exv10w1





Exhibit 10.1




EXECUTION COPY




 
 





AMENDED AND RESTATED CREDIT AGREEMENT




Dated as of September 3, 2010




among




HUTTIG BUILDING PRODUCTS, INC.,




and




HUTTIG, INC.,




as Borrowers,




THE OTHER CREDIT PARTIES SIGNATORY HERETO,




as Credit Parties,




THE LENDERS SIGNATORY HERETO




FROM TIME TO TIME,




as Lenders,




WELLS FARGO CAPITAL FINANCE, LLC,




as Co-Lead Arranger, Co-Collateral Agent, Co-Syndication Agent and Lender




and




GENERAL ELECTRIC CAPITAL CORPORATION,




as Agent, Co-Syndication Agent and Lender




GE CAPITAL MARKETS, INC.




as Co-Lead Arranger




 
 







 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	1.	 	AMOUNT AND TERMS OF CREDIT	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Credit Facilities	 	 	1	 
	 
	 	1.2	 	Letters of Credit	 	 	5	 
	 
	 	1.3	 	Prepayments	 	 	6	 
	 
	 	1.4	 	Use of Proceeds	 	 	7	 
	 
	 	1.5	 	Interest and Applicable Margins	 	 	8	 
	 
	 	1.6	 	Eligible Accounts	 	 	10	 
	 
	 	1.7	 	Eligible Inventory	 	 	13	 
	 
	 	1.8	 	[INTENTIONALLY OMITTED]	 	 	14	 
	 
	 	1.9	 	Fees	 	 	14	 
	 
	 	1.10	 	Receipt of Payments	 	 	15	 
	 
	 	1.11	 	Application and Allocation of Payments	 	 	15	 
	 
	 	1.12	 	Loan Accounts	 	 	16	 
	 
	 	1.13	 	Indemnity	 	 	17	 
	 
	 	1.14	 	Access	 	 	18	 
	 
	 	1.15	 	Taxes	 	 	18	 
	 
	 	1.16	 	Capital Adequacy; Increased Costs; Illegality	 	 	19	 
	 
	 	1.17	 	Single Loan	 	 	21	 
	 
	 	1.18	 	Increases in Aggregate Commitments	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	2.	 	CONDITIONS PRECEDENT	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Effectiveness of Restatement	 	 	22	 
	 
	 	2.2	 	Further Conditions to Each Loan	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	3.	 	REPRESENTATIONS AND WARRANTIES	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Corporate Existence; Compliance with Law	 	 	24	 
	 
	 	3.2	 	Executive Offices, Collateral Locations, FEIN	 	 	24	 
	 
	 	3.3	 	Corporate Power, Authorization, Enforceable Obligations	 	 	24	 
	 
	 	3.4	 	Financial Statements and Projections	 	 	25	 
	 
	 	3.5	 	Material Adverse Effect	 	 	26	 
	 
	 	3.6	 	Ownership of Property; Liens	 	 	26	 
	 
	 	3.7	 	Labor Matters	 	 	26	 
	 
	 	3.8	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness	 	 	27	 
	 
	 	3.9	 	Government Regulation	 	 	27	 
	 
	 	3.10	 	Margin Regulations	 	 	27	 
	 
	 	3.11	 	Taxes	 	 	28	 
	 
	 	3.12	 	ERISA	 	 	29	 
	 
	 	3.13	 	No Litigation	 	 	29	 
	 
	 	3.14	 	Brokers	 	 	30	 
	 
	 	3.15	 	Intellectual Property	 	 	30	 
	 
	 	3.16	 	Full Disclosure	 	 	30	 






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	 	 	 	 	 	 	Page	 
	 
	 	3.17	 	Environmental Matters	 	 	31	 
	 
	 	3.18	 	Insurance	 	 	31	 
	 
	 	3.19	 	Deposit Accounts	 	 	31	 
	 
	 	3.20	 	Government Contracts	 	 	32	 
	 
	 	3.21	 	Customer and Trade Relations	 	 	32	 
	 
	 	3.22	 	Bonding; Licenses	 	 	32	 
	 
	 	3.23	 	Solvency	 	 	32	 
	 
	 	3.24	 	Patriot Act	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	4.	 	FINANCIAL STATEMENTS AND INFORMATION	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Reports and Notices	 	 	32	 
	 
	 	4.2	 	Communication with Accountants	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Maintenance of Existence and Conduct of Business	 	 	33	 
	 
	 	5.2	 	Payment of Charges	 	 	34	 
	 
	 	5.3	 	Books and Records	 	 	34	 
	 
	 	5.4	 	Insurance; Damage to or Destruction of Collateral	 	 	34	 
	 
	 	5.5	 	Compliance with Laws	 	 	36	 
	 
	 	5.6	 	Supplemental Disclosure	 	 	36	 
	 
	 	5.7	 	Intellectual Property	 	 	36	 
	 
	 	5.8	 	Environmental Matters	 	 	36	 
	 
	 	5.9	 	Landlords’ Agreements, Mortgagee Agreements; Bailee Letters and Real Estate Purchases	 	 	37	 
	 
	 	5.10	 	Further Assurances	 	 	38	 
	 
	 	5.11	 	[Reserved.]	 	 	38	 
	 
	 	5.12	 	Bank Accounts	 	 	38	 
	 
	 	5.13	 	Cash Management System	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	6.	 	NEGATIVE COVENANTS	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Mergers, Subsidiaries, Etc.	 	 	39	 
	 
	 	6.2	 	Investments; Loans and Advances	 	 	42	 
	 
	 	6.3	 	Indebtedness	 	 	43	 
	 
	 	6.4	 	Employee Loans and Affiliate Transactions	 	 	44	 
	 
	 	6.5	 	Capital Structure and Business	 	 	44	 
	 
	 	6.6	 	Guaranteed Indebtedness	 	 	45	 
	 
	 	6.7	 	Liens	 	 	45	 
	 
	 	6.8	 	Sale of Stock and Assets	 	 	45	 
	 
	 	6.9	 	ERISA	 	 	45	 
	 
	 	6.10	 	Financial Covenant	 	 	45	 
	 
	 	6.11	 	Hazardous Materials	 	 	46	 
	 
	 	6.12	 	Sale-Leasebacks	 	 	46	 
	 
	 	6.13	 	Restricted Payments	 	 	46	 
	 
	 	6.14	 	Change of Corporate Name or Location; Change of Fiscal Year	 	 	46	 
	 
	 	6.15	 	No Impairment of Intercompany Transfers	 	 	46	 
	 
	 	6.16	 	Real Estate Purchases	 	 	46	 






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	 	 	 	 	 	 	Page	 
	7.	 	TERM	 	 	47	 
	 
	 
	 	7.1	 	Termination	 	 	47	 
	 
	 	7.2	 	Survival of Obligations Upon Termination of Financing Arrangements	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT; RIGHTS AND REMEDIES	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Events of Default	 	 	47	 
	 
	 	8.2	 	Remedies	 	 	49	 
	 
	 	8.3	 	Waivers by Credit Parties	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	9.	 	ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Assignment and Participations	 	 	50	 
	 
	 	9.2	 	Appointment of Agent. GE Capital is hereby appointed to act on behalf	 	 	 	 
	 
	 	 	 	of all Lenders as Agent under this Agreement and the other Loan Documents	 	 	52	 
	 
	 	9.3	 	Agent’s Reliance, Etc.	 	 	53	 
	 
	 	9.4	 	GE Capital and Affiliates	 	 	54	 
	 
	 	9.5	 	Lender Credit Decision	 	 	54	 
	 
	 	9.6	 	Indemnification	 	 	54	 
	 
	 	9.7	 	Successor Agent	 	 	55	 
	 
	 	9.8	 	Setoff and Sharing of Payments	 	 	55	 
	 
	 	9.9	 	Advances; Payments; Non-Funding Lenders; Information; Actions in Concert	 	 	56	 
	 
	 	9.10	 	Collateral Determinations	 	 	58	 
	 
	 	9.11	 	Syndication Agents	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	10.	 	SUCCESSORS AND ASSIGNS	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Successors and Assigns	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	59	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Complete Agreement; Modification of Agreement	 	 	59	 
	 
	 	11.2	 	Amendments and Waivers	 	 	59	 
	 
	 	11.3	 	Fees and Expenses	 	 	61	 
	 
	 	11.4	 	No Waiver	 	 	62	 
	 
	 	11.5	 	Remedies	 	 	63	 
	 
	 	11.6	 	Severability	 	 	63	 
	 
	 	11.7	 	Conflict of Terms	 	 	63	 
	 
	 	11.8	 	Confidentiality	 	 	63	 
	 
	 	11.9	 	GOVERNING LAW	 	 	63	 
	 
	 	11.10	 	Notices	 	 	65	 
	 
	 	11.11	 	Section Titles	 	 	65	 
	 
	 	11.12	 	Counterparts	 	 	65	 
	 
	 	11.13	 	WAIVER OF JURY TRIAL	 	 	65	 
	 
	 	11.14	 	Press Releases and Related Matters	 	 	66	 
	 
	 	11.15	 	Reinstatement	 	 	66	 
	 
	 	11.16	 	Advice of Counsel	 	 	66	 
	 
	 	11.17	 	No Strict Construction	 	 	67	 
	 
	 	11.18	 	Amendment and Restatement	 	 	67	 






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	 	 	 	 	 	 	Page	 
	 
	 	11.19	 	Consent and Affirmation	 	 	68	 
	 
	 	11.20	 	USA PATRIOT Act.	 	 	68	 
	 
	 	 	 	 	 	 	 	 
	12.	 	CROSS-GUARANTY	 	 	68	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1	 	Cross-Guaranty	 	 	68	 
	 
	 	12.2	 	Waivers by Borrowers	 	 	68	 
	 
	 	12.3	 	Benefit of Guaranty	 	 	69	 
	 
	 	12.4	 	Waiver of Subrogation, Etc.	 	 	69	 
	 
	 	12.5	 	Election of Remedies	 	 	69	 
	 
	 	12.6	 	Limitation	 	 	70	 
	 
	 	12.7	 	Contribution with Respect to Guaranty Obligations	 	 	70	 
	 
	 	12.8	 	Liability Cumulative	 	 	71	 






iv 









 






INDEX OF APPENDICES




	 	 	 	 	 

	Annex A (Recitals)
	 	—	 	Definitions
	Annex B (Section 1.2)
	 	—	 	Letters of Credit
	Annex C (Section 2.1(a))
	 	—	 	Restatement Checklist
	Annex D (Section 4.1(a))
	 	—	 	Financial Statements and Projections — Reporting
	Annex E (Section 4.1(b))
	 	—	 	Collateral Reports
	Annex F (Section 6.10)
	 	—	 	Financial Covenants
	Annex G (Section 9.9(a))
	 	—	 	Lenders’ Wire Transfer Information
	Annex H (Section 11.10)
	 	—	 	Notice Addresses
	Annex I (from Annex A-
Revolving Loan Commitments
	 	—	 	 Revolving Loan Commitments as of Restatement Date 
	definition)
	 	 	 	 
	 
	 	 	 	 
	Exhibit 1.1(a)(i)
	 	—	 	Form of Notice of Revolving Credit Advance
	Exhibit 1.1(a)(ii)
	 	—	 	Form of Revolving Note
	Exhibit 1.1(b)(ii)
	 	—	 	Form of Swing Line Note
	Exhibit 1.5(e)
	 	—	 	Form of Notice of Conversion/Continuation
	Exhibit 4.1(b)
	 	—	 	Form of Borrowing Base Certificate
	Exhibit 9.1(a)
	 	—	 	Form of Assignment Agreement
	Exhibit B-1
	 	—	 	Application for Standby Letter of Credit
	Exhibit B-2
	 	—	 	Application and Agreement for Documentary Letter of Credit
	 
	 	 	 	 
	Schedule 1.1
	 	—	 	Agent’s Representatives
	Disclosure Schedule 1.4
	 	—	 	Sources and Uses; Funds Flow Memorandum
	Disclosure Schedule 3.1
	 	—	 	Type of Entity; State of Organization
	Disclosure Schedule 3.2
	 	—	 	Executive Offices, Collateral Locations, FEIN
	Disclosure Schedule 3.4(B)
	 	—	 	Projections
	Disclosure Schedule 3.6
	 	—	 	Real Estate and Leases
	Disclosure Schedule 3.7
	 	—	 	Labor Matters
	Disclosure Schedule 3.8
	 	—	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock
	Disclosure Schedule 3.11
	 	—	 	Tax Matters
	Disclosure Schedule 3.12
	 	—	 	ERISA Plans
	Disclosure Schedule 3.13
	 	—	 	Litigation
	Disclosure Schedule 3.15
	 	—	 	Intellectual Property
	Disclosure Schedule 3.17
	 	—	 	Hazardous Materials
	Disclosure Schedule 3.19
	 	—	 	Deposit Accounts
	Disclosure Schedule 3.20
	 	—	 	Government Contracts
	Disclosure Schedule 3.22
	 	—	 	Bonds; Patent, Trademark Licenses
	Disclosure Schedule 5.1
	 	—	 	Trade Names
	Disclosure Schedule 6.2
	 	—	 	Investments
	Disclosure Schedule 6.3
	 	—	 	Indebtedness
	Disclosure Schedule 6.4(a)
	 	—	 	Transactions with Affiliates






v 









 






	 	 	 	 	 

	Disclosure Schedule 6.7
	 	—	 	Existing Liens
	Disclosure Schedule 6.8
	 	—	 	Sale of Stock and Assets






vi









 






          This AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of September 3, 2010
among HUTTIG BUILDING PRODUCTS, INC., a Delaware corporation (“Parent”) and HUTTIG, INC., a
Delaware corporation (“Huttig”) (Parent and Huttig are sometimes collectively referred to
herein as “Borrowers” and individually as a “Borrower”); the other Credit Parties
hereafter signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its
individual capacity, “GE Capital”), for itself, as Lender, as Co-Syndication Agent and as
Agent for Lenders, Wells Fargo Capital Finance, LLC, as an L/C Issuer (an “L/C Issuer”), as
Co-Collateral Agent (“Co-Collateral Agent”), Co-Syndication Agent and a Lender and the
other Lenders signatory hereto from time to time.



RECITALS




          WHEREAS, Borrowers, the other Credit Parties thereto, the Lenders party thereto, and Agent
entered into that certain Credit Agreement dated as of October 20, 2006, as amended from time to
time prior to the date hereof (the “Existing Credit Agreement”);




          WHEREAS, Borrowers have requested that Agent and Lenders amend and restate the Existing Credit
Agreement to, among other things, extend the maturity date of the revolving credit facility to
September 3, 2014, and Agent and Lenders are willing to amend and restate the Existing Credit
Agreement and to continue the existing loans to Borrowers on the terms and conditions set forth
herein; and




          WHEREAS, Borrowers and the other Credit Parties have agreed to continue to secure all of their
obligations under the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of their existing and after-acquired personal and real
property; and




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




          NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto agree as follows:




1. AMOUNT AND TERMS OF CREDIT




          1.1 Credit Facilities.




          (a) Revolving Credit Facility.




               (i) Subject to the terms and conditions hereof, each Lender agrees to make available
to Borrowers from time to time until the Commitment Termination Date its Pro Rata Share of
advances (each, a “Revolving Credit Advance”).



1









 




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




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



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



2









 




Section 2 have not been met. All Overadvances shall constitute Index Rate
Loans, shall bear interest at the Default Rate and shall be payable on the earlier of
demand or the Commitment Termination Date. Except as otherwise provided in Section
1.11(b), the authority of Agent to make Overadvances is limited to an aggregate amount
not to exceed $1,000,000 at any time, shall not cause the Revolving Loan to exceed the
Maximum Amount, and may be revoked prospectively by a written notice to Agent signed by
Requisite Lenders.




               (iv) On the Closing Date, the “Lenders” issued “Revolving Loan Commitments” (as each
such term is defined in the Existing Credit Agreement) to the Borrowers (“Existing
Revolving Loan Commitments”). On the Restatement Date, the aggregate outstanding principal
balance of the “Revolving Credit Advances” (as such term is defined in the Existing Credit
Agreement) outstanding under the Existing Revolving Loan Commitments was $49,100,000
(“Existing Revolving Extensions of Credit”). On the Restatement Date, the Additional
Lenders shall purchase from the Departing Lenders, Existing Revolving Loan Commitments and
the related Existing Credit Advances in amounts such that after giving effect to all such
purchases, the Revolving Loan Commitments of the Lenders shall be as indicated on Annex
I. Such purchase shall be at par and shall be payable by such Additional Lenders to
Agent, for the respective accounts of the applicable Departing Lenders, by 1:00 p.m.
(Chicago time) on the Restatement Date. Upon the terms and subject to the conditions of
this Agreement, such outstanding Existing Revolving Loan Commitments and Existing Revolving
Credit Advances shall constitute Revolving Loan Commitments and Revolving Credit Advances,
respectively, under this Agreement from and after the Restatement Date, and shall
henceforth be governed by the terms and conditions of this Agreement in all respects.



          (b) Swing Line Facility.




               (i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice of
Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing Line
Lender may, in its discretion, make available from time to time until the Commitment
Termination Date advances (each, a “Swing Line Advance”) in accordance with any
such notice. The provisions of this Section 1.1(b) shall not relieve Lenders of
their obligations to make Revolving Credit Advances under Section 1.1(a); provided
that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such
Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Lenders pursuant to such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed at any time the lesser of (A) the Swing Line Commitment and
(B) the lesser of the Maximum Amount and (except for Overadvances) the Borrowing Base, in
each case, less the outstanding balance of the Revolving Loan at such time (“Swing Line
Availability”). Until the Commitment Termination Date, Borrowers may from time to time
borrow, repay and reborrow under this Section 1.1(b). Each Swing Line Advance
shall be made pursuant to a Notice of Revolving Credit Advance delivered to Agent by
Borrower Representative on behalf of the applicable Borrower in accordance with Section
1.1(a). Any such notice must be given no later than 12:00 noon (Chicago time) on the
Business Day of the proposed




3











 




Swing Line Advance. Unless the Swing Line Lender has received at least one Business
Day’s prior written notice from Requisite Lenders instructing it not to make a Swing Line
Advance, the Swing Line Lender shall, notwithstanding the failure of any condition
precedent set forth in Sections 2.2, be entitled to fund that Swing Line Advance,
and to have such Lender make Revolving Credit Advances in accordance with Section
1.1(b)(iii) or purchase participating interests in accordance with Section
1.1(b)(iv). Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrowers shall repay
the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.




               (ii) Each Borrower shall execute and deliver to the Swing Line Lender a promissory
note to evidence the Swing Line Commitment. Each note shall be in the principal amount of
the Swing Line Commitment of the Swing Line Lender, dated the Restatement Date and
substantially in the form of Exhibit 1.1(b)(ii) (each a “Swing Line Note”
and, collectively, the “Swing Line Notes”). Each Swing Line Note shall represent
the obligation of each Borrower to pay the amount of the Swing Line Commitment or, if less,
the aggregate unpaid principal amount of all Swing Line Advances made to such Borrower
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the Swing Line Loan and all other noncontingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment Termination Date
if not sooner paid in full.



               (iii) The Swing Line Lender, at any time and from time to time no less frequently than
once weekly, shall on behalf of any Borrower (and each Borrower hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request each Lender (including
the Swing Line Lender) to make a Revolving Credit Advance to each Borrower (which shall be
an Index Rate Loan) in an amount equal to that Lender’s Pro Rata Share of the principal
amount of the applicable Borrower’s Swing Line Loan (the “Refunded Swing Line
Loan”) outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures
of Section 1.1(b)(iv) shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit Advance are then
satisfied, each Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving
Credit Advance on behalf of the Swing Line Lender, prior to 2:00 p.m. (Chicago time), in
immediately available funds on the Business Day next succeeding the date that notice is
given. The proceeds of those Revolving Credit Advances shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan of the applicable
Borrower.



               (iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant
to Section 1.1(b)(iii), one of the events described in Sections 8.1(h) or
8.1(i) has occurred, then, subject to the provisions of Section 1.1(b)(v)
below, each Lender shall, on the date such Revolving Credit Advance was to have been made
for the benefit of the applicable Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan to such Borrower in an amount equal
to its Pro Rata Share of such Swing Line Loan. Upon request, each Lender shall



4









 




promptly transfer to the Swing Line Lender, in immediately available funds, the amount
of its participation interest.




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



          (c) Reliance on Notices; Appointment of Borrower Representative. Agent shall be
entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent to be genuine.
Agent may assume that each Person executing and delivering any notice in accordance herewith was
duly authorized, unless the responsible individual acting thereon for Agent has actual knowledge to
the contrary. Each Borrower hereby designates Parent as its representative and agent on its behalf
for the purposes of issuing Notices of Revolving Credit Advances and Notices of
Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of
the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all
other notices and consents hereunder or under any of the other Loan Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers
under the Loan Documents (as so designated, “Borrower Representative”). Borrower
Representative hereby accepts such appointment. Agent and each Lender may regard any notice or
other communication pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication required or permitted to
be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such
Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall
be deemed for all purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been made directly by such
Borrower.




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







5









 








          1.3 Prepayments.




          (a) Voluntary Prepayments; Reductions in Revolving Loan Commitments. Borrowers may at
any time on at least five (5) days’ prior written notice by Borrower Representative to Agent
permanently reduce (but not terminate) the Revolving Loan Commitment; provided that (i) any
such reductions shall be in a minimum amount of $5,000,000 and integral multiples of $5,000,000 in
excess of such amount, (B) the Revolving Loan Commitment shall not be reduced to an amount less
than $100,000,000, and (C) after giving effect to such reductions, Borrowers shall comply with
Section 1.3(b)(i). In addition, Borrowers may at any time on at least ten (10) days’ prior
written notice by Borrower Representative to Agent terminate the Revolving Loan Commitment;
provided that upon such termination, all Loans and other Obligations shall be immediately
due and payable in full and all Letter of Credit Obligations shall be cash collateralized or
otherwise satisfied in accordance with Annex B hereto. Any such prepayment, reduction or
termination of the Revolving Loan Commitment must be accompanied by the payment of any LIBOR
funding breakage costs in accordance with Section 1.13(b). Upon any such prepayment,
reduction or termination of the Revolving Loan Commitment, each Borrower’s right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf,
or request Swing Line Advances, shall simultaneously be permanently reduced or terminated, as the
case may be; provided that a permanent reduction of the Revolving Loan Commitment shall
require a corresponding pro rata reduction in the L/C Sublimit.




          (b) Mandatory Prepayments.




