guarantor shall
be liable therefor. (ii) Any notice by the Company to prepay the Notes, and any
subsequent prepayment thereof pursuant to this Section 3.2(c), shall be
accompanied by an officers certificate (A) stating the principal amount
of each Note to be prepaid, (B) stating the Prepayment Date, (C) stating
the accrued interest and all other amounts thereunder on each such Note
to the Prepayment Date to be prepaid, (D) stating the Prepayment Premium
payable in connection with such proposed prepayment (calculated as of the
date of such notice or prepayment, as the case may be), (E) certifying
that the conditions of this Section 3.2(c) have been fulfilled, and (F)
specifying the nature of the Change of Control, the transactions or
proposed transactions resulting in such Change of Control and the date or
proposed date of the occurrence of such Change of Control. Section 3.3 Place of Payments. All payments of principal, interest, fees
and all other amounts payable hereunder shall be made to such Purchasers
account as specified in the Purchaser Schedule on the date any such payment is
due and payable. All such payments shall be made in lawful money of the United
States of America, by wire transfer of immediately available funds at the place
of payment, without setoff or counterclaim and without reduction for, 4




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and free from, any and all present or future taxes, levies, imposts,
duties, fees, charges, deductions, withholdings, restrictions or conditions of
any nature imposed by any government or any political subdivision or taxing
authority thereof (but excluding any taxes imposed on or measured by the net
income of such Purchaser). Payments received by such Purchaser after 1:00 p.m.
(Chicago time) or any date shall be deemed received as of the opening of
business on the next Business Day. Except as herein provided, all payments
shall be received by the Agent for the ratable account of the Purchasers and
shall be promptly distributed by the Agent ratably to the Purchasers. No
amount paid or prepaid on the Notes may be reborrowed. Section 3.4 Application of Payments Anything contained herein to the
contrary notwithstanding, all payments and collections received in respect of
the Notes and other Obligations by the Agent or any of the Purchasers, after
acceleration or the final maturity of the Obligations as a result of an Event
of Default, shall be remitted to the Agent and distributed as follows: (a) first, to the payment of any outstanding costs and expenses incurred
by the Agent in protecting, preserving or enforcing rights under this Agreement
and the other Operative Documents and in any event including all costs and
expenses of a character which the Company has agreed to pay under Section 13.4
hereof (such funds to be retained by the Agent for its own account unless it
has previously been reimbursed for such costs and expenses by the Purchasers,
in which event such amounts shall be remitted to the Purchasers to reimburse
them for payments theretofore made to the Agent); (b) second, to the payment of any outstanding interest or other fees or
indemnification amounts due under the Operative Documents other than for
principal of the Notes, ratably as among the Agent and the Purchasers in accord
with the amount of such interest and other fees or Obligations owing each; (c) third, to the payment of all other unpaid Obligations and all other
indebtedness, obligations, and liabilities of the Company and its Subsidiaries
secured by the Operative Documents (including, without limitation, the Put
Price and any Deferred Put Obligation) to be allocated pro rata in accordance
with the aggregate unpaid amounts owing to each holder thereof; and (d) fourth, to the Company or to whoever the Agent reasonably determines
to be lawfully entitled thereto. SECTION 4 COLLATERAL Section 4.1 Collateral. The payment and performance of the Obligations
shall at all times be secured by, among other things, (a) all of the Companys
and its Subsidiaries accounts, chattel paper, documents, instruments, general
intangibles, inventory, equipment and certain other assets and property of the
Company and its Subsidiaries, in each case whether now owned or held or
hereafter acquired or arising, pursuant to that certain Security Agreement from
the Company and its Subsidiaries dated as of March 26, 2004, as the same has
been or may
hereafter 5




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be amended, modified or supplemented from time to time (the
"Security Agreement), (b) all of the capital stock of the Subsidiaries and
certain other assets and property of the Company and its Subsidiaries, in each
case whether now owned or held or hereafter acquired or arising, pursuant to
that certain Pledge Agreement from the Company dated as of March 26, 2004, as
the same has been or may be hereafter amended, modified or supplemented from
time to time (the Pledge Agreement), and (c) the real estate and related
assets and properties of the Company and its Subsidiaries, in each case whether
now owned or held or hereafter acquired or arising, pursuant to mortgages and
trust deeds reasonably acceptable to the Agent as to form and substance (as
supplemented or otherwise modified from time to time, collectively the
"Mortgages and individually each a Mortgage). Section 4.2 Guaranties. Payment of obligations evidenced by the Notes and
the other Obligations shall at all times be jointly and severally guaranteed by
each Subsidiary pursuant hereto or pursuant to a Guaranty issued by such
Subsidiary. In the event any Subsidiary is hereafter acquired or formed, the
Company shall also cause such Subsidiary to execute such Collateral Documents
(having terms and conditions substantially similar to those executed by the
Company and its Subsidiaries in connection with the purchase and sale of the
Securities under this Agreement) as the Agent may then require, granting in
favor of the Agent for the benefit of the holders of the Notes a security
interest in and lien on the assets of such Subsidiary as collateral security
for the Notes and the other Obligations, together with such other instruments,
documents, certificates and opinions required by the Agent in connection
therewith. Section 4.3 Further Assurances. The Company covenants and agrees that it
shall, and shall cause each Subsidiary to, comply with all terms and conditions
of each of the Collateral Documents and that the Company shall, and shall cause
each Subsidiary to, at any time and from time to time as requested by the
Agent, execute and deliver such further instruments and do such other acts as
the Agent or the Majority Holders may deem necessary or desirable to provide
for or protect or perfect the Lien of the Agent in the Collateral. Section 4.4 Collections. The Company shall establish and maintain such
arrangements as shall be necessary or appropriate to assure that all proceeds
of the Collateral of the Company and its Subsidiaries are deposited (in the
same form as received) in accounts maintained with a financial institution
reasonably satisfactory to, and under the dominion and control of, the Agent
(subject to the dominion and control of the Senior Bank Agent), such accounts
to constitute special restricted accounts, the Company and Guarantors
acknowledging that the Agent has (and is hereby granted) a lien on such
accounts and all funds contained therein to secure the Obligations. It shall
be a condition to the Companys or any Subsidiarys right to establish and
maintain such deposit accounts at any time following the Closing Date, that the
financial institutions maintaining such accounts shall have delivered to the
Agent blocked account agreements reasonably satisfactory to the Agent in form
and substance pursuant to which such financial institutions acknowledge the
Agents Lien thereon, waive any right of offset or bankers liens thereon
(other than (i) Liens of the Senior Bank Agent which are subject to the
Subordination Agreement and (ii) with respect to account maintenance charges
and returned items). Agent acknowledges that Harris Trust and Savings Bank is
a satisfactory financial institution for purposes of this Section 4.4. 6




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SECTION 5 DEFINITIONS; INTERPRETATION. Section 5.1 Definitions. The following terms when used herein shall have
the following meanings: "A Notes means and includes those certain Senior Secured Subordinated
Promissory Notes dated the date hereof in the aggregate principal amount of
Nine Million Fifty Thousand Dollars $9,050,000, issued to BMO and JZ Partners
by the Company pursuant to this Agreement, in substantially the form attached
hereto as Exhibit A-1, with the blanks appropriately filled in, as may be
amended, restated, replaced, substituted or otherwise modified from time to
time. "Acquisition means (i) the acquisition of all or any substantial part of
the assets, property or business of any other Person, firm or corporation, (ii)
any acquisition of a majority of the common stock or other equity securities of
any firm or corporation, or (iii) any other transaction pursuant to which a
Person is newly allocated a majority of the profits or losses of any other
Person. "Affiliate means any Person, directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; providedthat, in any event,
any Person that owns, directly or indirectly, 5% or more of the securities
having the ordinary voting power for the election of directors or governing
body of a corporation or 5% or more of the partnership or other ownership
interests of any other Person (other than as a limited partner of such other
Person) will be deemed to control such corporation or other Person. "Agent means BMO Nesbitt Burns Capital (U.S.), Inc. and any successor
thereto appointed pursuant to Section 11.1 hereof. "Authorized Representative means those Persons shown on the list of
officers and employees of the Company pursuant to Section 7.2(h) hereof or on
any update of any such list provided by the Company to the Agent, or any
further or different officers and employees so named by any Authorized
Representative in a written notice to the Agent. "B Note means and includes that certain Senior Secured Subordinated
Promissory Note dated the date hereof in the aggregate principal amount of Two
Million Nine Hundred Fifty Thousand Dollars $2,950,000, issued to Prism by the
Company pursuant to this Agreement, in substantially the form attached hereto
as Exhibit A-2, with the blanks appropriately filled in, as may be amended,
restated, replaced, substituted or otherwise modified from time to time. "BMO means BMO Nesbitt Burns Capital (U.S.), Inc., a Delaware
corporation. "Board shall mean the board of directors (or comparable managers) of a
Person. 7




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"Borrowing Base shall have the meaning given such term in the Senior
Credit Agreement as in effect on the date hereof. "Borrowing Base Certificate shall have the meaning given such term in the
Senior Credit Agreement as in effect on the date hereof. "Business Day means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois. "Capital Expenditures means, for any period, capital expenditures of the
Company and its Subsidiaries during such period as defined and classified in
accordance with GAAP. "Capital Lease means any lease of Property which, in accordance with
GAAP, is required to be capitalized on the balance sheet of the lessee. "Capital Stock shall mean (i) in the case of a corporation, voting
capital stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of voting capital stock, (iii) in the case of a partnership, voting
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, voting membership or similar interests and (v) any
other interest or participation that confers on a Person the right to vote and
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person. "Capitalized Lease Obligation means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP. "Cash Maturities means, with reference to any period, the aggregate
amount of payments required to be made by the Company and its Subsidiaries
during such period with respect to principal on all Indebtedness (whether at
maturity, as a result of mandatory sinking fund redemption, scheduled mandatory
prepayment or otherwise). "CERCLAis defined in Section 6.15(b). "Change of Control means the occurrence, at any time after the date
hereof, of (i) any Person or two or more Persons acting in concert acquiring
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act), directly or indirectly,
of securities of the Company (or other securities convertible into such
securities) representing more than twenty-five percent (25%) of the combined
voting power of all securities of the Company entitled to vote in the election
of directors; or (ii) commencing after the date hereof, individuals who as of
the date hereof were directors of the Company ceasing for any reason to
constitute a majority of the Parent Board unless the Persons replacing such
individuals were nominated by William D. Morton or the Parent Board; or (iii)
any Person or two or more Persons acting in concert acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of the
Company (or other securities convertible into such securities) representing
more than twenty-five percent (25%) of the combined voting power of all
securities of the Company entitled to vote in the election of directors; or
(iv) except for Permitted Transfers, either William D. Morton or Mark W. Mealy 8




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ceases any time and for any reason own and to hold of record at least
ninety percent (90%) of the securities of the Company which he owns and holds
of record on March 26, 2004; or (v) William D. Morton shall fail to own or be a
party to one or more contracts or arrangements giving him voting control over
at least fifty-one percent (51%) of the combined voting power of all securities
of the Company entitled to vote in the election of directors. "Closing Date means the date on which the Agent has received signed
counterpart signature pages of this Agreement from each of the signatories and
the conditions in Section 7.1 and 7.2 hereof have been fulfilled. "Code means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto. "Collateral Documents means the Security Agreement, the Pledge Agreement,
the Mortgages and all other mortgages, deeds of trust, security agreements,
assignments, financing statements and other documents as shall from time to
time secure the Obligations. "Consolidated Entity means, collectively, the Company and each of its
Subsidiaries that are consolidated for financial reporting purposes. "Consolidated Net Income means, with reference to any period, the net
income (or net deficit) of the Company and its Subsidiaries for such period as
computed on a consolidated basis in accordance with GAAP. "Controlled Group means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any Subsidiary, are treated as a single
employer under Section 414 of the Code. "Credit Parties means the Company and the Domestic Subsidiaries, and the
term Credit Party shall mean any of the foregoing unless the context in which
such term is used shall otherwise require. "Current Interest means the rate of twelve percent (12.00%) per annum
(computed on the basis of a 360-day year and the actual number of days elapsed
in any year) on the unpaid principal amount of the Notes outstanding from time
to time from and including the date of issuance thereof until the date paid, or
if less, at the highest rate then permitted under applicable law. "Default means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default. "Deferred Interest means the rate of four percent (4%) per annum
(computed on the basis of a 360-day year and the actual number of days elapsed
in any year) on the unpaid principal amount of the Notes outstanding from time
to time from and including the date of issuance thereof until the date paid, or
if less, at the highest rate then permitted under applicable law. "Deferred Put Obligations shall have the meaning given such term in the
Warrants. 9




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"Domestic Subsidiary means each Subsidiary of the Company which is
organized under the laws of the United States of America or any State thereof. "EBIT means, with reference to any period, Consolidated Net Income for
such period plus all amounts deducted in arriving at such Consolidated Net
Income for such period in respect of (i) Interest Expense for such period, plus
(ii) federal, state and local income taxes for such period, plus(iii) with
respect to any applicable accounting period of the Company, to the extent such
charges against Consolidated Net Income are reflected on the Companys annual
audited financial statements for the most recent fiscal year then ended, (x)
non-cash charges reflecting impairment charges arising from SFAS No. 142
(Goodwill and Other Intangible Assets), for such period, and (y) non-cash
charges for accretion of discount on, or interest on, preferred stock of the
Company for such period, plus or minus(iv) non-cash charges or gains resulting
from any valuation of the Warrants in accordance with the provisions of FAS
150. "EBITDA means, with reference to any period, EBIT for such period plus
all amounts properly deducted in arriving at such Consolidated Net Income for
such period in respect of depreciation of fixed assets and amortization of
intangible assets during such period on the books of the Company and its
Subsidiaries; provided, that EBITDA for the fiscal quarters of the Company
listed below shall be deemed by the parties hereto to be, notwithstanding the
other provisions of this definition, $3,401,000 for the fiscal quarter ended
June 30, 2003, $2,324,000 for the fiscal quarter ended September 30, 2003, and
$2,365,000 for the fiscal quarter ended December 31, 2003. "Environmental Claims means all claims, however asserted, by any
governmental authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment. "Environmental Laws means any present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, licenses, authorizations and permits
of, and agreements with, any governmental authority, in each case relating to
Environmental Matters. "Environmental Matters means any matter arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Materials. "ERISA means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto. "Event of Default means any event or condition identified as such in
Section 10.1 hereof. "Fixed Charge Coverage Ratio means, as of the last day of each fiscal
quarter of the Company, the ratio of (i) EBITDA for the four fiscal quarters of
the Company ending on such date, less Capital Expenditures for such four fiscal
quarters, to (ii) the sum for such four fiscal quarters of (a) Interest Expense
(but excluding therefrom all payment-in-kind interest and non-cash interest
relating to the Warrants in accordance with the provisions of FAS 150), (b)
Cash 10




