exv10w3



 




Exhibit 10.3




 

 




$53,000,000




TERM LOAN AGREEMENT




among




INTEGRATED ELECTRICAL SERVICES, INC.,

as Borrower,




The Several Lenders from Time to Time Party Hereto,




and




WILMINGTON TRUST COMPANY,

as Administrative Agent




Dated as of May 12, 2006
 

 














 



 




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Definitional Provisions
	 	 	17	 
	 
	 	 	 	 
	SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS
	 	 	18	 
	 
	 	 	 	 
	2.1 Term Commitments
	 	 	18	 
	2.2 Procedure for Loan Borrowing
	 	 	18	 
	2.3 Maturity Date
	 	 	18	 
	2.4 Fees, etc.
	 	 	18	 
	2.5 Optional Prepayments
	 	 	18	 
	2.6 Mandatory Prepayments
	 	 	18	 
	2.7 Additional Terms Relating to Prepayments
	 	 	19	 
	2.8 Interest Rates and Payment Dates
	 	 	19	 
	2.9 Computation of Interest and Fees
	 	 	21	 
	2.10 Pro Rata Treatment and Payments
	 	 	22	 
	2.11 Requirements of Law
	 	 	22	 
	2.12 Taxes
	 	 	23	 
	2.13 Change of Lending Office
	 	 	25	 
	2.14 Replacement of Lenders
	 	 	25	 
	 
	 	 	 	 
	SECTION 3. REPRESENTATIONS AND WARRANTIES
	 	 	25	 
	 
	 	 	 	 
	3.1 Financial Condition
	 	 	25	 
	3.2 No Change
	 	 	26	 
	3.3 Existence; Compliance with Law
	 	 	26	 
	3.4 Power; Authorization; Enforceable Obligations
	 	 	26	 
	3.5 No Legal Bar
	 	 	27	 
	3.6 Litigation
	 	 	27	 
	3.7 No Default
	 	 	27	 
	3.8 Ownership of Property; Liens
	 	 	27	 
	3.9 Intellectual Property
	 	 	27	 
	3.10 Taxes
	 	 	27	 
	3.11 Federal Regulations
	 	 	28	 
	3.12 Labor Matters
	 	 	28	 
	3.13 ERISA
	 	 	28	 
	3.14 Investment Company Act; Other Regulations
	 	 	28	 
	3.15 Subsidiaries
	 	 	28	 
	3.16 Use of Proceeds
	 	 	29	 
	3.17 Environmental Matters
	 	 	29	 
	3.18 Accuracy of Information, etc
	 	 	29	 
	3.19 Security Documents
	 	 	30	 
	3.20 Solvency
	 	 	30	 












 



 


	 	 	 	 	 
	 	 	Page	 
	3.21 Certain Documents
	 	 	30	 
	 
	 	 	 	 
	SECTION 4. CONDITIONS PRECEDENT
	 	 	30	 
	 
	 	 	 	 
	4.1 Conditions to Initial Extension of Credit
	 	 	30	 
	 
	 	 	 	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	33	 
	 
	 	 	 	 
	5.1 Financial Statements
	 	 	33	 
	5.2 Certificates; Other Information
	 	 	34	 
	5.3 Payment of Obligations
	 	 	35	 
	5.4 Maintenance of Existence; Compliance
	 	 	35	 
	5.5 Maintenance of Property; Insurance
	 	 	35	 
	5.6 Inspection of Property; Books and Records; Discussions
	 	 	35	 
	5.7 Notices
	 	 	36	 
	5.8 Environmental Laws
	 	 	36	 
	5.9 Additional Collateral, etc
	 	 	37	 
	 
	 	 	 	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	38	 
	 
	 	 	 	 
	6.1 Financial Condition Covenants
	 	 	38	 
	6.2 Indebtedness
	 	 	40	 
	6.3 Liens
	 	 	41	 
	6.4 Fundamental Changes
	 	 	42	 
	6.5 Disposition of Property
	 	 	43	 
	6.6 Restricted Payments
	 	 	43	 
	6.7 Investments
	 	 	43	 
	6.8 Modifications of Certain Debt Instruments
	 	 	44	 
	6.9 Transactions with Affiliates
	 	 	44	 
	6.10 Sales and Leasebacks
	 	 	44	 
	6.11 Swap Agreements
	 	 	44	 
	6.12 Changes in Fiscal Periods
	 	 	44	 
	6.13 Negative Pledge Clauses
	 	 	44	 
	6.14 Clauses Restricting Subsidiary Distributions
	 	 	44	 
	6.15 Lines of Business
	 	 	45	 
	 
	 	 	 	 
	SECTION 7. EVENTS OF DEFAULT
	 	 	45	 
	 
	 	 	 	 
	SECTION 8. THE Administrative agent
	 	 	47	 
	 
	 	 	 	 
	8.1 Appointment
	 	 	47	 
	8.2 Delegation of Duties
	 	 	47	 
	8.3 Exculpatory Provisions
	 	 	48	 
	8.4 Reliance by Administrative Agent
	 	 	48	 
	8.5 Notice of Default
	 	 	49	 
	8.6 Non-Reliance on Administrative Agent and Other Lenders
	 	 	49	 
	8.7 Indemnification
	 	 	50	 
	8.8 Administrative Agent in Its Individual Capacity
	 	 	50	 












 



 


	 	 	 	 	 
	 	 	Page	 
	8.9 Successor Administrative Agent
	 	 	50	 
	 
	 	 	 	 
	SECTION 9. MISCELLANEOUS
	 	 	50	 
	 
	 	 	 	 
	9.1 Amendments and Waivers
	 	 	50	 
	9.2 Notices
	 	 	51	 
	9.3 No Waiver; Cumulative Remedies
	 	 	52	 
	9.4 Survival of Representations and Warranties
	 	 	52	 
	9.5 Payment of Expenses and Taxes
	 	 	52	 
	9.6 Successors and Assigns; Participations and Assignments
	 	 	53	 
	9.7 Adjustments; Set-off
	 	 	56	 
	9.8 Counterparts
	 	 	56	 
	9.9 Severability
	 	 	56	 
	9.10 Integration
	 	 	56	 
	9.11 GOVERNING LAW
	 	 	56	 
	9.12 Submission To Jurisdiction; Waivers
	 	 	57	 
	9.13 Acknowledgements
	 	 	57	 
	9.14 Releases of Guarantees and Liens
	 	 	57	 
	9.15 Confidentiality
	 	 	58	 
	9.16 Patriot Act
	 	 	58	 
	9.17 WAIVERS OF JURY TRIAL
	 	 	58	 













 



 





SCHEDULES:




	 	 	 
	1.1A
	 	Commitments
	1.1B
	 	Bonded Contracts
	1.1C
	 	Mortgaged Property
	1.1D
	 	Commercial Subsidiaries
	1.1E
	 	Residential Subsidiaries
	1.1F
	 	Shutdown Subsidiaries
	3.4
	 	Consents, Authorizations, Filings and Notices
	3.15
	 	Subsidiaries
	3.19(a)
	 	UCC Filing Jurisdictions
	3.19(c)
	 	Mortgage Filing Jurisdictions
	5.10
	 	Post-Closing Matters
	6.2(d)
	 	Existing Indebtedness
	6.3(f)
	 	Existing Liens






EXHIBITS:




	 	 	 
	A
	 	Form of Guarantee and Collateral Agreement
	B
	 	Form of Compliance Certificate
	C
	 	Form of Closing Certificate
	D
	 	Form of Mortgage
	E
	 	Form of Assignment and Assumption
	F
	 	Form of Legal Opinion of Vinson & Elkins LLP
	G
	 	Form of Intercreditor Agreement












 



 


          TERM LOAN AGREEMENT (this “Agreement”), dated as of May 12, 2006, among INTEGRATED
ELECTRICAL SERVICES, INC., a Delaware corporation (the “Borrower”), the several banks and
other financial institutions from time to time party to this Agreement (collectively, the
“Lenders”) and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as administrative
agent.




WITNESSETH:




          WHEREAS, on February 14, 2006 (the “Petition Date”), the Borrower and certain of its
direct and indirect domestic subsidiaries (collectively, the “Debtors”) filed voluntary
petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101
et seq. (as amended, the “Bankruptcy Code”) with the United States
Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”) and continued
in possession of their property and in the management of their businesses pursuant to Bankruptcy
Code Sections 1107 and 1108;




          WHEREAS, (i) on April 28, 2006, the Bankruptcy Court entered an order (the “Confirmation
Order”) confirming the Debtors’ Second Amended Joint Plan of Reorganization of Integrated
Electrical Services, Inc., dated as of March 17, 2006 (as in effect on the date of confirmation
thereof pursuant to the Confirmation Order, the “Plan of Reorganization”); and




          WHEREAS, in connection with confirmation and implementation of the Plan of Reorganization, the
Debtors have requested the Lenders to make loans and other extensions of credit available to the
Debtors to enable the Debtors to finance certain aspects of the Plan of Reorganization, including
repayment in full of the holders of the Senior Convertible Notes (as defined below) and pay related
fees and expenses under this Facility, and the Lenders have agreed, subject to the terms and
conditions hereof, to enter into this Agreement.




          Accordingly, the parties hereto hereby agree as follows:




SECTION 1. DEFINITIONS




          1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.




          “ABL Facility”: the revolving credit facility provided to the Borrower and certain of
its Subsidiaries pursuant to the ABL Facility Agreement and any refinancings, renewals or
extensions thereof in accordance with Section 6.2.




          “ABL Facility Agent”: Bank of America, N.A., in its capacity as agent under the ABL
Facility Agreement, and any successor agent thereto.




          “ABL Facility Agreement”: the Loan and Security Agreement, dated as of the date
hereof, among the Borrower, the Subsidiaries of the Borrower party thereto, the financial
institutions named therein and the ABL Facility Agent, as in effect on the date hereof and as
hereafter amended, supplemented or otherwise modified from time to time in accordance with Section
6.8 or refinanced, renewed or extended in accordance with Section 6.2.




          “ABL Facility Amount”: $10,000,000; provided that the ABL Facility Amount
shall be $15,000,000 for the initial 45 days after the Closing Date.










 



 




 2 




          “Adjusted Applicable Interest Rate”: the Applicable Interest Rate as it may be
adjusted from time to time in accordance with Section 2.8.




          “Adjusted Net Earnings from Operations”: with respect to any period of the Loan
Parties, the Loan Parties’ net income on a consolidated basis after provision for income taxes for
such period, as determined in accordance with GAAP and reported on the financial statements for
such period, excluding any and all of the following to the extent included in such net income: (a)
gain or loss arising from the sale of any capital assets; (b) gain arising from any write-up in the
book value of any asset; (c) earnings of any Person, substantially all the assets of which have
been acquired by any Loan Party in any manner, to the extent realized by such other Person prior to
the date of acquisition; (d) earnings of any Person (other than a Loan Party) in which any Loan
Party has an ownership interest unless (and only to the extent) such earnings shall actually have
been received by such Loan Party in the form of cash distributions; (e) earnings of any Person to
which assets of any Loan Party shall have been sold, transferred or disposed of, or into which the
Loan Party shall have been merged, or which has been a party with any Loan Party to any
consolidation or other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of the Loan Parties or from cancellation
or forgiveness of Indebtedness; and (g) gain arising from extraordinary items, as determined in
accordance with GAAP, or from any other non-recurring transaction.




          “Administrative Agent”: Wilmington Trust Company, as the administrative agent for the
Lenders under this Agreement and the other Loan Documents, together with any of its successors and
assigns.




          “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.




          “Aggregate Principal Amount Outstanding”: at any time, the amount equal to the sum of
(a) the principal amount of the Loans outstanding at such time and (b) the amount of interest, if
any, at such time that has accrued and been paid by capitalizing such interest as additional Loans
under the Facility.




          “Agreement”: as defined in the preamble hereto.




          “Applicable Interest Rate”: 10.75% per annum.




          “Approved Fund”: as defined in Section 9.6(b).




          “Asset Sale”: any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by clause (a), (b), (c) or (d) of Section 6.5)
that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash proceeds) in excess of $100,000.




          “Assignee”: as defined in Section 9.6(b).




          “Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit E.










 



3




          “Bankruptcy Code”: as defined in the recitals hereto.




          “Bankruptcy Court”: as defined in the recitals hereto.




          “Benefitted Lender”: as defined in Section 9.7(a).




          “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).




          “BofA Loan Termination Date”: as defined in the Intercreditor Agreement and after
taking into account Section 5.3(b) thereof.




          “Bonded Accounts”: as to any Loan Party, all now owned or hereafter acquired accounts
(as defined in the Uniform Commercial Code) and (whether included in such definition) accounts
receivable, and proceeds (other than such proceeds which are negotiable instruments or cash or Cash
Equivalents in the possession or control of the ABL Facility Agent or the Administrative Agent, as
applicable), including, without limitation, all insurance proceeds and letter of credit proceeds,
in each case solely to the extent such accounts, accounts receivable and proceeds arise out of a
Bonded Contract including, but not limited to, Bonded Retainage, and all forms of obligations
whatsoever owing to any Loan Party under instruments and documents of title constituting the
foregoing or proceeds thereof; and all rights, securities and guarantees with respect to each of
the foregoing.




          “Bonded Contract”: the contracts listed on Schedule 1-1B attached hereto and any
future contract in respect of which any Surety Bond shall have been issued on behalf of any Loan
Party.




          “Bonded Equipment”: all now owned or hereafter acquired right, title and interest
with respect to equipment (as defined in the Uniform Commercial Code) owned by a Loan Party and
(whether or not included in such definition) all other personal property, in each case which is
delivered to, prefabricated for or specifically ordered for a Bonded Job Site, whether or not the
same will be deemed to be affixed to, arise out of or relate to any real property, together with
all accessions thereto.




          “Bonded Inventory”: all now owned or hereafter acquired inventory of the Loan Parties
including, without limitation, goods, merchandise and other personal property, in each case which
is furnished under any Bonded Contract, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description in each case which is delivered to,
prefabricated for or specifically ordered for a Bonded Job Site.




          “Bonded Job Site”: the site specified in a Bonded Contract where any Loan Party is to
perform the specialized electrical and communication services required thereunder, including all
other labor, materials, equipment and services provided or to be provided to fulfill its
obligations thereunder.




          “Bonded Retainage”: contract proceeds periodically withheld by an account debtor to
provide further security for the performance by any Loan Party of a Bonded Contract, and as such
are payable to it only upon a clear demonstration of compliance with the terms of a Bonded
Contract.




          “Borrower”: as defined in the preamble hereto.




          “Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close.










 



4




          “Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all expenditures by such Person and its Subsidiaries for the purchase, leasing (pursuant to a
capital lease) or other acquisition of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) that should be capitalized
under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.




          “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.




          “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.




          “Cases”: the voluntary cases under Chapter 11 of the Bankruptcy Code commenced by the
Debtors in the Bankruptcy Court.




          “Cash Collateral”: cash or Cash Equivalents, and any interest earned thereon, that
are deposited with the ABL Facility Agent in the Cash Collateral Account.