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



               (ii) At such times as Agent shall have the right to exercise dominion over Borrowers’
cash balances pursuant to Section 5.13 hereof, no later than the Business Day
following the date of receipt by any Credit Party of any cash proceeds of any asset
disposition, Borrowers shall prepay the Loans in an amount equal to all such adjustment
payments or proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable by Borrowers
in connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes, (C)
amounts payable to holders of senior Liens on such asset (to the extent such Liens
constitute Permitted Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with Section 1.3(c). The following shall not be subject to
mandatory prepayment under this clause (ii): (1) proceeds of sales of Inventory in
the ordinary course of business; (2) asset disposition proceeds of less than



6









 




$250,000 in the aggregate in any Fiscal Year and (3) asset disposition proceeds that
are reinvested in Equipment, Fixtures or Real Estate within one hundred and eighty (180)
days following receipt thereof; provided that Borrower Representative on behalf of the
applicable Borrower notifies Agent of its intent to reinvest at the time such proceeds are
received and when such reinvestment occurs; provided, further, that pending such
reinvestment, such asset disposition proceeds shall be delivered to Agent, for distribution
first, to the Swing Line Lender as a prepayment of Swing Line Loans (to the extent of Swing
Line Loans outstanding), but not as a permanent reduction of the Swing Line Commitment, and
thereafter to the Lenders as a prepayment of the Revolving Loans (to the extent of
Revolving Loans then outstanding), but not as a permanent reduction of the Revolving Loan
Commitment.




               (iii) At such times as Agent shall have the right to exercise dominion over Borrowers’
cash balances pursuant to Section 5.13 hereof, if any Borrower incurs any
Indebtedness (excluding intercompany Indebtedness, purchase money financing and Capitalized
Leases permitted pursuant to Article 6), no later than the Business Day following
the date of receipt of the cash proceeds thereof, the incurring Borrower shall prepay the
Loans in an amount equal to fifty percent (50%) of such proceeds, net of underwriting
discounts and commissions and other reasonable costs paid to non-Affiliates in connection
therewith. Any such prepayment shall be applied in accordance with Section 1.3(c).



          (c) Application of Mandatory Prepayments. Any prepayments made by any Borrower
pursuant to Sections 1.3(b)(ii) or (b)(iii) above shall be applied as follows:
first, to Fees and reimbursable expenses of Agent then due and payable pursuant to any of
the Loan Documents; second, to interest then due and payable on the Swing Line Loan;
third, to the principal balance of the Swing Line Loan until the same has been repaid in
full; fourth, to interest then due and payable on the Revolving Credit Advances;
fifth, to the outstanding principal balance of Revolving Credit Advances until the same has
been paid in full; and last, to any Letter of Credit Obligations to provide cash collateral
therefor in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized in the manner set forth in Annex B. Neither the
Revolving Loan Commitment nor the Swing Line Commitment shall be permanently reduced by the amount
of any such prepayments.




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




          1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the Loans solely
to pay transaction expenses relating to the amendment and restatement of the Existing
Credit Agreement and for the financing of Borrowers’ ordinary working capital and general
corporate needs. Disclosure Schedule (1.4) contains a description of Borrowers’
sources and uses of funds as of the Restatement Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum detailing how
funds from each source are to be transferred to particular uses.







7









 









          1.5 Interest and Applicable Margins.




          (a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in accordance
with the various Loans being made by each Lender, in arrears on each applicable Interest Payment
Date, at the following rates: (i) with respect to the Revolving Credit Advances, the Index Rate
plus the Applicable Revolver Index Margin per annum or, at the election of Borrower Representative,
the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum and (ii) with respect
to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.




          As of the Restatement Date, the Applicable Margins are as follows:




	 	 	 	 	 

	Applicable Revolver Index Margin
	 	 	0.50	%
	Applicable Revolver LIBOR Margin
	 	 	2.50	%
	Applicable L/C Margin
	 	 	2.50	%
	Applicable Unused Line Fee Margin
	 	 	0.375	%






          The Applicable Margins (other than the Applicable Unused Line Fee Margin) may be adjusted by
reference to the following grids:




	 	 	 
	If Average Availability is:	 	Level of Applicable Margins:
	>$50,000,000

	 	Level I
	>$35,000,000 but <$50,000,000

	 	Level II
	>$25,000,000 but <35,000,000

	 	Level III
	>$25,000,000

	 	Level IV






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margins	 
	 	 	Level I	 	 	Level II	 	 	Level III	 	 	Level IV	 
	Applicable Revolver
Index Margin
	 	 	0.25	%	 	 	0.50	%	 	 	0.75	%	 	 	1.00	%
	Applicable Revolver
LIBOR Margin
	 	 	2.25	%	 	 	2.50	%	 	 	2.75	%	 	 	3.00	%
	Applicable L/C Margin
	 	 	2.25	%	 	 	2.50	%	 	 	2.75	%	 	 	3.00	%






          The Applicable Unused Line Fee Margin may be adjusted by reference to the following
grids:




8









 









	 	 	 
	If Average Revolving Outstandings:	 	Level of Applicable Margins:
	>$60,000,000

	 	Level I
	<$60,000,000

	 	Level II






	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margins	 
	 	 	Level I	 	 	Level II	 
	Applicable Unused Line Fee Margin
	 	 	0.30	%	 	 	0.375	%






          Adjustments in the Applicable Margins commencing with the Fiscal Quarter beginning October 1,
2010 shall be implemented quarterly as of the first day of the Fiscal Quarter in which Agent
receives delivery of the Borrowing Base Certificate dated and accurate as of the last day of the
most recently completed Fiscal Quarter evidencing the need for an adjustment. Concurrently with
the delivery of such Borrowing Base Certificate, Borrower Representative shall deliver to Agent and
Lenders a certificate, signed by its chief financial officer or treasurer, setting forth in
reasonable detail the basis for the continuance of, or any change in, the Applicable Margins,
including, without limitation, a calculation of Average Availability for such period. Failure to
timely deliver such quarter-end Borrowing Base Certificate shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the Applicable Margins to the highest
level set forth in the foregoing grid, until the first day of the first calendar month following
the delivery of a Borrowing Base Certificate demonstrating that such an increase is not required.
If an Event of Default has occurred and is continuing at the time any reduction in the Applicable
Margins is to be implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Event of Default is waived or cured.




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




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




          (d) So long as an Event of Default has occurred and is continuing under Section 8.1(a),
(h) or (i), or so long as any other Event of Default has occurred and is continuing and at the
election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice
from Agent to Borrower Representative, the interest rates applicable to the Loans and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest
or the rate of such Fees otherwise applicable hereunder unless Agent or






9









 







Requisite Lenders elect to impose a smaller increase (the “Default Rate”), and all
outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations.
Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such
Event of Default until that Event of Default is cured or waived and shall be payable upon demand.




          (e) Subject to the conditions precedent set forth in Section 2.2, Borrower
Representative shall have the option to (i) request that any Revolving Credit Advance be made as a
LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans (other than the Swing
Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan
subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the expiration
of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall
commence on the first day after the last day of the LIBOR Period of the Loan to be continued. Any
Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or
converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral multiples of
$500,000 in excess of such amount. Any such election must be made by 11:00 a.m. (Chicago time) on
the Third Business Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a
LIBOR Loan for a LIBOR Period designated by Borrower Representative in such election. If no
election is received with respect to a LIBOR Loan by 11:00 a.m. (Chicago time) on the Third
Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event
of Default has occurred and is continuing or the additional conditions precedent set forth in
Section 2.2 shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower Representative must make such election by
notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice of
Conversion/Continuation”) in the form of Exhibit 1.5(e).




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




          1.6 Eligible Accounts. All of the Accounts owned by each Borrower and
reflected in the most recent Borrowing Base Certificate delivered by each Borrower






10









 







to Agent shall be “Eligible Accounts” for purposes of this Agreement, except
any Account to which any of the exclusionary criteria set forth below applies. Agent and
Co-Collateral Agent shall have the right to establish, modify or eliminate Reserves against
Eligible Accounts from time to time in their reasonable credit judgment. In addition,
Agent and Co-Collateral Agent reserve the right, at any time and from time to time after
the Restatement Date, to adjust any of the criteria set forth below and to establish new
criteria, and to adjust advance rates with respect to Eligible Accounts, in their
reasonable credit judgment, reflecting changes in the collectability or realization values
of such Accounts arising or discovered by Agent and Co-Collateral Agent after the
Restatement Date subject to the approval of Requisite Lenders in the case of adjustments,
new criteria or changes in advance rates which have the effect of making more credit
available. Eligible Accounts shall not include any Account of any Borrower:




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




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




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




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




          (e) with respect to which an invoice, reasonably acceptable to Agent in form and substance,
has not been sent to the applicable Account Debtor;




          (f) that (i) is not owned by such Borrower or (ii) is subject to any Lien of any other Person,
other than (x) Liens in favor of Agent, on behalf of itself and Lenders, (y) Liens described in
clause (a) of the definition of Permitted Encumbrances and (z) Liens described in clause (g) of the
definition of Permitted Encumbrances with respect to judgments not in excess of $250,000 and with
respect to which lien execution has been stayed within thirty (30) days by appropriate judicial
proceedings or the posting of an appeal bond or other security;




          (g) that arises from a sale to any director, officer, other employee or Affiliate of any
Credit Party, or to any entity that has any common officer with any Credit Party;




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






11









 







obligation with the Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such obligation;




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




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




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




          (l) that is in default; provided, that, without limiting the generality of the
foregoing, an Account shall be deemed in default upon the occurrence of any of the following:




               (i) the Account is not paid within the earlier of: sixty (60) days following its due
date or one hundred twenty (120) days following its original invoice date;
provided, that the aggregate Dollar amount of all Eligible Accounts consisting of
Accounts not paid after ninety (90) days following the original invoice date shall not
exceed $10,000,000;



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



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



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




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




          (o) as to which any of the representations or warranties in the Loan Documents specifically
related to Accounts are untrue;




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







12









 








          (q) to the extent such Account exceeds any credit limit applicable to the Account Debtor as
established by Agent, in its reasonable credit judgment, following prior notice of such limit by
Agent to Borrower Representative;




          (r) to the extent that such Account, together with all other Accounts owing to such Account
Debtor and its Affiliates as of any date of determination exceed 15% of all Eligible Accounts;
provided, that at the sole discretion of Agent, the aggregate limit for Accounts
from Lumberman’s Merchandising Corporation, or any other such Account Debtors, may be up to an
amount not to exceed 20% of all Eligible Accounts); or




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




          1.7 Eligible Inventory. All of the inventory owned by the Borrowers and
reflected in the most recent Borrowing Base Certificate delivered by each Borrower to Agent
shall be “Eligible Inventory” for purposes of this Agreement, except any Inventory
to which any of the exclusionary criteria set forth below applies. Agent and Co-Collateral
Agent shall have the right to establish, modify, or eliminate Reserves against Eligible
Inventory from time to time in their reasonable credit judgment. In addition, Agent and
Co-Collateral Agent reserve the right, at any time and from time to time after the
Restatement Date, to adjust any of the criteria set forth below and to establish new
criteria and to adjust advance rates with respect to Eligible Inventory in their reasonable
credit judgment reflecting changes in the salability or realization values of Inventory
arising or discovered by Agent and Co-Collateral Agent after the Restatement Date, subject
to the approval of Requisite Lenders in the case of adjustments, new criteria or changes in
advance rates which have the effect of making more credit available. Eligible Inventory
shall not include any Inventory of any Borrower that:




          (a) is not owned by such Borrower free and clear of all Liens and rights of any other Person
(including the rights of a purchaser that has made progress payments and the rights of a surety
that has issued a bond to assure such Borrower’s performance with respect to that Inventory),
except (i) the Liens in favor of Agent, on behalf of itself and Lenders and (ii) Liens described in
clauses (a) or (e) of the definition of Permitted Encumbrances;




          (b) (i) is not located on premises owned, leased or rented by such Borrower and set forth in
Disclosure Schedule (3.2) or (ii) is stored at a leased location, unless Agent has given
its prior consent thereto and unless (x) a reasonably satisfactory landlord waiver has been
delivered to Agent, or (y) Reserves satisfactory to Agent have been established with respect
thereto, (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter has been received by Agent and Reserves reasonably satisfactory to Agent
have been established with respect thereto, or (iv) is located at an owned location subject to a
mortgage in favor of a lender other than Agent, unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent, or (v) is located at any site if the aggregate book value of Inventory
at any such location is less than $100,000;







13









 








          (c) is placed on consignment or is in transit, except for Inventory in transit between
domestic locations of Credit Parties as to which Agent’s Liens have been perfected at origin and
destination;




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




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




          (f) consists of display items or packing or shipping materials, manufacturing supplies,
work-in-process Inventory or replacement parts;




          (g) consists of defective goods which have been returned by the buyer;




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




          (i) is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders,
subject to Permitted Encumbrances as set forth in clause (e) of the definition thereof
(subject to Reserves satisfactory to Agent);




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




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




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




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




          1.8 [INTENTIONALLY OMITTED].




          1.9 Fees.




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




          (b) As additional compensation for the Lenders, Borrowers shall pay to Agent, for the ratable
benefit of such Lenders, in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a Fee for Borrowers’ non-use of
available funds in an amount equal to the Applicable Unused Line Fee Margin per annum (calculated
on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x)
the Maximum Amount (as it may be reduced from time to time)






14









 







and (y) the average for the period of the daily closing balances of the Revolving Loan and the
Swing Line Loan outstanding during the period for which the such Fee is due.




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




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




          1.11 Application and Allocation of Payments.




          (a) So long as no Event of Default has occurred and is continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be applied, first, to the
Swing Line Loan and, second, to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; (iii) voluntary prepayments shall
be applied in accordance with the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Section 1.3(c). All payments and prepayments
applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all payments made when an
Event of Default has occurred and is continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any and all payments
received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Agent
shall have the continuing exclusive right to apply any and all such payments against the
Obligations of Borrowers as Agent may deem advisable notwithstanding any previous entry by Agent in
the Register or any other books and records. In all circumstances, after acceleration or maturity
of the Obligations, all payments and proceeds of Collateral shall be applied to amounts then due
and payable in the following order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2) to
interest on the Swing Line Loan; (3) to principal payments on the Swing Line Loan; (4) to interest
on the other Loans, ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for contingent Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate, combined
principal balance of the other Loans and outstanding Letter of Credit Obligations; and (6) to all
other Obligations including, without limitation, the unpaid Bank Product Obligations, and expenses
of Lenders to the extent reimbursable under Section 11.3.




          (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance
on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including
insurance premiums in accordance with Section 5.4(a)) and interest and principal, other
than principal of the Revolving Loan, owing by Borrowers under this






15









 







Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay
promptly any such amounts as and when due, even if the amount of such charges would exceed
Borrowing Availability at such time. At Agent’s option and to the extent permitted by law, any
charges so made shall constitute part of the Revolving Loan hereunder.




          1.12 Loan Accounts.




          (a) Agent, on behalf of the Lenders, shall record on its books and records the amount of each
Loan made, the interest rate applicable, all payments of principal and interest thereon and the
principal balance thereof from time to time outstanding. Agent shall deliver to the Borrower
Representative on a monthly basis a loan statement setting forth such record for the immediately
preceding calendar month. Such record shall, absent manifest error, be conclusive evidence of the
amount of the Loans made by the Lenders to the Borrowers and the interest and payments thereon.
Any failure to so record or any error in doing so, or any failure to deliver such loan statement
shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder (and under
any Note) to pay any amount owing with respect to the Loans or provide the basis for any claim
against Agent.




          (b) Agent, acting as a non-fiduciary agent of the Borrowers solely for tax purposes and solely
with respect to the actions described in this subsection 1.12(b), shall establish and
maintain at its address referred to in Section 11.10 (or at such other address as Agent may
notify the Borrower Representative) (A) a record of ownership (the “Register”) in which
Agent agrees to register by book entry the interests (including any rights to receive payment
hereunder) of Agent, each Lender and each L/C Issuer in the Revolving Loans, Swing Line Loans, and
Letter of Credit Obligations, each of their obligations under this Agreement to participate in each
Loan, Letter of Credit and Letter of Credit Obligations, and any assignment of any such interest,
obligation or right and (B) accounts in the Register in accordance with its usual practice in which
it shall record (1) the names and addresses of the Lenders and the L/C Issuers (and each change
thereto pursuant to Sections 1.16(d), 9.1, 9.9(d) and 11.1(d)), (2)
the Revolving Loan Commitments of each Lender, (3) the amount of each Loan and each funding of any
participation described in clause (A) above, and for LIBOR Loans, the LIBOR Period
applicable thereto, (4) the amount of any principal or interest due and payable or paid, (5) the
amount of the L/C Obligations due and payable or paid in respect of Letters of Credit and (6) any
other payment received by Agent from a Borrower and its application to the Obligations.




          (c) Notwithstanding anything to the contrary contained in this Agreement, the Loans (including
any Notes evidencing such Loans and, for Revolving Loans, the corresponding obligations to
participate in Letter of Credit Obligations and Swing Line Loans) and the L/C Obligations are
registered obligations, the right, title and interest of the Lenders and the L/C Issuers and their
assignees in and to such Loans or L/C Obligations, as the case may be, shall be transferable only
upon notation of such transfer in the Register and no assignment thereof shall be effective until
recorded therein. This Section 1.12 and Section 9.1 shall be construed so that the
Loans and L/C Obligations are at all times maintained in “registered form” within the meaning of
Sections 163(f), 871(h)(2) and 881(c)(2) of the IRC.




          (d) The Credit Parties, Agent, the Lenders and the L/C Issuers shall treat each Person whose
name is recorded in the Register as a Lender or L/C Issuer, as applicable, for all






16









 







purposes of this Agreement. Information contained in the Register with respect to any Lender
or any L/C Issuer shall be available for access by the Borrowers, the Borrower Representative,
Agent, such Lender or such L/C Issuer during normal business hours and from time to time upon at
least one Business Day’s prior notice. No Lender or L/C Issuer shall, in such capacity, have
access to or be otherwise permitted to review any information in the Register other than
information with respect to such Lender or L/C Issuer unless otherwise agreed by Agent.
Notwithstanding any provision contained herein to the contrary, any Lender may elect (which
election may be revoked) to dispense with the issuance of Notes to that Lender and rely on the
Register as evidence of the amount of Obligations from time to time owing to it.




          1.13 Indemnity.




          (a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and
hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and representatives (each, an
“Indemnified Person”), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any appeal) that may be
instituted or asserted against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, “Indemnified Liabilities”); provided, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that
any such suit, action, proceeding, claim, damage, loss, liability or expense results from (i) that
Indemnified Person’s gross negligence or willful misconduct or (ii) a dispute among the Lenders
and/or their transferees. NEITHER ANY INDEMNIFIED PERSON NOR ANY CREDIT PARTY SHALL BE RESPONSIBLE
OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY,
FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.




          (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i)
any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any provision of this Agreement or any other Loan
Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or interest on any LIBOR
Loan; (iii) any Borrower shall refuse to accept any borrowing of, or shall request a termination of
any borrowing, conversion into or continuation of LIBOR Loans after Borrower Representative has
given notice requesting the same in accordance herewith; or (iv) any Borrower shall fail to make
any prepayment of a LIBOR Loan after Borrower






17









 







Representative has given a notice thereof in accordance herewith, then Borrowers shall jointly
and severally indemnify and hold harmless each Lender from and against all losses, costs and
expenses resulting from or arising from any of the foregoing. Such indemnification shall include
any loss (excluding loss of margin) or expense arising from the reemployment of funds obtained by
it or from fees payable to terminate deposits from which such funds were obtained. For the purpose
of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to
have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at
the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable
to the relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR Loans
in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this subsection. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as
practicable under the circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower Representative shall object in
writing within ten (10) Business Days of receipt thereof, specifying the basis for such objection
in detail.




          1.14 Access. Each Credit Party that is a party hereto shall, during normal
business hours, from time to time upon two (2) Business Days’ prior notice as frequently as
Agent reasonably determines to be appropriate: (a) provide Agent and any of its officers,
employees and agents access to its properties, facilities, advisors, officers and employees
of each Credit Party and to the Collateral, (b) permit Agent, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit Party’s books and
records, and (c) permit Agent, and its officers, employees and agents, to inspect, review
and evaluate the Accounts, Inventory and other Collateral of any Credit Party and make test
verifications, including without limitation, field examinations and collateral audits, and
counts of the Accounts, Inventory and other Collateral of any Credit Party (other than,
prior to the occurrence and continuation of an Event of Default, any verifications of
Accounts requiring communications with the Account Debtors of any Credit Party). If an
Event of Default has occurred and is continuing, each such Credit Party shall provide such
access to Agent and to each Lender at all times and without advance notice. Furthermore,
so long as any Event of Default has occurred and is continuing, Borrowers shall provide
Agent and each Lender with access to their suppliers and customers. Each Credit Party
shall make available to Agent and its counsel reasonably promptly originals or copies of
all books and records that Agent may reasonably request. Each Credit Party shall deliver
any document or instrument necessary for Agent, as it may from time to time request, to
obtain records from any service bureau or other Person that maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation on media,
including computer tapes and discs owned by such Credit Party. Agent will give Lenders at
least five (5) days’ prior written notice of regularly scheduled audits. Representatives
of other Lenders may accompany Agent’s representatives on regularly scheduled audits at no
charge to Borrowers.




          1.15 Taxes.







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          (a) Any and all payments by each Borrower hereunder (including any payments made pursuant to
Section 12) or under the Notes shall be made, in accordance with this Section
1.15, free and clear of and without deduction for any and all present or future Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the Notes, (i) the
sum payable shall be increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under this Section
1.15) Agent or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii)
such Borrower shall pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes
pursuant to this Section 1.15, Borrower Representative shall furnish to Agent the original
or a certified copy of a receipt evidencing payment thereof.




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




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




          1.16 Capital Adequacy; Increased Costs; Illegality.




          (a) If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted after the Restatement
Date, from any central bank or other Governmental Authority increases or would have the effect of
increasing the amount of capital, reserves or other funds required to be maintained by such Lender
and thereby reducing the rate of return on such Lender’s capital as a consequence of its
obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a
copy of such demand to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the amount of that
reduction and showing the basis of the






19









 







computation thereof submitted by such Lender to Borrower Representative and to Agent shall be
presumptive evidence of the matters set forth therein.




          (b) If, due to either (i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of law), in each case
adopted after the Restatement Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to
time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the
account of such Lender additional amounts sufficient to compensate such Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to Borrower Representative
and to Agent by such Lender, shall be presumptive evidence of the matters set forth therein. Each
Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred
to above which would result in any such increased cost, the affected Lender shall, to the extent
not inconsistent with such Lender’s internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers
pursuant to this Section 1.16(b).