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Maturities, (c) federal, state and local income taxes and (d) without
duplication of the foregoing, stock redemption payments required to be made
pursuant to the terms of the Stock Redemption Agreement; provided that, for all
calculations of the Fixed Charge Coverage Ratio for fiscal quarters ending
through and including December 31, 2004, (1) Interest Expense for the four
fiscal quarters then ended shall be deemed by the parties hereto to be equal to
the product of (x) Interest Expense incurred during the period (the
"post-closing period) from and including the effective date through and
including the last day of such period and (y) a fraction, the numerator of
which is 365 and the denominator of which is the number of days in such
post-closing period, (2) Cash Maturities for the four fiscal quarters then
ended shall be deemed by the parties hereto to be equal to the product of (x)
Cash Maturities during the post-closing period and (y) a fraction, the
numerator of which is 365 and the denominator of which is the number of days in
such post-closing period, and (3) stock redemption payments required to be made
during the four fiscal quarters then ended shall be deemed by the parties
hereto to be $500,000. "GAAP means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Companys audited financial statements referred to
in Section 6.5 hereof. "Guarantor means each Subsidiary that is a signatory hereto or that
executes and delivers to the Agent a Guaranty along with the accompanying
closing documents required by Section 4.2 hereof. "Guaranteed Obligations is defined in Section 12.1 hereof. "Guaranty means this Agreement as to Guarantors party hereto and
otherwise, a letter to the Agent in the form of Exhibit E hereto executed by a
Subsidiary whereby it acknowledges it is party hereto as a Guarantor under
Section 12 hereof and also in the case of any Subsidiary not organized under
the laws of the United States of any State thereof, such other form of guaranty
as shall be reasonably acceptable to the Agent and the Majority Holders. "Hazardous Material means all or any of the following: (i) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as hazardous substances, hazardous
materials, hazardous wastes, toxic substances or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (ii) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iii) any flammable substances
or explosives or any radioactive materials; and (iv) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls. "Hedging Liability means the liability of the Company to any of the
Senior Lenders or their Affiliates in respect of any interest rate swaps,
interest rate caps, interest rate collars, or other interest rate hedging
arrangements as the Company may from time to time enter into with any one or
more of the Senior Lenders or their Affiliates. Unless and until the amount of
the Hedging Liability is fixed and determined, the Hedging Liability shall be
deemed to be the 11




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market value of the notional amount of the hedge from the date of
computation to the date the hedge expires. "Indebtedness means for any Person (without duplication) (i) all
indebtedness created, assumed or incurred in any manner by such Person
representing money borrowed (including by the issuance of debt securities),
(ii) all indebtedness for the deferred purchase price of property or services
(but specifically excluding (x) trade accounts payable arising in the ordinary
course of business which are not more than 180 days past due and (y) unsecured
indebtedness of the type and in the amount permitted pursuant to Section
8.14(f) hereof), (iii) all indebtedness secured by any Lien upon Property of
such Person, whether or not such Person has assumed or become liable for the
payment of such indebtedness, (iv) all indebtedness secured by a purchase money
mortgage or other Lien to secure all or part of the purchase price of Property
subject to such mortgage or Lien, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person on or with respect to letters of
credit, bankers acceptances and other extensions of credit whether or not
representing obligations for borrowed money, (vii) each non-compete and like
payment owed by such Person in connection with an Acquisition, to the extent
such payment would be classified as a liability under GAAP, and (viii) with
respect to the Company or any of its Subsidiaries, all obligations of such
Persons to pay the Purchase Price (and, to the extent all or any portion of
such amount is reinstated pursuant to the Stock Redemption Agreement, the
Stated Redemption Amount) for the Subject Stock under, and as such capitalized
terms are defined in, the Stock Redemption Agreement, it being understood that
for the purpose of calculating compliance with the terms and provisions of this
Agreement, the amount of Indebtedness at any time of the type described in
this clause (viii) shall be agreed by the parties to be the arithmetical sum of
all such obligations then due and unpaid or to become due at any time in the
future under such agreement as in effect at the time of determination, provided
that there shall be excluded from this definition of Indebtedness the
obligations of the Company under the Warrants, notwithstanding any contrary
treatment thereof under GAAP. "Interest Expense means, with reference to any period (the measurement
period), the sum of all interest expense with respect to Indebtedness or
Hedging Liabilities relating to indebtedness (including imputed interest
charges with respect to Capitalized Lease Obligations and all amortization of
debt discount and expense) of the Company and its Subsidiaries for such
measurement period determined in accordance with GAAP (and including, for any
measurement period in the overall calculation of Interest Expense for such
measurement period, the net amount of interest expense relating to Hedging
Liabilities during such measurement period, whether positive or negative). "Investors has the meaning given such term in the second Whereas clause
hereof. "Investor Rights Agreement means that certain Investor Rights Agreement
dated as of March 26, 2004, as amended by that certain Joinder and First
Amendment to Investor Rights Agreement dated the date hereof, among the
Company, Agent and the Purchasers and certain other Persons, as the same has
been or may hereafter be further amended, modified, supplemented or restated
from time to time in accordance with the terms hereof. "Junior Subordinated Debt means, collectively (x) the currently
outstanding Indebtedness of the Company evidenced by those two Non-Negotiable
Promissory Notes 12




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(subordinated) each dated as of April 8, 1998, one payable to the order of
Joseph T. Buie, Jr. in the currently outstanding principal amount of
$1,198,358, and the second payable to the order of Ernest J. Butler in the
currently outstanding principal amount of $569,632, (y) Indebtedness to
Worthington under the Settlement Agreement and the Stock Redemption Agreement
and (z) any other indebtedness for borrowed money which shall be subordinated
in right of payment to the prior payment of the Obligations by written
provisions acceptable to the Agent and Majority Holders in form and substance
and otherwise pursuant to documentation, in an amount, and containing interest
rates, payment terms, maturities, amortization schedules, covenants, defaults,
remedies and other material terms in form and substance satisfactory to the
Agent and Majority Holders. "JZ Partners has the meaning given such term in the second Whereas
clause hereof. "Lien means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of
a vendor or lessor under any conditional sale, capital lease or other title
retention arrangement. "Majority Holders means, as of the date of determination thereof, the
holders of at least fifty-one percent (51%) of the outstanding principal amount
of the Notes and the holders of at least fifty-one percent (51%) of the
Underlying Capital Stock (on an as-converted basis). "Material Adverse Effect means (a) a material adverse change in, or
material adverse effect upon, the operations, business, Property, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole, (b) a material impairment of the ability of the Company or
any Subsidiary to perform its material obligations under any Operative
Document, or (c) a material adverse effect upon (i) the legality, validity,
binding effect or enforceability against the Company or any Subsidiary of any
Operative Document or the rights and remedies of the Agent and the Purchasers
thereunder or (ii) the perfection or priority of any Lien granted under any
Collateral Document. "Material Plan is defined in Section 10.1(j) hereof. "Maturity Date means (x) March 26, 2009, or (y) if earlier, such earlier
date on which the Notes are accelerated in whole pursuant to Sections 10.1 or
10.2 hereof. "Mid-Central means Mid-Central Plastics, Inc., an Iowa corporation. "Mid-Central Notes means those certain promissory notes received by
Mid-Central as partial consideration for the Mid-Central Sale, including
without limitation the Three Month Note, the Six Month Note and the
Subordinated Note as defined in the asset purchase agreement for the
Mid-Central Sale, all of which are subject to the terms of the Wells Fargo
Subordination Agreement. "Mid-Central Sale means the sale by Mid-Central to Innovative Injection
Technologies, Inc. of substantially all of its assets, including without
limitation its right, title and interest in and to its real property and
associated improvements and certain personal property associated therewith
located at 2360 Grand Avenue, West Des Moines, Iowa. 13




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"Mortgage is defined in Section 4.1 hereof. "Morton South Carolina means Morton Metalcraft Co. of South Carolina, a
South Carolina corporation. "Notes means and includes, collectively, the A Notes and the B Note. "Obligations means all obligations of the Company to pay the principal
and interest on the Notes, all fees and charges payable hereunder, and all
other payment obligations of the Company arising under or in relation to any
Operative Document, including, without limitation, the Put Price and any
Deferred Put Obligations, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired. "Officers Certificate means a certificate signed on behalf of the
Company by the Companys president, CEO or chief financial officer, stating
that (a) the officers signing such certificate have made or have caused to be
made such investigations as are necessary in order to permit them to verify the
accuracy of the information set forth in such certificate and (b) such
certificate does not misstate any material fact and does not omit to state any
fact necessary to make the certificate not misleading. "Operative Documents means this Agreement, the Notes, the Warrants, the
Investor Rights Agreement, the Guaranties, the Collateral Documents and all
other documents, instruments and agreements executed by or on behalf of the
Company and delivered concurrently herewith or at any time hereafter to or for
the Purchasers, Agent or any Affiliate of Purchasers or Agent, all as amended,
restated or supplemented from time to time. "Option Plans means the Stock Option Plan and the Company Director Plan,
as each such term is defined in Section 6.21(a) hereof. "Original BMO Note has the meaning given such term in the first Whereas
clause hereof. "Original BMO Warrant has the meaning given such term in the first
Whereas clause hereof. "Original Purchase Agreement has the meaning given such term in the first
Whereas clause hereof. "Parent Board has the meaning given such term in Section 8.11 hereof. "Payment Default means in Event of Default as described in Section
10.1(a) after the expiration of any applicable grace period. "PBGC means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA. 14




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"Person means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof. "Permitted Transfers means any sale, assignment, transfer, pledge,
hypothecation, mortgage, encumbrance or other disposition of all or any of the
Capital Stock of the Company held by William Morton or Mark Mealy,
respectively, as follows: (i) by way of gift to any member of his family or to
any trust or other estate planning entity for his benefit or the benefit of any
such family member, provided that any such transferee shall agree in writing
with the Company and the Purchasers, as a condition to such transfer, to be
bound by all of the provisions of this Agreement to the same extent as if such
transferee were such transferor; or (ii) by will or the laws of descent and
distribution, in which event each such transferee shall be bound by all of the
provisions of this Agreement to the same extent as if such transferee were such
transferor. As used herein, the word family shall include any spouse, lineal
ancestor or descendant. "Plan means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group, (ii) is maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions, or (iii) under which a member
of the Controlled Group has any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years or by reason of being deemed a
contributing sponsor under Section 4064 of ERISA. "Pledge Agreement is defined in Section 4.1 hereof. "Prism has the meaning given such term in the second Whereas clause
hereof. "Property means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible. "Reportable Event means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code. "Securities means, collectively, the Notes and the Warrants. "Securities Act means the Securities Act of 1933, as amended, or any
similar federal law then in force. "Security Agreement is defined in Section 4.1 hereof. 15




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"Securities and Exchange Commission includes any governmental body or
agency succeeding to the functions thereof. "Securities Exchange Act means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force. "Senior Bank Agent means Harris Trust and Savings Bank, in its capacity
as agent under the Senior Credit Agreement and any successor thereto appointed
pursuant to the Senior Credit Agreement. "Senior Credit Agreement means that certain Second Amended and Restated
Credit Agreement, dated as of March 26, 2004, as amended by that certain First
Amendment to Second Amended and Restated Credit Agreement dated the date
hereof, by and among the Company, certain guarantor parties thereto, the Senior
Lenders and the Senior Bank Agent, as further amended, supplemented or modified
from time to time, including, without limitation, any agreement refinancing in
whole or in part the Obligations (as defined therein) as permitted under the
Subordination Agreement. "Senior Credit Documents means the Senior Credit Agreement and the
related agreements, documents and instruments, as amended, modified or
supplemented in accordance with the Subordination Agreement. "Senior Debt means the Indebtedness of the Company and extension of
credit by the Senior Lenders under the Senior Credit Agreement, together with
extensions of credit pursuant to any modifications of the Senior Credit
Agreement, to the extent permitted under the Subordination Agreement, as the
same may be amended, modified, supplemented or restated from time to time in
accordance with the provisions of this Agreement. "Senior Lenders means the financial institutions from time to time party
to the Senior Credit Agreement. "Settlement Agreement means that certain Settlement Agreement dated as of
November 20, 2003 by and between Worthington Industries, Inc., Worthington and
the Company. "Shares shall mean certificated or uncertificated instruments or
denominations that represent the ownership of the Capital Stock of any Person. "SMP means SMP Steel Corporation, a South Carolina corporation. "Stock Redemption Agreement means that certain Stock Redemption Agreement
dated as of December 23, 2003 between the Company and Worthington. "Subordination Agreement means that certain Subordination and
Intercreditor Agreement dated as of March 26, 2004, as amended by that certain
First Amendment to Subordination and Intercreditor Agreement dated the date
hereof, by and between the Agent and Senior Bank Agent, as the same has been or
may hereafter be further amended, modified, supplemented or restated from time
to time in accordance with the terms hereof. 16




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"Subsidiary means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of such Subsidiaries. "Subsidiary Board has the meaning given such term in Section 8.11 of this
Agreement. "Tax or Taxes means federal, state, county, local, foreign or other
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or
add-on minimum, estimated and other taxes of any kind whatsoever (including,
without limitation, deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not. "Tax Return means any return, information report or filing with respect
to Taxes, including any schedules attached thereto and including any amendment
thereof. "Total Funded Debt means, at any time the same is to be determined, the
aggregate of all Indebtedness of the Company and its Subsidiaries at such time,
plusall Indebtedness of any other Person which is directly or indirectly
guaranteed by the Company or any of its Subsidiaries or which the Company of
any of its Subsidiaries has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which the Company or any of its Subsidiaries
has otherwise assured a creditor against loss. "Total Funded Debt/EBITDA Ratio means, as of the last day of any fiscal
quarter of the Company, the ratio of (x) Total Funded Debt as of such date to
(y) EBITDA for the four fiscal quarters of the Company ending on such date. "Total Senior Funded Debt means, at any time the same is to be
determined, Total Funded Debt at such time minus the sum of (i) the principal
balance of the Obligations, and (ii) the principal balance of Junior
Subordinated Debt then outstanding to Messrs. Bouie and Butler, and (iii)
amounts owing by the Company to Worthington pursuant to the Settlement
Agreement or the Stock Redemption Agreement. "Total Senior Funded Debt/EBITDA Ratio means, as of the last day of any
fiscal quarter of the Company, the ratio of (x) Total Senior Funded Debt as of
such date to (y) EBITDA for the four fiscal quarters of the Company ending on
such date. "Underlying Capital Stock means (a) the Capital Stock issued or issuable
upon exercise of the Warrants and (b) any Capital Stock issued or issuable
with respect to the securities referred to in clause (a) above by way of
dividend or split or in connection with a combination of Shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, any Person who exercises a Warrant shall be deemed to be the
holder of the Underlying Capital Stock obtainable upon exercise of such
Warrant, and such Person shall be entitled to exercise the rights of a holder
of Underlying Capital Stock hereunder. As to any particular Shares of
Underlying Capital Stock, such Shares shall cease to be Underlying Capital
Stock when they have been (i) effectively registered under the Securities Act 17