          “Cash Collateral Account”: as defined in the ABL Facility Agreement in effect as of
the Closing Date.




          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers’ acceptances having maturities of twelve months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the laws of the United
States or any state thereof or the District of Columbia having combined capital and surplus of not
less than $500,000,000 and not subject to offset rights in favor of such bank arising from any
banking relationship with such bank; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc.
(“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within nine months from the date of acquisition; (d) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities with maturities of one year
or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody’s and having maturities of not more than twelve
months; (f) securities with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank satisfying the requirements
of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money
market funds that (i) comply with the criteria set forth in SEC
Rule 2a-7










 



5



under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $5,000,000,000.




          “Chubb”: Federal Insurance Company, an Indiana corporation, or any of its affiliates
or Subsidiaries.




          “Closing Date”: the date on which the conditions precedent set forth in Section 4.1
shall have been satisfied, which date is May 12, 2006.




          “Code”: the Internal Revenue Code of 1986, as amended from time to time.




          “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.




          “Commercial EBIT”: solely with respect to the Commercial Subsidiaries, for any
period, on a consolidated basis, Adjusted Net Earnings from Operations plus, to the extent
deducted in the determination of Adjusted Net Earnings from Operations for such period (but without
duplication), the sum of interest expense, federal, state, local and foreign income tax expense and
other identified non-cash items not otherwise included which are acceptable to (x) the ABL Facility
Agent at any time prior to the BofA Loan Termination Date and (y) at any time thereafter, the
Initial Lenders.




          “Commercial Subsidiaries”: the Subsidiaries of the Borrower listed on Schedule 1.1D.




          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group
that includes the Borrower and that is treated as a single employer under Section 414 of the Code.




          “Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.




          “Conduit Lender”: any special purpose corporation organized and administered by any
Lender for the purpose of making Loans otherwise required to be made by such Lender and designated
by such Lender in a written instrument; provided, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the
designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to
deliver all consents and waivers required or requested under this Agreement with respect to its
Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled
to receive any greater amount pursuant to Sections 2.11, 2.12 or 9.5 than the designating Lender
would have been entitled to receive in respect of the Loans made by such Conduit Lender or (b) be
deemed to have any Term Commitment.




          “Confirmation Order”: as defined in the recitals hereto.




          “Consolidated EBITDA”: for any period, Consolidated Net Income for such period
plus, without duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and
other fees and charges associated with Indebtedness (including the Aggregate Principal Amount
Outstanding), (c) depreciation and amortization expense and (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any non-cash compensation
costs, (f) other identified non-cash items not otherwise included which are acceptable to the
Initial Lenders and (g) professional fees and expenses incurred by










 



6



the Debtors during, and directly related to, the Cases and fees and expenses of Glass &
Associates up to $1,000,000, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) interest income, (ii) income tax credits
(to the extent not netted from income tax expense) and (iii) any other non-cash income.




          Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a) the
difference between (x) (i) for fiscal periods occurring prior to the date of this Agreement,
EBITDAR for such period and (ii) for all fiscal periods thereafter, EBITDA and (y) Shutdown EBIT to
(b) the sum (without duplication) of (i) cash interest expense for such period, (ii) Capital
Expenditures (excluding Capital Expenditures funded with Indebtedness other than any revolving
loans under the ABL Facility Agreement but including, without duplication, principal payments with
respect to such Indebtedness) for such period, (iii) principal payments of Indebtedness (other than
revolving loans under the ABL Facility Agreement and mandatory prepayments from Asset Sales) for
such period and (iv) federal, state, local and foreign income taxes (including accrued taxes) for
such period.




          “Consolidated Leverage Ratio”: as at the last day of any period, the ratio of (a) the
sum of (i) Indebtedness outstanding under the ABL Facility Agreement on such day plus (ii)
LC Outstandings (as defined in the ABL Facility Agreement) on such day plus (iii) the
Indebtedness outstanding under this Agreement on such day minus (y) Eligible Cash
Collateral on such day to (b) (i) for fiscal periods occurring prior to the date of this Agreement,
EBITDAR for such period and (ii) for all fiscal periods occurring thereafter, EBITDA for such
period.




          “Consolidated Net Income”: for any period, the consolidated net income (or loss) of
the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of
any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the terms of any
Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to
such Subsidiary.




          “Continuing Directors”: the directors of the Borrower on the Closing Date, after
giving effect to the Plan of Reorganization and the other transactions contemplated hereby, and
each other director, if, in each case, such other director’s nomination for election to the board
of directors of the Borrower is recommended by at least 50% of the then Continuing Directors.




          “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.




          “Debtors”: as defined in the recitals hereto.




          “Default”: any of the events specified in Section 7, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.




          “DIP Credit Facility”: the debtor-in-possession financing facility provided pursuant
to the Debtor-in-Possession Loan and Security Agreement, dated as of February 14, 2006, among the
Borrower, Bank of America, N.A., as agent, and the lenders from time to time party thereto, as
amended,










 



7



supplemented or otherwise modified, together with all instruments and other agreements entered
into by the Borrower, any Debtor or any other Group Member in connection therewith.




          “Disclosure Statement”: the Second Amended Disclosure Statement for the First Amended
Joint Plan of Reorganization of Integrated Electrical Services, Inc. and Certain of Its Direct and
Indirect Subsidiaries Under Chapter 11 of the Bankruptcy Code, dated as of March 17, 2006, approved
by the Bankruptcy Court on March 10, 2006, describing the Plan of Reorganization and distributed to
certain holders of claims in connection with voting on the Plan of Reorganization.




          “Disposition”: with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and
“Disposed of” shall have correlative meanings.




          “Dollars” and “$”: dollars in lawful currency of the United States.




          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States.




          “EBITDA”: for any period, on a consolidated basis for the Loan Parties, Adjusted Net
Earnings from Operations for such period plus, to the extent deducted in the determination
of Adjusted Net Earnings from Operations for that period (but without duplication), the sum of
interest expense, federal, state, local and foreign income tax expense, depreciation, amortization,
non-cash compensation expenses, other identified non-cash items not otherwise included which are
acceptable to (x) the ABL Facility Agent at any time prior to the BofA Loan Termination Date and
(y) at any time thereafter, the Initial Lenders, any paid restructuring expenses (including
professional fees) incurred in connection with the Case), any unpaid restructuring expenses
(including professional fees) incurred in connection with the Cases to the extent the amount of
such unpaid expenses are not included in excess of the sum of (a) the Restructuring Expenses
Reserve and (b) the Cash Collateral deposited in a Cash Collateral Account in excess of the amount
required pursuant to Section 6.1(g), restructuring expenses up to $8,600,000 related to impairments
to Net Working Capital in connection with the Shutdown Subsidiaries, and expenses related to fees
of Glass & Associates in an amount up to $200,000 in an any calendar month incurred in the first
three calendar months after the Closing Date.




          “EBITDA-CapEx Level”: the difference between Consolidated EBITDA for a given period
and the Capital Expenditures of the Loan Parties for such period.




          “EBITDAR”: for any period, on a consolidated basis for the Loan Parties, Adjusted Net
Earnings from Operations for such period plus, to the extent deducted in the determination
of Adjusted Net Earnings from Operations for that period (but without duplication), the sum of
interest expense, federal, state, local and foreign income tax expense, depreciation, amortization,
non-cash compensation expenses, and other identified non-cash items not otherwise included which
are acceptable to (x) the ABL Facility Agent at any time prior to the BofA Loan Termination Date
and (y) at any time thereafter, the Initial Lenders, and restructuring expenses (including
professional fees and up to $8,600,000 related to impairments to Net Working Capital related to the
Shutdown Subsidiaries).




          “Eligible Cash Collateral”: cash representing proceeds of Collateral or proceeds from
such other source of funding which is satisfactory to the Initial Lenders and the ABL Facility
Agent, each in the exercise of their reasonable discretion, that is deposited into a demand
deposit, money market or other account in ABL Facility Agent’s name and subject to the ABL Facility
Agent’s Liens; provided that the term “Eligible Cash Collateral” shall not include
(i) any cash (a) to the extent that the ABL Facility Agent does not have therein a valid,
enforceable first priority Lien, (b) to the extent that any defense,










 



8



counterclaim, setoff or dispute exists or is asserted with respect thereto or (c) that it is
subject to any Lien of any Person, other than Liens in favor of the ABL Facility Agent and the
Administrative Agent or that is not owned by a Loan Party or (ii) any Cash Collateral that is
securing letters of credit issued and outstanding under the ABL Facility Agreement.




          “Eligible Interest Capitalization Period”: (a) initially, the period beginning on the
Closing Date and ending on December 31, 2006; and (b) thereafter, each period beginning on the day
after the end of the immediately preceding Eligible Interest Capitalization Period and ending on
the Interest Payment Date nearest to the date that is the earlier of (x) six months after the end
of the immediately preceding Eligible Interest Capitalization Period and (y) the third anniversary
of the Closing Date.




          “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the environment, as have
been, are now or may at any time hereafter be in effect.




          “Environmental Permits”: any and all permits, licenses, approvals, registrations,
notifications, exemptions and any other authorization pursuant to or required under any
Environmental Law.




          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.




          “Eton Park”: collectively, Eton Park Fund, L.P. and Eton Park Master Fund, Ltd.




          “Event of Default”: any of the events specified in Section 7, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.




          “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by
such Subsidiary of the Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.




          “Facility”: the Term Commitments and the Loans made thereunder.




          “Flagg Street”: collectively, Flagg Street Partners LP, Flagg Street Partners
Qualified LP and Flagg Street Offshore, L.P.




          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.




          “Funding Office”: the office of the Administrative Agent specified in Section 9.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.




          “GAAP”: generally accepted accounting principles in the United States as in effect
from time to time, except that for purposes of Section 6.1, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements referred to in Section 3.1(b). In the event that
any “Accounting Change” (as defined below) shall occur and such change results in a change in the
method of calculation of financial










 



9



covenants, standards or terms in this Agreement, then the Borrower and the Administrative
Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to
reflect equitably such Accounting Changes with the desired result that the criteria for evaluating
the Borrower’s financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall have been
executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes
in accounting principles required by the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.




          “Goochland Project”: that certain construction project that is the subject of an
Agreement, dated December 12, 2003, by and between the County of Goochland, Virginia, as the owner,
and Bryant Electric Company, Inc., as the contractor.




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




          “Group Members”: the collective reference to the Borrower and its Subsidiaries.




          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be
executed and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form of
Exhibit A-1.




          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing
Person that guarantees or in effect guarantees, or which is given to induce the creation of a
separate obligation by another Person (including any bank under any letter of credit) that
guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the
“primary obligations”) of any other third Person (the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability
in respect thereof as determined by the Borrower in good faith.




          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase
price of










 



10



property or services (other than current trade payables incurred in the ordinary course of
such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or similar
arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation, and (j) for the purposes of Section 7(e) only, all obligations
of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.




          “Initial Lenders”: Eton Park and Flagg Street.




          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.




          “Insolvent”: pertaining to a condition of Insolvency.




          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.




          “Intercreditor Agreement”: an Intercreditor Agreement to be executed and delivered by
the Borrower, each Subsidiary Guarantor, the ABL Facility Agent, the initial lenders under the ABL
Facility Agreement, the Administrative Agent and the Initial Lenders on the Closing Date,
substantially in the form of Exhibit G.




          “Interest Payment Date”: as to any Loan, the last day of each March, June, September
and December to occur while such Loan is outstanding and the final maturity date of such Loan.




          “Investments”: as defined in Section 6.7.




          “Lenders”: as defined in the preamble hereto; provided, that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.




          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, restriction, covenant, easement, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including any conditional sale or other title retention agreement and
any capital lease having substantially the same economic effect as any of the foregoing).










 



11




          “Loan”: as defined in Section 2.1.




          “Loan Documents”: this Agreement, the Security Documents and any amendment, waiver,
supplement or other modification to any of the foregoing.




          “Loan Parties”: each Group Member that is a party to a Loan Document.




          “Material Adverse Effect”: a material adverse effect on (a) the business, property,
operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.




          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, asbestos, polychlorinated biphenyls,
urea-formaldehyde insulation, radioactivity, molds and any other substances, materials or wastes
that are regulated pursuant to or could give rise to liability under any Environmental Law.




          “Maturity Date”: May 12, 2013.




          “Modified Net Working Capital”: at any date of determination, without duplication,
(i) the sum for any Person and its consolidated Subsidiaries, of (A) the unpaid face amount
(including retentions) of all accounts receivable of such Person and its consolidated Subsidiaries
as at such date of determination, plus (B) the amount of all inventory of such Person and
its consolidated Subsidiaries as at such date of determination, plus (C) the aggregate
amount of all contract underbillings of such Person and its consolidated Subsidiaries as at such
date of determination minus (ii) the sum, for such Person and its consolidated
Subsidiaries, of (A) the aggregate amount of all contract overbillings of such Person and its
consolidated Subsidiaries as at such date of determination, plus (B) the aggregage amount
of outstanding and unpaid claims up to $3,000,000 of such Person and its consolidated Subsidiaries
related to the Goochland Project, in each case determined on a consolidated basis in accordance
with GAAP.




          “Mortgaged Property”: the real property listed on Schedule 1.1C, as to which the
Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the
Mortgages.




          “Mortgage”: Each mortgage and/or deed of trust made by any Loan Party in favor of, or
for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the
form of Exhibit D (with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded).




          “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.




          “Negative EBITDA-CapEx Level”: as defined in Section 2.8(c).




          “Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash and Cash Equivalents (including any such cash or Cash
Equivalents paid or delivered pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees,
accountants’ fees, investment banking or consultant fees, amounts actually applied to the repayment
of any Indebtedness secured by a Lien expressly permitted hereunder (other than the Liens under the
Security Documents and the Liens securing the obligations under the ABL Facility Agreement) on any
asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a
Security Document) and other customary fees and










 



12



expenses actually incurred in connection therewith and net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of
Capital Stock, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees,
investment banking or consultant fees, accountants’ fees, underwriting discounts and commissions
and other customary fees and expenses actually incurred in connection therewith.




          “Net Working Capital”: at any date of determination, without duplication, (i) the
sum, for any Person and its consolidated Subsidiaries, of (A) cash or Cash Equivalents of such
Person and its consolidated Subsidiaries as at such date of determination, plus (B) the
unpaid face amount of all accounts receivable of such Person and its consolidated Subsidiaries as
at such date of determination, plus (C) the amount of all inventory of such Person and its
consolidated Subsidiaries as at such date of determination, plus (D) the aggregate amount
of all contract underbillings of such Person and its consolidated Subsidiaries as at such date of
determination, plus (E) the aggregate amount of prepaid expenses of such Person and its
consolidated Subsidiaries as at such date of determination plus (F) the aggregate amount of
all prepaid items to Chubb of such Person and its consolidated Subsidiaries as at such date of
determination, minus (ii) the sum, for such Person and its consolidated Subsidiaries, of
(A) the aggregate amount of Indebtedness outstanding under the ABL Facility Agreement as at such
date of determination, plus (B) the unpaid amount of all accounts payable of such Person
and its consolidated Subsidiaries as at such date of determination, plus (C) the aggregate
amount of all accrued expenses of such Person and its consolidated Subsidiaries as at such date of
determination, plus (D) the aggregate amount of all contract overbillings of such Person
and its consolidated Subsidiaries as at such date of determination (but, excluding from accounts
payable and accrued expenses, the current portion of long-term Indebtedness and all accrued
interest and federal, state, local and foreign income taxes) plus (E) the aggregate amount
of accrued contract losses of such Person and its consolidated Subsidiaries as at such date of
determination plus (F) the aggregate amount of all restructuring expenses (including
professional fees) incurred in connection with the Cases and unpaid by such Person and its
consolidated Subsidiaries as at such date of determination, in each case determined on a
consolidated basis in accordance with GAAP.