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




          (d) Within thirty (30) days after receipt by Borrower Representative of written notice and
demand from any Lender (an “Affected Lender”) for payment of additional amounts or
increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), Borrower
Representative may, at its option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower Representative, with the consent of Agent, may obtain, at Borrowers’ expense,
a replacement Lender (“Replacement Lender”) for the Affected Lender, which Replacement
Lender must be reasonably satisfactory to Agent. If Borrowers obtains a Replacement Lender within
ninety (90) days following notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal
balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale and such assignment shall not require the payment of an
assignment fee to Agent; provided, that Borrowers shall have reimbursed such Affected
Lender for the additional amounts or increased costs that it is entitled to receive under this
Agreement






20









 







through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall
not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its receipt of Borrowers’
notice of intention to replace such Affected Lender. Furthermore, if Borrowers give a notice of
intention to replace and do not so replace such Affected Lender within ninety (90) days thereafter,
Borrowers’ rights under this Section 1.16(d) shall terminate with respect to such Affected
Lender and Borrowers shall promptly pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).




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




          1.18 Increases in Aggregate Commitments. Upon the written consent of Agent, Borrowers
may, at their option, seek to increase the aggregate Revolving Loan Commitments by up to
$40,000,000 on a one-time basis. After receiving such prior written consent of Agent, Borrower
Representative shall first offer the increase in the aggregate Commitments to each of the existing
Lenders on a pro-rata basis; provided, that neither Agent nor any Lender shall have any
obligation to extend such additional Commitment. Each of the existing Lenders shall have ten (10)
Business Days following receipt of a request for such increase from Borrower Representative to
notify Borrowers and Agent of such Lender’s commitment to increase its Revolving Loan Commitment.
In the event that Borrowers have not received commitments from the existing Lenders in an amount
equal to the requested increase within such ten (10) Business Day period, then Borrower
Representative may invite other banks, financial institutions or other entities reasonably
satisfactory to Agent to be joined as parties to this Agreement as Lenders hereunder with respect
to the portion of such Revolving Loan Commitments not taken within such ten (10) Business Day
period by existing Lenders, provided, that, such other banks, financial institutions and investment
funds shall enter into such joinder agreements to give effect thereto as Agent and Borrowers may
reasonably request. No increase in the aggregate Commitments shall become effective until (a)
Borrowers and each existing or new Lender extending such incremental commitment amount shall have
executed and delivered to Agent an agreement in writing in form and substance reasonably acceptable
to Agent pursuant to which such Lender states its Commitment amount and agrees to assume and accept
the obligations and rights of a Lender hereunder, (b) Borrowers shall have demonstrated pro forma
compliance with the Financial Covenant (calculated without regard to whether the then current
Borrowing Availability exceeds the Minimum Availability Amount) and (c) Borrower Representative has
provided Agent with such certificates, opinions and other documents as Agent may reasonably
request. In conjunction with such increase, the Lenders (new or existing) shall accept (and the
existing Lenders shall make) an assignment at par of an interest in the Loans and Letter of Credit
Obligations outstanding at the time of such aggregate Commitment increase such that, after giving
effect thereto, all Loans and Letter of Credit Obligations are held by the Lenders on a pro-rata
basis. Borrowers shall make any payments under Section 1.13(b) resulting from such
assignments.







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2. CONDITIONS PRECEDENT




          2.1 Effectiveness of Restatement. This Agreement shall become effective when the
following conditions have been satisfied or provided for in a manner reasonably satisfactory to
Agent, or waived in writing by Agent, Co-Collateral Agent and Requisite Lenders:




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




          (b) [Reserved.]




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




          (d) Opening Availability. The Eligible Accounts and Eligible Inventory supporting the
Revolving Credit Advances and the Letter of Credit Obligations existing and incurred and the amount
of the Reserves to be established on the Restatement Date shall be sufficient in value, as
determined by Agent, to provide Borrowers, collectively, with Borrowing Availability, after giving
effect to the Revolving Credit Advance made to each Borrower, the incurrence of any Letter of
Credit Obligations and the consummation of the Related Transactions (on a pro forma basis, with
trade payables being paid currently, and expenses and liabilities being paid in the ordinary course
of business and without acceleration of sales) of at least $30,000,000.




          (e) Payment of Fees. Borrowers shall have paid the Fees required to be paid on the
Restatement Date in the respective amounts specified in Section 1.9 (including the Fees
specified in the GE Capital Fee Letter), and shall have reimbursed (i) Co-Collateral Agent for
reasonable legal fees of its counsel and other due diligence fees and expenses in a maximum amount
not to exceed $20,000 and (ii) Agent for all fees, costs and expenses of closing presented as of
the Restatement Date.




          (f) Capital Structure: Other Indebtedness. The capital structure of each Credit Party
and the terms and conditions of all Indebtedness of each Credit Party shall be acceptable to Agent
in its sole discretion.




          (g) Due Diligence. Agent shall have completed its business and legal due diligence,
including a roll forward of its previous Collateral audit with results reasonably satisfactory to
Agent.




22









 








          (h) Departing Lender Consents. Agent shall have received a duly executed and
delivered departing lender consent from each Departing Lender in form satisfactory to Agent.




          (i) Allocations and Purchases. The allocations by Agent, and purchases among the
Departing Lenders and Additional Lenders, described in Section 1.1(a)(iv), shall have
occurred in the manner set forth therein.




          (j) Repayments under Existing Credit Agreement. All interest, fees and other amounts
owing (and not otherwise continuing hereunder) under the Existing Credit Agreement shall have been
(or shall substantially contemporaneously be) repaid in full.




          2.2 Further Conditions to Each Loan. Except as otherwise expressly provided
herein, no Lender shall be obligated to fund any Advance, convert or continue any Loan as a
LIBOR Loan or incur any Letter of Credit Obligation, if, as of the date thereof:




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




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




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



The request and acceptance by any Borrower of the proceeds of any Advance, the incurrence of any
Letter of Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR
Loan shall be deemed to constitute, as of the date thereof, (i) a representation and warranty by
Borrowers that the conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrowers of the cross-guaranty provisions set forth in Section 12 and of
the
granting and continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.




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3. REPRESENTATIONS AND WARRANTIES




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




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




          3.2 Executive Offices, Collateral Locations, FEIN. As of the Restatement
Date, each Credit Party’s name as it appears in official filings in its state of
incorporation or organization, state of incorporation or organization, organization type,
organization number, if any, issued by its state incorporation or organization, and the
current location of each Credit Party’s chief executive office and the warehouses and
premises at which any Collateral is located are set forth in Disclosure Schedule
(3.2), and none of such locations has changed within four (4) months preceding the
Restatement Date except as set forth on Disclosure Schedule (3.2). In addition,
Disclosure Schedule (3.2) lists the federal employer identification number of each
Credit Party.




          3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it is a party
and the creation of all Liens provided for therein: (a) are within such Person’s power; (b)
have been duly authorized by all necessary corporate, limited liability company or limited
partnership action; (c) do not contravene any provision of such Person’s charter, bylaws or
partnership or operating agreement as applicable; (d) do not
violate any law or regulation, or any order or decree of any court or Governmental
Authority; (e) do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance required by, any






24









 







indenture, mortgage, deed of trust, material lease, material agreement or other material
instrument to which such Person is a party or by which such Person or any of its property
is bound; (f) do not result in the creation or imposition of any Lien upon any of the
material property of such Person other than those in favor of Agent, on behalf of itself
and Lenders, pursuant to the Loan Documents; and (g) do not require the consent or approval
of any Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior to the
Restatement Date. Each of the Loan Documents shall be duly executed and delivered by each
Credit Party that is a party thereto and each such Loan Document shall constitute a legal,
valid and binding obligation of such Credit Party enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors’ rights generally and general principles of
equity (regardless of whether the application of such principles is considered in a
proceeding in equity or at law).




          3.4 Financial Statements and Projections. Except for the Projections, all
Financial Statements concerning Borrowers and their Subsidiaries that are referred to below
have been prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited Financial
Statements, for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the periods then
ended.




          (a) Financial Statements. The following Financial Statements have been delivered on
or prior to the date hereof:




               (i) The audited consolidated balance sheets at December 31, 2009 and the related statements of
income and cash flows of Borrowers and their Subsidiaries for the Fiscal Year then ended, certified
by KPMG LLP.



               (ii) The unaudited balance sheet at June 30, 2010 and the related statement of income and cash
flows of Borrowers for the two Fiscal Quarters then ended.



          (b) Projections. The Projections delivered on the date hereof and attached hereto as
Disclosure Schedule (3.4(B)) have been prepared by Borrowers in light of the past
operations of its businesses, but including future payments of known contingent liabilities, and
reflect projections through December 31, 2013 on a month-by-month basis through December 31, 2011
and on a year-by-year basis thereafter. Except as otherwise disclosed therein, the Projections are
based upon the same accounting principles as those used in the preparation of the financial
statements described above and reflect Borrowers’ good faith and reasonable estimates of the future
financial performance of Borrowers for the period set forth therein based on good faith assumptions
made in light of current conditions and current facts known to Borrowers. The
Projections are not a guaranty of future performance, and actual results may differ from the
Projections and such differences may be material.




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          3.5 Material Adverse Effect. Between December 31, 2009 and the Restatement
Date, (a) no Credit Party has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward or long-term
commitments that are not reflected in the Financial Statements or Projections delivered
pursuant to Section 3.4 and that, alone or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon any Credit
Party’s assets and no law or regulation applicable to any Credit Party has been adopted
that has had or would reasonably be expected to have a Material Adverse Effect, and (c) no
Credit Party is in default and to the best of Borrowers’ knowledge no third party is in
default under any material contract, lease or other agreement or instrument, that alone or
in the aggregate would reasonably be expected to have a Material Adverse Effect. Since
December 31, 2009, there has been no Material Adverse Effect.




          3.6 Ownership of Property; Liens. As of the Restatement Date, the real estate
(“Real Estate”) listed in Disclosure Schedule (3.6) constitutes all of the
real property owned, leased, subleased, or used by any Credit Party. Each Credit Party
owns good and marketable fee simple title to all of its owned Real Estate, and valid and
marketable leasehold interests in all of its leased Real Estate, all as described on
Disclosure Schedule (3.6), and copies of all such leases or a summary of terms
thereof reasonably satisfactory to Agent have been delivered or otherwise made available to
Agent. Disclosure Schedule (3.6) further describes any Real Estate with respect to
which any Credit Party is a lessor, sublessor or assignor as of the Restatement Date. Each
Credit Party also has good and marketable title to, or valid leasehold interests in, all of
its personal property and assets. As of the Restatement Date, none of the properties and
assets of any Credit Party are subject to any Liens other than Permitted Encumbrances, and
there are no facts, circumstances or conditions known to any Credit Party that may result
in any Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers, consents,
bills of sale and other documents, and has duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Credit Party’s right, title and
interest in and to all such Real Estate and other properties and assets. Disclosure
Schedule (3.6) also describes any purchase options, rights of first refusal or other
similar contractual rights pertaining to any Real Estate. As of the Restatement Date, no
portion of any Credit Party’s Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all material respects
to its original condition or otherwise remedied. As of the Restatement Date, all material
permits required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.




          3.7 Labor Matters. Except as set forth on Disclosure Schedule (3.7),
as of the Restatement Date: (a) no strikes or other material labor disputes against any
Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b) hours
worked by and payment made to employees of each Credit Party comply with the Fair
Labor Standards Act and each other federal, state, local or foreign law applicable to such
matters; (c) all payments due from any Credit Party for employee health and welfare






26









 







insurance have been paid or accrued as a liability on the books of such Credit Party; (d)
no Credit Party is a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement or
arrangement (and true and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered or otherwise made available to Agent); (e) there is
no organizing activity involving any Credit Party pending or, to any Credit Party’s
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party’s knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of employees of any
Credit Party has made a pending demand for recognition; and (g) there are no material
complaints or charges against any Credit Party pending or, to the knowledge of any Credit
Party, threatened to be filed with any Governmental Authority or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment or termination
of employment by any Credit Party of any individual.




          3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
Except as set forth in Disclosure Schedule (3.8), as of the Restatement Date, no
Credit Party has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and outstanding
Stock of each Credit Party (other than Parent, which is publicly traded) is owned by each
of the Stockholders and in the amounts set forth in Disclosure Schedule (3.8).
Except as set forth in Disclosure Schedule (3.8), there are no outstanding rights
to purchase, options, warrants or similar rights or agreements pursuant to which any Credit
Party may be required to issue, sell, repurchase or redeem any of its Stock or other equity
securities or any Stock or other equity securities of its Subsidiaries. All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Restatement Date
(except for the Obligations) is described in Section 6.3 (including Disclosure
Schedule (6.3)).




          3.9 Government Regulation. No Credit Party is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act of 1940. No Credit Party
is subject to regulation under the Public Utility Holding Company Act of 2005, the Federal
Power Act, or any other federal or state statute that restricts or limits its ability to
incur Indebtedness or to perform its obligations hereunder. The making of the Loans by
Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on behalf of
Borrowers, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange Commission.




          3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending credit
for the purpose of “purchasing” or “carrying” any “margin stock” as such terms are
defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter
in effect (such securities being referred to herein as “Margin Stock”). No Credit






27









 







Party owns any Margin Stock (except to the extent received in satisfaction of claims in a
bankruptcy proceeding or the like), and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring
any Indebtedness that was originally incurred to purchase or carry any Margin Stock or for
any other purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U
or X of the Federal Reserve Board. No Credit Party will take or permit to be taken any
action that might cause any Loan Document to violate any regulation of the Federal Reserve
Board.




          3.11 Taxes. Except as set forth in Disclosure Schedule (3.11), all
Federal and other material tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party have been
filed with the appropriate Governmental Authority, and all Charges have been paid prior to
the date on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, excluding Charges or other amounts being contested in accordance with
Section 5.2(b) and unless the failure to so file or pay would not reasonably be
expected to result in fines, penalties or interest in excess of $500,000 in the aggregate.
Proper and accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the respective
Governmental Authorities. Disclosure Schedule (3.11) sets forth as of the
Restatement Date those taxable years for which any Credit Party’s tax returns are currently
being audited by the IRS or any other applicable Governmental Authority and any assessments
or threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in Disclosure Schedule (3.11), as of the
Restatement Date, no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. Except as set forth in
Disclosure Schedule (3.11), none of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any tax sharing
agreements) or (b) to each Credit Party’s knowledge, as a transferee. As of the
Restatement Date, no Credit Party has agreed or been requested to make any adjustment under
IRC Section 481(a), by reason of a change in accounting method or otherwise, which would
reasonably be expected to have a Material Adverse Effect.





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          3.12 ERISA.




          (a) Disclosure Schedule (3.12) lists as of the Restatement Date, all Plans and
separately identifies all Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and
Welfare Plans, including all Retiree Welfare Plans. Copies of all such listed Plans (other than
any Multiemployer Plan), together with a copy of the latest form IRS/DOL 5500-series for each such
Plan required to file such form have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401 of the IRC,
the trusts created thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the IRC, and, to the knowledge of any Credit Party, nothing has occurred that would
cause the loss of such qualification or tax-exempt status. Each Plan is in compliance in all
material respects with the applicable provisions of ERISA and the IRC, including the timely filing
of all reports required under the IRC or ERISA, including the statement required by 29 CFR Section
2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed to make any material
contribution or pay any material amount due as required by either Section 412 of the IRC or Section
302 of ERISA or the terms of any such Plan. Neither any Credit Party nor ERISA Affiliate has
engaged in a “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the
IRC, in connection with any Plan, that would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC.




          (b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has any
material Unfunded Pension Liability; (ii) no ERISA Event or event described in Section 4062(e) of
ERISA with respect to any Title IV Plan has occurred or is reasonably expected to occur; (iii)
there are no pending, or to the knowledge of any Credit Party, threatened material claims (other
than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any material liability as a result
of a complete or partial withdrawal from a Multiemployer Plan; (v) within the last five years no
Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a
“standard termination” as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of
any Credit Party or ERISA Affiliate (determined at any time within the past five years) with
material Unfunded Pension Liabilities been transferred outside of the “controlled group” (within
the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; (vi) except in
the case of any ESOP or other “eligible individual account plan” as defined in Section 407(d)(3) of
ERISA, Stock of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more
than 10% of fair market value of the assets of any Plan measured on the basis of fair market value
as of the latest valuation date of any Plan; and (vii) no liability under any Title IV Plan has
been satisfied with the purchase of a contract from an insurance company that is not rated AAA by
the Standard & Poor’s Corporation or an equivalent rating by another nationally recognized rating
agency.




          3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened against any
Credit Party, before any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, “Litigation”), (a) that challenges any Credit Party’s
right or power to enter into or perform any of its obligations under the Loan Documents to
which






29









 







it is a party, or the validity or enforceability of any Loan Document or any action
taken thereunder, or (b) that has a reasonable risk of being determined adversely to any
Credit Party and that, if so determined, would reasonably be expected to have a Material
Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as of the
Restatement Date there is no Litigation pending or, to the best of any Credit Party’s
knowledge, threatened that seeks damages in excess of $500,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.




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




          3.15 Intellectual Property. As of the Restatement Date, each Credit Party
owns or has rights to use all material Intellectual Property necessary to continue to
conduct its business as now conducted by it or presently proposed to be conducted by it and
each Patent, Trademark, Copyright and License reasonably necessary to continue to conduct
its business as now conducted by it or presently proposed to be conducted by it other than
any such License that may be acquired by purchase or license of a commodity or
off-the-shelf software or other product, is listed, together with application or
registration numbers, as applicable, in Disclosure Schedule (3.15). Each Credit
Party conducts its business and affairs without infringement of or interference in any
material respect with any Intellectual Property of any other Person which is material to a
Credit Party. Except as set forth in Disclosure Schedule (3.15), no Credit Party
is aware of any material infringement claim by any other Person with respect to any
Intellectual Property.




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







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          3.17 Environmental Matters.




          (a) Except as set forth in Disclosure Schedule (3.17), as of the Restatement Date: (i)
the Real Estate is free of contamination from any Hazardous Material except for such contamination
that would not adversely impact the value or marketability of such Real Estate and that would not
result in Environmental Liabilities that, to the extent not covered by insurance, would reasonably
be expected to exceed $500,000; (ii) no Credit Party has caused or suffered to occur any material
Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance that would not result in Environmental Liabilities which would reasonably be
expected to exceed $500,000; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where the failure to so
obtain or comply with such Environmental Permits would not result in Environmental Liabilities that
would reasonably be expected to exceed $500,000, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely
to result in any Environmental Liabilities of such Credit Party which, to the extent not covered by
insurance, would reasonably be expected to exceed $500,000; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $500,000 or injunctive relief against, or
that alleges criminal misconduct by, any Credit Party; (vii) no notice has been received by any
Credit Party identifying it as a “potentially responsible party” or requesting information under
CERCLA or analogous state statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified as a “potentially
responsible party” under CERCLA or analogous state statutes; and (viii) the Credit Parties have
provided to Agent copies of all existing environmental reports, reviews and audits pertaining to
actual or potential Environmental Liabilities, in each case relating to any Credit Party and in
each case to the extent in any Credit Party’s possession or control.




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




          3.18 Insurance. Each Credit Party and each of their respective Subsidiaries and their
respective properties are insured with financially sound and reputable insurance companies which
are not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning similar properties
in localities where such Person operates. A true and complete listing of such insurance, including
issuers, coverages and deductibles, has been provided to Agent.




          3.19 Deposit Accounts. Disclosure Schedule (3.19) lists all banks and other
financial institutions at which any Credit Party maintains deposit or other accounts as of the
Restatement Date, and such Schedule correctly identifies the name, address and telephone






31









 







number of each depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number therefor.




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




          3.21 Customer and Trade Relations. As of the Restatement Date, there exists no actual
or, to the knowledge of any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in: the business relationship of any Credit Party with any
customer or group of customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business relationship of any
Credit Party with any supplier essential to its operations.




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




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




          3.24 Patriot Act. To the extent applicable, each Credit Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V,
as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of the proceeds of the
loans made hereunder will be used by any Credit Party or any of their Affiliates, directly or
indirectly, for any payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct business or obtain any improper advantage, in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended.




4. FINANCIAL STATEMENTS AND INFORMATION




          4.1 Reports and Notices.




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




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




          4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate directly with its independent certified public
accountants, including KPMG LLP, and authorizes and shall instruct those accountants and
advisors to communicate to Agent and each Lender information relating to any Credit Party
with respect to the business, results of operations and financial condition of any Credit
Party. Unless an Event of Default shall have occurred and be continuing, Agent shall
provide reasonable advance notice of any such communications and Borrowers shall have the
right to participate therein.




5. AFFIRMATIVE COVENANTS




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




          5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: do or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its material rights and franchises; continue to conduct
its business substantially as now conducted or as otherwise permitted hereunder; at all
times maintain, preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1). The
foregoing shall not obligate the Credit Parties to operate any specific location or limit
the Credit Parties’ rights under Section 6.8.







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          5.2 Payment of Charges.




          (a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause to
be paid and discharged promptly all Charges payable by it, including (i) except as to Charges
identified in Disclosure Schedule (3.11), Charges imposed upon it, its income and profits,
or any of its property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to
warehousemen and bailees, in each case, before any thereof shall become past due, except in the
case of clauses (ii) and (iii) where the failure to pay or discharge such Charges would not
result in aggregate liabilities in excess of $500,000.




          (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges, Taxes or claims described in Section 5.2(a); provided, that
(i) adequate reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing
payment of the Obligations and such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges, (iii) none of the
Collateral becomes subject to forfeiture or loss as a result of such contest, and (iv) such Credit
Party shall promptly pay or discharge such contested Charges, Taxes or claims and all additional
charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this Section
5.2(b) are no longer met.




          5.3 Books and Records. Each Credit Party shall keep adequate books and records with
respect to its business activities in which proper entries, reflecting all financial transactions,
are made in accordance with GAAP and on a basis consistent with the Financial Statements.