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and disposed of in accordance with the registration statement covering
them, (ii) distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar provision then in
force) or (iii) repurchased by the Company or any of its Subsidiaries. "Unfunded Vested Liabilities means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA. "Unused Revolving Credit Commitments shall have the meaning given such
term in the Senior Credit Agreement. Warrantsmeans and includes those certain Stock Purchase Warrants issued
by the Company in favor of the Purchasers to acquire an aggregate of nine
percent (9%) of the Capital Stock of the Company, on a fully-diluted basis, in
substantially the form attached hereto as Exhibit B, with the blanks
appropriately filled in, as may be amended, restated, replaced, substituted or
otherwise modified from time to time, and Warrant means each of the Warrants
issued hereunder, individually. "Welfare Plan means a welfare plan as defined in Section 3(1) of ERISA. "Wells Fargo Subordination Agreement means that certain Subordination
Agreement dated as of June 20, 2003 made by the Company for the benefit of
Wells Fargo Business Credit, Inc. and relating to the Mid-Central Notes, in the
form delivered to the Agent. "Wholly Owned Subsidiary means a Subsidiary of the Company all of the
issued and outstanding shares of capital stock (other than directors
qualifying shares as required by law) or other equity interests are owned by
the Company and/or one or more Wholly Owned Subsidiaries within the meaning of
this definition. "Worthington means WI Products, Inc., f/k/a Worthington Custom Plastics,
Inc. Section 5.2 Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. All
references to time of day herein are references to Chicago, Illinois time
unless otherwise specifically provided. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, it shall be done in accordance with GAAP except
where such principles are inconsistent with the specific provisions of this
Agreement. Section 5.3 Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in generally accepted accounting
principles from those used in the preparation of the financial statements
referred to in Section 6.5 hereof and such change shall result in a change in
the method of calculation of any financial covenant, standard or term found in
this Agreement, either the Company or the Majority Holders may by notice to the
holders of the Notes and the Company, respectively, require that the Agent (at
the direction
of the Majority 18




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Holders) and the Company negotiate in good faith to amend
such covenant, standard and term so as equitably to reflect such change in
accounting principles, with the desired result being that the criteria for
evaluating the financial condition of the Company and its Subsidiaries shall be
the same as if such change had not been made. No delay by the Company or the
Majority Holders in requiring such negotiation shall limit their right to so
require such a negotiation at any time after such a change in accounting
principles. Without limiting the generality of the foregoing, the Company
shall neither be deemed to be in compliance with any financial covenant
hereunder nor out of compliance with any financial covenant hereunder if such
state of compliance or noncompliance, as the case may be, would not exist but
for the occurrence of a change in accounting principles after the date hereof. SECTION 6 REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the Agent and the Purchasers as
follows: Section 6.1 Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the
laws of the State of Georgia, and has full and adequate corporate power to own
its Property and carry on its business as now conducted. The Company is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualification unless and to the extent
that the failure to be so licensed or qualified or to be in such good standing
would not have any material adverse effect on the financial condition,
Properties, business, or operations of the Company or in its ability to perform
or the Agents ability to enforce performance of the Companys obligations
under the Operative Documents. Section 6.2 Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and carry on its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualification unless and to the extent
that the failure to be so licensed or qualified or to be in such good standing
would not have any material adverse effect on the financial condition,
Properties, business or operations of the Company and its Subsidiaries taken as
a whole or in its ability to perform or the Agents ability to enforce
performance of the Companys obligations under the Operative Documents.
Schedule 6.2 hereto identifies each Subsidiary, the jurisdiction of its
incorporation or organization, as the case may be, the percentage of issued and
outstanding shares of each class of its Capital Stock or other equity interests
owned by the Company and the Subsidiaries and, if such percentage is not 100%
(excluding directors qualifying shares as required by law), a description of
each class of its authorized Capital Stock and other equity interests and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 6.2 as owned by the
Company or a Subsidiary are owned, beneficially and of record, by the Company
or such Subsidiary free and 19




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clear of all Liens, other than Liens in favor of the Senior Bank Agent
that are subject to the Subordination Agreement. There are no outstanding
commitments or other obligations of any Subsidiary to issue, and no options,
warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary. Section 6.3 Authority and Validity of Obligations. The Company has full
right and authority to enter into this Agreement and the other Operative
Documents executed by it, to issue its Notes and Warrants, to grant to the
Agent the Liens described in the Collateral Documents executed by the Company,
and to perform all of its obligations hereunder and under the other Operative
Documents executed by it. Each Subsidiary has full right and authority to
enter into the Operative Documents executed by it, to grant to the Agent the
Liens described in the Collateral Documents executed by such Person, and to
perform all of its obligations under the Operative Documents executed by it.
The Operative Documents delivered by the Company and its Subsidiaries have been
duly authorized, executed, and delivered by such Persons and constitute valid
and binding obligations of the Company and its Subsidiaries enforceable against
them in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors rights generally and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law); and this Agreement and the other Operative Documents do not,
nor does the performance or observance by the Company or any Subsidiary of any
of the matters and things herein or therein provided for, (a) contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Company or any Subsidiary or any provision of
the organizational documents (e.g., charter, certificate or articles of
incorporation and by-laws, certificate or articles of association and operating
agreement, partnership agreement, or other similar organizational documents) of
the Company or any Subsidiary, (b) contravene or constitute a default under any
covenant, indenture or agreement of or affecting the Company or any Subsidiary
or any of their Property, in each case where such contravention or default,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (c) result in the creation or imposition of any
Lien on any Property of the Company or any Subsidiary other than the Liens (i)
granted in favor of the Agent pursuant to the Collateral Documents, and (ii)
granted in favor of the Senior Bank Agent that are subject to the Subordination
Agreement. Section 6.4 Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the issuance of the Notes to refinance all or a part of its
existing senior credit facility, to pay fees and expenses associated with such
refinancing and general working capital purposes. Neither the Company nor any
of its Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Note hereunder will be used to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock. Section 6.5 Financial Reports. The consolidated balance sheet of the
Company and its Subsidiaries as at December 31, 2003 and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report
of KPMG LLP, independent public accountants, and the unaudited interim
consolidated
balance 20




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sheet of the Company and its Subsidiaries as at February 29, 2004
and the related consolidated statements of income, retained earnings and cash
flows of the Company and its Subsidiaries for the two (2) months then ended,
heretofore furnished to the Purchasers, fairly present the consolidated
financial condition of the Company and its Subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods
then ended in conformity with GAAP applied on a consistent basis. Neither the
Company nor any of its respective Subsidiaries has contingent liabilities which
are material to it other than as indicated on such financial statements or,
with respect to future periods, on the financial statements furnished pursuant
to Section 8.5 hereof. Since December 31, 2003, no event or condition has
occurred which would have a Material Adverse Effect. Section 6.6 Full Disclosure. The statements and information furnished to
the Agent and the Purchasers in connection with the negotiation of this
Agreement and the commitments by the Purchasers to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a
material fact or omit a material fact necessary to make the material statements
contained therein or herein not misleading, the Purchasers acknowledging that
as to any projections furnished to any Purchaser, the Company only represents
that the same were prepared on the basis of information and estimates the
Company believed to be reasonable. Section 6.7 Good Title. The Company and its respective Subsidiaries have
good and defensible title to their respective Property as reflected on the most
recent consolidated balance sheet of the Company and its Subsidiaries furnished
to the Purchasers (except for sales of assets by the Company and such
Subsidiaries in the ordinary course of their respective businesses), subject to
no Liens other than such thereof as are specifically identified on Schedule 6.7
or, with the exception of Liens on real Property, permitted by Section 8.15
hereof. Section 6.8 Litigation and Other Controversies. There is no litigation or
governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any of its Subsidiaries which if
adversely determined would result in any material adverse change in the
financial condition, Properties, business or operations of the Company and its
Subsidiaries taken as a whole. Section 6.9 Taxes. All Tax Returns with respect to any material Tax
required to be filed by the Company or any Subsidiary in any jurisdiction have,
in fact, been filed, and all Taxes upon the Company or any Subsidiary or upon
any of their respective Properties, income or franchises, which are shown to be
due and payable in such returns, have been paid. The Company does not know of
any proposed additional Tax assessment against the Company or any Subsidiary
which if paid (taking into consideration any cash segregated for such purpose)
would have a Material Adverse Effect. Adequate provisions in accordance with
GAAP for Taxes on the books of the Company and each Subsidiary have been made,
or (to the extent such provisions have not been made) adequate cash reserves
for such Taxes have been segregated, in each case for all open years, and for
its current fiscal period. No Consolidated Entity has made an election under
§341(f) of the Code. No Consolidated Entity is liable for the Taxes of another
Person that is not a Subsidiary in an amount under (i) Treasury Regulation
§1.1502-6 (or comparable provisions of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract or indemnity, or (iv) otherwise. No
Consolidated Entity is a party to any tax sharing agreement. Each Consolidated
Entity has disclosed on its federal income Tax Returns any position taken for 21




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which substantial authority (within the meaning of Code §6662(d)(2)(B)(i))
did not exist at the time the Tax Return was filed. No Consolidated Entity has
made any payments, is obligated to make payments or is a party to an agreement
that could obligate it to make any payments that would not be deductible under
Code §280G. Section 6.10 Approvals. No authorization, consent, license, exemption,
filing or registration with any court or governmental department, agency or
instrumentality, nor any approval or consent of the stockholders of the Company
or any other Person, is or will be necessary to the valid execution, delivery
or performance by the Company of this Agreement, the Operative Documents, the
Notes, the Warrants or the Investor Rights Agreement. Section 6.11 Affiliate Transactions. Neither the Company nor any of its
Subsidiaries is a party to any contracts or agreements with any of its
Affiliates (other than with Wholly Owned Subsidiaries) on terms and conditions
which are less favorable to the Company or such Subsidiary than would be usual
and customary in similar contracts or agreements between Persons not affiliated
with each other. Section 6.12 Investment Company; Public Utility Holding Company. Neither
the Company nor any of its Subsidiaries is an investment company or a company
controlled by an investment company within the meaning of the Investment
Company Act of 1940, as amended, or a public utility holding company within
the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 6.13 ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Company nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title
I of ERISA. Section 6.14 Compliance with Laws (Nonenvironmental). The Company and its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations (in each case, other than with respect to
Environmental Laws) applicable to or pertaining to the Properties or business
operations of the Company or any such Subsidiary (including, without
limitation, the Occupational Safety and Health Act of 1970, and the Americans
with Disabilities Act of 1990, non-compliance with which would reasonably be
expected to have a Material Adverse Effect as a whole. Neither the Company nor
any of its Subsidiaries has received notice to the effect that its operations
are not in compliance with any of the requirements of applicable federal, state
or local statutes and regulations (other than Environmental Laws), which
non-compliance would reasonably be expected to have a Material Adverse Effect. Section 6.15 Environmental and Safety Matters (a) Except as set forth on the Schedule 6.15, the Company and its
Subsidiaries have materially complied with and are currently in material
compliance with all Environmental 22




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Laws, and neither the Company nor any of its respective Subsidiaries have
received any oral or written notice, regarding any liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) or any corrective,
investigatory or remedial obligations arising under Environmental Laws which
have not been corrected and which relate to the Company or any of its
Subsidiaries or any of their Properties or facilities. Without limiting the
generality of the foregoing, the Company and its Subsidiaries have obtained and
materially complied with, and are currently in material compliance with, all
permits, licenses and other authorizations that may be required pursuant to any
Environmental Law for the occupancy of their properties or facilities or the
operation of their businesses. Neither this Agreement nor the consummation of
the transactions contemplated by this Agreement shall impose any obligations on
the Company or any of its Subsidiaries or otherwise for site investigation or
cleanup, or notification to or consent of any government agencies or third
parties under any Environmental Laws (including, without limitation, any so
called transaction-triggered or responsible property transfer laws and
regulations). None of the following exists in violation of Environmental Laws
at any property or facility owned, occupied or operated by the Company or any
of its respective Subsidiaries: (i) underground storage tanks or surface impoundments; (ii) asbestos-containing materials in any form or condition; or (iii) materials or equipment containing polychlorinated biphenyls. (b) Except as set forth on Schedule 6.15, neither the Company nor any of
its respective Subsidiaries has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or released any substance
(including, without limitation, any Hazardous Material) or owned, occupied or
operated any facility or property, so as to give rise to liabilities of the
Company or any of its Subsidiaries for response costs, natural resource damages
or attorneys fees pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), as amended, or any other
Environmental Law, except where any such action would not, individually or in
the aggregate, have a Material Adverse Effect. (c) Without limiting the generality of the foregoing, except as set forth
on Schedule 6.15, no facts, events or conditions relating to the past or
present Properties, facilities or operations of the Company or its Subsidiaries
shall materially prevent, hinder or limit continued compliance with
Environmental Laws, give rise to any corrective, investigatory or remedial
obligations pursuant to Environmental Laws or any other material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental Laws (including, without limitation, those liabilities relating
to onsite or offsite releases or threatened releases of Hazardous Materials,
personal injury, property damage or natural resources damage). (d) Except as set forth on Schedule 6.15, neither the Company nor any of
its Subsidiaries has, either expressly or by operation of law, assumed or
undertaken any liability or corrective, investigatory or remedial obligation of
any other Person relating to any Environmental Laws. 23




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(e) Except as set forth on Schedule 6.15, neither the Company nor any of
its Subsidiaries has received or is subject to any Environmental Claims. No
Lien, whether recorded or unrecorded, in favor of any international, federal,
state or local governmental authority having jurisdiction over the Company or
any of its Subsidiaries, relating to any liability of the Company or any of its
Subsidiaries arising under any Environmental Laws has attached to any property
owned, leased or operated by the Company or any of its Subsidiaries. Section 6.16 Other Agreements. Neither the Company nor any of its
Subsidiaries is in default under the terms of any covenant, indenture or
agreement of or affecting the Company or any such Subsidiary or any of their
Properties, which default would have a Material Adverse Effect. All of the
Companys and its Subsidiaries material contracts are valid, binding and
enforceable in accordance with their respective terms, except where any failure
or failures thereof would not, considered in the aggregate, have a Material
Adverse Effect. Each of the Company and each of its Subsidiaries has performed
all obligations required to be performed by it under such contracts and is not
in default under or in breach of nor in receipt of any claim of default or
breach under any such contract; no event has occurred which, with the passage
of time or the giving of notice or both, would result in a default, breach or
event of noncompliance by the Company or any of its Subsidiaries under any such
contract; and neither the Company nor any of its Subsidiaries has any present
expectation or intention of not fully performing all such obligations; neither
the Company nor any of its Subsidiaries has knowledge of any breach or
anticipated breach by the other parties to any such contract. Neither the
Company nor any of its Subsidiaries is a party to any contract or commitment
requiring it to purchase or sell goods or services or lease property above or
below (as the case may be) prevailing market prices and rates. Section 6.17 No Default. No Default or Event of Default has occurred and
is continuing. Section 6.18 Trademarks, Franchises, and Licenses. The Company and its
Subsidiaries own, possess, or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how, and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person, except for any such failures to so
own, possess or have the right to use the same or any such conflicts which
would not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. Section 6.19 Governmental Authority and Licensing. The Company and its
Subsidiaries have received all licenses, permits, and approvals of all federal,
state, and local governmental authorities, if any, necessary to conduct their
businesses, in each case where the failure to obtain or maintain the same could
reasonably be expected to have a Material Adverse Effect. No investigation or
proceeding which, if adversely determined, could reasonably be expected to
result in revocation or denial of any material license, permit or approval is
pending or, to the knowledge of the Company, threatened. 24