          “Non-Excluded Taxes”: as defined in Section 2.12(a).




          “Non-U.S. Lender”: as defined in Section 2.12(d).




          “Notes”: the collective reference to any promissory note evidencing Loans.




          “Obligations”: the unpaid principal of and interest on (including interest accruing
after the maturity of the Aggregate Principal Amount Outstanding and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any bankruptcy, insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower
to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal, interest, fees,
indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto)
or otherwise.




          “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the










 



13



execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.




          “Participant”: as defined in Section 9.6(c).




          “Patriot Act”: the USA Patriot Act, Title III of Pub. L. 107-56, signed into law on
October 26, 2001, as amended.




          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).




          “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.




          “Petition Date”: as defined in the recitals hereto.




          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.




          “Plan Effective Date”: the date on which the Plan of Reorganization became effective
as provided therein.




          “Plan of Reorganization”: as defined in the recitals hereto.




          “Principal Stockholders”: Fidelity Management & Research Co., Southpoint Capital
Advisors LP, Tontine Capital Partners L.P. and their respective Affiliates.




          “Pro Forma Balance Sheet”: as defined in Section 3.1(a).




          “Pro Forma Statement of Operations”: as defined in Section 3.1(a).




          “Projections”: as defined in Section 5.2(b).




          “Recovery Event”: any settlement of or payment in respect of any property or casualty
insurance claim arising from a single event or a series of related events or any condemnation
proceeding, in each case, relating to any asset of any Group Member that yields gross proceeds to
any Group Member in excess of $250,000.




          “Register”: as defined in Section 9.6(b).




          “Regulation U”: Regulation U of the Board as in effect from time to time.




          “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Group Member in connection therewith that are not applied to
prepay the Aggregate Principal Amount Outstanding pursuant to Section 2.6(a) as a result of the
delivery of a Reinvestment Notice.




          “Reinvestment Event”: any Recovery Event in respect of which the Borrower has
delivered a Reinvestment Notice.










 



14




          “Reinvestment Notice”: a written notice executed by a Responsible Officer stating
that no Event of Default has occurred and is continuing and that the Borrower (directly or
indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of a Recovery Event to acquire or repair tangible capital assets useful in its
business.




          “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire or repair tangible capital assets useful in the Borrower’s
business.




          “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the
Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair
tangible capital assets useful in the Borrower’s business with all or any portion of the relevant
Reinvestment Deferred Amount.




          “Related Parties”: as defined in Section 8.3.




          “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.




          “Repayment Option”: the Lenders’ option to demand repayment in full in cash of the
Aggregate Principal Amount Outstanding as described in Section 2.3.




          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived
under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.




          “Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Term Commitments then in effect and (b) thereafter, the Aggregate Principal
Amount Outstanding.




          “Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.




          “Residential EBIT”: solely with respect to the Residential Subsidiaries, for any
period, on a consolidated basis, Adjusted Net Earnings from Operations for such period
plus, to the extent deducted in the determination of Adjusted Net Earnings from Operations
for that period (but without duplication), the sum of federal, state, local and foreign income tax
expense, interest expense and other identified non-cash items not otherwise included which are
acceptable to (x) the ABL Facility Agent at any time prior to the BofA Loan Termination Date and
(y) at any time thereafter, the Initial Lenders.




          “Residential Subsidiaries”: the Subsidiaries of the Borrower listed on Schedule 1.1E.




          “Responsible Officer”: the chief executive officer, president, general counsel or
chief financial officer of the Borrower, but in any event, with respect to financial matters, the
chief financial officer or treasurer of the Borrower.




          “Restricted Payments”: as defined in Section 6.6.










 



15




          “Restructuring Expenses Reserve”: on any date of determination thereof, an amount
equal to difference between (i) the sum of all restructuring expenses (including professional fees)
incurred in connection with the Cases and unpaid by the Loan Parties as of such date and (ii) the
aggregate amount of Cash Collateral on deposit in all Cash Collateral Accounts in excess of
$20,000,000 on such date. If at any date of determination the aggregate amount of Cash Collateral
on deposit in all Cash Collateral Accounts in excess of $20,000,000 on such date is greater than
the sum of all restructuring expenses (including professional) incurred in connection with the
Cases and unpaid by the Loan Parties as of such date, then the Restructuring Expense Reserve shall
be $0.




          “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.




          “Second Lien Net Cash Proceeds”: in connection with an Asset Sale or a Recovery
Event, Net Cash Proceeds net of amounts actually (i) deposited in the Cash Collateral Account in an
amount not to exceed the book value of any Eligible Accounts and any Eligible Inventory (as each
such term is defined in the ABL Facility Agreement) subject of such Asset Sale or Recovery Event
and (ii) applied to repay the revolving loans outstanding under the ABL Facility Agreement.




          “Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Mortgages and all other security documents hereafter delivered to the Administrative
Agent granting a Lien on any property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.




          “Senior Convertible Notes”: the Series A 6.5% Senior Convertible Notes due 2014 and
Series B 6.5% Senior Convertible Notes due 2014 issued by the Borrower, together with the
subsidiary guarantees thereof.




          “Shutdown EBIT”: solely with respect to the Shutdown Subsidiaries, for any period, on
a consolidated basis, Adjusted Net Earnings from Operations for such period plus, to the
extent deducted in the determination of Adjusted Net Earnings from Operations for that period (but
without duplication), the sum of interest expense, federal, state, local and foreign income tax
expense and other identified non-cash items not otherwise included which are acceptable to (x) the
ABL Facility Agent at any time prior to the BofA Loan Termination Date and (y) at any time
thereafter, the Initial Lenders.




          “Shutdown Subsidiaries”: the Subsidiaries of the Borrower listed on Schedule 1.1F.




          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.




          “Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach
gives










 



16



rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.




          “Specified Change of Control”: a “Change of Control” (or any other defined term having
a similar purpose) as defined in any ABL Facility.




          “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.




          “Subsidiary Guarantor”: each Subsidiary of the Borrower other than any Excluded
Foreign Subsidiary.




          “Surety Bond”: any surety bond, insurance policy, indemnity agreement, guaranty,
letter of credit or other instrument provided by a third party (that is, excluding an Affiliate of
the obligor) to an obligee to assure the payment by and/or performance of an obligor.




          “Surety Collateral”: (a) all of the right, title and interest of the Loan Parties in
and to all existing and future Bonded Contracts and associated contract rights, (b) Bonded
Accounts, (c) all claims, rights and choses in action against any account debtor on any Surety Bond
or against any other Person with respect to any Surety Bond or Bonded Contract, (d) to the extent
assignable (other than to the extent that any such prohibition and assignment term would be
rendered ineffective pursuant to applicable law) all rights and actions that any Loan Party may
have or acquire in any subcontract, purchase order or other agreement in connection with any Bonded
Contract and against any subcontract, purchase order or other agreement with any Person furnishing
or agreeing to furnish or supply vehicles, labor, supplies, machinery or other inventory or
equipment in connection with or on account of any Bonded Contract, and against any surety or
sureties of any such subcontractor, laborer or other Person, (e) Bonded Equipment, (f) Bonded
Inventory, (g) any and all books, accounts, computer software and other computer stored
information, and any and all drawings, plans, specifications, shop and as-built drawings, in each
case, used in or necessary to fully perform all obligations and services required of any Loan Party
under the Bonded Contracts, (h) all progress schedules, work in process schedules (including, but
not limited to, estimates of completion costs), accounts receivable ledgers, accounts payable
ledgers and estimates of completion costs relating to any and all Bonded Contracts, and (i) any and
all proceeds (other than such proceeds which are negotiable instruments or cash or Cash Equivalents
in the possession or control of the ABL Facility Agent or the Administrative Agent, as applicable)
remaining due to the Group Members and products arising with respect thereto.




          “Swap Agreement”: any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries
shall be a “Swap Agreement”.










 



17




          “Term Commitment”: as to any Lender, the obligation of such Lender to make a Loan to
the Borrower in a principal amount not to exceed the amount set forth under the heading “Term
Commitment” opposite such Lender’s name on Schedule 1.1A. The original aggregate amount of the
Term Commitments is $53,000,000.




          “Term Percentage”: as to any Lender at any time, the percentage which such Lender’s
Term Commitment then constitutes of the Term Commitments (or, at any time after the Closing Date,
the percentage which such Lender’s Aggregate Principal Amount Outstanding constitutes of the total
Aggregate Principal Amount Outstanding of all of the Lenders).




          “Transactions”: the consummation of the Plan of Reorganization, including the
entering into and funding of the ABL Facility and the Loans hereunder and all related transactions
contemplated thereby and hereby.




          “Transferee”: any Assignee or Participant.




          “United States”: the United States of America.




          “Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital
Stock of which (other than directors’ qualifying shares required by law) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.




          “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower.




          1.2 Other Definitional Provisions.




          (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or other document made or
delivered pursuant hereto or thereto.




          (b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii)
the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect
of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings),
(iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time.




          (c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.




          (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.










 



18




SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS




          2.1 Term Commitments. Subject to the terms and conditions hereof, each Lender
severally agrees to make a term loan (each, a “Loan” and collectively, the “Loans”)
to the Borrower on the Closing Date in an amount not to exceed the amount of the Term Commitment of
such Lender.




          2.2 Procedure for Loan Borrowing. The Borrower shall give the Administrative Agent
and the Initial Lenders irrevocable notice (which notice must be received by the Administrative
Agent and the Initial Lenders prior to 1:00 P.M., New York City time, one Business Day prior to the
anticipated Closing Date) requesting that the Initial Lenders make the Loans on the Closing Date in
a single drawing and specifying the amount to be borrowed. Not later than 3:00 P.M., New York City
time, on the Closing Date each Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the Loan to be made by such
Initial Lender. The Administrative Agent shall disburse by wire transfer of immediately available
funds to an account specified by the Borrower the aggregate of the amounts made available to the
Administrative Agent by the Initial Lenders in immediately available funds.




          2.3 Maturity Date. The Aggregate Principal Amount Outstanding of each Lender shall
mature on the Maturity Date; provided that at any time on or after the fourth anniversary
of the Closing Date, the Required Lenders may, upon not less than sixty days’ written notice to the
Borrower, exercise the Repayment Option.




          2.4 Fees, etc. The Borrower agrees to pay the fees in the amounts and on the dates as
set forth in any fee agreements between the Borrower and the Administrative Agent and/or among the
Borrower and the Initial Lenders, and to perform any other obligations contained therein.




          2.5 Optional Prepayments. The Borrower may at any time and from time to time prepay
the Aggregate Principal Amount Outstanding, in whole or in part, subject to payment of the amounts
required by Section 2.7, upon irrevocable notice delivered to the Administrative Agent no later
than 1:00 P.M., New York City time, five Business Days prior thereto. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender. If any such notice is given,
the amount specified in such notice shall be due and payable on the date specified therein,
together with payment of (i) any cash interest (as opposed to paid in kind interest) that has
accrued to the date of such prepayment on the Aggregate Principal Amount Outstanding so prepaid and
(ii) all amounts required to be paid pursuant to Section 2.7(a). Partial prepayments of Aggregate
Principal Amount Outstanding shall be in an aggregate principal amount of $500,000 or a whole
multiple thereof.




          2.6 Mandatory Prepayments(a) . (a) (i) If on any date prior to the BofA Loan
Termination Date, any Group Member shall receive Second Lien Net Cash Proceeds from any Asset Sale,
(x) 331/3% of such Second Lien Net Cash Proceeds from such Asset Sale shall be applied on such date
toward the prepayment of the Aggregate Principal Amount Outstanding, (y) 331/3% of such Second Lien
Net Cash Proceeds shall be retained by the Borrower for general corporate purposes and (z) 331/3%
shall be deposited into the Cash Collateral Account. If on any date after the BofA Loan
Termination Date any Group Member shall receive Net Cash Proceeds from any Asset Sale, 100% of such
Net Cash Proceeds shall be applied on such date toward the prepayment of the Aggregate Principal
Amount Outstanding.





          (ii) If on any date prior to the BofA Loan Termination Date any Group Member shall
receive Second Lien Net Cash Proceeds from any Recovery Event, 100% of such Second Lien Net
Cash Proceeds shall be applied on such date toward the prepayment of the Aggregate Principal
Amount Outstanding. If on any date after the BofA Loan Termination Date any Group Member
shall receive Net Cash Proceeds from any Recovery Event, 100% of such Net Cash









 



19



Proceeds
shall be applied on such date toward the prepayment of the Aggregate Principal Amount
Outstanding. Notwithstanding the foregoing, (x) the Borrower may, pursuant to one or more
Reinvestment Notices, retain up to $1,000,000 from Recovery Events in any fiscal year of the
Borrower and (y) on each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be applied toward
the prepayment of the Aggregate Principal Amount Outstanding as set forth in Section 2.6(b).



          (b) If (x) after the Closing Date, Second Lien Net Cash Proceeds shall have been deposited
into the Cash Collateral Account and (y) either contemporaneously with or at any time after such
deposit, any amount shall be released from the Cash Collateral Account by the ABL Facility Agent to
be turned over to the Borrower other than in connection with a refinancing of the ABL Facility
(which refinancing requires that a cash collateral account substantially similar to the Cash
Collateral Account be established), an amount equal to the lesser of the amount deposited and the
amount released shall be applied on the date of release toward the prepayment of the Aggregate
Principal Amount Outstanding.




          (c) Amounts to be applied in connection with prepayments made pursuant to this Section 2.6
shall be applied to the prepayment of the Aggregate Principal Amount Outstanding in accordance with
Section 2.10(b). Each prepayment of the Aggregate Principal Amount Outstanding under this Section
2.6 shall be accompanied by payment at such time of (i) any cash interest (as opposed to paid in
kind interest) that has accrued to the date of such prepayment on the amounts so prepaid and (ii)
all amounts required to be paid pursuant to Section 2.7(a).