          5.4 Insurance; Damage to or Destruction of Collateral.




          (a) Each Credit Party shall, and shall cause each of its Subsidiaries to, (i) maintain or
cause to be maintained in full force and effect all policies of insurance of any kind with respect
to the property and businesses of the Credit Parties and such Subsidiaries (including policies of
fire, theft, product liability, public liability, Flood Insurance, property damage, other casualty,
employee fidelity, workers’ compensation, and employee health and welfare insurance) with
financially sound and reputable insurance companies or associations (in each case that are not
Affiliates of any Borrower) of a nature and providing such coverage as is sufficient and as is
customarily carried by businesses of the size and character of the business of the Credit Parties
and reasonably acceptable to Agent and (ii) cause all such insurance relating to any property or
business of any Credit Party to name Agent as additional insured or loss payee, as appropriate.
All policies of insurance on real and personal property of the Credit Parties will contain an
endorsement, in form and substance acceptable to Agent, showing loss payable to Agent (Form 438 BFU
or equivalent) and extra expense endorsements. Such endorsement, or an independent instrument
furnished to Agent, will provide that the insurance companies will give Agent at least






34









 







thirty (30) days’ prior written notice before any such policy or policies of insurance shall
be altered or canceled and that no act or default of any Borrower or any other Person shall affect
the right of Agent to recover under such policy or policies of insurance in case of loss or damage.
Each Credit Party shall direct all present and future insurers under its “All Risk” policies of
insurance to pay all proceeds payable thereunder directly to Agent, which direction shall be
effective at such time as Agent has the right to exercise dominion over Borrower’s cash balances
pursuant to Section 5.13 hereof. During such time, if any insurance proceeds are paid by
check, draft or other instrument payable to any Credit Party and Agent jointly, Agent may endorse
such Credit Party’s name thereon and do such other things as Agent may deem advisable to reduce the
same to cash. Agent reserves the right at any time, upon review of each Credit Party’s risk
profile, to require, in Agent’s reasonable judgment, additional forms and limits of insurance.
Notwithstanding the requirements in subsection (i) above, Federal Flood Insurance shall not be
required for (x) Real Estate not located in a Special Flood Hazard Area, or (y) Real Estate located
in a Special Flood Hazard Area in a community that does not participate in the National Flood
Insurance Program.




          (b) Unless the Borrower Representative provides Agent with evidence of the insurance coverage
required by this Agreement, Agent may purchase insurance at the Credit Parties’ expense to protect
Agent’s and Lenders’ interests in the Credit Parties’ and their Subsidiaries’ properties. This
insurance may, but need not, protect the Credit Parties’ and their Subsidiaries’ interests. The
coverage that Agent purchases may not pay any claim that any Credit Party or any Subsidiary of any
Credit Party makes or any claim that is made against such Credit Party or any Subsidiary in
connection with said property. The Borrowers may later cancel any insurance purchased by Agent,
but only after providing Agent with evidence that there has been obtained insurance as required by
this Agreement. If Agent purchases insurance, the Credit Parties will be responsible for the costs
of that insurance, including interest and any other charges Agent may impose in connection with the
placement of insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance shall be added to the Obligations. The costs of the
insurance may be more than the cost of insurance the Borrowers may be able to obtain on its own.




          (c) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory to
Agent, endorsements to (i) all “All Risk” insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies naming Agent, on behalf
of itself and Lenders, as additional insured. Each Credit Party irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent), so long as any Event of
Default has occurred and is continuing or at any time Agent has the right to exercise dominion over
Borrowers’ cash balances pursuant to Section 5.13 hereof, as each Credit Party’s true and
lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under
such “All Risk” policies of insurance, endorsing the name of each Credit Party on any check or
other item of payment for the proceeds of such “All Risk” policies of insurance and for making all
determinations and decisions with respect to such “All Risk” policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower Representative shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not covered by
insurance. After deducting from such proceeds (i) the expenses incurred by Agent in the collection
or handling thereof, and (ii) amounts required to be paid to






35









 







creditors (other than Lenders) having Permitted Encumbrances, Agent may, at its option, apply
such proceeds to the reduction of the Obligations in accordance with Section 1.3(d),
provided that in the case of insurance proceeds pertaining to any Credit Party that is not
a Borrower, such insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower, or permit or require each Credit Party to use such money, or any part thereof, to
replace, repair, restore or rebuild the Collateral in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds
occurs at a time when Agent does not have the right to exercise dominion over Borrowers’ cash
balances pursuant to Section 5.13 hereof, Agent shall promptly release to the Borrower
Representative any insurance proceeds Agent receives with respect to such casualty and permit the
applicable Credit Party to replace, restore, repair or rebuild the property.




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




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




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




          5.8 Environmental Matters. Each Credit Party shall and shall cause each Person within
its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with
all Environmental Laws and Environmental Permits other than noncompliance that would not reasonably
be expected to have a Material Adverse Effect; (b) implement any and all investigation,
remediation, removal and response actions that are appropriate or necessary to maintain the value
and marketability of the Real Estate or to otherwise comply with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in,






36









 







under, above, to, from or about any of its Real Estate in all material respects; (c) notify
Agent promptly after such Credit Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate
that is reasonably likely to result in Environmental Liabilities in excess of $500,000; and (d)
promptly forward to Agent a copy of any order, notice, request for information or any communication
or report received by such Credit Party in connection with any such violation or Release or any
other matter relating to any Environmental Laws or Environmental Permits that would reasonably be
expected to result in Environmental Liabilities in excess of $500,000 in each case whether or not
the Environmental Protection Agency or any Governmental Authority has taken or threatened any
action in connection with any such violation, Release or other matter. If Agent at any time has a
reasonable basis to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate,
that, in each case, would reasonably be expected to have a Material Adverse Effect, then each
Credit Party shall, upon Agent’s written request (i) cause the performance of such environmental
audits including subsurface sampling of soil and groundwater, and preparation of such environmental
reports, at Borrowers’ expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be
in form and substance reasonably acceptable to Agent, and (ii) permit Agent or its representatives
to have access to all Real Estate for the purpose of conducting such environmental audits and
testing as Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrowers shall reimburse Agent for the costs of such audits and tests and the same will constitute
a part of the Obligations secured hereunder.




          5.9 Landlords’ Agreements, Mortgagee Agreements; Bailee Letters and Real Estate
Purchases. To the extent not already provided to Agent in connection with the Existing Credit
Agreement, each Credit Party shall use commercially reasonable efforts to obtain a landlord’s
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each leased
property, mortgagee of owned property or bailee with respect to any warehouse, processor or
converter facility or other location where Collateral is stored or located, which agreement or
letter shall contain a waiver or subordination of all Liens or claims that the landlord, mortgagee
or bailee may assert against the Collateral at that location, and shall otherwise be reasonably
satisfactory in form and substance to Agent. With respect to such locations or warehouse space
leased or owned as of the Restatement Date and thereafter, if Agent has not received a landlord or
mortgagee agreement or bailee letter as of the Restatement Date (or, if later, as of the date such
location is acquired or leased), any Borrower’s Eligible Inventory at that location shall, in
Agent’s and Co-Collateral Agent’s discretion, be excluded from the Borrowing Base or be subject to
such Reserves as may be established by Agent in its reasonable credit judgment. After the
Restatement Date, no Inventory or other material Collateral shall be shipped to a processor,
converter, warehouse or other third-party property under arrangements established after the
Restatement Date without the prior written consent of Agent (which consent, in Agent’s discretion,
may be conditioned upon the exclusion from the Borrowing Base of Eligible Inventory at that
location or the establishment of Reserves acceptable to Agent) or, unless and until a satisfactory
landlord agreement or bailee letter, as appropriate, shall first have been obtained with respect to
such location; provided, however, that the Credit Parties may ship Inventory having
a book value not to exceed $100,000 in each instance to third party properties






37









 







without Agent’s consent and without receipt of a landlord waiver or bailee letter in the
ordinary course of business. The Credit Parties acknowledge and agree that such Inventory shall be
excluded from the Borrowing Base or subject to such Reserves as may be established by Agent and
Co-Collateral Agent in their reasonable credit judgment. Each Credit Party shall timely and fully
pay and perform its obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. To the extent permitted
hereunder, if any Credit Party proposes to acquire a fee ownership interest in Real Estate after
the Restatement Date, it shall first provide to Agent a mortgage or deed of trust granting Agent a
first priority Lien on such Real Estate, together with environmental audits, mortgage title
insurance commitment, real property survey, local counsel opinion(s), and, if required by Agent,
supplemental casualty insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Agent, in each case, in form and substance reasonably
satisfactory to Agent; including, without limitation, appraisals complying with FIRREA (such
appraisals shall be completed by appraisers chosen by Agent and shall not count against the limited
number of appraisals for which expense reimbursement may be sought) and Flood Insurance as
otherwise required herein.




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




          (b) Each Credit Party shall (i) cause each Person, upon its becoming a Subsidiary of such
Credit Party (provided that this shall not be construed to constitute consent by Agent or any of
the Lenders to any acquisition or other transaction not expressly permitted by the terms of this
Agreement), promptly to guaranty the Obligations and to grant to Agent, for the benefit of Agent
and Lenders, a security interest in the real, personal and mixed property of such Subsidiary to
secure the Obligations, together, in the case of Real Estate located in a Special Flood Hazard
Area, Federal Flood Insurance as required by Section 5.4(a), and (ii) pledge, or cause to
be pledged, to Agent, for the benefit of Agent and Lenders, all of the Stock and any intercompany
Indebtedness of such Subsidiary to secure the Obligations. The documentation for such guaranty,
security and pledge (including any mortgage) shall be substantially similar to the Loan Documents
(and other real estate deliveries) executed and delivered concurrently herewith with such
modifications as are reasonably requested by Agent. In addition to the obligations set forth in
Section 5.4(a) and this clause (b) above, within 45 days after written notice from Agent to
Credit Parties that any Real Estate is located in a Special Flood Hazard Area, Credit Parties shall
satisfy the Federal Flood Insurance requirements of Section 5.4(a).




          5.11 [Reserved.]




          5.12 Bank Accounts. On or before the date which is sixty (60) days after the
Restatement Date, the Borrowers shall, in consultation with Wells Fargo, review and analyze their
cash management functions and consider the use of Wells Fargo as the Borrowers’ primary provider of
cash management services, including the possible transition of deposit accounts and other treasury
services to Wells Fargo, which shall be subject to the delivery to Agent of fully






38









 







executed Control Letters or control agreements, as applicable, as required pursuant to Section
5.13. The foregoing shall not obligate the Borrowers to move any cash management functions to
Wells Fargo and Borrowers shall not thereafter be obligated to maintain any cash management
functions with Wells Fargo.




          5.13 Cash Management System. Each Credit Party shall enter into, and cause each
depository, securities intermediary or commodities intermediary to enter into, Control Letters or
control agreements, with respect to each deposit, securities, commodity or similar account
maintained by such Person (other than any payroll account so long as such payroll account is a zero
balance account and withholding tax and fiduciary accounts) providing springing cash dominion to
Agent in the case of deposit accounts as of or after the Restatement Date; provided, that
Agent shall not assert such cash dominion until such time as either (i) an Event of Default has
occurred and is continuing or (ii) Borrowing Availability is less than $20,000,000;
provided, further, that in any instance where Borrowing Availability is less than
$20,000,000, such right shall be terminated with respect to such instance following certification
by Borrower Representative to Agent and Agent’s confirmation that Borrowing Availability has
exceeded $25,000,000 for ninety (90) consecutive days.




6. NEGATIVE COVENANTS




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




          6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or indirectly, by
operation of law or otherwise, (a) form or acquire any Subsidiary unless such Subsidiary, upon its
formation or acquisition, as applicable, become a Credit Party hereunder and Borrowers and such
Subsidiary take such actions as required by Section 5.10, or (b) merge with, consolidate
with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or
acquire, any Person; provided, that (x) any Borrower may merge with and into another
Borrower so long as the Borrower Representative shall be the survivor of any such merger to which
it is a party, (y) any Subsidiary may merge with and into a Borrower so long as such Borrower shall
be the survivor of any such merger to which it is a party and (z) any Subsidiary may merge with,
consolidate with, acquire all, or substantially all the assets or Stock of another Subsidiary so
long as, if either is a Borrower, then the survivor of any such merger, consolidation or
acquisition is a Borrower and, if either is a Credit Party that is not a Borrower, then the
survivor of any such merger, consolidation or acquisition is a Credit Party. Notwithstanding the
foregoing, any Borrower may acquire all or substantially all of the assets or Stock of any Person
(the “Target”) (in each case, a “Permitted Acquisition”) subject to the
satisfaction of each of the following conditions:




               (i) Agent shall receive at least thirty (30) days’ prior written notice of such
proposed Permitted Acquisition, which notice shall include a reasonably detailed
description of such proposed Permitted Acquisition;



               (ii) such Permitted Acquisition shall only involve assets located in the United States
or Canada (subject to immaterial amounts of assets not so located) and comprising a
business, or those assets of a business, of the type engaged in



39









 




by Borrowers as of the Restatement Date, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the exercise of its
rights and remedies under this Agreement or any other Loan Documents other than approvals
of the type applicable to the exercise of such rights and remedies with respect to
Borrowers prior to such Permitted Acquisition;




               (iii) such Permitted Acquisition shall be consensual and shall have been approved by
the Target’s board of directors or persons performing similar functions;



               (iv) no additional Indebtedness, Guaranteed Indebtedness, contingent obligations or
other liabilities shall be incurred, assumed or otherwise be reflected on a consolidated
balance sheet of Borrowers and Target after giving effect to such Permitted Acquisition,
except (A) Loans made hereunder, (B) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of the Target to the extent no Default or Event of Default has
occurred and is continuing or would result after giving effect to such Permitted
Acquisition and (C) other debt that would constitute Indebtedness permitted under
Section 6.3;



               (v) unless Agent otherwise consents, the sum of all amounts payable in connection with
all Permitted Acquisitions (including all transaction costs and all Indebtedness,
liabilities and contingent obligations incurred or assumed in connection therewith or
otherwise reflected in a consolidated balance sheet of Borrowers and Target) shall not
exceed $50,000,000 (and $15,000,000 for any single Permitted Acquisition) and the portion
thereof allocable to goodwill and intangible assets for all such Permitted Acquisitions
during the term hereof shall not exceed $10,000,000;



               (vi) unless Agent otherwise consents, the Target shall not have incurred negative
EBITDA for the trailing twelve-month period preceding the date of the Permitted
Acquisition, as determined based upon the Target’s financial statements for its most
recently completed fiscal year and its most recent interim financial period completed
within sixty (60) days prior to the date of consummation of such Permitted Acquisition;



               (vii) the business and assets acquired in such Permitted Acquisition shall be free and
clear of all Liens (other than Permitted Encumbrances);



               (viii) at or prior to the closing of any Permitted Acquisition, Agent will be granted
a first priority perfected Lien (subject to Permitted Encumbrances) in all assets acquired
pursuant thereto or in the assets and Stock of the Target, and Borrowers and the Target
shall have executed such documents and taken such actions as may be required by Agent in
connection therewith;



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



40









 






          (A) a pro forma consolidated balance sheet, income statement and cash
flow statement of Borrowers and its Subsidiaries (the “Acquisition Pro
Forma”), based on recent financial statements, which shall be complete
and shall fairly present in all material respects the assets, liabilities,
financial condition and results of operations of Borrowers and its
Subsidiaries in accordance with GAAP consistently applied, but taking into
account such Permitted Acquisition and the funding of all Loans in
connection therewith, and such Acquisition Pro Forma shall reflect that (x)
average daily Borrowing Availability of all Borrowers for the 90-day period
preceding the consummation of such Permitted Acquisition would have exceeded
$30,000,000 on a pro forma basis (after giving effect to such Permitted
Acquisition and all Loans funded in connection therewith as if made on the
first day of such period) and the Acquisition Projections (as hereinafter
defined) shall reflect that such Borrowing Availability of $30,000,000 shall
continue for at least ninety (90) days after the consummation of such
Permitted Acquisition, and (y) on a pro forma basis, no Event of Default has
occurred and is continuing or would result after giving effect to such
Permitted Acquisition and either (i) Borrowers would have been in compliance
with the Financial Covenant for the four quarter period reflected in the
Compliance Certificate most recently delivered to Agent pursuant to
Annex D prior to the consummation of such Permitted Acquisition
(after giving effect to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such period and
calculated without regard to whether the then current Borrowing Availability
exceeds the Minimum Availability Amount or (ii) the sum of all amounts
payable (including all transaction costs and all Indebtedness, liabilities
and contingent obligations incurred or assumed in connection therewith or
otherwise reflected in a consolidated balance sheet of Borrowers and the
applicable Target(s)) in connection with (A) all Permitted Acquisitions
shall not exceed $10,000,000 in the aggregate and (B) any such Permitted
Acquisition shall not exceed $5,000,000 (or such greater amount agreed to by
Agent, but in any event not to exceed, when aggregated with all other
Permitted Acquisitions for purposes of this clause (ii), $10,000,000);




          (B) updated versions of the most recently delivered Projections
covering the 1-year period commencing on the date of such Permitted
Acquisition and otherwise prepared in accordance with the Projections (the
“Acquisition Projections”) and based upon historical financial data
of a recent date reasonably satisfactory to Agent, taking into account such
Permitted Acquisition; and




          (C) a certificate of the chief financial officer or treasurer of
Borrower each to the effect that: (w) each Borrower (after taking into
consideration all rights of contribution and indemnity such Borrower has
against each Borrower and each other Subsidiary of Borrower) will be Solvent
upon the consummation of the Permitted Acquisition; (x) the



41









 







Acquisition Pro Forma fairly presents the financial condition of
Borrowers (on a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition Projections are
reasonable and good faith estimates of the future financial performance of
Borrowers subsequent to the date thereof based upon the historical
performance of Borrowers and the Target and based upon good faith
assumptions made in light of current conditions and current facts known to
Borrowers and show that Borrowers shall continue to be in compliance with
the Financial Covenant for the 2-year period thereafter; and (z) Borrowers
have completed their due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was conducted in a
manner similar to that which would have been conducted by a prudent
purchaser of a comparable business and the non-privileged results of which
investigation were delivered to Agent and Lenders;



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



               (xi) at the time of such Permitted Acquisition and after giving effect thereto, no
Default or Event of Default has occurred and is continuing.



          Notwithstanding the foregoing, the Accounts and Inventory of the Target shall not be included
in Eligible Accounts and Eligible Inventory until Agent has notified Borrower Representative that
it has completed such diligence matters (including, audits and appraisals (which shall be completed
by appraisers chosen by Agent), as applicable) necessary to determine the eligibility thereof;
provided; that Agent shall agree to act as promptly as practicable to complete such
diligence matters; provided, further, that any audits, field examinations and/or
appraisals in connection with Permitted Acquisitions shall not count against the limited number of
audits, field examinations and appraisals for which expense reimbursement may be sought. The
foregoing shall not preclude the Borrowers from including the Accounts and Inventory of the Target
in any pro forma calculations required pursuant to this Section 6.1.




          6.2 Investments; Loans and Advances. No Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of securities or
otherwise, except that: (a) the Credit Parties may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to a Credit Party pursuant
to negotiated agreements with respect to settlement of such Account Debtor’s Accounts in
the ordinary course of business, consistent with past practices or received pursuant to the
settlement of a Credit Party’s claims in any bankruptcy proceeding; (b) each Credit Party
may maintain its existing investments in its Subsidiaries as of the Restatement Date and
may make additional debt and equity investments therein from time to time to extent
specifically permitted hereunder; (c) so long as no Default or Event of Default has
occurred and is continuing and Agent does not






42









 







have the right to exercise dominion over Borrowers’ cash balances pursuant to
Section 5.13 hereof, Credit Parties may make investments (which shall be limited to
overnight investments of funds received after 2:00 pm (Chicago time) or otherwise in an
aggregate amount of up to $1,000,000 at any time when there is any outstanding Revolving
Loan balance at the time of investment), subject to Control Letters in favor of Agent for
the benefit of Lenders or otherwise subject to a perfected security interest in favor of
Agent for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof maturing
within one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the highest
rating obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Service,
Inc., (iii) certificates of deposit maturing no more than one year from the date of
creation thereof issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided profits of not less
than $300,000,000 and having a senior unsecured rating of “A” or better by a nationally
recognized rating agency (an “A Rated Bank”), (iv) time deposits maturing no more
than thirty (30) days from the date of creation thereof with A Rated Banks and (v) mutual
funds that invest solely in one or more of the investments described in clauses (i)
through (iv) above; (d) loans to employees specifically permitted by Section
6.4(b); (e) Permitted Acquisitions; (f) investments set forth in Disclosure
Schedule 6.2; (g) guaranties of the obligations of another Credit Party specifically
permitted by Section 6.6; (h) bank deposits in the ordinary course of business in
deposit accounts which satisfy the provisions of Section 5.13; and (i) investments
constituting Indebtedness specifically permitted by Section 6.3.




          6.3 Indebtedness.




          (a) No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except
(without duplication) (i) Indebtedness secured by purchase money security interests and Capital
Leases permitted in Section 6.7(c), (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and liabilities to the extent
they are permitted to remain unfunded under applicable law, (iv) existing Indebtedness described in
Disclosure Schedule (6.3) and refinancings thereof or amendments or modifications thereof
that do not have the effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on terms and conditions no less
favorable to any Credit Party, Agent or any Lender, than the terms of the Indebtedness being
refinanced, amended or modified, (v) Indebtedness specifically permitted under Section 6.1,
(vi) hedging obligations under swaps, caps and collar arrangements arranged by GE Capital or
provided by any Lender entered into or for the sole purpose of hedging in the normal course of
business and consistent with industry practices, and (vii) Indebtedness consisting of intercompany
loans and advances made by any Borrower to any other Credit Party; provided, that: (A) such
Credit Party shall have executed and delivered to such Borrower, on the Restatement Date for any
such Indebtedness to be outstanding on the Restatement Date and otherwise prior to any such
intercompany loan or advance, a demand note (collectively, the “Intercompany Notes”) to
evidence any such intercompany Indebtedness owing at any time by such Credit Party to such Borrower
which Intercompany Notes shall be in form and substance reasonably satisfactory to Agent and shall
be pledged and delivered to Agent pursuant to the






43









 







applicable Pledge Agreement or Security Agreement as additional collateral security for the
Obligations; (B) the obligations of such Borrower and such Credit Party under any such Intercompany
Notes shall be subordinated to the Obligations of such Borrower and such Credit Party hereunder in
a manner reasonably satisfactory to Agent; (C) at the time any such intercompany loan or advance is
made by any Borrower to any other Credit Party and after giving effect thereto, each of Borrower
and such Credit Party shall be Solvent; and (D) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; (viii) contingent
liabilities arising with respect to customary indemnification obligations in favor of sellers in
connection with Permitted Acquisitions or in favor of buyers in connection with asset dispositions
permitted hereby; and (ix) other unsecured Indebtedness in an aggregate amount not to exceed
$10,000,000.