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Section 6.20 Solvency. The Company and its Subsidiaries are solvent, able
to pay their debts as they become due, and have sufficient capital to carry on
their business and all businesses in which they are about to engage. Section 6.21 Capital Structure. (a) Generally. The authorized capital stock of the Company consists of
(i) 20,000,000 shares of Class A Common Stock, $.01 par value, of which there
are 4,560,547 shares issued and outstanding as of the Closing Date and no
shares held in the treasury of the Company; (ii) 200,000 shares of Class B
Common Stock, $.01 par value, of which there are 100,000 shares issued and
outstanding as of the Closing Date and no shares held in the treasury of the
Company; and (iii) 2,000,000 shares of Preferred Stock, no par value, of which
10,000 shares are issued and outstanding as of the Closing Date and no shares
held in the treasury of the Company. All outstanding shares of the Companys
Class A and Class B Common Stock and Preferred Stock are duly authorized,
validly issued, fully paid and nonassessable and are not subject to preemptive
rights created by statute, the Articles of Incorporation or Bylaws of the
Company or any agreement or document to which the Company is a party or by
which it is bound. Shares of the Companys Class B Common Stock are
convertible, on a one-to-one basis, into shares of the Companys Class A Common
Stock, and shares of the Companys Preferred Stock are not convertible into any
Capital Stock of the Company. As of the Closing Date the Company had remaining
a reserve of an aggregate of 1,166,711 shares and 25,000 shares, respectively,
of the Companys Class A Common Stock for issuance to employees pursuant to the
Companys 1997 Employee Stock Option Plan (the Stock Option Plan), and the
Companys Morton Industrial Group, Inc. Nonemployee Directors Compensation
Plan (the Company Director Plan). Except for the Warrants, Schedule 6.21
sets forth for each Person who held options to acquire shares of the Companys
Class A or Class B Common Stock, or any other capital stock of the Company, in
each case as of the Closing Date, the name of the holder of such option, the
number of shares subject to such option, the exercise price of such option, the
number of shares as to which such option was vested at such date and the
vesting schedule for such option. As of the Closing Date there are, in the
aggregate, 336,981 shares of Class A Common Stock available for issuance under
the Option Plans. (b) Obligations With Respect to Capital Stock. Except as set forth in
Section 6.21(a), and except for the Warrants, as of the Closing Date, there are
no equity securities, partnership interests or similar ownership interests of
any class of the Company, or any securities exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. As of the
Closing Date, except as described in Section 6.21(a) and except for the
Warrants, there are no options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Company or any
of its Subsidiaries is a party or by which it is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition, of any shares of capital stock,
partnership interests or similar ownership interests of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. 25




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Section 6.22 SEC Disclosure. The Class A Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the Exchange Act), and the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has filed (a)
its Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and
(b) its Quarterly Report on Form 10-Q for the fiscal quarter ended October 31,
2003 (collectively, the SEC Reports). Each SEC Report was, at the time of
its filing, in substantial compliance with the requirements of its respective
form and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the United States
Securities and Exchange Commission or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present
in all material respects the financial condition, the results of operations and
the cash flows of the Company and its Subsidiaries, on a consolidated basis, as
of, and for, the periods presented in each such SEC Report. SECTION 7 CONDITIONS PRECEDENT. The obligation of the Purchasers to purchase and pay for the Securities is
subject to fulfillment on or prior to the Closing Date of the following
conditions precedent to the satisfaction of the Purchasers in their sole
discretion: Section 7.1 Conditions. As of the time of the purchase of the Securities
by the Purchasers: (a) each of the representations and warranties set forth in Section 6
hereof and the other Operative Documents shall be true and correct in all
material respects as of such time, except to the extent the same relate
expressly to an earlier date; (b) the Company shall be in compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred and
be continuing hereunder; (c) the Company shall have simultaneously sold to the Purchasers the
Securities to be purchased by the Purchasers hereunder at the Closing; (d) the Company shall have made all filings under all applicable federal
and state securities laws necessary to consummate the issuance of the
Securities pursuant to this Agreement in compliance with such laws; 26




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(e) the purchase and sale of the Securities shall not violate any order,
judgment or decree of any court or other authority or any provision of law or
regulation applicable to the Agent or any Purchaser (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System, the Securities Act and the Securities Exchange Act) as then in effect; (f) the Company, the Senior Bank Agent and the Senior Lenders shall have
entered into the Senior Credit Agreement and all conditions to its
effectiveness shall have been satisfied and no default or event of default
shall have occurred and be continuing thereunder prior to and after giving
effect to this Agreement and the transactions contemplated hereby; (g) the Purchasers shall have received approval from each of their
respective investment committees to purchase the Securities and enter into this
Agreement; (h) since December 31, 2003 there shall have been no change in the
financial condition, operating results, assets, operations, business prospects,
results, assets, operations, business prospects, employee relations or customer
or supplier relations of the Company or any of its Subsidiaries which would
have a Material Adverse Effect; (i) Agent and the other Purchasers shall have completed a due diligence
review of the Company and its Subsidiaries and their respective records,
financial condition and operations, which due diligence review shall be
satisfactory to Agent and the other Purchasers in their sole discretion; and (j) Agent shall have paid Prism $75,000 in immediately available funds;
and (k) the Company shall have paid to BMO, by wire transfer of immediately
available funds, an amount equal to $4,000,000 in prepayment of a portion of
the Original BMO Note. Section 7.2 Documents. At or prior to the purchase of the Securities, the
Agent shall have received the following for the account of the Purchasers (each
to be properly executed and completed) and the same shall have been approved as
to form and substance by the Purchasers: (a) this Agreement, the Notes and the Warrants, duly executed by the
Company, the Guarantors and the Purchasers, as applicable; (b) a Secretarys Certificate of the Company and each Guarantor, together
with (i) authorizing resolutions and (ii) incumbency certificates; (c) such other documents, instructions and agreements as the Agent shall
request in connection with the foregoing matters; (d) Agent shall have received from the Company the commitment fee required
pursuant to Section 3.1(a); (e) the Company, the Senior Bank Agent and the Senior Lenders shall have
entered into the First Amendment to Senior Credit Agreement and all conditions
to its 27




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effectiveness shall have been satisfied and no default or event of
default shall have occurred and be continuing thereunder prior to and after
giving effect to this Agreement and the transactions contemplated hereby; (f) the Agent and Senior Bank Agent shall have entered into that certain
First Amendment to Subordination Agreement and all conditions to its
effectiveness shall have been satisfied; (g) the Company, Agent and the Purchasers and certain other Persons shall
have entered into that certain Joinder and First Amendment to Investor Rights
Agreement and all conditions to its effectiveness shall have been satisfied;
and (h) Agent shall have delivered to the Company the Original BMO Note and
the Original BMO Warrant. SECTION 8 COVENANTS. The Company agrees that, so long as any portion of the Notes remains
outstanding, except to the extent compliance in any case or cases is waived in
writing by the Majority Holders: Section 8.1 Maintenance of Business. The Company shall, and shall cause
each of its Subsidiaries to, preserve and keep in force and effect its
corporate existence (except to the extent such existence terminates in mergers
and consolidations permitted by Section 8.19 hereof) and all licenses, permits
and franchises necessary to the proper conduct of its business. Section 8.2 Maintenance of Property. The Company will maintain, preserve
and keep those of its Properties material to its business in good repair,
working order and condition (ordinary wear and tear excepted) and will from
time to time make all needful and proper repairs, renewals, replacements,
additions and betterments thereto so that at all times the efficiency thereof
shall be fully preserved and maintained, and will cause each of their
respective Subsidiaries to do so in respect of Property owned or used by it. Section 8.3 Taxes and Assessments. The Company will duly pay and
discharge, and will cause each of its Subsidiaries to duly pay and discharge,
all federal and other material taxes, rates, assessments, fees and governmental
charges upon or against it or its Properties, in each case before the same
become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings
which prevent enforcement of the matter under contest and adequate reserves are
provided therefor. Section 8.4 Insurance. The Company will insure and keep insured, and will
cause each of its Subsidiaries to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons
similarly situated and operating like Properties against loss or damage
from such hazards and risks, and in such amounts, as are insured by Persons
similarly situated and operating like Properties; and the Company will insure,
and cause each of their respective Subsidiaries to 28




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insure, such other hazards
and risks (including employers and public liability risks) with other good and
responsible insurance companies as and to the extent usually insured by Persons
similarly situated and conducting similar businesses. The Company will upon
request of the Agent furnish a certificate setting forth in summary form the
nature and extent of the insurance maintained pursuant to this Section. Section 8.5 Financial Reports. The Company will, and will cause each of
its Subsidiaries to, maintain a standard system of accounting in accordance
with GAAP, will permit the Agent, each holder of any Note and their
representatives to visit and inspect the properties and assets (including books
and records) of the Company and its Subsidiaries at all reasonable times and
will furnish to the Agent, each holder of the Securities and their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as the Agent or such
holder may reasonably request; and without any request, the Company will
furnish to the holders of the Notes: (a) as soon as available, and in any event within 45 days after the close
of each monthly fiscal period of the Company which is also the end of a fiscal
quarter of the Company and within 30 days after the close of each other monthly
fiscal period of the Company, a copy of the balance sheet, statements of
income, retained earnings and cash flows of the Company and its Subsidiaries
for such period, all prepared on a consolidated basis and in reasonable detail
showing in comparative form the figures for the corresponding date and period
in the previous fiscal year and a comparison to budget, prepared by the Company
in accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes) and certified to by the chief financial officer of the
Company; (b) as soon as available, and in any event within 90 days after the close
of each fiscal year of the Company, a copy of the consolidated balance sheet of
the Company and its Subsidiaries as of the close of such fiscal year and the
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for such period, and accompanying notes thereto,
all in reasonable detail showing in comparative form the figures for the
previous fiscal year and a comparison to budget, accompanied by an unqualified
opinion thereon of KPMG LLP or another firm of independent public accountants
of recognized national standing, selected by the Company and satisfactory to
the Agent, to the effect that the financial statements have been prepared in
accordance with GAAP and present fairly in accordance with GAAP the
consolidated financial condition of the Company and its Subsidiaries as of the
close of such fiscal year and the results of their operations and cash flows
for the fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances; (c) a copy of any management letters on internal accounting controls of
the Company or any Subsidiary prepared by its independent public accountants; (d) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports the Company sends to its
shareholders, and copies of all other regular, periodic and special reports
(other than SEC Form 3, Form 4, Form 5, Form S-8 or 29




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similar administrative
reports) and all registration statements the Company files with the Securities
and Exchange Commission or any successor thereto, or with any national
securities exchanges; (e) promptly after knowledge thereof shall have come to the attention of
any responsible officer of the Company, written notice of (x) any threatened or
pending litigation or governmental proceeding or labor controversy against the
Company or any Subsidiary which, if adversely determined, would have a material
adverse effect on the financial condition, Properties, business or operations
of the Company and its Subsidiaries taken as a whole or of (y) the occurrence
of any Default or Event of Default hereunder; (f) as soon as available, and in any event within 30 days prior to the end
of each fiscal year of the Company, a copy of the Companys consolidated and
consolidating business plan for the following fiscal year, such budget and
business plan to show the Companys projected consolidated and consolidating
revenues, expenses and balance sheet on a quarter-by-quarter/month-by-month
basis, such business plan to be in reasonable detail prepared by the Company
and in form satisfactory to the Agent and the Majority Holders (which shall
include a summary of all assumptions made in preparing such budget and business
plan); (g) notice of any Change of Control; and (h) within thirty (30) days after the close of each month, a Borrowing
Base Certificate prepared as of the last day of such month. Each of the financial statements furnished to the holders of the Notes
pursuant to clauses (a) and (b) of this Section shall be accompanied by a
written certificate in the form attached hereto as Exhibit C signed by the
chief financial officer of the Company to the effect that to the best of the
chief financial officers knowledge and belief no Default or Event of Default
is continuing as of the close of the period covered by such statements or, if
any such Default or Event of Default is continuing as of the close of such
period, setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Company to remedy the same. Such
certificate shall also set forth the calculations supporting such statements in
respect of Sections 8.6, 8.7, 8.8, 8.9 and 8.10 of this Agreement. The Company will, and will cause each Subsidiary to, permit the Agent, the
Purchasers and their duly authorized representatives to visit and inspect any
of the Properties of the Company and its Subsidiaries, to examine all of their
books of account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers, employees and independent public
accountants (and by this provision the Company authorizes such accountants to
discuss with the holders of the Notes (and such Persons as any holder of any
Note may designate) the finances and affairs of the Company and its
Subsidiaries) all at such reasonable times and as often as may be reasonably
requested. 30




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Section 8.6 Total Funded Debt/EBITDA Ratio. The Company shall not, as of
the last day of each fiscal quarter of the Company ending on the dates set
forth below, permit the Total Funded Debt/EBITDA Ratio to be greater than the
corresponding ratio set forth opposite such dates: Total FundedFiscal Quarter
    
    Debt/EBITDA RatioEnding Dates
    
    Shall Not Be Greater ThanClosing Date through and including
9/30/04
    
    5.00 to 1.012/31/04 through 9/30/05
    
    4.50 to 1.012/31/05 through 9/30/06
    
    4.00 to 1.012/31/06 through 9/30/07
    
    3.50 to 1.012/31/07 and thereafter
    
    3.40 to 1.0
 Section 8.7 Total Senior Funded Debt/EBITDA Ratio. The Company shall not,
as of the last day of each fiscal quarter of the Company ending on the dates
set forth below, permit the Total Senior Funded Debt/EBITDA Ratio to be greater
than the corresponding ratio set forth opposite such dates: Fiscal Quarter
    
    Total Senior Funded Debt/EBITDAEnding Dates
    
    Ratio Shall Not Be Greater ThanClosing Date through and including
9/30/04
    
    3.95 to 1.012/31/04 through 9/30/05
    
    3.30 to 1.012/31/05 through 9/30/06
    
    2.90 to 1.012/31/06 through 9/30/07
    
    2.45 to 1.012/31/07 and thereafter
    
    2.35 to 1.0
 Section 8.8 Minimum EBITDA. The Company shall not, as of the last day of
each fiscal quarter of the Company ending on the dates set forth below, permit
EBITDA for the four fiscal quarters of the Company then most-recently ended to
be less than the corresponding amount set forth opposite such dates: 31




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Fiscal Quarter
    
    EBITDA For Such PeriodEnding Date
    
    Shall Not Be Less Than:3/31/04 through 9/30/04
    
    $10,000,00012/31/04 through 9/30/06
    
    $10,200,00012/31/06 and thereafter
    
    $9,775,000
 Section 8.9 Fixed Charge Coverage Ratio. The Company will not, as of the
last day of each fiscal quarter of the Company ending on the dates set forth
below, permit the Fixed Charge Coverage Ratio to be less than: Fiscal Quarter
    
    Fixed Charge CoverageEnding Dates
    
    Ratio Shall Not Be Less ThanAt all times
    
    1.0 to 1.0
 Section 8.10 Capital Expenditures. The Company will not, nor will it
permit any Subsidiary to, expend or (without duplication) become obligated to
expend, in each case for Capital Expenditures aggregating for the Company and
its Subsidiaries (taken together) an amount during any fiscal year of the
Company in excess of the corresponding amount set forth below opposite such
fiscal year: Capital ExpendituresFiscal Year
    