          2.7 Additional Terms Relating to Prepayments.




          (a) In the event that all or any of Aggregate Principal Amount Outstanding is voluntarily or
mandatorily prepaid under Sections 2.5 or 2.6 for any reason at any time following the Closing
Date, the Borrower shall at such time pay an additional amount equal to: (i) 5.5% of the amount of
Aggregate Principal Amount Outstanding prepaid, if such prepayment occurs on or prior to the first
anniversary of the Closing Date; (ii) 4.5% of the amount of Aggregate Principal Amount Outstanding
prepaid, if such prepayment occurs after the first anniversary of the Closing Date but on or before
the second anniversary of the Closing Date; (iii) 3.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the second anniversary of the Closing Date but
on or before the third anniversary of the Closing Date; (iv) 2.5% of the amount of Aggregate
Principal Amount Outstanding prepaid, if such prepayment occurs after the third anniversary of the
Closing Date but on or before the fourth anniversary of the Closing Date; (v) 1.5% of the amount of
Aggregate Principal Amount Outstanding prepaid, if such prepayment occurs after the fourth
anniversary of the Closing Date but on or before the fifth anniversary of the Closing Date; and
(vi) 0.5% of the amount of Aggregate Principal Amount Outstanding prepaid, if
such prepayment occurs after the fifth anniversary of the Closing Date but on or before the
sixth anniversary of the Closing Date; provided that the Borrower shall not be required to
pay the amounts set forth in clauses (iv), (v) or (vi) if such prepayment occurs solely as a result
of the exercise of the Repayment Option under Section 2.3.




          (b) If, after giving effect to any optional or mandatory prepayment under Sections 2.5 or 2.6,
the Aggregate Principal Amount Outstanding is less than $12,000,000, then the Borrower shall
immediately prepay in full in cash the Aggregate Principal Amount Outstanding. The Borrower shall,
together with such prepayment, also pay (i) any cash interest (as opposed to paid in kind interest)
that has accrued to the date of the prepayment on the Aggregate Principal Amount Outstanding so
prepaid and (ii) all amounts required to be paid pursuant to Section 2.7(a).




          2.8 Interest Rates and Payment Dates.










 



20




          (a) The Aggregate Principal Amount Outstanding shall bear interest at the Applicable Interest
Rate; provided that if either or both paragraphs (b) and (c) of this Section 2.8 shall be
applicable, the Aggregate Principal Amount shall bear interest at the Adjusted Applicable Interest
Rate as therein provided.




          (b) If at any time the amount outstanding under the ABL Facility exceeds the ABL Facility
Amount at such time (exclusive of any letters of credit issued under the ABL Facility in connection
with or to (i) insurance contracts, (ii) surety bonds, (iii) any of the Loan Parties’
self-insurance program or (iv) vendors for purposes of purchases of products and services and
customers to secure performance, in each case in the ordinary course of business), then the
Adjusted Applicable Interest Rate under the Facility shall be for the next succeeding fiscal
quarter of the Borrower an amount equal to the sum of (I) the Applicable Interest Rate or, if
Section 2.8(c) is in effect, the Adjusted Applicable Interest Rate determined pursuant to such
section, and (II) the product of (x) a whole number equal to the difference between (i) the peak
amount outstanding under the ABL Facility in such earlier fiscal quarter of the Borrower and (ii)
the ABL Facility Amount (with such difference to be divided by $1,000,000 and rounded up to the
next whole number) and (y) 0.10%.




          (c) If, as of the end of any fiscal quarter ending on or prior to December 31, 2006, the
EBITDA-CapEx Level for such quarter is less than zero (a “Negative EBITDA-CapEx Level”),
then the Adjusted Applicable Interest Rate under the Facility effective as of the first day of the
next succeeding fiscal quarter shall be an amount equal to the sum of (I) the Applicable Interest
Rate or, if Section 2.8(b) is in effect, the Adjusted Applicable Interest Rate determined pursuant
to such section, and (II) the product of (x) the sum of the absolute values of all Negative
EBITDA-CapEx Levels since January 1, 2006 through December 31, 2006 (with such amounts to be
divided by $1,000,000 and rounded up to the next whole number) and (y) 0.15%. If the Adjusted
Applicable Interest Rate under this paragraph (c) shall become effective, it shall remain in effect
until the earlier of (i) the Maturity Date and (ii) the first day of the fiscal quarter immediately
following the end of two consecutive fiscal quarters of the Borrower in which the EBITDA-CapEx
Level exceeded zero and the cumulative EBITDA-CapEx Level from the Closing Date until the end of
the second such fiscal quarter is greater than the absolute value of the cumulative Negative
EBITDA-CapEx Levels; provided that, if the EBITDA Cap-Ex Level is greater than zero for
more than two consecutive fiscal quarters, but the cumulative EBITDA-CapEx Level from the Closing
Date until the end of the second such fiscal quarter is less than zero, the Adjusted Applicable
Interest then in effect shall be reduced by the product of (x) the EBITDA-CapEx Levels for such
fiscal quarters (with such amounts to be divided by $1,000,000 and rounded up to the next whole
number) and
(y) 0.15%; provided that such Adjusted Applicable Interest Rate shall not be less than
the Applicable Interest Rate.




          (d) (i) If all or a portion of the Aggregate Principal Amount Outstanding shall not be paid
when due (whether at the stated maturity, by acceleration or otherwise), the Aggregate Principal
Amount Outstanding (whether or not overdue) shall bear interest at a rate per annum equal to the
rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 2.8 plus 2% and (ii) if all or a portion of any interest payable on the Aggregate
Principal Amount Outstanding, any fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section 2.8 plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (as
well after as before judgment).




          (e) Interest shall be payable in arrears on each Interest Payment Date; provided that
for the initial Eligible Interest Capitalization Period, interest accruing on the Aggregate
Principal Amount Outstanding shall be capitalized and, for each Eligible Interest Capitalization
Period thereafter, interest










 



21



accruing on the Aggregate Principal Amount Outstanding shall be
capitalized at the Borrower’s option for subsequent Eligible Interest Capitalization Periods only
if the Borrower shall have provided written notice to the Administrative Agent and the Initial
Lenders of the exercise of such option not less than 10 Business Days prior to the commencement of
each such subsequent Eligible Interest Capitalization Period. Notwithstanding anything to the
contrary contained in this paragraph (e):





          (i) if as of the end of any fiscal quarter ending on or prior to December 31, 2006,
there is a Negative EBITDA-CapEx Level, the option of capitalizing interest shall be
terminated immediately until the earlier of (x) the Maturity Date and (y) the first day of
the fiscal quarter immediately following the end of two consecutive fiscal quarters of the
Borrower in which the EBITDA-CapEx Level exceeded zero and such EBITDA-CapEx Level for such
two fiscal consecutive fiscal quarters is greater in the aggregate than the absolute value
of the cumulative Negative EBITDA-CapEx Level; provided that notwithstanding that
there may be a Negative EBITDA-CapEx Level as of the fiscal quarter ended March 31, 2006,
interest accruing on the Aggregate Principal Amount Outstanding shall be capitalized for the
initial Eligible Interest Capitalization Period at a rate equal to the Adjusted Applicable
Interest Rate plus 0.50%; provided further that, after the initial
Eligible Interest Capitalization Period, interest accruing on the Aggregate Principal Amount
Outstanding for subsequent Eligible Interest Capitalization Periods shall be at an interest
rate equal to (x) the Adjusted Applicable Interest Rate, if such interest is to be paid in
cash during such Eligible Interest Capitalization Period, or (y) the Adjusted Applicable
Interest Rate plus 0.50%, if such interest is to be capitalized during such Eligible
Interest Capitalization Period at the Borrower’s option, except that, with respect to clause
(y), the Adjusted Applicable Interest Rate shall not be increased by 0.50% for subsequent
Eligible Interest Capitalization Periods if the EBITDA-CapEx Level exceeds zero for two
consecutive fiscal quarters after the fiscal quarter ended March 30, 2006 and such
EBITDA-CapEx Level for such two fiscal consecutive quarters is greater in the aggregate than
the absolute value of the cumulative Negative EBITDA-CapEx Level from January 1, 2006
through the fiscal quarter ended March 31, 2006 and any subsequent fiscal quarters of the
Borrower in which there were Negative EBITDA-CapEx Levels; and




          (ii) if an Event of Default shall have occurred and be continuing, the option to
capitalize interest shall be suspended automatically as of the date of such Event of Default
for such Eligible Interest Capitalization Period and any subsequent Eligible Interest
Capitalization Period during which such Event of Default shall be continuing and interest
shall be payable in
arrears in immediately available funds beginning on the next Interest Payment Date
after the Event of Default, or upon acceleration, and in the case of interest payable
pursuant to Section 2.8(d), on demand.


          2.9 Computation of Interest and Fees(a) . (a) Interest and fees payable pursuant
hereto shall be calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and amount of any change in the Applicable Interest Rate as a result of the
adjustments made pursuant to Section 2.8.



          (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the adjustments made to the Applicable Interest Rate under
Section 2.8(b) or (c).










 



22



          2.10 Pro Rata Treatment and Payments(a) . (a) Each borrowing by the Borrower from
the Lenders hereunder and each payment by the Borrower on account of any fee payable to the Lenders
shall be made pro rata according to the respective Term Percentages of the Lenders.



          (b) Each payment (including each prepayment) by the Borrower on account of principal of and
interest on the Aggregate Principal Amount Outstanding shall be made pro rata
according to the Aggregate Principal Amount Outstanding of the respective Lenders. Amounts so
prepaid may not be reborrowed.



          (c) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding sentence, interest
thereon shall be payable at the then applicable rate during such extension.



          2.11 Requirements of Law(a) . (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance by any Lender with
any request or directive (whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:





          (i) shall subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 2.12 and changes in the rate of tax on the
overall net income of such Lender);




          (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender; or




          (iii) shall impose on such Lender any other condition;


and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower in writing (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.




          (b) If any Lender shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
such Lender or any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into










 



23



consideration such Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such corporation for such reduction.




          (c) A certificate as to any additional amounts payable pursuant to this Section 2.11 submitted
by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. Notwithstanding anything to the contrary in this Section 2.11, the
Borrower shall not be required to compensate a Lender pursuant to this Section 2.11 for any amounts
incurred more than nine months prior to the date that such Lender notifies the Borrower of such
Lender’s intention to claim compensation therefor; provided that, if the circumstances
giving rise to such claim have a retroactive effect, then such nine-month period shall be extended
to include the period of such retroactive effect. The obligations of the Borrower pursuant to this
Section 2.11 shall survive the termination of this Agreement and the payment of the Aggregate
Principal Amount Outstanding and all other amounts payable hereunder.




          2.12 Taxes.




          (a) All payments made by the Borrower under this Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection between the
Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the
Administrative Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable
to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative
Agent or such Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to
such Lender’s failure to comply with the requirements of paragraph (d) or (e) of this Section or
(ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with
respect to such Non-Excluded Taxes pursuant to this paragraph.




          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.




          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the Administrative Agent for its own account or for
the account of the relevant Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to
the Administrative Agent the required receipts or other required documentary evidence, the Borrower
shall










 



24



indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a result of any such
failure.




          (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related participation shall
have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit H and a Form W-8BEN, or any other applicable U.S. Internal
Revenue Service Forms (including, without limitation, U.S. Internal Revenue Service Form W-81MY)
or, in each case, any subsequent versions thereof or successors thereto, properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by the Borrower under this Agreement and the other Loan
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes
a party to this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered certificate to the Borrower
(or any other form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.




          (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with
a copy to the Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed documentation prescribed
by applicable law as will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender is legally entitled to complete, execute and deliver such
documentation and in such Lender’s judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.




          (f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has
received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.12, it shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section 2.12 with respect to
the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender
to make available its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.










 



25




          (g) The agreements in this Section 2.12 shall survive the termination of this Agreement and
the payment of the Aggregate Principal Amount Outstanding and all other amounts payable hereunder.




          2.13 Change of Lending Office. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 2.11 or 2.12(a) with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to
suffer no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section 2.13 shall affect or postpone any of the obligations of the Borrower or the
rights of any Lender pursuant to Section 2.11 or 2.12(a).




          2.14 Replacement of Lenders. The Borrower shall be permitted to replace any Lender
that (a) requests reimbursement for amounts owing pursuant to Section 2.11 or 2.12(a) or (b)
defaults in its obligation to make Loans hereunder, with a replacement financial institution;
provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior
to any such replacement, such Lender shall have taken no action under Section 2.13 so as to
eliminate the continued need for payment of amounts owing pursuant to Section 2.11 or 2.12(a), (iv)
the replacement financial institution shall purchase, at par, the Aggregate Principal Amount
Outstanding owing to such Lender and other amounts owing to such replaced Lender on or prior to the
date of replacement, (v) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent (at the direction of the Required Lenders),
(vi) the replaced Lender shall be obligated to make such replacement in accordance with the
provisions of Section 9.6 (provided that the Borrower shall be obligated to pay the registration
and processing fee referred to
therein), (vii) until such time as such replacement shall be consummated, the Borrower shall
pay all additional amounts (if any) required pursuant to Section 2.11 or 2.12(a), as the case may
be, and (viii) any such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.




SECTION 3. REPRESENTATIONS AND WARRANTIES




          To induce the Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans, the Borrower hereby represents and warrants to the Administrative Agent and each Lender
that:




          3.1 Financial Condition.




          (a) The unaudited pro forma consolidated balance sheet of the Borrower and its
consolidated Subsidiaries attached to the Disclosure Statement as at the date set forth therein
(including the notes thereto) (the “Pro Forma Balance Sheet”), copies of which have
heretofore been furnished to the Initial Lenders, has been prepared giving effect (as if such
events had occurred on such date) to (i) the consummation of the Transactions, (ii) the Loans to be
made and the ABL Facility to be consummated on the Closing Date and the use of proceeds thereof and
(iii) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance
Sheet has been prepared based on reasonable estimates and assumptions and the most current
information available to the Borrower as of the date of delivery thereof, and presents fairly on a
pro forma basis the estimated financial position of Borrower and its consolidated
Subsidiaries as at the date set forth therein, assuming that the events specified in the preceding
sentence had actually occurred at such date. The pro forma statement of operations
attached to the Disclosure Statement for the seven-month period ending on the date set forth
therein (including the notes thereto) (the “Pro Forma Statement of Operations”), copies of
which have heretofore been furnished to the Initial










 



26



Lenders, has been prepared giving effect (as if
such events had occurred on the date set forth therein) to (i) the consummation of the
Transactions, (ii) the Loans to be made and the ABL Facility to be consummated on the Closing Date
and the use of proceeds thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Statement of Operations has been prepared based on reasonable estimates
and assumptions and the most current information available to the Borrower as of the date of
delivery thereof, and presents fairly on a pro forma basis the estimated results of
operations of Borrower and its consolidated Subsidiaries for the period set forth therein, assuming
that the events specified in the preceding sentence had actually occurred on the date set forth
therein.