          (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount payable in respect of any
Indebtedness prior to its scheduled maturity, other than (i) the Obligations; (ii) Indebtedness
secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Sections 6.8(b) or (c); (iii) Indebtedness
permitted by Section 6.3(a)(iv) upon any refinancing thereof in accordance with Section
6.3(a)(iv); and (iv) so long as (A) no Event of Default shall have occurred and be continuing
or would result therefrom and (B) Borrowing Availability shall be in excess of $25,000,000 after
giving effect thereto, purchase money financing and Capitalized Leases permitted pursuant to
Section 6.3 in an aggregate amount not to exceed $2,500,000 for the term of the Agreement.




          6.4 Employee Loans and Affiliate Transactions.




          (a) Except as otherwise expressly permitted in this Section 6 with respect to
Affiliates, no Credit Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to the reasonable
requirements of such Credit Party’s business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm’s length transaction with
a Person not an Affiliate of such Credit Party. In addition, if any such transaction or series of
related transactions involves payments in excess of $500,000 in the aggregate, the terms of these
transactions must be disclosed in advance to Agent and Lenders. All such transactions existing as
of the date hereof are described in Disclosure Schedule 6.4(a).




          (b) No Credit Party shall enter into any lending or borrowing transaction with any employees
of any Credit Party, except loans to its respective employees on an arm’s-length basis in the
ordinary course of business consistent with past practices for travel and entertainment expenses,
relocation costs and similar purposes up to a maximum of $100,000 to any employee and up to a
maximum of $250,000 in the aggregate at any one time outstanding.




          6.5 Capital Structure and Business. If all or part of a Credit Party’s Stock is
pledged to Agent, that Credit Party shall not issue additional Stock unless such Stock is pledged
to Agent, on behalf of itself and Lenders, on terms and conditions reasonably satisfactory to
Agent. No Credit Party shall amend its charter or bylaws in a manner that would adversely affect
Agent or Lenders or such Credit Party’s duty or ability to repay the Obligations. No Credit






44









 







Party shall engage in any business other than the businesses currently engaged in by it or
businesses reasonably related thereto.




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




          6.7 Liens. No Credit Party shall create, incur, assume or permit to exist any Lien on
or with respect to its Accounts or any of its other properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in existence on the date
hereof and summarized on Disclosure Schedule (6.7) securing Indebtedness described on
Disclosure Schedule (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of the Indebtedness secured by any such Liens; provided
that the principal amount so secured is not increased and the Lien does not attach to any other
property; and (c) Liens created after the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money Indebtedness with
respect to Equipment and Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness and Capital Lease
Obligations of not more than $7,500,000 outstanding at any one time for all such Liens
(provided that such Liens attach only to the assets subject to such purchase money debt and
such Indebtedness is incurred within twenty (20) days following such purchase and does not exceed
100% of the purchase price of the subject assets). In addition, no Credit Party shall become a
party to any agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in favor of Agent, on
behalf of itself and Lenders, as additional collateral for the Obligations, except operating
leases, Capital Leases or Licenses which prohibit Liens upon the assets that are subject thereto.




          6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey, assign or
otherwise dispose of any of its properties or other assets, including the Stock of any of its
Subsidiaries (whether in a public or a private offering or otherwise) or any of its Accounts, other
than (a) the sale of Inventory in the ordinary course of business, (b) the sale or other
disposition by a Credit Party of Equipment, Fixtures or Real Estate that are obsolete or no longer
used or useful in such Credit Party’s business, (c) the sale or other disposition of other
Equipment and Fixtures having a book value not exceeding $3,500,000 in the aggregate in any Fiscal
Year, (d) the sale of assets or Stock by one Credit Party to another Credit Party, subject to
compliance with Section 6.4 and (e) the property and assets described on Disclosure
Schedule (6.8).




          6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate to,
cause or permit to occur (i) an event that could result in the imposition of a Lien under Section
412 of the IRC or Section 302 or 4068 of ERISA or (ii) an ERISA Event to the extent such ERISA
Event would reasonably be expected to result in taxes, penalties and other liability in excess of
$500,000 in the aggregate.




          6.10 Financial Covenant. Borrowers shall not breach or fail to comply with the
Financial Covenant.







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




          6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its assets.




          6.13 Restricted Payments. No Credit Party shall make any Restricted Payment, except
(a) dividends and distributions by Subsidiaries of any Borrower paid to such Borrower, (b) employee
loans permitted under Section 6.4(b), (c) payments to redeem, purchase, repurchase, or
retire, or to obtain the surrender of, any outstanding warrants, options, or other rights to
acquire Stock of any Credit Party now or hereafter outstanding in connection with employee benefit
plans or compensation of directors of a Credit Party in the ordinary course of business, so long
as, prior to and after giving effect to any such payment, (i) no Default or Event of Default
exists, and (ii) Borrower is in compliance with the Financial Covenant (calculated without regard
to whether the then current Borrowing Availability exceeds the Minimum Availability Amount and (d)
dividends or payments made in respect of the Stock of Parent made in the form of additional units
of Parent’s Stock and the issuance of options to acquire shares of Parent’s Stock.




          6.14 Change of Corporate Name or Location; Change of Fiscal Year. No Credit Party
shall (a) change its name as it appears in official filings in the state of its incorporation or
other organization, (b) change its chief executive office, principal place of business, or
corporate offices or add new warehouses or locations at which Collateral is held or stored, or
change the location of its records concerning the Collateral except as permitted in the Loan
Documents, (c) change the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization, or (e) change its state
of incorporation or organization, in each case without at least thirty (30) days prior written
notice to Agent and provided that any such new location shall be in the continental United
States. No Credit Party shall change its Fiscal Year.




          6.15 No Impairment of Intercompany Transfers. No Credit Party shall directly or
indirectly enter into or become bound by any agreement, instrument, indenture or other obligation
(other than this Agreement and the other Loan Documents) that could directly or indirectly
restrict, prohibit or require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary of any Borrower to
any Borrower.




          6.16 Real Estate Purchases. No Credit Party shall purchase fee simple ownership
interest Real Estate (excluding any such purchase pursuant to a Permitted Acquisition) with an
aggregate purchase price in excess of (i) $5,000,000 in any Fiscal Year and (ii) $25,000,000 during
the term hereof; provided, that at or prior to the closing of any such purchase, Borrowers
shall have made such deliveries as required pursuant to the last sentence of






46









 







Section 5.9; provided, further, that after giving effect to any such
purchase, Borrowing Availability is greater than $25,000,000.




7. TERM




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




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




8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES




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




          (a) Any Borrower (i) fails to make any payment of principal of the Loans or any of the other
Obligations when due and payable, (ii) fails to make any payment of interest on, or Fees owing in
respect of, the Loans within three (3) Business Days after the date such payment is due and
payable, or (iii) fails to pay or reimburse Agent or Lenders for any expense reimbursable hereunder
or under any other Loan Document within five (5) Business Days following Agent’s demand for such
reimbursement or payment of expenses.




          (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of
Sections 1.4, 5.4(a), 5.13 or 6, or any of the provisions set forth in Annex F,
respectively.




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




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






47









 







unremedied for thirty (30) days from the earlier of (i) the date that an officer of such
Credit Party has actual knowledge of such failure or (ii) the date written notice thereof is given
to the Borrower Representative by Agent or Requisite Lenders.




          (e) A default or breach occurs under any other agreement, document or instrument to which any
Credit Party is a party that is not cured within any applicable grace period therefor, and such
default or breach (i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess
of $1,000,000 in the aggregate (including amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a portion
thereof in excess of $1,000,000 in the aggregate to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such right is exercised, by
such holder or trustee.




          (f) Any information contained in any Borrowing Base Certificate is untrue or incorrect in any
respect (other than (i) inadvertent, immaterial errors not exceeding the greater of (A) $250,000 or
(B) up to two percent (2%) of the then current Borrowing Availability, in the aggregate in any
Borrowing Base Certificate and (ii) errors understating the Borrowing Base) or any representation
or warranty herein or in any Loan Document or in any written statement, report, financial statement
or certificate (other than a Borrowing Base Certificate) made or delivered to Agent or any Lender
by any Credit Party is untrue or incorrect in any material respect as of the date when made or
deemed made.




          (g) Assets of any Credit Party, with a fair market value equal to the greater of (i) $250,000
or (ii) up to two percent (2%) of the then current Borrowing Availability, are attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.




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




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






48









 







foregoing, or (v) admits in writing its inability to, or is generally unable to, pay its debts
as such debts become due.




          (j) A final judgment or judgments for the payment of money in excess of the greater of (i)
$250,000 or (ii) up to two percent (2%) of the then current Borrowing Availability, in the
aggregate, at any time are outstanding against one or more of the Credit Parties (which judgments
are not covered by insurance policies as to which liability has been accepted by the insurance
carrier), and the same are not, within thirty (30) days after the entry thereof, discharged or
execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to
the expiration of any such stay.




          (k) Any material provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Credit Party shall challenge the enforceability of
any Loan Document or shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan
Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted
herein or therein) in any Collateral with a fair market value in excess of an aggregate amount of
$1,000,000 purported to be covered thereby.




          (l) Any Change of Control occurs.




          8.2 Remedies.




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




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






49









 







terminated and all of the Obligations, including the Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.




          8.3 Waivers by Credit Parties. Except as otherwise provided for in this Agreement or
by applicable law, each Credit Party waives (including, for purposes of Section 12): (a)
presentment, demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent on which any Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this
regard, (b) all rights to notice and a hearing prior to Agent’s taking possession or control of, or
to Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing Agent to exercise any of its remedies, and (c) the benefit
of all valuation, appraisal, marshaling and exemption laws.




9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT




          9.1 Assignment and Participations.




          (a) Subject to the terms of this Section 9.1, any Lender may make an assignment to a
Qualified Assignee of, or sale of participations in, at any time or times, the Loan Documents,
Loans, Letter of Credit Obligations and any Revolving Loan Commitment or any portion thereof or
interest therein, including any Lender’s rights, title, interests, remedies, powers or duties
thereunder. Any assignment by a Lender shall: (i) require the consent of Agent (which consent
shall not be unreasonably withheld or delayed with respect to a Qualified Assignee and shall not be
required in connection with assignments to a Lender or an Affiliate of a Lender) and the execution
of an assignment agreement (an “Assignment Agreement” substantially in the form attached
hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory to,
and acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have Revolving Loan
Commitments in an amount at least equal to $5,000,000 and the assigning Lender shall have retained
Revolving Loan Commitments in an amount at least equal to $5,000,000; (iv) include a payment to
Agent of an assignment fee of $3,500 and (v) so long as no Event of Default has occurred and is
continuing, require the consent of Borrower Representative, (which consent shall be deemed to have
been given unless an objection is delivered to Agent within five (5) Business Days after notice of
a proposed assignment is delivered to Borrower Representative); provided that no such consent shall
be required for an assignment to a Qualified Assignee. Subject to the recording of the assignment
by Agent in the Register pursuant to Section 1.12(b) (i) in the case of an assignment by a
Lender under this Section 9.1, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as all other Lenders hereunder and (ii) the assigning
Lender shall be relieved of its obligations hereunder with respect to its Revolving Loan
Commitments or assigned portion thereof from and after the date of such assignment. Each Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of
Borrowers to the assignee and that the assignee shall be considered to be a “Lender”. In all
instances, each Lender’s liability to make Loans hereunder shall be several and






50









 







not joint and shall be limited to such Lender’s Pro Rata Share of the applicable Revolving
Loan Commitment. In the event Agent or any Lender assigns or otherwise transfers all or any part
of the Obligations, Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon
the request of Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned. Upon receipt (i) by Agent of an executed copy of the Assignment Agreement and the
assignment fee set forth above and (ii) of the new Notes by the applicable Person, and conditioned
upon such receipt and upon Agent (and the Borrower Representative, if applicable) consenting to
such assignment (following confirmation of the condition set forth in this Section 9.1)
from and after the effective date specified in such Assignment Agreement, Agent shall record or
cause to be recorded in the Register the information contained in such Assignment Agreement.
Notwithstanding the foregoing provisions of this Section 9.1(a), any Lender may at any time
pledge the Obligations held by it and such Lender’s rights under this Agreement and the other Loan
Documents to a Federal Reserve Bank, and any lender that is an investment fund may assign the
Obligations held by it and such Lender’s rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided, that no such
pledge to a Federal Reserve Bank shall release such Lender from such Lender’s obligations hereunder
or under any other Loan Document.




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




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




          (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably required to enable the
assigning or selling Lender to effect any such assignment or participation, including the execution
and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and the preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants. Each Credit Party executing this Agreement
shall certify the correctness, completeness and accuracy of all descriptions of the






51









 







Credit Parties and their respective affairs contained in any selling materials provided by it
and all other information provided by it and included in such materials, except that any
Projections delivered by Borrowers shall only be certified by Borrowers as having been prepared by
Borrowers in compliance with the representations contained in Section 3.4(c).




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




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




          (g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”), may grant to a special purpose funding vehicle (an “SPC”), identified as such
in writing by the Granting Lender to Agent and Borrowers, the option to provide to Borrowers all or
any part of any Loans that such Granting Lender would otherwise be obligated to make to Borrowers
pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment
by any SPC to make any Loan; and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such
Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Revolving Loan Commitment of the Granting Lender to the same extent, and as if such Loan were made
by such Granting Lender. No SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting Lender). Any SPC may
(i) with notice to, but without the prior written consent of, Borrowers and Agent and assign all or
a portion of its interests in any Loans to the Granting Lender or to any financial institutions
(consented to by Borrowers and Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to
such SPC. This Section 9.1(g) may not be amended without the prior written consent of each
Granting Lender, all or any of whose Loans are being funded by an SPC at the time of such
amendment. For the avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of any Loan Document
or the obligation to pay any amount otherwise payable by the Granting Lender under the Loan
Documents, continue to be the Lender of record in the Register hereunder.




          9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all
Lenders as Agent under this Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and no Credit Party nor any
other Person shall have any rights as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement and the other Loan Documents, Agent






52









 







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




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




          9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement or the other Loan Documents,
except for damages caused by its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer thereof signed by
such payee and in form reasonably satisfactory to Agent; (b) rely on the Register to the extent set
forth in Section 1.12, (c) may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel, accountants or experts;
(d) makes no warranty or representation to any Lender and shall not be responsible to any Lender
for any statements, warranties or representations made in or in connection with this Agreement or
the other Loan Documents; (e) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of any Credit Party or to inspect the Collateral (including the
books and records) of any Credit Party; (f) shall not be responsible to any Lender






53









 







for the due execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; and (g) shall incur no liability under or in respect of this Agreement
or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.




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




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




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






54









 







rights or responsibilities under, this Agreement and each other Loan Document, to the extent
that Agent is not reimbursed for such expenses by Credit Parties.




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




          (b) Co-Collateral Agent may resign at any time upon written notice to Borrower Representative
and Agent, and such resignation shall become effective immediately upon the delivery of such
written notice. In addition, if, at any time, the Revolving Loan Commitment of Wells Fargo shall
be less than $40,000,000, then Wells Fargo shall be deemed to have resigned as Co-Collateral Agent
as of such date. Upon a resignation or deemed resignation by Co-Collateral Agent pursuant to this
clause (b), all Collateral Determinations shall thereafter be made solely by Agent.




          9.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights, upon the occurrence
and during the continuance of any Event of Default and subject to Section 9.9(f), each
Lender is hereby authorized at any time or from time to time, without prior notice to any Credit
Party or to any Person other than Agent, any such notice being hereby expressly waived, to offset
and to appropriate and to apply any and all balances held by it at any of its offices for the
account of any Borrower or Guarantor (regardless of whether such balances are then due to such
Borrower or Guarantor) and any other properties or assets at any time held or owing by that






55









 







Lender or that holder to or for the credit or for the account of any Borrower or Guarantor
against and on account of any of the Obligations that are not paid when due; provided that the
Lender exercising such offset rights shall give notice thereof to the affected Credit Party
promptly after exercising such rights. Any Lender exercising a right of setoff or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such participations in each such
other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such
Lender to share the amount so offset or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares, (other than offset rights exercised by any Lender
with respect to Sections 1.13, 1.15 or 1.16). Each Lender’s obligation under this
Section 9.8 shall be in addition to and not in limitation of its obligations to purchase a
participation in an amount equal to its Pro Rata Share of the Swing Line Loans under Section
1.1. Each Credit Party that is a Borrower or Guarantor agrees, to the fullest extent permitted
by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of
its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to
other Lenders and holders and (b) any Lender so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of offset, bankers’
lien, counterclaim or similar rights with respect to such participation as fully as if such Lender
or holder were a direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the purchase price
restored without interest.




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




          (a) Advances; Payments.




               (i) Lenders shall refund or participate in the Swing Line Loan in accordance with clauses
(iii) and (iv) of Section 1.1(b). If the Swing Line Lender declines to make a Swing
Line Loan or if Swing Line Availability is zero, Agent shall notify Lenders, promptly after receipt
of a Notice of Revolving Advance and in any event prior to 1:00 p.m. (Chicago time) on the date
such Notice of Revolving Advance is received, by telecopy, telephone or other similar form of
transmission. Each Lender shall make the amount of such Lender’s Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent’s account as set
forth in Annex G not later than 2:00 p.m. (Chicago time) on the requested funding date, in
the case of an Index Rate Loan and not later than 11:00 a.m. (Chicago time) on the requested
funding date in the case of a LIBOR Loan. After receipt of such wire transfers (or, in Agent’s
sole discretion, before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to the Borrower designated by Borrower Representative
in the Notice of Revolving Credit Advance. All payments by each Lender shall be made without
setoff, counterclaim or deduction of any kind.



               (ii) Not less than once during each calendar week or more frequently at Agent’s election
(each, a “Settlement Date”), Agent shall advise each Lender by telephone, or telecopy of
the amount of such Lender’s Pro Rata Share of principal, interest and Fees paid for the benefit of
Lenders with respect to each applicable Loan. Provided that each Lender has



56









 




funded all payments and Advances required to be made by it and purchased all participations
required to be purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of principal, interest
and Fees paid by Borrowers since the previous Settlement Date for the benefit of such Lender on
the Loans held by it. To the extent that any Lender (a “Non-Funding Lender”) has failed to
fund all such payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender’s Pro
Rata Share of all payments received from Borrowers. Such payments shall be made by wire transfer
to such Lender’s account (as specified by such Lender in Annex G or the applicable
Assignment Agreement) not later than 1:00 p.m. (Chicago time).




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




          (c) Return of Payments.




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



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



          (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any Revolving
Credit Advance or any payment required by it hereunder, or to purchase any participation in any
Swing Line Loan to be made or purchased by it on the date specified therefor shall not relieve any
other Lender (each such other Lender, an “Other Lender”) of its obligations






57









 







to make such Advance or purchase such participation on such date, but neither any Other Lender
nor Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment required hereunder. Notwithstanding anything
set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a “Lender” (or be included in the
calculation of “Requisite Lenders” hereunder) for any voting or consent rights under or with
respect to any Loan Document. At Borrower Representative’s request, Agent or a Person acceptable
to Agent shall have the right with Agent’s consent and in Agent’s sole discretion (but shall have
no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it
shall, at Agent’s request, sell and assign to Agent or such Person, all of the Revolving Loan
Commitments of that Non-Funding Lender for an amount equal to the principal balance of all Loans
held by such Non-Funding Lender and all accrued interest and fees with respect thereto through the
date of sale, such purchase and sale to be consummated pursuant to an executed Assignment
Agreement.




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




          (f) Actions in Concert. Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or
enforce its rights arising out of this Agreement or the Notes (including exercising any rights of
setoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it being
the intent of Lenders that any such action to protect or enforce rights under this Agreement and
the Notes shall be taken in concert and at the direction or with the consent of Agent or Requisite
Lenders.




          9.10 Collateral Determinations. If Agent or the Co-Collateral Agent proposes an
adjustment or revision to Borrowing Base eligibility standards, advance rates applicable to the
Borrowing Base or Reserves, or makes any other proposal regarding a determination or action
relating to Collateral which is to be made by Agent and the Co-Collateral Agent pursuant to this
Agreement (each a “Collateral Determination” and collectively, the “Collateral
Determinations”), the other Person shall respond to such proposal promptly, but in any event,
within three (3) Business Days of its receipt of such written proposal. The failure of such Person
to respond to such proposal within such three (3) Business Day time frame shall be deemed a
rejection by such Person of such proposal. In the event that Agent and the Co-Collateral Agent
cannot agree on any Collateral Determination (which shall include any deemed rejection pursuant to
the preceding sentence), such Collateral Determination shall be made by the Person either asserting
the more conservative credit judgment or declining to permit the requested action for which consent
is being sought by the Borrowers, as applicable.







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          9.11 Syndication Agents. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Co-Syndication Agents (in their
capacity as such) shall not have any duties or responsibilities, nor shall the Co-Syndication
Agents have or be deemed to have 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 Co-Syndication Agents. At any
time that any Lender serving as a Co-Syndication Agent shall have transferred to any other Person
all of its interests in the Loans and the Revolving Loan Commitment, such Lender shall be deemed to
have concurrently resigned as such Co-Syndication Agent.




10. SUCCESSORS AND ASSIGNS




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




11. MISCELLANEOUS




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




          11.2 Amendments and Waivers.




          (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan Document, or any consent
to any departure by any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrowers and by Requisite Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and






59









 







(c) below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.




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




          (c) No amendment, modification, termination or waiver shall, unless in writing and signed by
Agent and each Lender and each L/C Issuer directly affected thereby: (i) except as set forth in
Section 1.18, increase the principal amount of any Lender’s Revolving Loan Commitment (which action
shall be deemed to directly affect all Lenders); (ii) reduce the principal of, rate of interest on
or Fees payable with respect to any Loan or Letter of Credit Obligations of any affected Lender;
(iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under
Section 1.3(b)(ii) or (iii) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees
as to any affected Lender; (v) release any Guaranty or, except as otherwise permitted herein or in
the other Loan Documents, release, or permit any Credit Party to sell or otherwise dispose of, any
Collateral with a value exceeding $5,000,000 in the aggregate (which action shall be deemed to
directly affect all Lenders and the L/C Issuers); (vi) change the percentage of the Revolving Loan
Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; (vii) amend or waive this Section 11.2
or the definition of the term “Requisite Lenders” insofar as such definition affects the substance
of this Section 11.2; and (viii) amend, modify or waive Section 1.11. Furthermore,
no amendment, modification, termination or waiver affecting the rights or duties of Agent,
Co-Collateral Agent or an L/C Issuer under this Agreement or any other Loan Document, including any
increase in the L/C Sublimit or any release of any Guaranty or Collateral requiring a writing
signed by all Lenders, shall be effective unless in writing and signed by Agent, Co-Collateral
Agent or each such L/C Issuer, as the case may be, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall be effective only in
the specific instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver of any provision
of any Note shall be effective without the written concurrence of the holder of that Note. No
notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other
Credit Party to any other or further notice or demand in similar or other circumstances. Any
amendment, modification,






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termination, waiver or consent effected in accordance with this Section 11.2 shall be
binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.