    Shall Not Exceed2004
    
    $
    5,280,0002005
    
    $
    5,720,0002006
    
    $
    7,260,0002007
    
    $
    7,370,0002008
    
    $
    7,590,000
 Section 8.11 Board Matters. The Company shall hold meetings of its Board
of Directors (the Parent Board) at least once every quarter. The Board of
Directors of any Subsidiary of the Company (each, a Subsidiary Board) shall
hold meetings at least once every quarter. The Parent Board shall have an
audit committee and a compensation committee. Members of the audit committee
and the compensation committee shall be members of the Parent Board that are
not employees of the Company or any of its Subsidiaries. Each of BMO Nesbitt
Burns Capital (U.S.), Inc. and Prism shall have the right to appoint one (1)
Person as its designee to the Parent Board and each Subsidiary Board (each, an
Investor Designee). Each Investor Designee shall have observation rights
with respect to all meetings of the Parent Board 32




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and each Subsidiary Board. Each Investor Designee shall have the right to
attend each meeting of the Parent Board and each Subsidiary Board and all
committees, respectively, thereof. The Parent Board and each Subsidiary Board
shall give each Investor notice of each meeting of its Board and each committee
thereof at the same time and in the same manner as notices given to the members
of its Board (which notice shall be promptly confirmed in writing). Each
Investor Designee and each Investor shall be entitled to receive all written
materials and other information given to members of the Parent Board and the
Subsidiary Boards and each committee thereof in connection with such meetings
at the same time such materials and information are given to all other members
of such Boards and such committees. The Company and each Subsidiary shall
reimburse each Investor Designee for reasonable out-of-pocket expenses in
connection with attending such Parent Board and Subsidiary Board and committee
meetings. The Company and each Subsidiary agrees to take any and all actions
necessary to effectuate the intent of the foregoing provisions. Section 8.12 Investor Protection. In connection with any Change of
Control or similar transaction under circumstances where any Purchaser or any
holder thereof continues to hold a Warrant, the Company shall make, or cause to
be made, available to such Purchaser and/or such holder all economic benefits
in a manner that treats any Purchaser and/or such holder equitably with respect
to all other equity holders of the Company. In this regard, the Company agrees
to structure any Change of Control or similar transaction, under circumstances
where any Purchaser or any holder thereof continues to hold a Warrant, in order
to treat all equity holders, including such Purchaser and/or such holder, in a
fair and equitable manner and such transaction structure shall not include
disguised purchase price components in the form of payments allocated to
covenants not to compete, consulting payments and the like, except for
employment agreements or similar agreements providing for reasonable arms
length levels of compensation to such equity holder in return for future
services to be rendered to the acquirer subsequent to a Change of Control. Section 8.13 Equity Restriction. The Company shall not: (a) except as expressly permitted under Section 8.18 and 8.33 of this
Agreement, directly or indirectly make, or permit any of its Subsidiaries to
make, any purchase of any Capital Stock, or directly or indirectly redeem,
purchase or make, or permit any of its Subsidiaries to redeem, purchase or
make, any payments with respect to any stock appreciation rights, phantom stock
plans or similar rights or plans; and (b) authorize, issue or enter into any agreement providing for the
issuance (contingent or otherwise) of any notes or debt securities containing
equity features (including, without limitation, any notes or debt securities
convertible into or exchangeable for Capital Stock or other equity securities
issued in connection with the issuance of Capital Stock, or other equity
securities or containing profit participation features) at a price at issuance
which is lower than the then current market price of the Companys Capital
Stock except as otherwise expressly contemplated by this Agreement. Section 8.14 Indebtedness. The Company will not, nor will it permit any
of its Subsidiaries to, issue, incur, assume, create or have outstanding any
Indebtedness; provided, however, that the foregoing provisions shall neither
restrict nor operate to prevent: 33




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(a) obligations of the Company and its Subsidiaries owing to the Agent and
the Senior Lenders (and their Affiliates) under the Senior Credit Agreement; (b) purchase money indebtedness and Capitalized Lease Obligations secured
by Liens permitted by Section 8.15(d) hereof in an aggregate amount which does
not exceed $3,000,000 at any one time outstanding; (c) obligations of the Company arising out of interest rate, foreign
currency and commodity hedging arrangements entered into with financial
institutions in the ordinary course of business and not for speculative
purposes; (d) intercompany borrowings by and from the Company and its Subsidiaries; (e) indebtedness secured by Liens permitted by Section 8.15(e) hereof in
an aggregate amount which does not exceed $1,000,000 at any one time
outstanding; (f) unsecured indebtedness in an aggregate principal amount not to exceed
$1,500,000 at any one time outstanding in favor of vendors or suppliers other
than Deere or Caterpillar representing the extension, with the consent of the
creditor, beyond the normal due date (but not beyond 360 days from invoice) of
trade credit incurred in the ordinary course of business; (g) the liability of Morton Metalcraft Co. of South Carolina for the
currently outstanding indebtedness of SMP to Little River Electric Cooperative,
Inc. (Little River) evidenced by that certain Mortgage Note of SMP dated as
of November 22, 1996 payable to the order of Little River in the face principal
amount of $400,000 providedsuch liability at no time aggregates in excess of
$400,000; (h) all obligations of the Company to pay the Purchase Price (and, to the
extent all or any portion of such amount is reinstated pursuant to the Stock
Redemption Agreement, the Stated Redemption Amount) for the Subject Stock
under, and as such capitalized terms are defined in, the Stock Redemption
Agreement; (i) to the extent not included in Section 8.14(h), the Junior Subordinated
Debt; and (j) unsecured indebtedness not otherwise permitted by this Section 8.14
provided the aggregate amount at any one time outstanding does not exceed
$100,000. Section 8.15 Liens. The Company will not, and will not permit any of its
Subsidiaries to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any such Subsidiary; provided, however, that
this Section shall not apply to nor operate to prevent: (a) Liens arising by statute in connection with workers compensation,
unemployment insurance, old age benefits, social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith cash
deposits in connection with tenders, contracts or leases to which the Company
or any of its Subsidiaries is a party or other 34




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cash deposits required to be made in the ordinary course of business,
provided in each case that the obligation is not for borrowed money and that
the obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the matter
under contest and adequate reserves have been established therefor; (b) mechanics, workmens, materialmens, landlords, carriers, or other
similar Liens arising in the ordinary course of business with respect to
obligations which are not overdue or which are being contested in good faith by
appropriate proceedings which prevent enforcement of the matter under contest; (c) the pledge of assets for the purpose of securing an appeal, stay or
discharge in the course of any legal proceeding, provided that the aggregate
amount of liabilities of the Company and its Subsidiaries secured by a pledge
of assets permitted under this clause, including interest and penalties
thereon, if any, shall not be in excess of $250,000 at any one time
outstanding; (d) Liens securing indebtedness permitted by Section 8.14(b) hereof in
respect of Property now owned or hereafter acquired by the Company or any of
its Subsidiaries (not extending to any other Property), or Liens on Property so
acquired (not extending to any other Property) existing at the time of
acquisition thereof, or renewals, extensions and refundings of any such Liens
(not extending to any other Property); (e) any Lien existing on any Property (other than (i) shares of stock in
any Subsidiary, (ii) receivables, inventory and similar working capital assets
and (iii) patents, trademarks and similar intangibles) prior to the acquisition
thereof by the Company or any Subsidiary, provided that such Lien is not
created in contemplation of or in connection with such acquisition; (f) Liens on the real estate of Morton Metalcraft Co. of South Carolina in
Honea Path, Abbeville County, South Carolina and the buildings and other
improvements situated on such real estate securing the indebtedness permitted
by Section 8.14(g) hereof provided such liens do not in any event encumber any
trade fixtures or similar equipment; (g) Liens granted in favor of Senior Bank Agent on certain assets of the
Company and its Subsidiaries that are subject to the terms of the Subordination
Agreement; (h) the Liens described on Schedule 8.15 hereof; and (i) with respect to real property, easements, rights of way, reservations
and other minor defects or irregularities in title which do not materially
impair the use thereof for the purposes for which it is held by the Company or
any of its Subsidiaries. Section 8.16 Investments, Loans, Advances and Guaranties. The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances (other
than for travel advances and other similar cash advances made to employees in
the ordinary course of business) to, any other Person, or be or become liable
as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other 35




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Person, or otherwise agree to provide funds for payment of the obligations
of another, or supply funds thereto or invest therein or otherwise assure a
creditor of another against loss or apply for or become liable to the issuer of
a letter of credit which supports an obligation of another, or subordinate any
claim or demand it may have to the claim or demand of any other Person;
provided, however, that the foregoing provisions shall not apply to nor operate
to prevent: (a) investments in direct obligations of the United States of America or
of any agency or instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America, provided that any
such obligations shall mature within one year of the date of issuance thereof; (b) investments in commercial paper rated at least P-1 by Moodys
Investors Services, Inc. and at least A-1 by Standard & Poors Corporation
maturing within 270 days of the date of issuance thereof; (c) investments in certificates of deposit issued by any United States
commercial bank having capital and surplus of not less than $100,000,000 which
have a maturity of one year or less; (d) endorsement of items for deposit or collection of commercial paper
received in the ordinary course of business; (e) the Companys investments from time to time in its Subsidiaries, and
other intercompany loans and advances by and from the Company and its
Subsidiaries to one another; (f) the Mid-Central Notes; (g) the Guaranties; and (h) guaranties by the Company of (i) trade accounts payable of its
Subsidiaries arising in the ordinary course of business which are not more than
ninety (90) days past due and (ii) indebtedness of its Subsidiaries permitted
pursuant to Sections 8.14(b), (c), (f), and (j) hereof. In determining the amount of investments, loans, advances and guarantees
permitted under this Section, investments shall always be taken at the original
cost thereof (regardless of any subsequent appreciation or depreciation
therein); loans and advances shall be taken at the principal amount thereof
then remaining unpaid; and guarantees shall be taken at the amount of
obligations guaranteed thereby. In addition to the foregoing, neither the Company nor any Subsidiary will
(i) create or be or become a party to the creation of any special-purpose
vehicle or entity, whether or not the Company or any Subsidiary owns an equity
interest therein, (ii) be or become a partner of any general or limited
partnership or a member of any limited liability Company or similar Person, or
(iii) enter into any agreement pursuant to which it will be allocated any
profits or losses of any Person, whether or not it holds an equity interest of
any type therein. 36




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Section 8.17 Leases. (a) The Company will not, and will not permit any of
its Subsidiaries to, enter into any arrangement with any bank, insurance
company or any other lender or investor providing for the leasing by the
Company or any such Subsidiary of any Property theretofore owned by it and
which has been or is to be sold or transferred by such owner to such lender or
investor. (a) Operating Leases. The Company shall not, nor shall it permit any of
its Subsidiaries to, acquire the use or possession of any Property under a
lease or similar arrangement, whether or not the Company or any of its
Subsidiaries have the express or implied right to acquire title to or purchase
such Property, at any time if, after giving effect thereto, the aggregate
amount of fixed rentals and other consideration payable by the Company and its
Subsidiaries under all such leases and similar arrangements would exceed
$7,500,000 for fiscal year 2004, $8,100,000 for fiscal year 2005, and
$8,500,000 for fiscal year 2006 and thereafter. Section 8.18 Dividends and Certain Other Restricted Payments. The Company
will not (a) declare or pay any dividends on or make any other distributions in
respect of any class or series of its capital stock or (b) directly or
indirectly purchase, redeem or otherwise acquire or retire any of its capital
stock, provided, however, that the foregoing shall neither apply to nor operate
to prevent: (i) provided that no Default or Event of Default exists before or
after giving effect thereto or would be caused thereby, the Companys
expenditure of up to $20,000 in the aggregate to redeem fractional shares
of its common stock resulting from a previous reverse stock split of the
Company; or (ii) the Companys redemption of up to 10,000 shares of its Series
1999A Preferred Stock at a redemption price not to exceed $50,000 per 333
(or 334, as the case may be) shares redeemed and payable at the times set
forth in Section 3 of the Stock Redemption Agreement as in effect on the
Closing Date, providedthat at the time of such redemption (x) the
Company was in compliance with the requirements of each of Sections 8.6,
8.7, 8.8, 8.9 and 8.10 of this Agreement as of the end of the most recent
fiscal quarter for which it was required to submit financial statements
and a compliance certificate pursuant to Section 8.5 hereof, (y) no Event
of Default exists under Section 10.1(a) or (b) hereof before or after
giving effect to such redemption and (z) no Standstill Period (as
defined in the Subordination Agreement) is in effect under the
Subordination Agreement at the time of such redemption. Section 8.19 Mergers, Consolidations and Sales. The Company will not, and
will not permit any of its Subsidiaries to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of any operating
unit or division or any rights to any trade name or similar intangible or all
or any substantial part of its Property (except for sales of inventory in the
ordinary course of business), or in any event sell or discount (with or without
recourse) any of its notes or accounts receivable; provided, however, that: (a) any Subsidiary of the Company may merge or consolidate with or into
the Company or any Wholly Owned Subsidiary of the Company; provided thatin any
such merger or consolidation involving the Company, the Company shall be the
surviving or continuing 37




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corporation, or, in the case of any other merger or consolidation of a
Subsidiary and a Wholly Owned Subsidiary of the Company, such Wholly Owned
Subsidiary shall be the continuing or surviving corporation; and provided,
further, that, in the case of such a merger or consolidation involving a
Guarantor, the net worth of the continuing or surviving corporation shall not
be less than the net worth of such Guarantor immediately prior to such merger
or consolidation; (b) any Subsidiary may in the ordinary course of its business sell, lease
or otherwise dispose of all or any substantial part of its equipment to the
Company or any Wholly Owned Subsidiary of the Company; and (c) the Company may merge with a Wholly Owned Subsidiary incorporated in
Delaware and directly owned by the Company solely for the purpose of changing
the Companys state of incorporation to Delaware, with such Wholly Owned
Subsidiary surviving such merger, provided that: (i) at the time of such merger, no Default or Event of Default shall
occur or be continuing; (ii) such Wholly Owned Subsidiary shall have acknowledged in writing
(in form and substance reasonably satisfactory to the Agent and Majority
Holders) its assumption of all the Companys obligations under the
Operative Documents to the same extent, with the same force and effect,
as if such Wholly Owned Subsidiary were originally the Company identified
and defined therein; (iii) the Agent shall have received an opinion of counsel of the
Company, and such other assurances that the Agent or Majority Holders
shall reasonably require, to confirm that such merger has been effected
in accordance with all applicable laws and that the foregoing conditions
set forth in this subsection (c) have been satisfied; and (iv) such merger shall have no adverse effect on the financial
condition Properties, business or operations the Company or any
Subsidiary or on the ability of any Subsidiary to perform or the Agents
ability to enforce performance of the obligations of any of them under
the Operative Documents. The term substantial as used herein shall mean the sale, transfer, lease or
other disposition in any fiscal year of five percent (5%) or more of the
Properties of the Company and its Subsidiaries taken as a whole. Section 8.20 Acquisitions. The Company will not, and will not permit any
of its Subsidiaries to, make or commit to make any Acquisitions. Section 8.21 Maintenance of Subsidiaries. The Company will not assign,
sell or transfer, or permit any of its Subsidiaries to issue, assign, sell or
transfer, any shares of capital stock of a Subsidiary, provided that the
foregoing shall not operate to prevent (a) the issuance, sale and transfer to
any person of any shares of Capital Stock of a Subsidiary solely for the
purpose of qualifying, and to the extent legally necessary to qualify, such
person as a director of such Subsidiary, (b) the issuance of such stock to the
Company or a Wholly-Owned Subsidiary, 38