          (b) The audited consolidated balance sheets of the Borrower and its Subsidiaries as at
September 30, 2005, and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an unqualified report from
Ernst & Young LLP, present fairly in all material respects the consolidated financial condition of
the Borrower and its Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the respective fiscal years then ended. The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2005, and the
related unaudited consolidated statements of income and cash flows for the three-month period ended
on such date, present fairly in all material respects the consolidated financial condition of the
Borrower and its Subsidiaries as at such date, and the consolidated results of their operations and
their consolidated cash flows for the three-month period then ended (subject to normal year-end
audit adjustments). All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and disclosed therein),
subject, in the case of unaudited financial statements, to normal year-end audit
adjustments and the absence of footnotes. No Group Member has any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives that are not reflected in the most recent
financial statements referred to in this paragraph. During the period from January 1, 2006 to and
including the date hereof there has been no Disposition by any Group Member of any material part of
its business or property.




          3.2 No Change. Since January 1, 2006, there has been no development or event that has
had or could reasonably be expected to have a Material Adverse Effect other than any change of the
type that customarily occurs as a result of the commencement of the Cases.




          3.3 Existence; Compliance with Law. Each Group Member (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation or other organization and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the conduct of its
business requires such qualification except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.




          3.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power and
authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Party
has taken all necessary organizational action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the
extensions of credit on the terms and conditions of this Agreement. No consent or authorization
of, filing with, notice to or other










 



27



act by or in respect of, any Governmental Authority or any
other Person is required in connection with the Transactions and the extensions of credit hereunder
or with the execution, delivery, performance, validity or enforceability of this Agreement or any
of the Loan Documents, except (i) Bankruptcy Court approval, (ii) consents, authorizations, filings
and notices described in Schedule 3.4, which consents, authorizations, filings and notices have
been obtained or made and are in full force and effect and (iii) the filings referred to in Section
3.19. Each Loan Document has been duly executed and delivered on behalf of each Loan Party party
thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute,
a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each
such Loan Party in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).




          3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the
other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of any Group Member and will not result in, or
require, the creation or imposition of any Lien on any of their respective properties or revenues
pursuant
to any Requirement of Law or any such Contractual Obligation (other than the Liens created by
the Security Documents). No Requirement of Law or Contractual Obligation applicable to the
Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.




          3.6 Litigation. Other than the Bankruptcy Court consideration of the Plan of
Reorganization and any other litigation described in the Disclosure Statement, no litigation,
investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Borrower, threatened by or against any Group Member or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a
Material Adverse Effect.




          3.7 No Default. No Group Member is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.




          3.8 Ownership of Property; Liens. Each Group Member has title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any Lien except as
permitted by Section 6.3. Schedule 1.1C lists, as of the Closing Date, each parcel of owned real
property located in the United States and held by the Borrower or any of its Subsidiaries that has
a value, in the reasonable opinion of the Borrower, in excess of $100,000.




          3.9 Intellectual Property. Except as would not reasonably be expected to have a
Material Adverse Effect, each Group Member owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted. No material claim has been
asserted and is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know
of any valid basis for any such claim. To the Borrower’s knowledge, the use of Intellectual
Property by each Group Member does not infringe on the rights of any Person in any material
respect.




          3.10 Taxes. Each Group Member has filed or caused to be filed all Federal, state and
other material tax returns that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any Governmental Authority
(other than any the










 



28



amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the relevant Group Member); no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.




          3.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be
used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of
the quoted terms under Regulation U as now and from time to time hereafter in effect for any
purpose that violates the provisions of the Regulations of the Board or (b) for any purpose that
violates the provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1, as applicable, referred to in Regulation U.




          3.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Group
Member pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment
made to employees of each Group Member have not been in violation of the Fair Labor Standards Act
or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from
any Group Member on account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the relevant Group Member.




          3.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or deemed made with respect
to any Plan, and each Plan, excluding each Multiemployer Plan, has complied in all material
respects with the applicable provisions of ERISA and the Code. To the knowledge of the Borrower,
each Multiemployer Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of
the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a
material amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete or
partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to
result in a material liability under ERISA, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is made or deemed made.
No such Multiemployer Plan is in Reorganization or Insolvent.




          3.14 Investment Company Act; Other Regulations. No Loan Party is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any
Requirement of Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness.




          3.15 Subsidiaries. Except as disclosed to the Administrative Agent and the Initial
Lenders by the Borrower in writing from time to time after the Closing Date, (a) Schedule 3.15 sets
forth the name and jurisdiction of organization of each Subsidiary and, as to each such Subsidiary,
the percentage of each
class of Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors’ qualifying shares) of any nature relating to any










 



29



Capital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents or as
disclosed on Schedule 3.15.




          3.16 Use of Proceeds. The proceeds of the Loans shall be used to finance the Loan
Parties’ obligations under the Plan of Reorganization, including to repay in full the holders of
the Senior Convertible Notes, and to pay related fees and expenses arising from this Facility and
for general corporate purposes.




          3.17 Environmental Matters. Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:




          (a) each Group Member: (i) is, and within the period of all applicable statutes of limitation
has been, in compliance with all applicable Environmental Laws; (ii) holds all Environmental
Permits (each of which is in full force and effect) required for any of its current operations or
for any property owned, leased, or otherwise operated by it; (iii) is, and within the period of all
applicable statutes of limitation has been, in compliance with all of its Environmental Permits;
and (iv) reasonably believes that: each of its Environmental Permits will be timely renewed and
complied with; any additional Environmental Permits that may be required of it will be timely
obtained and complied with; and compliance with any Environmental Law that is or is expected to
become applicable to it will be timely attained and maintained;




          (b) Materials of Environmental Concern are not present at, on, under, in, or about any real
property currently or formerly owned, leased or operated by any Group Member or at any other
location (including, without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal) which could
reasonably be expected to (i) give rise to liability of any Group Member under any applicable
Environmental Law or otherwise result in costs to any Group Member, or (ii) interfere with any
Group Member’s continued operations, or (iii) impair the fair saleable value of any real property
owned or leased by any Group Member;




          (c) there is no judicial, administrative, or arbitral proceeding (including any notice of
violation or alleged violation) under or relating to any Environmental Law to which any Group
Member is, or to the knowledge of the Borrower will be, named as a party that is pending or, to the
knowledge of the Borrower, threatened;




          (d) no Group Member has received any written request for information, or been notified that it
is a potentially responsible party under or relating to the federal Comprehensive Environmental
Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any
Materials of Environmental Concern;




          (e) no Group Member has entered into or agreed to any consent decree, order, or settlement or
other agreement, nor is subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral, or other forum, relating to compliance with or liability under
any Environmental Law; and




          (f) no Group Member has assumed or retained, by contract or operation of law, any liabilities
of any kind, fixed or contingent, known or unknown, under any Environmental Law or with respect to
any Material of Environmental Concern.




          3.18 Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Loan Document, the Disclosure Statement, the financial statements identified
in










 



30



Section 3.1 or any other document, certificate or statement furnished by or on behalf of any
Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so furnished, any untrue statement of
a material fact or omitted to state a material fact necessary to make the statements contained
herein or therein not misleading. The projections and pro forma financial
information contained in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a material amount. There is
no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Loan Documents or in any other
documents, certificates and statements furnished to the Administrative Agent and the Lenders for
use in connection with the transactions contemplated hereby and by the other Loan Documents.




          3.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective to
create in favor of the Administrative Agent, for its benefit and for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Collateral described therein and proceeds
thereof. In the case of the Pledged Stock described in the Guarantee and Collateral Agreement,
when stock certificates representing such Pledged Stock are delivered to the ABL Facility Agent,
and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when
financing statements and other filings specified on Schedule 3.19(a) in appropriate form are filed
in the offices specified on Schedule 3.19(a), the Guarantee and Collateral Agreement shall
constitute a perfected Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in
the Guarantee and Collateral Agreement), in each case prior and superior in right to any other
Person, subject to the Intercreditor Agreement and except for Liens permitted by Section 6.3,
including the Liens securing the obligations under the ABL Facility Agreement.




          (b) Each Mortgage is effective to create in favor of the Administrative Agent, for its benefit
and for the benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Property
described therein and proceeds thereof, and when such Mortgage is filed in the offices specified on
Schedule 3.19(c), such Mortgage shall constitute a perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in the Mortgaged Property described therein and the
proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each
case prior and superior in right to any other Person, except for Liens permitted by Section 6.3,
including the Liens securing the obligations under the ABL Facility Agreement.




          3.20 Solvency. The Borrower is, and the Borrower and its Subsidiaries taken as a whole are, and after
giving effect to the Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be, Solvent.




          3.21 Certain Documents. The Borrower has delivered to the Administrative Agent a
complete and correct copy of the Plan of Reorganization, the Confirmation Order and the ABL
Facility Agreement, including any amendments, supplements or modifications with respect to any of
the foregoing.




SECTION 4. CONDITIONS PRECEDENT




          4.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make
the initial extension of credit requested to be made by it is subject to the satisfaction, prior to
or










 



31



concurrently with the making of such extension of credit on the Closing Date, of the following
conditions precedent:





          (a) Credit Agreement; Loan Documents. The Administrative Agent and the Initial
Lenders shall have received (i) this Agreement, executed and delivered by the Administrative
Agent, the Borrower and each Person listed on Schedule 1.1A, (ii) the Guarantee and
Collateral Agreement, executed and delivered by the Borrower and each Subsidiary Guarantor
and (iii) the Intercreditor Agreement executed and delivered by each party thereto.




          (b) DIP Credit Facility. The Initial Lenders shall have received satisfactory
evidence that (i) the DIP Credit Facility and all commitments thereunder shall have been
terminated and all amounts thereunder shall have been repaid or otherwise satisfied in full
and all Liens and security interests granted in connection therewith shall have been
terminated or released or (ii) the DIP Credit Facility shall have been converted, pursuant
to the Plan of Reorganization, into a commitment to provide the ABL Facility to the Loan
Parties after the Closing Date, and no pre-petition indebtedness, debtor-in-possession
financing or other claims against the Loan Parties shall remain outstanding as obligations
of the Loan Parties, except to the extent converted as set forth in clause (ii) above,
outstanding letters of credit deemed issued under the ABL Facility or as otherwise
specifically contemplated by the Plan of Reorganization.




          (c) Plan of Reorganization; Confirmation Order. The Confirmation Order
confirming the Plan of Reorganization (i) shall be in form and substance reasonably
satisfactory to the Initial Lenders and shall authorize the Loan Parties to execute and
deliver this Agreement and perform their obligations hereunder and (ii) shall be in full
force and effect and shall not have been reversed or modified and shall not be stayed or
subject to a motion to stay, the period for appealing the Confirmation Order shall have
elapsed and the Confirmation Order shall have become a Final Order (as defined in the Plan
of Reorganization in effect on the date hereof). No provision of the Plan of Reorganization
shall have been amended, supplemented or otherwise modified in any material respect that is
adverse to the Lenders without the prior consent of the Initial Lenders. The Plan Effective
Date shall have occurred (and all conditions precedent thereto as set forth in the Plan of
Reorganization shall have been satisfied) or shall occur simultaneously with the closing of
the Facility. The documentation to effect the Plan of Reorganization including, without
limitation, the ABL Facility Agreement, shall have reasonably satisfactory terms and
conditions, and no provision of such documentation shall have been waived, amended,
supplemented or otherwise modified in any material respect without approval of the Initial
Lenders. The capitalization, structure and equity ownership of each Loan Party, and the
organizational documents and senior management of the Loan Parties, after the
consummation of the Plan of Reorganization, shall be consistent in all material respects
with the description set forth in the Disclosure Statement.




          (d) Financial Statements. The Initial Lenders shall have received (i)
unaudited interim consolidated financial statements of the Borrower for each quarterly
period ended subsequent to the date of the most recent financial statements delivered to the
Initial Lenders, provided that at least 45 days have elapsed since the end of such quarter,
and (ii) any budgets, projections or any other financial information delivered to Bank of
America, N.A. during the Cases.




          (e) Approvals. All governmental and third party approvals necessary in
connection with the Transaction, the financing contemplated thereby and hereby and the
continuing operations of the Group Members (including shareholder approvals, if any) shall
have been obtained on satisfactory terms and shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or threatened
by any competent authority that would









 



32



restrain, prevent or otherwise impose adverse
conditions on the Transactions or the financing thereof or any of the transactions
contemplated hereby.




          (f) Lien Searches. The Initial Lenders shall have received the results of a
recent lien search in each relevant jurisdiction where the Loan Parties are organized, and
such search shall reveal no liens on any of the assets of the Loan Parties except for liens
permitted by the ABL Facility, Section 6.3 hereof or otherwise permitted by the Loan
Documents.




          (g) Fees. The Administrative Agent and the Initial Lenders shall have received
all fees and expenses (including the reasonable fees and expenses of legal counsel) required
to be paid for which invoices have been presented two Business Days before the Closing Date.




          (h) Closing Certificate; Certified Certificate of Incorporation; Good Standing
Certificates. The Initial Lenders shall have received (i) a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments, including the certificate of incorporation of each Loan Party
that is a corporation and (ii) a long form good standing certificate for each Loan Party
from its jurisdiction of organization. The Administrative Agent shall be reasonably
satisfied with the form and substance of the certificates of incorporation and by-laws or
other applicable organizational documents of each Loan Party.




          (i) Legal Opinions. The Administrative Agent and the Initial Lenders shall
have received the following executed legal opinions:




          (i) the legal opinion of Vinson & Elkins LLP, counsel to the Borrower and its
Subsidiaries, substantially in the form of Exhibit F; and




          (ii) the legal opinions of local counsel in Maryland and of such other special
and local counsel as may be required by the Administrative Agent or the Initial
Lenders.




Each such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Initial Lenders may reasonably require.




          (j) Pledged Stock; Stock Powers; Pledged Notes. The ABL Facility Agent shall
have received (a) (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral Agreement together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the pledgor thereof
and (ii) each
promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee
and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.




          (k) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents or under law
or reasonably requested by the Initial Lenders to be filed, registered or recorded in order
to create in favor of the Administrative Agent, for its benefit and for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by Section 6.3),
subject to the Intercreditor Agreement, shall be in proper form for filing, registration or
recordation.




          (l) Mortgages, etc. The Administrative Agent and the Initial Lenders shall
have received a Mortgage with respect to the Mortgaged Property, executed and delivered by a
duly authorized officer of each party thereto.









 



33



          (m) Insurance. The Initial Lenders and the Administrative Agent shall have
received insurance certificates satisfying the requirements of Section 5.2(b) of the
Guarantee and Collateral Agreement.




          (n) Other Documents. The Administrative Agent and the Initial Lenders shall
have received such documents and other instruments as the Administrative Agent, the Initial
Lenders or their respective counsel may reasonably request.




          (o) Representations and Warranties. Each of the representations made by any
Loan Party in or pursuant to the Loan Documents including, without limitation, the material
adverse change and litigation representations shall be true and correct in all material
respects as of the Closing Date.




          (p) No Default. No Default or Event of Default shall have occurred and be
continuing on the Closing Date after giving effect to the Loans made on the Closing Date.




          (q) The ABL Facility. The ABL Facility Agreement shall provide for a revolving
commitment for the Borrower in an aggregate principal amount not to exceed $80,000,000 and
shall otherwise be on terms and conditions reasonably satisfactory to the Initial Lenders.