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




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



               (ii) requiring the consent of Requisite Lenders, the consent of Lenders holding 51% or
more of the aggregate Revolving Loan Commitments is obtained, but the consent of Requisite
Lenders is not obtained;


then, so long as Agent is not a Non Consenting Lender, at Borrower Representative’s request, Agent,
or a Person reasonably acceptable to Agent, shall have the right with Agent’s consent and in
Agent’s sole discretion (but shall have no obligation) to purchase from such Non Consenting
Lenders, and such Non Consenting Lenders agree that they shall, upon Agent’s request, sell and
assign to Agent or such Person, all of the Revolving Loan Commitments of such Non Consenting
Lenders for an amount equal to the principal balance of all Loans held by the Non Consenting
Lenders and all accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment Agreement.




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




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




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




          (b) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent,
any Lender, any Credit Party or any other Person and whether as a party,
witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any



61









 






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




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




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




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



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




          11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to require
strict performance by the Credit Parties of any provision of this Agreement or any other Loan
Document shall not waive, affect or diminish any right of Agent or such Lender thereafter to demand
strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether the same is prior or
subsequent thereto and whether the same or of a different type. Subject to the provisions of
Section 11.2, none of the undertakings, agreements, warranties, covenants and
representations of any Credit Party contained in this Agreement or any of the other Loan




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Documents and no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by Agent or any Lender, unless such waiver or suspension is by an instrument in
writing signed by an officer of or other authorized employee of Agent and the applicable required
Lenders and directed to Borrowers specifying such suspension or waiver.




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




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




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




          11.8 Confidentiality. Agent and each Lender agree to use commercially reasonable
efforts (equivalent to the efforts Agent or such Lender applies to maintain the confidentiality of
its own confidential information) to maintain as confidential all confidential information provided
to them by the Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender, so long as such Persons are informed of the
confidential nature of the information and Agent or such Lender, as applicable, takes all steps
reasonably necessary to insure that such Persons will hold such information confidential; (c) to
any bona fide assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide assignee or
participant or potential assignee or participant may disclose such information to Persons employed
or engaged by them as described in clause (a) above); (d) as required or requested by any
Governmental Authority or reasonably believed by Agent or such Lender to be compelled by any court
decree, subpoena or legal or administrative order or process; (e) as, on the advice of Agent’s or
such Lender’s counsel, is required by law; (f) in connection with the exercise of any right or
remedy under the Loan Documents or in connection with any Litigation to which Agent or such Lender
is a party; or (g) that ceases to be confidential through no fault of Agent or any Lender.




          11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE
LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS





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OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN COOK COUNTY, CITY OF CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF COOK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH
IN ANNEX H OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID.





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          11.10 Notices.




          (a) Addresses. All notices, demands, requests, directions and other communications
required or expressly authorized to be made by this Agreement shall, whether or not specified to be
in writing but unless otherwise expressly specified to be given by any other means, be given in
writing and (i) addressed to (A) the party to be notified and sent to the address or facsimile
number indicated in Annex H, or (B) otherwise to the party to be notified at its address
specified on the signature page of any applicable Assignment Agreement, (ii) posted to
Intralinks® (to the extent such system is available and set up by or at the direction of
Agent prior to posting) in an appropriate location by uploading such notice, demand, request,
direction or other communication to www.intralinks.com, faxing it to 866-545-6600 with an
appropriate bar-coded fax coversheet or using such other means of posting to Intralinks®
as may be available and reasonably acceptable to Agent prior to such posting, (iii) posted to any
other E-System set up by or at the direction of Agent in an appropriate location or (iv) addressed
to such other address as shall be notified in writing (A) in the case of Borrower Representative,
Agent and Swingline Lender, to the other parties hereto and (B) in the case of all other parties,
to Borrower Representative and Agent. Transmission by electronic mail (including E-Fax, even if
transmitted to the fax numbers set forth in clause (i) above) shall not be sufficient or
effective to transmit any such notice under this clause (a) unless such transmission is an
available means to post to any E-System.




          (b) Effectiveness. All communications described in clause (a) above and all other
notices, demands, requests and other communications made in connection with this Agreement shall be
effective and be deemed to have been received (i) if delivered by hand, upon personal delivery,
(ii) if delivered by overnight courier service, one Business Day after delivery to such courier
service, (iii) if delivered by mail, when deposited in the mails, (iv) if delivered by facsimile
(other than to post to an E-System pursuant to clause (a)(ii) or (a)(iii) above), upon sender’s
receipt of confirmation of proper transmission, and (v) if delivered by posting to any E-System, on
the later of the date of such posting in an appropriate location and the date access to such
posting is given to the recipient thereof in accordance with the standard procedures applicable to
such E-System. Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to any Person (other than Borrower Representative or
Agent) designated in Annex H to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or other
communication. The giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice.




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




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




          11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND





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




          11.14 Press Releases and Related Matters. Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press releases or other
public disclosure using the name of GE Capital or its affiliates or referring to this Agreement,
the other Loan Documents or the Related Transactions Documents without at least two (2) Business
Days’ prior notice to GE Capital and without the prior written consent of GE Capital unless (and
only to the extent that) such Credit Party or Affiliate is required to do so under law and then, in
any event, such Credit Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure unless restricted from doing so by law. The Credit Parties’
undertaking to consult with Agent shall not in any event preclude the Credit Parties from effecting
timely and comprehensive public disclosures as required by law. Each Credit Party consents to the
publication by Agent or any Lender of advertising material relating to the financing transactions
contemplated by this Agreement using Borrowers’ name, product photographs, logo or trademark.
Agent or such Lender shall provide a draft of any advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right to provide to
industry trade organizations information necessary and customary for inclusion in league table
measurements.




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




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





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




          11.18 Amendment and Restatement.




          (a) On the Restatement Date, the Existing Credit Agreement shall be amended, restated and
superseded in its entirety. The parties hereto acknowledge and agree that (i) this Agreement, the
Notes delivered pursuant to Sections 1.1(a)(ii) and 1.1(b)(i) (the “Restated Notes”) and the other
Loan Documents executed and delivered in connection herewith do not constitute a novation, payment
and reborrowing, or termination of the “Obligations” (as defined in the Existing Credit Agreement)
under the Existing Credit Agreement as in effect prior to the Restatement Date; (ii) such
“Obligations” are in all respects continuing with only the terms thereof being modified as provided
in this Agreement; (iii) the Liens as granted under the Collateral Documents securing payment of
such “Obligations” are in all respects continuing and in full force and effect and secure the
payment of the Obligations (as defined in this Agreement) and are hereby fully ratified and
affirmed; and (iv) upon the effectiveness of this Agreement all loans and letters of credit
outstanding under the Existing Credit Agreement immediately before the effectiveness of this
Agreement will be part of the Loans hereunder on the terms and conditions set forth in this
Agreement. Without limitation on the foregoing, each of the Borrowers and the other Credit Parties
hereby fully and unconditionally ratifies and affirms all Collateral Documents and agree that all
collateral granted thereunder shall from and after the date hereof secure all Obligations
hereunder.




          (b) Notwithstanding the modifications effected by this Agreement of the representations,
warranties and covenants of the Borrowers contained in the Existing Credit Agreement, each of the
Borrowers and the other Credit Parties acknowledges and agrees that any choses in action or other
rights created in favor of any Lender and its respective successors arising out of the
representations and warranties of Borrower contained in or delivered (including representations and
warranties delivered in connection with the making of the Loans or other extensions of credit
thereunder) in connection with the Existing Credit Agreement, shall survive the execution and
delivery of this Agreement; provided, however, that it is understood and agreed that the Borrowers’
monetary obligations under the Existing Credit Agreement in respect of the loans and letters of
credit thereunder are evidenced by this Agreement as provided in Article I hereof.




          (c) All indemnification obligations of Borrowers and the other Credit Parties pursuant to the
Existing Credit Agreement shall survive the amendment and restatement of the Existing Credit
Agreement pursuant to this Agreement.




          (d) On and after the Restatement Date, (i) each reference in the Loan Documents to the “Credit
Agreement”, “thereunder”, “thereof” or similar words referring to the Credit Agreement shall mean
and be a reference to this Agreement (as amended, restated, supplemented or otherwise modified from
time to time) and (ii) each reference in the Loan Documents to a “Note” shall mean and be a Note as
defined in this Agreement.





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          11.19 Consent and Affirmation. By its execution hereof, each Continuing
Lender confirms its consent to the payment of the “Departing Lender Obligations” (as
defined in the applicable departing lender consents) to the Departing Lenders without a
corresponding payment to the Continuing Lenders.




          11.20 USA PATRIOT Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrowers that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies Borrowers, which
information includes the name and address of Borrowers and other information that will
allow such Lender to identify Borrowers in accordance with the Patriot Act.




12. CROSS-GUARANTY




          12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is jointly and
severally liable for, and hereby absolutely and unconditionally guarantees to Agent and Lenders and
their respective successors and assigns, the full and prompt payment (whether at stated maturity,
by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty obligation hereunder is
a continuing guaranty of payment and performance and not of collection, that its obligations under
this Section 12 shall not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this Section 12 shall be absolute
and unconditional, irrespective of, and unaffected by,




          (a) the genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any other Loan Document or any other agreement, document or instrument
to which any Borrower is or may become a party;




          (b) the absence of any action to enforce this Agreement (including this Section 12) or
any other Loan Document or the waiver or consent by Agent and Lenders with respect to any of the
provisions thereof;




          (c) the existence, value or condition of, or failure to perfect its Lien against, any security
for the Obligations or any action, or the absence of any action, by Agent and Lenders in respect
thereof (including the release of any such security);




          (d) the insolvency of any Credit Party; or




          (e) any other action or circumstances that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor.



Each Borrower shall be regarded, and shall be in the same position, as principal debtor with
respect to the Obligations guaranteed hereunder.




          12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it may have now
or in the future under any statute, or at common law, or at law or in equity, or otherwise, to
compel Agent or Lenders to marshal assets or to proceed in respect of the Obligations guaranteed
hereunder against any other Credit Party, any other party or against any








68









 







security for the payment
and performance of the Obligations before proceeding against, or as a condition to proceeding
against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing
waivers are of the essence of the transaction contemplated by this Agreement and the other Loan
Documents and that, but for the provisions of this Section 12 and such waivers, Agent and
Lenders would decline to enter into this Agreement.




          12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this
Section 12 are for the benefit of Agent and Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other
Borrower and Agent or Lenders, the obligations of such other Borrower under the Loan Documents.




          12.4 Waiver of Subrogation, Etc. Notwithstanding anything to the contrary in this
Agreement or in any other Loan Document, and except as set forth in Section 12.7, each
Borrower hereby expressly and irrevocably waives any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all
defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges
and agrees that this waiver is intended to benefit Agent and Lenders and shall not limit or
otherwise affect such Borrower’s liability hereunder or the enforceability of this
Section 12, and that Agent, Lenders and their respective successors and assigns are
intended third party beneficiaries of the waivers and agreements set forth in this Section
12.4.




          12.5 Election of Remedies. If Agent or any Lender may, under applicable law, proceed
to realize its benefits under any of the Loan Documents giving Agent or such Lender a Lien upon any
Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or
by non-judicial sale or enforcement, Agent or any Lender may, at its sole option, determine which
of its remedies or rights it may pursue without affecting any of its rights and remedies under this
Section 12. If, in the exercise of any of its rights and remedies, Agent or any Lender
shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment
against any Borrower or any other Person, whether because of any applicable laws pertaining to
“election of remedies” or the like, each Borrower hereby consents to such action by Agent or such
Lender and waives any claim based upon such action, even if such action by Agent or such Lender
shall result in a full or partial loss of any rights of subrogation that each Borrower might
otherwise have had but for such action by Agent or such Lender. Any election of remedies that
results in the denial or impairment of the right of Agent or any Lender to seek a deficiency
judgment against any Borrower shall not impair any other Borrower’s obligation to pay the full
amount of the Obligations. In the event Agent or any Lender shall bid at any foreclosure or
trustee’s sale or at any private sale permitted by law or the Loan Documents, Agent or such Lender
may bid all or less than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether Agent, Lender or any other party is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and the difference
between such bid amount and the remaining balance of the Obligations shall be conclusively deemed
to be the amount of the Obligations guaranteed under this Section 12, notwithstanding that
any present or future law or court decision or ruling may have the effect of reducing the amount of
any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding
at any such sale.





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          12.6 Limitation. Notwithstanding any provision herein contained to the contrary, each
Borrower’s liability under this Section 12 (which liability is in any event in addition to
amounts for which such Borrower is primarily liable under Section 1) shall be limited to an
amount not to exceed as of any date of determination the greater of:




          (a) the net amount of all Loans advanced to any other Borrower under this Agreement and then
re-loaned or otherwise transferred to, or for the benefit of, such Borrower; and




          (b) the amount that could be claimed by Agent and Lenders from such Borrower under this
Section 12 without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law after taking into account, among other
things, such Borrower’s right of contribution and indemnification from each other Borrower under
Section 12.7.




          12.7 Contribution with Respect to Guaranty Obligations.




          (a) To the extent that any Borrower shall make a payment under this Section 12 of all
or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable)
(a “Guarantor Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would
otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower’s “Allocable Amount” (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of
each of the Borrowers as determined immediately prior to the making of such Guarantor Payment,
then, following indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon
their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.




          (b) As of any date of determination, the “Allocable Amount” of any Borrower shall be
equal to the maximum amount of the claim that could then be recovered from such Borrower under this
Section 12 without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.




          (c) This Section 12.7 is intended only to define the relative rights of Borrowers and
nothing set forth in this Section 12.7 is intended to or shall impair the obligations of
Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and
payable in accordance with the terms of this Agreement, including Section 12.1. Nothing
contained in this Section 12.7 shall limit the liability of any Borrower to pay the Loans
made directly or indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.






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          (d) The parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Borrower to which such contribution and indemnification is
owing.




          (e) The rights of the indemnifying Borrowers against other Credit Parties under this
Section 12.7 shall be exercisable upon the full and indefeasible payment of the Obligations
and the termination of the Commitments.




          12.8 Liability Cumulative. The liability of Borrowers under this Section 12
is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and
Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in
respect of any Obligations or obligation of the other Borrower, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.





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




	 	 	 	 	 
	 	HUTTIG BUILDING PRODUCTS, INC., as

Borrower

 	 
	 	By:  	/s/  Philip W. Keipp
 	 
	 	 	Name:  	Philip W. Keipp 	 
	 	 	Title:  	Vice President & CFO 	 
	 
	 	HUTTIG, INC., as Borrower

 	 
	 	By:  	/s/  Philip W. Keipp
 	 
	 	 	Name:  	Philip W. Keipp 	 
	 	 	Title:  	Vice President 	 
	 
	 	GENERAL ELECTRIC CAPITAL

CORPORATION, as Agent and Lender

 	 
	 	By:  	/s/  Jack F. Morrone
 	 
	 	 	Duly Authorized Signatory 	 
	 	 	 	 
	 
	 	WELLS FARGO CAPITAL FINANCE, LLC,

as Co-Collateral Agent, an L/C Issuer and Lender

 	 
	 	By:  	/s/  Anwar S. Young
 	 
	 	 	Name:  	Anwar S. Young 	 
	 	 	Title:  	Director 	 



A-1









 






	 	 	 	 	 



ANNEX A (Recitals)

to

CREDIT AGREEMENT




DEFINITIONS




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




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




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




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




          “ACH Transactions” means any cash management or related services (including the
Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve
Fedline system) provided by a Bank Product Provider for the account of any Credit Party.




          “Additional Lenders” means each of the Lenders party hereto on the Restatement Date
other than the Continuing Lenders and the Departing Lenders.




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




          “Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary,





A-2









 







10% or more of the Stock having ordinary voting power in the election of directors of such Person,
(b) each Person that controls, is controlled by or is under common control with such Person, (c)
each of such Person’s officers, directors, joint venturers and partners and (d) in the case of
Borrowers, the immediate family members, spouses and lineal descendants of individuals who are
Affiliates of any Borrower. For the purposes of this definition, “control” of a Person
shall mean the possession, directly or indirectly, of the power to direct or cause the direction of
its management or policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term “Affiliate” shall specifically
exclude Agent and each Lender.




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




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




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




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




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




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




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




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




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




          “Average Availability” means, on any day, an amount equal to the quotient of (a) the
sum of the end of day Borrowing Availability for each day of the immediately preceding thirty (30)
day period, divided by (b) thirty (30), all as determined by Agent.




          “Average Revolving Outstandings” means as of any date of determination, an amount
equal to the quotient of (a) the sum of the end of day (i) Revolving Loans and (ii) Swing





A-3









 







Line
Loans outstanding for each day during the most recently ended Fiscal Quarter, divided by (b) the
number of days in such Fiscal Quarter, all as determined by Agent based on Borrowing Base
Certificates previously delivered to Agent by Borrower Representative.




          “Banking Services” means treasury management services, (including, without limitation,
controlled disbursement, automated clearing house transactions, returned items, overdrafts,
interstate depository network services, credit cards and credit card services) provided to any
Credit Party by any Lender (or Affiliate of a Lender).




          “Bank Product” means any financial accommodation extended to Credit Parties, by a Bank
Product Provider (other than pursuant to the Agreement) including: (a) credit cards, (b) credit
card processing services, (c) debit cards, (d) purchase cards (including so-called “procurement
cards” or “P cards”), (e) ACH Transactions, (f) cash management, including controlled disbursement,
accounts or services, (g) transactions under Hedge Agreements in the normal course of their
business, or (h) Banking Services.




          “Bank Product Agreements” means those agreements entered into from time to time by any
Credit Party with a Bank Product Provider in connection with the obtaining of any of the Bank
Products.




          “Bank Product Obligations” means (a) all obligations, liabilities, reimbursement
obligations, fees, or expenses owing by any Credit Party to any Bank Product Provider pursuant to
or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter
arising, and (b) all amounts that Credit Parties are obligated to reimburse to any Lender or any
Bank Product Provider as a result of such Lender or such Bank Product Provider purchasing
participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank
Product Provider with respect to the Bank Products provided by such Bank Product Provider to Credit
Parties.




          “Bank Product Provider” means any Lender or any of its Affiliates.




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




          “Borrower Representative” has the meaning ascribed thereto in Section 1.1(c).




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




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




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




          (a) 85% of Borrowers’ Eligible Accounts at such time;





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      (b) the lesser of (i) 65% of Borrowers’ Eligible Inventory valued at the lower of cost
(determined on an average cost basis) or market at such time and (ii) 85% of the NOLV Factor
times Borrowers’ Eligible Inventory at such time;




          (c) the Real Estate Borrowing Base; and




          (d) the Incremental Borrowing Base;




in each case, less any Reserves established by Agent pursuant to the terms of this Agreement and in
effect at such time; provided, that the aggregate amount of the Borrowing Base comprised of
clauses (c) and (d) above shall not exceed (x) 25% of the Borrowing Base (including the Real Estate
Borrowing Base and the Incremental Borrowing Base), during any period where the Borrowers and their
Subsidiaries shall have on a consolidated basis as of the end of the most recently ended Fiscal
Quarter a Fixed Charge Coverage Ratio for the 12 month period then ended of at least 1.25 to 1.00,
and (y) 20% of the Borrowing Base (including the Real Estate Borrowing Base and the Incremental
Borrowing Base), during any period where the Borrowers and their Subsidiaries shall have on a
consolidated basis as of the end of the most recently ended Fiscal Quarter a Fixed Charge Coverage
Ratio for the 12 month period then ended of less than 1.25:1.00.




          “Borrowing Base Certificate” means a certificate to be executed and delivered from
time to time by each Borrower in the form attached to the Agreement as Exhibit 4.1(b).




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




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




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




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




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




          “Change of Control” means the occurrence of any of the following events: (a) any
“person” or “group” (as such terms are used in Section 1(d) and 14(d) of the Securities Exchange
Act of 1934), as amended (the “Exchange Act”)), excluding CEMEX, S.A. de C.V. (or its Affiliates),
shall become, or obtain rights (whether by means of warrants, options or





A-5









 







otherwise) to become the
“beneficial owner”, directly or indirectly of 20% or more of the outstanding Stock of Parent (on a
fully diluted basis and taking into account any securities or contract rights exercisable,
exchangeable or convertible into voting Stock) or have or obtained the power to elect 20% or more
of the board of directors of Parent; (b) the board of directors of Parent shall cease to consist of
a majority of the Continuing Directors; (c) except as permitted in this Agreement, each Borrower
shall cease to, directly or indirectly, own and control 100% of each class of outstanding Stock of
its wholly-owned Subsidiaries; or (d) CEMEX, S.A. de C.V. (or its Affiliates) shall obtain control
of, whether through ownership of Stock, by contract or otherwise, a majority or greater of the
seats on the board of directors of Parent, or CEMEX, S.A. de C. V. (or its Affiliates) shall
become, or obtain rights (whether by means of warrants, options or otherwise) to become the
“beneficial owner”, directly or indirectly of 35% or more of the Stock of Parent (on a fully
diluted basis and taking into account any securities or contract rights exercisable, exchangeable
or convertible into voting Stock). As used in this definition, “beneficial owner” has the meaning
provided in the rules to the Exchange Act. As used in this definition, “Continuing Directors”
means a member of the board of directors of Parent who either (i) was a member of Parent’s board of
directors on the day before the Closing Date and has been such continuously thereafter or (ii)
became a member of such board of directors after the day before the Closing Date and whose election
or nomination for election was approved by a vote of the majority of the Continuing Directors then
members of Parent’s board of directors.




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




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




          “Closing Date” means October 20, 2006.




          “Co-Collateral Agent” has the meaning ascribed thereto in the preamble to the
Agreement.




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





A-6









 








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




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




          “Collateral Determinations” has the meaning ascribed to it in Section 9.10.




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




          “Collection Account” means that certain account of Agent, account number 502-795-13
in the name of Agent at Deutsche Bank in New York, New York ABA No. 021 001 033, or such other
account as may be specified in writing by Agent as the “Collection Account.”




          “Commitment Termination Date” means the earliest of (a) September 3, 2014, (b) the
date of termination of Lenders’ obligations to make Advances and to incur Letter of Credit
Obligations or permit existing Loans to remain outstanding pursuant to Section 8.2(b), and
(c) the date of indefeasible prepayment in full by Borrowers of the Loans and the cancellation and
return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Annex B, and the permanent reduction of the Revolving
Loan Commitments to zero dollars ($0).