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and (c) the Lien granted on equity interests in the Companys Subsidiaries
in favor of the Agent and, subject to the Subordination Agreement, Liens
granted therein to Senior Bank Agent. Section 8.22 Formation of Subsidiaries. In the event any Subsidiary is
formed or acquired after the date hereof, the Company shall within thirty (30)
Business Days thereof (x) furnish an update to Schedule 6.2 hereof to reflect
such new Subsidiary and (y) cause such newly-formed or acquired Subsidiary to
execute a Guaranty and execute such Collateral Documents to the extent required
by Section 4 hereof (on terms substantially similar to those executed in
connection with this Agreement) as the Agent may then require granting the
Agent for the benefit of the holders of the Notes a security interest in and
lien on the personal property of such Subsidiary as collateral security for the
Notes and the other Obligations, together with documentation (including a legal
opinion) similar to that described in Section 7.2 hereof relating to the
authorization for, execution and delivery of, and validity of such Subsidiarys
obligations as a Guarantor hereunder and otherwise under the Operative
Documents in form and substance satisfactory to the Agent and such other
instruments, documents, certificates and opinions as are required by the Agent
in connection therewith. Section 8.23 ERISA. The Company will, and will cause each of its
Subsidiaries to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of a Lien against any material portion of its Properties.
The Company will, and will cause each of its Subsidiaries to, promptly notify
the holders of the Notes of (i) the occurrence of any Reportable Event with
respect to a Plan, (ii) receipt of any notice from the PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor, (iii) its
intention to terminate or withdraw from any Plan, and (iv) the occurrence of
any event with respect to any Plan which would result in the incurrence by the
Company or any of its Subsidiaries of any material liability, fine or penalty,
or any material increase in the contingent liability of the Company or any such
Subsidiary with respect to any post-retirement Welfare Plan benefit. Section 8.24 Compliance with Laws. The Company will, and will cause each
of its Subsidiaries to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to the Properties or business operations of the
Company or any such Subsidiary, non-compliance with which could have a Material
Adverse Effect or would reasonably be expected to result in a Lien upon any of
their Property. Section 8.25 Burdensome Contracts with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into any contract,
agreement or business arrangement with any of its Affiliates (other than with
Wholly Owned Subsidiaries) on terms and conditions which are less favorable to
the Company or such Subsidiary than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other. Section 8.26 Changes in Fiscal Year. Except to change (with notice to the
Purchasers) its fiscal year to correspond with the calendar year, neither the
Company nor any of its Subsidiaries will change its fiscal year from its
present basis without the prior written consent of the Majority Holders. 39




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Section 8.27 Change in the Nature of Business. The Company will not, and
will not permit any of its Subsidiaries to, engage in any business or activity
if as a result the general nature of the business of the Company or any such
Subsidiary would be changed in any material respect from the general nature of
the business engaged in by the Company or such Subsidiary on the date of this
Agreement. Section 8.28 Use of Loan Proceeds. The Company will use the proceeds of
the Loans solely for the purposes described in, or otherwise permitted by,
Section 6.4 hereof. Section 8.29 No Restrictions. Except as provided herein, the Company
shall not, nor shall it permit any Subsidiary to, directly or indirectly create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of the Company or any
Subsidiary to: (a) pay dividends or make any other distribution on any
Subsidiarys capital stock or other equity interests owned by the Company or
any other Subsidiary, (b) pay any indebtedness owed to the Company or any other
Subsidiary, (c) make loans or advances to the Company or any other Subsidiary,
(d) transfer any of its Property to the Company or any other Subsidiary, or (e)
guarantee the Obligations and/or grant Liens on its assets to the Agent as
required by the Operative Documents, except for such encumbrances or
restrictions relating to (i) customary non-assignment provisions of any lease
and restrictions therein restricting subletting, (ii) customary net worth
provisions contained in leases and other agreements entered into by the Company
or a Subsidiary in the ordinary course of business, (iii) customary
non-assignment provisions in licenses entered into by the Company or a
Subsidiary as lessee, in the ordinary course of business, and (iv) purchase
money obligations and Capitalized Lease Obligations that impose restrictions on
the property purchased or leased. Section 8.30 Senior Debt. The Company shall not, nor shall it permit any
Subsidiary to, amend or modify the terms and conditions applicable to the
Senior Debt owing to Senior Lender in violation of the terms of the
Subordination Agreement. Section 8.31 Junior Subordinated Debt. The Company shall not, nor shall
it permit any Subsidiary to (a) amend or modify the terms and conditions
applicable to the Junior Subordinated Debt owing to Messrs. Buie and Butler or
amend or modify any terms applicable to any other Junior Subordinated Debt in
any respect whatsoever, (b) make any voluntary prepayment of the Junior
Subordinated Debt or effect any voluntary redemption thereof, or (c) make any
payment on account of any Junior Subordinated Debt which is prohibited under
the terms of any instrument or agreement subordinating the same to the
Obligations. Notwithstanding the foregoing, the Company may agree to a
decrease in the interest rate applicable to the Junior Subordinated Debt or to
a deferral of repayment of any of the principal of or interest on the Junior
Subordinated Debt beyond the current due dates therefor. Section 8.32 [Reserved]. Section 8.33 Worthington Settlement Documents. The Company will not, nor
will it permit any Subsidiary to, amend or modify any of the terms or
provisions of either of the Settlement Agreement or the Stock Redemption
Agreement without the prior written consent of the Majority Holders. The
Company will not, nor will it permit any Subsidiary to, (i) prepay or otherwise
advance the time for the payment of any amounts due, or pay more than the
amounts 40




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otherwise due, under the Settlement Agreement or the Stock Redemption
Agreement, or (ii) pay any amount due under the Stock Redemption Agreement
unless such payment is permitted pursuant to the terms of Section 8.18 hereof
(or represents interest on such a permitted payment permitted to be paid
pursuant to the immediately following sentence), without (in each case
described in the foregoing clauses (i) and (ii)) the prior written consent of
the Majority Holders. Without limiting the foregoing, the Company will not
pay, or permit any Subsidiary to pay, more than $50,000 during any month as a
payment of the Purchase Price (as defined in the Stock Redemption Agreement)
for the Subject Stock (as defined in the Stock Redemption Agreement), unless
such additional payment is a Deferred Payment (as defined in the Stock
Redemption Agreement) or interest on a Deferred Payment which, pursuant to the
terms of the Stock Redemption Agreement, may no longer be deferred. If the
making of any payment due under the Stock Redemption Agreement would constitute
a Payment Default or a Statutory Default (as those terms are defined in the
Stock Redemption Agreement), the Company will, and will cause any Subsidiary
to, take all necessary actions to defer such payment under the Stock Redemption
Agreement in accordance with the terms thereof. Section 8.34 Mid-Central Debt. The Company will not, nor will it permit
Mid-Central or any other Subsidiary to, amend or modify any of the terms or
provisions of, or agree to defer or forgive any payments otherwise due under,
any of the Mid-Central Notes, except to the extent required by the Wells Fargo
Subordination Agreement. Section 8.35 D & O Insurance. The Company shall at all times maintain
directors and officers liability insurance policies. Section 8.36 Capital Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Capital Stock,
solely for the purpose of issuance upon any conversion of the Warrants, such
number of shares of Capital Stock issuable upon the conversion of the Warrants.
All shares of Capital Stock which are so issuable shall, when issued, be duly
and validly issued, fully paid and nonassessable and free from all taxes,
liens, charges and encumbrances. The Company shall take all such actions as
may be necessary to assure that all such Shares of Capital Stock may be so
issued without violation of any applicable law or governmental regulation or
any requirements of any domestic securities exchange upon which Shares of
Capital Stock may be listed. Section 8.37 Management Compensation. The Company shall not, without the
Agents prior written approval, increase the compensation paid to any officer,
key employee or consultant in excess of historical increases in such
compensation consistent with the past practices of the Company; provided,
however, that, upon the approval of the compensation committee of the Parent
Board, the Company shall be permitted to pay to William Morton a bonus of up to
$150,000 for the Companys 2003 fiscal year. Section 8.38 Additional Life Insurance. The Agent shall have received,
for the benefit of the Purchasers, collateral assignments of life insurance in
form and substance satisfactory to the Agent (a) on the life of William D.
Morton in the amount of $4,000,000 at the Closing; and (b) on the lives of
certain key employees of the Company determined by the Agent, which insurance
shall be in an aggregate amount of not less than $2,000,000 for all such
persons, within thirty (30) days of the Closing. 41




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In addition to the foregoing, so long any portion of the Warrant, the
Underlying Capital Stock or the Deferred Put Obligations remains outstanding,
except to the extent compliance in any case or cases is waived in writing by
the Majority Holders, the Company shall and shall cause its Subsidiaries to
observe the covenants set forth in Sections 8.1, 8.2, 8.5, 8.11, 8.12, 8.13,
8.36 and 8.37 hereof. SECTION 9 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS As a material inducement to the Company entering into this Agreement and
selling the Securities hereunder, each Purchaser, severally but not jointly,
hereby represents and warrants to Holdings and the Company as follows: Section 9.1 Organization and Good Standing. It is a limited partnership,
limited liability company, corporation, or trust, as the case may be, duly
organized, validly existing and in good standing under the laws of its state or
country of formation or organization and has all requisite power and authority
to carry on its business as now conducted. Section 9.2 Authorization; Power. The execution and delivery by it of,
and the performance by it under, the Operative Documents to which it is a party
and the purchase of the Note and the Warrant issued in favor of it have been
duly authorized by all requisite action, and it has the full right, power and
authority to enter into, and perform its obligations under, this Agreement. Section 9.3 Validity. This Agreement has been duly executed and delivered
by it and constitutes its valid and binding obligation, enforceable in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors rights generally or by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law. The execution, delivery and performance of this Agreement
and the purchase of the Securities will not conflict with, or result in a
material breach of any of the terms of, or constitute a material default under,
its charter documents. Section 9.4 Accredited Investor. It is an accredited investor as such
term is defined in Rule 501 of Regulation D under the Securities Act. Section 9.5 Purchase for Own Account; Acknowledgment of Risk. It is
acquiring the Securities purchased hereunder by it or acquired pursuant hereto
by it for its own account without the present intention of resale or
distribution. It acknowledges that it may not resell or otherwise transfer
such Securities without an effective registration statement or exemption
therefrom under federal and applicable state securities laws, and that it may
have to hold its investment for an indefinite amount of time. It further
acknowledges that the purchase of the Securities is a risky investment and that
it may lose its entire investment hereby. 42




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SECTION 10 EVENTS OF DEFAULT AND REMEDIES. Section 10.1 Events of Default. Any one or more of the following shall
constitute an Event of Default hereunder: (a) default in the payment when due of all or any part of the principal of
any Note (whether at the stated maturity thereof or at any other time provided
for in this Agreement); or (b) default for five (5) days or more in the payment when due of all or
any part of interest on any Note (whether at the stated maturity thereof or at
any other time provided for in this Agreement) or of any fee or other amount
payable by the Company hereunder or under any other Operative Document; or (c) default in the observance or performance of any covenant set forth in
Section 8.1, 8.6, 8.7, 8.8, 8.9, 8.10, 8.13, 8.14, 8.15, 8.16, 8.17, 8.18,
8.19, 8.20, 8.21, 8.22, 8.28, 8.31, 8.33 or 8.34 hereof or of any provision in
any Operative Document dealing with the use, disposition or remittance of the
proceeds of Collateral or requiring the maintenance of insurance thereon; or (d) default in the observance or performance of any covenant set forth in
Section 8.5, 8.11 or 8.12 which is not remedied within ten (10) days after
written notice thereof to the Company by the Agent or any holder of any Note;
or (e) default in the observance or performance of any other provision hereof
or of any other Operative Document which is not remedied within thirty (30)
days after written notice thereof to the Company by the Agent or any holder of
any Note; or (f) any representation or warranty made by the Company herein or in any
other Operative Document, or in any statement or certificate furnished by it
pursuant hereto or thereto, or in connection with the purchase and sale of the
Securities, proves untrue in any material respect as of the date of the
issuance or making thereof; or (g) any event occurs or condition exists (other than those described in
subsections (a) through (f) above) which is specified as an event of default
under any of the other Operative Documents, or any of the Operative Documents
shall for any reason not be or shall cease to be in full force and effect or is
declared to be null and void, or any Guarantor shall purport to disavow,
revoke, repudiate or terminate its obligations thereunder, or any of the
Collateral Documents shall for any reason fail to create a valid and perfected
first priority Lien in favor of the Agent in any Collateral purported to be
covered thereby except as expressly permitted by the terms thereof, or any
Subsidiary takes any action for the purpose of terminating, repudiating or
rescinding any Loan Document executed by it or any of its obligations
thereunder; or (h) default shall occur under any evidence of Indebtedness aggregating
$1,000,000 or more issued, assumed or guaranteed by the Company or any
Subsidiary or under 43




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any indenture, agreement or other instrument under which the same may be
issued, and such default shall continue for a period of time sufficient to
permit the acceleration of the maturity of any such Indebtedness (whether or
not such maturity is in fact accelerated) or any such Indebtedness shall not be
paid when due (whether by lapse of time, acceleration or otherwise); or (i) any judgment or judgments, writ or writs, or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in
excess of $250,000 shall be entered or filed against the Company or any of its
Subsidiaries or against any of their Property and which remains unvacated,
unbonded, unstayed or unsatisfied for a period of thirty (30) days; or (j) the Company or any member of its Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess $250,000 which it shall
have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested
Liabilities in excess of $250,000 (collectively, a Material Plan) shall be
filed under Title IV of ERISA by the Company or any other member of its
Controlled Group, any plan administrator or any combination of the foregoing;
or the PBGC shall institute proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any Material Plan or a
proceeding shall be instituted by a fiduciary of any Material Plan against the
Company or any member of its Controlled Group to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within
thirty (30) days thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or (k) a Change of Control shall occur; or (l) the Company or any Subsidiary shall (i) have entered involuntarily
against it an order for relief under the United States Bankruptcy Code, as
amended, (ii) not pay, or admit in writing its inability to pay, its debts
generally as they become due, (iii) make an assignment for the benefit of
creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial part of its Property, (v) institute any proceeding
seeking to have entered against it an order for relief under the United States
Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment or proceeding
described in this Section 10.1(l); or (m) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any of its Subsidiaries or any
substantial part of any of their Property, or a proceeding described in Section
10.1(l) shall be instituted against the Company or any of its Subsidiaries, and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) days; or (n) the Senior Lenders shall accelerate the Senior Debt; or 44