Notwithstanding the foregoing, certain conditions specified in this Section 4.1 may be satisfied on
the date(s) required by Section 5.10.




SECTION 5. AFFIRMATIVE COVENANTS




                 The Borrower hereby agrees that, so long as any Loan or other amount is owing to any Lender or
the Administrative Agent hereunder, the Borrower shall and shall cause each of its Subsidiaries to:




                 5.1 Financial Statements. Furnish to the Administrative Agent for the benefit of each
Lender:





          (a) as soon as available, but in any event within 90 days after the end of each fiscal
year of the Borrower, a copy of the audited consolidated balance sheet of the Borrower and
its
consolidated Subsidiaries as at the end of such year and the related audited
consolidated statements of income and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on without a “going
concern” or like qualification or exception, or qualification arising out of the scope of
the audit, by Ernst & Young LLP or other independent certified public accountants of
nationally recognized standing;




          (b) as soon as available, but in any event not later than 45 days after the end of each
of the first three quarterly periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and




          (c) as soon as available, but in any event not later than 30 days after the end of each
month occurring during each fiscal year of the Borrower (but within 60 days after the last
month in the Borrower’s fiscal year), the unaudited consolidated balance sheets of the
Borrower and its









 



34



consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated statements of income and of cash flows for such month and the portion
of the fiscal year through the end of such month, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit adjustments).


All such financial statements shall be complete and correct in all material respects and shall be
prepared in reasonable detail and in accordance with GAAP applied (except as approved by such
accountants or officer, as the case may be, and disclosed in reasonable detail therein)
consistently throughout the periods reflected therein and with prior periods, subject in the case
of unaudited financial statements to normal year-end audit adjustments and the absence of
footnotes.




                 5.2 Certificates; Other Information. Furnish to the Administrative Agent for the
benefit of each Lender (or, in the case of clause (g), to the relevant Lender):





          (a) concurrently with the delivery of the financial statements referred to in Section
5.1(a), a copy of the accountants’ letter to Borrower’s management that is prepared in
connection with such financial statements and a certificate of the independent certified
public accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event of Default
pursuant to Section 6.1, except as specified in such certificate;




          (b) concurrently with the delivery of any financial statements pursuant to Section 5.1,
(i) a certificate of a Responsible Officer stating that, to the best of each such
Responsible Officer’s knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied every condition contained
in this Agreement and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii) in the case
of quarterly or annual financial statements, (w) a Compliance Certificate containing all
information and calculations necessary for determining compliance by the Group Members with
the provisions of this Agreement referred to therein as of the last day of the fiscal
quarter or fiscal year of the Borrower, including, without limitation,
calculations of the EBITDA-CapEx Level for each such fiscal quarter or fiscal year and
the peak amount outstanding under the ABL Facility during each fiscal quarter, as the case
may be, (x) to the extent not previously disclosed to the Administrative Agent and the
Initial Lenders, a description of any change in the jurisdiction of organization of any Loan
Party, the name or corporate structure of any Loan Party and a list of any Intellectual
Property acquired by any Loan Party since the date of the most recent report delivered
pursuant to this clause (x) (or, in the case of the first such report so delivered, since
the Closing Date), (y) to the extent not previously disclosed to the Administrative Agent
and the Initial Lenders, certifications that no property of the type described in Section
5.9 as to which the Administrative Agent does not have a perfected Lien pursuant to the
Security Documents has been acquired and (z) no Subsidiary, including an Excluded Foreign
Subsidiary, has been formed or acquired or, if any such Subsidiary has been formed or
acquired, the Borrower has complied with the requirements of Section 5.9 with respect
thereto.




          (c) as soon as available, but in any event no later than 15 days prior to the end of
each fiscal year of the Borrower, projections with respect to the forthcoming three fiscal
years, year by year, of the Borrower and for the forthcoming fiscal year, month by month
(collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information









 



35



and assumptions and that such Responsible Officer
has no reason to believe that such Projections are incorrect or misleading in any material
respect;




    (d) within 45 days after the end of the first three fiscal quarters of the Borrower, a
narrative discussion and analysis of the financial condition and results of operations of
the Borrower and its Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal quarter, as compared to
the comparable periods of the previous year;




    (e) promptly prior to the execution thereof, copies of substantially final drafts of
any proposed amendment, supplement, waiver or other modification with respect to the ABL
Facility;




    (f) promptly after the sending or filing thereof, as the case may be, copies of all
financial statements and reports that the Borrower sends to the holders of any class of its
debt securities or public equity securities and copies of all financial statements and
reports that the Borrower may make to, or file with, the SEC or any Governmental Authority
which may be substituted therefor, or any national securities exchange;




    (g) promptly after the sending or filing thereof and upon the request of the
Administrative Agent or the Initial Lenders, the Borrower shall also furnish copies of any
annual report to be filed in accordance with ERISA in connection with each Plan that is an
“employee pension benefit plan,” within the meaning of Section 3(2) of ERISA; and




    (h) promptly, such additional financial and other information as any Lender may from
time to time reasonably request.



          5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its material obligations of whatever
nature, including, without limitation, taxes, except where the amount or validity thereof is
currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant Group Member.




          5.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in full
force and effect its organizational existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 6.4 and except, in the case of clause (ii)
above, to the extent that failure to do so would not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to
the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.




          5.5 Maintenance of Property; Insurance. (a) Keep all property useful and necessary
in its business in good working order and condition, ordinary wear and tear excepted and (b)
maintain with financially sound and reputable insurance companies insurance on all its property in
at least such amounts and against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business.




          5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation to its business and
activities and (b) permit representatives of any Lender upon reasonable advance notice to visit and
inspect










 



36



any of its properties and examine and make abstracts from any of its books and records at
any reasonable time, but only during normal business hours, and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and other condition of
the Group Members with officers and employees of the Group Members and with their independent
certified public accountants.




          5.7 Notices. Promptly give notice to the Administrative Agent and each Lender of:





    (a) the occurrence of any Default or Event of Default;




    (b) any (i) default or event of default under any Contractual Obligation of any Group
Member or (ii) litigation, investigation or proceeding that may exist at any time between
any Group Member and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;




    (c) any litigation or proceeding affecting any Group Member (i) in which the amount
involved is $1,000,000 or more and not covered by insurance, (ii) in which injunctive or
similar relief is sought or (iii) which relates to any Loan Document;




    (d) the following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event
with respect to any Single Employer Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer
Plan;




    (e) the following events: (i) any Governmental Authority has identified Borrower as a
potentially responsible party under any Environmental Law for the cleanup of Materials of
Environmental Concern at any location, whether or not owned, leased, or operated by the
Borrower; (ii) any Governmental Authority may deny any Environmental Permit held by, or is
refusing to renew any Environmental Permit sought by, Borrower; or (iii) any property owned,
leased, or operated by the Borrower is being listed on, or proposed for listing on, any list
maintained by any Governmental Authority, including without limitation the National
Priorities List (“NPL”) and the Comprehensive Environmental Response, Compensation and
Liability Information System (“CERCLIS”) maintained by the U.S. Environmental Protection
Agency and any similar list maintained by any other federal, state, local, or other
authority; and




    (f) any development or event that has had or could reasonably be expected to have a
Material Adverse Effect.


Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
relevant Group Member proposes to take with respect thereto.




          5.8 Environmental Laws.




          (a) Comply in all material respects with, and ensure compliance in all material respects by
all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply
in all material respects with and maintain, and ensure that all tenants and subtenants obtain and
comply in all material respects with and maintain, any and all Environmental Permits.










 



37




          (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.




          (c) Generate, use, treat, store, release, dispose of, and otherwise manage Materials of
Environmental Concern in a manner that would not reasonably be expected to result in a material
liability to any Group Member or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating, using, treating,
storing, releasing, disposing of, or otherwise managing Materials of Environmental Concern in a
manner that could reasonably be expected to result in a material liability to, or materially affect
any real property owned or operated by, any Group Member.




          5.9 Additional Collateral, etc.




          (a) With respect to any property acquired after the Closing Date by any Group Member of the
type constituting Collateral under the Guarantee and Collateral Agreement (other than (x) any
property described in paragraph (b) or (c) below, (y) any property subject to a Lien expressly
permitted by Section 6.3(g) and (z) property acquired by any Excluded Foreign Subsidiary) as to
which the Administrative Agent, for its benefit and for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative Agent and the Lenders such
amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative
Agent or the Initial Lenders deem necessary or advisable to grant to the Administrative Agent, for
its benefit and for the benefit of the Lenders, a security interest in such property and (ii) take
all actions necessary or advisable to grant to the Administrative Agent, for its benefit and for
the benefit of the Lenders, a perfected security interest in such property, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent or
the Initial Lenders.




          (b) With respect to any fee interest in any real property having a value (together with
improvements thereof) of at least $100,000 acquired after the Closing Date by any Group Member (or
which is owned by a Subsidiary which is acquired by a Group Member) (other than (x) any such real
property subject to a Lien expressly permitted by Section 6.3(g) and (y) real property acquired by
any Excluded Foreign Subsidiary), promptly (i) execute and deliver a Mortgage, in favor of the
Administrative Agent, for its benefit and for the benefit of the Lenders, covering such real
property and (ii) if requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative Agent.




          (c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or
acquired after the Closing Date by any Group Member (which, for the purposes of this paragraph (c),
shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent or the Initial Lenders deem necessary or advisable to grant
to the Administrative Agent, for its benefit and for the benefit of the Lenders, a perfected
security interest in the Capital Stock of such new Subsidiary that is owned by any Group Member,
(ii) prior to the BofA Loan Termination Date, deliver to the ABL Facility Agent and, thereafter, to
the Administrative Agent, the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for
the benefit of the Lenders a perfected










 



38



security interest in the Collateral described in the
Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent or
the Initial Lenders and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments,
and (iv) if requested by the Administrative Agent or the Initial Lenders, deliver to the
Administrative Agent legal opinions relating to the matters described above, which opinions shall
be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent and
the Initial Lenders.




          (d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing
Date by any Group Member (other than by any Group Member that is an Excluded Foreign Subsidiary),
promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent or the Initial Lenders deem necessary or advisable
to grant to the Administrative Agent, for its benefit and for the benefit of the Lenders, a
perfected security interest in the Capital Stock, which shall be a certificated security, of such
new Subsidiary that is owned by any such Group Member (provided that in no event shall more than
66% of
the total outstanding voting Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) prior to the BofA Loan Termination Date, deliver to the ABL Facility Agent and,
thereafter, to the Administrative Agent, the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized officer of the
relevant Group Member, and take such other action as may be necessary or, in the opinion of the
Administrative Agent or the Initial Lenders, desirable to perfect the Administrative Agent’s
security interest therein, and (iii) if requested by the Administrative Agent or the Initial
Lenders, deliver to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to
the Administrative Agent and the Initial Lenders.




          (e) The Borrower hereby agrees (a) that if the ABL Facility Agent or any lender party to the
ABL Facility Agreement is granted a Lien in any property of any Loan Party or any other Person as
security for the ABL Facility, the Borrower shall ensure that the Administrative Agent, on behalf
of the Lenders, shall also promptly receive a Lien in such property, and shall ensure that the
Administrative Agent’s Lien in such property shall have the same priority as the other Liens
granted to the Administrative Agent hereunder, pursuant to documentation satisfactory to the
Administrative Agent in the good faith exercise of its credit judgment, and (b) that if any Person
guarantees all or any portion of the ABL Facility, the Borrower shall ensure that a comparable
guarantee is promptly obtained in favor of the Administrative Agent and the Lenders, pursuant to
documentation satisfactory to the Administrative Agent in the good faith exercise of its credit
judgment.




          5.10 Post-Closing Matters. Cause the post-closing matters identified on Schedule 5.10
to be completed on or before the date which is 15 Business Days after the Closing Date (which
period may be extended by the Administrative Agent (at the direction of the Initial Lenders) from
time to time in its discretion).




SECTION 6. NEGATIVE COVENANTS




          The Borrower hereby agrees that, so long as any Loan or other amount is owing to any Lender or
the Administrative Agent hereunder, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:




          6.1 Financial Condition Covenants.










 



39




          (a) Minimum Shutdown EBIT. Permit Shutdown EBIT to be less than zero as of the last
day of each calendar month ending on or after October 31, 2006.




          (b) Conversion to Cash of Shutdown Subsidiaries Non-Cash Modified Net Working Capital.
Permit the Shutdown Subsidiaries to convert their aggregate Modified Net Working Capital existing
as of March 31, 2006 to cash in an amount less than the amount set forth below for the
corresponding period set forth below as of the last day of such period:




	 	 	 
	 	 	Minimum Non-Cash Net Working Capital
	Period	 	Converted to Cash
	March 31, 2006 through October 31, 2006
	 	$17,200,000
	 	 	 
	March 31, 2006 through
November 30, 2006
	 	$18,900,000
	 	 	 
	March 31, 2006 through
December 31, 2006
	 	$20,600,000
	 	 	 
	March 31, 2006 through January 31, 2007
	 	$22,300,000
	 	 	 
	March 31, 2006 through
February 28, 2007
	 	$22,600,000
	 	 	 
	March 31, 2006 through March 31, 2007
	 	$23,600,000






          (c) Minimum Commercial EBIT. Permit Commercial EBIT, tested as of the last day of
each calendar month for such calendar month, to be less than $1,250,000 for any two consecutive
calendar months ending on or after October 31, 2006.




          (d) Minimum Residential EBIT. Permit Residential EBIT, tested as of the last day of
each calendar month for such calendar month, to be less than $1,750,000 for any two consecutive
calendar months ending on or after October 31, 2006.




          (e) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio, as of the last day of each calendar month commencing on October 31, 2006 and
calculated on a trailing twelve month calendar basis, to be less than 1.25 to 1.00.




          (f) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio, tested
monthly on a the last day of each calendar month on a trailing twelve calendar month basis
commencing on October 31, 2006, to exceed the ratio set forth below opposite each such calendar
month:










 



40


	 	 	 
	Period Ending	 	Consolidated Leverage Ratio
	October 31, 2006
	 	4:75 to 1.00
	 	 	 
	November 30, 2006
	 	4:75 to 1.00
	 	 	 
	December 31, 2006
	 	4:75 to 1.00
	 	 	 
	January 31, 2007
	 	4:75 to 1.00
	 	 	 
	February 28, 2007
	 	4:75 to 1.00
	 	 	 
	March 31, 2007
	 	4:75 to 1.00
	 	 	 
	April 30, 2007 and the last day of each calendar

month thereafter
	 	4.25 to 1.00






          (g) Cash Collateral. At any time prior to the BofA Loan Termination Date, permit the
Cash Collateral in the Cash Collateral Account to be less than $20,000,000.