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




          “Continuing Lender” means any Lender that (i) is a “Lender” (as defined under the
Existing Credit Agreement) on the Restatement Date prior to giving effect to this Agreement and
(ii) has a Revolving Loan Commitment under this Agreement.




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




          “Control Letter” means a letter agreement between Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name of any Credit
Party, (ii) a securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a securities account in
the name of any Credit Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit Party, whereby, among
other






A-7









 








things, the issuer, securities intermediary or futures commission merchant limits any
security interest in the applicable financial assets in a manner reasonably satisfactory to Agent,
acknowledges the Lien of Agent, on behalf of itself and Lenders, on such financial assets, and
agrees to follow the instructions or entitlement orders of Agent without further consent by the
affected Credit Party.




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




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




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




          “Credit Parties” means each Borrower and each Guarantor.




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




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




          “Departing Lender” means “Lender” as defined under the Existing Credit Agreement that
is not a Continuing Lender. For purposes of clarity, no Departing Lender shall be deemed a Lender
hereunder.




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




          “Disclosure Schedules” means the Schedules prepared by Borrowers and denominated as
Disclosure Schedules (1.4) through (6.7) in the Index to the Agreement.




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




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




          “EBITDA” means, with respect to any Person for any fiscal period, without duplication,
an amount equal to (a) consolidated net income of such Person for such period, determined in
accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii) interest income,
(iii) gain from extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other disposition of






A-8









 







capital assets by such Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all securities), and (v) any
other non-cash gains that have been added in determining consolidated net income, in each case to
the extent included in the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) any unusual or non-recurring
non-cash losses (excluding those related to current assets) or fixed asset write-offs or intangible
asset write-offs that were not paid in cash during such period and will not be paid in cash
thereafter, plus (d) the sum of (i) any provision for income taxes, (ii) Interest Expense,
(iii) loss from extraordinary items for such period, (iv) depreciation and amortization for such
period, (v) amortized debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant of any Stock or any Stock option pursuant to an
equity incentive plan, in each case to the extent included in the calculation of consolidated net
income of such Person for such period in accordance with GAAP, but without duplication. For
purposes of this definition, the following items shall be excluded in determining consolidated net
income of a Person: (1) the income (or deficit) of any other Person accrued prior to the date it
became a Subsidiary of, or was merged or consolidated into, such Person or any of such Person’s
Subsidiaries; (2) the income (or deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any such income has actually been
received by such Person in the form of cash dividends or distributions; (3) the undistributed
earnings of any Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary; (4) any restoration
to income of any contingency reserve, except to the extent that provision for such reserve was made
out of income accrued during such period; (5) any write-up of any asset; (6) any net gain from the
collection of the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of such
Person; (8) in the case of a successor to such Person by consolidation or merger or as a transferee
of its assets, any earnings of such successor prior to such consolidation, merger or transfer of
assets; and (9) any deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment
in such Subsidiary.




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




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




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




          “Environmental Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the








A-9









 







Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601
et seq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of
1994 (49 U.S.C. §§ 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act
(42 U.S.C. §§ 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251
et seq.); the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and
the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and
any transfer of ownership notification or approval statutes.




          “Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs, investigation and feasibility
study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages,
property damages, natural resource damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute or common law,
including any arising under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal property.




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




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




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




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





A-10









 








          “ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate, (a) any
event described in Section 4043(c) of ERISA with respect to a Title IV Plan, except for any such
event for which the notice requirement has been waived by the PBGC; (b) the withdrawal of any
Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer
Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party or
ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan
unless such failure is cured within thirty (30) days; (g) any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan’s
qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064 of
ERISA.




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




          “E-System” means any electronic system, including Intralinks® and any other
Internet or extranet-based site, whether such electronic system is owned, operated or hosted by
Agent, any of its Affiliates, or any of such Person’s respective officers, directors, employees,
attorneys, agents and representatives or any other Person, providing for access to data protected
by passcodes or other security system.




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




          “Existing Revolving Loan Commitments” has the meaning ascribed to it in Section
1.1(a)(iv).




          “Existing Revolving Credit Advances” has the meaning ascribed to it in Section
1.1(a)(iv).




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




          “Federal Flood Insurance” means Federally backed Flood Insurance available under the
National Flood Insurance Program to owners of real property improvements located in Special Flood
Hazard Areas in a community participating in the National Flood Insurance Program.




          “Federal Funds Rate” means, for any day, a floating rate equal to the weighted average
of the rates on overnight federal funds transactions among members of the Federal








A-11









 







Reserve System,
as determined by Agent in its sole discretion, which determination shall be final, binding and
conclusive (absent manifest error).




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




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




          “FEMA” means the Federal Emergency Management Agency, a component of the U.S.
Department of Homeland Security that administers the National Flood Insurance Program.




          “Financial Covenant” means the financial covenant set forth in Annex F.




          “Financial Statements” means the consolidated income statements, statements of cash
flows and balance sheets of Borrowers delivered in accordance with Section 3.4 and
Annex D.




          “FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of
1989, as amended.




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




          “Fiscal Quarter” means any of the quarterly accounting periods of Borrowers, ending on
March 31, June 30, September 30 and December 31 of each year.




          “Fiscal Year” means any of the annual accounting periods of Borrowers ending on
December 31 of each year.




          “Fixed Charges” means, with respect to any Person for any fiscal period, (a) the
aggregate of all Interest Expense paid or accrued during such period, plus (b) scheduled
payments of principal with respect to Indebtedness during such period, plus (c) to the
extent not deducted in determining EBITDA, Restricted Payments made pursuant to Section
6.13 during such period, plus (d) any current amortization of the Real Estate Borrowing
Base scheduled to take place over the next 12 months; provided, however, that in no event shall the
amortization of deferred financing fees be deemed a Fixed Charge.




          “Fixed Charge Coverage Ratio” means, with respect to any Person for any fiscal period,
the ratio of (i)(a) EBITDA, minus (b) Capital Expenditures during such period,
minus (c)income taxes paid or payable in cash during such period to (ii) Fixed
Charges.




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




          “Flood Insurance” means, for any Real Estate located in a Special Flood Hazard Area,
Federal Flood Insurance or private insurance that meets the requirements set forth by FEMA in its
Mandatory Purchase of Flood Insurance Guidelines. Flood Insurance shall be in an amount equal to
the replacement cost of improvements on the premises located in any Special






A-12









 







Flood Hazard Area plus
any prior liens on the Real Estate up to the maximum policy limits set under the National Flood
Insurance Program, or as otherwise required by Agent, with deductibles not to exceed $50,000.




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




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




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




          “GE Capital Fee Letter” means that certain letter, dated as of July 15, 2010, between
GE Capital and Borrowers with respect to certain Fees to be paid from time to time by Borrowers to
GE Capital.




          “General Intangibles” means “general intangibles,” as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest
that such Credit Party may now or hereafter have in or under any Contract, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and
reissues, extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all rights and claims
in or under insurance policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all unearned premiums), uncertificated
securities, chooses in action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other
property in respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices and other papers,
including without limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.




          “Goods” means any “goods” as defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located, including embedded software to the extent






A-13









 







included in “goods”
as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals.




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




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




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




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




          “Hazardous Material” means any substance, material or waste that is regulated by, or
forms the basis of liability now or hereafter under, any Environmental Laws, including any material
or substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,”
“hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or
phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance.




          “Hedge Agreement” means any and all agreements or documents now existing or hereafter
entered into by any Credit Party that provide for an interest rate, credit, commodity or equity
swap, cap, floor, forward foreign exchange transaction, currency swap, cross currency rate swap,
currency option, or any combination of, or option with respect to, these or similar






A-14









 







transactions,
for the purpose of hedging any Credit Party’s exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security, or currency valuations or commodity prices.




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




          “Incremental Borrowing Base” means, as of any date determined by Agent, from time to
time, an amount equal to the lesser of (a) the sum of (i) 5% of the book value of Borrowers’
Eligible Accounts at such time and (ii) 5% of the NOLV Factor times the book value of Borrowers’
Eligible Inventory at such time, and (b) $4,000,000.




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




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




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




          “Index Rate” means, for any day, a floating rate equal to the highest of (i) the rate
publicly quoted from time to time by The Wall Street Journal as the “prime rate” (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per annum rate of interest
published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
“Selected Interest Rates” as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum and (iii) the sum of (A) the LIBOR Rate calculated for
each such day based on a one month LIBOR Period determined two (2) Business Days prior to such date
plus (B) the excess of the Applicable Margin for LIBOR Loans over the Applicable Margin for Index
Rate Loans, in each instance, as of such day. Each change in any interest rate provided





A-15









 







for in the
Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate.




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




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




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




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




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




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




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





A-16









 








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




          “IRS” means the Internal Revenue Service.




          “L/C Issuer” means Wells Fargo Capital Finance, LLC and any other Lender or an
Affiliate thereof or a bank or other legally authorized Person, in each case, reasonably acceptable
to Agent, in such Person’s capacity as an issuer of Letters of Credit hereunder.




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




          “Lenders” means GE Capital, the other Lenders named on the signature pages of the
Agreement, and, if any such Lender shall decide to assign all or any portion of the Obligations,
such term shall include any assignee of such Lender.




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




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




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




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




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




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




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






     (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day,
such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the
result of such extension would be to carry such LIBOR Period



A-17









 






into another calendar month in
which event such LIBOR Period
shall end on the immediately preceding LIBOR Business Day;




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




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




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




     (e) Borrower Representative shall select LIBOR Periods so that there shall be no more
than eight (8) separate LIBOR Loans in existence at any one time.



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




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




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




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




          “Loan Documents” means the Agreement, the Notes, the Collateral Documents, the Master
Standby Agreement, and all other agreements, instruments, documents and certificates identified in
the Restatement Checklist executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Credit Party, or any employee of any Credit Party, and delivered to Agent or
any Lender in connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan







A-18









 







Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.




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




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




          “Master Standby Agreement” means that Master Agreement for Standby Letter of Credit
dated as of the Closing Date between Borrowers, as Applicant and GE Capital.




          “Material Adverse Effect” (a) a material adverse change in, or a material adverse
effect upon, the operations, business, properties or condition (financial or otherwise) of the
Credit Parties and the Subsidiaries taken as a whole; (b) a material impairment of the ability of
any Credit Party, any Subsidiary of any Credit Party or any other Person (other than Agent or
Lenders) to perform in any material respect its obligations under any Loan Document; or (c) a
material adverse effect upon (i) the legality, validity, binding effect or enforceability of any
Loan Document, or (ii) the perfection or priority of any Lien granted to the Lenders or to Agent
for the benefit of the Lenders under any of the Collateral Documents and encumbering assets having
a fair market value in excess of $500,000.




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




          “Minimum Availability Amount” means, as of any date of determination, an amount equal
to the greater of (a) $10,000,000 and (b) 12.5% of the Borrowing Base (but not to exceed 12.5% of
the Maximum Amount) as of that date.




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




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




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




          “Net Orderly Liquidation Value” means the cash proceeds of Inventory which could be
obtained in an orderly liquidation (net of all liquidation expenses, costs of sale, operating
expenses and retrieved and related costs), as determined pursuant to the most recent third party
appraisals of such Inventory delivered to Agent by an appraiser chosen by Agent.





A-19









 








          “NOLV Factor” means, as of the date of the appraisal of Inventory most recently
received by Agent, the quotient of the Net Orderly Liquidation Value of Inventory divided by the
cost basis of Inventory, expressed as a percentage. The NOLV Factor will be increased or reduced
promptly upon receipt by Agent of each updated appraisal.




          “National Flood Insurance Program” means the program created by the U.S. Congress
pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973,
as revised by the National Flood Insurance Reform Act of 1994, that mandates the purchase of flood
insurance to cover real property improvements located in Special Flood Hazard Areas in
participating communities and provides protection to property owners through a Federal insurance
program.




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




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




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




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




          “Obligations” means all loans, advances, debts, liabilities and obligations for the
performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or such amounts are liquidated or determinable) owing
by any Credit Party to Agent or any Lender, and all covenants and duties regarding such amounts, of
any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of
credit agreement or other instrument, arising under the Agreement or any of the other Loan
Documents. This term includes all principal, interest (including all interest that accrues after
the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or
not allowed in such case or proceeding), Fees, Bank Product Obligations, hedging obligations under
swaps, caps and collar arrangements provided by any Lender in accordance with the terms of the
Agreement, expenses, attorneys’ fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents. Obligations shall also include obligations of the
Credit Parties to any Lender (or any Affiliate of any Lender) in respect of Banking Services.




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




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




          “Parent Pledge Agreement” means the Pledge Agreement dated as of the Closing Date
executed by Parent in favor of Agent, on behalf of itself and Lenders, pledging all Stock of its
Subsidiaries.




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





A-20









 








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




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




          “PBGC” means the Pension Benefit Guaranty Corporation.




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




          “Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are being contested in
accordance with Section 5.2(b); (b) pledges or deposits of money securing statutory
obligations under workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of money) or leases
to which any Credit Party is a party as lessee made in the ordinary course of business; (d)
inchoate and unperfected workers’, mechanics’ or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e)
carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary
course of business and securing liabilities that are not past due or otherwise not yet due and
payable, so long as such Liens attach only to Inventory; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title) thereto, so long as the same do not
materially impair the use, value, or marketability of such Real Estate; (i) presently existing or
hereafter created Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly permitted
under clauses (b) and (c) of Section 6.7 of the Agreement.




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




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




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





A-21









 








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




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




          “Pro Rata Share” means with respect to all matters relating to any Lender (a) the
percentage obtained by dividing (i) the Revolving Loan Commitment of that Lender by (ii) the
aggregate Revolving Loan Commitments of all Lenders, and (b) on and after the Commitment
Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal
balance of the Loans held by that Lender, by (ii) the outstanding principal balance of the Loans
held by all Lenders.




          “Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial loans, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other entity which is an
“accredited investor” (as defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of BBB or higher from
S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and which,
through its applicable lending office, is capable of lending to Borrowers without the imposition of
any withholding or similar taxes; provided, that (i) so long as no Event of Default exists,
no Person proposed to become a Lender after the Restatement Date and determined by Agent to be
acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee, and (ii) no Person or Affiliate of such Person proposed to become a Lender after the
Restatement Date and that holds 1% or more of the Stock having ordinary voting power in the
election of directors of Parent, or Subordinated Debt issued by any Credit Party shall be a
Qualified Assignee.





A-22









 








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




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




          “Real Estate Borrowing Base” means, as of any date determined by Agent, from time to
time, an amount equal to the lesser of (a) 50% of the appraised fair market value of Borrowers’
owned Real Estate and (b) $30,000,000; provided that the amount of the Real Estate
Borrowing Base shall amortize monthly on a ten-year straight-line basis, beginning on the
Restatement Date.




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




          “Register” has the meaning ascribed to it in Section 1.12(b).




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




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




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




          “Requisite Lenders” means Lenders having (a) more than 50% of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than 50% of the aggregate outstanding amount of the Loans; provided that at any time that more than
one Lender has a Revolving Loan Commitment, one Lender shall not by itself constitute “Requisite
Lenders.”




          “Reserves” means, with respect to the Borrowing Base of Borrowers (a) reserves
established by Agent and Co-Collateral Agent from time to time against Eligible Inventory pursuant
to Section 5.9, (b) reserves established pursuant to Section 5.4(c), and (c) such
other reserves against Eligible Accounts, Eligible Inventory or Borrowing Availability of any
Borrower that Agent and Co-Collateral Agent may, in their reasonable credit judgment, establish
from time to time. Without limiting the generality of the foregoing, Reserves established to
ensure the payment of accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable
exercise of Agent’s and Co-Collateral Agent’s credit judgment.




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







A-23









 








          “Restatement Date” means September 3, 2010.




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




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




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




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




          “Revolving Loan Commitment” means (a) as to any Lender, the aggregate commitment of
such Lender to make Revolving Credit Advances or incur Letter of Credit Obligations as set forth on
Annex I to the Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall be One Hundred
Twenty Million Dollars ($120,000,000) on the Restatement Date, as such amount may be adjusted, if
at all, from time to time in accordance with the Agreement.




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





A-24












 





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




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




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




          “Special Flood Hazard Area” means an area that FEMA’s current flood maps indicate has
at least a one percent (1%) chance of a flood equal to or exceeding the base flood elevation (a
100-year flood) in any given year.




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




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




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






A-25









 







general partner. Unless the context otherwise requires, each reference to a Subsidiary shall
be a reference to a Subsidiary of a Borrower.




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




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




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




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




          “Swing Line Lender” means GE Capital.




          “Swing Line Loan” means, as the context may require, at any time, the aggregate amount
of Swing Line Advances outstanding to any Borrower or to all Borrowers.




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




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




          “Termination Date” means the date on which (a) the Loans have been indefeasibly repaid
in full, (b) all other Obligations under the Agreement and the other Loan Documents have been
completely discharged, (c) all Letter of Credit Obligations have been cash collateralized,
cancelled or backed by standby letters of credit in accordance with Annex B, and (d) none
of Borrowers shall have any further right to borrow any monies under the Agreement.




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




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




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




          “Trademarks” means all of the following now owned or hereafter adopted or acquired by
any Credit Party: (a) all trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers, prints and labels on which






A-26









 







any of the foregoing have appeared or appear, designs and general intangibles of like nature
(whether registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of the United States,
any state or territory thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.




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




          “Welfare Plan” means a Plan described in Section 3(1) of ERISA.




          “Wells Fargo” means Wells Fargo Capital Finance, LLC, a Delaware limited liability
company.




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




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





A-27












 





ANNEX B (Section 1.2)

to

CREDIT AGREEMENT




LETTERS OF CREDIT




          (a) Issuance. Subject to the terms and conditions of the Agreement, Agent and Lenders
agree to incur, from time to time prior to the Commitment Termination Date, upon the request of
Borrower Representative on behalf of the applicable Borrower and for such Borrower’s account,
Letter of Credit Obligations with respect to Letters of Credit issued by any L/C Issuer for such
Borrower’s account. Each Lender shall, subject to the terms and conditions hereinafter set forth,
purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued
with the written consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time exceed the least of
(i) Twenty Million Dollars ($20,000,000) (the “L/C Sublimit”), and (ii) the Maximum Amount
less the aggregate outstanding principal balance of the Revolving Credit Advances and the Swing
Line Loan, and (iii) the Borrowing Base less the aggregate outstanding principal balance of the
Revolving Credit Advances and the Swing Line Loan. No such Letter of Credit shall have an expiry
date that is more than one year following the date of issuance thereof, unless otherwise determined
by Agent and the applicable L/C Issuer in their respective sole discretion (including with respect
to customary evergreen provisions), and neither Agent nor Lenders shall be under any obligation to
incur Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date that is later than the Commitment Termination Date. Each Letter of
Credit shall be in form and substance reasonably acceptable to the applicable L/C Issuer. The
amounts payable under each Letter of Credit must be payable in Dollars.




          (b)(i) Advances Automatic; Participations. In the event that an L/C Issuer makes or
is required to make any payment on or pursuant to any Letter of Credit, (1) it shall promptly
notify Agent and Borrower Representative thereof, (2) Agent shall pay such L/C Issuer the amount of
such payment within one Business Day after receipt of such notice, and (3) such payment shall be
deemed to be a Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of
the Agreement, regardless of whether a Default or Event of Default has occurred and is continuing
and notwithstanding any Borrower’s failure to satisfy the conditions precedent set forth in
Section 2, and each Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement. The failure of any Lender to make available to Agent for Agent’s
own account its Pro Rata Share of any such Revolving Credit Advance or payment by Agent to the
applicable L/C Issuer shall not relieve any other Lender of its obligation hereunder to make
available to Agent its Pro Rata Share thereof, but no Lender shall be responsible for the failure
of any other Lender to make available such other Lender’s Pro Rata Share of any such payment.




               (ii) If any Borrower shall be unable to incur Revolving Credit Advances as contemplated by
paragraph (b)(i) above because of an Event of Default described in Sections 8.1(h) or (i)
or otherwise or if it shall be illegal or unlawful for any Lender to be



B-1









 




deemed to have assumed a ratable share of the reimbursement obligations owed to the applicable
L/C Issuer, then (A) immediately and without further action whatsoever, each Lender shall be deemed
to have irrevocably and unconditionally purchased from such L/C Issuer an undivided interest and
participation equal to such Lender’s Pro Rata Share (based on its Revolving Loan Commitment) of the
Letter of Credit Obligations in respect of all Letters of Credit then outstanding and (B)
thereafter, immediately upon issuance of any Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased from such L/C Issuer an undivided interest and
participation in such Lender’s Pro Rata Share (based on its Revolving Loan Commitment) of the
Letter of Credit Obligations with respect to such Letter of Credit on the date of such issuance.
Each Lender shall fund its participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to Revolving Credit Advances,
and Agent shall reimburse such L/C Issuer for such payment and disbursements as set forth in clause
(i) above.




               (iii) The obligations of Lenders under clauses (i) and (ii) above shall be for the benefit of
Agent and L/C Issuers and may be enforced by each such L/C Issuer.



          (c) Cash Collateral. (i) If Borrowers are required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement, including Section 8.2 of the
Agreement, prior to the Commitment Termination Date, each Borrower will pay to Agent for the
ratable benefit of itself and Lenders cash or cash equivalents acceptable to Agent (“Cash
Collateral”) in an amount equal to 105% of the maximum amount then available to be drawn under
each applicable Letter of Credit outstanding for the benefit of such Borrower. Such Cash
Collateral shall be held by Agent and pledged to, and subject to the control of, Agent, for the
benefit of Agent, Lenders and L/C Issuers. Each Borrower hereby pledges and grants to Agent, on
behalf of itself and Lenders, a security interest in all such Cash Collateral and all proceeds
thereof, as security for the payment of all amounts due in respect of the Letter of Credit
Obligations and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.




          (ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any
reason be outstanding on the Commitment Termination Date, Borrowers shall either (A) provide Cash
Collateral therefor in the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver to the applicable L/C
Issuer a stand-by letter (or letters) of credit in guarantee of such Letter of Credit Obligations,
which stand-by letter (or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of the aggregate maximum amount then available
to be drawn under, the Letters of Credit to which such outstanding Letter of Credit Obligations
relate and shall be issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent and such L/C Issuer in their respective sole discretion.




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






B-2









 







of Credit Obligations of such Borrower, to any other Obligations of any Borrower then due and
payable.