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(o) the Company shall breach or fail to perform any of its covenants or
obligations contained in the Investor Rights Agreement; or (p) all or any portion of the outstanding principal of the Notes (or any
accrued and unpaid interest thereon) has not been paid in full and any
Purchaser exercises its put rights under the Warrant; or (q) the Company shall have defaulted in any of its obligations under any
Warrant. Section 10.2 Consequences of Events of Default. (a) If any Event of Default has occurred, the total interest rate on the
Notes shall increase immediately by two (2) percentage points and such two
percent (2%) shall be deemed to be and treated as Current Interest. Any
increase of the Current Interest resulting from the operation of this
subsection shall terminate as of the close of business on the date on which no
Event of Default exists (subject to subsequent increases pursuant to this
subparagraph). Notwithstanding the foregoing, if a Payment Default occurs at
any time on or prior to December 31, 2004, the sum of the Current Interest and
Deferred Interest with respect to the Notes shall permanently increase by two
(2) percentage points; provided, however, that if such Payment Default is cured
within one hundred eighty (180) days of the occurrence thereof, the sum of the
Current Interest and Deferred Interest shall thereafter decrease to sixteen
percent (16%) with respect to the A Notes and fourteen percent (14%) with
respect to the B Note. (b) If an Event of Default of the type described in Section 10.1(l) has
occurred, then the aggregate principal amount of the Notes (together with all
accrued interest thereon and all other amounts due and payable with respect
thereto) shall become immediately due and payable without any action on the
part of the holders of the Notes, and the Company shall immediately pay to the
holders of the Notes all amounts due and payable with respect to the Notes. (c) If any Event of Default has occurred and is continuing, then each
holder of the Notes may declare all or any portion of the outstanding principal
amount of its Note (together with all accrued interest thereon and all other
amounts due and payable with respect thereto) to be immediately due and payable
and may demand immediate payment of all or any portion of the outstanding
principal amount of such Note (together with all such other amounts then due
and payable) owned by such holder. (d) Subject to Section 11 hereof the Agent (at the direction of the
Majority Holders, shall also have any other rights which such holder may be
afforded under any contract or agreement from time to time and any other rights
which such holder may have pursuant to applicable law. (e) The Agent (at the direction of the Majority Holders) may commence
enforcement actions under the Collateral Documents and may exercise the Put
under and as defined in the Warrants. 45




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SECTION 11 THE AGENT Section 11.1 Appointment and Authorization of Agent. Each Purchaser
hereby appoints BMO Nesbitt Burns Capital (U.S.), Inc. as the Agent under the
Operative Documents and hereby authorizes the Agent to take such action as
Agent on its behalf and to exercise such powers under the Operative Documents
as are delegated to the Agent by the terms thereof, together with such powers
as are reasonably incidental thereto. The Purchasers expressly agree that the
Agent is not acting as a fiduciary of the holders of the Notes in respect of
the Operative Documents, the Company or otherwise, and nothing herein or in any
of the other Operative Documents shall result in any duties or obligations on
the Agent or any of the Operative Documents except as expressly set forth
herein. Section 11.2 Agent and its Affiliates. The Agent shall have the same
rights and powers under this Agreement and the other Operative Documents as any
other Purchaser and may exercise or refrain from exercising such rights and
power as though it were not the Agent, and the Agent and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company or any Affiliate of the Company as if it were not the
Agent under the Operative Documents. The term Purchaser or holder of a
Note as used herein and in all other Operative Documents, unless the context
otherwise clearly requires, includes the Agent in its individual capacity as a
holder of a Note. References herein to the Agents Notes, or to the amount
owing to the Agent for which an interest rate is being determined, refer to the
Agent in its individual capacity as a holder of a Note. Section 11.3 Action by Agent. If the Agent receives from the Company a
written notice of an Event of Default pursuant to Section 8.5 hereof, the Agent
shall promptly give each of the holders of the Notes written notice thereof.
The obligations of the Agent under the Operative Documents are only those
expressly set forth therein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action hereunder with respect to
any Default or Event of Default, except as expressly provided in Section 11.2.
Upon the occurrence of an Event of Default, the Agent shall take such action to
enforce its Lien on the Collateral and to preserve and protect the Collateral
as may be directed by the Majority Holders. Unless and until the Majority
Holders give such direction, the Agent may (but shall not be obligated to) take
or refrain from taking such actions as it deems appropriate and in the best
interest of all the holders of the Notes. In no event, however, shall the
Agent be required to take any action in violation of applicable law or of any
provision of any Operative Document, and the Agent shall in all cases be fully
justified in failing or refusing to act hereunder or under any other Operative
Document unless it first receives any further assurances of its indemnification
from the holders of the Notes that it may require, including prepayment of any
related expenses and any other protection it requires against any and all
costs, expense, and liability which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall be entitled to assume
that no Default or Event of Default exists unless notified in writing to the
contrary by a holder of a Note or the Company. In all cases in which the
Operative Documents do not require the Agent to take specific action, the Agent
shall be fully justified in using its discretion in failing to take or in
taking any action thereunder. Any instructions of the Majority Holders, or of
any other group 46




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of holders of the Notes called for under the specific provisions of the
Operative Documents, shall be binding upon all the holders of the Notes and the
holders of the Obligations. Section 11.4 Consultation with Experts. The Agent 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. Section 11.5 Liability of Agent; Credit Decision. Neither the Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or not taken by it in connection with the Operative Documents:
(i) with the consent or at the request of the Majority Holders or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its directors, officers, agents or employees shall be responsible
for or have any duty to ascertain, inquire into or verify: (i) any statement,
warranty or representation made in connection with this Agreement, any other
Operative Document or any Note or Warrant; (ii) the performance or observance
of any of the covenants or agreements of the Company or any Subsidiary
contained herein or in any other Operative Document; (iii) the satisfaction of
any condition specified in Section 7 hereof, except receipt of items required
to be delivered to the Agent; or (iv) the validity, effectiveness, genuineness,
enforceability, perfection, value, worth or collectibility hereof or of any
other Operative Document or of any other documents or writing furnished in
connection with any Operative Document or of any Collateral; and the Agent
makes no representation of any kind or character with respect to any such
matter mentioned in this sentence. The Agent may execute any of its duties
under any of the Operative Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the holders of the Notes, the
Company, or any other Person for the default or misconduct of any such agents
or attorneys-in-fact selected with reasonable care. The Agent shall not incur
any liability by acting in reliance upon any notice, consent, certificate,
other document or statement (whether written or oral) believed by it to be
genuine or to be sent by the proper party or parties. In particular and
without limiting any of the foregoing, the Agent shall have no responsibility
for confirming the accuracy of any compliance certificate or other document or
instrument received by it under the Operative Documents. The Agent may treat
the payee of any Note as the holder thereof until written notice of transfer
shall have been filed with the Agent signed by such payee in form satisfactory
to the Agent. Each holder of a Note acknowledges that it has independently and
without reliance on the Agent or any other holder of any Note, and based upon
such information, investigations and inquiries as it deems appropriate, made
its own credit analysis and decision to purchase the Securities in the manner
set forth in the Operative Documents. It shall be the responsibility of each
holder of any Note to keep itself informed as to the creditworthiness of the
Company and its Subsidiaries, and the Agent shall have no liability to any
holder of any Note with respect thereto. Section 11.6 Indemnity. The holders of the Notes shall ratably, in
accordance with their respective interests in the Notes and Warrants, indemnify
and hold the Agent, and its directors, officers, employees, agents, and
representatives harmless from and against any liabilities, losses, costs or
expenses suffered or incurred by it under any Operative Document or in
connection with the transactions contemplated thereby, regardless of when
asserted or arising, except to the extent they are promptly reimbursed for the
same by the Company and except to the extent that any event giving rise to a
claim was caused by the gross negligence or willful 47




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misconduct of the party seeking to be indemnified. The obligations of the
holders of the Notes under this Section shall survive termination of this
Agreement. The Agent shall be entitled to offset amounts received for the
account of a holder of a Note under this Agreement against unpaid amounts due
from such holder to the Agent hereunder (whether as fundings of participations,
indemnities or otherwise), but shall not be entitled to offset against amounts
owed to the Agent by any holder of a Note arising outside of this Agreement and
the other Operative Documents. Section 11.7 Resignation of Agent and Successor Agent. The Agent may
resign at any time by giving written notice thereof to the holders of the Notes
and the Company. Upon any such resignation of the Agent, the Majority Holders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Majority Holders, and shall have accepted such
appointment, within 30 days after the retiring Agents giving of notice of
resignation then the retiring Agent may, on behalf of the holders of the Notes,
appoint a successor Agent, which may be any holder of a Note hereunder or any
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$200,000,000. Upon the acceptance of its appointment as the Agent hereunder,
such successor Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent under the Operative Documents, and the
retiring Agent shall be discharged from its duties and obligations thereunder.
After any retiring Agents resignation hereunder as Agent, the provisions of
this Section 11 and all protective provisions of the other Operative Documents
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent, but no successor Agent shall in any event be liable or
responsible for any actions of its predecessor. If the Agent resigns and no
successor is appointed, the rights and obligations of such Agent shall be
automatically assumed by the Majority Holders and (i) the Company shall be
directed to make all payments due each holder of any Note hereunder directly to
such holder and (ii) the Agents rights in the Collateral Documents shall be
assigned without representation, recourse or warranty to the holders of the
Notes as their interests may appear. Section 11.8 Designation of Additional Agents. The Agent shall have the
continuing right, for purposes hereof, at any time and from time to time to
designate one or more of the holders of the Notes (and/or its or their
Affiliates) as syndication agents, documentation agents, arrangers, or
other designations for purposes hereto, but such designation shall have no
substantive effect, and such holder and their Affiliates shall have no
additional powers, duties or responsibilities as a result thereof. Section 11.9 Authorization to Release or Subordinate or Limit Liens. The
Agent is hereby irrevocably authorized by each Purchaser and any of the holders
of the Notes to (a) release any Lien covering any Collateral that is sold,
transferred, or otherwise disposed of in accordance with the terms and
conditions of this Agreement and the relevant Collateral Documents (including a
sale, transfer, or disposition permitted by the terms of Section 8.19 hereof or
which has otherwise been consented to in accordance with Section 13.3 hereof),
(b) release or subordinate any Lien on Collateral consisting of goods financed
with purchase money indebtedness or under a Capital Lease to the extent such
purchase money indebtedness or Capitalized Lease Obligation, and the Lien
securing the same, are permitted by Sections 8.14(b) and 8.15(d) hereof, and
(c) reduce or limit the amount of the indebtedness secured by any 48




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particular item of Collateral to an amount not less than the estimated
value thereof to the extent necessary to reduce mortgage registry, filing and
similar tax. Section 11.10 Authorization to Enter into, and Enforcement of, the
Collateral Documents. The Agent is hereby irrevocably authorized by each of
the holders of the Notes to execute and deliver the Collateral Documents on
behalf of each of the holders of the Notes and their Affiliates and to take
such action and exercise such powers under the Collateral Documents as the
Agent considers appropriate, providedthe Agent shall not amend the Collateral
Documents unless such amendment is agreed to in writing by the Majority
Holders. Each holder of the Notes acknowledges and agrees that it will be
bound by the terms and conditions of the Collateral Documents upon the
execution and delivery thereof by the Agent. Except as otherwise specifically
provided for herein, no holder (or its Affiliates) other than the Agent shall
have the right to institute any suit, action or proceeding in equity or at law
for the foreclosure or other realization upon any Collateral or for the
execution of any trust or power in respect of the Collateral or for the
appointment of a receiver or for the enforcement of any other remedy under the
Collateral Documents; it being understood and intended that no one or more of
the holder of the Notes (or their Affiliates) shall have any right in any
manner whatsoever to affect, disturb or prejudice the Lien of the Agent (or any
security trustee therefor) under the Collateral Documents by its or their
action or to enforce any right thereunder, and that all proceedings at law or
in equity shall be instituted, had, and maintained by the Agent (or its
security trustee) in the manner provided for in the relevant Collateral
Documents for the benefit of the holder of the Notes and their Affiliates. Section 11.11 Subordination and Intercreditor Agreement. The Agent is
hereby irrevocably authorized by each of the Purchasers on their own behalf to
execute and deliver the Subordination Agreement on the Closing Date, and to
take such action and exercise such powers under the Subordination Agreement as
the Agent considers appropriate. Each Lender acknowledges that it has read,
and accepts, the Subordination Agreement and will be bound by the terms and
conditions thereof. SECTION 12 THE GUARANTIES Section 12.1 The Guaranties. To induce the Purchasers to purchase the
Securities described herein and in consideration of benefits expected to accrue
to each Guarantor by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, each Subsidiary party
hereto and each Subsidiary which executes and delivers a Guaranty (each such
Subsidiary being hereinafter referred to individually as a Guarantor and
collectively as the Guarantors) hereby unconditionally and irrevocably
guarantees jointly and severally to the Agent, the Purchasers, their Affiliates
and each other holder of the Securities and any of the Obligations, the due and
punctual payment of all present and future Obligations, including, but not
limited to, the due and punctual payment of principal of and interest on the
Notes and obligations with respect to the Warrants and under the Deferred Put
Obligations, as and when the same shall become due and payable, whether at
stated maturity, by acceleration or otherwise, according to the terms hereof
and thereof as and when the same shall become due and payable, whether at its
stated maturity, by acceleration or otherwise,
according to the terms 49




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thereof (the Obligations so guaranteed being
hereinafter referred to collectively as the Guaranteed Obligations). In case
of failure by the Company punctually to pay any Guaranteed Obligations, each
Guarantor hereby unconditionally and jointly and severally agrees to make such
payment or to cause such payment to be made punctually as and when the same
shall become due and payable, whether at stated maturity, by acceleration or
otherwise, and as if such payment were made by the Company. Each Guaranty is a
guaranty of payment and not of collection. Section 12.2 Guaranty Unconditional. The obligations of each Guarantor as
a guarantor under this Section 12 and with respect to the Operative Documents
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Company or of any other Guarantor under this
Agreement or any other Operative Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or
any other Operative Document; (c) any change in the corporate existence, structure or ownership of, or
any insolvency, bankruptcy, reorganization or other similar proceeding
affecting, the Company, any other Guarantor, or any of their respective assets,
or any resulting release or discharge of any obligation of the Company or of
any other Guarantor contained in any Operative Document; (d) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Agent, any holder of any Note or any
other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any
exercise of, or failure to exercise, any rights or remedies against the
Company, any other Guarantor or any other Person or Property; (f) any application of any sums by whomsoever paid or howsoever realized
to any obligation of the Company, regardless of what obligations of the Company
remain unpaid; (g) any invalidity or unenforceability relating to or against the Company
or any other Guarantor for any reason of this Agreement or of any other
Operative Document or any provision of applicable law or regulation purporting
to prohibit the payment by the Company or any other Guarantor of the principal
of or interest on any Note or any other amount payable by them under the
Operative Documents; or (h) any other act or omission to act or delay of any kind by the Agent,
any holder of any Note or any other Person or any other circumstance whatsoever
that might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of the obligations of the Guarantors under the Operative
Documents. 50