          (h) EBITDA-CapEx Level. Permit the EBITDA-CapEx Level to be less than negative
$20,000,000 (i) for any fiscal quarter, as of the last day of the second, third or fourth fiscal
quarters of the Borrower’s 2006 fiscal year or as of the last day of the first quarter of the
Borrower’s 2007 fiscal year or (ii) on a cumulative basis for any consecutive quarters, as measured
on the last day of such period, commencing on the first day of the second fiscal quarter of the
Borrower’s 2006 fiscal year and ending on the last day of the first quarter of the Borrower’s 2007
fiscal year.




          6.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer
to exist any Indebtedness, except:





   (a) Indebtedness of any Loan Party pursuant to any Loan Document;




   (b) Indebtedness of (i) the Borrower to any Subsidiary, (ii) of any Wholly Owned
Subsidiary Guarantor to the Borrower or any other Subsidiary and (iii) of any Loan Party to
any other Loan Party.




   (c) Guarantee Obligations incurred in the ordinary course of business by the Borrower
or any of its Subsidiaries of obligations of any Wholly Owned Subsidiary Guarantor;




   (d) Indebtedness outstanding on the date hereof and listed on Schedule 6.2(d) and any
refinancings, refundings, renewals or extensions thereof (without increasing, or shortening
the maturity of, the outstanding principal amount thereof at the time of such refinancing,
renewal or extension thereof);




   (e) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 6.3(g) in an aggregate principal amount not to exceed $2,000,000
at any one time outstanding;




   (f) (i) Indebtedness of the Borrower in respect of the ABL Facility in an aggregate
amount not to exceed $90,000,000 and any refinancings, renewals or extensions thereof
(without increasing the principal amount in excess of $90,000,000 or shortening the maturity
thereof); provided that the aggregate amount of outstanding Indebtedness thereunder
(exclusive of any letters of credit issued under the ABL Facility in connection with or to
(w) insurance contracts, (x) surety bonds, (y) any of the Loan Parties’ self-insurance
program or (z) vendors for purposes









 



41



of purchases of products and services and customers to
secure performance and, with respect solely to this clause (z), in an aggregate amount not
to exceed $12,000,000 at any one time outstanding, in each case in the ordinary course of
business) shall not exceed $25,000,000, which sublimit may be increased to an aggregate
amount not to exceed $50,000,000 by adding to the $25,000,000 sublimit no more than 50% of
the Net Cash Proceeds received in connection with the issuance of common or preferred stock
(other than mandatorily redeemable preferred stock) by the Borrower; provided
further that for the initial 45 days after the Closing Date, all reimbursed or
unreimbursed letter of credit drawings under the ABL Facility shall be ignored for purposes
of determining compliance with the $25,000,000 sublimit set forth in this paragraph (f);
provided further that the $25,000,000 sublimit set forth in this paragraph
(f) shall be permanently reduced dollar-for-dollar by any Net Cash Proceeds from Asset Sales
not either applied to prepay the Aggregate Principal Amount Outstanding or deposited into
the Cash Collateral Account and (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness;




          (g) Indebtedness arising from Surety Bonds procured in the ordinary course of business;
and




          (h) unsecured Indebtedness of any Loan Party in an aggregate principal amount not to
exceed $1,000,000 at any one time outstanding so long as (i) such Indebtedness does not
mature earlier than the fourth anniversary of the Closing Date, (ii) such Indebtedness
accrues interest at a rate not to exceed 13% per annum payable in cash and (iii) the terms
of such Indebtedness do not provide for any amortization or repayment while the Loans are
outstanding.



                 6.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except:





          (a) Liens for taxes not yet due or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;




          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business that are not overdue for a period of more
than 30 days or that are being contested in good faith by appropriate proceedings;




          (c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;




          (d) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of business;
provided that to the extent any such Liens attach to any of the Collateral, such
Liens are at all times subordinate and junior to the Liens upon the Collateral in favor of
the Administrative Agent;




          (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in
the ordinary course of business that, in the aggregate, are not substantial in amount and
that do not materially interfere with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries;




          (f) Liens in existence on the date hereof listed on Schedule 6.2(f), securing
Indebtedness permitted by Section 6.2(d), provided that no such Lien is spread to
cover any additional property after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;









 



42



          (g) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 6.2(e) to finance the acquisition of fixed or capital assets,
provided that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;




          (h) Liens created pursuant to the Security Documents;




          (i) any interest or title of a lessor under any lease entered into by the Borrower or
any other Subsidiary in the ordinary course of its business and covering only the assets so
leased;




          (j) Liens securing the Indebtedness under the ABL Facility permitted pursuant to
Section 6.2(f) hereof;




          (k) Liens arising from judgments and attachments in connection with court proceedings;
provided that (i) the attachment or enforcement of such Liens would not result in an
Event of Default hereunder, (ii) such Liens are being contested in good faith by appropriate
proceedings, (iii) adequate reserves have been set aside for such court proceeding, (iv) no
material assets or property of any Loan Party is subject to a material risk of loss or
forfeiture as a result of any such judgment or attachment, (v) the claims in respect of such
Liens are fully covered by insurance (subject to ordinary and customary deductibles) and
(vi) a stay of execution pending appeal or proceeding in respect of any such judgment or
attachment for review is in effect;




          (l) Liens in the Surety Collateral securing reimbursement obligations for Surety Bonds
procured by a Loan Party in the ordinary course of business;




          (m) Liens securing Indebtedness of a Loan Party to the Borrower or to another Loan
Party; and




          (n) Normal and customary rights of setoff upon deposits of cash in favor of banks and
other depository institutions and Liens of a collection bank arising under the Uniform
Commercial Code on payment items in the course of collection.



                 6.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or substantially all of its property or business, except that:





          (a) any Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any Wholly Owned Subsidiary Guarantor (provided that
the Wholly Owned Subsidiary Guarantor shall be the continuing or surviving corporation);




          (b) any Subsidiary of the Borrower may Dispose of any or all of its assets (i) to the
Borrower or any Wholly Owned Subsidiary Guarantor (upon voluntary liquidation or otherwise)
or (ii) pursuant to a Disposition permitted by Section 6.5; and




          (c) any Investment expressly permitted by Section 6.7 may be structured as a merger,
consolidation or amalgamation.









 



43


                 6.5 Disposition of Property. Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s Capital Stock to any Person, except:





          (a) the Disposition of obsolete or worn-out property in the ordinary course of
business;




          (b) the sale of inventory in the ordinary course of business;




          (c) Dispositions permitted by clause (i) of Section 6.4(b);




          (d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any
Wholly Owned Subsidiary Guarantor; and




          (e) the Disposition of other property having a fair market value not to exceed
$12,000,000 in the aggregate during the term of this Agreement; provided that, if
such Disposition is consummated prior to the BofA Loan Termination Date, any Second Lien Net
Cash Proceeds from such Disposition shall be applied in accordance with Section 2.6(a) of
this Agreement.



                 6.6 Restricted Payments. Declare or pay any dividend (other than dividends payable
solely in common stock of the Person making such dividend) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of any Group Member, whether now
or hereafter outstanding, or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of any Group Member (collectively,
“Restricted Payments”), except that (a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor and (b) the Borrower may repurchase its common
stock from employees in order to satisfy their tax obligations arising from their acquisition of
such common stock.




                 6.7 Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or any assets constituting a business unit of, or make any other
investment in, any Person (all of the foregoing, “Investments”), except:





          (a) extensions of trade credit in the ordinary course of business;




          (b) investments in Cash Equivalents;




          (c) Guarantee Obligations permitted by Section 6.2;




          (d) loans and advances for business purposes to employees of any Group Member in the
ordinary course of business (including for travel, entertainment, commissions and relocation
expenses); provided that such loans and advances made to any officer or director of
any Group Member shall not exceed $250,000 in the aggregate at any one time outstanding;




          (e) Investments in assets useful in the business of the Borrower and its Subsidiaries
made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;




          (f) intercompany Investments by any Group Member in the Borrower or any Person that,
prior to such investment, is a Wholly Owned Subsidiary Guarantor; or









 



44



(g) in addition to Investments otherwise expressly permitted by this Section 6.7,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount (valued at
cost) not to exceed $2,000,000 during the term of this Agreement.



          6.8 Modifications of Certain Debt Instruments. Amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the ABL Facility or the ABL Facility
Agreement, together with all instruments and other agreements entered into by any Group Member in
connection therewith (other than as permitted under the Intercreditor Agreement.).




          6.9 Transactions with Affiliates. Enter into any transaction, including any purchase,
sale, lease or exchange of property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than the Borrower or any Wholly Owned
Subsidiary Guarantor) unless such transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of business of the relevant Group Member and (c) upon fair and reasonable
terms no less favorable to the relevant Group Member than it would obtain in a comparable arm’s
length transaction with a Person that is not an Affiliate.




          6.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for
the leasing by any Group Member of real or personal property that has been or is to be sold or
transferred by such Group Member to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental obligations of such
Group Member.




          6.11 Swap Agreements. Enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure
(other than those in respect of Capital Stock) and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating
rate to another floating rate or otherwise) with respect to any interest-bearing liability or
investment of the Borrower or any Subsidiary.




          6.12 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a
day other than September 30 or change the Borrower’s method of determining fiscal quarters.




          6.13 Negative Pledge Clauses. Enter into or suffer to exist or become effective any
agreement that prohibits or limits the ability of any Group Member to create, incur, assume or
suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its obligations under the Loan Documents to which it is a party other than (a)
this Agreement and the other Loan Documents, (b) the ABL Facility Agreement and (c) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the assets financed
thereby), and (d) any agreements governing the issuance of Surety Bonds.




          6.14 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the
Borrower to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary held
by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make
loans or advances to, or other Investments in, the Borrower or
any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower or any
other Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents, the ABL Facility Agreement or any
agreement governing the issuance of Surety Bonds and (ii) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement that has been entered into in










 



45



connection with the
Disposition of all or substantially all of the Capital Stock or assets of such Subsidiary.




          6.15 Lines of Business. Enter into any business, either directly or through any
Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on
the date of this Agreement (after giving effect to the Plan of Reorganization) or that are
reasonably related thereto.




SECTION 7. EVENTS OF DEFAULT




          If any of the following events shall occur and be continuing:





   (a) the Borrower shall fail to pay any Aggregate Principal Amount Outstanding or any
interest thereon when due in accordance with the terms hereof; or any other amount payable
hereunder or under any other Loan Document within five Business Days after any such other
amount becomes due in accordance with the terms hereof; or




   (b) any representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been inaccurate in any material respect on
or as of the date made or deemed made; or




   (c) any Loan Party shall default in the observance or performance of any agreement
contained in clause (i) or (ii) of Section 5.4(a), Section 5.7(a) or Section 6 of this
Agreement or Sections 5.5 and 5.7(b) of the Guarantee and Collateral Agreement; or




   (d) any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section 7), and such default shall continue unremedied
for a period of 30 days; or




   (e) any Group Member shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Aggregate Principal
Amount Outstanding) on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to permit the holder
or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such Indebtedness to become
due prior to its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults, events or
conditions of
the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $500,000; or









 



46



          (f) (i) any Group Member shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Group Member any
case, proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed or undischarged for a period of 60 days; or (iii) there shall be
commenced against any Group Member any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any such relief
that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) any Group Member shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they become due;
or




          (g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
any Group Member or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Person shall give notice of intent to terminate
a Single Employer Plan shall under Section 4041(c) of ERISA, (v) any Group Member or any
Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, could, in the sole
judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect;
or




          (h) one or more judgments or decrees shall be entered against any Group Member
involving in the aggregate a liability (not paid or fully covered by insurance as to which
the relevant insurance company has acknowledged coverage) of $500,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or




          (i) any of the Security Documents shall cease, for any reason, to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien
created by
any of the Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or









 



47



    (j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement
shall cease, for any reason, to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert; or




    (k) the Intercreditor Agreement shall cease for any reason to be valid or any Loan
Party or any of its Subsidiaries shall so assert in writing; or




    (l) (i)(A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) excluding
the Principal Stockholders shall become, or obtain rights (whether by means of warrants,
options or otherwise) to become the “beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 50% of the outstanding
common stock of the Borrower, (B) the board of directors of the Borrower shall cease to
consist of a majority of Continuing Directors, or (C) the Borrower shall cease to own and
control, of record and beneficially, 100% of each class of outstanding Capital Stock of the
Subsidiaries free and clear of all Liens (except Liens created by the Guarantee and
Collateral Agreement or Liens securing the Indebtedness under the ABL Facility) or (ii) a
Specified Change of Control shall occur;


then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, the Aggregate Principal Amount
Outstanding (with accrued interest thereon) and all other amounts owing under this Agreement and
the other Loan Documents shall immediately become due and payable, and (B) if such event is any
other Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Aggregate Principal Amount Outstanding (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except as expressly
provided above in this Section 7, presentment, demand, protest and all other notices of any kind
are hereby expressly waived by the Borrower.




SECTION 8. THE ADMINISTRATIVE AGENT




          8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Administrative Agent.




          8.2 Delegation of Duties. (a) The Administrative Agent may execute any of its duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care. The exculpatory provisions of this Agreement shall apply to any such agents or
attorneys in fact and to their Related Parties. The Administrative Agent is authorized on behalf
of all the Lenders, without the necessity of any notice to or further consent from the Lenders,
from time to time to take any action with respect to any Collateral or the Security Documents which
may be necessary to










 



48



perfect and maintain a perfected security interest in and Liens upon the
Collateral granted pursuant to the Loan Documents. Except for the safe custody of any Collateral
in its possession and the accounting for moneys actually received by it hereunder or under any of
the other Loan Documents, the Administrative Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Administrative Agent is deemed to have
knowledge of such matters, or as to taking of any necessary steps to preserve rights against any
parties or any other rights pertaining to any Collateral (including the filing of UCC Continuation
Statements). The Administrative Agent shall be deemed to have exercised appropriate and due care
in the custody and preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which other administrative agents accord similar property.
In addition, the Lenders hereby empower and authorize the Administrative Agent, on behalf of the
Lenders, to execute and deliver to the Loan Parties the other Loan Documents, the Intercreditor
Agreement and all related agreements, certificates, documents, or instruments as shall be necessary
or appropriate to effectuate the purposes of the Loan Documents. Each Lender agrees that any
action taken by the Administrative Agent or the Required Lenders in accordance with the terms of
this Agreement, the Intercreditor Agreement or the other Loan Documents, and the exercise by the
Administrative Agent or the Required Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.




          (b) Each Loan Party will furnish such information about the Collateral, the Loan Parties and
any other information the Administrative Agent deems necessary to exercise any of the rights or
powers vested in it by the Loan Documents as the Administrative Agent may reasonably request from
time to time.




          8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact, controlling persons or affiliates (collectively,
the “Related Parties”) shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and nonappealable decision of
a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer thereof contained
in this Agreement or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent or any of the
Related Parties under or in connection with, this Agreement or any other Loan Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any
other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. Notwithstanding anything herein to the contrary, the
Administrative Agent shall not be required to act
hereunder or to advance its own funds or otherwise incur any financial liability in the
performance of its duties or the exercise of its rights hereunder and under any other agreements or
documents to which it is a party, and shall in all cases be fully justified in failing or refusing
to act hereunder unless it shall receive further assurances to its satisfaction from the Loan
Parties and the Lenders (other than the Administrative Agent) of their indemnification obligations
hereunder against any and all liability and expense that may be incurred by it by reason of taking
or continuing to take or refraining from taking any such action.