          (iv) No Borrower nor any Person claiming on behalf of or through any Borrower shall have any
right to withdraw any of the Cash Collateral, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to Agent and Lenders in
respect thereof, any remaining Cash Collateral shall be applied to other Obligations then due and
owing and upon payment in full of such Obligations any remaining amount shall be paid to Borrowers
or as otherwise required by law. Interest earned on Cash Collateral shall be held as additional
collateral.




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




          (e) Request for Incurrence of Letter of Credit Obligations. Borrower Representative
shall give Agent at least two (2) Business Days’ prior written notice requesting the incurrence of
any Letter of Credit Obligation. The notice shall be accompanied by the form of the Letter of
Credit (which shall be acceptable to the applicable L/C Issuer) and (i) a completed Application for
Standby Letter of Credit or Application and Agreement for Documentary letter of Credit as
applicable in the form  Exhibit B-1 or B-2 attached hereto or
(ii) shall specify (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such
Letter of Credit, (C) the expiration date of such Letter of Credit, (D) the name and address of the
beneficiary of the Letter of Credit, and (E) such other information (including, in the case of an
amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed,
or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit.
Notwithstanding anything contained herein to the contrary, Letter of Credit applications by
Borrower Representative and approvals by Agent and the applicable L/C Issuer may be made and
transmitted pursuant to electronic codes and security measures mutually agreed upon and established
by and among Borrower Representative, Agent and such L/C Issuer. The applicable L/C Issuer shall
provide prior written notice to Agent before the issuance of any Letter of Credit or the amendment,
renewal or extension thereof.




          (f) Obligation Absolute. The obligation of Borrowers to reimburse Agent and Lenders
for payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional
and irrevocable, without necessity of presentment, demand, protest or other formalities, and the
obligations of each Lender to make payments to Agent with respect to






B-3









 







Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrowers and
Lenders shall be paid strictly in accordance with the terms hereof under all circumstances
including the following:





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




     (ii) the existence of any claim, setoff, defense or other right that any Borrower or
any of their respective Affiliates or any Lender may at any time have against a beneficiary
or any transferee of any Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Letter of Credit, the transactions contemplated herein or therein or
any unrelated transaction (including any underlying transaction between any Borrower or any
of their respective Affiliates and the beneficiary for which the Letter of Credit was
procured);




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




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




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




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



          (g) Indemnification; Nature of Lenders’ Duties.




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




          (ii) As between Agent and any Lender and Borrowers, Borrowers assume all risks of the acts and
omissions of, or misuse of any Letter of Credit by beneficiaries of any Letter of Credit. In
furtherance and not in limitation of the foregoing, to the fullest extent permitted by






B-4









 







law neither Agent nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary
of any Letter of Credit to comply fully with conditions required in order to demand payment under
such Letter of Credit; provided, that in the case of any payment by Agent under any Letter
of Credit or guaranty thereof, Agent shall be liable to the extent such payment was made solely as
a result of its gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction) in determining that the demand for payment under such Letter of Credit or
guaranty thereof complies on its face with any applicable requirements for a demand for payment
under such Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they may be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay
in the transmission or otherwise of any document required in order to make a payment under any
Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent’s or any Lender’s rights or powers hereunder or under the
Agreement.




          (iii) Nothing contained herein shall be deemed to limit any waivers, covenants or indemnities
made by Borrowers in favor of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between or among Borrowers and such L/C
Issuer, including, without limitation, an Application and Agreement for Documentary Letter of
Credit and a Master Standby Agreement entered into with GE Capital.










B-5









 








ANNEX C (Section 2.1(a))

to

CREDIT AGREEMENT




RESTATEMENT CHECKLIST




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




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




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




          C. Reaffirmation of Collateral Documents. Duly executed originals of a Reaffirmation
of Collateral Documents, dated the Restatement Date, executed by each Credit Party.




          D. Insurance. Satisfactory evidence that the insurance policies required by
Section 5.4 are in full force and effect, together with appropriate evidence showing loss
payable and/or additional insured clauses or endorsements, as reasonably requested by Agent, in
favor of Agent, on behalf of Lenders.




          E. Security Interests and Code Filings. (a) Evidence satisfactory to Agent that Agent
(for the benefit of itself and Lenders) has a valid and perfected first priority security interest
in the Collateral, including (i) such documents duly executed by each Credit Party (including
financing statements under the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may request in order to perfect its
security interests in the Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies of such financing
statements, none of which shall cover the Collateral, except for those relating to Permitted
Encumbrances.




          (b) Evidence reasonably satisfactory to Agent, including copies, of all UCC-1 and other
financing statements filed in favor of any Credit Party with respect to each location, if any, at
which Inventory may be consigned.




          (c) Control Letters from (i) all issuers of uncertificated securities and financial assets
held by each Borrower, (ii) all securities intermediaries with respect to all securities accounts
and securities entitlements of each Borrower, and (iii) all futures commission agents and clearing
houses with respect to all commodities contracts and commodities accounts held by any Borrower.







C-1









 








          F. [Reserved.]




          G. [Reserved.]




          H. [Reserved.]




          I. Borrowing Base Certificate. Duly executed originals of a Borrowing Base
Certificate from Borrowers, dated the Restatement Date, reflecting information concerning Eligible
Accounts and Eligible Inventory of Borrowers as of July 31, 2010.




          J. [Reserved.]




          K. Letter of Direction. Duly executed originals of a letter of direction from
Borrower Representative addressed to Agent, on behalf of itself and Lenders, with respect to the
disbursement on the Restatement Date of the proceeds of the Revolving Credit Advance on such date.




          L. Cash Management System; Control Agreements. Evidence satisfactory to Agent that,
as of the Restatement Date, cash management systems complying with Section 5.13 to the
Agreement have been established and are currently being maintained in the manner set forth therein,
together with copies of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Section 5.13.




          M. Charter and Good Standing. For each Credit Party, such Person’s (a) charter and
all amendments thereto, (b) good standing certificates (including verification of tax status) in
its state of incorporation and (c) good standing certificates (including, as requested by Agent,
within ninety (90) days following the Restatement Date (or such longer period to which Agent may
consent), verification of tax status) and certificates of qualification to conduct business in each
jurisdiction where its ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Restatement Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.




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




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




          P. Opinions of Counsel. Duly executed originals of opinions of Bryan Cave LLP,
counsel for the Credit Parties, together with any local counsel opinions reasonably requested by
Agent, each in form and substance reasonably satisfactory to Agent and its counsel, dated the
Restatement Date.







C-2









 








          Q. [Reserved.]




          R. [Reserved.]




          S. [Reserved.]




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




          U. Officer’s Certificate. Agent shall have received duly executed originals of a
certificate of the Chief Executive Officer and Chief Financial Officer of each Borrower, dated the
Restatement Date, stating that, (a) since December 31, 2009, (i) no event or condition has occurred
or is existing which could reasonably be expected to have a Material Adverse Effect; (ii) there has
been no material adverse change in the industry in which any Borrower operates other than changes
in general market conditions affecting the construction and housing industries; (iii) no Litigation
has been commenced which, if successful, would have a Material Adverse Effect or could challenge
any of the transactions contemplated by the Agreement and the other Loan Documents; (iv) there have
been no Restricted Payments made by any Credit Party other than those permitted by Section
6.13(a), (b) or (c); and (v) before and after giving effect to the transactions contemplated by
the Credit Agreement, each Credit Party will be Solvent, and (b) since December 31, 2009, there has
been no material increase in liabilities, liquidated or contingent, and no material decrease in
assets of any Borrower or any of its Subsidiaries except as reflected in the Financial Statements
or Projections.




          V. Environmental Reports. To the extent in any Credit Party’s possession or control,
Agent shall have received Phase I Environmental Site Assessment Reports, consistent with American
Society of Testing and Materials (ASTM) Standard E 1527-00 (or the current ASTM standard for Phase
I environmental site assessment reports), and applicable state requirements, on all of the Real
Estate, prepared by environmental engineers and Agent shall be satisfied, in its sole discretion,
with the contents of all such environmental reports.




          W. Appraisals. Agent shall have received recent appraisals on all of the Mortgaged
Properties, conducted by an appraiser chosen by Agent, and in form and substance (including,
without limitation, in compliance with FIRREA appraisal requirements), reasonably satisfactory to
Agent.




          X. Audited Financials; Financial Condition. Agent shall have received the Financial
Statements, Projections and other materials set forth in Section 3.4, in each case in form
and substance satisfactory to Agent, and Agent shall be satisfied, in its sole discretion, with all
of the foregoing. Agent shall have further received a certificate of the Chief Executive Officer
and/or the Chief Financial Officer of each Borrower, based on such Projections, to the effect that
(a) Borrowers will be Solvent upon the consummation of the transactions contemplated herein; (b)
the Projections reflect Borrowers’ good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set forth therein based
on good faith assumptions made in light of current conditions and current facts known to Borrowers;
and (c) containing such other statements with respect to the solvency of Borrowers and matters
related thereto as Agent shall reasonably request.







C-3









 








          Y. [Reserved.]




          Z. Mortgage Deliveries. Each Credit Party shall deliver to Agent: (a) duly executed
Mortgages (or amended and restated Mortgages, as applicable) covering all of the Real Estate owned
by such Credit Party (collectively, the “Mortgaged Properties”) together, with respect to
each of the Mortgaged Properties, (b)(i) a duly executed copy of an opinion of counsel in each
state in which any Mortgaged Property is located, in form and substance reasonably satisfactory to
Agent, (ii) copies of the most recent surveys (accompanied by bring-down affidavits or “survey
affidavits of no change”) for each such survey, in form and substance reasonably satisfactory to
Agent and (iii) title insurance commitments (or date-down endorsements with respect thereto) for
each of the Mortgaged Properties, in form and substance reasonably satisfactory to Agent.




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





C-4












 





ANNEX D (Section 4.1(a))

to

CREDIT AGREEMENT




FINANCIAL STATEMENTS AND PROJECTIONS — REPORTING



          Borrowers shall deliver or cause to be delivered to Agent (and Agent shall provide a copy to
each Lender) or to Agent and Lenders, as indicated, the following:




          (a) Monthly Financials. To Agent, within thirty (30) days after the end of each
Fiscal Month, financial information regarding Borrowers and their Subsidiaries, certified by the
chief financial officer or treasurer of Borrower Representative (solely with respect to such
financial information delivered at the end of the first two (2) Fiscal Months of each Fiscal
Quarter), consisting of consolidated (and, upon request of Agent, consolidating) (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements of income and cash
flows for that portion of the Fiscal Year ending as of the close of such Fiscal Month; and (ii)
unaudited statements of income and cash flows for such Fiscal Month, setting forth in comparative
form the figures for the corresponding period in the prior year and the figures contained in the
Borrowers’ current operating plan described in clause (c) below for such Fiscal Year, all prepared
in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes).
Such financial information shall be accompanied by the certification of the chief financial officer
or treasurer of Borrower Representative that (i) such consolidated financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments and the absence of
footnotes) the financial position and results of operations of Borrowers and their Subsidiaries, on
a consolidated basis, in each case as at the end of such Fiscal Month and for that portion of the
Fiscal Year then ended and (ii) any other information presented is true, correct and complete in
all material respects and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default shall have occurred and be continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of Default.




          (b) Quarterly Financials. To Agent, within forty-five (45) days after the end of each
of the first three (3) Fiscal Quarters of each Fiscal Year, consolidated (and, upon request of
Agent, consolidating) financial information regarding Borrowers and their Subsidiaries, certified
by the chief financial officer or treasurer of Borrower Representative, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements of income and cash
flow for that portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii)
unaudited statements of income and cash flows for such Fiscal Quarter, in each case setting forth
in comparative form the figures for the corresponding period in the prior year and the figures
contained in the Borrowers’ current operating plan described in clause (c) below for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end adjustments and the absence
of footnotes). Such financial information shall be accompanied by (A) a statement in reasonable
detail (each, a “Compliance Certificate”) showing the calculations used in determining
compliance with the Financial Covenant (regardless of whether the Financial Covenant is applicable
with respect to such calculation during such period) and (B) the certification of the chief
financial officer or treasurer of Borrower Representative that (i) such






D-1









 







consolidated financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments and the absence of footnotes) the financial position, results of operations
and statements of cash flows of Borrowers and their Subsidiaries, on a consolidated basis, as at
the end of such Fiscal Quarter and for that portion of the Fiscal Year then ended, (ii) any other
information presented is true, correct and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such
Default or Event of Default and (iii) that all lease or rental payments have been made as to each
leased or rented location at which material Collateral is located or, if there has been a failure
to make such a payment during such period, describing the nature thereof and the efforts to remedy
such failure. In addition, Borrowers shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year, a management
discussion and analysis that includes a comparison of performance for that Fiscal Quarter to the
corresponding period in the prior year.




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




          (d) Annual Audited Financials. To Agent, within ninety (90) days after the end of each
Fiscal Year, audited Financial Statements for Borrowers and their Subsidiaries on a consolidated
(and, upon request of Agent, unaudited consolidating) basis, consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth in comparative form in
each case the figures for the previous Fiscal Year, which Financial Statements shall be prepared in
accordance with GAAP and certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) a statement prepared in reasonable detail showing the calculations used
in determining compliance with each of the Financial Covenants that is then required to be tested,
(ii) a report from such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe that a Default or Event
of Default has occurred with respect to the Financial Covenants (or specifying those Defaults and
Events of Default that they became aware of), it being understood that such audit examination
extended only to accounting matters and that no special investigation was made with respect to the
existence of Defaults or Events of Default, (iii) the annual letters to such accountants in
connection with their audit examination detailing contingent liabilities and material litigation
matters, and (iv) the certification of the chief executive officer, chief financial officer or
treasurer of Borrowers that all such Financial Statements present fairly in accordance with GAAP
the financial position, results of operations and statements of cash flows of Borrowers and their
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for the period then
ended, and that there was no Default or Event






D-2









 







of Default in existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.




          (e) Management Letters. To Agent, within five (5) Business Days after receipt thereof
by any Credit Party, copies of all management letters, exception reports or similar letters or
reports received by such Credit Party from its independent certified public accountants.




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




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




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




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




          (j) Litigation. To Agent in writing, promptly upon learning thereof, notice of any
Litigation commenced or threatened against any Credit Party that (i) seeks damages in excess of
$500,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its
fiduciaries or its assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the violation of any law
regarding, or seeks remedies in connection with, any Environmental Liabilities; or (vi) involves
any product recall.




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




          (l) Lease Default Notices. To Agent, (i) copies of any and all default notices
received under or with respect to any leased location or public warehouse where Collateral in an
amount in excess of $100,000 is located, within two (2) Business Days after receipt thereof (or,






D-3









 







with respect to locations where less than $100,000 of Collateral is located at the time when
such default notice is received, within two (2) Business Days after the date on which in excess of
$100,000 of Collateral is located at such location) and (ii) such other notices or documents as
Agent may reasonably request.




          (m) Hedging Agreements. To Agent within two (2) Business Days after entering into
such agreement or amendment, copies of all interest rate, commodity or currency hedging agreements
or amendments thereto.




          (n) Judgments. To Agent, in writing, promptly upon learning thereof, notice of any
final judgment or judgment for the payment of money in excess of $50,000 against any Credit Party.




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




D-4









 





ANNEX E (Section 4.1(b))

to

CREDIT AGREEMENT




COLLATERAL REPORTS



          Borrowers shall deliver or cause to be delivered (and Agent shall provide a copy to each
Lender) or otherwise permit the following:




          (a) To Agent, upon its request, and in any event not later than seven (7) Business Days after
the end of each Fiscal Month or, at any time Borrowing Availability is less than $18,000,000 (for
each such instance, until such time as Agent shall have received certification from Borrower
Representative and shall have confirmed that Borrowing Availability has exceeded $25,000,000 for
ninety (90) consecutive days), not later than two (2) Business Days after the end of each week (in
each case, together with a copy of all or any part of the following reports requested by any Lender
in writing after the Restatement Date), each of the following reports, each of which shall be
prepared by the Borrowers as of the last day of the immediately preceding Fiscal Month or week or
the date two (2) days prior to the date of any such request:





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




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




     (iii) with respect to each Borrower, a monthly trial balance showing Accounts
outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion.



          (b) To Agent, on a monthly basis or, at any time Borrowing Availability is less than
$18,000,000 (for each such instance, until such time as Agent shall have received certification
from Borrower Representative and shall have confirmed that Borrowing Availability has exceeded
$25,000,000 for ninety (90) consecutive days), on a weekly basis or at such more frequent intervals
as Agent may request from time to time (together with a copy of all or any part of such delivery
requested by any Lender in writing after the Restatement Date), collateral reports with respect to
each Borrower, including all additions and reductions (cash and non-cash) with respect to Accounts
of such Borrower, in each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared by the applicable
Borrower as of the last day of the immediately preceding week or the date two (2) days prior to the
date of any such request;







E-1









 








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





          (i) a reconciliation of the most recent Borrowing Base, general ledger and month-end
Inventory reports of Borrowers to Borrowers’ general ledger and monthly Financial Statements
delivered pursuant to such Annex D, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable discretion;




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




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




          (iv) a reconciliation of the Accounts aging to Borrowers’ most recent Borrowing Base
Certificate, general ledger and monthly Financial Statements delivered pursuant to Annex
D, in each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and




          (v) a reconciliation of the outstanding Loans as set forth in the monthly loan account
statement provided by Agent to Borrowers’ general ledger and monthly Financial Statements
delivered pursuant to Annex D, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion;



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




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







E-2









 








          (f) Upon Agent’s request from time to time, the Credit Parties shall permit and enable Agent
to obtain appraisals from appraisers chosen by Agent and in form and substance reasonably
satisfactory to Agent stating (i) the then Net Orderly Liquidation Value, or such other value as
determined by Agent, on all or any portion of the Inventory of each Credit Party and all Credit
Parties and (ii) the fair market value, or such other value as determined by Agent (for example,
replacement costs for purposes of Flood Insurance) of any Real Estate of any Credit Party,
including any appraisal required to comply with FIRREA; provided, that
notwithstanding any provision herein to the contrary, the Credit Parties shall only be obligated to
reimburse Agent for the expense of (i) appraisals of Inventory occurring twice per year (or three
times during any year where Availability falls below $12,500,000 at any time during such year) and
(ii) appraisals of Real Estate once per year or, in each case, more frequently so long as an Event
of Default has occurred and is continuing; and




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




E-3









 





ANNEX F (Section 6.10)

to

CREDIT AGREEMENT




FINANCIAL COVENANT




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




          (a) Minimum Fixed Charge Coverage Ratio. On any day that Borrowing Availability is
less than the Minimum Availability Amount, Borrowers and their Subsidiaries shall have on a
consolidated basis at the end of each Fiscal Quarter, a Fixed Charge Coverage Ratio for the
12-month period then ended of not less than 1.25:1.00.




          Unless otherwise specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall
in no way be construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a change in the calculation of the financial covenants, standards
or terms used in the Agreement or any other Loan Document, then Borrowers, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of the Agreement so as to equitably
reflect such Accounting Changes with the desired result that the criteria for evaluating Borrowers’
and their Subsidiaries’ financial condition shall be the same after such Accounting Changes as if
such Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be sufficient to bind all
Lenders. “Accounting Changes” means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or successor thereto or
any agency with similar functions), (ii) changes in accounting principles concurred in by
Borrowers’ certified public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or
17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109,
including the establishment of reserves pursuant thereto and any subsequent reversal (in whole or
in part) of such reserves; (iv) the reversal of any reserves established as a result of purchase
accounting adjustments; and (v) a requirement that any Borrower or any of its Subsidiaries commence
the preparation of financial statements in accordance with the International Financial Reporting
Standards as adopted by the International Accounting Standards Board from time to time. All such
adjustments resulting from expenditures made subsequent to the Restatement Date (including
capitalization of costs and expenses or payment of pre-Restatement Date liabilities) shall be
treated as expenses in the period the expenditures are made and deducted as part of the calculation
of EBITDA in such period. If Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the underlying Accounting
Change with respect thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting Change, refer to GAAP,
consistently applied after giving effect to the implementation of such Accounting Change. If






F-1









 







Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments within thirty
(30) days following the date of implementation of any Accounting Change, then all Financial
Statements delivered and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1, a breach
of a Financial Covenant contained in this Annex F shall be deemed to have occurred as of
any date of determination by Agent or as of the last day of any specified measurement period,
regardless of when the Financial Statements reflecting such breach are delivered to Agent.




F-2









 





ANNEX G (Section 9.9(a))

to

CREDIT AGREEMENT




LENDERS’ WIRE TRANSFER INFORMATION



	 	 	 	 	 

	Name:

	 	General Electric Capital Corporation

	Bank:

	 	Deutsche Bank

	 

	 	New York, New York

	ABA #:

	 	021001033
	Account #:

	 	50279513
	Account Name:

	 	GECC CFS CIF Collection Account

	Reference:

	 	CFN 8670 — Huttig Building Products







G-1









 





ANNEX H (Section 11.10)

to

CREDIT AGREEMENT




NOTICE ADDRESSES





	(A)	 	If to Agent or GE Capital, at

General Electric Capital Corporation

500 West Monroe Street

Chicago, Illinois 60661

Attention: Huttig Building Products, Jack Morrone

Telecopier No.: (312) 441-7395

Telephone No.: (312) 463-2258
	 
	 	 	with copies to:
	 
	 	 	Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60601

Attention: Timothy J. Dable

Telecopier No.: (312) 558-5700

Telephone No.: (312) 558-5600
	 
	 	 	and
	 
	 	 	General Electric Capital Corporation

500 West Monroe Street

Chicago, Illinois 60661

Attention: Corporate Counsel-Corporate Lending

Telecopier No.: (312) 441-6876

Telephone No.: (312) 463-2451
	 
	(B)	 	If to any Credit Party, at

Huttig Building Products, Inc.

555 Maryville University Drive

St. Louis, Missouri 63141

Attention: Mr. Philip W. Keipp, Vice President, Chief Financial Officer

Telecopier No.: (314) 216-2893

Telephone No.: (314) 216-8793
	 
	 	 	With copies to:

Bryan Cave LLP

One Metropolitan Square

211 N. Broadway, Suite 3600

St. Louis, Missouri 63102

Attention: Harold R. Burroughs

Telecopier No.: (314) 552-8706

Telephone No.: (314) 259-2706




H-1









 











ANNEX I (from Annex A — Revolving Loan Commitments definition)

to

CREDIT AGREEMENT






	 	 	 	 	 

	Lender(s):
	 	 	 	 
	 
	General Electric Capital Corporation
	 	 	 	 
	 
	Revolving Loan Commitment
(including a Swing Line Commitment
of $12,000,000):
	 	$	60,000,000	 
	 
	Wells Fargo Capital Finance, LLC
	 	$	60,000,000	 







I-1