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Section 12.3 Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantors obligations under this Section 12 shall remain
in full force and effect until the principal of and interest on the Notes and
all other Guaranteed Obligations shall have been paid and satisfied in full.
If at any time any payment of the principal of or interest on any Note or any
other amount payable by the Company under any of the Operative Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or of any Guarantor, or otherwise,
each Guarantors obligations under this Section 12 with respect to such payment
shall be reinstated at such time as though such payment had become due but had
not been made at such time. Section 12.4 Waivers. (a) General. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Agent, any holder
of any Note or any other Person against the Company, another Guarantor or any
other Person. (b) Subrogation and Contribution. Each Guarantor hereby agrees not to
exercise or enforce any right of exoneration, contribution, reimbursement,
recourse or subrogation available to such Guarantor against any Person liable
for payment of the Guaranteed Obligations, or as to any security therefor,
unless and until the full amount owing on the Guaranteed Obligations has been
paid; and the payment by such Guarantor of any amount pursuant to any of the
Operative Documents on account of credit extended to the Company shall not in
any way entitle such Guarantor to any right, title or interest (whether by way
of subrogation or otherwise) in and to any of the Guaranteed Obligations or any
proceeds thereof or any security therefor unless and until the full amount
owing on the Guaranteed Obligations has been paid. Section 12.5 Limit on Recovery. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 12
shall not (to the extent required by or as may be necessary or desirable to
ensure the enforceability against such Guarantor of its obligations hereunder
or thereunder in accordance with the laws of the jurisdiction of its
incorporation or where it carries on business) exceed (x) the amount which
would render such Guarantors obligations under this Section 11 void or
voidable under applicable law, including without limitation fraudulent
conveyance law minus (y) $1.00. Section 12.6 Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company under this Agreement or any other
Operative Document is stayed upon the insolvency, bankruptcy or reorganization
of the Company, all such amounts otherwise subject to acceleration under the
terms of this Agreement or the other Operative Documents shall nonetheless be
payable jointly and severally by the Guarantors hereunder forthwith on demand
by the Agent made at the request of the Majority Holders. Section 12.7 Benefit to Guarantors. All of the Guarantors are engaged in
related businesses and integrated to such an extent that the financial strength
and flexibility of each
Guarantor has a direct impact on the success of each other Guarantor.
Each Guarantor will derive substantial direct and indirect benefit from the
extension of credit hereunder. 51




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Section 12.8 Guarantor Covenants. Each Guarantor shall take such action
as the Company is required by this Agreement to cause such Guarantor to take,
and shall refrain from taking such action as the Company is required by this
Agreement to prohibit such Guarantor from taking. SECTION 13 MISCELLANEOUS. Section 13.1 Holidays. If any payment of principal or interest on any
Note or any fee hereunder shall fall due on a day which is not a Business Day,
principal together with interest at the rate the Note bears for the period
prior to maturity or any fee at the rate such fee accrues shall continue to
accrue from the stated due date thereof to and including the next succeeding
Business Day, on which the same is payable. Section 13.2 No Waiver, Cumulative Remedies. No delay or failure on the
part of the Agent or on the part of any other holder of any Note in the
exercise of any power or right shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof, or the exercise
of any other power or right, and the rights and remedies hereunder of the
Agent, each holder of any Note are cumulative to, and not exclusive of, any
rights or remedies which any of them would otherwise have. Section 13.3 Waivers, Modifications and Amendments. Any provision hereof
or of the Notes or the Guaranties may be amended, modified, waived or released
and any Default or Event of Default and its consequences may be rescinded and
annulled upon the written consent of the Majority Holders; provided, however,
that without the consent of all holders of the Notes no such amendment,
modification or waiver shall (a) increase the amount or extend the terms of any
Note or (b) reduce the interest rate applicable to or extend the maturity
(including any scheduled installment) of its Notes or (c) reduce the amount of
the principal or interest or fees to which such holder is entitled hereunder or
(d) release any substantial (in value) part of the collateral security afforded
by the Collateral Documents (except in connection with a sale or other
disposition required to be effected by the provisions hereof or of the
Collateral Documents) or release any Guarantor or (e) change this Section or
Section 1.3 hereof or (f) change the definition of Majority Holders or (g)
change the number of holders of Notes required to take any action hereunder or
under the Guaranties or (h) affect the rights of any one Purchaser, or group of
Purchasers, without similarly affecting the rights of all Purchasers. No
amendment, modification or waiver of the Agents protective provisions shall be
effective without the prior written consent of the Agent. Section 13.4 Costs and Expenses. The Company agrees to pay on demand the
costs and expenses of each of the Purchasers in connection with the
negotiation, preparation, execution and delivery of the Operative Documents and
the other instruments and documents to be delivered hereunder or thereunder or
in connection with the transactions contemplated hereby or thereby or in connection with any consents hereunder or waivers or
amendments hereto or thereto, including the fees and expenses of Vedder, Price,
Kaufman & Kammholz, P.C., counsel for the Agent, with respect to all of the
foregoing (whether or not the transactions contemplated hereby 52




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are
consummated), and all costs and expenses (including attorneys fees), if any,
incurred by the Agent, the holders of the Notes or any other holders of a Note
in connection with a default under or the enforcement of the Operative
Documents or any other instrument or document to be delivered hereunder or
thereunder. The Company agrees to indemnify and save the holders of the Notes
and the Agent harmless from any and all liabilities, losses, costs and expenses
(collectively, indemnified liabilities) incurred by the holders of the Notes
or the Agent in connection with any action, suit or proceeding brought against
the Agent or any holder of any Note by any Person (but excluding attorneys
fees for litigation solely between the holders of the Notes to which the
Company is not a party) which arises out of the transactions contemplated or
financed hereby or out of any action or inaction by the Agent or any holder of
any Note hereunder or thereunder, except for such thereof as is caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
The provisions of this Section and the protective provisions of Section 2
hereof shall survive payment of the Notes. Section 13.5 Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement, the
Notes, the Warrant, any Collateral Document or any Guaranty including interest
and penalties, in the event any such taxes are assessed, irrespective of when
such assessment is made and whether or not any credit is then in use or
available hereunder. Section 13.6 Survival of Representations. All representations and
warranties made herein or in any other Operative Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder. Section 13.7 Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the holders of the Notes of amounts
sufficient to protect the yield of the holders of the Notes with respect to the
Notes, including, but not limited to, Sections 1.3, 2.7, 2.8 and 2.9 hereof,
shall survive the termination of this Agreement and the payment of the Notes. Section 13.8 Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including cable or telecopy) and shall be given
to the relevant party at its address or telecopier number set forth below, in
the case of the Company, or on the appropriate signature page hereof, in the
case of the holders of the Securities and the Agent, or such other address or
telecopier number as such party may hereafter specify by notice to the Agent
and the Company given by United States certified or registered mail or by
telecopy. Notices hereunder to the Company shall be addressed to the name of
such Person at: 1021 West Birchwood
     Morton, Illinois 61550-0429
     Attention: Chief Financial Officer
     Telephone: (309)266-7176
     Telecopy: (309)263-1841 53




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Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; provided thatany notice given
pursuant to Section 1 or Section 2 hereof shall be effective only upon receipt. Section 13.9 Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any
other purpose. Section 13.10 Severability of Provisions. Any provision of this Agreement
which is unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. All rights, remedies and powers provided
in this Agreement and the Notes may be exercised only to the extent that the
exercise thereof does not violate any applicable mandatory provisions of law,
and all the provisions of this Agreement and the Notes are intended to be
subject to all applicable mandatory provisions of law which may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement or the Notes invalid or unenforceable. Section 13.11 Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument. Section 13.12 Binding Nature, Governing Law, Etc. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Agent and the Purchasers and the benefit of their successors and
assigns, including any subsequent holder of an interest in the Notes. This
Agreement and the rights and duties of the parties hereto shall be governed by,
and construed in accordance with, the internal laws of the State of Illinois
without regard to principles of conflicts of laws. The Company may not assign
its rights hereunder without the written consent of the Agent and the holders
of the Notes. Section 13.13 Entire Understanding. This Agreement, together with other
Operative Documents, constitutes the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby except for prior
understandings related to fees payable to the Agent upon the initial closing of
the transactions contemplated hereby. (a) Transfer Restrictions. The Securities acquired pursuant hereto are
subject to the applicable transfer restrictions contained in the Notes, the
Warrants and the Investor Rights Agreement, as the case may be.
Notwithstanding anything to the contrary contained herein or in the other
Operative Documents, the Company hereby consents to each Purchasers sale,
assignment, transfer or other disposition, at any time and from time to time
hereafter, of this Agreement or the other Operative Documents, or of any
portion thereof, to such Purchasers Affiliates, and to each Purchasers
granting participations to such Purchasers Affiliates in the Obligations and
related Operative Documents, including, without limitation,
each Purchasers rights, title, interest, remedies, powers and/or duties.
The Company agrees that it shall execute and deliver such documents as such
Purchaser may request in connection with the foregoing. 54




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Section 13.14 Confidentiality. The Agent and each holder of any Note
shall hold in confidence any material nonpublic information delivered or made
available to them by the Company or any Subsidiary. The foregoing to the
contrary notwithstanding, nothing herein shall prevent any holder of any Note
from disclosing any information delivered or made available to it by the
Company or any Subsidiary (i) to any other holder, (ii) to any other Person if
reasonably incidental to the administration of the credit contemplated hereby,
(iii) upon the order of any court or administrative agency, (iv) upon the
request or demand of any regulatory agency or authority, (v) which has been
publicly disclosed other than as a result of a disclosure by the Agent or any
holder of any Note which is not permitted by this Agreement, (vi) in connection
with any litigation to which the Agent, any holder, or any of their respective
Affiliates may be a party, along with the Company, any Subsidiary or any of
their respective Affiliates, (vii) to the extent reasonably required in
connection with the exercise of any right or remedy under this Agreement or
otherwise, (viii) to such holders Affiliates and to its and its Affiliates
legal counsel and financial consultants and independent auditors, and (ix) to
any actual or proposed participant or assignee of all or part of its rights
hereby. Section 13.15 Sharing of Set-Off. Each holder of any Note agrees with
each other holder a party hereto that if such holder shall receive and retain
any payment, whether by set-off or application of deposit balances or
otherwise, on any of the Notes or Obligations in excess of its ratable share of
payments on all such Obligations then outstanding to the holder of the Notes,
then such holder shall purchase for cash at face value, but without recourse,
ratably from each of the other holders such amount of the Notes or Obligations,
or participations therein, held by each such other holder (or interest therein)
as shall be necessary to cause such holder to share such excess payment ratably
with all the other holders of the Notes; provided, however, that if any such
purchase is made by any holder, and if such excess payment or part thereof is
thereafter recovered from such purchasing holder, the related purchases from
the other holders of the Notes shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest. Section 13.16 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement. Section 13.17 Set-off. 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 continuation of any Event of Default, each holder of
any Note and each subsequent holder of any Obligation is hereby authorized by
the Company and each Guarantor at any time or from time to time, without notice
to the Company or such Guarantor or to any other Person, any such notice being
hereby expressly waived, to set-off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts, and in whatever currency denominated) and any other
indebtedness at any time held or owing by that Purchaser or that subsequent
holder to or for the credit or the account of the Company or such Guarantor,
whether or not matured, against and on account of the Obligations of the
Company or such
Guarantor to that Purchaser or that subsequent holder under the Operative
Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Operative Documents,
irrespective of whether or not (a) that Purchaser or that subsequent holder
shall have made any demand hereunder or (b) the principal of or the interest on
the Loans or 55




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Notes and other amounts due hereunder shall have become due and
payable pursuant to Section 9 hereof and although said obligations and
liabilities, or any of them, may be contingent or unmatured. Section 13.18 Construction. The provisions of this Agreement relating to
Subsidiaries shall only apply during such times as the Company has one or more
Subsidiaries. Nothing contained herein shall be deemed or construed to permit
any act or omission which is prohibited by the terms of any Collateral
Document, the covenants and agreements contained herein being in addition to
and not in substitution for the covenants and agreements contained in the
Collateral Documents. Section 13.19 Submission to Jurisdiction; Waiver of Jury Trial. The
Company and the Guarantors hereby submit to the nonexclusive jurisdiction of
the United States District Court for the Northern District of Illinois and of
any Illinois State court sitting in the City of Chicago for purposes of all
legal proceedings arising out of or relating to this Agreement, the other
Operative Documents or the transactions contemplated hereby or thereby. The
Company and the Guarantors irrevocably waive, to the fullest extent permitted
by law, any objection which they may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum. THE COMPANY, THE GUARANTORS, THE AGENT, AND THE PURCHASERS HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY. Section 13.20 Confirmation and Ratification of Terms. (a) Upon the effectiveness of this Agreement, each reference to the
Original Purchase Agreement in any other Operative Document, and any document,
instrument or agreement executed and/or delivered in connection with the
Original Purchase Agreement or any other Operative Document, shall mean and be
a reference to this Agreement. (b) The other Operative Documents and all agreements, instruments and
documents executed or delivered in connection with the Original Purchase
Agreement or any other Operative Document shall each be deemed to be amended to
the extent necessary, if any, to give effect to the provisions of this
Agreement, as the same may be amended, modified, supplemented or restated from
time to time. (c) The effect of this Agreement is to amend and restate the Original
Purchase Agreement in its entirety, and to the extent any rights, benefits,
Liens or provisions in favor of Agent of any Purchaser existed in the Original
Purchase Agreement and continue to exist in this Agreement without any written
waiver of any such rights, benefits, Liens or provisions prior to the date
hereof, then such rights, benefits, Liens or provisions are acknowledged to be
and continue to be effective from and after March 26, 2004. This Agreement is
not a novation. (d) The parties hereto agree and acknowledge that any and all rights,
remedies, Liens and payment provisions under the Original Purchase Agreement,
including, without limitation, any and all rights, remedies and payment
provisions with respect to (i) any 56




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representation and warranty made or deemed
to be made pursuant to the Original Purchase Agreement or (ii) any
indemnification provision, shall continue and survive the execution and
delivery of this Agreement. (e) The parties hereto agree and acknowledge that any amounts owing as
fees, expenses, charges, costs, Obligations or otherwise under or pursuant to
the Original Purchase Agreement, immediately prior to the effectiveness of this
Agreement shall be owing as or for fees, expenses, charges, costs, Obligations
or otherwise under or pursuant to this Agreement. (f) BMO hereby waives any and all prepayment fees required to be paid by
the Company under the Original BMO Note. The foregoing waiver is limited to
the prepayment fees required to be paid due to the Companys prepayment of a
portion of the Original BMO Note in connection with the execution of this
Agreement, and shall not be deemed to constitute a waiver of any other
prepayment fees subsequently required to be paid pursuant to the Note executed
by the Company in favor of BMO in connection herewith. [Signature Pages to Follow] 57




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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth. Dated as of the date first above written. MORTON INDUSTRIAL GROUP, INC.By:
    /s/ Rodney B. HarrisonName:
    Rodney B. HarrisonTitle:
    Vice President of Finance MORTON METALCRAFT CO.By:
    /s/ William D. MortonName:
    William D. MortonTitle:
    Chairman/CEO MORTON METALCRAFT CO. OF NORTH CAROLINABy:
    /s/ William D. MortonName:
    William D. MortonTitle:
    Chairman/CEO MORTON METALCRAFT CO. OF SOUTH CAROLINABy:
    /s/ William D. MortonName:
    William D. MortonTitle:
    Chairman/CEO MID CENTRAL PLASTICS, INC.By:
    /s/ William D. MortonName:
    William D. MortonTitle:
    Chairman/CEO B&W METAL FABRICATORS, INC.By:
    /s/ William D. MortonName:
    William D. MortonTitle:
    Chairman/CEO 58




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Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written. BMO NESBITT BURNS CAPITAL (U.S.), INC.,as Agent and as a PurchaserBy:
    /s/ Douglas P. SuttonName:
    Douglas P. SuttonTitle:
    Managing Director JZ EQUITY PARTNERS PLC, as a PurchaserBy:
    /s/ David W. ZalaznickName:
    David W. ZalaznickTitle:
    Director of Investment Advisor PRISM MEZZANINE FUND SBIC, L.P., as a PurchaserBy:
    /s/ Blaine A. CrissmanName:
    Blaine A. CrissmanTitle:
    Partner 59




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Schedule 8.15Page 1