          8.4 Reliance by Administrative Agent. The Administrative Agent and its Related
Parties shall be entitled to rely, and shall be fully protected in relying, upon any instrument,
writing,











 



49



resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent and its Related Parties may
deem and treat the Lenders set forth in the Register as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent and its Related Parties shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan Document unless it
shall first receive such written advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by all of the Lenders against any and all liability and expense that may be incurred
by it by reason of taking or continuing to take any such action. The Administrative Agent and its
Related Parties shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request of the Required
Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.




          8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed in writing by the Required Lenders (or, if so specified
by this Agreement, all Lenders); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.




          8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Administrative Agents nor any of its Related Parties have made any
representations or warranties to it and that no act by the Administrative Agent hereafter taken,
including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be
deemed to constitute any representation or warranty by the Administrative Agent to any Lender.
Each Lender represents to the Administrative Agent that it has, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a
Loan Party that may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.










 



50




          8.7 Indemnification. The Lenders agree to indemnify the Administrative Agent and its
Related Parties, as applicable, in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably according to their
respective Term Percentages in effect on the date on which indemnification is sought under this
Section 8.7 (or, if indemnification is sought after the date upon which the Aggregate Principal
Amount Outstanding shall have been paid in full, ratably in accordance with such Term Percentages
immediately prior to such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
(including attorney’s fees and expenses) whatsoever that may at any time (whether before or after
the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent
and/or any of its Related Parties, in any way relating to or arising out of this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence
or willful misconduct. The agreements in this Section 8.7 shall survive the payment of the
Aggregate Principal Amount Outstanding and all other amounts payable hereunder.




          8.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its
affiliates may make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Administrative Agent were not an agent. Notwithstanding
anything herein to the contrary, the Administrative Agent shall in no event make any make any Loan
or other advances hereunder or under any other Loan Documents.




          8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then
the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7(a) or Section 7(f) with respect
to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower
(which approval shall not be unreasonably withheld or delayed), whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any holders of the
Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is
10 days following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders
shall assume and perform all of the duties of the Administrative Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for above. After any
retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section
8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.




SECTION 9. MISCELLANEOUS




          9.1 Amendments and Waivers. (a) Neither this Agreement, any other Loan Document, nor
any terms hereof or thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 9.1. The Required Lenders, each of the Initial Lenders (so long as such
Initial Lender holds more than 15% of the Aggregate Principal Amount Outstanding at the











 



51



time any
such amendment, supplement, waiver or consent shall become effective) and each Loan Party party to
the relevant Loan Document may, or, with the written consent of the Required Lenders, all of the
Initial Lenders (so long as such Initial Lender holds more than 15% of Aggregate Principal Amount
Outstanding at the time any such amendment, supplement, waiver or consent shall become effective),
the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or
changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or
(b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this Agreement or the other
Loan Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification shall (i)
forgive the principal amount or extend the final scheduled date of maturity of any Loan, reduce the
stated rate of any interest or fee payable hereunder or extend any due date of any such interest or
fee (except (x) in connection with the waiver of applicability of any post-default increase in
interest rates and (y) that any amendment or modification of defined terms used in the financial
covenants in this Agreement shall not constitute a reduction in the rate of interest for purposes
of this clause (i)) without the written consent of each Lender directly affected thereby; (ii)
eliminate or reduce the voting or consent rights of any Lender under this Section 9.1 without the
written consent of such Lender or Initial Lender; (iii) reduce any percentage specified in the
definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release all or substantially all of the Subsidiary
Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders; or (iv) amend, modify or waive any provision of
Section 8 or Section 9.5 or impose any additional duties or obligations on the Administrative
Agent, in each case without the written consent of the Administrative Agent. Any such waiver and
any such amendment, supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all future holders of
the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.




          9.2 Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the Administrative Agent, and as set
forth in an administrative questionnaire delivered to the Administrative Agent in the case of the
Lenders, or to such other address as may be hereafter notified by the respective parties hereto:




	 	 	 	 	 
	 

	 	Borrower:
	 	1800 West Loop South, Suite 500
	 

	 	 	 	Houston, Texas 77027
	 

	 	 	 	Attention: David A. Miller, Chief Financial
Officer
	 

	 	 	 	Telecopy: (713) 860-1599
	 

	 	 	 	Telephone: (713) 860-1521
	 
	 	 	 	 
	 

	 	Administrative Agent:
	 	Rodney Square North
	 

	 	 	 	1100 North Market Street
	 

	 	 	 	Wilmington, Delaware 19890
	 

	 	 	 	Attention: Corporate Trust Administration












 



52


	 	 	 	 	 
	 

	 	 	 	Telecopy: (302) 636-4145
	 

	 	 	 	Telephone: (302) 636-6453
	 
	 	 	 	 
	 

	 	Eton Park:
	 	825 Third Avenue, 8th Floor
	 

	 	 	 	New York, New York 10022
	 

	 	 	 	Attention: Aba Schubert
	 

	 	 	 	Telecopy: (212) 756-5488
	 

	 	 	 	Telephone: (212) 756-5391
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 

	 	 	 	Attention: David Zalta
	 

	 	 	 	Telecopy: (212) 756-5401
	 

	 	 	 	Telephone: (212) 756-5302
	 
	 	 	 	 
	 

	 	Flagg Street:
	 	44 Brattle Street
	 

	 	 	 	Cambridge, Massachusetts 02138
	 

	 	 	 	Attention: Andrew Moss, Esq.
	 

	 	 	 	Telecopy: (617) 876-6081
	 

	 	 	 	Telephone: (617) 876-6085





provided that any notice, request or demand to or upon the Administrative Agent or the
Lenders shall not be effective until received.




          Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.




          9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent
or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided
by law.




          9.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans and other extensions of credit hereunder.




          9.5 Payment of Expenses and Taxes. The Borrower agrees whether or not the transaction
completed herein were consummated (a) to pay or reimburse the Administrative Agent and the Initial
Lenders for all of their respective reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation, execution and delivery of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and any other documents
prepared in connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and disbursements of
counsel to the Administrative Agent and the Initial Lenders and filing and recording fees and
expenses, with










 



53



statements with respect to the foregoing to be submitted to the Borrower prior to
the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time
thereafter on a quarterly basis or such other periodic basis as the Administrative Agent or the
Initial Lenders shall deem appropriate, (b) to pay or reimburse each Lender and the Administrative
Agent for all its out-of-pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and any such other
documents, including the fees and disbursements of counsel to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable
or determined to be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Related Parties (each, an “Indemnitee”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental
Law applicable to the operations of any Group Member, or any actual or alleged presence or release
of Materials of Environmental Concern on or from any property currently or formerly owned or
operated by any Group Member, and the reasonable fees and expenses of legal counsel in connection
with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the “Indemnified
Liabilities”), provided, that the Borrower shall have no obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are
found by a final and nonappealable decision of a court of competent jurisdiction to have resulted
from the bad faith, gross negligence or willful misconduct of such Indemnitee. Without limiting
the foregoing, and to the extent permitted by applicable law, the Borrower
agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees
to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery
with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might
have by statute or otherwise against any Indemnitee. All amounts due under this Section 9.5 shall
be payable not later than 10 days after written demand therefor. The agreements in this Section
9.5 shall survive repayment of the Aggregate Principal Amount Outstanding and all other amounts
payable hereunder.




          9.6 Successors and Assigns; Participations and Assignments. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null
and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section 9.6.




          (b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees (each, an “Assignee”) all or a portion of its rights and
obligations under this Agreement (including all or a portion of the Aggregate Principal Amount
Outstanding at the time owing to it or Term Commitments) without the prior written consent of the
Borrower; provided that the consent of the Borrower shall be required in the case of
assignments of Term Commitments, which consent shall not be unreasonably withheld or delayed;
provided further that no consent of the Borrower shall be required for an
assignment to an Initial Lender or an affiliate of an Initial Lender;










 



54





    (ii) Assignments shall be subject to the following additional conditions:




    (A) except in the case of an assignment to a Lender, an affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s
Loans, the amount of the Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent, at the direction of the Required Lenders, otherwise
consent, provided that (1) no such consent of the Borrower shall be required if an
Event of Default under Section 8(a) or (f) has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds,
if any;




    (B) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and




    (C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire.



          For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity
that administers or manages a Lender.




          (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from
and after the effective date specified in each Assignment and Assumption the Assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.11, 2.12 and 9.5). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 9.6 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section.




          (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Aggregate Principal
Amount Outstanding owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.




          (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this










 



55



Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this paragraph.




          (c)(i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of the
Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (C) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole right to enforce
this Agreement and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that (1) requires the
consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of
Section 9.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections
2.11 and 2.12 to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 9.7(b) as though it were a Lender, provided such
Participant shall be subject to Section 9.7(a) as though it were a Lender.




          (ii) A Participant shall not be entitled to receive any greater payment under Section 2.11 or
2.12 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the
Borrower’s prior written consent. Any Participant that is a Non-U.S. Lender shall not be
entitled to the benefits of Section 2.12 unless such Participant complies with Section 2.12(d).




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




          (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue a
Note to any Lender requiring a Note to facilitate transactions of the type described in paragraph
(d) above.




          (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it
may have funded hereunder to its designating Lender without the consent of the Borrower or the
Administrative Agent and without regard to the limitations set forth in Section 9.6(b). Each of
the Borrower, each Lender and the Administrative Agent hereby confirms that it will not institute
against a Conduit Lender or join any other Person in instituting against a Conduit Lender any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however, that each
Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other
party hereto for any loss, cost, damage or expense arising out of its inability to institute such a
proceeding against such Conduit Lender during such period of forbearance.










 



56




          9.7 Adjustments; Set-off.




          (a) Except to the extent that this Agreement expressly provides for payments to be allocated
to a particular Lender, if any Lender (a “Benefitted Lender”) shall receive any payment of
all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred
to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in
such portion of the Obligations owing to each such other Lender, or shall provide such other
Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but without interest.




          (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and
appropriate and apply against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Borrower,
as the case may be. Each Lender agrees promptly to notify the Borrower and the Administrative
Agent after any such setoff and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such setoff and application.




          9.8 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.




          9.9 Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.




          9.10 Integration. This Agreement, the Intercreditor Agreement and the other Loan
Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders
with respect to the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other Loan Documents.




          9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.










 



57




           9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:





    (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;




    (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;




    (c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail),
postage prepaid, to the Borrower, its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto;




    (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and




    (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.



           9.13 Acknowledgements. The Borrower hereby acknowledges that:




    (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;




    (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with
or duty to the Borrower arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and




    (c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among the
Borrower and the Lenders.



           9.14 Releases of Guarantees and Liens.




          (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document,
the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of
notice to or consent of any Lender except as expressly required by Section 9.1) to take any action
requested by the Borrower having the effect of releasing any Collateral or guarantee obligations
(i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with Section 9.1 or (ii) under the
circumstances described in paragraph (b) below.










 



58




          (b) At such time as the Aggregate Principal Amount Outstanding and the other obligations under
the Loan Documents shall have been paid in full, the Collateral shall be released from the Liens
created by the Security Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and each Loan Party under
the Security Documents shall terminate, all without delivery of any instrument or performance of
any act by any Person. At the request and expense of the Borrower following any such termination,
the Administrative Agent shall promptly deliver to the appropriate Loan Party any Collateral held
by the Administrative Agent and shall promptly execute and deliver to such Loan Party such
documents as the Borrower shall reasonably request to evidence such termination.




          9.15 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep confidential all non-public
information provided to it by any Loan Party, the Administrative Agent or any Lender pursuant to or
in connection with this Agreement that is designated by the provider thereof as confidential;
provided that nothing herein shall prevent the Administrative Agent or any Lender from
disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate
thereof, (b) subject to an agreement to comply with the provisions of this Section, to any actual
or prospective Transferee, (c) to its employees, directors, agents, attorneys, accountants and
other professional advisors or those of any of its affiliates, (d) upon the request or demand of
any Governmental Authority, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or
required to do so in connection with any litigation or similar proceeding, (g) that has been
publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or (i)
in connection with the exercise of any remedy hereunder or under any other Loan Document.




          9.16 Patriot Act. Each Lender that is subject to the requirements of the Patriot Act
and the Administrative Agent (on behalf of itself and not on behalf of any Lender) hereby notifies
the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify
and record information that identifies the Borrower, which information includes the name and
address of the Borrower and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Patriot Act. The Borrower
shall, and shall cause each of its Subsidiaries to, provide, to the extent commercially reasonable,
such information and take such actions as are reasonably requested by each Lender and the
Administrative Agent to maintain compliance with the Patriot Act.




          9.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.










 



59




          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.




	 	 	 	 	 
	 	INTEGRATED ELECTRICAL SERVICES, INC.

 	 
	 	By:  	/s/
Curt L. Warnock 	 
	 	 	Name:  	Curt L. Warnock 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	WILMINGTON TRUST COMPANY,

in its capacity as Administrative Agent

 	 
	 	By:  	/s/
James A. Hanley 	 
	 	 	Name:  	James A. Hanley 	 
	 	 	Title:  	Senior Financial Services Officer 	 




Signature
Page for the Credit Agreement






 



 

	 	 	 	 	 



	 	 	 	 	 
	 	ETON PARK FUND, L.P.,

by its investment manager Eton Park Capital

Management, L.P.

 	 
	 	By:  	/s/
Marcy Engel 	 
	 	 	Name:  	Marcy Engel 	 
	 	 	Title:  	General Counsel 	 
	 
	 	ETON PARK MASTER FUND, LTD.,

by its investment manager Eton Park Capital

Management, L.P.

 	 
	 	By:  	/s/ Marcy Engel 	 
	 	 	Name:  	Marcy Engel 	 
	 	 	Title:  	General Counsel 	 
	 
	 	FLAGG STREET PARTNERS LP,

by its general partner Flagg Street Capital LLC

 	 
	 	By:  	/s/
Andrew Moss 	 
	 	 	Name:  	Andrew Moss 	 
	 	 	Title:  	Chief Operating Officer and General Counsel 	 
	 
	 	FLAGG STREET PARTNERS QUALIFIED LP,

by its general partner Flagg Street Capital LLC

 	 
	 	By:  	/s/ Andrew Moss 	 
	 	 	Name:  	Andrew Moss 	 
	 	 	Title:  	Chief Operating Officer and General Counsel 	 
	 
	 	FLAGG STREET OFFSHORE L.P.,

by its general partner Flagg Street Capital LLC

 	 
	 	By:  	/s/ Andrew Moss 	 
	 	 	Name:  	Andrew Moss 	 
	 	 	Title:  	Chief Operating Officer and General Counsel 	 
	 




Signature
Page for the Credit Agreement